MINISTERS have been urged to get a grip of Edinburgh's troubled tram project, in a critical assessment by public spending watchdogs.
Audit Scotland called on the Scottish Government's Transport Scotland agency to take a bigger role in the 545 million scheme, which is running years late, amid concerns over whether it will be completed.
The watchdog warned of the possible impact on 500m of Scottish Government funding if the Edinburgh airport-Newhaven line is initially built only as far east as the city centre.
It also raised questions over whether Edinburgh city council-owned tram developer Tie (the former Transport Initiatives Edinburgh) would have sufficient skills to finish the job if more staff quit following a series of recent departures.
Transport Scotland has taken over major projects that have hit problems or delays, such as the Stirling-Alloa-Kincardine and Borders rail lines. It is also responsible for Scotland's two biggest transport projects - the 2 billion new Forth bridge and the 692m M74 extension in Glasgow.
Tram industry chiefs last night backed the call for a greater Transport Scotland role.
Andrew Braddock, director-general of industry group UKTram, ?said the Scottish Government "clearly needs to take more interest in seeing a successful outcome to the present troubled situation".
Edinburgh North and Leith Labour MSP Malcolm Chisholm said: "Sadly, the SNP government and Transport Scotland have completely failed to exercise any supervision over the project.
"This is the biggest infrastructure project the city has ever seen and it cannot be allowed to slip further behind schedule."
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Audit Scotland's 44-page interim report comes as Tie prepares to start mediation talks with a consortium of tram-line builders led by German firm Bilfinger Berger in an effort to resolve their bitter dispute, which has dragged on for nearly two years and brought work to a near standstill.
The report stated: "The Edinburgh trams project is at a significant decision point. There is a high level of concern and media coverage about what the project may finally cost and whether a tram network will be realised.
"The city council and Tie urgently need to strengthen public confidence in the project."
John Baillie, chairman of the Accounts Commission, for which the report was prepared, said public confidence in the tram works was "extremely low".
The report said trams might not be running until at least 2013, two years later than planned, and that the contract dispute "shows no sign of abating".It also said the line would cost more than its 545m budget, which includes 45m from the city council.
Audit Scotland said Transport Scotland had reduced its role in the council-run project in 2007 after government funding was confirmed following an unsuccessful SNP attempt to scrap the scheme after it came to power.
It went on: "Although Transport Scotland already monitors project spend, the Scottish Government has a significant financial commitment to the project and it needs to consider Transport Scotland's future involvement in providing advice and monitoring the project's progress.
"In particular, if the council decides an incremental approach should be taken to the delivery of Phase 1a (airport-Newhaven], there may be implications for the conditions of the grant which would require to be considered. The Scottish Government should also consider whether Transport Scotland should use its expertise in managing major transport projects to be more actively involved and assist the project in avoiding possible further delays and cost overruns."
The call was welcomed by Edinburgh West Lib Dem MSP Margaret Smith, who said: "I find it difficult to understand why the Scottish Government withdrew from the project board in 2007. With 500m of government funding at stake, this is a major infrastructure scheme for Scotland and should have had the benefit of any expertise available at Transport Scotland."
However, a Transport Scotland spokesman said: "We have been in close contact with the council as the difficulties in the project have become clear. With mediation due to start in a few weeks' time, it is not the right time to be discussing substantial changes to the governance of the project."
The report said criticism of the project had hit Tie staff morale and the firm had to reassure the public over its "project management capabilities". Chairman David Mackay quit unexpectedly in November, describing the Princes Street section of the project, the flashpoint for the dispute, as "hell on wheels".
The report said: "A number of staff have left Tie in recent months and others may also leave, creating a risk that it may lack the necessary skills and experience to complete the project."
Tie chief executive Richard Jeffrey described the report as "a fair and balanced summary" and admitted boosting public confidence in the scheme would be "quite a challenge". However, he added: "If we spend too much time and money on communications, we get criticised for spin."
He added: "We have a good relationship with Transport Scotland and would welcome any involvement they wish to have."
Audit Scotland said a total of 402m had been spent on the project by last December, but only 28 per cent of building work had been completed.
Lothians SNP MSP Shirley-Anne Somerville said: "The SNP has been the only party holding this project to account. It is clear from Audit Scotland there are too many managers and not enough construction."