Developer wins first round in fight over capital's tram costs

Published on 14/10/2009 22:19

EDINBURGH'S tram developers have won the first round of their acrimonious dispute with the companies building the line, The Scotsman has learned.

An independent adjudicator has ruled in favour of city council-run firm TIE over the first of hundreds of disputed issues.

It concerns a claim of some 90,000 by the construction consortium for extra work at the Hilton Hotel at Edinburgh Airport.

The group of companies, led by German-based Bilfinger Berger, is now expected to have to shoulder the additional cost.

This relates to work on an embankment to create access to the site, which will involve the creation of extra parking spaces for the hotel in return.

However, while the decision marks an early victory for TIE, Bilfinger Berger is understood to be confident of winning other issues in the dispute where far more money is at stake.

Sources close to the project said the consortium never expected to win this first issue, but its chiefs were so frustrated with TIE they added it to the dispute.

It has been claimed that the consortium has sought a total extra 80 million for changes to the original 120 million tram line building contract.

The dispute began in February when the contractors refused to start track laying in Princes Street, claiming changes and delays, including late-running preliminary work to divert underground pipes and cables. A temporary agreement a month later enabled work to resume.

A formal dispute resolution process was triggered in August after the two sides failed to reach agreement, with five areas of issues now at various stages. It is not clear whether the adjudication will affect the outcome of other issues.

The wrangle has delayed completion of the 545 million project by seven months to February 2012, but TIE has warned that if the dispute is not settled and the work not speeded up, trams will not start running until 2013.

TIE declined to comment on the adjudication yesterday.

Chief executive Richard Jeffrey said: "Our priority is to deliver the trams for the people of Edinburgh. The formal adjudication process is commercial and confidential under the terms of the contract.

"What I can say is that my team and I continue to strive to achieve the best value for Edinburgh as we work through these issues with the contractor."

A spokesman for the construction consortium said: "Due to confidentiality Bilfinger Berger is not able to comment."