Tram dispute ruling 'could see Capital held to ransom'

Published on Monday 30 August 2010 19:53

FEARS have been raised that contractors could "hold the city to ransom" after winning a key ruling on the future of Edinburgh's tram project.

The Evening News understands that tram bosses have lost an adjudication battle which could lead to workers downing tools every time a dispute arises about the cost of work.

Before the ruling, tram bosses had the power to instruct contractors to continue working even if an estimate had not been provided for how much the job would cost.

However, following the adjudicator's decision, which has been labelled a "test case", should German firm Bilfinger Berger revise the cost of the job, tram firm TIE now cannot order them back to work until a new estimate has been agreed.

The dispute is understood to have arisen due to a 100,000 piece of work on the off-road section of the line near Haymarket.

While the ruling relates to just one case under one clause of the tram contract, there are concerns that it could set a precedent.

Sources close to the project said there were "many, many cases" across the scheme where the German firm had failed to provide estimates about how much a particular job would cost.

The development came as hopes of a breakthrough between the two sides in their long-running dispute appeared to move closer.

TIE is understood to be negotiating with the contractor about how much it will be paid for building a section of the route, thought to be the airport to city centre, before a new firm is found to eventually complete the 11.5-mile line to Newhaven.

A source close to the tram project said the latest adjudication had been "disappointing" and would lead to fears that the contractor would be able to "hold the city to ransom".

He said: "You can't put a positive spin on it, it's a setback for us.

"It's disappointing, but it's one brick in the wall, it's not the whole wall."

So far there have been seven adjudications by an independent industry expert, with the construction consortium of which Bilfinger is part claiming to have won the majority.

Last week tram bosses postponed a long-awaited report on the project which critics hoped would answer questions about its cost and timetable.

It is now clear that bosses hope to push ahead with the "incremental delivery" of the scheme, raising fears that some parts of the line may not be built for many years to come.

When asked about the adjudicator's latest ruling, a spokesman for TIE said: "We do not comment on confidential matters."

A source close to Bilfinger said TIE should blame Scottish contract law rather than the contractors. He said: "This is all about avoidance of blame, rather than delivering the tram project."