Ferguson Marine CEO blames £90m of ferry overspend on 'management and build errors', many under Jim McColl

Management failures and errors during the construction of two embattled ferries at Ferguson Marine has cost the taxpayer around £90 million extra, the shipyard’s chief executive has said.

Alongside these mistakes, David Tydeman, who has run the shipyard since February this year, said there was also £50m in additional cost linked to the passage of time and the overheads at the yard, and £40m from inflation and the complexities of the design.

It came as Mr Tydeman said the yard would “re-assess” the delivery dates for the Glen Sannox and the as-yet unnamed hull 802, which are intended to be delivered by May next year and March 2024 respectively.

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The vessels have cost taxpayers more than £300m after the yard received the work in 2015, but soon fell behind schedule in construction and later into financial difficulty, being nationalised by the Scottish Government in 2019.

Their delay has caused a major political scandal, with the SNP accused of awarding the contract to the yard, owned by Jim McColl – a high-profile independence supporter – for political reasons. The yard had been saved by Mr McColl in 2014 following an intervention by the-then first minister Alex Salmond during the first independence referendum campaign.

In a letter to the public audit committee, Mr Tydeman set out how the total cost of the vessels – other than a £45m loan – had risen from £97m to £277m.

The chief executive said £83m had been paid by ferry procurement body CMAL to the McColl-owned FMEL, with an additional £122m budgeted to the nationalised FMPG, and an additional £72m that was announced by John Swinney in the Scottish Budget last week.

He adds the increase includes around £50m in overhead cost, relating to “the simple fact that the two ferries will have carried the costs of the shipyard for around nine years by the time of delivery”.

The budget for two ferries cost £90m extra due to a raft of "management and build errors", the chief executive of the Ferguson Marine shipyard has said.The budget for two ferries cost £90m extra due to a raft of "management and build errors", the chief executive of the Ferguson Marine shipyard has said.
The budget for two ferries cost £90m extra due to a raft of "management and build errors", the chief executive of the Ferguson Marine shipyard has said.

Mr Tydeman also said there was an increase of £40m attributable to inflation, stating Ferguson’s would price the ferries at £140m had they bid for them in the recent past for the existing delivery dates.

However, his most stinging criticism related to £90m connected to “management and build errors”, something he labelled a “function of mistakes” and factors such as the Covid pandemic and recovery from administration.

The chief executive specifically attacked the decision by the McColl-owned yard to “run concurrent design and engineering, starting construction of the hull and superstructures before the design was complete”. This, Mr Tydeman said, “always, in my experience, adds significant costs”.

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He also attacked FMEL for failing to “follow conventional shipbuilding practices” and to build “a largely empty shift”. This, he said, “could have double the sub-contractor and direct labour man hours”.

The termination of the electrical and power management contracts prior to administration by the McColl management also impacted costing, alongside “significant changes to design contracts and key engineering partners in 2020, post administration”.

Mr Tydeman also said there were “challenges” in ensuring the correct engineering expertise was in place following administration and nationalisation, as well as the high number of new starts and leavers during the pandemic.

In a letter to the net zero committee, the chief executive also alluded to the possibility of further slippage in the delivery dates of the two vessels.

He told MSPs: “Overall, we will use the departure of GS [Glen Sannox] to dry-dock in late February as a milestone to reassess confidence of meeting the target delivery dates. Meanwhile, apart from the LNG Skids, we are managing the continuing list of ‘unknown-unknowns’ that arise on GS and continue the planning for a more efficient outfitting and commissioning on 802, learning from GS.

“The February date will also be a good opportunity to re-assess 802 and the structural consolidation progress, design cleansing process and the progress with fit-out.”

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