Trams: council admits it was wrong and pays £66m to contractors

City of Edinburgh Council has been forced to pay its tram-line contractors £66 million after conceding responsibility for changes and delays to the ill- fated scheme.

The figure came in a council report three months after The Scotsman revealed the bitter dispute between the two sides had been resolved, with the council to pay the builders “tens of millions” for design changes.

It follows some £15m-£20m being paid by the council after losing a series of independent adjudications into aspects of the dispute. However, the total paid has yet to emerge.

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The £66m was agreed in mediation talks between the council and the construction consortium of Bilfinger Berger, Siemens and tram-maker CAF in March.

The consortium had been locked in a two-year dispute with council-owned tram developers Transport Initiatives Edinburgh (Tie), which has now been disbanded.

The deal paved the way for work to resume on the line after councillors agreed last month it should extend from Edinburgh airport as far east as St Andrew Square at a cost of £776 million.

Among ten sites along the route where work has restarted, traffic diversions are in place at Haymarket and repairs to already-laid tram tracks in Princes Street are under way.

A council official said last night the £66m was paid because of “a number of core scope changes” which had been in dispute between the council and consortium in March.

He said: “As part of the subsequent settlement, agreement was reached regarding these changes and payment made for works completed. These changes now form part of the core scope of the contract and are included in the revised budget reported to council of £776m.”

The figure was produced after public spending watchdog Audit Scotland chased up the council over missing parts of its 2010-11 accounts.

One council source told The Scotsman: “The contract did not do what we were told it did, and we were liable for far greater claims than anticipated for adjustments to the design and delays.”

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A source close to the consortium said: “These costs were borne out of matters which were the responsibility of Tie.”

Allan Jackson, transport spokesman for the council’s Conservative group and convener of the audit committee, said: “Councillors were surprised at the amount. It was a substantial sum.”

Andrew Burns, the Labour group leader, said: “This sum of money is very significant. This is the type of issue that will be looked at very carefully by any public inquiry. What I do not understand is why it has taken so long for these figures to seep into the public domain.”

Council transport convener Gordon Mackenzie said: “The £66m is part of a commercial settlement which allows the project to go forward. The council and the contractor agreed on the figure against outstanding claims. We were already in the realms of 700 or 800 claims thus far and that could have increased. This figure settled all these claims.”

Council chief executive Sue Bruce said: “While mediation has incurred costs to the project, the process has been crucial in settling the disputed claims, substantially reducing the council’s liability and gaining a much needed resolution and way forward for the project.”