£15m at heart of the trams fiasco

IT'S already been described as a "Mexican stand-off" and now the stakes in Edinburgh's long-running tram dispute have been dramatically raised.

The Evening News can today reveal how the company at the centre of the city's tram dispute believes it is owed up to 15 million for work already carried out.

Sources have told how the debt was the trigger for the contractor's decision to lay off dozens of staff last week and plunge the project into fresh chaos. TIE disputes it owes Bilfinger anything.

The latest twist in the legal battle which has seen work on the embattled project grind to a halt only adds fuel to growing fears that any hope of rescuing the scheme have all but disappeared.

The Evening News revealed on Saturday how Tory councillors are set to launch a motion calling for the contract to be ripped up to bring the dispute to an end but that would then risk a lengthy court battle.

It also emerged that an update on the future of the project may not now come for several weeks, with termination of the contract looking more and more likely.

It is understood that contractors believe that while the complete route from the airport to Ocean Terminal cannot be delivered, the line could be built to York Place for 700 million. That is around 100m more than TIE has at its disposal.

One source, who estimated the amount owed to the firm as 10m-15m, said: "There is now a substantial gap in price between what Bilfinger Berger believe the work will cost and TIE's estimates.

"It's a huge financial gap and relations are really beginning to hit rock bottom."

It had been claimed that Bilfinger Berger - which makes up the BSC construction consortium along with Siemens and Spanish firm CAF - was carrying out "goodwill works", despite not being paid by TIE.

One of those projects was work on the A8 underpass and workers were pulled off that job last week.Bilfinger Berger dismissed 36 workers in total, claiming the company could no longer afford to pay its staff.

TIE immediately rubbished the claims.

It is understood that TIE has issued Bilfinger with nine "remedial termination" or breach of contract notices in recent weeks.

One of those notices relates to what TIE believes is a clear breach of contract in the work carried out on Princes Street, where a number of patch-up jobs have been carried out since tram tracks were laid last year.

Failure to comply with the notices by carrying out improvements would give TIE grounds to terminate the contract. Bilfinger is yet to respond to any of the notices.

John Carson, a former head of maintenance at Network Rail and a long-standing criticof the scheme, said he doubted the tram project could now ever be delivered.

He said: "I think termination of the contract has got to be good for the people of Edinburgh. The project is completely in limbo and relationships have obviously broken down.

"At least a termination would focus minds, but I think you're looking at no trams ever in Edinburgh now.

"All the money will now go to compensate Bilfinger Berger - it's a no-win situation."

A spokesman for TIE said there was a long-running dispute with Bilfinger Berger about monies owed for preliminary works.

He said: "There is one aspect of the contract referred to as preliminaries which is in dispute.

"Other than that, we can confirm again that we have met all the monies due as payments to the consortium.

"If there is any suggestion the contractor had been working out of goodwill, then that would be curious.

"We will continue to decline to be drawn into speculation. However, we can categorically say that the consortium has been paid for the completed pieces of work, including agreed changes, as per the contract and continues to be.

"We have made no secret of the fact that we will leave no stone unturned in protecting the public purse and that we have been progressing rigorously for a resolution. And we will continue to do that."

Tracking a crisis

March 2003: Details of a tram scheme are announced, complete with

a 2008 finish date and a cost of 375m.

January 2006: One of the proposed lines is scrapped due to funding crisis. Only line from Leith to airport is deemed to be affordable in a "first phase".

September: Completion date: 2010; cost: 512m.

July 2007: Preparatory work begins. Completion date: 2011; cost: 512m.

December 2008: David Mackay appointed new chair of TIE after the departure of Willie Gallagher.

February 2009: Tram work grinds to halt on Princes Street as

Bilfinger Berger demands more money.

April: Richard Jeffrey, a former managing director of Edinburgh Airport, is unveiled as the new chief executive of TIE

May: Completion date: 2012; cost: 545m.

March 2010: Bilfinger Berger proposes delaying completion until 2014, as fears rise that the route may be scaled back.

June 7: Evening News reveals that the project is heading for court and huge delays after council begins moves to kick Bilfinger Berger off the job.

June 9: It emerges that just 18 per cent of construction work has so far been completed, when the figure should be 86 per cent by this stage of the project.

June 18: Report admits project faces 10 per cent cost increase and delays.

September 4: The Evening News reveals that the city's tram saga can only end in one of two ways – trams will run as far as the city centre, or bosses will give their German contractors the boot.

September 11: Evening News reveals the row looks almost certain to head for the courts.

September 25: Reports Princes Street could be dug up again after more defects were discovered in the laying of tram tracks.

September 29: It emerges Transport Scotland has approved a further 30 million worth of spending in the last five months, despite the ongoing row with contractors.

October 2: Councillors launch moves to demand the contract with Bilfinger is ripped up.