Tram contractors have tried three times already to get more money

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THE contractor at the centre of a £80m dispute which is threatening to derail Edinburgh's tram project has fought and lost three previous battles with city transport bosses, the Evening News can reveal today.

On one occasion Bilfinger Berger demanded 1m for a piece of work and walked away with just 40,000.

Today a TIE source claimed the firm was "chancing it" and attempting to "gouge" money out of the project.

Is tram project coming off the rails?

WHEN workers first began digging on the site of what will become the Capital's new tram depot at Gogarburn it was assumed that they were engaged in one of the more straightforward parts of the project.

But no sooner had they broken the soil than they discovered of a huge – but unexpected – water main.

It had apparently not been picked up on extensive surveys carried out ahead of work beginning. The result? Scratching of heads, delays, and inevitable cost rises.

It is just one example from the myriad of problems faced by those attempting one of the largest civil engineering projects ever carried out in Scotland.

Today, the Evening News can lift the lid on the growing number of claims and counter-claims surrounding a project in crisis.

As work remains halted on Princes Street and relations between tram firm TIE and German contractor Bilfinger Berger show no signs of thawing, sources close to the project have told of their fears it will end up to two years late and more than 250 million over budget.

Critics paint a picture of a scheme in chaos, with project managers lacking experience and out of their depth.

TIE angrily deny such suggestions, insisting that the scheme remains on time and on budget.

Bilfinger Berger has previously told of how it warned tram bosses months ago of impending delays before its 11th-hour demands of an extra 50 to 80 million to start work.

Today it has been revealed that the contractor has fought and lost three previous disputes with city transport bosses each time going to "dispute resolution panels".

A TIE source: "They are trying to gouge out as much money as they can. They did come to us to say they wanted 50-80 million and they are lying if they say they didn't. They're chancing it, and they have done it before. They did it the time of the contract sign-up.

"There's a lot of unhappiness within the consortium at the stance being taken by Bilfinger Berger.

"The other companies are not happy about the damage that is being done to reputations.

"Siemens and CAF will have to take a decision about whether Bilfinger stays in the consortium – it's not for TIE or the city council to make that decision."

The Evening News contacted Bilfinger about this but the company was today unable to comment.

One senior source said the building firm had been hamstrung due to delays in completing utility diversion works caused by TIE's insistence on adhering to flawed initial surveys.

He said: "The problem is that Bilfinger Berger's contract is based on them having a clear run at the works.

"The utility diversion work on Princes Street should have been finished in October, but they're still there today carrying out work. It's like getting someone to paint your house when the plasterer hasn't finished the walls.

"This current disagreement is just a smokescreen to mask the fact the utilities are six months behind schedule. Bilfinger are one of the biggest construction firms in Europe – they're not a bunch of cowboys. A company of that stature is not going to extort money without good reason."

Insiders say there have been huge failings with the planning of the project, claiming initial surveys failed to pick up major gas and water mains which would have to be moved.

Hundreds of pipes first installed by long defunct utility firms are also not thought to have been picked up by the surveys and have been causing problems.

It is feared that delays to the utility diversions will end up with the council being forced to pay another contractor – Carillion – millions more to finish the work.

Another source said: "The council and TIE have got two choices – one is to pay the true cost of the project, which is likely to be 700-800 million, or they can cancel it and effectively write off 200 million.

"The costs have always been understated to try and keep the project going and get it to the next stage. The 512m was always the lowest possible price and there was never a hope in hell of it coming in at that."

It is now certain that the final cost will not include the completion of the ill-fated line 1b, between Roseburn and Granton. The final nail in the coffin for the project came at a meeting between councillors and TIE officials earlier this week in which representatives were told the credit crunch has effectively killed it off.

Indeed, the lack of development in the north of the city has also led to suggestions that the Newhaven to Edinburgh Airport route could be shortened to save around 20million.

Figures obtained by the Evening News late last year showed that the council coffers contained just 3m of the 25m it planned to raise from developers' contributions for the first part of the tram project. Just 300,000 had been raised for line 1b.

It has already emerged that the city council could be liable to pay back millions of pounds to Transport Scotland if the local authority is unable to complete the project.

That is not something which either the council or tram boss David McKay are contemplating. The latter has already mounted a spirited defence this week, saying he would not be "held to ransom" by the German contractor.

Indeed, Councillor Gordon Mackenzie, the city's finance leader and a TIE board member, told the Evening News there was still optimism that the project could be delivered within the stated costs, and even under budget.

He said: "I'm pretty confident we will get the project finished close to budget. The final cost could actually be significantly less than that.

"It's absolute nonsense to suggest it could be anything like 800 million. Parts of the project are behind, but we have time to make it up."

In the end, only one thing seems clear. Like the water main at Gogarburn, when it comes to Edinburgh's trams project, everyone has learned to expect the unexpected.


Official line

TIE says work has stalled on Princes Street due to the disagreement with Bilfinger Berger. The tram firm insists it was only made aware of the company's concerns at the 11th hour, but the construction giant claims it had been issuing warnings for months. Both TIE and the city council say Princes Street is "ready to go" and work will begin in earnest once the dispute is resolved.

Inside track

A schedule of works dating from April 2008 shows that TIE had planned to have completed the utility diversion works on Princes Street by the fourth quarter of last year. However, work is still being carried out on the street today.

Bilfinger Berger said it is this work which is preventing it from beginning work to lay the tram tracks. There are also concerns that a turning table which was used for the city's previous tram system may have to be dug up at the junction with Lothian Road and could cause further delays.


Official line

Tram work at Haymarket has so far led to the destruction of the historic Caledonian Ale House and will see the temporary removal of the Hearts war memorial. There have also been a series of diversions for traffic.

TIE says phase 2 of the Haymarket utility works began on January 10. Work to construct the Verity House Access Road on Haymarket Yards began on February 10 and is expected to last eight weeks.

Inside track

Sources say TIE are way behind schedule with utility works at Haymarket, particularly work to move another water main. TIE had hoped to complete a viaduct by the end of the last year, but only the foundations are currently in place.


Official line

Utility diversion work began again on January 19 following a Christmas embargo that was called for by traders.

Next month will see the installation of a new pedestrian crossing outside the Playhouse and utility diversions between Annandale Street and Picardy Place. Scotland Gas Networks will carry out service connections between Smith's Place and Iona Street. This will include work on the carriageway and pavements, and will likely require access to properties.

Inside track

The laying of tram tracks, which had been expected in January, may now not begin until Easter. The Leith Business Association says it does not expect to see the tracks until June, and says it has had two years of holes being dug without a single piece of track going down. However, some traders have been critical of the Christmas embargo called for by the association, saying it simply delayed the works.


Official line

Work started on the construction of a tram depot in August and it expected to be complete by 2010. TIE says moving a large water main has proved more difficult than was previously anticipated, and has led to a "reprogram-ming" of the works. The tram firm is still confident of having the depot finished on time.

Inside track

Insiders claim that the surveys carried out before the tram project was under way were inadequate and missed the water main at Gogarburn. They say the work has been delayed for months as TIE and Scottish Water work out the best way of moving it.


Official line

Publicly, both TIE and the city council have said no decision has yet been made on the 87 million spur line.

Councillor Phil Wheeler, the city's transport convener, has previously said he remains committed to line 1b and a final decision is expected to be made by the council next month.

Inside track

In a private meeting earlier this week, councillors were told that line lb should be cancelled for the time being. TIE officials said it was "not the right time" for the spur because development had stalled at the Waterfront.

Funding for the line is dependent on developers' contributions and has been hit hard by the recession.

One source told the Evening News: "Line 1b died in September, they just haven't been to register the death yet."