Edinburgh council takes legal action against tramway provider

20 Aug 09
A row has flared over Edinburgh’s controversial tramway plan after the city council entered into a formal legal dispute with the consortium building the £545m project
By David Scott in Edinburgh

20 August 2009

A row has flared over Edinburgh’s controversial tramway plan after the city council entered into a formal legal dispute with the consortium building the £545m project.

The City of Edinburgh Council announced that the council-owned firm set up to oversee the project had initiated formal contractual dispute procedures against the German firm, Bilfinger Siemens, the consortium building the trams scheme.

The action centres on the council’s concern over the threat of rising costs and further delays.
Project directors estimated that the scheme might not now be completed until 2013 and that the £545m budget was likely to be breached. The council, which considered a report on the latest dispute at a meeting on August 20, said that there were still a number of outstanding issues between the company and the consortium.

This was despite the efforts of Transport Initiatives Edinburgh – the firm it set up for the project – to resolve the matter ‘through ongoing discussions and mediation’.

The council-backed move to enter into formal legal proceedings is the latest phase of a row which began several months ago when work was temporarily halted.

The dispute caused a month-long stoppage on Edinburgh’s much-disrupted Princes Street. Contractors demanded extra payment and more time to complete the project, partly because of delays in work diverting underground pipes and cables undertaken by different contractors.

Council leader Jenny Dawe said: ‘It is clearly regrettable that the dispute has escalated to this stage but we are giving TIE our full backing as we must ensure that contractual obligations on the tram project are met by the consortium.

‘The process may take several months but it is crucial that TIE enters into these proceedings to ensure we get best value for the project in the long term.’

The council said several contingency options were being considered if extra funding was required. These include a controlled amount of prudential borrowing, with debt repayments funded through Edinburgh transport profits, potential leasing arrangements and funding through the revenue or capital budgets.

Edinburgh Conservative MSP David McLetchie claimed the project had been ‘mishandled right from the start’ by the Liberal Democrat-SNP run council.

He added: ‘Reassurances must be given that work will continue and no more taxpayers’ money will be spent.’

Bilfinger Siemens declined to comment in advance of the council meeting.

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