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City Council backs tram company in legal proceedings

posted 14 Aug 2009, 02:36 by myEdinburgh Admin   [ updated 14 Aug 2009, 02:43 ]
The company delivering the tram project for Edinburgh has now initiated formal contractual dispute resolution with the Bilfinger Siemens CAF (BSC) consortium in an attempt to resolve the dispute which began in February of this year. The move is being backed by the City of Edinburgh Council.

Despite the efforts of tie Ltd to address the matter though ongoing discussions and mediation there are still a number of outstanding issues between tie Ltd and the BSC consortium.

Further detail of the dispute resolution process is contained within a report published by the City of Edinburgh Council today (Friday, 14 August) which will be considered by Councillors at the Council meeting on Thursday, 20 August.

The report also states that given these issues it is now considered difficult for Phase 1 to be completed within the available project envelope of £545m and that the delivery date of the project is now forecast to be Spring 2012.

There are several contingency options under consideration including a controlled amount of prudential borrowing with debt repayments funded through Transport Edinburgh Limited (TEL) profits, potential leasing arrangements or the Council’s revenue budget or through identification of future spending from the Council’s capital programme. These options would be available to the Council if additional  funding is required.

Leader of the City of Edinburgh Council, 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 BSC. The process may take several months but is crucial that tie enter into these proceedings to ensure we get best value for the project in the long term.”

Richard Jeffrey, Chief Executive, tie Limited said: "We have always been clear that we will pay for what is just and offer fair recompense to our contractors as laid out in the tram contract.

"We appreciate that this development is very disappointing for all parties concerned, but equally we know from the support we have had that the Capital would wish us to stand firm in our pledge to the city under the agreed contract.

"The support of City of Edinburgh Council is welcomed in maintaining this stance."

The report also gives an update on the major investment in the hidden infrastructure of the city, which was required to replace pipe work for major utilities such as water, gas, and telecoms. This work was required before tram tracks could be laid from Newhaven to the Airport to minimise disruption to homes and businesses along the route as well as the tram system itself in the future.

Edinburgh is a World Heritage City and as expected a number of discoveries have been made such as ancient burial sites and large air raid shelters. These have caused obvious challenges and caused some delays for the contractors carrying out the utility diversion works. The overall MUDFA programme is now almost complete and work will finish in November. This has led to additional cost pressures of up to £7m which is approximately 12% of the works value.

The report published today makes reference to excellent progress being made by CAF who are manufacturing 27 trams for the Edinburgh fleet. It also outlines the TEL and tie Ltd business plans.

Download the report here.
myEdinburgh Admin,
14 Aug 2009, 02:43