Edinburgh City Council is taking legal action against the consortium hired to build the city’s £500 million tram system.
A report has warned council bosses that the consortium is demanding more money for the project and highlighted a potential cash shortfall in the project, which is already late and over budget.
In response, the council is taking the consortium to court over failure to meet contractual obligations.
City transport convenor, Gordon MacKenzie, said: “We have lodged formal dispute papers with the consortium. We are unhappy with the progress of the tram project. We need to contain the costs. We need to improve the programme delivery.
“Our position is clear. We have a contract and we intend to hold the contractor to that contract.”
The latest row comes after the project ground to a halt in February when the consortium demanded extra cash because of contractual wrangles and problems diverting utilities.
But city Conservatives have accused the council of mishandling the project from the beginning.
Edinburgh Conservative MSP David McLetchie said: “Reassurances must be given that work will continue and no more taxpayers’ money will be spent on the trams project. The trams saga is bearing all the hallmarks of the Scottish Parliament building fiasco. Over budget and over time.”