The contract between City of Edinburgh Council and German contractor Bilfinger Berger has been blamed for Edinburgh’s tram scheme problems.
Audit Scotland last week said the Scottish Government should intervene in the project because it risked collapse.
The watchdog found that just 28 per cent of infrastructure work had been carried out against a target of 99 per cent for December 2010, while 74 per cent of the funding had been spent.
An industry source told CN: “The main problem is within the contract itself. There is absolutely no flex built in so there’s a convoluted procedure for any problem that occurs. At the same time let’s not forget that we’re talking about digging up a medieval city, so there will obviously be problems.”
The Audit Scotland report called on the Scottish National Party to use the expertise of its agency Transport Scotland to prevent any more delays to the £545 million city centre scheme. Utilities diversion works are 97 per cent complete, and 75 per cent of tram vehicles have been built.
So far, £402m has been spent on Phase 1a, to run from Edinburgh Airport to Leith Waterfront. Work has been put on hold until a
dispute between the council and Bilfinger Berger has been resolved.
Audit Scotland said the body set up by the council to oversee the project, Transport Initiatives Edinburgh, no longer had the skills and experience to ensure the work was completed following the recent departure of key staff.
The project’s chairman David Mackay announced in November he was taking early retirement. After stepping down he criticised Bilfinger Berger for forbidding staff from talking to the press.
The source said he thought an overseas contractor was less likely to worry about the effect of the dispute on its future work prospects: A Scottish contractor might give way, but I bet Bilfinger won’t.”
It is still hoped the project will be completed in 2013, although Audit Scotland said it could not be done within the £545m budget.
John Baillie, the chairman of the Accounts Commission, for which Audit Scotland works, said it was important that mediation talks were pursued and all other choices, including the consequences of terminating the contract, were fully evaluated.
The Scottish Government is providing £500m of the project’s funding through Transport Scotland, which monitors the way this money is spent through regular meetings with the council. The report says the government should consider expanding its future involvement.
An Edinburgh Trams spokesman said: “While we understand that the contractual dispute has generated a lot of interest in the project, all parties have signed a confidentiality clause to give the upcoming talks the best chance of success for the good of the city.”