Page last updated at 17:26 GMT, Friday, 20 February 2009

Contract row derails tram project

Princes Street had been due to close to traffic for a year

Tram work on Edinburgh's Princes Street has been put on hold just a day before it was due to begin, following a row over the contract.

However, project managers Tie said the work would not go ahead after contractors BSC demanded "unacceptable" late changes to the contract.

A spokesman for the contractors denied that additional costs of 80m had been requested before work started.

The street will still close to all traffic from 0500 GMT on Saturday.

However, it could reopen next week if a resolution is not found.

The world-famous thoroughfare had been due to close to traffic for a year to allow tram rails to be laid.

A break had been planned in the works during August but retailers had called for it to continue so Princes Street could reopen in time for the festive period.

They said they were worried deadlines would be missed and the street would still be closed to all traffic during the Christmas shopping period.

The row was said to centre around BSC seeking between 50m and 80m of additional money from Transport Initiative Edinburgh (Tie), the arms-length body set up by City of Edinburgh Council to oversee the 512m tram project.

In a statement released to BBC Scotland, Tie confirmed the work was now going to be delayed.

The statement said: "The decision was brought about because the project was given 48 hours notice before the commencement of Princes Street works that the tram project consortium, BSC - comprising Bilfinger Berger, Siemens and CAF - wished to impose unacceptable conditions as a requirement to start in Princes Street.

Tram in Princes Street (artist impression)
The trams project has divided opinions in the city

"This announcement is supported by the City of Edinburgh Council, the project client, and Transport Scotland, the principal funder, is fully aware of this situation.

"We will issue a further update in due course. Meantime, we will continue to work with all stakeholders over the coming days."

Christian Daumann of Bilfinger Berger, part of the BSC consortium, said: "As the client failed to meet contractually-agreed conditions and as no agreement has been reached on the resulting additional costs, construction work in Princes Street cannot yet commence.

"Bilfinger Berger advised the client on several occasions that work can only begin when the contractually-agreed preliminary services have been completed in full.

"Contrary to press reports, additional costs of 80m have never been requested by Bilfinger Berger as a pre-condition for the start of works in Princes Street.

"Given the on-going negotiations with the client we cannot go into further detail."

Councillor Jenny Dawe, leader of City of Edinburgh Council, said the authority remained "strongly committed" to introducing trams.

Scottish Tory chief whip David McLetchie insisted "not a penny more" of taxpayer's money should go towards the project.

Mr McLetchie, the MSP for Edinburgh Pentlands, added: "The taxpayer expects contracts signed in good faith to be honoured in full at the agreed price.

"The Scottish Government's contribution to the project was capped at 500m thanks to the insistence of Scottish Conservative MSPs. Not a penny more should be paid from the Scottish public purse to bail out either the city council or the contractors. The taxpayer must not be taken for a ride or held to ransom.

"This could hardly have come at a worse time as Edinburgh is in the midst of unparalleled upheaval.

"It is imperative that all the parties get round the table and sort this out. A solution must be found, and found fast."

'Prestigious contract'

Lib Dem Margaret Smith, the MSP for Edinburgh West, backed the stance taken by Tie.

"No-one wants to see any delays to the Princes Street works, given the amount of disruption they will cause, but I think Tie and the council are right to stand firm in the face of this eleventh hour demand," she said.

"It is totally unacceptable that the project is being held to ransom and Tie is right to try to protect the public purse. The consortium have obviously picked this time because of the importance of this section of the works."

Lothians SNP MSP Shirley-Anne Somerville said: "Today's news shows once again how businesses in the city centre are paying the price of this ill-thought out project. Work had to start this month to ensure Princes Street was returned to its original state in time for the vital build up to Christmas."

Sustainable transport alliance Transform Scotland called on the Scottish Government to suspend all other contracts with Bilfinger Berger and Siemens until the situation is resolved.

Director Colin Howden said: "It is simply not acceptable for contractors to pull out with two days notice when contracts have been signed off months previously.

"Working to build a new public transport system in the heart of Scotland's capital is a prestigious contract, so this is damaging to the reputation of the contractors involved.

"Until such time as this contract dispute is resolved, the Scottish Government should suspend all contracts with Bilfinger Berger and Siemens.

"Only a month ago, Transport Scotland awarded a 320m project to Bilfinger Berger. If contractors can't be trusted to deliver upon signed contracts then we shouldn't be giving them any further taxpayers' money."

A Scottish Government spokesman said: "This is a dispute between Tie and their contractor which is specific to the Edinburgh Trams project. It has no bearing on Scottish Government contracts."

Tram works in Edinburgh
Large areas of the city centre have been dug up so tram lines can be laid

Under the plans for tram works, no traffic would be allowed on Princes Street from South Charlotte Street in the West End to South St David Street, just off St Andrews Square.

Buses, taxis and cycles will be diverted via George Street.

It is estimated about 400 businesses will be directly affected by the latest stage of the tram works but pedestrians will still be able to use the walkway on the shop side of the street.

Speaking prior to Tie's announcement, Chris Wayne-Wills, owner of the Roxburghe Hotel in Edinburgh's West End, told BBC Radio Scotland: "If it is going ahead we need to do as much as possible as businesses to support it and to try to get through the installation process as quickly as possible. There are longer-term benefits for the city."

Ray Withie, a shopkeeper on Leith Walk, claimed: "Edinburgh has become a world building site not a world heritage site. It's not worth it. People are staying away in their droves. They are avoiding these roadworks.

"The business plan does not add up, it will not be completed on time or on budget."

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