Local councillors are set to decide the future of Edinburgh’s troubled tram project this week after a council report revealed the spiralling costs of completing and cancelling the scheme.
Scrap or scale back
A full meeting of the City of Edinburgh Council today is to decide whether to scrap the 18.5km line, continue with the full scope or to scale it back.
But sources have suggested to NCE that today’s decision will not be the end of the council’s deliberations. Even if it chooses to continue with the scheme it is thought that discussions about its future could continue in August after the council’s summer break.
NCE understands that an unpublished appendix to the council’s report states that the cost of cancelling the project would be as much as £750M.
The report recommends scaling down the project, limiting it to the completion of the first phase of Line 1a − from the city’s airport to St Andrew Square/York Place − at a final cost of between £725M and £773M.
“The utility diversions weren’t done to time because when they dug up the ground they found things that were unexpected. The project never really recovered from that”
At potentially £200M more than the project’s initial £545M budget, this would be the most costly option but the report claims that the finished tramway would generate £2M in annual profit with trams running from 2014.
Another option presented in the report would be to stop building the line at Haymarket.
At £700M this would be the cheapest solution but it is not favoured by the report as the resulting tram system would terminate too far from the city centre and make a financial loss.
One industry insider said: “£700M to get to Haymarket is of no use to anybody as the main bus station is at St Andrew Square.”
‘Redundant rolling stock’
The report says that if the project is scaled back some of its rolling stock will become redundant. “The proposal to have a service to St Andrew Square will result in a surplus of up to 10 trams, until further phases are eventually delivered. These would have a potential value through sale or leasing of £25M,” it says.
The project, which started on site in 2007, has been mired by disputes between Tie − the council client set up to deliver the project − and main contractor Bilfinger Berger.
It is thought that the root of the dispute is complications with preliminary utility works for the project. The industry insider said: “The utility diversions weren’t done to time because when they dug up the ground they found things that were unexpected. The project never really recovered from that. Bilfinger Berger didn’t get to start on time and therefore there were delay costs.”
The line was originally due to run from Edinburgh Airport through the city centre and east to the old port of Newhaven.The council’s report also highlighted funding gaps for the project.
“It has previously been reported to council that contingency planning had been undertaken to identify further finance for the project up to £600M.
“The additional increase in project cost will require the council to secure funding beyond the previous contingency planning arrangements,” it says.