Researchers in Construction Management

Lowe, J G (2010) Edinburgh trams: a case study of a complex project. In: Egbu, C. (Ed) Procs 26th
Annual ARCOM Conference, 6-8 September 2010, Leeds, UK, Association of Researchers in
Construction Management, 1289-1298.
EDINBURGH TRAMS: A CASE STUDY OF A COMPLEX
PROJECT
John G Lowe1
Department of Construction Management and Economics, Glasgow Caledonian University,
Cowcaddens Road, Glasgow, G3 6BU, UK
The Edinburgh Tram project has proved to be politically contentious, complex, and
problematical since preparatory work on services diversion commenced in 2007. The
proposed network has been reduced to a single 18.5 km line linking Newhaven to
Edinburgh Airport via Leith, Princes Street, Haymarket, Edinburgh Park and the
Gyle. The main contract was let on a fixed price design and build basis to a
consortium of Bilfinger Berger (civil engineering) works, Siemens (electrical) and
CAF (tramcars). Work commenced in summer 2008. An earlier contract for the
preparatory works and services diversions was carried out by Carillion. It appears
likely that the project will not be completed before 2012 rather than the original target
of 2011 and the budget cost of £545 million as included in the final business case
appears likely to be exceeded. The early stages of the project’s life have been blighted
by political disputes between the Scottish National Party on one side, who have
opposed the project and the other political parties including Labour, Liberal
Democrats, Conservatives and Green Party on the other who have generally backed
the scheme. The SNP currently form a minority administration in the Scottish
Government at Holyrood and are part of the ruling coalition with the Liberal
Democrats on City of Edinburgh Council who are the sponsors of the project. Since
the opposition parties at Holyrood forced the finance for the project through there
have been a number of high profile contractual disputes between the arms’ length
project company, Transport Initiatives Edinburgh and Bilfinger Berger. The
resolution of these disputes has caused several delays to key operations for the
project. This paper will analyse implications of the political disputes and way that the
project was let on the progress and cost of the project.
Keywords: project management, political issues, dispute resolution, game theory.
INTRODUCTION
This paper is intended to illustrate the difficulties involved in project management on
a highly politicised project. The network can be broken down into two distinct stages.
The first is a largely on-road line starting at Newhaven in the north of the City and
continuing via Ocean Terminal, Constitution Street and Leith Walk to St Andrews
Square. It then proceeds along Princes Street and Shandwick Place to Haymarket. The
second section is largely off-road and commences at Haymarket following the main
line alignment to Edinburgh Park before going through to the Gyle Shopping Centre,
under the A8 and across country to the airport.
The two sections present very different challenges. The on-road sector poses no real
technical problems apart from the need to divert services from directly under the tram
1 j.lowe@gcal.ac.uk
Lowe
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line or to provide side access manholes for services which cannot be diverted. The real
issue is that of traffic management during the works and the disruption to local
residents and businesses. In the case of the off-road section of the works the disruption
faced is less of a problem. The challenge here is the construction of retaining walls,
bridges, viaducts and a tunnel often with poor ground conditions. Working alongside
a main line and constructing two bridges over the main Glasgow-Edinburgh main line
involves dealing with Network Rail. They can impose restrictions on the hours
worked. Some work may only be carried out overnight at weekends. It is fair to say
that the on-road section faces logistical and political issues while the off-road section
will have to deal with technical problems. The project has been bedevilled by
contractual disputes between the Project Manager (TIE) and the main infrastructure
contractor (BBS). This has led to the most of the working on the on-road sections
being suspended because of the refusal of BBS to start work until unspecified issues
were resolved. This led to the Client considering whether to remove the BBS from the
project.
THE PROJECT
Background
Trams have been considered as the solution to Edinburgh’s traffic problems since the
1980s. Edinburgh lost virtually all its suburban rail system in the 1960s. Only the line
to North Berwick and the reinstated service to Bathgate remain. Edinburgh overcame
this as car ownership was amongst the lowest in the UK and bus usage was very high.
However over the last twenty years, car ownership has steadily increased towards the
national average leading to increased traffic congestion. In a number of roads, such as
Princes Street and also Leith Walk much of the congestion is created by large volume
of well patronized bus traffic. The only substantial area of land available for housing
to meet demands from the rapidly expanding City population was on the Leith
waterfront. Building on the scale expected would put great strains on the bus service
and increase the congestion along Leith Walk and Princes Street. Obviously things
would be much worse if the newcomers opted for car travel. A full metro system was
always going to be ruled out on the grounds of cost so trams emerged as the only
viable solution. A consensus emerged on the City of Edinburgh Council (CEC) in
favour of a tram network supported by all the parties represented. Labour were the
majority party but the scheme was also supported by the Conservatives and Liberal
Democrats. The CEC allocated the management of the project to their ‘arms-length’
company Transport Initiatives Edinburgh (TIE).
The parliamentary bill
In order to progress the proposed tramway a Parliamentary Bill was required. This
gained the approval of the ruling Labour and Liberal Democrat coalition as well as the
opposition parties. Contrary to the popular misconception the project was initially
backed by the Scottish National Party (SNP) with their then Transport spokesman
Kenny MacAskill being particularly vociferous in support between 2000 and 2002.
The Scottish Executive announced the approval of funding in 2002. The project had
the support of all parties on CEC and most of the Scottish Parliament plus also the
local Chamber of Commerce and the business sector. This consensus was broken by
the SNP. According to the respected SNP member of the Scottish Parliament,
Christopher Harvie, this about-turn was engineered by Kenny MacAskill who was
standing for election in for Edinburgh East constituency in the upcoming 2007
election. Edinburgh East was the only seat not included in the proposed tram network.
The SNP were not a force on CEC until 2005 when a Labour councillor and Deputy
Edinburgh trams
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Provost Steve Cardownie defected to the SNP forming initially a group of one. The
Parliamentary approval was two lines. One was a loop linking the City Centre and the
Leith waterfront while the second linked this to the airport with a branch to the
Newbridge industrial estate. The first phase (1A) was prioritized. This involved a line
from Newhaven to the airport. The remainder of the loop was labelled Phase 1B and
Phase 2 while the Newbridge branch was to become Phase 3.
The network funded
The Final Business Case was under preparation while the Scottish Executive voted
funds to commence design of the network plus preparatory and investigative works.
Before the final approval could be given the 2007 Scottish Parliamentary elections
took place. This gave the SNP a one seat advantage over Labour although well short
of an overall majority. The SNP signed a concordat with the two Green Party MSPs.
This effectively precluded any coalition not involving the SNP other than the
implausible Labour-Liberal Democrat-Conservative grand coalition. The outcome
was a minority SNP administration with critical support from the Greens. Meanwhile
a new Council was elected in Edinburgh. The new proportional representation system
dramatically reduced the Labour representation and contributed to a big increase in
SNP numbers. The Liberal Democrats became the largest party and the Greens gained
representation. A Liberal Democrat-SNP coalition took control. The start of the
project was delayed with some service diversion work put on hold by the incoming
minority SNP Administration at Holyrood while they commissioned a report by Audit
Scotland (2007). This gave the project a clean bill of health. The new First Minister
Alex Salmond wanted to scrap the project. However a resolution backing the project
was passed with the support of all opposition parties including the Greens and the
former SNP Edinburgh Independent Margo MacDonald. After some delay, the SNP
leadership agreed to give £500 million funding to the project, possibly with the threat
of a motion of no confidence if the will of Parliament was frustrated. It was also
necessary for the SNP to keep their Green allies on side. CEC pledged to contribute
£45 million to the project. This was intended to be raised in part by charging for
planning applications on or near to the proposed tramline.
Political issues
The political dispute was far from over despite the project being given the funding.
The fault-lines ran through the middle of the ruling coalition on CEC. The SNP
councillors did not see themselves a bound to support the project even though they
were part of the administration sponsoring it. Similarly the SNP Government ministers
at Holyrood lost few opportunities in attacking the project even though they were the
main funders. This continued after the Scottish Government cancelled the Edinburgh
Airport Rail Link in favour of making the trams the means of linking the City Centre
and the main line rail network to the airport. The Scottish Government were
committed to building a new station on the Edinburgh-Fife/Aberdeen line at Gogar to
link with the trams and the airport. As the disruption increased with the road closures
for the MUDFA contract, resentment from the public increased. This was not helped
by some inaccurate reporting in the local press and the comments by ‘rentaquote’
politicians. Public opinion was certainly in favour of the project before construction
started and almost certainly will be once it is operational. However when the City
Centre resembled ‘cone city’ with barriers in place and seemingly never-ending road
works and street closures, it is understandable why many became antagonistic. There
were also attempts made to further politicise the issue by branding the project as a
Labour Party creation. In fact the Labour Party at Westminster was almost
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ideologically opposed to light rail. Local MP Alastair Darling spent much of his
period as Minister of Transport cancelling light rail projects throughout England.
Ironically the one tram project that he could not cancel was Edinburgh as this was a
devolved issue and outside his powers.
Contractual arrangements
There were four distinct contracts let for the project:
1. System Design Services (SDS)
2. The Multi Utilities Diversion Framework Agreement (MUDFA)
3. The Tram Infrastructure and Maintenance Contract (INFRACO)
4. Vehicle Supply and Maintenance Contract (TRAMCO)
The SDS contract was let to Parsons Brinkerhoff in September 2005.
The MUDFA contract was awarded to Alfred McAlpine (AMIS) in October 2006.
AMIS was subsequently taken over by Carillion. In addition parts of the service
diversions were carried out by Farrans and Clancy Docwra to take some pressure off
Carillion. The INFRACO contract went to BBS a consortium of Bilfinger-Berger
carrying out the civil engineering works and Siemens responsible for the electrical
side in May 2008. The TRAMCO contract was won by the Spanish firm CAF in
November 2007. Subsequently the SDS and the TRAMCO contracts were novated to
the INFRACO consortium. This was intended to avoid any claims arising from design
issues and also from any conflicts between the tram specifications and the
infrastructure. The MUDFA contract was deliberately kept separate to avoid delays in
the service diversions being used to justify claims for extension of time and
consequent loss and expense on the subsequent infrastructure contract. It was intended
that the MUDFA works would be substantially completed prior to BBS taking
possession of the section of works. There was provision for some situations where
BBS would work alongside the MUDFA operations although BBS are currently
rejecting this. In the final outcome, the MUDFA works ran over time this was a cause
of many of the subsequent disputes. The cost of the project including contingencies
was around £512 million. This left some headroom with a £545 million funding
envelope. The fall in Sterling against the Euro posed a risk of cost escalation.
However currency hedging limited this increase to around £10 million.
PROGRESS
Project commenced
After some preparatory and investigative work the MUDFA contract commenced in
July 2007 and was due to be completed by November 2008. The work was delayed by
prevarication by First Minister Alex Salmond in 2007 before the funds were allocated.
A further issue was the decision of the Scottish Government to fund a new station at
Gogar as a partial replacement for the Edinburgh Airport Rail Link project. This
necessitated a redesign of the tram track layout near to the depot at Gogar and the
construction of a new tram stop to facilitate the interchange.
Service diversions
The MUDFA works were running behind schedule from the start. One major issue
was at the Tram Depot site at Gogar. This was on the airport flight path and
consequently had to be constructed below existing ground level. A major water main
was found crossing the site that was not apparent on the drawings. This resulted in a
major delay of at least a year while the main was diverted by Carillion before Barr
Construction could gain access to the site to start the work package let to them by
Edinburgh trams
1293
BBS. Further delays were experienced by Carillion elsewhere due to the inadequate
nature of the drawings for the existing services. Many of the services dated back to the
Victorian era and were not documented. Several archaeological sites were discovered
including large number of human skeletons near the site of a former leprosy hospital
on Leith Walk. An unexploded bomb from the Second World War was also found
near to the airport. There were also delays caused by traffic management issues with
work on Princes Street being halted after the diversions caused gridlock in the City
Centre. The framework agreement was let on the basis of remeasureable approximate
quantities. In the final outcome the quantity of services diverted was close to double
the initial estimate. However with around 98% complete, the cost has only gone up
from the initial £42 million to a projected £50 million final cost. It became clear that
Carillion were struggling to complete the additional work and two further contractors
were brought in. Farrans came in to carry out works at the airport while Clancy
Docwra was appointed to work at the other end of the line around Ocean Terminal.
Subsequently a weary Carillion withdrew from the final stages of the framework
agreement and Clancy Docwra took over to complete the works at Haymarket and
York Place. As things stand with the MUDFA works should be substantially complete
by May 2010. This is around 18 months behind schedule.
Infrastructure works
The INFRACO contract was finally signed in May 2008 with a start on site expected
by September 2008 and completion by January 2011. It was intended that passenger
carrying operations would start in July 2011. BBS are operating as a management
contractor letting out packages to firms such as Barr, Graham, Raynesway, Bam Rail,
Laing O’Rourke, MacKenzie, Crummock, Farrans and McKean corresponding to the
sections of the works. The first dispute came to light in March 2009 when BBS
refused to start on the track laying on Princes Street. The whole of the main
thoroughfare was closed to allow for the diversion of services near to the Mound
towards the middle of the street while two contractors, MacKenzie and Crummock
were to start laying tracks from either end. It was envisaged that by the time they
would meet at the Mound the MUDFA works by Carillion would be complete. There
were suggestions in the press that BBS were demanding that a claim of an extra £80
million was agreed before they would commence track laying. This was not confirmed
by BBS but they did cite a large number of outstanding unresolved issues. This
resulted in a month long stalemate before it was eventually agreed that works would
start. This agreement came hours before the automatic dispute resolution procedure
was due to kick-in. The works were completed by the November 2009 deadline. The
disputes continued into 2010. BBS were due to commence work on Leith Walk,
Shandwick Place and return to Princes Street to link the tracks laid to St Andrews
Square, and York Place. To date they are standing firm on this. However work is
proceeding on the off-road sections of the tramway. Work has also started on one on
road section of work in the north of the City. This involves the widening and
strengthening of the existing Tower Place Bridge near to Ocean Terminal. This
package is being carried out by McKean & Company.
Tramcar construction
This part of the works is proceeding smoothly. The first two tram cars built underwent
trials at Siemens test track in Wildenrath, Germany. One has now been delivered and
is on display in Princes Street. The remaining 26 trams cars will be delivered over the
coming months.
Lowe
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