German construcion firm may thrown off £550m project unless it controls costs and delays

German construction giant Bilfinger Berger is facing the sack from Edinburgh’s controversial £550m tram project if it fails to control spiralling costs and delays.

Client Edinburgh council warned the controversial scheme was now “at the brink” and ordered Bilfinger, which is heading a consortium that includes Siemens and Spanish tram builders CAF, to come up with concrete proposals to cap costs within three weeks or have its contract terminated.

The row centres on a series of delays and projected overspends on the project to build an 11 mile tram line from Edinburgh Airport to Leith.
Bilfinger has claimed changes will add £100m to the current cost of the project, which is already running at more than £50m over the original budget of £498m.

It also told council owned tram developers TIE that the line will not be completed until January 2014. It is currently due to be finished by the end of 2012, more than a year later than its original completion date of July 2011.

Gordon Mackenzie, transport convenor for the council, said the claims were “ludicrous”.

Bilfinger was unavailable for comment.

The row has already halted construction of parts of the route.

Mackenzie said: “This city will not be held to ransom by this contractor any longer. There needs to be a move to settle the project’s contractual dispute within the month. There would be worse things for the project than for this contract to be terminated.”

Several disputes arising out of additional work are already the subject of adjudication. It is understood that four of the six adjudications so far, have found in the consortium’s favour.

But Mackenzie said: “Every major infrastructure contract includes normal design development and while we accept that there have been substantial changes to the design, the claims that this contractor are putting in are from the realms of fantasy.”

He added: “If there isn’t substantial movement by BSC [the consortium] over the next two or three weeks I will be recommending TIE initiate breach of contract procedures. If we don’t get an acceptable cost and programme soon I won’t be able to recommend the council continues its support for the project with this contractor.”

In what appeared to be an olive branch to Siemans and CAF he added: “Two of the three members of the consortium have a can do attitude. One has a can’t do attitude. Collectively, they need to evidence their commitment to resolving this situation in a cost-effective way and within a sensible time frame.”