Edinburgh Tram Inquiry: ‘Concerns were raised over financial risks’

Duncan Fraser said he had been concerned over the financial risks of the project. Picture: Colin Hattersley
Duncan Fraser said he had been concerned over the financial risks of the project. Picture: Colin Hattersley
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THE man formerly tasked with co-ordinating the council’s controversial trams project has recalled his concern over the financial risks which could arise upon signing the contract.

Mr Fraser, who was employed by the council as tram co-ordinator from June 2007 to September 2009, said he felt officials did not have a proper understanding of the type of contract being used or the financial risks that could come along with it.

The retired official gave evidence as the inquiry, which is being heard before Lord Hardie, yesterday entered its second week.

Mr Fraser explained his role did not include approvals for elements of tram design such as rail and locomotives.

He said it was to advise the project’s directorate about important issues to allow them to make informed decisions and raise critical issues during confidential meetings at a higher level, which he himself did not attend.

Giving evidence, Mr Fraser described the tram contract as “very difficult and complex” and therefore it required a large degree of expertise.

He said: “We were trying to build a railway under [the] Railways Act through a city on road. It is very difficult – it is a World Heritage site, so you need a vast amount of expertise to be able to do that.

“We felt that – or I felt – specifically that TIE had some excellent experience of how to build the railway infrastructure which formed the tram on a greenfield site.

“But what I was less convinced about was all the necessary skills to do with all the complexity of claims and counterclaims and these kind of commercial issues, as well as how to integrate that into an existing road work.

“I felt that they needed some more expertise to facilitate that process because of the gaps that we were seeing with the submissions on the design, for example.”

Mr Fraser explained a project management company called Turner & Townsend had been earmarked to act as consultants on some of the financial and contractual matters.

However, following an examination of the risks as part of a forthcoming OGC [Office of Government Commerce] review it was decided their services were no longer required.

When questioned, Mr Fraser voiced disappointment at this decision – which he said he assumed had been taken by the council directorate – because of his view that Turner & Townsend could have provided officials with “invaluable” independent advice. “I was slightly uncomfortable that we were going in this other direction,” he said.

Mr Fraser said he felt a fund of £25 million should have been set aside as a contingency in case of changes to design. He said he outlined this in a report but when told by senior officials it was too “expansive” and that it should be compressed, this figure was then lost. He said he felt councillors were not given a full enough insight into the potential financial implications of any last-minute design changes.

Mr Fraser went on to say he was also disheartened at the withdrawal of Transport Scotland from the project after the 2007 election.

He said: “I did feel that we were losing a very helpful knowledge and experience base that would have helped us along our journey towards the completion of the tram.”

He also described how council officials were having to “work at a great pace” and under “a lot of pressure” to conclude the contract, saying: “We were under very clear instruction that there were key deadlines to be met and not least reporting to the council.”

In a prior written statement, Mr Fraser explained he felt the tram project’s failures could have been avoided by “improved and better-informed decision-making at key stages” in order to minimise unintentional consequences.

He added a “simpler governance structure” with “shorter lines of communication and clearer lines of accountability” would also have helped.

The inquiry continues.