Tram bosses in a hole as delays send costs rising

TRAMS chiefs are facing a battle to keep the project on schedule and expect a legal wrangle over inevitable cost rises.

The timetable for delivering the £512 million tram line by 2011 has already slipped, with work at the trams depot at Gogar in particular causing a headache.

Tram firm TIE is confident of making up the lost time, although it is braced for the unavoidable rise in costs that will result, and disputes with contractors over who is responsible for the extra spending. The troubles facing the project can be revealed following the surprise resignation of trams boss Willie Gallagher.

Mr Gallagher, who was appointed executive chairman of TIE in June 2006, said he was quitting for family reasons and said he looked forward to seeing the trams up and running by 2011.

The decision not to shut Princes Street – which would have allowed the tram work to press ahead faster – and the effects of the global economic slowdown are understood to have put a strain on TIE's budget.

The late change of plan on Princes Street today led one source to draw comparisons with the building of the Scottish Parliament, which opened three years late and came in ten times over budget.

"When you're already on site and then you change spec, it's inevitable that costs and times will change. It's similar to what happened with the Scottish Parliament," the source said.

But trams chiefs insist both publicly and privately that the current problems can be contained within the existing budget.

However, the rising costs – coupled with the inevitable downturn in developer contributions as a result of the credit crunch – does mean the prospect of adding a spur line from Haymarket to Granton is looking increasingly difficult.

City council leader Jenny Dawe said she was "very disappointed" to lose Mr Gallagher at this point. She added: "I am confident that we have a solid team going forward to deliver a world-class transport network for the city, many of whom have worked on other tram schemes and major construction projects."

City leaders are understood to be preparing a quick change of power in an effort to ensure the project does not lose momentum.

The trams project is also due to see the departure of Neil Renilson, chief executive of Lothian Buses and Transport Edinburgh Limited, the firm which will eventually oversee the running of the trams, who announced last month he will retire at the end of the year.

One option believed to be under consideration is splitting Mr Gallagher's responsibilities among current members of senior management.

Deputy council leader Steve Cardownie, who called for Mr Gallagher's resignation following a disastrous start to works on Princes Street, said there now needed to be a "seamless transition" of power.

He said: "I still absolutely think the tram project is a bad idea, but we're too far gone now. There will have to be a seamless transition because the tram project is continuing apace."

The resignation of Mr Gallagher, who had previously held senior roles with Scottish Power Group and the Strategic Rail Authority, is said to have come as a "bolt out of the blue" for council leaders.

Mr Gallagher, who commanded a basic salary of £170,000, is understood to have grown increasingly unhappy about leaving his family behind in Kilmarnock as he travelled through to work in the Capital.

He is also thought to have came under pressure from senior figures in the city council for the mishandling of roadworks which have left the city centre in gridlock.

Mark McInnes, the city's Tory transport spokesman, said the timing of Mr Gallagher's departure raised questions about the running of the project.

He said: "This comes at a crucial time and I'm disappointed there is not going to be continuity. One of the reasons Willie was brought in was his experience in the private sector and his experience at bringing things in on time and on budget.

"I think people will now begin to have a serious look at the project. This is going to be a very difficult job for anyone.

"We've been promised that the project will not go over budget and that the funds have been found, but there are a number of questions and the TIE board needs to quickly get a grip of things and instil confidence in the general public."

Gordon Burgess, of the Leith Walk Traders' Association, said the new boss would have to address concerns from small businesses who have seen their takings drop off as a result of the tram works.

He said: "I think there's no doubt that it's going to be a testing time. From a trader's point of view, the project has been mismanaged with Willie at the helm. I have nothing against Willie Gallagher, but ultimately if things go awry then the buck has to stop with someone.

"I don't know what's going on behind the scenes at TIE, I can only look outside my shop and see the chaos I have had to put up with for the past 15 months."

A council spokesman said today: "We have robust monitoring procedures in place to ensure that the project meets its targets.

"A huge undertaking like the tram works always carries risks, but we have confidence in our contingency arrangements."

TIE declined to add any comment to the council's statements.