Introduction
The Edinburgh trams construction project turned out to be a complex and highly politicized endeavor. Initially, the project managers had an ambitious vision of restoring the Edinburgh tram network to its former glory. A cross-city web of rails was supposed to link the village of Newbridge in the west to Musselburgh in the east through the city center.
In addition, a circular lane was planned to connect the northern wards of Edinburgh (Erdal, n.d.). Gradually, the Edinburgh authorities and project contractors reduced the scope of construction to a single 18.5 km line linking Newhaven to Edinburgh Airport (Lowe, 2010). However, even the toned-down vision of the Edinburgh tram had become hard to fulfill.
Political bickering and engineering problems resulted in multiple setbacks and deadline violations. Initially, Alex Salmond, the First Minister representing the Scottish National Party (SNP), sought to scrap the costly project (Lowe, 2010). When major political obstacles had been removed and the SNP leadership had been granted the necessary funding to maintain good relationships with its allies, various technical and engineering issues began to emerge. These problems quickly escalated into heated disputes between the project manager in Transport Initiatives Edinburgh (TIE) and its key private contractors.
Ultimately, Edinburgh trams required twice as much funding as initially estimated, despite the cancellation of the branches to Leith and Newhaven. The tram system opened in 2014, three years behind the original schedule (McKie, 2014). In this regard, the Edinburgh trams case provides a valuable insight into what can go wrong in a highly politicized project where contractors and project managers tend to prefer competition to cooperation.
Key Objectives and Beneficiaries
By the end of the 20th century, Edinburgh, Scotland’s second-largest city, faced severe road congestion. As residential housing construction and car ownership rates increased, roads became congested (Lowe, 2010). The city had to develop a solution to prevent the looming infrastructure collapse.
On the one hand, expanding the public bus service was not an option, as it was already strained. On the other hand, a whole metro system was ruled out due to unfeasibly high construction costs (Lowe, 2010). As a result, the City of Edinburgh Council (CEC) had to develop an alternative.
Thankfully for Edinburgh, the answer to the road traffic problem was in the local history. Until the 1960s, the city had a well-developed suburban rail system. It was almost entirely scrapped for various reasons, presumably due to high operating costs. Edinburgh could afford that decision at the time, since car ownership was among the lowest in the United Kingdom (Lowe, 2010).
Times have changed, and CEC saw a potentially effective solution in restoring the tram system. The new tram system would have reduced the strain on popular roads, such as Princes Street and Leith Walk (Lowe, 2010). As such, the key objective was to mitigate increasing road congestion caused by cars and address the emerging problem of excessive bus traffic on existing roads.
Several parties were supposed to benefit from the construction of the tram system. Residents of Edinburgh would have the option of fast, convenient travel around the city. Major political parties backing the project, such as Conservatives, Labor, and Liberal Democrats, hoped to score political points by solving a serious infrastructure issue. Finally, the companies contracted to carry out specific project parts would reap financial benefits and enhance their professional reputation. Ultimately, these hopes were shattered mainly by political issues, engineering problems, and contractual disputes.
Project Strategy, Expectations, Costs, and Timeline
In its final shape, the project strategy envisioned two distinct stages. The first stage included a mostly on-road line from Newhaven to Haymarket. The works at this stage did not involve significant engineering issues. The main challenge was the inevitable disruption to local businesses and residents (Lowe, 2010).
In contrast, the second stage — the construction of an off-road sector between Haymarket and Gyle Shopping Center — was not expected to cause inconvenience to the public. Instead, the second stage required the construction of retaining walls, bridges, viaducts, and an auxiliary tunnel in poor ground conditions (Lowe, 2010). TIE, the project management company representing CEC, contracted several experienced companies to address two fundamentally different tasks and fulfill the original vision for the Edinburgh tram system’s reincarnation.
In terms of costs, the SNP-led minority administration ultimately agreed to fund the project. According to Lowe (2010), the Scottish Government agreed to give £500 million to avoid a potential vote of no confidence. Furthermore, the CEC pledged to contribute another £45 million (Lowe, 2010). The planned timeline of works should have looked as follows:
- July 2007 – November 2008: service diversion works under the Multi Utilities Diversion Framework Agreement (MUDFA);
- September 2008 – January 2011: Infrastructure works, civil, and electrical engineering under the Tram Infrastructure and Maintenance Contract (INFRACO).
As such, the CEC expected the project to take approximately 3.5 years from start to completion. Contractors working on the MUDFA services were supposed to complete their work by late autumn 2008, slightly after the INFRACO team began its part of the project. By separating two contracts, TIE hoped to prevent the use of potential delays in service diversions as an excuse for time extension claims (Lowe, 2010). However, the plan did not work as intended, as the project was completed almost 3 years after the original deadline. Risk management strategies deployed by TIE and its contractors, when faced with significant technical and logistical issues, led to numerous costly setbacks.
Organizational Structure
Initially, the TIE divided the two fundamental stages of tram system construction into four work directions. By separating the contracts, the project manager aimed to prevent delays in service diversion (Lowe, 2010). Experienced privately-owned contractors were assigned to the corresponding directions as follows:
Contracts, Contractors, and Dates
- System Design Services (SDS): Parsons Brinkerhoff (September 2005).
- Multi Utilities Diversion Framework Agreement (MUDFA): Alfred McAlpine (October 2006), taken over by Carillion, Farrans, and Clancy Docwra later on.
- Tram Infrastructure and Maintenance Contract (INFRACO): BBS consortium (May 2008). Bilfinger-Berger conducted civil engineering works; Siemens carried out electrical engineering.
- Vehicle Supply and Maintenance Contract (TRAMCO): CAF (November 2007).
However, the TIE eventually merged specific directions and reduced the total number of contractors. For example, the SDS and the TRAMCO contracts were transferred to the BBS (Lowe, 2010). According to Lowe (2010), the TIE sought to prevent claims arising from design issues and to avoid conflicts between contractors that might have emerged due to differences between tram specifications and infrastructure. As a result, the project’s final organizational structure was streamlined compared to the original design.
The TIE remained the sole project manager; Carillion was supposed to handle the diversion of services under the MUDFA contract. Finally, BBS was expected to build the tram infrastructure and tramcars. As such, one can outline two primary directions within the project’s organizational structure: service diversions and infrastructure works.
Service Diversions
Carillion, the company initially awarded the MUDFA contract, was supposed to divert services along the projected path of the tram system. This preliminary work was necessary to provide the BBS consortium with safe and quick access to infrastructure construction sites.
Infrastructure Works
The infrastructure works contract, which included track laying and tramcar construction, was awarded to the BBS consortium under the INFRACO contract. As a management contractor, the BBS would let work packages to various firms, such as Barr, Graham, Raynesway, and others (Lowe, 2010).
Overall, one can say that TIE has created a straightforward organizational structure in which all work is divided into two interconnected directions, handled by a single main contractor. In theory, this structure should have streamlined the working process and prevented delays. However, the original plans were disrupted again by the Scottish Government’s intervention, subsequent engineering issues, and BBS’s stance.
Project Schedule
One can remember that full project completion should have taken approximately 3.5 years, according to the TIE estimation. The scheduled completion dates for works under the MUDFA and INFRACO contracts looked as follows:
- MUDFA: start — July 2007, completion — November 2008 (Lowe, 2010);
- INFRACO: start — September 2008, completion — January 2011 (Lowe, 2010).
In fact, the reduced version of the Edinburgh tram system was launched in May 2014, more than three years behind schedule. The delay started to grow from the very beginning of the project implementation. Initially, Alex Salmond and the SNP stalled the allocation of funds for a costly idea (Lowe, 2010). Once this barrier had been removed, the Scottish Government insisted on altering the initial design. Specifically, the Government funded an additional station at Gogar, which required redesigning the track layout and constructing an extra tram stop (Lowe, 2010). The sudden change of plan set the domino effect in motion.
Firstly, Carillion fell behind on the works contracted by the MUDFA. The delay was hardly the contractor’s fault — the intended site of the tram depot had a previously unknown central water main. Carillion had to spend an extra year to divert the main (Lowe, 2010). Furthermore, the MUDFA was delayed due to various discrepancies in drawings and the discovery of several archaeological sites in the vicinity of the new tram station. Due to these difficulties, work on MUDFA fell behind schedule by 18 months (Lowe, 2010). Carillion was unable to handle the sheer amount of unexpected work, which also disrupted the estimated project timeline.
Due to severe issues around MUDFA completion, most work within INFRACO has also been affected. Since MUDFA failed to meet the deadlines, TIE attempted to pressure BBS into an early start of the works. BBS budgeted only after significant resistance, because the company had not envisaged commencing civil and electrical engineering works until Carillion completed MUDFA. Ultimately, only the assembly of tramcars at the Siemens test track proceeded as scheduled (Lowe, 2010). All other parts of the project dragged on as TIE and BBS fought hard to avoid losses and responsibility associated with an impending failure.
Allocated Resources
SNP delayed funding for the project until the political risks of open resistance became too significant. Initially, the costs have been estimated at approximately £512 million. However, the Government took visible precautions against a potential budget shortfall and allocated £545 million (Lowe, 2010). As time has shown, such generosity was not nearly enough to counter the challenges TIE and its contractors faced.
Once engineering works under the MUDFA contract started to face one obstacle after another, the project costs began to inflate. The contractors had to contend with mounting expenses, including the cost of additional materials, equipment, and remedial work (Lowe, 2010). Unsurprisingly, some contractors decided to stand against the unexpected loss of profits. For instance, Lowe (2010) assumed that BBS sought to claim an additional £180 million to cover new costs. Upon completion of the project, its final costs were estimated to be approximately £1 billion (Marshall, 2022). In that regard, a poorly prepared design change and subsequent contractual disputes cost Scottish taxpayers around £500 million.
Risk Management Elements
The relationships between TIE and its contractors have turned into a standoff. Cooperation remained minimal as both parties made desperate attempts to minimize potential losses and shift responsibility. From the theoretical standpoint, the construction of the Edinburgh tram system became a non-cooperative game. In game theory, non-cooperative games are played for individual players’ self-interest (Piraveenan, 2019).
Lowe (2010) compared the conflict between TIE and BBS to a “chicken game,” in which both parties probe each other’s intentions and gradually raise the stakes in the hope that the opponent will back down. In that regard, TIE attempted to manage risk by refusing to comply with new demands put up by BBS. In turn, BBS sought to minimize risk by halting work until all controversy was resolved and the design plans were fully confirmed. One can depict the “chicken game” between TIE and BBS as the following sequence of steps:
- BBS refuses to start work unless TIE allocates an additional £80 million (Lowe, 2010);
- TIE has the choice between accepting the claim and losing £80 million or rejecting the contractor’s demands. TIE prefers rejection to demonstrate its willingness to hold its ground.
- BBS has to choose between giving in and standing firm. The BBS stands firm out of fear that TIE would ignore its claims, which would result in substantial losses for BBS.
Ultimately, the game continues as both parties are drawn into a prolonged legal dispute, despite early concessions from one side that could reduce losses. Neither side wants to be responsible for delays or losses, and they manage risk by portraying the other party as the primary culprit for failures.
Monitoring and Control Processes and Procedures
Considering the state of relationships between project management and contractors, the monitoring and control processes have undergone a drastic transformation. In management theory, one can explain these negative changes by applying game theory to project management. The “chicken game” prompted both parties to deploy unpredictable strategies to keep the opponent under control (Lowe, 2010). In the end, both parties sought to limit damage to their reputations rather than to ensure project completion. For instance, BBS submitted 550 formal change notices, 14 of which ended in official contractual disputes (Lowe, 2010).
In addition, BBS stopped working on on-road sections of the project, trying to force TIE to accept its terms to prevent further inconveniences for residents and businesses. However, TIE responded to the situation by standing firm and showing its readiness for a prolonged dispute (Lowe, 2010). As a result, traffic diversions and barriers remained on the streets of Edinburgh as both parties attempted to maintain control over each other by raising the stakes in the non-cooperative game.
Overall Summary and Assessment of the Project
In summary, one can state that the Edinburgh tram system network project ended in a debacle. The works fell behind schedule by 3 years and cost taxpayers twice as much as planned. The SNP’s political interests disrupted the project’s flow, forcing contractors to cope with unexpected costs stemming from a design change. The contractors responded by stalling the works to exploit public dissatisfaction and win contractual disputes.
The only saving grace of the Edinburgh tram system project was in its eventual completion, albeit in a scaled-down version. Based on the case, politicking and self-serving risk management and monitoring procedures pose the greatest danger to large infrastructure projects. Regardless of how tempting it might be to blame the other side for problems and setbacks, such an approach leads to worse outcomes than difficult cooperation.
References
Erdal, I. (n.d.). “Hell on wheels“: The miserable history of the Edinburgh Trams project, 2001 to the present. Retrospect Journal.
Lowe, J. G. (2010). Edinburgh trams: A case study of a complex project. In 26th Annual Association of Researchers in Construction Management Conference (pp. 1289-1298). ARCOM.
Marshall, C. (2022). Hell on wheels: How the Edinburgh tram project got back on track. Holyrood.
McKie, R. (2014). Edinburgh’s tram system opens – £375m over budget and three years late. The Guardian.
Piraveenan, M. (2019). Applications of game theory in project management: A structured review and analysis. Mathematics, 7(9), 858-888.