Dispute resolution on the Edinburgh tram project

The Edinburgh tram project is one of the largest civil engineering projects in the country. It was originally projected to cost around £570 million but appears likely to exceed that by some margin. The project was affected by contractual disputes from the time that the main infrastructure contract was signed in May 2008. The construction has all but ground to a halt as a result of unresolved disputes between BBS, the main contracting consortium, and the project managers Transport Initiatives Edinburgh. There have been a large number of claims submitted despite this ostensibly being a novated design and build project. By the end of 2010, 816 notices of claim were submitted and 426 estimates were submitted for claims that the contract persisted with. Less than half of those have been resolved. Most of those resolved have been via informal negotiation but others have been settled using formal dispute resolution procedures such as adjudication, external mediation, and negotiation. Those issues settled have amounted to around 50% of that claimed by BBS with £23.8 million being agreed from the £44 million claimed. The City of Edinburgh Council considered terminating the infrastructure contract but has not made a decision. It has been decided to refer the dispute to an external mediator as a way to get the project moving again with the mediation process being complete by the middle of March 2011. This paper presents an analysis of the dispute to date and the lessons that may be learned from this.