Tram contractors to net £3.2m if expansion plan hits buffers

A "contingency payment" will be triggered if tram firm TIE does not take up its 87m fixed-price deal to build the Haymarket to Granton spur by next spring.

Only around half the money is in place for line 1B at present, and council chiefs are facing a race against time to get the rest.

The contingency payment was set as part of a deal which saw contractors agree to hold a fixed price for 1B until spring next year. Tram chiefs today said that without getting the construction firms to hold this price, the cost of 1B would be well in excess of 87m.

But opposition politicians today raised concerns at yet another potential increase in costs. Councillor Mark McInnes, the city's Tory transport spokesman, said: "I would be concerned that when the council comes to make a decision on 1B we are unduly influenced by this 3.2m penalty. 1B needs to be looked at on its own merits." Months of talks with German and Spanish contractors concluded when contracts for tram vehicles, track and other infrastructure were signed.

The contracts have left the overall price tag for line 1A at 512m within the overall 545m available for the scheme.

Protracted contract negotiations and record low exchange rates against the euro have been blamed for the recent price rises on the scheme.

Councillor Tom Buchanan, the city's economic development convener and the SNP's transport spokesman on the council, said: "We have consistently said we expect this project to stick within its budget and timescales, and that is still the case, so anything which leads to an increase in the price like this is of concern.

"But the council has still to take a decision on 1B and it will be a crucial decision because we need an integrated tram network."

The Roseburn to Granton spur has been a controversial part of the proposed tram network, not least because it would run along the Roseburn urban wildlife corridor.

Willie Gallagher, chief executive of TIE, said: "This contingency ensures that the competitive price negotiated for line 1B remains fixed while the city examines options on its construction.

"If we were to ask contractors to price Line 1B separately, the costs would be significantly higher."