Trams, whether you like it or not

Macbeth complained that “I am in blood stepped in so far, that should I wade no more, returning were as tedious as go o’er” and it seems that Edinburgh City Council is up to its knees in something as well.

BBC news reports that it would now cost £750m to not have trams in Edinburgh, which is a far cry from the £545m it was supposed to cost to have them.

You're definitely getting them

I’m regularly disappointed with public building contracts which seem to utterly fail at setting deadlines, cost ceilings, penalties, or even just exit strategies. The trick to running a public building project in the UK seems to be that, if it’s nice enough, people will eventually forget the nightmarish cost and delays involved in getting it there.

The sad thing is that it does seem to work like that. The Scottish Parliament is an example I’m old enough to remember imploding horribly and then being accepted over time.

I’m also regularly impressed with the way government contracts manage to make what are obviously unreasonably low starting bids so large to begin with (IT projects are particularly jaw dropping for me because a fair few of them seem within the reach of one guy with a laptop) but it’s how they can grow from that which is really shocking.

I have no experience with major building projects but even I can see that you’d want to agree on a price with a builder and not pay an extra couple of hundred million on top of that. I can think of a fairly basic way of incentivising a builder to finish on time, charge you what you agreed and not go on strike. It’s called a contract.

I think that contracts, particularly several hundred million pound taxpayer funded ones, should be written carefully and fairly. It seems strange that it’s even possible to be hundreds of millions of pounds over budget on something and every time I see this I have two equal thoughts, firstly “that’s a lot of money wasted” and secondly “I should really get on that”. I’m serious about the second one; the money seems to be fantastic and I don’t know how to manage a major building project either so I should be fine.

BBC News reports:

Andrew Burns, Edinburgh City Council’s Labour leader, said: “This is a project which Audit Scotland gave a clean bill of health in June 2007.

“Since then it has totally unravelled.”

“I believe it would be wrong to commit further public money to trams.”

And the problem is not so much that a project can unravel, it’s that the suppliers seem to be able to use a project unravelling as a way to bill quite a bit more.

It seems that public projects suffer from being too big to fail. A contractor who catastrophically bungles building a housing estate will simply have their ass sued off by the developer who’ll calmly add their per day losses, which the commercial contract probably put onto the defaulting party, for as long as the court process takes. On the other hand, a contractor who digs up a major city’s high street and then threatens industrial action unless they get eighty million pounds simply needs to be paid off as quickly as possible. We desperately need to get away from that power imbalance.