The scheme could face major delays if the two sides cannot reach agreement. Bilfinger Berger claims that delays caused by utility companies failing to lay cables in time have pushed costs up. Sources claim the additional cost runs to ВЈ80m.
The dispute arose last week just two days before the contractor was due to start tram work on Edinburgh's Princes Street. The street was to be closed for nine months during the works.
A spokeswoman for Transport Initiatives Edinburgh (TIE), Edinburgh Councils arms length body which oversees the contract, said TIE was hopeful of a resolution within the next few days. However she said there were some unreasonable demands by Bilfinger Berger which TIE will not back down on. She declined to give details in case this goes to court.
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A spokesman for Bilfinger Berger confirmed the problem lay with delays to preliminary work. He commented: "As the client failed to meet contractually agreed conditions and as no agreement has been reached on the resulting additional costs, construction work in Princes Street cannot yet commence. Bilfinger Berger advised the client on several occasions that work can only begin when the contractually agreed preliminary services have been completed in full."
He added that the firm had never requested ВЈ80m as a pre-condition for the start of works in Princes Street. Given the on-going negotiations with the client we cannot go into further detail.
Bilfinger Berger was awarded the design, build and maintain contract in October 2007 in joint venture with Siemens. The deal finally reached financial close last May after lengthy and difficult negotiations. The deal included a significant shift of risk transferred from the public to the private sector in return for incentives linked to key milestones in the project. The Edinburgh Tram Project when completed will run 24km from the city centre to Edinburgh Airport.
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