£1 billion tram jam

Posted: 27th December 2012

TramThe scale of the slow-motion disaster that is befalling the £1 billion project to give Greater Manchester the most extensive tramway system in the UK has been revealed by a High Court ruling. Amidst delays and cost over-runs, Transport for Greater Manchester (TGM) is at loggerheads with Thales Transport & Security Limited, which has a £22 million contract to provide the tramway's operating system.

Thales is responsible for providing monitoring and communication equipment in each tram, trackside signalling and points control systems, control room computers and other equipment needed to direct, monitor and communicate with trams. However, in a preliminary ruling on disclosure issues, Mr Justice Akenhead, said of the contract: ‘something has obviously gone seriously wrong’.

Four years into the project, only £7.8 million has been paid to Thales and the company is facing potential claims for up to £36 million for delay. For its part, Thales is seeking a 43-month extension of time in which to complete the contract and additional payments from TGM totalling £42.3 million.

The judge observed: ‘The factual reality is that this project has been subjected to very substantial delays with many of the sections of work being already late, compared with the original contractual completion requirements. In terms of milestones, no more than about one third are said to have been completed.’

Whilst not forming any view on where responsibility lay, the judge said that, if Thales' £42.3 million claim is justified, the overall cost of the contract would be trebled. He added: ‘If, as asserted by Thales, the project has and will cost £42 million more than it has priced for, something has gone seriously wrong, leaving aside whose fault it is.’

TGM sought disclosure of documents that it said it needed to vet Thales' performance and to verify that it has complied with its contractual obligations. Thales had already provided some of the requested documents to TGM but resisted disclosure of others on grounds including confidentiality, price sensitivity and irrelevance. The judge directed disclosure of some, but not all, of the documents sought by TGM, saying that it was entitled to vet, audit or check information already supplied by Thales.