Below is a briefing from Council Officers on the progress made in building the business case for completing (or some people say extending) the line to Newhaven. The Outline Business Case was approved last year based on an estimated cost of £165m, so it’s incredible to see that’s already risen by ~20% to £196m, & may surge further to £207m. The revised business case will be interesting.
A data room is being made available to all Councillors to scrutinise the Final Business Case (FBC) for taking the Trams to Newhaven.
The FBC sets out the case for taking trams to Newhaven and outlines the project cost and timescales for councillors to base their final decision on when it goes to Council on 14 March.
The FBC has been developed using best practice for major capital projects from both HM Treasury (Green Book) and Scottish Government (STAG) and, after a thorough tendering process, outlines that the project can be delivered within a budget of £196.0m. This figure includes a significant additional risk allocation as well as funding to support local business through the construction process. If “optimism bias”, a percentage added to an overall project cost in order to mitigate potential under-estimation of risk by a project team, is added at 6% (in line with Scottish Government guidelines), the project total is £207.3m. This would still be affordable and self-financing and would not divert funds from other Council services. The number of passengers projected to use the system in year one is almost 16 million, nearly double the patronage forecast for the existing Airport to York Place line in the same year.
The cost reflects the outcome of a comprehensive procurement exercise and the inclusion of a six-month ‘Early Contractor Involvement’ (ECI) period to allow the project team and the appointed contractor to refine the construction programme and approach.
To provide further assurance, the project team also tested the FBC against the risk of similar, past, completed tram projects using an approach developed by academics from the University of Oxford’s Saïd Business School. The data showed that the project is more likely than not to be delivered within budget, but they also recommended that the Council considers providing an additional risk allocation of up to £50m for all eventualities.
Even in this unlikely scenario, the project would still be delivered without putting additional pressure on Council budgets and would represent value for money for the tax payer, deliver significant economic, social and environmental benefits and would be affordable within the overall financial model.
This whole approach has been subject to significant scrutiny from professional experts, as well as following the Council’s audit processes.
The dates for the data room, where elected members can discuss the FBC in detail with officers, are as follows:
|Fri 8 Feb: 10am until 3pm||Mandela Room|
|Mon 11Feb: 9am until 8pm
Tues 12 Feb: 9am until 8pm
Wed 13 Feb: 9am until 8pm
|Dean of Guild Waiting Room (all 3 days)|
|Mon 4 March: 9am – 5pm||Diamond Jubilee Room|
|Tues 5 March: 9am – 5pm||The Dunedin|
|Wed 6 March: 9am – 5pm||The Dean of Guild Waiting Room|
The opening of the data room marks the beginning of the final decision-making process on the Edinburgh Tram York Place to Newhaven project, which completes the originally envisaged Phase 1a of the Edinburgh tram network. The full Final Business Case will be made public later this month as part of the agenda for the Transport and Environment Committee’s 28 February meeting. A further report on the award of the ‘swept path’ and infrastructure and systems contracts will go to Finance and Resources Committee on 7 March 2019, followed by the final decision on taking trams to Newhaven by Council on 14 March.