1 Wednesday, 25 October 2017 2 (9.30 am) 3 MR STEVEN BELL (continued) 4 CHAIR OF THE INQUIRY: Good morning. You're still under 5 oath, Mr Bell. 6 Examination by MR MACKENZIE (continued) 7 MR MACKENZIE: Good morning. 8 A. Good morning. 9 Q. I would like to move on the question of the risk 10 allowance at contract close. Is that something you were 11 involved in or had any responsibilities for? 12 A. Directly we reviewed -- I reviewed the risk allowance 13 and one of my team, Susan Clark, dealt with the risk 14 management on a day-to-day basis using her risk manager. 15 That was Mr Mark Hamill. 16 Q. Did Susan Clark deal with that in terms of the procedure 17 of that or the substance of it? 18 A. She dealt with the process and she contributed to the 19 key elements, particularly on scheduling programme. 20 Q. Would it be fair to say that as Tram Project Director, 21 you would have required to have satisfied yourself at 22 contract close that the risk allowance was adequate? 23 A. Yes. I did review the risk allowance and the headings 24 that the items were identified against, in conjunction 25 with my colleagues as well. 1 1 Q. When exactly did that take place? 2 A. We reviewed it on a number of occasions between January 3 and May 2008, and certainly in the run-up to contract 4 close in May 2008. 5 Q. Who else was involved in that review exercise? 6 A. I would recall Mark Hamill as the Risk Manager, and 7 Susan certainly contributed from a programme 8 perspective. Dennis Murray, my Commercial Director, 9 myself, and Stewart McGarrity or his deputy, 10 Gregor Roberts, I'm pretty sure were also involved with 11 the finance leads. 12 Q. From what you have described, that sounds like a fairly 13 regular process of reviewing the risk allowance; is that 14 correct? 15 A. We dealt with it on a monthly or bimonthly basis, but we 16 particularly looked at matters when there was more 17 significant potential change during that contract close 18 period. So if there was a suggestion that a price 19 movement or a particular term was intended to be 20 amended, that was usually considered at that time, not 21 necessarily by all of those people, but certainly by the 22 relevant ones. 23 Q. So between, say, January and contract close in May, how 24 many of these reviews took place, roughly? 25 A. I would -- I would -- I certainly recall undertaking one 2 1 during March 2008, and we did undertake a review, 2 and I certainly reviewed the final version of that in 3 May 2008 with input from some of my colleagues. 4 Q. So you talk about a review in March 2008, and then you 5 reviewed the final version in May 2008. Did any further 6 reviews take place between the review in March and the 7 review in May? 8 A. There may well have been detailed risk assessment 9 sessions that Mark ran individually with some of the 10 project managers or individuals in the lead areas. That 11 was an ongoing process that he may have described to you 12 or to the Inquiry. And that continued throughout the 13 duration of my time at tie as a regular review process. 14 Q. You're quite sure you carried out a review, the final 15 version in May 2008? 16 A. I reviewed the consolidated numbers that were proposed 17 for risk in total in May 2008, yes. 18 Q. Just for the avoidance of doubt, did any of your 19 colleagues take part in that May 2008 review? 20 A. I'm sure they reviewed it. I can only recall myself 21 sitting and reviewing the numbers and the Schedule. I'm 22 sure they would have reviewed it in addition. 23 Q. Do you recall whether you suggested or instructed any 24 changes as a result of your review in May 2008? 25 A. I recall that we had made some amendments in -- I can't 3 1 remember if it was late April or early May 2008, 2 associated with roads reconstructions. And also to 3 finalise the -- to finalise the Project Control Budget. 4 However, that may have been -- that particular session 5 may have been after contract close. 6 Q. When you talked about the review you carried out in 7 May 2008, just to be quite clear, you're referring to 8 a review before contract close? 9 A. In relation to the likes of roads reconstruction items, 10 yes, I did, yes, reviewed that. 11 Q. I think you -- 12 CHAIR OF THE INQUIRY: Was it restricted to roads? 13 A. No. 14 CHAIR OF THE INQUIRY: It was a general review of risk? 15 A. Yes, the risk elements, including the non-Infraco 16 elements. So it included matters for MUDFA, for 17 example, and matters that were reserved for the Council. 18 Q. We also looked yesterday at Schedule 4 of the Infraco 19 contract. I think there were about 43 Pricing 20 Assumptions set out there, any one of which had the 21 potential to result in a Notified Departure, and I think 22 you explained yesterday that you did expect certain 23 Notified Departures after contract close. 24 I think you also yesterday explained that you had 25 reviewed the risk allowance in light of the expected or 4 1 anticipated Notified Departures. Is that correct? 2 A. Particularly in relation to Schedule, yes, but also 3 against all of the Pricing Assumption headings, we 4 reviewed those items, yes. 5 Q. So just to be quite clear, are you saying then that you 6 went through the risk allowance with reference to the 7 Pricing Assumptions in Schedule 4 to check that the risk 8 allowance was adequate? 9 A. I reviewed the Pricing Assumptions and the items 10 I considered were -- had the potential to have 11 a Notified Departure impact, and satisfied myself that 12 I considered the total risk allowance was adequate. 13 Q. That exercise you just described, when did that take 14 place? 15 A. I would suggest probably in the first or second week of 16 May. I would have looked at certain of the individual 17 elements before that as particular elements were 18 discussed at previous agreements. So I think when we 19 discussed some of the Schedule Part 4 elements in 20 March 2008, and talked about things like the V26 to V28 21 SDS design change, or a specific where we did some work 22 on roads reconstruction options, we certainly -- and the 23 commercial team did some analysis of that, and I think 24 we incorporated that between May and April -- sorry, 25 between March and April, and then certainly there was 5 1 an entry in there, as I recall, for the May 2008 2 conclusion. 3 Q. Just again to be quite clear, when you said in the first 4 or second week of May, you have reviewed the Pricing 5 Assumptions against the risk allowance, did that result 6 in any changes to the risk allowance? 7 A. In -- in total terms, no. I think we re-allocated some 8 of the risks and we certainly formalised that in 9 a session with Mark and others in late May 2008. 10 Q. I'm interested in before contract close. So when you 11 carried out the review in the first or second week of 12 May, did that result in any changes to the risk 13 allowance? 14 A. I don't believe it changed the totals, we understood 15 where the individual entry areas were intended to be 16 adjusted, and I don't think we reran the quantified risk 17 analysis at that point. 18 Q. Why not? 19 A. We -- I think we'd considered that the adjustments that 20 were being made were appropriate and discrete to the 21 entries, and from recollection, the overall adjustment 22 was circa GBP1 million, GBP1.5 million. 23 Q. I would like now, please, to go to look at the actual 24 figure of the risk allowance at contract close and try 25 and explore how that was made up. I think the best 6 1 starting point is the Close Report. If we can go to 2 that, please, it's CEC01338853. If we can go to page 5, 3 please. We can see in the middle of the page, we can 4 perhaps blow up "Risk Allowance at Financial Close", 5 32.3 million. So that's the figure to bear in mind just 6 now. 7 We see underneath that there that there has been 8 a further round of negotiations, and it then explains: 9 "The detail behind the final position reached has 10 been documented separately for CEC." 11 I will come back to that. I think there was one 12 final adjustment to this figure, but just to take it 13 step by step, bear in mind the GBP32.3 million. We can 14 then put that to one side. 15 I would like then, please, to go to a document, 16 CEC01245223. If we look at the second half of the 17 document, we will see an email from Stewart McGarrity of 18 15 April 2008 to Alan Coyle, and others in the Council. 19 He attaches two files, firstly: 20 "The cost analysis spreadsheet ... which I have 21 updated to reflect the very last knockings on Infraco 22 price but which does not change the budget." 23 If we can go to that spreadsheet, please, it's 24 CEC01245225. 25 If we can scroll down this page, please, to I think 7 1 line 313. 2 Sorry, 313. At the very bottom, you'll find a blue 3 box. That's it. We can see it's headed "Risk Allowance 4 Analysis". If we go to the bottom right-hand corner of 5 this box, we can see a figure, GBP32.3 million, which 6 seems to correlate with the GBP32.3 million figure we 7 saw in the Close Report. 8 Just sticking with the blue box, I think we have 9 looked at this before at the hearings, but in short, 10 I think the main headings of the various risk topics are 11 set out together with the sum allowed for them in the 12 risk allowance. 13 I think there's one mistake we discovered in this 14 table. Do you see, Mr Bell, at the top left-hand 15 corner, the reference to Infraco/Tramco Procurement? 16 A. I do. 17 Q. There's a figure given there for 6.8 million, but 18 I think what has happened, that should be zero because 19 this is the risk allowance at financial close. So where 20 we see in the right-hand column a zero, I think it has 21 been explained to us that that zero should be at the top 22 of that column and all the figures should drop down one. 23 So I think there should read -- 24 A. So the Infraco/Tramco Delivery item would be 6.8 million 25 and so on and so forth; is that -- 8 1 Q. Exactly, Mr Bell. Does that accord with your 2 recollection of matters? 3 A. It does, and an example of a couple of the areas that 4 were added into this over that period are shown at the 5 bottom, non-delivery of VE items, including in the 6 Infraco price, GBP2 million. And extent of road 7 reinstatement, a GBP2 million risk were examples of some 8 of the adjustments that had been made during 9 March/April. 10 Q. So am I right in thinking that where we see QRA total of 11 GBP27.937 million, is that the figure that's been 12 generated by the computer software? 13 A. The analysis based on the detailed individual line 14 entries, yes, and then there's been two additional 15 specific entries underneath that, one in relation to the 16 risk of non-delivery of value engineering that's 17 incorporated in the price, and one in relation to the -- 18 primarily one of the Pricing Assumptions associated with 19 road reinstatement. 20 Q. Yes. So in short, as I understand it, and tell me if 21 I'm wrong, the QRA total of 27.937 million has been 22 generated by the computer software, the quantified risk 23 allowance software, but then manually a human being or 24 beings have come to a judgment that there should be 25 additional sums added in relation to the non-delivery of 9 1 value engineering, the risk of that, and also the risk 2 relating to road reinstatement, and also unspecified 3 risks, but in short the GBP2 million plus the 4 GBP2 million plus the 409,000, et cetera, they have been 5 added manually; is that correct? 6 A. Yes, that's correct. 7 Q. Just again to deal with this, the extent of road 8 reinstatement, does that relate to the issue you told us 9 about yesterday in terms of the extent to which the 10 consortium were to reinstate the road and -- 11 A. And assumption around planning back and tying into 12 existing road structures, yes. 13 Q. To what extent, if at all, does that risk allowance 14 figure of 2 million deal with the risk that Parsons 15 might be right, that in fact there would require to be 16 a full depth excavation of the road, and a reinforced 17 concrete base for the track would require to be put in? 18 A. I think there may be an element of it, but it wasn't 19 intended primarily for that. 20 Q. Thank you. Just to be quite clear, do you know when 21 these additional sums of 2 million plus 2 million plus 22 409,000-odd were added in? 23 A. I expect that happened during either March or 24 April 2008. I believe you'd said this related to 25 a spreadsheet that Stewart McGarrity sent on 15 April. 10 1 So in that time window, from early March through to 2 mid-April, as a number of these matters were being 3 discussed in finalising Schedule Part 4. 4 Q. Why were these added items added in manually rather than 5 being identified as a risk and run through the computer 6 software QRA process? 7 A. It was a specific piece of work that the commercial team 8 looked at, based on the Infraco Proposals and drawings, 9 and did some quantity surveying work to size some of the 10 potential difference between Infraco Proposals and what 11 might be a more significant road reinstatement. So we 12 based that on some calculations from first principles 13 and drawings provided. 14 So that was that particular element. 15 On the Infraco price and the risk of non-delivery of 16 VE, I think it was an assessment made at that time that 17 not all of the value engineering elements may be fully 18 realised. Some of them have conditions around them, and 19 therefore it was considered appropriate to make an 20 element of allowance for that. 21 Q. Before leaving this, I would like you just to remember 22 the QRA total of GBP27.937 million. We will keep that 23 figure in our head, please, and go to a different tab. 24 The P80 risk allocation 1a plus 1b tab, please. 25 Now, do we see towards the top right-hand corner in 11 1 yellow, phase 1a allocation GBP27.937 million? 2 A. Yes. 3 Q. So I think what this tab does is give a breakdown of how 4 that sum has been made up; is that correct? 5 A. Yes, that is a carry forward number. 6 Q. Can we also see at the top left-hand corner of this 7 spreadsheet, this is in relation to the current period 8 end 1 March 2008? 9 A. Yes. 10 Q. So on the face of it, we saw that this was sent with an 11 email dated 15 April. So on the face of it, the QRA 12 hasn't been updated since the period ending 13 1 March 2008? 14 A. That was -- I think that was the basis that was used, 15 and then there was the additional manual adjustments 16 that you've described. 17 Q. Can we also please go to now another document, 18 CEC01506052. 19 We can see from the top, this is an email from Mark 20 Hamill dated 3 March 2008 to Duncan Fraser and others in 21 the Council. In this email Mr Hamill says that: 22 "Stewart asked me to send on the attached document. 23 Please note that this document is strictly work in 24 progress at this moment and should be regarded as being 25 for information only." 12 1 Now, I'll give the attachment in passing for the 2 record; it's CEC01506053. Without going to it, but 3 I have checked, Mr Bell, and the QRA attached to this 4 email of 3 March is exactly the same as the QRA we just 5 looked at that came to the GBP27 million-odd. 6 So in short, what appears to have happened is that 7 at least the QRA aspect of the risk allowance had 8 remained unchanged since 3 March 2008, when Mr Hamill 9 sent it to tie, saying it was strictly a work in 10 progress and should be regarded as information only; is 11 that correct? 12 A. Certainly my -- my reading of what you have presented 13 there looks correct, sir, yes. Yes, it looks correct. 14 I would perhaps amplify that you've seen some additional 15 entries included in a later version, but they're not 16 embedded within the QRA. 17 Q. We will come back to that, but just to be absolutely 18 clear, is it correct that the QRA aspect of the risk 19 allowance, which came to GBP27.937 million, had remained 20 unchanged since this version sent on 3 March 2008? 21 A. Yes. 22 Q. So does it follow -- 23 CHAIR OF THE INQUIRY: Sorry, I understood that the Schedule 24 that we looked at was based on a run of the programme on 25 1 March. So that was the latest -- looking at that 13 1 document at any rate, that was when it was run, was it? 2 A. Yes, I am sorry. I thought that's what Counsel to the 3 Inquiry had asked. 4 CHAIR OF THE INQUIRY: I'm just trying to get it clear in my 5 own mind. 6 So in fact what Mr Hamill is probably sending is 7 based upon the run of 1 March? 8 A. Yes, a week before this email, I would think. 9 CHAIR OF THE INQUIRY: Or even two days before. 10 A. Sorry. 11 MR MACKENZIE: Yes, thank you, my Lord, for clarifying that. 12 Again, just so there's no doubt at all, Mr Bell, as 13 the Chairman says, essentially the QRA part of the risk 14 allowance at financial close of GBP27.937 million was 15 based on a run of the QRA programme on or about 16 1 March 2008. 17 A. Yes. 18 Q. So does that mean that the QRA part of the risk 19 allowance did not reflect any changes that may have 20 occurred in the risk profile between 1 March and 21 financial close? 22 A. It hadn't been re-run at that point, and there hadn't 23 been any re-allocation of items within it. So it 24 wouldn't have been in -- it would have reflected the 25 base information included. 14 1 Q. So just to repeat the question, does that mean that the 2 QRA part of the risk allowance did not reflect any 3 changes that may have occurred in the risk profile 4 between 1 March and financial close? 5 A. Generally correct for the QRA portion, yes. Yes. 6 Q. You say generally correct. It must be correct. 7 A. Yes, for the QRA portion, sorry, yes. 8 Q. I would also, please, like to move on to another 9 document now, to look at the one change that I think did 10 occur to the risk allowance at financial close. 11 It's another document, please. It is CEC01338847. 12 I think we've looked at this yesterday. We can see from 13 the top, it's "FINANCIAL CLOSE PROCESS AND RECORD OF 14 RECENT EVENTS. 15 If we go, please, to page 6. I'm going to 16 paraphrase this page and then let you read it for 17 yourself, but I think in short there was a change in the 18 risk allowance to reflect the Kingdom Agreement we 19 looked at yesterday. So I'll let you just take a couple 20 of minutes to read the page yourself. Perhaps we can 21 blow it up a little, the text. Thank you. (Pause) 22 So I think the headline figure for us is three lines 23 from the bottom, where we see the risk contingency is 24 GBP31.2 million. So I take it that was the final risk 25 allowance at contract close? 15 1 A. It was, yes. 2 Q. So it's changed just a little from the figure of 3 32.3 million we saw in the Close Report down to 4 GBP31.2 million, and I think we can see from the text in 5 that paragraph that that came about by the risk 6 allowance being reduced by GBP1.8 million on the one 7 hand, but on the other hand being increased by 8 GBP1 million, resulting in a net overall reduction, 9 I think, of GBP800,000; is that correct? 10 A. Yes. 11 Q. Are you able to briefly explain the thinking or 12 reasoning behind, on the one hand, the figure reducing 13 by 1.8 million and on the other hand increasing by 14 GBP1 million? 15 A. There were some -- I think it's mentioned at the top of 16 the page. There were some explicit items that the 17 agreement capped under the contract. So there was 18 a GBP2 million allowance for roads reinstatement in our 19 original risk allowance that was capped in the final 20 agreement at 1.5. Therefore, we were able to remove the 21 GBP0.5 million or make that element of the adjustment. 22 That was an explicit item. 23 There was adjustments to the Infraco budget in 24 consequence, and we reviewed at the time the overall 25 elements associated with the completion of the novation 16 1 and the risk activities on schedule, and concluded in 2 overview that a net adjustment was merited in total. 3 Q. Thank you. Now, the net reduction was GBP800,000. 4 I think when one deducts GBP800,000 from the previous 5 figure of GBP32.3 million, one arrives at 6 GBP31.5 million. It's hard, I think, to reconcile that 7 31.5 million with the figure we see in the report of 8 31.2 million. 9 It sounds as though some final reconciliation was 10 required; is that correct? 11 A. Yes, I think it would have been some of the 12 non-attributed contingency item, but yes, that needed to 13 be reconciled to a final control budget. 14 Q. Could I then please put that document to one side and go 15 on to another document. It is CEC01288043. We can see 16 this is an email from Mark Hamill. It's after contract 17 close, 27 May 2008. Subject "Private - QRA at Financial 18 Close". Why was it private? 19 A. I don't know. 20 Q. We can then see it is sent to yourself, Mr McGarrity, 21 Susan Clark and Dennis Murray. 22 Sensitivity: confidential. Why was it confidential? 23 A. I don't know why Mark marked it in that way. 24 Q. Mr Hamill then says: 25 "Please see attached spreadsheet which I have 17 1 updated following our meeting last week." 2 I'll pause to give the reference for the record 3 there, going through the spreadsheet, I think it's 4 CEC01288043. 5 The reference by Mr Hamill to "our meeting last 6 week", were you at that meeting? 7 A. I'm sure I would have been. He wouldn't have -- sent it 8 to me on that basis. I recall reviewing this item for 9 the project control budget in late May. So I'm sure 10 that would be the meeting Mark refers to. 11 Q. So what was the purpose of the meeting and what was 12 discussed and what was the outcome? 13 A. As I recall the purpose of the meeting was to ensure 14 that the up-to-date project control budget, including 15 the risk elements, accurately reflected the final 16 financial close numbers that you alluded to earlier, and 17 that would enable each of the project managers within 18 our organisation to be allocated the appropriate area of 19 budget to manage to a conclusion, and then to identify 20 if there were any change control items to be raised from 21 that throughout the duration of the programme. 22 Q. Thank you. I'll read on: 23 "As agreed, Risk ID 343 ..." 24 I think in the QRA spreadsheet that's referred to as 25 general programme delay; does that sound right? 18 1 A. It does sound right, yes. 2 Q. "... which allows for delays has been reduced by 3 GBP1.3 million which means we now have GBP5.187 million 4 against this risk and, accordingly, the overall risk 5 allocation has reduced by GBP1.3 million to 6 GBP26.637 million. 7 "One thing which we all need to be aware of is that 8 it is not possible to reduce the value of one risk in 9 the QRA without affecting all the others. This is 10 because the P80 allocation is driven by the total mean 11 sum. Therefore, in order to get round this problem, 12 I have basically 'pockled' the spreadsheet and hard- 13 entered some values. This solves the problem and helps 14 us get the final result past CEC as I doubt they will 15 notice what I have done." 16 What do you understand Mr Hamill to mean by the use 17 of the word "pockled"? 18 A. He's made a manual adjustment to achieve the final 19 answer reconciled with the 1.3 million adjustment, 20 because the software wouldn't assure that it landed at 21 exactly the same number. 22 Q. Pockle, I think, means cheating or dishonesty, doesn't 23 it? 24 A. I believe that could be a dictionary definition. I'm 25 absolutely sure that's not the intent behind Mark's use 19 1 of that language. 2 Q. Put the word "pockle" to one side. That is exactly what 3 was happening here, wasn't it? A figure was being 4 manually inserted in the QRA spreadsheet to give the 5 appearance to the Council that that figure was included 6 in the programme, the figures produced by the computer 7 software? 8 A. I don't think that was the intention at all. It was to 9 confirm that the entire risk register matched back to 10 the final control budget based on the summaries that we 11 had previously agreed. 12 Q. Well, Mr Hamill refers to "this solves the problem". 13 What was the problem? 14 A. I assumed from his email to get the totals to match the 15 discussion that we'd already had. 16 Q. And how about his reference to "helps us get the final 17 result past CEC as I doubt they will notice what I have 18 done"? 19 A. I didn't read that into that what you appear to suggest. 20 For me, we had a project control budget to reconcile 21 against the approved Final Business Case. That was the 22 process we were closing off, and that -- that visibility 23 was shared with CEC at a budget level and I think with 24 Alan Coyle. 25 Q. Stepping back a little, the QRA computer programme or 20 1 process, that I think is based on the Monte Carlo 2 statistical method; is that correct? 3 A. I believe so, yes. 4 Q. Essentially, I think that involves the computer 5 undertaking multiple calculations to generate a range of 6 possible outcomes and by doing that, the software is 7 able to arrive at the probability of occurrence and 8 value identified risks; is that correct? 9 A. Yes. 10 Q. So -- and the software is set up in such a way that 11 there is a statistical validity to that method? 12 A. Yes. 13 Q. And that statistical validity is derived from the 14 computer -- I emphasise -- undertaking multiple 15 calculations to generate a range of possible outcomes; 16 is that correct? 17 A. I understand that to be its purpose, yes. 18 Q. So what Mr Hamill is doing for the programme figure in 19 the QRA is completely departing from that proven and 20 accepted statistical method involving many calculations 21 and just entering one figure. That's what he's doing? 22 A. He's adjusting this particular figure, yes. 23 Q. I can quite understand when we looked back at how the 24 GBP32.3 million manually adding figures outwith the QRA, 25 I can quite understand that, and that's perfectly open 21 1 and transparent, but what I suggest is not honest is to 2 change figures which are part of the QRA and present 3 them as though they have been produced by the computer 4 model? 5 MR FAIRLEY: My Lord, I hesitate to interrupt learned 6 Counsel to the Inquiry. I am conscious he was not 7 Counsel who took the evidence of Mr Hamill. And 8 respectfully, it seems to me that he's putting to this 9 witness matters which would probably better, if they 10 were going to be put to anyone, have been put to 11 Mr Hamill. But he appears now to be suggesting things 12 to this witness that should have been put to Mr Hamill, 13 if they were going to be put, and in particular he 14 appears to be suggesting that Mr Hamill has behaved in 15 a way which was dishonest. 16 I may be wrong, but I don't think that was the 17 gravamen of the examination by Counsel to the Inquiry 18 who took Mr Hamill's evidence. I think it may be 19 a little unfair to Mr Hamill to take that evidence from 20 a different witness when what the witness is being asked 21 about is something that Mr Hamill did and something in 22 an email written by Mr Hamill. 23 CHAIR OF THE INQUIRY: I think two things. 24 First of all, I think the Counsel to the Inquiry who 25 examined Mr Hamill took him to the spreadsheet which 22 1 seemed to be, from recollection, a readjustment of the 2 figures which had been produced by the QRA, a manual 3 readjustment. And I certainly remember putting to 4 Mr Hamill the interpretation of the word "pockle", and 5 so I think Mr Hamill probably was in no doubt as to what 6 was being suggested. 7 However, if you're concerned on behalf of Mr Hamill, 8 then you can make an application to have him recalled. 9 The other thing is that this witness is part of that 10 because he was in a superior position. He received this 11 email and I would certainly like to know what, if 12 anything, he did about it. 13 MR FAIRLEY: I certainly have no objection, my Lord, if 14 learned Counsel to the Inquiry's questions followed the 15 line that my Lord has just indicated, but it seemed to 16 me that that wasn't what he was being asked. If that is 17 what he was being asked, then I'll withdraw my -- it's 18 not an objection. I'll withdraw my observation. 19 But if the line of questioning is indeed as my Lord 20 has indicated it is, I have no objection to it. 21 CHAIR OF THE INQUIRY: Thank you. 22 MR MACKENZIE: My Lord, I wonder if I may respond to that. 23 CHAIR OF THE INQUIRY: I don't think it's necessary. 24 MR MACKENZIE: No. If I could just finish the line I have 25 started. I think my suggestion in short, Mr Bell, is 23 1 that what is being done here is dishonest, because it is 2 making a manual entry to what should be a computer 3 derived model and sum, and is then presenting or passing 4 off that manual entry as having been produced by the 5 computer model. Do you have any comments on that 6 suggestion? 7 A. I certainly don't believe it was intended to be 8 a dishonest or misleading action. I believe the reason 9 Mark adjusted the Infraco delay entry because it was 10 already a known entry in the risk log, ID 343, and rather 11 than make a manual adjustment outwith that, what he 12 adjusted was the particular entry in question. 13 I understand the comment that you make around the 14 transparency of that. I think it was very clear to the 15 parties who reviewed that that the intent was clearly to 16 make that adjustment identified against delay so that 17 was traceable, not to mislead anybody in relation to 18 QRA. 19 CHAIR OF THE INQUIRY: Mr Bell, I think the impression that 20 might have been given by Mr Hamill was that he was under 21 pressure to change the figures. 22 Do you have any comment to make? Were you aware of 23 that, that he was put under pressure to alter the 24 figures manually, and he was unhappy with that? 25 A. My recollection at the time was that everybody was in 24 1 agreement that we would reconcile the project control 2 budget back to the final close number. That confirmed 3 an adjustment to risk, and that Mark would undertake 4 that adjustment to the risk summary. 5 CHAIR OF THE INQUIRY: And he would use a method that wasn't 6 really appropriate in the sense that he was adjusting 7 a figure derived by -- rather, the computer programme, 8 to make it appear that that was the figure that the 9 computer programme had produced? 10 A. I think the intention behind -- 11 CHAIR OF THE INQUIRY: Is that what actually happened? 12 A. He adjusted that figure associated with the particular 13 risk that we had been talking about that we believed 14 merited the reduction. That happened to be a specific 15 item within the entries that had previously run through 16 the QRA. 17 CHAIR OF THE INQUIRY: He adjusted a figure that was in the 18 QRA. He manually adjusted the figure in the QRA to make 19 it appear that that was the QRA figure. If you look at 20 the Schedule, and you see the QRA output, and the figure 21 for that particular risk item has been manually 22 adjusted, and there's no note to that effect, then the 23 impression that you would get was that this was 24 a generation of the QRA programme; is that right? 25 A. I thought there was a note that had identified 25 1 adjustment to delay, general delay on the risk summary, 2 in a Schedule that I'd previously been shown that showed 3 the project control budget. 4 CHAIR OF THE INQUIRY: Perhaps we can go to the Schedule. 5 A. And there was an entry to say that, my Lord. 6 CHAIR OF THE INQUIRY: We will go to the Schedule after the 7 break. 8 MR MACKENZIE: So just finally this point, Mr Bell. Was 9 Mr Hamill's version of the Schedule, the QRA Schedule, 10 sent to the Council? 11 A. I believe it was. 12 Q. Thank you. Now, I would like to move on -- 13 CHAIR OF THE INQUIRY: Before you do that, look at the 14 email. What did you make of the email when he says: 15 "... helps us get the final result past CEC as 16 I doubt they will notice what I have done." 17 What did you make of that? 18 A. I considered that Mark was sharing the answer with CEC. 19 He made an observation around whether there would be 20 particular scrutiny of that. At that time I didn't give 21 it particular weight, my Lord. 22 CHAIR OF THE INQUIRY: What about the next sentence: 23 "I will revert to normal practice for future QRAs." 24 So did you recognise that that this was an abnormal 25 practice? 26 1 A. I think we were clear that he was making an adjustment 2 to reconcile this budget -- 3 CHAIR OF THE INQUIRY: Was that normal practice or not? 4 A. It was not. 5 CHAIR OF THE INQUIRY: And you knew that? 6 A. Yes, I did. 7 CHAIR OF THE INQUIRY: Why did you allow it? You were the 8 superior person in the department, weren't you? 9 A. I considered that it was a transparent adjustment to 10 reconcile to the total risk number. 11 CHAIR OF THE INQUIRY: Why did you allow a practice that was 12 not normal? 13 A. I considered in this particular circumstance, my Lord, 14 that we had transparently explained what we were doing. 15 CHAIR OF THE INQUIRY: And so transparently explained it 16 that it would get past the CEC without noticing what had 17 been done, and he then goes on, after reverted to normal 18 practice: 19 "However in this instance I think this is the best 20 way to do it in order to avoid unnecessary scrutiny from 21 our 'colleagues' at CEC." 22 What did you make of that? What did you think he 23 was saying there? 24 A. In recollection at that time, I believed that there was 25 a number of conversations that Mark had had over 27 1 a number of months where he felt there had been 2 amendments to some of his work that he'd shared, perhaps 3 not helpfully, and perhaps that's what he intended to 4 mean. But I didn't particularly go back and query with 5 him. 6 MR MACKENZIE: Thank you. 7 Mr Bell, I would like now to move on to the period 8 after contract close. And I'm going to ask you just 9 about particular matters in that regard, and largely 10 take your statement as read. 11 If we could, please, go back to your statement to 12 page 79. In question 61 we refer to the dispute which 13 arose and we asked: 14 "What were the main matters in dispute?" 15 You explained: 16 "I think there were three topic areas. The first, 17 which primarily drove the interpretation of 18 Clause 3.4.1, was "what is normal design 19 development?" ... 20 The second strand was that the value of estimates 21 produced was excessive ... 22 The third strand was the issue surrounding whether 23 the Infraco should be progressing with works while 24 Notified Departures and estimates were being agreed or 25 whether they were entitled to wait until an estimate had 28 1 been agreed." 2 In relation to the second strand, the value of 3 limits produced was excessive, can you expand upon that 4 a little, please? 5 A. When Infraco produced estimates and there was some delay 6 in doing so, generally for the items that were agreed as 7 a change, and we had an agreed value and signed change 8 order, it was finally agreed at a number, on average, of 9 circa 52 per cent of the original application from the 10 contractor, and this felt that this was excessive and 11 wrong. 12 This is an average over a number of, I think, 13 probably a couple of hundred change orders at this 14 particular point, or at that point in time, when we 15 undertook this analysis. 16 Q. What were your main concerns in relation to the 17 performance of the consortium after contract close? 18 A. I think there were three areas particularly. One was 19 the management and completion of the design and 20 associated works to then commence on site. So there was 21 a mobilisation and completion of design area. 22 When changes were identified or Infraco Notices of 23 tie change were notified, there was a reluctance from 24 the consortium to progress works until that change had 25 been finally agreed and signed off. 29 1 And where we had other factors that were not the 2 consortium's responsibility, such as MUDFA delays, there 3 was a reluctance to consider any mitigating actions from 4 their programme that could ease the effect on the 5 overall open for revenue service work for the tram. 6 Q. Do you know why it took so long to complete the design 7 and obtain all approvals and consents after contract 8 close? 9 A. I believe there were a variety of reasons suggested over 10 that period of time. These included completion of 11 design by SDS, incorporation of the Infraco proposals. 12 We touched yesterday on some requirements to align SDS 13 and Infraco proposals to meet the Employer's 14 Requirements, and there were outstanding technical and 15 prior approvals and completion of the conditions 16 associated with those prior approvals prior to the 17 Infraco completing works, commencing works. 18 Q. To what extent, if at all, did tie lose visibility over 19 and control of the design process after SDS novation? 20 A. The novation put the Infraco as client to the SDS, and 21 that was the intention, but there was a design review 22 process agreed as part of that contract suite in one of 23 the schedules, which was intended to ensure that there 24 was consistent visibility of progress in the area of 25 completion of design, progress against the necessary 30 1 approvals, and to identify if there were any key items 2 or issues that were causing a blockage or a hold upon 3 completion of the design, particularly if it was 4 a matter that tie could contribute to solving. 5 Damian Sharp, our design and consents manager, had 6 a particular focus on working with the consortium and 7 their designer to review progress in this area. 8 Q. So to what extent, if at all, do you consider that tie 9 lost visibility over and control of the design process 10 after SDS Novation? 11 A. We retained a degree of visibility through that process 12 and the reporting from the Infraco. There were 13 improvements that could have been made. So we did lose 14 some visibility on that, and the -- it took longer to 15 get to the root of any particular issues or problems, be 16 they tie, CEC or Infraco, SDS related. 17 Q. So do you accept there was some loss of visibility over 18 and control of -- 19 A. Yes. Yes, and the intention was that there would be 20 a change in control in that the client became Infraco, 21 and it was in Infraco's focus and responsibility to 22 manage that design to completion, including 23 incorporating the proposals. 24 Q. In relation to the misalignment workshops in relation to 25 the SDS design and Employer's Requirements, and also SDS 31 1 design and Infraco proposals, I think we heard evidence 2 from Mr Chandler of SDS that before contract close, he 3 had, I think, appointments in his diary, I think, for 4 these workshops to take place in the weeks following 5 contract close. But in the event these workshops didn't 6 take place until late 2008 and early 2009. 7 Was there a delay in these workshops taking place? 8 A. My recollection was it was late 2008 the workshops were 9 finally undertaken. I can't recall a primary reason for 10 that at this time. 11 Q. I think we have seen from documentation it was both late 12 2008 and early 2009, and some in fact were later. Your 13 position is you can't recall why there was a delay? 14 A. No. I wasn't aware of that question before today, 15 sorry. 16 Q. Did you have any involvement in any of the workshops? 17 A. No. One of my delivery managers, Bob Bell, was in the 18 lead for progressing those workshops, and I don't recall 19 a specific reason from that time as to why that was 20 later than Jason appears to have expected it to be. 21 Q. Mr Chandler also referred to a Value Engineering 22 Structures Workshop where his evidence was that he, 23 I think, turned up to the workshop being -- expecting to 24 have to justify and explain the SDS design, and 25 expecting the meeting to perhaps go over several days? 32 1 A. Yes. 2 Q. There were various meetings over several days, and 3 I think he said that what happened at this workshop was 4 that essentially Bilfinger, the consortium turned up and 5 accepted the SDS design without any discussion or 6 consideration of value engineering opportunities. And 7 that Parsons were baffled, but that you were present and 8 agreed to that. Do you recall that? 9 A. I don't actually. I don't recall that meeting. I do 10 recall looking, and we looked specifically at a number 11 of value engineering opportunities over the life of the 12 contract, and there were key conditions to be met in 13 order to instruct them, and that was part of the 14 Contract Schedules. 15 I don't recall that particular workshop. 16 Q. When you say you don't recall it, are you saying you 17 don't recall it but it may have happened as Mr Chandler 18 described it, or are you saying you don't recall it and 19 it's very unlikely to have happened as Mr Chandler 20 described it? 21 A. I genuinely don't recall it. 22 Q. Do you recall -- 23 A. My position would be I would be surprised not to be 24 encouraging any value engineering opportunity that could 25 be realised. That's where I would have expected to be. 33 1 Q. Do you recall whether there were discussions with the 2 consortium in relation to value engineering 3 opportunities for structures? 4 A. I believe there were on all topics, not just structures. 5 But I believe there were, yes. 6 Q. Do you recollect whether any value engineering savings 7 were made in relation to structures? 8 A. There was a detailed schedule for all of the value 9 engineering opportunities. Some were able to be 10 realised. Some were definitely not, and some elements 11 needed to be evaluated over the duration of 12 implementation. I don't think I saw final schedules. 13 I can't recall if there's a specific structures example 14 that springs to mind. But I'm sure that the Inquiry 15 should have records to demonstrate what change control 16 items were agreed on that basis. 17 Q. I would like to move on to another matter, please. If 18 we can go to document CEC00652924. 19 We can see these appear to be the minutes of a 20 meeting between tie and BSC, 16/17 December 2008. In 21 attendance, yourself, Stewart McGarrity, Richard Walker, 22 Michael Flynn. Then blow up the first bit of the table, 23 please, under 1. Princes Street. Thank you. 24 We can see that instructions are required for 25 certain items. For example, 1(c): 34 1 "Instruction required to implement modified track 2 slab/base designs to suit ground conditions with 3 a provisional sum to cater for cost and time if 4 necessary." 5 Then (d): 6 "Instruction required to prepare modified road 7 construction options to suit ground conditions ..." 8 I just wondered, Mr Bell, what was this meeting in 9 relation to? 10 A. We were looking -- from memory, it was two particular 11 elements. One was general progress and issues around 12 mobilisation on parts of the site, and also particularly 13 with regard to Princes Street, which was due to 14 commence, I think, about three months after that 15 meeting, with physical works on site; and there required 16 to be traffic management enabling works undertaken in 17 advance of that, because much of the Princes Street 18 traffic was going to be diverted on to George Street and 19 surrounding routes. 20 It also dealt with elements of Change Orders and 21 items that had been identified by BSC, and we were in 22 the process of resolving either with an agreed estimate 23 or confirming that we were not agreed on the principle 24 of the change. 25 Q. We've heard evidence, I think, from the Parsons 35 1 witnesses that when work started in Princes Street, the 2 ground conditions were found to be such that their 3 recommended track slab was required. 4 Do you agree with that? 5 A. That's my recollection, there certainly had to be 6 additional work to be done in Princes Street. 7 Q. Do you remember when it was discovered that additional 8 work was required to be done in Princes Street? 9 A. For that particular item or more generally? 10 Q. For that -- for the track slab. 11 A. I think it would have been round about this time, 12 because clearly there's been some discussion on -- some 13 intention to amend designs or at least have a design 14 ready if ground conditions were found to be more onerous 15 than originally expected. 16 Q. Yes. What I wondered in short was whether the reference 17 in 1(c) to "Instruction required to implement modified 18 track slab/base designs to suit ground conditions", if 19 it was known at this time that the ground conditions 20 were such that there would require to be modified track 21 slab and base designs, and that an instruction was 22 required for that to be done. 23 A. My recollection at the time was that we wanted to have 24 a design option available, so that if it was desired to 25 be implemented as we uncovered the ground and tested it, 36 1 then we didn't have extra delay of waiting for that 2 design to be completed. So it was a preparatory 3 measure, so that we had a design ready to implement if 4 required, as opposed to we definitely knew there was 5 a problem at that particular point in time. That's my 6 recollection. 7 Q. So do you know when it was known that this would be 8 required? 9 A. I think, as the excavations commenced of the existing 10 road and there was testing of the sub-surface and 11 inspection of the ground conditions. So as the access 12 was taken, is my recollection, we tested that as we went 13 along the particular route and confirmed whether 14 a modified track slab was required. 15 Q. When did that excavation take place on Princes Street? 16 A. I think we eventually started in August -- sorry, in 17 April 2009. Certainly the traffic management was set up 18 from March 2009, but we had a significant dispute about 19 whether the Infraco would start under the current terms 20 and conditions of the Infraco contract, and that -- and 21 advised us in February they would not do so. There was 22 a fairly public difference of views and that resulted 23 finally in a Princes Street Supplemental Agreement being 24 made, to deal with the expected circumstances for 25 Princes Street particularly. 37 1 I think that's referred to as the PSSA. 2 Q. When you say there "the expected circumstances for 3 Princes Street", I'm a little confused, because you say 4 that it wasn't known that the modified track slab and 5 base designs would be required until excavation started 6 in April 2009. You just referred there to expected 7 circumstances? 8 A. Yes, there were other matters that were expected/known 9 about in relation to some residual utilities diversions 10 to be addressed. These were matters that would fall 11 under the terms of the contract that would be changes, 12 and the Infraco -- my recollection at that time was the 13 Infraco were not prepared to undertake that work without 14 agreed change, or in alternatively of confirming that 15 they were going to recover their costs associated with 16 that work. 17 Q. In relation to the Princes Street dispute, can I just be 18 quite clear, please. What was your understanding of the 19 cause or causes of that dispute? 20 A. Primarily at the -- I think it would be round about 21 February 2009, Richard Walker and some of his colleagues 22 from Bilfinger, and Michael Flynn and a colleague from 23 Siemens met with Stewart McGarrity and I, and advised us 24 of a, in their view, the likelihood that the Infraco 25 contract was going to cost Infraco GBP50 million to 38 1 GBP80 million more than originally intended, and they 2 believed that that was a -- in the main, a tie 3 liability. 4 They also advised at that time they weren't prepared 5 to start on Princes Street without an agreement on 6 recompense for items they viewed as would fall under the 7 tie change clause, including matters such as utilities 8 diversions, but also any other items that would fall 9 under the Pricing Assumption Schedule. 10 As a consequence, they had confirmed to us they did 11 not intend to mobilise at the scheduled time to start 12 work in Princes Street unless we came to a different 13 agreement on how that would be valued. 14 Q. Did you have any involvement in the resolution of that 15 dispute? 16 A. I worked with my colleagues around understanding what 17 the key issues and concerns were and whether we could 18 propose a Supplemental Agreement that could be tested to 19 address those matters for the Princes Street section of 20 works, which was circa a kilometre or so worth of 21 on track work. And therefore still take advantage of the 22 access that had been negotiated with the Council between 23 April and November 2009. 24 Q. What was the price basis for the Princes Street 25 Supplementary Agreement? 39 1 A. The approach was to identify and agree the costs that 2 the contractor and their supply chain incurred, record 3 and measure those items, and identify and deduct the 4 core price that was already included within the Infraco 5 contract, so that elements weren't being paid for twice, 6 and that was in general terms a process put in place to 7 supply the records of plant, labour, materials and other 8 resources associated with all of those works, including 9 their supply chain, for that period of time. 10 tie would have visibility and review that on 11 a weekly basis with the Infraco, and confirm the 12 validity of these submissions or have them amended in 13 realtime in effect, and there would be, as I said, 14 a deduction for the element that was already within the 15 Infraco price. 16 Q. Now, I think we know the works were carried out between 17 April and November 2009, but there were defects 18 discovered and the works had to be redone later? 19 A. There were. 20 Q. What was your understanding of the cause of the defects? 21 A. Considered it was a -- fundamentally a solution that 22 didn't satisfy the Employer's Requirements, and the 23 installation of that by the Infraco had failed to 24 demonstrate that it did so satisfy the specification. 25 There were, I believe, some -- a range of technical 40 1 reports undertaken, and subsequent on-street sections 2 had amended detailing and design, particularly in the 3 rail and road interface. 4 Q. When you say there was a solution that didn't require 5 the Employer's Requirements, can you briefly explain 6 what you mean by a solution? 7 A. Sorry, the design that was -- and detailing that was 8 proposed by Infraco for Princes Street for that section 9 did not satisfy the performance characteristics and 10 criteria. There was subsequent cracking and 11 delamination gaps opening up between the rails and the 12 road surfacing, amongst other things. 13 Q. I think we've also read that the works were undertaken 14 during a period of very heavy rain. Was that 15 a contributory factor? 16 A. I think it would be fair to say that the works were 17 undertaken over a significant six or seven-month period. 18 There was inclement weather on some occasions, but 19 Infraco suggested that was entirely because of the rain 20 and nothing to do with any workmanship or specification 21 issues. tie didn't agree with that. 22 Q. Thank you. 23 I would like to move on to another matter, please. 24 I think after contract close in May 2008, and then in 25 the following months, many Notified Departures were 41 1 received by tie from the consortium. 2 One matter I would like to put to you, Mr Fitchie 3 has given evidence, at least in his written statement, 4 that he advised you from the summer of 2008 that tie 5 should take the impasse regarding Notified Departures to 6 dispute resolution procedure, but that wasn't in fact 7 done until well into 2009. 8 Do you remember receiving any such advice from 9 Mr Fitchie in the summer of 2008? 10 A. I don't know it was the summer of 2008, but I do 11 remember Andrew Fitchie suggesting that we should use 12 the dispute resolution mechanics under the contract. 13 Certainly I'm sure it was at some point in 2008, 14 I suspect the autumn of that point, as the volume of 15 items started to arise. 16 Q. So why wasn't that done at that time? 17 A. We were seeking to understand and support -- in effect, 18 understand and confirm whether or not we considered the 19 items raised by the Infraco were in fact changes. There 20 was some delay in achieving clarity on the argument or 21 the justification. We were making some progress in 22 a number of areas with Infraco at that time to try and 23 fully mobilise the works, and we believed that we could 24 agree without going to the formality of the DRP process, 25 an acceptable resolution. 42 1 From late 2008 onwards, I think it became 2 increasingly clear that the Infraco had a singular 3 position on matters such as design development and whose 4 liability that was. It was a position we disagreed 5 with, and we tried to mediate -- to have a session 6 through the -- a general mediation on issues in, 7 I think, the early summer of 2009, and when that was 8 unsuccessful, we commenced some of the more formal 9 specific DRP processes. 10 Q. I suppose it would have been possible, when you say that 11 from late 2008 onward, it had become increasingly clear 12 that the Infraco had a singular position on matters such 13 as design development and whose liability that it was, 14 it is possible to have a twin-track process to go to the 15 DRP processes while also seeking to achieve a mediation 16 settlement as well. Was any consideration given to that 17 twin-track process? 18 A. In essence, yes, because there was some preparatory work 19 to think around how would we resolve this process 20 through dispute resolution mechanics in the contract, 21 which had in essence a five-stage process for -- and 22 that is for myself and the Infraco representative to see 23 if we can come to a resolution. 24 If not, to take that up between the respective CEOs 25 of tie and the consortium, which was Richard Walker from 43 1 Bilfinger. 2 And then you can move into a formal DRP process of 3 either mediation or adjudication or eventually, if you 4 so wish, to litigation. 5 Q. With the benefit of hindsight, do you think tie ought to 6 have gone to formal DRP earlier? 7 A. Looking back then, there may have been some advantages 8 to crystallise the position sooner, yes. 9 Q. We've also heard reference to Project Pitchfork, which 10 I think may have begun in early 2010. Are you able to 11 give a brief overview of what Project Pitchfork was, 12 including, importantly, where did the name come from? 13 A. I have no idea where the name came from. The areas that 14 we were looking at under that particular project aimed 15 to understand what resolution options we had under the 16 contract, including using the formal Dispute Resolution 17 Processes. In parallel, are there any other 18 alternatives which might include consideration of 19 termination of the existing Agreement and reprocuring. 20 It also addressed the funding issues and options 21 that were becoming evident at that time, and clearly the 22 original funding envelope of 545 million was not going 23 to be able to be kept within, and elements such as 24 consideration of shortening of the scheme or alternative 25 funding scenarios were being tested. 44 1 These were areas that were discussed at the Tram 2 Project Board as a set of actions that tie should 3 progress and develop, in parallel with continuing to 4 seek to resolve matters through the Infraco contract. 5 Q. We've also heard reference to things such as Carlisle, 6 Project Carlisle negotiations and offers. Is that 7 something you were involved in or was that -- Tony Rush 8 involved in that? 9 A. Tony Rush was in the lead. So Tony was brought in by 10 Richard Jeffrey at that time, but certainly myself and 11 some of my colleagues such as Dennis Murray and 12 Susan Clark contributed to certain factual information 13 and tested some of the proposals that Tony was putting 14 forward, round what he could seek an agreement on for 15 completion of. I think Carlisle, definitely the 16 off-street works and then consideration of what approach 17 might be taken to on-street works. 18 Q. Thank you. 19 Now, we know that various matters were taken to 20 adjudication and various adjudication decisions were 21 issued between, I think, late 2009 and early 2011. 22 Did there come a point in time when you began to 23 form the view that tie were starting to lose more 24 adjudications than they were winning? 25 A. I think we reviewed the adjudication decisions as they 45 1 were made. We also resolved matters at mediation as 2 well in that time frame. 3 During 2010 I think we also had additional legal 4 input from Brandon Nolan of McGrigors, and Brandon, for 5 example, challenged what -- our interpretation and DLA's 6 interpretation of the Design Development Clause 7 particularly, and that was an area where we had been 8 consistent in our approach and he offered a challenge or 9 an alternative view to that. 10 There were a number of areas where we continued to 11 seek resolution of differences, whether it was around 12 extension of time entitlement or obligation to commence 13 work without tie change orders being made, and tested 14 certain provisions of the contract particularly, and 15 those were run, from memory, during 2010. 16 So I would suggest by late 2010, there was certainly 17 a mix of outcomes from the DRP process and some 18 challenge around some of the core tenets that we had 19 been relying on and utilising under the contract. 20 Q. Did it go further again by late 2010 in that around that 21 time, did you begin to form the view that tie was 22 starting to lose more adjudications than tie were 23 winning? 24 A. I think it's simplistic to call it winning and losing. 25 On certain points of principle, we were successful. On 46 1 a number of others the Infraco were held to be 2 successful by the adjudicator on that item. Generally 3 also there was -- if we had asked for a valuation, there 4 was a resolution that was nearer our estimate than the 5 Infraco's. 6 So I don't recognise it as winning or losing, but 7 there was certainly a number of adjudications where the 8 adjudicator found for the argument of principle with the 9 Infraco in late 2010, and probably one that springs to 10 mind would be Lord Dervaird on Murrayfield underpass, 11 where it was around our ability to instruct the Infraco 12 to progress works. 13 Q. At the risk of over-simplification, it may be suggested 14 that overall tie tended to lose on liability but have 15 some success on quantum. 16 A. That probably is a little bit of over-simplification, 17 but there are certain elements of truth in your 18 statement, yes. 19 CHAIR OF THE INQUIRY: Were tie ever guilty of 20 over-simplification about the outcome of these 21 adjudications? Did tie ever speak in terms of winning 22 and losing? 23 A. Personally, I didn't use the language of winning and 24 losing. From a tie perspective, I'm sure there were 25 conversations around what was a successful outcome and 47 1 not a successful outcome. 2 CHAIR OF THE INQUIRY: I'd certainly the impression from 3 stuff that I had read that the city were being advised 4 that tie were winning many of these adjudications. Is 5 that not -- was that -- were you not aware that that 6 message might have been conveyed? 7 A. We tried to give a very -- particularly in the formal 8 reports that were produced and the discussions at the 9 Tram Project Board and the like, we tried to give a very 10 accurate representation of what we knew at the time. 11 I would say that sometimes we should have followed 12 up with further amplification as more matters became 13 clearer, and I know we did in Tram Project Board 14 discussions, but there's probably areas that we could 15 have in the written reports amplified certain things 16 that would have made it more helpful for the less 17 informed reader. 18 MR MACKENZIE: Thank you. 19 Another document I should put to you, Mr Bell, for 20 your comments. If we can go, please, to CEC00013342. 21 What this is, you may not have seen it before. If 22 we can go to page 3, please. We can see it's a document 23 by Alastair Maclean who was Head of Legal and Admin at 24 the Council, 17 November 2010. 25 If we go back to page 1, please, the paragraph at 48 1 the top states: 2 "The purpose of this note is to report to the City 3 of Edinburgh Council monitoring officer concerns in 4 relation to tie which yesterday were raised with 5 Alastair Maclean ..." 6 We see at 2.1: 7 "Richard Jeffrey, the chief executive of tie 8 yesterday indicated that he had concerns in relation to 9 events at the time the tram contract with Infraco was 10 entered into." 11 The reason I'm putting this document to you is 12 simply because you were a senior officer in tie at that 13 time, and to get your comments on what is suggested 14 here. 15 2.2 says: 16 "Those events require to be investigated but there 17 is a suspicion that: ..." 18 I'll just give you a minute to read each of the 19 points set out there. (Pause) 20 Thank you. 21 What are your views on each of these concerns set 22 out? 23 A. It's the first time I have seen this type of document 24 set out. I can answer for myself that I absolutely do 25 not consider that I was incentivised to negotiate a deal 49 1 at a headline rate. 2 I don't believe that there was softening of other 3 positions from that perspective, certainly not in my 4 view. 5 Other provisions, I don't believe there was any 6 collusion with the Infraco that I was aware of. 7 After financial close, I think I became aware of the 8 point number 2.2.4 that was suggested that 9 Andrew Fitchie had been paid a bonus. But I had no 10 knowledge of that at the time. 11 With regards to contract being defective in a number 12 of respects, we were -- I was certainly not aware of any 13 defects in the contract at the time it was signed, and 14 that -- I can only answer that I don't believe that was 15 associated with any incentivisation or negligence from 16 my perspective. 17 In the closing report, I don't believe that was 18 misrepresentation. 19 I haven't spoken, I don't believe, with Andrew 20 since -- as part of any investigation if that was 21 carried out. I don't believe so. So I don't know the 22 outcome of that investigation. 23 Q. Just for -- 24 A. And if it was held. 25 Q. Did Mr Jeffrey discuss any of these concerns with you at 50 1 any time? 2 A. We certainly discussed the emerging fact base that there 3 were areas in the contract that appeared to be defective 4 to tie, compared to our understanding. So we definitely 5 discussed that, and the design development type point 6 would be an example of that. 7 I don't recall discussing any of the other items, 8 other than in passing the comment around his 9 understanding that there had been a bonus paid to 10 Andrew Fitchie. 11 And in the Close Report, I think, you know, 12 matters -- matters were read and entered at that time 13 with the understanding that the tie officers had of 14 those matters. 15 Q. Thank you. I would like to move on, please, to 16 Mar Hall, the mediation in March 2011. 17 Just by way of overview, what was your involvement 18 and role at the actual mediation discussions? 19 A. I was in attendance at Mar Hall. I had done some 20 preparatory work with Colin Smith, Tony Rush and others 21 who were also in attendance. The principals, I think, 22 were Sue Bruce and Vic Emery from CEC and tie 23 respectively, and clearly senior representation from the 24 consortium and also, I think, a representative from 25 Transport Scotland, Ainslie McLaughlin. 51 1 I presented a number of topics or positions from 2 tie's perspective during the mediation to -- and the 3 approach that was taken was that the seniors for the 4 relevant companies listened to key points or topics that 5 were being debated and the position was put forward 6 generally by Martin Foerder for the Infraco or myself 7 from tie, to understand the background of the difference 8 or the issue. 9 Then there was then subsequent discussions 10 follow-ups or negotiations. I tended to concentrate on 11 the Infraco-related matters. One of my colleagues, 12 Alastair Richards, was involved specifically for some of 13 the Tramco-related matters with CAF; and I would say 14 that was a very intensive first couple of days and then 15 there were some discussions that I wasn't particularly 16 party to from the sort of third day of the mediation 17 forward, and the representatives of the organisations 18 concluded, I think, on the Thursday, Thursday evening, 19 with a proposed form of agreement or way forward. 20 Q. Thank you. Now, we've heard evidence from 21 Alastair Maclean that agreement was reached in the 22 evening of day 2 regarding Heads of Terms, including an 23 off-street price and a target on-street price, and in 24 particular that agreement on behalf of the Council tie 25 side was led by Sue Bruce and Vic Emery. Does that 52 1 accord with your recollection? 2 A. It does, yes. 3 Q. In the Heads of Terms, the agreed price for the 4 off-street works were GBP362.5 million, and the target 5 price for the on-street works was GBP39 million. 6 I think that then increased before the Final Settlement 7 Agreement was reached in September 2011. 8 In short, what were your views on the sums agreed 9 and why? 10 A. It felt like an expensive final answer. In preparation 11 to Mar Hall, CEC and Vic Emery for -- who was the 12 Chairman of tie at this point, had asked for some work 13 to be done looking at the likely costings and various 14 options on that, and I would have to accept that this 15 was a negotiation led by CEC. So at the end of the day, 16 Sue Bruce was the primary decision-maker on what was 17 tolerable for her from a Council perspective, just as 18 the seniors from Bilfinger and Siemens were similar from 19 the Infraco's perspective. 20 But it felt like an expensive final resolution. The 21 approach that was proposed was a series of amendments 22 following on from those Heads of Terms, and then seeking 23 to achieve a final ratification or final agreement in 24 September 2011. I think the target was slightly earlier 25 than that originally. 53 1 Q. You've referred to undertaking various preparatory work 2 in the run-up to Mar Hall. Did that involve costing 3 various options on different scenarios? 4 A. It did, yes. 5 Q. From the work you had done in preparation for Mar Hall, 6 do you consider that the sums agreed could be considered 7 to be reasonable? 8 A. I thought they were expensive. 9 Q. Thank you. 10 Now, I think you then left tie in October 2011; is 11 that correct? 12 A. That's correct. 13 CHAIR OF THE INQUIRY: I think the question was: did you 14 consider them to be reasonable, and you said they were 15 expensive. I suppose things can be expensive and 16 reasonable, or expensive and unreasonable. 17 What is your position about the reasonableness of 18 the solution, of the figure? 19 A. My reflection at the time was that there was a number of 20 proposed changes to the contract as well as part of 21 that. The figures would be at the top end of any range 22 for me, and I felt that there was some weakening of the 23 client side terms and conditions. 24 However, I would acknowledge that CEC had a view 25 that they had considered a number of options, including 54 1 termination and reprocurement and the risks associated 2 with that, and they had certainly done some, in their 3 view, some scenario planning around what that might or 4 might not cost. 5 I assume that informed their ranging on their 6 figures, but it seemed, as I say, at the top end of 7 a range from my perspective. 8 MR MACKENZIE: Thank you. There's one final matter I would 9 like to go to, please, Mr Bell, in reference to two 10 short documents. 11 It concerns the question of bonuses because that has 12 been raised by other witnesses. 13 If we go, please, to CEC01491920. 14 We can see in the middle of the page, towards the 15 top, an email from Mr Gallagher dated 21 March 2008 to 16 Brian Cox and copied to others. 17 Mr Gallagher says: 18 "I would like to meet up in Edinburgh week after 19 next if possible to discuss the bonus options and issues 20 associated with contract close. In essence, the deal 21 has really been delivered by Jim McEwan, Steven Bell and 22 Andrew Fitchie - not Matthew. We had an incentive 23 agreement in place with the Procurement team which 24 I intend to alter to reflect the outcome and individual 25 contributions." 55 1 To pause there, do you know what Mr Gallagher is 2 referring to when he talks of an incentive agreement in 3 place with the procurement team? 4 A. No, I don't. 5 Q. Did you in fact receive a bonus for closing the 6 contract? 7 A. I -- I received a bonus, I think, in the -- about the 8 end of the first quarter of 2008 that ran from the 9 period from 2007 up to that point. It was prior to 10 contract close, and for the year 2008 through to 2009 11 there was a bonus entitlement assessed, and a number of 12 the tie executives, including myself, deferred that 13 bonus entitlement until open for revenue service after 14 a discussion with Richard Jeffrey. 15 Q. Do you know whether it was any part of receiving bonuses 16 that procurement milestones had been met? 17 A. In terms of -- for -- 18 Q. Yes, in terms of were -- let me rephrase the question. 19 Were bonus payments to any extent dependent on 20 procurement milestones having been met? 21 A. I don't know how it relates to the procurement team or 22 matters with regards to that or other executives. There 23 were about six headings that were quoted to me, 24 including works that I did in 2007, closing out of EARL, 25 some particular engineering work, progressing the 56 1 particular support to the tram procurement process, 2 including the evaluations, et cetera, and an anticipated 3 outcome, I think, within a range of financial values for 4 the tram which was within the overall funding budget. 5 That's my recollection. 6 Q. And the last document I would like to take you to in 7 this regard, please, similar point, CEC02084810. 8 This, Mr Bell, you won't have seen. It's a lessons 9 learned document produced by Trudi Craggs of Dundas & 10 Wilson in 2008. 11 If we can go to page 3, please, and under 12 "Programme" towards the bottom, Ms Craggs has said: 13 "This needs to be realistic and not based on bonuses 14 if milestones are reached (this impacts on quality as 15 the need to meet the deadline outweighs the need to get 16 it right)." 17 Do you have any comments on what is set out there? 18 A. I think programme does need to be realistic and the 19 milestones absolutely should be appropriate. The 20 milestones were amended a number of times during this 21 procurement process. I don't think there was a blind 22 affirmation or alignment with original milestones. 23 Q. Finally, do you know -- it may not be a matter within 24 your knowledge, but do you know whether bonuses paid to 25 senior tie staff were based to any extent on procurement 57 1 milestones being reached? 2 A. I can only comment about my own, which I have already 3 said. There was a procurement time frame and support to 4 that timetable, was one of six particular criteria. 5 Q. Thank you. My Lord, I have no further questions, but 6 there was the outstanding matter in relation to QRA 7 spreadsheet. I think we should check that over the 8 break, if we may? 9 CHAIR OF THE INQUIRY: I think actually an opportunity of 10 looking at -- I think, Mr Fairley, I overstated the 11 position about the adjustment of the figure and I was in 12 error when I said that Mr Hamill had adjusted the figure 13 that was produced by the QRA, in the sense of -- if the 14 impression that I gave and wrongly had was that he had 15 actually adjusted that figure, whereas in fact the 16 figure was adjusted in the sense of a deduction being 17 made in the Schedule. 18 MR FAIRLEY: Yes, I think that's right. I was intending to 19 ask Mr Bell, if permitted, some questions about this in 20 any event, and it was my intention to take him to the 21 Schedule. So I'm happy to do that if it saves the 22 Counsel to the Inquiry from doing so. 23 CHAIR OF THE INQUIRY: That's very helpful. 24 I think there have been intimations of questions 25 from Edinburgh and from you. I don't know what the 58 1 position is about Edinburgh. 2 MR BURNET: My Lord, I'm grateful, and I'm grateful to 3 Counsel to the Inquiry, and given his thorough 4 examination of the witness, I think he's covered the 5 areas that we indicated we would like to put to this 6 witness. So I'm not intending to proffer any additional 7 questions. 8 MR DUNLOP QC: My Lord, for myself, there are a couple of 9 follow-up questions I would like to put to the witness, 10 following on from the questions my learned friend, 11 Counsel to the Inquiry, has put, regarding knowledge and 12 mitigation of risk. I envisage no more than five to ten 13 minutes. I'm quite happy to do that before Mr Fairley 14 wraps up with this witness. 15 CHAIR OF THE INQUIRY: Well, I think we will adjourn for 15 16 and then we will start with Mr Dunlop and Mr Fairley. 17 We will resume again at 11.25. 18 (11.11 am) 19 (A short break) 20 (11.30 am) 21 Questions by CHAIR OF THE INQUIRY 22 CHAIR OF THE INQUIRY: You're still under oath, Mr Bell. 23 I think before Mr Dunlop asks you any questions, 24 could we go back, please, to the CEC01288043. 25 That's the email that we looked at before, and 59 1 attached to it was the spreadsheet that Mr Fairley is 2 going to ask you about. 3 In the second paragraph, Mr Hamill explains that you 4 can't alter one figure in the QRA without affecting the 5 others, and he then says: 6 "Therefore, in order to get round this problem, 7 I have basically 'pockled' the spreadsheet and hard- 8 entered some values." 9 So what did you understand by "hard-entered"? 10 A. He didn't run a calculation against that particular line 11 entry. He made a direct adjustment to that particular 12 risk ID. 13 CHAIR OF THE INQUIRY: He put in a predetermined figure? 14 A. Adjusted it, yes. So it resulted in the revised number. 15 CHAIR OF THE INQUIRY: Thank you. 16 Examination by MR DUNLOP QC 17 MR DUNLOP QC: I'm obliged, my Lord. 18 Mr Bell, if we leave to one side the difference 19 between what Mr Fitchie said and what you have said 20 regarding normal development risk, normal design 21 development, am I right in understanding that you 22 certainly knew that significant change in design was at 23 tie's risk? 24 A. Yes, it is beyond that normal design development, that 25 would be a client-related risk. 60 1 Q. And likewise delays in consents or approvals would be 2 a tie risk? 3 A. Yes, but I think with a certain minor caveat such as the 4 quality of submission. That was an Infraco and SDS 5 risk. Similarly, if matters had been associated with 6 Infraco proposals, that was not a tie risk. That would 7 have been an Infraco responsibility. 8 Q. If we have those two examples in mind, please, could we 9 look again at parts of a document we've seen but weren't 10 taken to. CEC01449100. 11 Do you remember looking at this with my learned 12 friend? This is Bilfinger's Design Due Diligence 13 Summary Report. I think you accepted seeing it at the 14 time; is that right? 15 A. Or certainly shortly thereafter, yes. 16 Q. Thank you. If we go to page 3 of that document, and if 17 we look at the top half of the page, I think you were 18 taken to the first paragraph, and we see that the 19 executive summary says: 20 "In order to determine the design status prior to 21 contract award a technical due diligence has been 22 carried out for the design of the ETN Project. The due 23 diligence process has been based on the relevant design 24 information received by [the consortium] by 25 14 December 2007." 61 1 If we could just look at the next paragraph, it 2 says: 3 "Contrary to the tie's original intention for this 4 project stage, the design is incomplete and will require 5 significant further development." 6 Is that correct? 7 A. It's what it says, yes. 8 Q. So significant further development, you were aware that 9 that was going to be at tie's risk? 10 A. The design was incomplete. The design that SDS were 11 completing is to achieve the Employer's Requirements, 12 Infraco understood what they were, as did SDS. So some 13 elements will be less progressed. So there's quite 14 a lot of work to do, but the end result was a clear 15 outcome in target, and therefore I would have expected 16 that the Infraco would have assessed what that normal 17 design development would have been. If it was beyond 18 that, then that would have been at tie's risk, but just 19 because it's early in the process doesn't mean that it 20 automatically falls to be automatically beyond normal 21 design development. You have to measure it against 22 where you start from in the process. 23 Q. Well, it's you that's used the word "significant" in 24 your own evidence. I'm just asking you to comment on 25 the fact that you must have been aware, from this 62 1 document, that significant further development of the 2 design was going to be necessary. 3 A. The design needed to be completed. So in terms of 4 volume of work, there was a more significant volume of 5 work than items that had still to be completed, but the 6 principles may well -- they are normally set out in the 7 outline design, and therefore I would have expected that 8 that would have been taken cognisance of by the Infraco 9 as part of that. 10 Q. In terms of to what extent it was completed, if we look 11 to the last sentence in that paragraph, we see that: 12 "According to the SDS document tracker more than 13 40% of the [DDI] has not been issued to BBS at 14 all by the above mentioned cut-off date." 15 Is that right? 16 A. That's what it says, yes. 17 Q. The importance of the above-mentioned cut-off date, 18 December 2007, was that Wiesbaden was tied to what was 19 apparent as at that date, wasn't it? 20 A. It was. However, the outline design information was 21 also available. So that's the earlier stage in the 22 process. So it was not unknown, the type of solution 23 that was there. What hadn't been issued in certain 24 circumstances was some of the detailed design drawings 25 or information in individual packages. 63 1 Q. Yes. Okay. On the question of delays in consents and 2 approvals, if you look down that document, please, and 3 if we see the third last paragraph on that page: 4 "For many areas the 3rd party approval status is 5 not clear. Formal tie/CEC design approvals are 6 generally outstanding. Not a single design element has 7 received final approval and has been issued for 8 construction." 9 So again, that was known. This is February 2008. 10 It was known that there was an outstanding issue with 11 regards to consents and approvals? 12 A. There was, and the lack of clarity on third party 13 approval status was highlighted there, yes. 14 Q. And consents or approvals, subject to the caveat you 15 mentioned earlier, were a tie risk? 16 A. If the -- yes, subject to the caveat around there needs 17 to be a quality submission with regards to that, and if 18 the third party or consenting authority required 19 a different change from that proposed, then that was 20 likely to result in a tie risk, yes. 21 Q. It was also known that a number of the Pricing 22 Assumptions in Wiesbaden carried forward into Schedule 23 Part 4 were incorrect, and that, as and when they fell, 24 there would be a Notified Departure? 25 A. I think we'd already talked extensively about the design 64 1 programme example. 2 Q. Yes. 3 A. The other regularly discussed example was the roads 4 reconstruction assumptions that Infraco had made, and 5 we've already talked about that specific pricing 6 assumption, and yes, that was identified. 7 The purpose of Wiesbaden was also to confirm the 8 value engineering approach, and those were elements that 9 were also clearly embedded within that Schedule. So 10 that was discussed. 11 Q. We can go back to it, if necessary, but it's perhaps not 12 immediately required. If you think about the email from 13 Mr Fitchie, 31 March 2008, do you remember that one 14 talking about the risk of Notified Departure? 15 A. Yes. 16 Q. Using the words like "all encompassing" and 17 "conservative" would be the approach of Bilfingers? 18 A. Yes. 19 Q. So from that email, you were aware, or tie generally 20 were aware, that there were going to be Notified 21 Departures, plural, once the contract was signed? 22 A. We did expect Notified Departures, and I think we 23 covered that yesterday. 24 Q. Yes. As you fairly indicated, you weren't able to say 25 with certainty how many there would be or to what extent 65 1 they were agreed? 2 A. Yes. 3 Q. Mr Fitchie suggested a mitigation approach, and we saw 4 the two responses, one from Mr Gilbert, one from 5 Mr McEwan, that perhaps suggested a difference of 6 approach in dealing with that. 7 Your evidence is that you, I think, largely heeded 8 Mr Fitchie's advice; is that right? 9 A. We undertook a number of mitigations or continued with 10 a number of mitigations, but there were some matters 11 that weren't fully resolved. 12 Q. As Mr Fitchie said in that email, the mitigation risks 13 were practical ones, rather than legal ones. They were 14 ones that you and Mr McEwan were best placed to deal 15 with; is that right? 16 A. I think in the main, yes. There were a number of 17 contractual or risk allocation items that were tweaked 18 that we touched on, I think, in the two stages of price 19 adjustment. One on 7 March and one on the 9th or so of 20 May. 21 So there was some contractual risk adjustment in 22 those examples, but many of the other things were about 23 delivery performance. 24 Q. Yes. Primarily you dealt with that by making risk 25 allocations, by making provisional sums and the like? 66 1 A. From a financial perspective, yes, but from an action 2 point of view, confirming that any mitigations were 3 being undertaken, or planning to do so. 4 Q. You will have told Mr Fitchie that you were acting in 5 accordance with his advice and taking steps to mitigate 6 the risk? 7 A. We certainly went through those mitigating actions and 8 reinforcement of those that I can recall with Andrew. 9 I don't think we went through every single item, but we 10 certainly covered a number of them. 11 Q. Yes. If we could go back, please, to the DLA advice 12 letter, CEC01033532. 13 You will recall looking at this. This is DLA's 14 letter of 12 May 2008, shortly before close? 15 A. Yes. 16 Q. If we go to page 3 of that, please. Paragraph 5 under 17 "Risk". You looked at this yesterday. I just want to 18 be clear. 19 My learned friend sought to suggest that the second 20 paragraph under "Risk" only alerted parties to one 21 possible Notified Departure. I think you were telling 22 his Lordship that the position was otherwise. 23 Can I just be clear; is that correct? 24 A. Yes, the point around management of Notified Departures, 25 plural, when and/or if any of the programme-related 67 1 Pricing Assumptions fall was the illustration that was 2 given there. 3 Q. Yes. Just to be clear, as at 12 May 2008, was there any 4 doubt that some of the Pricing Assumptions would fall? 5 A. We expected some of them to a degree. 6 Q. Yes, thank you. 7 That, you were telling his Lordship yesterday about 8 the conference call that you took part in with -- 9 I think it was yourself and Mr Fitchie and Ms Lindsay? 10 A. Yes, and there may have been others on the call, but 11 certainly that's my recollection. 12 Q. And the possibility of multiple Notified Departures will 13 have been part of that conference call? 14 A. We didn't -- I don't recall talking numbers of, but I do 15 recall about the principle of Notified Departures, and 16 that entitlement sits in the suite of documents. 17 Q. Yes. We've already spoken about things like the design 18 needing to be completed, consents being outstanding for 19 multiple items, and that remained something that was -- 20 was live in May 2008, didn't it? 21 A. It was, yes. 22 Q. If you could look, please, at CEC01347795. 23 That's the risk allocation matrix that I think you 24 were talking about yesterday with his Lordship. 25 A. Yes. 68 1 Q. You indicated that -- perhaps a previous iteration of 2 this, but these sorts of things will have again been 3 discussed in the conference call? 4 A. Yes. I think the purpose of the call was to really 5 highlight any differences from the previous version of 6 this, which from memory I think was produced round about 7 early March. 8 Q. Yes. Okay. So as far as you were concerned, Edinburgh 9 Council were, or Ms Lindsay at least, was fully sighted 10 on the risk allocation matrix if you wanted to make 11 clear any differences that there were? 12 A. Yes, and I think to be fair to Ms Lindsay, it was 13 an action arising from one of the Tram Project Boards 14 that -- to make sure that that tripartite discussion had 15 taken place. 16 Q. Yes. If you just look briefly at this document, please. 17 If we can turn to page 22 in the document. If we look 18 to the bottom half, just after the table break, we see 19 a number of items where public sector holds the risk. 20 The first is Pricing Assumption does not hold good; 21 is that right? 22 A. Yes. 23 Q. Five below that: 24 "Execution of Utilities Works or MUDFA works." 25 A. Yes. 69 1 Q. Then four again below that: 2 "Failure by tie to obtain any Land Consent, Building 3 Fixing Agreement, Consent, land agreement or TRO." 4 A. Yes, that's Traffic Regulation Order, yes. 5 Q. All at the public risk? 6 A. Yes. 7 Q. Again, if we turn on, please, to page 24 in that 8 document, if we see at the top, the third line in the 9 top part of the table, 80.14, that's referring to 10 Clause 80 in the contract, I think? 11 A. Yes. 12 Q. "Delay/costs due to a tie Change (save where the Infraco 13 could have prevented the need for the tie change)." 14 A. Yes. 15 Q. And again public sector risk? 16 A. Yes. 17 Q. Again, please, to page 26. Do we see there, again, 18 a reference to Clause 80. It's the second line after 19 the break: 20 "tie Changes, Mandatory tie Changes and Notified 21 Departures." 22 Again, noted as being public sector risk? 23 A. Yes. 24 Q. Thank you. 25 Matters such as Notified Departures you were telling 70 1 us earlier will have been discussed with Ms Lindsay in 2 the course of the conference call? 3 A. I expect so, because they're in effect the kind of 4 mandatory tie change Notified Departure part of that 5 line 80. 6 Q. Yes. You will have discussed at least at a level of 7 generality that tie were anticipating and assessing 8 anticipated Notified Departures and were making 9 mitigation or trying to mitigate this by making 10 contingencies; is that right? 11 A. I think we probably discussed two levels mitigating to 12 try and avoid the Notified Departure, but if that was 13 not able to be mitigated, then an appropriate 14 contingency or allowance for it, as we evaluated. 15 Q. Yes. On things like contingencies and allowances, 16 that's a technical or commercial matter rather than 17 a legal one? 18 A. Primarily, yes. 19 Q. Again, you will have discussed that with Ms Lindsay? 20 A. I'm sure we did in the generality of that principle. 21 Q. So if we think about a question that his Lordship asked 22 you yesterday, if someone -- let's say the Council -- 23 wanted to know what the exact price would be, then you 24 indicated you wouldn't be able to say: I can tell you 25 what the exact price would be. 71 1 A. Correct. 2 Q. Ms Lindsay would have known that she couldn't say what 3 the exact price would be? 4 A. I believe so because we did discuss, I'm pretty sure, 5 the description of the construction works price and what 6 that was made up of. 7 Q. Because frankly, at the point of contract close, no one 8 could know what the final price was going to be. Were 9 you hiding any of that from the Council? 10 A. No. 11 Q. Had you any reason to conceal that from the Council? 12 A. Absolutely not. 13 MR DUNLOP QC: Thank you, Mr Bell. I'm obliged, my Lord. 14 CHAIR OF THE INQUIRY: Mr Fairley? 15 Examination by MR FAIRLEY 16 MR FAIRLEY: Mr Bell, could I take you back to the early 17 part of 2008 when Mr Gilbert was discussing and 18 negotiating with Bilfingers over the Part 4 of the 19 Schedule and in particular the Pricing Assumptions. 20 At that stage, if I have understood correctly, 21 design was around 40 per cent incomplete; is that right? 22 A. Yes. I think we talked earlier circa two thirds 23 complete, but yes, between -- 24 Q. Somewhere of that -- 25 A. Between 60 and 70 per cent complete or 30 to 40 per cent 72 1 incomplete. 2 Q. Yes. Can I take you that that would have been known to 3 Mr Gilbert as a senior member of the commercial team? 4 A. Absolutely. 5 Q. Now, I think it's also fair to say that that created 6 a potential departure from the procurement process which 7 had been to ensure that there was 100 per cent design by 8 the time the contract was let to Infraco; is that right? 9 A. Yes. 10 Q. And again, I don't think it's contentious, but simply to 11 set the context of what I'm asking you about here, tie 12 evolved a strategy to deal with that, that essentially 13 had two limbs. The first being novation of the design 14 subcontract to Bilfingers and the second being 15 a transfer to Bilfingers of normal design development 16 risk; is that right? 17 A. Yes. The novation strategy was set though fairly early 18 in the process. So that was always the intent. 19 Q. Okay. I'm not going to ask you about the novation 20 strategy. I simply mentioned it in case I was accused 21 of being selective. 22 But I really just want to ask you about the transfer 23 of risk of normal design development. 24 When we talk about normal design development risk, 25 that's risk to cost and risk to time; is that right? 73 1 A. Yes. 2 Q. Again, how clear was it to Mr Gilbert in early 2008 that 3 the strategy of tie was to transfer normal design 4 development risk in terms of cost and time to the 5 consortium? 6 A. I think it was very clear. 7 Q. You've talked about meetings attended not just by people 8 from tie, but by external advisers, including DLA. How 9 clear was it to DLA that the strategy of tie in the 10 period early 2008 was to transfer normal design 11 development risk of cost and time to BBS? 12 A. I believe that was very clear, and I think we've covered 13 some email correspondence from Mr Fitchie to that effect 14 where he talks about it. 15 Q. Okay. 16 But the question that may beg, I suppose, is: what 17 is the meaning of normal design development? And that, 18 I think, ultimately came to be at the heart of a lot of 19 the disputes that tie ended up in with BBS. Am I right 20 about that? 21 A. It did, yes. 22 Q. You were asked yesterday by Counsel to the Inquiry for 23 an example of something that would fall outwith normal 24 design development, and the example I think you gave was 25 something like a change from a bridge to an underpass; 74 1 you said would go beyond the scope of normal design 2 development. Am I right about that? 3 A. That was the example I gave, yes. It's probably at the 4 extreme end of the spectrum. 5 Q. Yes. 6 Well, that's really why I want to explore this with 7 you in a little more detail. 8 I took from that, although you weren't asked about 9 the other end of the spectrum by Counsel to the Inquiry, 10 about what would fall within normal design development, 11 but I took from that an implication that it was changes 12 that were fundamental and perhaps also unforeseen or 13 unforeseeable. Am I right about that? 14 A. At which end of the spectrum? 15 Q. That would fall outwith normal design development? 16 A. Yes. They wouldn't have been foreseen by the concept of 17 the design or the normal completion of that design. 18 Q. Yes. So if there was a radical change that had not been 19 either foreseen or foreseeable at the time when 20 Bilfinger were fixing their price, such as a change from 21 a bridge to an underpass, that would constitute a change 22 to normal design development? 23 A. Yes. 24 Q. But I think we know that there were other sources of 25 information available to Bilfingers apart from simply 75 1 design drawings as to how this tram was going to be 2 built; is that right? 3 A. That's correct. 4 Q. We'll come on in a moment and I'll ask you about 5 Employer's Requirements, but just pausing here, at this 6 time was it tie's strategy then to pass on to Bilfingers 7 risk for normal design development, that being things 8 that were unforeseeable at the time when Bilfingers were 9 quoting their price? 10 A. I heard that question as normal design development 11 including unforeseeable matters; is that what you mean? 12 Q. Sorry. It's my fault. It's a bad question. 13 The strategy of tie at this time was to pass to 14 Bilfingers the risk for normal design development? 15 A. Yes. 16 Q. And tie's understanding of what normal design 17 development was, was it was everything apart from the 18 unforeseeable? 19 A. Particularly matters that could be moved to completion 20 from the current design status as viewed by an 21 experienced design and build civil engineering 22 contractor. 23 Q. As viewed by an experienced design and build civil 24 engineering contractor with information about what it 25 was he had to build? 76 1 A. Correct, which included the Employer's Requirements, 2 information such as the Tram Design Manual and other 3 guidance. 4 Q. So was that strategy one that Mr Gilbert was well aware 5 of? 6 A. Yes. 7 Q. Was that strategy one which DLA were well aware of? 8 A. Yes. 9 Q. So was it therefore tie's strategy that in addition 10 to -- sorry, that any changes additional to Base Date 11 Design Information that were consequent upon Employer 12 Requirements should fall to BBS as at their risk? 13 A. Yes, generally. Clearly if there's a specific example, 14 BBS intimated that we would review that on the base of 15 its individual facts, but generally you're correct. 16 Q. And the reason I ask that is we looked at a couple of 17 the Pricing Assumptions yesterday, I think it was 13 and 18 19, where there was a very specific area of work where 19 Bilfingers said: we are not taking risk for anything on 20 this beyond what is in the Base Date Design Information. 21 A. Yes. 22 Q. That might tend to suggest that in other areas where 23 that wasn't specifically catered for in those very 24 specific Pricing Assumptions, there was the prospect of 25 Bilfingers taking risk for things that went beyond Base 77 1 Date Design Information. Was that your understanding? 2 A. Correct, and I think that was debated in some of the 3 Dispute Resolution Procedures as well. 4 Q. Was that a clear understanding within tie, and in 5 particular on the part of Mr Gilbert, that that was what 6 you were trying to achieve? 7 A. I believe that was very clear, yes. 8 Q. Were DLA clear about that too? 9 A. I believe so, yes. 10 Q. Now, at any stage did Mr Gilbert say to you that the 11 words that he had negotiated with BBS did not achieve 12 that objective? 13 A. No. 14 Q. The same question in relation to DLA. At any stage did 15 anyone at DLA say to you: you haven't achieved that 16 objective of transferring risk for completing Employer's 17 Requirements, effectively, to BBS? 18 A. No, that wasn't stated. 19 Q. If we look just briefly at the Schedule Part 4, please, 20 which is document CEC01245224. 21 If we go in that document, please, to page 5, and if 22 you could enlarge the section at the foot of page 5, 23 3.4, Pricing Assumptions, just down to the foot of the 24 page is fine. 25 Now, just looking at this section in isolation, this 78 1 Price Assumption is to the effect that the design 2 prepared by SDS will not, and then there's a section in 3 parenthesis which I'll come back to, but if we leave the 4 section in parenthesis just now, it says it will not: 5 "in terms of design principle, shape, form 6 and/or specification be amended from the drawings 7 forming the Base Date Design." 8 Do you see that? 9 A. Yes. 10 Q. If we then read into that the section in parenthesis, so 11 the general proposition is that the designs prepared by 12 SDS will not differ in design principle, shape, form 13 and/or specification from the drawings forming the base 14 date design. That's the general principle. But the 15 exception in parenthesis is: 16 "... (other than amendments arising from the normal 17 development and completion of designs)" 18 Do you see that? 19 A. Yes. 20 Q. So thus far in this clause, what we have is a provision 21 that says that if it's normal development and completion 22 of designs, that is at BBS risk. Is that right? 23 A. Yes. 24 Q. That would be regardless of whether or not it was 25 a change to design principle, shape, form and/or 79 1 specification? 2 A. That's correct. That's -- 3 Q. So there could be changes to design principle, shape, 4 form and/or specification that were simply normal design 5 development? 6 A. Yes. 7 Q. Your understanding was that the strategy at tie was to 8 transfer all of that risk for normal design development 9 to BBS; is that correct? 10 A. That's correct. 11 Q. When we go on, however, in this clause, and if you can 12 just go over the page, please, could you enlarge the 13 section -- just the section, "For the avoidance of 14 doubt", please. This is the section right at the end of 15 this clause which I think we now know caused all the 16 difficulty because what it says is that: 17 "normal development and completion of designs means 18 the evolution of design ... 19 and excludes changes of design principle, shape and 20 form and outline specification." 21 That's exactly the opposite of the strategy that tie 22 was trying to pursue, isn't it? 23 A. Yes. 24 Q. Was that ever highlighted to you by Mr Gilbert in the 25 course of his drafting and negotiation of this document? 80 1 A. Not that I can recall. No. 2 Q. Did you notice this problem in the document when you 3 read it at the time? 4 A. I read it understanding it to enact the transfer of risk 5 that we identified for normal design development. 6 I didn't read it in the way that was subsequently tested 7 in a number of disputes, and highlighted the difficulty 8 in reading it, as did, I think I mentioned earlier, when 9 McGrigors reviewed it, this was a particular area of 10 concern they flagged in 2010. 11 Q. Yes. So it was really only when tie started losing 12 adjudications that the penny started to drop that 3.4, 13 pricing assumption 3.4 may not have fulfilled to any 14 extent the strategy that had been in the minds of 15 yourself and others at the start of 2008? 16 A. That we believed had been delivered through the 17 contract, yes. 18 Q. And that led to some fairly extreme results in certain 19 of the adjudications. In the Carrick Knowe 20 Adjudication, for example, there was, I think, an 21 argument about whether anti-pigeon measures on 22 Carrick Knowe Bridge were a Notified Departure. Do you 23 remember that? 24 A. I do remember that, yes. 25 Q. And in fact I think I'm right in saying that the 81 1 conclusion of that adjudicator was that these 2 anti-pigeon measures on the Carrick Knowe Bridge were 3 a Notified Departure because even though they were in 4 the Employer Requirements, they weren't shown on the 5 Base Date Design Information. 6 A. For example, that particular adjudicator had 7 a particular view on the interpretation of that. Others 8 had a different perspective. 9 Q. I understand that. I'm really focusing on the defect in 10 the contract as it was interpreted by those 11 adjudicators. But that certainly, if that adjudicator 12 was right, and that's the hypothesis on which we're 13 operating for the purposes of these questions, his 14 reasoning was that the reason that the consortium was 15 entitled to be paid more for anti-pigeon measures on the 16 bridge was that even though they knew that that was part 17 of the Employer's Requirements, and they knew from the 18 outset that that was what they were going to have to 19 build, because it wasn't specifically drawn on the Base 20 Date Design Information, it was a Notified Departure. 21 That was his conclusion? 22 A. It was. 23 Q. Was that extreme interpretation or result of the 24 contract something that you had anticipated? 25 A. No, it was not. 82 1 Q. Was it something that anybody, Mr Gilbert or anybody 2 else, had ever warned you about? 3 A. No, I can't recall any discussion of that type of 4 conclusion. 5 Q. Leaving that point now, Mr Bell, could I take you to the 6 Schedule of Risk Allocation that was mentioned in the 7 email that you looked at earlier, but you weren't taken 8 to it, so I'll do that, having undertaken to do so. 9 CEC01295329. CEC01295329. 10 Now, if you take it from me, Mr Bell, this is the 11 spreadsheet that was attached to the email you were 12 referred to earlier from Mr Hamill. I think I'm right 13 in saying that the figures shown there in red are the 14 adjustments that Mr Hamill had hard entered to this 15 Schedule. Is that your understanding? 16 A. That's my understanding, yes. 17 Q. Can I just, first of all, start below the line 321 that 18 reads "QRA Total". Do you see that? 19 A. Yes. 20 Q. So there's a line there that says "QRA Total" and 21 beneath that there are three other items. I think you 22 told us about each of these in your evidence earlier, 23 but these were pretty round figures that had been 24 included for respectively value engineering, road 25 reinstatement, and a less round figure for unspecified 83 1 risks, but these are all added after the QRA total? 2 A. Yes. 3 Q. So this is taking the QRA total which the computer 4 software has thrown up and it's adding in manually 5 additional allowance for risk; is that right? 6 A. Yes, it is. 7 Q. It was that that brought out the figure of 32,000. 8 Now, can I ask you, first of all, what was the 9 thought process behind adding in figures to the QRA 10 total? Surely if the QRA total is designed to do what 11 it's supposed to do, then you should just live with the 12 QRA total and you don't have to add anything else in? 13 A. That is based on the risk items identified and included 14 in the modelling. There were examples that you see at 15 the bottom such as non-delivery of VE and extent of road 16 reinstatement weren't included at the time of that March 17 review, but arose during the items where we were 18 confirming agreements with the Infraco on Schedule 19 Part 4. So we considered that in those examples that 20 there was the potential for a risk of non-achievement or 21 non-delivery of VE and that we should make an allowance 22 for that; and similarly, as I've touched on in my 23 earlier evidence, there was a difference between the 24 Infraco proposals on road reinstatement and what may be 25 required, depending on the CEC technical approval final 84 1 conclusion, which is why we had made that original 2 assessment of circa GBP2 million in each of these 3 categories. 4 Q. Would it be over-simplistic to describe this as a human 5 intervention in what would otherwise be an entirely 6 automated programme? 7 A. Definitely a human intervention. 8 Q. So you're applying your mind to whether or not the 9 number that the computer has coughed out is adequate? 10 There's clearly been a conclusion that additional 11 numbers need to be put in, and that has been done; is 12 that right? 13 A. That's correct. 14 Q. Now, you spoke about the extent of road reinstatement, 15 and I think you said in your evidence that there came 16 a point when the maximum liability for that was capped 17 off at 1.5 million. Did I understand that correctly? 18 A. That's correct. 19 Q. Is that what we see there in line 323, where 20 an allowance has been made of 2 million, but you have 21 then learned that the maximum liability is 1.5 million, 22 and so there's a manual reduction of that by 500,000 in 23 that same line, 323 in the deltas column? 24 A. That's correct. 25 Q. By the same token, if we go up above the VRA total line 85 1 to 316, under "General Programme Delay"? 2 A. Yes. 3 Q. There has been a manual reduction of 1.3 million in 4 relation to general programme delay. 5 A. That's correct. 6 Q. How was that assessed? 7 A. Again, that was assessed looking at the change in risks 8 and liabilities on quality of SDS design, and as part of 9 the final contractual discussions, the roads 10 reinstatement item and a series of four GBP1.2 million 11 incentivisation payments were identified. So there 12 would have been time elements associated with road 13 reinstatement that would have reduced a general risk, 14 and also there was a consideration that being 15 incentivised to deliver the key milestones with 16 a financial incentive on time would allow some reduction 17 of general programme delay. That's how we concluded 18 that GBP1.3 million adjustment. 19 Q. Is it fair to say that that is more a question of 20 judgment than the extent of road reinstatement saving on 21 risk of 500,000? 22 A. It is, yes. 23 Q. Did you and others exercise your judgement about whether 24 or not it was appropriate to make a reduction of 25 1.3 million in general programme delay? 86 1 A. Yes, we did. 2 Q. Were you satisfied that it was? 3 A. At that time, and with our understanding of the contract 4 and terms, yes. 5 Q. So were you making that reduction honestly and in good 6 faith? 7 A. Absolutely. 8 Q. Looking at the reduction for road reinstatement, that 9 wouldn't affect the QRA figures if they were re-run 10 because it's below the line; is that right? 11 A. That's correct, unless we amend the QRA and add in a new 12 risk ID for road reinstatement, and then incorporate it. 13 At this point in time, that hadn't been done. 14 Q. But any change to anything below the QRA total line is 15 not going to have an effect if you re-run the QRA 16 programme? 17 A. No, it's just going to be added afterwards. 18 Q. But something above the line is going to affect the QRA 19 programme, isn't it? 20 A. When it's re-run. 21 Q. When it's re-run. If I have understood Mr Hamill's 22 evidence on that correctly, it is not possible simply to 23 take GBP1.3 million out of general programme delay 24 because the computer doesn't understand that, and when 25 you re-run the figures, all of the figures change; is 87 1 that right? 2 A. Yes. 3 Q. This discussion over risk in the period leading up to 4 financial close, was this something in which City of 5 Edinburgh Council officials had been closely involved? 6 A. I don't think they were at the final meeting that we 7 discussed this item -- 8 Q. No, sorry, that wasn't my question. In the period 9 leading up to the point at which this spreadsheet was 10 produced, had there been discussions over a period of 11 weeks and months with City of Edinburgh Council about 12 risk allocation? 13 A. Yes, there had, and in particular some of the technical 14 items associated with things like road reinstatement and 15 the approvals risks, because they were intimately linked 16 to the City of Edinburgh's ability to perform in those 17 areas. 18 Q. Just taking one example out of this, if we look at the 19 Infraco/Tramco delivery risk, which is shown there at 20 6.872314 million, is that a figure that would have been 21 discussed with City of Edinburgh Council in the period 22 leading up? 23 A. I'm sure the summary that totalled up to the 32.347 was. 24 Q. Yes. 25 A. So each of the individual build-ups would have been 88 1 discussed, and, for example, things like TROs were very 2 much informed by the City of Edinburgh Council's 3 expertise on that process. 4 Q. Yes. 5 A. And we -- we relied on some key information from their 6 officers. 7 Q. So if we look at the figures in the AFC P1 column, from 8 line 313 down to 320, just the line above the total, do 9 I understand then that those are all figures with which 10 those in CEC would have been familiar as a result of 11 these earlier discussions? 12 A. Yes, and I would have expected that type of summary to 13 be part of what had been shared with Alan Coyle and his 14 colleagues back in March. 15 Q. So was the point that Mr Hamill was making in his email 16 effectively that if you try to deduct 1.3 million from 17 general programme delay in isolation, you're actually 18 going to change every single one of these figures if you 19 run the QRA again? 20 A. That's the risk, yes. 21 Q. It's not just a risk. That's the way the programme 22 works, isn't it? 23 A. Yes. 24 Q. That would have meant that the figures that you would 25 have then have been showing City of Edinburgh Council 89 1 for, for example, Infraco/Tramco delivery, would have 2 been different? 3 A. It would have been different. We don't know what it 4 would be, but it would have been different. 5 Q. But in point of fact, the risk profile of Infraco/Tramco 6 delivery had not, as far as you were concerned, changed? 7 A. We hadn't made a change too that at all. 8 Q. And similarly, I could go down through the risk, but the 9 risk profile for designs and consents remained at 10 3.301992? 11 A. Yes. 12 Q. And MUDFA 8644277; is that right? 13 A. Yes. 14 Q. So really what Mr Hamill was saying he was trying to do 15 was maintain the position on these other risks which had 16 not changed, so as to give City of Edinburgh the figures 17 that they were used to seeing? 18 A. Yes. 19 Q. Whilst at the same time taking 1.3 million out of 20 general programme delay? 21 A. Correct. 22 Q. There was no subterfuge involved in that. It was simply 23 a question of presenting figures that they'd already 24 seen? 25 A. Absolutely not. And any time that Alan Coyle or his 90 1 team sought to enquire on some of these matters, my 2 recollection is he got a very clear opportunity to work 3 through the detail. And as did some of his colleagues. 4 Q. Is it correct that when the human element becomes 5 involved in a risk assessment, there can be a level of 6 subjectivity in deciding what figures to put in? 7 A. Yes. 8 Q. That explains the 2 million additions that we see for 9 value engineering and 2 million for road reinstatement, 10 but it also explains the 1.3 million reduction? 11 A. They were -- had an element of subjectivity applied to 12 them. 13 Q. And in the Close Report -- I wonder if we could just 14 look finally at that. That's CEC01338847. 15 Can you go to page 6 of that document when it's on 16 the screen, please. 17 If you just stay on page 1 of the document so we can 18 see what it is. I think I have described it wrongly. 19 It's one of the financial close documents, but it's 20 the financial close process and record of recent events 21 document that you were shown. 22 Could you go to page 6, please, now. 23 In the fourth line of that page 6, there is 24 a reference to 4.6 million of exposures having been 25 removed, acknowledging that their evaluation is 91 1 judgmental. 2 Now, I know we're not talking about exactly the same 3 thing, but is that a reference to there being an element 4 of subjectivity when looking at risk exposure? 5 A. Yes, it is an element of subjectivity in that reference. 6 Q. But you are saying that in the report, in this report -- 7 A. Yes. 8 Q. -- which is part of the close papers? 9 A. At that time. 10 Q. And there is an element of subjectivity in that? 11 A. And it draws out where there are some explicit items. 12 Q. That was the next question. The 0.5 million is 13 explicitly reflected in the QRA; is that the roads 14 reinstatement? 15 A. Strictly speaking, it was in the line below the QRA 16 number, but as part of the overall risk summary, and 17 I think in this report, QRA was being used as shorthand 18 for the total risk. 19 MR FAIRLEY: Shorthand for risk. I see, I understand. 20 Thank you, Mr Bell. I have no further questions. 21 Questions by CHAIR OF THE INQUIRY 22 CHAIR OF THE INQUIRY: Mr Fairley, you referred Mr Bell to 23 the Schedule 01295329, which I also recognise, and that 24 was the Schedule which I mentioned before the break. 25 But as I understand it, the mechanism adopted by 92 1 Mr Hamill related to the QRA document CEC01288044. So 2 could you put that up, please. CEC01288044. 3 Now, this is the QRA assessment. I think if you -- 4 can we scroll down, please? I'm looking for a figure 5 under PB. Sorry, go back up. There's a column with PB. 6 Can you move it to the left, please. 7 If you go back then to P80, to the left. I'm 8 looking for a figure of 517. 9 Anyway, perhaps we can deal with this another way. 10 But I understood from material I have read that what 11 happened was that Mr Hamill took a figure here and 12 instead of the formula which -- the computer uses 13 a formula, instead of the formula for particular 14 figures, he put in the figure overriding the formula. 15 And he got a print-out showing the figure which then 16 adjusted. 17 Did you understand that had been done? 18 A. When we reviewed it and discussed it with Mark, we 19 utilised the summary sheet that we've just looked at 20 prior to this sheet. So this was around what 21 adjustments were to be made. 22 CHAIR OF THE INQUIRY: Yes. And then did he go on and 23 adjust -- 24 A. At the time I had assumed that he had gone on and dealt 25 with it within the individual line entry -- 93 1 CHAIR OF THE INQUIRY: Yes. 2 A. -- that was relevant to general delay. That was my 3 understanding of what he was going to do; it was one of 4 the reasons why we had flagged that in the summary sheet 5 to show that's what we had done in that particular 6 circumstance. 7 CHAIR OF THE INQUIRY: Would that involve adjusting the QRA 8 figure -- 9 A. I think -- 10 CHAIR OF THE INQUIRY: -- by substituting the figure that 11 you want for the formula? 12 A. My expectation was -- I don't know the mechanics of how 13 it would work -- that he would look at the relevant 14 total column and make that adjustment, rather than 15 trying to adjust matters within the min/max and most 16 likely values because he doesn't know what's going to 17 spit out accordingly. 18 So the column on the right-hand side in total for 19 that entry, I believe was the one he intended to make 20 a manual adjustment to. 21 CHAIR OF THE INQUIRY: So he would make a specific entry 22 relating to -- 23 A. Yes. 24 CHAIR OF THE INQUIRY: In the QRA relating to a particular 25 item of risk. 94 1 A. Against that particular item. 2 CHAIR OF THE INQUIRY: And that's achieved by overriding the 3 formula and putting in the figure that you want to see? 4 A. I believe that was the end result, subjective 5 conclusion, that that element within the QRA was 6 adjusted to the 5.7 number as opposed to its 7 predecessor. 8 CHAIR OF THE INQUIRY: Do you want to ask anything else, 9 Mr Fairley? 10 MR FAIRLEY: No, my Lord. 11 CHAIR OF THE INQUIRY: Thank you. 12 Thanks very much, Mr Bell. You're free to go. 13 You're still under citation, and it's possible you could 14 be recalled. But if that happens, we will be in touch. 15 A. Thank you. 16 (The witness withdrew) 95 1 INDEX 2 PAGE 3 MR STEVEN BELL (continued) ...........................1 4 5 Examination by MR MACKENZIE (continued) .......1 6 7 Questions by CHAIR OF THE INQUIRY ............59 8 9 Examination by MR DUNLOP QC ..................60 10 11 Examination by MR FAIRLEY ....................72 12 13 Questions by CHAIR OF THE INQUIRY ............92 14 15 MS SUSAN CLARK (sworn) ..............................95 16 17 Examination by MR MACKENZIE ..................95 18 19 Examination by MR DUNLOP QC .................169 20 21 Examination by MR FAIRLEY ...................172 22 23 MR TOM HICKMAN (sworn) .............................177 24 25 Examination by MR MACKENZIE .................178 203