1 Tuesday, 28 November 2017 11 (3.38 pm) 12 CHAIR OF THE INQUIRY: Yes. 13 MR MACKENZIE: Thank you, my Lord. The next witness is 14 Andrew Holmes. 15 MR ANDREW HOLMES (sworn) 16 CHAIR OF THE INQUIRY: You are going to be asked some 17 questions, initially at least, by counsel to the 18 Inquiry, Mr Mackenzie. 19 If you simply listen to the question and answer it 20 as directly as possible. If you also speak into the 21 microphone, so that people can hear what you are saying, 22 and if you speak at a measured pace, so that the 23 shorthand writers can keep up with you. 24 A. Thank you, my Lord. 25 Examination by MR MACKENZIE 179 1 MR MACKENZIE: Good afternoon. 2 A. Good afternoon. 3 Q. Could you state your full name, please? 4 A. Andrew Mayhew Holmes. 5 Q. And your current occupation? 6 A. Retired. 7 Q. I think you were Director of City Development for City 8 of Edinburgh Council between 1999 and 1 April 2008; is 9 that correct? 10 A. Yes. 11 Q. Now, you provided a statement to the Inquiry, Mr Holmes. 12 If we can look, please, at TRI00000046_C, and I think 13 you should have a hard copy on the desk as well. So 14 coming up on screen. 15 If I just check your signature, please, the very 16 last page at page 126. Could you confirm, please, that 17 that is your signature and this is the written statement 18 you have provided to the Inquiry. 19 A. Yes, I can confirm that. 20 Q. Thank you. Now, I think you've also provided 21 a supplementary note. Let's see if it's in the system. 22 It should be TRI00000186. We can see an amendment to 23 your statement and this is a very short paragraph. 24 I think this is in response to you having read 25 Neil Renilson's statement in evidence; is that correct? 180 1 A. That's correct. 2 Q. Now, you also, I think, provided a fuller note which is 3 headed "Comments on Neil Renilson's witness statement", 4 where you've gone through Mr Renilson's statement and 5 pointed out passages you disagree with. Are you content 6 for that note to also form part of your evidence to the 7 Inquiry? 8 A. Yes. This relates to points that I felt were relevant 9 to my own involvement. 10 Q. Thank you. So I think what we'll do, it doesn't appear 11 to be on our system just now. But we'll put it on, 12 hopefully for tomorrow, if possible, with a view to 13 other parties then having access to that. Thank you. 14 We can put that to one side, please. 15 I should say, your evidence to the Inquiry will 16 comprise both your written statements and the evidence 17 you give at today's hearing and tomorrow? 18 A. Yes. 19 Q. Thank you. 20 A. Could I just stop and say I had a cataract operation on 21 Thursday. So I may need to change between glasses at 22 times. 23 Q. Please do. Just tell me to stop if I'm going too fast. 24 A. Thank you. 25 Q. If I could start, please, at page 1 of your statement, 181 1 and in paragraph 1 you explain you have a degree in 2 civil engineering. We can read the rest and so on for 3 oust. You also have a masters degree in transport 4 planning. 5 CHAIR OF THE INQUIRY: Can I just stop there. Is that type 6 good enough for you to read or would you -- 7 A. Yes, it is, my Lord, on the screen at the moment, thank 8 you. 9 MR MACKENZIE: Is it better essentially, Mr Holmes, for the 10 typeface to be as large as possible? 11 A. I think the present one will do fine, Mr Mackenzie. 12 I've got various powers of glasses with me if necessary. 13 Q. Thank you. We can also see you had a career in local 14 government. You also, towards the bottom of the page, 15 the fourth line from the bottom, you explain: 16 "My main duties and responsibilities were planning, 17 economic development, transport, property, emergency 18 planning, building regulation and various other minor 19 things as well as facilities management of the Council's 20 offices." 21 Could I pause there, please, and ask: do you 22 consider you had sufficient time to devote to the tram 23 project given your other duties and responsibilities? 24 A. At the time, yes, though it became increasingly 25 difficult. In hindsight, probably not. 182 1 Q. Thank you. Over the page, please, at page 2. In 2 paragraph 2, we can see in the third line you say: 3 "I was the tram monitoring officer and the person 4 responsible for the majority of the reports to the 5 council on the project." 6 Just compare that, please, with at page 113 of your 7 statement, in paragraph 417, you say: 8 "I am asked about the Tram Monitoring Officer but 9 cannot recall the role and responsibilities of that 10 individual." 11 So I just wondered in short, Mr Holmes, whether 12 there is an inconsistency there and whether you were the 13 Tram Monitoring Officer or not. 14 A. I'm afraid I cannot remember the period -- the 15 approximate period in question. I certainly was the 16 Tram Monitoring Officer at the point. I have seen 17 documents which refer to me as the Tram Monitoring 18 Officer, but my memory is at some point in the process 19 it -- it became too much of a conflict, and it may have 20 been adopted by somebody else. But I cannot answer that 21 for certainty. 22 Q. We certainly know that Marshall Poulton became Tram 23 Monitoring Officer, but I think that was after you had 24 left the Council; is that correct? 25 A. That was after I had left, yes. Though the Head of 183 1 Transport was one of my reports. So I suppose it 2 would -- even if it had been the Head of Transport, it 3 would have been my responsibility -- the Director's 4 responsibility. 5 Q. So is your recollection that at one time you were Tram 6 Monitoring Officer, but you then gave up that role? 7 A. I can remember a discussion about whether or not it was 8 appropriate, given that at a particular point I would 9 have been monitoring a lot of my own actions, and 10 therefore it may have transferred to someone else. 11 But I'm afraid with the passage of time, like many 12 other things, I just cannot recall the details of that. 13 Q. Why would you have been monitoring your own actions? 14 A. Well, because my own actions were part of the tram -- of 15 the tram project, and increasingly -- I think it's 16 a difficulty, that if you are doing -- if you are 17 doing -- carrying out things, making recommendations 18 about the progress of a project, whether you can at the 19 same time be actually monitoring the totality of that 20 project. 21 Q. Certainly when you sat on the Tram Project Board one can 22 see you would have been making decisions in relation to 23 the project in that role? 24 A. Yes. 25 Q. Now, on a separate point, the question of being the 184 1 Monitoring Officer for tie Ltd, is it correct that you 2 were tie's Monitoring Officer? 3 A. Probably. I can't think of anybody else who would have 4 been. 5 Q. Why do you say probably? 6 A. Because again I cannot remember the details. I was -- 7 I or various of my officers were Monitoring Officers for 8 a large number of companies, but we weren't the 9 Monitoring Officer for every company in which the 10 Council had an interest. But I suspect in the 11 allocation of duties, it would have come to -- to my 12 department. 13 Q. On the assumption you were the Monitoring Officer for 14 tie, what were the duties and responsibilities in that 15 regard and that role? 16 A. The monitoring -- monitoring of it, governance, 17 business -- business plans. Essentially governance, 18 conduct and business planning. 19 Q. Thank you. I would like, please, to go to the Council's 20 Code of Guidance. It's CEC01813429. We can see this is 21 a report -- sorry. Can we blow up, please, the top 22 half, thank you. 23 We can see this is a report to the Council dated 24 29 June 2006. In paragraph 1.1 we see the purpose of 25 the report is: 185 1 "To propose a revised 'Code of Guidance' to ensure 2 best practice in the monitoring and corporate governance 3 of the Council's Companies ..." 4 What I would like then, please, to do is to go to 5 page 6 to see the actual Code of Guidance itself. Thank 6 you. We can see this is headed "CODE OF GUIDANCE", in 7 short, in relation to Council-owned companies. Over the 8 page, please, to page 7. We see here, under 1, Company 9 Monitoring Officer, we see in the second paragraph: 10 "The Council will appoint a Company Monitoring 11 Officer for each Company ... The overall purpose of the 12 Company Monitoring Officer is to ensure that the 13 Council's interests are being safeguarded." 14 Then the fourth paragraph states: 15 "Where Council Officers have a liaison and support 16 role with companies such officers will not be the 17 Company Monitoring Officer." 18 Now, what was the purpose of that? 19 A. I imagine it was to avoid conflicts of interest. 20 Q. Now, in your statement at paragraph 394, you said that: 21 "Given my position to the Tram Project Board there 22 were obvious conflicts in … being Monitoring Officer." 23 Can you explain that a little, please? 24 Sorry, I should perhaps go to it. It's 25 paragraph 394 at page 107. 186 1 A. Mm-hm. 2 Q. I just wondered, are you able to explain why, given your 3 position on the Tram Project Board, there were obvious 4 conflicts in you being Monitoring Officer for tie? 5 A. I think it would probably be because it would have been 6 seen -- I presume at the time that the Tram Project 7 Board was in operation because it seemed to be so 8 inextricably linked with the way tie was operating and 9 was utilising powers delegated to it by the tie Board. 10 Q. So we're back really to the question of independence, 11 objectivity and avoiding conflicts of interest, whether 12 real or perceived? 13 A. Yes. I will say in respect of that that it was 14 a constant problem in -- for Monitoring Officers or 15 finding the Monitoring Officer to avoid that, because it 16 would be difficult, for example, with the companies who 17 were dealing with property to find somebody who had the 18 sufficient understanding of the operation of the 19 company, but who wasn't by virtue of their duties 20 actually involved in some way on a day-to-day basis 21 liaising with them or from time to time supporting with 22 them. 23 So I think that -- that conflict was a constant 24 issue, I think. Probably the same would go for the 25 likes of Lothian Buses as well. To understand it, by 187 1 the nature of your job, you're probably connected with 2 it. 3 Q. I understand. If we can go back, please, to the Code of 4 Conduct or guidance, CEC01813429, if we could blow up 5 again, please, the first half of the page. Do we see 6 about halfway down the paragraph commencing: 7 "The Company Monitoring Officer will ensure that the 8 Company is at all times adhering to best practice in 9 relation to corporate governance of shareholding 10 companies as informed by The Combined Code: Principles 11 of Good Governance and Code of Best Practice (based on 12 the Cadbury and Greenbury Reports)." 13 In relation to tie, we know that Mr Gallagher was 14 both Chairman and Chief Executive of tie between 15 August 2006 and November 2008, which was against the 16 combined Code of Good Governance which recommended that 17 these two roles be separate. 18 Did that issue ever give rise to any concerns on 19 your part? 20 A. Yes. I mean, I recognised that it is contrary to 21 Cadbury recommendations, although I can think of one or 22 two firms in the past, like Kwik Fit, for example, which 23 combine the roles. 24 I wasn't part of the discussion which led to 25 Mr Gallagher having those roles. My recollection is 188 1 that it was one of these things that was always in the 2 process of being -- of being changed, but until the 3 establishment of TEL, never came about. 4 Q. I think what brought that to an end was Mr Gallagher's 5 resignation. There wasn't anything done on the part of 6 the Council. Does that accord with your recommendation? 7 A. I wasn't employed when Mr Gallagher resigned. 8 Q. Thank you for reminding me. 9 Go back to the Code of Conduct, if we can scroll 10 down a little bit, I would just like to try and check 11 which of these steps as a matter of fact were taken in 12 relation to tie. 13 So we see a paragraph beginning: 14 "The Company Monitoring Officer will receive from 15 the Company quarterly reports on items identified in the 16 Operating Agreement ..." 17 To pause there, do you recollect whether, as 18 Monitoring Officer for tie, you received quarterly 19 reports from the company? 20 A. No, I can't recollect receiving that. 21 Q. Then the next sentence in the same paragraph says: 22 "The Company Monitoring Officer will be responsible 23 for ensuring that bi-annual reports are made to the 24 Council on the performance of the Company." 25 Again, can you recollect whether bi-annual reports 189 1 were made to the Council on the performance of tie? 2 A. I can't recollect that. 3 Q. The next paragraph provides: 4 "The company will provide to the Company Monitoring 5 Officer all agendas and papers for Board Meetings ..." 6 Can you recollect whether all agendas and papers for 7 Board meetings of tie Ltd were provided to you? 8 A. I can recollect that they were provided. I wouldn't 9 have necessarily read them all myself. 10 Q. Why not, if you were the company's Monitoring Officer? 11 A. I would probably have read most of them. I can't 12 recollect if I would have read all of them, and I think, 13 as we touched on a minute or two ago, there's a lot of 14 paper came across my desk. 15 Q. Thank you. 16 A. And I think I should also point out that as a member of 17 the Tram Project Board, the subject matter was appearing 18 as well for the most part. 19 Q. The next paragraph: 20 "The Company shall submit to the Company Monitoring 21 Officer ... draft annual accounts ..." 22 Do you recollect whether that was done? 23 A. I can recollect seeing on a fairly regular basis 24 patterns of expenditure and accounts. 25 Q. Would these have gone to Mr McGougan, perhaps, rather 190 1 than you, or would they have gone to both of you? 2 A. I -- I think certainly latterly in the project life, 3 they would have gone to both of us. 4 Q. The final question in this regard, please, if we can 5 scroll down a little towards the bottom, the paragraph 6 just appearing there at the bottom of the screen, second 7 last paragraph: 8 "The annual Business Plan would be provided by the 9 Company to the Company Monitoring Officer ... in order 10 that the annual Business Plan may be approved by the 11 Council." 12 Can you recollect whether that happened in relation 13 to tie? 14 A. I can recollect seeing their business plans. I cannot 15 recollect whether they actually appeared on time. 16 Q. Now, on a separate but related point, we have heard 17 evidence that there was a general Operating Agreement 18 between the Council and tie, I think dated 2005, but 19 a tram-specific Operating Agreement was not entered into 20 until May 2008. Are you able to help us with why 21 a tram-specific Operating Agreement wasn't in place 22 earlier? 23 A. No, I can't, I'm afraid. 24 Q. Is that something that would have fallen within your 25 duties and responsibilities at the time? 191 1 A. I can't recollect why we felt it -- it was felt 2 necessary to have the separate tram Operating Agreement 3 as opposed to the one for tie in 2005. It would have 4 been my staff who would probably have drawn up the 2005 5 agreement, and I don't know how much of that -- within 6 that agreement was actually tram specific. 7 Q. We've also heard that in relation to the tram-specific 8 Operating Agreement entered into in May 2008, that the 9 duties on tie were watered down from absolute duties to 10 a duty to use best endeavours and that other more junior 11 Council officers in short felt undermined by senior 12 officers in their efforts to draft the -- an Operating 13 Agreement with teeth. Do you have any comments on that 14 suggestion? 15 A. I think that the issue as to the duty of care and the 16 level of the duty of care would have been -- we would 17 have been advised by Council legal staff. I certainly 18 don't recollect watering it down in any way. 19 Q. Because it was the evidence of Council legal staff, in 20 particular Nick Smith, who I think had the day-to-day 21 responsibility for the drafting, and I think also 22 Mr Colin MacKenzie, they said that they were 23 disappointed essentially that the draft Operating 24 Agreement had been watered down in that way against 25 their wishes, and in support -- sorry, the watering down 192 1 was with the knowledge and support of senior officers 2 such as yourself. 3 A. No, I can't -- I can't recall that, and the drafting of 4 that, I'm sorry, I don't wish to sound as if I'm passing 5 the ball here, but the drafting of that and the fact 6 that the legal staff were commenting on it, that the 7 sign-off would have been by the Council Solicitor and 8 possibly the Director of Corporate Services. But 9 I certainly do not recall any watering down of an 10 agreement on my part. 11 Q. Now, you also sat on the Tram Project Board along with 12 Mr McGougan, I think; is that correct? 13 A. Yes. 14 Q. Would it be fair to say that yourself and Mr McGougan 15 were the two officers in the Council who were best 16 placed to, firstly, know what was going on in the tram 17 project, and secondly, influence decision-making? 18 A. Yes. In the -- yes, in the first instance, I think that 19 became diluted a bit when the Chief Executive -- not 20 diluted, but it became broadened when the 21 Chief Executive established his Internal Planning Group. 22 Q. On the question of overall governance of the tram 23 project, which body did you consider was in charge of 24 the project? 25 A. I think up to -- up to contract stage, the Council had 193 1 from the start set up tie to do this. The 2 decision-making process was coming back through the Tram 3 Project Board, and therefore the decision-making process 4 was the subject of almost a sign-off by the different 5 parties around the -- around the table for their own -- 6 for their own interests. So you have tie, the Council 7 through Mr McGougan, myself, and while 8 Transport Scotland were present, the Transport Scotland 9 representatives. 10 Whether you want to look upon it as a shared or 11 a diffused responsibility, I don't think it was the 12 responsibility of any individual body. I think we were 13 all locked into each other's approval -- certainly tie 14 were locked into the separate approval processes from 15 the Council and Transport Scotland. But they were the 16 one in charge of the project. 17 Q. So is the better question which bodies, plural, did you 18 consider were in charge of the project? 19 A. Probably at that stage, up to contract, yes. 20 Q. Just for the avoidance of doubt, which bodies did you 21 consider were in charge? 22 A. tie, the Council -- in charge of the decision-making 23 process, tie, the Council, and while they were involved, 24 Transport Scotland. 25 Q. How about the Tram Project Board? Were they in charge 194 1 to any extent? 2 A. I'm -- I'm -- I suppose saying that the Council and 3 Transport Scotland, through their presence in the Tram 4 Project Board. The Tram Project Board, as I recall, it 5 had certain decision-making powers put to it by the 6 Board of tie. The powers brought to it by the Council 7 and Transport Scotland were just those powers which the 8 individuals attending had through their own delegated 9 authorities from their parent bodies. Not, I think, 10 until towards the end of my involvement was there then 11 any formal delegation to the Tram Project Board, and 12 that was intended from memory, I think, to take effect 13 once contracts had been signed. 14 Q. Now, interestingly, you've not made any mention of TEL, 15 I don't think, in your answer. To what extent, if at 16 all, did you consider TEL were in charge of the project? 17 A. Well, TEL were -- yes, I'm sorry. That's -- you're 18 absolutely -- absolutely correct, that once TEL were set 19 up, TEL had an overarching responsibility for tie, and 20 in fact the Tram Project Board was chaired by the -- by 21 the Chairman of TEL. 22 Q. Now, how many employees did you understand TEL to have 23 had? 24 A. Single figure numbers. I wouldn't like to go beyond 25 that. 195 1 Q. How were TEL in a position to exercise their overarching 2 responsibility for the project with so few employees? 3 A. Well, TEL was -- I'm sorry, I would need to go back and 4 look at all the different governance structures, but if 5 you assume that TEL was the overarching body for tie, 6 then TEL had the core staff. It was chairing the Tram 7 Project Board meetings. It had its own Board. 8 Obviously they weren't taking overall responsibility for 9 all the technical intricacies, but they were the parent 10 body and were the ones who were going to operate the 11 tram when -- when it reached that stage. 12 Q. Who was the senior responsible officer for the project? 13 A. After the establishment of TEL, I would imagine it would 14 have been the -- the Chief Executive TEL, which was 15 Mr Renilson. From memory. 16 Q. I think Mr Renilson was also the Chief Executive of 17 Lothian Buses; is that correct? 18 A. He was a -- he was the Chief Executive of Lothian Buses. 19 My recollection was that he was actually seconded and 20 somebody was given the role of being interim 21 Chief Executive of Lothian Buses during his secondment. 22 Q. Now, one can quite understand the expertise and 23 experience that people from Lothian Buses such as 24 Mr Renilson can bring to the tram project in relation to 25 the operational phase of the tram project. What I think 196 1 is harder to understand is what experience or expertise 2 people from Lothian Buses such as Mr Renilson can bring 3 to the procurement and construction phases of the tram 4 project. Are you able to help with that? 5 A. No, there was nothing that obviously appears in that 6 respect, apart from the fact that they themselves were 7 major procurers of buses and equipment. 8 Q. Now, in your statement you refer to discussions between 9 Mr Aitchison and David Mackay that you were unaware of, 10 and you say there were other things Mr Aitchison had 11 a habit of going off and discussing. Do you remember 12 saying that in your statement? 13 A. Yes. 14 Q. What was that a reference to? 15 A. Well, I was aware that meetings with Mr Mackay were 16 taking -- were taking place. I felt that certainly 17 Mr Mackay would keep me abreast of anything that -- 18 through the Tram Project Board meetings or otherwise, 19 that was coming from those. I think the remark was 20 prompted by the fact that when making my statement, 21 I discovered that there had been an issue and 22 an investigation into something that I had supposedly 23 done in terms of planning issues around the tram and 24 that I had been completely unaware of. 25 Q. So do you remember what time period roughly we are 197 1 talking about, that these discussions took place? 2 A. I think -- you mean the discussions with Mr Mackay? 3 Q. Yes. 4 A. I think probably throughout Mr Mackay's tenure as 5 Chairman of TEL, in my time in office. 6 Q. Did that cause you any difficulties in your job? 7 A. I don't think so. I think, as I said a minute ago, 8 I had a very good working relationship with Mr Mackay 9 and I felt if there was anything coming out of those 10 that I needed to -- I needed to know, I would find out 11 about them. 12 They did of course include things like remuneration, 13 et cetera, and I was quite content for somebody else to 14 be carrying the load of that. 15 Q. Could I go back, please, to the question of the role of 16 Lothian Buses in the tram project. 17 What was the attitude of Lothian Buses towards the 18 tram project? 19 A. I think Lothian Buses -- I think I will start and 20 qualify my subsequent remarks by saying that I regard -- 21 I regarded Lothian Buses as being an extremely efficient 22 bus operator and we had some good working relationships 23 with its middle -- its middle management. 24 However, they were very reluctant, I think, to see 25 another form of public transport operating in the city, 198 1 even one in which they had the major role. 2 Now, it took some time for them to be brought into 3 the -- into the fold, and people like Mr Campbell, who 4 was the Operations Manager for Lothian Buses and who 5 came into TEL, were, I think, a tower of strength when 6 we were looking at things like patronage estimates. 7 But I think it would be fair to say that there was 8 a pretty strong initial reluctance to be involved. 9 Q. Did Lothian Buses see trams as a threat to their 10 operations? 11 A. I think they -- it would be fair to say that they saw 12 trams as something that was going to require them to 13 change their pattern of operations. I think the word -- 14 what they saw it as, I would hope, would not have been 15 as a threat so much as an opportunity to be involved in 16 wider transport provision. 17 Q. And what was done to keep Lothian Buses on board in 18 relation to the tram project? 19 A. I think constant -- constant discussion, explanation of 20 what -- what was intended. Certainly making them aware 21 of opportunity -- I think there was a constant dialogue, 22 certainly even before their incorporation into Transport 23 Edinburgh and what we now have as TEL, and what we have 24 now as Transport for Edinburgh. There was no attempt to 25 exclude them. It was a constant wooing, I think would 199 1 be the best phrase. 2 Q. Was part of that constant wooing giving individuals from 3 Lothian Buses positions on the governance bodies for the 4 tram project? 5 A. I can't recall whether that was offered or not. Nor 6 can I recall at what point individuals from 7 Lothian Buses started appearing on the -- on the tram -- 8 the Tram Project Board. Certainly once TEL was 9 established, then they were clearly there. I think -- 10 sorry. As I said, I can't recall at what point they 11 appeared in the Tram Project Board. 12 Q. One of the reasons I asked was that in one of your 13 answers you said that they were very reluctant, I think, 14 to see another form of public transport operating in the 15 city, even one in which they had the major role. 16 I wondered what you meant by Lothian Buses having 17 the major role. 18 A. Sorry, are you just referring to what I have just said? 19 Q. Yes. 20 A. I should perhaps have said a major role. 21 Q. And by a major role -- 22 A. I mean that they were there. They had an opportunity to 23 become integrated at some point with the tram operator. 24 They had an opportunity to discuss how services were 25 going to be combined. 200 1 Q. Thank you. I would like to move on, please, to another 2 matter, the question of the procurement strategy for the 3 tram project. That's probably best done by starting 4 with a document CEC01821403. 5 We can see this is -- I'm sorry, could we blow up 6 the first half of the page, please? We can see this is 7 the Draft Final Business Case dated November 2006. If 8 we can go to page 5, please, just to blow up the 9 heading, we can see this is the beginning of the 10 executive summary. 11 If we can then please go to page 17, if we blow up, 12 please, paragraph 1.77 and we can see that this is an 13 overview of the procurement strategy. 14 We can see the objectives of the procurement 15 strategy are summarised as follows. The first bullet 16 point states: 17 "Transfer design, construction and maintenance 18 performance risks to the private sector." 19 The second bullet point: 20 "Minimise the risk premia (and/or exclusions of 21 liability) that bidders for a design, construct and 22 maintain contract normally include. Usually at tender 23 stage bidders would not have a design with key consents 24 proven to meet the contract performance obligations and 25 hence they would usually add risk premiums for this." 201 1 We see for ourselves the next bullet point in 2 relation to mitigation of utilities, diversion risk. 3 If we then please go to paragraph 1.80, it states: 4 "In summary the key attributes of the strategy 5 are ..." 6 If we then go over the page, please, we see the 7 second bullet point states: 8 "Early commencement of design by the SDS contractor - 9 to reduce scope and pricing risk in Infraco and Tramco 10 bids ..." 11 Then we can see the fourth bullet point up from the 12 bottom, a reference to: 13 "Separate procurement of utilities works under 14 MUDFA - to enable completion of the utilities diversions 15 before commencement of infrastructure works thus 16 reducing risk during the construction phase and avoiding 17 the risk premiums that would otherwise be included if 18 this work was included with the Infraco package." 19 Now, I take it so far these provisions are 20 consistent with your understanding at that time of the 21 procurement strategy and objectives? 22 A. Yes. Is this an extraction from the actual Business 23 Case or from the report to the Council on the Business 24 Case? 25 Q. This is the actual Draft Final Business Case, not the 202 1 report to Council. 2 A. Right. Yes, I recall. 3 Q. Also please, and lastly on this point, page 85, please. 4 In paragraph 7.53, if we blow that up, please, it 5 states: 6 "It is expected that the overall design work to 7 Detailed Design will be 100 per cent complete when the 8 Infraco contract is signed." 9 Then we can read all of the rest for ourselves. 10 So just to stand back a little, I think the logic of 11 the procurement strategy was that by completing design 12 approvals and consents, and the MUDFA works in advance 13 of the Infraco contract, the Infraco contract would be 14 de-risked and a fixed price could be obtained; is that 15 correct? 16 A. Yes. 17 Q. I would like then to put that to one side and move on to 18 the question of design. 19 Just by way of overview, to ask you please to stand 20 back and let us know your understanding during 2006 and 21 2007 of the main reasons for the difficulties and delays 22 with design. 23 A. From memory, these were all internal to the process. 24 I can't -- obviously I would have been sitting in the 25 Tram Project Board and receiving reports on it. I can't 203 1 recall the -- at this remove in time the reasons for 2 that. I don't think at that point in time, certainly 3 not until the very end, was there any claim that these 4 were related to issues around planning. 5 Q. In your statement between pages 28 and 30, to summarise, 6 I think you essentially say any difficulties and delays 7 were largely the fault of the designer and tie, and in 8 particular having a lack of understanding in relation to 9 what was required for prior approvals. Do you recollect 10 saying words to that effect? 11 A. Yes, although I think the issues around design in that 12 period were far more than related to the areas where 13 prior approvals would have been required. 14 In respect of the prior approvals process, certainly 15 I feel the designers -- and this is not unique to SDS. 16 I've had similar experience in relation to designers of 17 other PFI type projects that have had to come through 18 planning. 19 Just were not getting it right first time, which is 20 why we put in quite a lot of time and effort into trying 21 to improve the prior approval process for the designers 22 through things like the Tram Design Manual, to give them 23 a good starting point, through the identification of 24 certain key design areas that we then held design 25 workshops around, and through the staffing measures that 204 1 we put in place to assist with the prior approvals 2 process once that got under way. 3 Q. What I would like to do, please, if I may, we've heard 4 evidence from individuals from Parsons Brinckerhoff who 5 made a number of suggestions as to the causes for design 6 delay, in particular coming back to the door of the 7 Council. I would like to put these suggestions to you, 8 to see if you agree or disagree and for your comments, 9 if any. 10 Firstly, it has been suggested that there was a lack 11 of clear guidance from the Council on what they wished 12 for, in particular in relation to urban design and 13 planning and prior approvals. 14 A. No. In terms of my own time, I can't agree with that. 15 That's exactly why we provided the Tram Design Manual, 16 which was a pretty comprehensive urban design manual, to 17 make it clear what was required. It was why we had what 18 were known as design charrettes, which is basically 19 round the table exercises of all the individual parties 20 around what we thought were the half dozen or so key 21 design areas, like Picardy Place, foot of Leith Walk, 22 St Andrew Square, Haymarket, so that everybody 23 understood, and there was a lot of hard words spoken by 24 everybody around the tables when we were doing this, but 25 this was to assist the design process. 205 1 In terms of the staffing prior approvals, I had 2 a lot of discussion with the Head of Planning and his 3 Development Manager whose staff would be actually 4 dealing with the prior approvals about what we needed to 5 do. We had dedicated staff. We embedded a member of 6 staff within the design team to assist them in getting 7 it right first time. So in terms of the planning and 8 the prior approvals, a lot of time, a lot of effort was 9 meant -- spent recognising that this was a potential 10 weakness in ensuring that it was right first time. 11 I can't answer for what actually happened after my 12 departure, but it was seen as something that needed 13 addressing, and we spent a lot of time and effort 14 addressing it, and putting what I thought was a workable 15 solution in place to avoid difficulties down the line. 16 Q. Can you recall the name of the member of staff who was 17 embedded in the design team? 18 A. No, it was a -- it was a planner who would have been the 19 responsibility of a gentleman called David Leslie, who 20 was the development manager at the time, and who is now 21 the Chief Planning Officer for the City Council. 22 Q. We've also heard evidence that there was a reluctance on 23 the part of Council officials to specify what they 24 wanted because they were concerned they may fetter their 25 discretion when then coming to consider any application. 206 1 Do you have any comments on that? 2 A. No. I can think that in the past that might have been 3 the starting point for one or two planning officials but 4 I think there was an issue in late 2006 and early 2007 5 with the city's design advisers where it was not so much 6 a question of telling them what a particular solution 7 was, but having to insist that they actually came to 8 a decision and stuck to it. So I think that caused 9 a bit of complaint behind the scenes, but it wasn't 10 a question of imposing a solution. It was a question of 11 imposing the need to make a decision. 12 Q. Just to make quite clear, which body was it that was 13 accused of not making the decision and sticking to it? 14 A. Sorry, you mean are you talking about who I was accusing 15 of not making a decision and sticking to it, or 16 something that was coming back from 17 Parsons Brinckerhoff? 18 Q. It's just when you said that "I think there was an issue 19 in late 2006 and early 2007" -- 20 A. Yes. 21 Q. "with the city's design advisers where it was not so 22 much a question of telling them what a particular 23 solution was, but having to insist that they actually 24 came to a decision and stuck to it", who were the "they" 25 that weren't coming to a decision? 207 1 A. That would have been the -- the city had appointed a -- 2 I forget his name who was actually a paid Council 3 official, nominally in my department, Mr Marini, who had 4 a reporting line back to the city's External Design 5 Adviser, who at that time was Sir Terry Farrell. And 6 I can recall actually going to discuss these issues with 7 Willie Gallagher at Sir Terry's office in London, just 8 to actually hammer out a working agreement, which 9 I think we did. 10 Q. So is it Mr Marini that required to come to a decision 11 and stick to it? 12 A. Yes. 13 Q. Was he the city design leader? 14 A. That's correct. That was his title. 15 Q. In relation to the Tram Design Manual, it may be 16 suggested that while that was produced around 17 December 2006, it was at too high a level and didn't 18 give sufficiently detailed guidance as to what was 19 required in the way that, say, the public realm design 20 manual which was produced around March 2008 did. 21 A. I think they were addressing -- they were addressing 22 different -- different elements. I would have thought 23 any competent -- it's some years since I have looked at 24 the Tram Design Manual, and they were both intended to 25 ensure that a competent designer knew exactly what was 208 1 required of them. 2 But I think the hostages to fortune, such as 3 lighting column, streetscape, et cetera, were identified 4 fairly early on, and I think anybody prepared to work 5 with the guidance should have had no problems with it. 6 Q. We also heard evidence from the designers, from 7 Parsons Brinckerhoff, that preliminary design was 8 delivered in June 2006, but there was a period of about 9 one year when they were unable to meaningfully progress 10 detailed design, because of the consideration of further 11 design options by the Council, including the charrettes 12 process and in short decisions not being taken. 13 A. No, the charrette process was for a number of key 14 locations which had been flagged up. Certainly the 15 process didn't go on for a year. We had these 16 charrettes over relatively short periods of time and 17 they all finished with an agreement as to the way 18 forward. 19 I cannot agree with that. It's one of the areas 20 that I can rather better recall than others. 21 Q. We've also heard evidence that there was a lack of clear 22 instructions in relation to the design required at 23 certain key locations such as Forth Ports, 24 Picardy Place, Haymarket, Murrayfield, the Royal Bank of 25 Scotland tram stop, the airport tram stop and structures. 209 1 Any comments on that suggestion? 2 A. I -- the Royal Bank, the airport, and Forth Ports, to be 3 fair, would have involved third parties outside the 4 Council. The three organisations involved all had quite 5 clear ideas, especially the Royal Bank, about the design 6 standards they wanted on their -- on their stops. 7 There were discussions going on. 8 The other points -- you know, you're back to the 9 charrettes and the Tram Design Manual. I was quite 10 clear what was required; it wasn't helped by the fact 11 that Parsons Brinckerhoff's first pass at design of some 12 of these points, I can only describe as a daft laddie 13 approach; that -- I can recall, these things do stick 14 your mind, for example, at the foot of Leith Walk, 15 giving hordes of pedestrians something like a metre and 16 a half of pavement to work on. We sorted it fairly 17 quickly once we got everybody round the table, but it 18 wasn't a good start from Parsons Brinckerhoff. 19 Q. We've also heard evidence from the Parsons witnesses 20 that the period between submitting preliminary design in 21 June 2006 and June 2007, when matters were unblocked and 22 progressed, was largely a wasted year because what was 23 built was largely what was set out in the preliminary 24 design. Do you have any comments on that suggestion? 25 A. No. I can't, but I cannot conceive of the existence of 210 1 the tram project, the existence of all the liaison 2 mechanisms, that the design team would have been allowed 3 to twiddle their thumbs for a year because somebody 4 inside the Council wasn't delivering. I think I would 5 have plenty of people from the senior managers of tie 6 shouting at me in that respect. 7 MR MACKENZIE: My Lord, that may be a suitable place to 8 pause for today. 9 CHAIR OF THE INQUIRY: Well, Mr Holmes, we're going to 10 adjourn now until tomorrow morning. We will adjourn 11 again at 9.30. If you could be in time to start again 12 at 9.30. 13 A. Yes, my Lord. 14 CHAIR OF THE INQUIRY: We will adjourn until tomorrow 15 morning. 16 (4.31 pm) 17 (The hearing adjourned until Wednesday, 29 November 2017 at 18 9.30 am) 19 20 21 22 23 24 25 211 1 INDEX 2 PAGE 3 MR TOM AITCHISON (sworn) .............................1 4 5 Examination by MR MACKENZIE ...................1 6 7 MR ANDREW HOLMES (sworn) ...........................179 8 9 Examination by MR MACKENZIE .................179 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 212