1 Thursday, 30 November 2017 11 (2.00 pm) 12 CHAIR OF THE INQUIRY: Good afternoon. Yes, Mr Mackenzie. 13 MR MACKENZIE: Thank you, my Lord. The next witness is 14 David Anderson. 15 MR DAVID ANDERSON (sworn) 16 CHAIR OF THE INQUIRY: You are going to be asked some 17 questions initially at least by Counsel to the Inquiry, 18 Mr Mackenzie. If you just listen to the question and 19 answer them as directly as you can. 20 Would you speak into the microphone so that everyone 21 can hear what you're saying, and speak in a measured 22 pace, so the shorthand writers can keep up with you. 23 A. Understood. 24 Examination by MR MACKENZIE 25 MR MACKENZIE: Good afternoon. 115 1 A. Good afternoon. 2 Q. Can you state your full name, please? 3 A. David Alexander Anderson. 4 Q. And your current occupation. 5 A. I'm a management consultant. 6 Q. I think you were a Director of City Development for the 7 City of Edinburgh Council between March 2008 and 8 December 2012; is that correct? 9 A. That's correct. 10 Q. Now, you have provided your CV to the Inquiry. I'll 11 give the reference without going to it. It's 12 CVS00000030. Reading things very shortly, I think you 13 have had a background in Scottish Enterprise before 14 joining Edinburgh Council; is that correct? 15 A. That is correct. I was with Scottish Enterprise for 16 17 years as a Director or Chief Executive. 17 Q. I think was this your first role in a local authority? 18 A. It was. 19 Q. I'll go to your statement, please, provided to the 20 Inquiry. It's TRI00000108_C. I think, if we can go, 21 please, to page 131, just to check this is your 22 signature. The very last page. 23 A. That's correct. 24 Q. Can you confirm, please, this is the written statement 25 you have provided to the Inquiry? 116 1 A. It is. 2 Q. Now, in addition, Mr Anderson, you have advised the 3 Inquiry that there are a number of corrections you would 4 like to make. Now, you've handwritten them out. We 5 will bring the document up on screen. 6 Now, what we will do, I think, the difficulty is 7 there is a reference to different page numbering. So 8 I think you've undertaken to type this up -- 9 A. I will do that. 10 Q. -- with the correct page numbers. 11 Now, for my part, just an initial quick impression, 12 these are fairly minor corrections, but once they have 13 been made and properly released to other parties, 14 obviously there will be an opportunity at that stage for 15 other parties to make representations to the Chairman if 16 any follow-up is considered to be required. 17 But I think we can just read what's set out there, 18 perhaps we can scroll down to the bottom of that page, 19 just to get an overview. Manual scrolling. 20 We can see the paragraph at the end as well. 21 I think, just to give an overview at this stage, 22 there's then a second page as well. If we can put the 23 second page, please. Thank you: 24 Again, if we can just then see what's at the bottom 25 of that page, please. 117 1 So because of the different page numbering, it's 2 better to deal with this aspect later, but that's just 3 to flag up that this will be coming in a proper typed-up 4 cross-referenced form? 5 A. Thank you. 6 Q. Now, so subject to these corrections, the written 7 statement you have provided, together with the evidence 8 you give at the hearings, will comprise your evidence to 9 the Inquiry. 10 I would like to start, please, with some general 11 questions, before I go on to some particular events and 12 documents. 13 Just as a general overview, what were your views on 14 the governance arrangements for the tram project? 15 A. The governance arrangements were quite complex in the 16 sense that the ultimate operator of the asset would be 17 Transport Edinburgh Limited, TEL. We had the client's 18 representative in effect, tie, delivering the project, 19 and then lead officers in the Council. 20 So they were different from arrangements I had 21 previously been accustomed to. 22 Q. What were the main differences? 23 A. Well, in most public sector contracts following the 24 Office of Government Commerce Prince 2 guidance, there 25 is a senior responsible owner. That person has the 118 1 authority to make executive decisions and is the key 2 sponsor, and normally is the client side representative 3 who has complete command of the overall project. 4 In this instance there was a mishmash of involvement 5 by TEL, tie, and the Council. And reporting to 6 Transport Scotland. 7 Q. Now, you've mentioned the senior responsible owner for 8 the project. I think after the Mar Hall Settlement 9 Agreement, did you become the senior responsible owner 10 of the project? 11 A. Well, I think in fairness, as defined in the way in 12 which government contracts are procured, typically IT 13 contracts, there was no senior responsible owner in the 14 way that one would expect to have seen. 15 What was agreed, however, post mediation, was that 16 Colin Smith, who Dame Sue Bruce had brought in as an 17 adviser, took over that responsibility. 18 Q. I see. So Mr Smith was the senior responsible owner 19 after -- post mediation? 20 A. Correct. 21 Q. I see. I think -- do you have an understanding as to 22 who was senior responsible owner when you arrived in the 23 Council and really thereafter? 24 A. Well, ultimately Neil Renilson within TEL was the -- the 25 project sponsor. However, he wasn't necessarily the 119 1 executive decision-maker, ie the most senior person 2 responsible for the administration of the contract. 3 That would be the Chief Executive of tie. 4 Q. So if we've heard reference to Mr Renilson having been 5 the senior responsible owner, was your understanding 6 that that was being used in a different way as described 7 in the OGC guidance? 8 A. Absolutely. 9 CHAIR OF THE INQUIRY: Is or was Colin Smith an employee of 10 the Council or was he a consultant? 11 A. He was a consultant brought in by Dame Sue Bruce. 12 CHAIR OF THE INQUIRY: To what extent in public sector 13 contracts would it be usual to have someone other than 14 someone from the public sector who was in the -- the 15 senior responsible owner? 16 A. I would say it would be unusual, my Lord. 17 CHAIR OF THE INQUIRY: Do you know why this happened on this 18 occasion? 19 A. Well, I think Dame Sue Bruce had brought in Colin 20 because he had some expertise as a surveyor, and 21 technical engineering expertise, to advise on mediation, 22 and as he had been intimately involved in the 23 discussions at Mar Hall, and understood the provisions 24 of the agreements at Mar Hall, that he was best placed 25 to supervise. 120 1 There were also new governance arrangements put in 2 place as a result of Mar Hall, where he became 3 effectively an agreed adjudication officer for both 4 sides. 5 CHAIR OF THE INQUIRY: So would the senior responsible owner 6 in a public contract normally be accountable to the 7 public authority whose contract -- 8 A. Yes. 9 CHAIR OF THE INQUIRY: And how would Mr Smith be accountable 10 if he weren't -- 11 A. I think that would be a question for Dame Sue. 12 MR MACKENZIE: When you arrived in the Council, and 13 thereafter, which body did you consider was in charge of 14 the project? 15 A. tie. 16 Q. At page 6 of your statement you say: 17 "… I would describe the Council's role as project 18 sponsor rather than client body." 19 Can you explain, please, what you meant by that? 20 A. Yes. The Council was the advocate of a strategic 21 integrated transport infrastructure with a combined tram 22 and bus network for the city. 23 In that sense, it was the Council's proposal to 24 proceed with the tram project, and at the level of the 25 corporate sponsoring body, it was the Council who was 121 1 sponsoring this. 2 Q. So who did you consider was the client body? Who was 3 the client? 4 A. Well, the contractual arrangement was between tie and 5 BSC. So if I can give an example, if I may, I mean, 6 recently I was involved in the Chester transport 7 interchange, which was completed last year. In that 8 scenario I was a consultant to Cheshire West and Chester 9 Council. I took the case through business planning to 10 secure the funding. I then stayed client side as the 11 Council's representative, alongside the architect who 12 did the concept design. 13 We then went out on a design and build contract to 14 Grahams, who completed it on a fixed price lump sum 15 contract, and they had developed some technical design 16 taken from the initial conceptual design from the 17 interchange. 18 So that's the way in which these contracts would 19 normally work. 20 Q. I see. Now, if we go, please, to page 115 of your 21 statement, in question 152(a) we asked about various 22 matters. You answered: 23 "In my experience the simpler the relationship 24 between client and contractor the more likely it is that 25 the client's requirements will be understood and 122 1 delivered. If the client requires technical advice and 2 support (and in this case that was certainly the case) 3 then it seems to me that it would have been better (in 4 the case of the Edinburgh tram) to procure such support 5 through a multi-disciplinary transport engineering 6 company with an established track record and subject 7 matter expert knowledge, than to set up an arms-length 8 company staffed largely by people with no prior 9 experience of delivering tram or light rail projects." 10 To pause there, was that your view at the time, or 11 is that a view formed with the benefit of hindsight? 12 A. My view at the time was that tie were not fit for 13 purpose. That they lacked competence in some areas. 14 And they had been set up initially as an organisation 15 that was looking at integrated ticketing. So they 16 retrofitted the project management capability, if you 17 like. 18 I think the simplest solution would have been to go 19 to one of the established consultancies, Atkins, Mott 20 MacDonald, AECOM, multi-disciplinary transport 21 engineering consultancies and brought in a team, and 22 ultimately, when Turner & Townsend were brought in, they 23 brought in competence from the Nottingham tram project 24 and recent expertise. 25 Q. Now, when did you first form that view approximately? 123 1 A. I would say that that was a view that unfolded over time 2 as my trust in tie's position on certain issues was -- 3 was undermined by various adjudications and other 4 developments. 5 Q. Now, we know that the adjudication results started 6 coming in, I think, late 2009 and throughout 2010. So 7 is it over that period in particular that you formed 8 a view you've just explained? 9 A. Yes. I mean, in the first six months in post, I was 10 learning a new job. I had 750 staff. We had the 11 recession. There were property projects falling down 12 all over Edinburgh, and difficulties with Council arm's 13 length companies such as EDI and Waterfront Edinburgh. 14 So I was heavily involved in sorting things other than 15 tram out, and I missed a few TPB meetings. 16 Richard Jeffrey, I was involved in his appointment, 17 alongside David Mackay and Councillor Wheeler. I had 18 known Richard from my time with Scottish Enterprise and 19 his time at the airport, and I did have a lot of 20 confidence in Richard when he came in. 21 However, what began to undermine that was that the 22 certainty with which tie were defending their position 23 became undermined by the early adjudication decisions. 24 Q. I understand. Did you ever discuss with your fellow 25 officers these views you formed? 124 1 A. I think it was a matter of common discussion within the 2 City of Edinburgh Council at different levels. So 3 I think probably Alan Coyle and Andy Conway and 4 Duncan Fraser, who were embedded in tie, were the most 5 disenchanted with the way things were going, but from 6 time to time I would become similarly disenchanted. 7 Marshall Poulton, for example, reported to me that tie 8 weren't adequately monitoring the Princes Street works 9 first time round, and that drains weren't tied into 10 gullies, the finishes were woefully short of standard; 11 and in part, in my judgement, that's you know, 12 a Bilfinger responsibility. They were doing it, but 13 tie's monitoring of that wasn't sufficient. 14 Q. I see. Then reading on in the written reply, you say: 15 "The Governance structure was further complicated by 16 the relationship between tie, TEL and Lothian Buses. 17 The latter company saw a direct threat to their 18 operations arising from the tram which made the dynamics 19 of the Tram Project Board interesting at times." 20 What's the issue that you were noting there? 21 A. Well, my sense from initial meetings with Neil Renilson 22 and Willie Gallagher was that Neil didn't believe the 23 Business Case, and saw the possibility of 11 routes 24 being taken off Leith Walk as a threat to Lothian Buses, 25 and Lothian Buses has been a badge of pride for the 125 1 city, but I think they perceived the tram to be a threat 2 rather than to be part of an integrated network that 3 they could run in a complementary fashion. 4 CHAIR OF THE INQUIRY: I think it was 11 routes, did you 5 say? 6 A. Yes. 7 CHAIR OF THE INQUIRY: The [draft] transcript is showing 8 111. 9 A. Oh, right. 10 MR MACKENZIE: I think, Mr Renilson either had been or was 11 the Chief Executive of Lothian Buses. Were you aware of 12 that? 13 A. Yes, I was, yes. 14 Q. Do you have any views as to whether it was appropriate 15 for Mr Renilson, given his background, and experience 16 and expertise, to be the senior responsible owner of the 17 project? 18 A. It was undoubtedly a concern that someone who ought to 19 have been championing the project appeared to have some 20 pretty fundamental doubts about it. 21 Q. Do you consider that Lothian Buses had an undue 22 influence over the tram project? 23 A. I don't think I can comment on that. All I can comment 24 on is my personal experience of dealing with 25 Mr Renilson. 126 1 Q. Moving on in your statement, you say: 2 "It seemed to me that an awful lot of power and 3 responsibility had been ceded to a special purpose 4 company - tie - without the Council having terribly much 5 control over their daily operations." 6 Again, was that a view you had at the time or later? 7 A. I think, given the complexity and size of this project, 8 there were a number of relatively junior Council 9 officers who were embedded within tie, Andy Conway, 10 Alan Coyle, Duncan Fraser, that -- we didn't have anyone 11 at a senior level that had daily oversight or weekly 12 oversight of operations who was in the loop and could 13 escalate issues that required to be escalated to the 14 Council. 15 Q. I suppose against that, it may be said that the whole 16 purpose of having an arm's length company is for them to 17 take over these responsibilities, at least on 18 a day-to-day basis, from the Council? 19 A. I think that's correct. I mean, I think there's all 20 sorts of implications if one gets into shadow 21 directorship and what have you. 22 So the old adage about why have a dog and bark 23 yourself rather applies here. So it's a common problem, 24 known as the agency problem in the MBA textbooks, about 25 organisations who cede control to other organisations 127 1 and then things go wrong. 2 Q. Could I also please go to page 120 in the statement. In 3 the question (e) at the bottom of the page, if we blow 4 that up, please. We asked whether you considered that 5 members who sat on the Tram Project Board and the boards 6 of tie and TEL had sufficient experience and expertise, 7 including of major infrastructure projects, to inform 8 their decisions as members of these boards, et cetera. 9 You replied: 10 "With the exception of Neil Scales who brought 11 experience from Mersey rail I would say that few of the 12 members of the TIE and TEL Boards had experience of 13 delivering major infrastructure projects and certainly 14 not on this scale or level of complexity." 15 Now, to pause there, again, was that a view you held 16 at the time or later, with the benefit of hindsight? 17 A. I think later with the benefit of hindsight as I got to 18 know the background of the individual directors. 19 Q. Could I also ask one last question in this general line. 20 Page 122, please. In question (b), if we could blow up 21 the question and answer, please, this was to do -- some 22 general questions about the Tram Project Board. In your 23 answer, halfway down, you say: 24 "However, as events unfolded it became clear to me 25 that the Tram Project Board had only limited influence 128 1 over tie's strategy, management and operations or on key 2 decisions made by tie eg to appoint legal advisers or 3 spend money contesting disputes." 4 Can you explain a little the point you are making 5 there, please? 6 A. Well, my primary involvement was as a Board member at 7 the monthly Tram Project Board. There were -- there was 8 a Finance, Legal and Commercial Issues Board and then 9 separately, I think, a Dispute Resolution Procedure 10 sub-committee. 11 So decisions were being made, particularly as we got 12 into the thick of the adjudication findings, that there 13 weren't visibility on, from my perspective; Donald, 14 I think, probably was on the DRP group. So I'm making 15 an observation from my viewpoint. 16 I think at that stage Tony Rush was also brought in 17 to advise on ways to settle the dispute, and again, 18 I didn't have much day-to-day involvement. So we were 19 heavily reliant upon a group of people trying to resolve 20 the operational issues within the project. 21 Q. Does that explain your observation that it wasn't 22 clear -- it became clear to you that the Tram Project 23 Board had only limited influence over tie's strategy? 24 I think what you've described is a sub-committee of the 25 Tram Project Board; is that correct? 129 1 A. Yes. If I can perhaps clarify, when we got into the 2 early adjudication findings, the Hunter findings, Wilson 3 findings, and Howie adjudications, it was evident that 4 they flushed out fundamental differences of view in 5 terms of how the contract should be interpreted, 6 particularly in relation to Pricing Assumptions and 7 Schedule Part 1. 8 As things progressed, Richard Jeffrey advised the 9 TPB that he was bringing in Tony to look at this, 10 because of his background in construction projects that 11 had gone awry. And Richard also communicated the 12 overall strategy, Project Pitchfork, which had a number 13 of elements. 14 The first being Project Carlisle, which was about 15 trying to find ways of making the contract work and 16 getting at least to St Andrew Square with a guaranteed 17 maximum price. 18 The second being the assertive use of clauses in the 19 contract to get Bilfinger Berger to perform. 20 The third being looking at the possibility of 21 separation, either through proving breach or by mutual 22 agreement. 23 Q. But all of these matters, I think, were put to the Tram 24 Project Board and approved by the Tram Project Board. 25 So I'm just a little unclear -- 130 1 A. No, I'm making the point, if I may, that I agree that at 2 the strategic level, the Tram Project Board was sighted 3 on the strategy. The point I'm making here was from 4 late 2009 through to late 2010, when adjudications came 5 to their peak, it seemed as though different advisers 6 were being brought in to advise tie on points of law, 7 and I felt a little bit disengaged from the background 8 to decisions to bring those advisers in. 9 Q. I understand. 10 Now, on a separate matter, you have in your 11 statement referred to a number of instances, I think, 12 where you had concerns in relation to reporting by tie. 13 I think one instance -- we may not have to go to it -- 14 paragraph 77, you refer to a lack of openness by tie in 15 relation to their responsibility for design changes and 16 delay. 17 What was your concern there? 18 A. I think that it was never entirely clear where the 19 problems with design lay, whether it was the failure of 20 tie to issue instructions, whether it was the failure of 21 SDS to produce the designs and the failure of BBS to 22 manage SDS in producing the designs. 23 Whether it was the failure of BB to produce 24 estimates, or whether it was the failure of the planning 25 service to expedite approvals, or indeed building 131 1 control or highways. 2 Q. I understand. 3 A separate matter you referred to in your statement, 4 you say: 5 "The discrepancies in relation to the utility 6 diversion works ought to have been spotted by the Tram 7 Project Board." 8 What did you mean by that observation? 9 A. Well, I was asked in the questionnaire why it was that 10 the reporting percentage of utilities work completed 11 varied from one month to the next, and in my memory 12 serves me right, at one time we were saying they were 13 97 per cent completed and then the following month's 14 report, we said they were 94 per cent completed. 15 I may be wrong, but that was the general gist of 16 things. 17 And I think the issue there was how utilities work 18 were -- was being measured. 19 In the final analysis, I think there was 20 181 per cent above project in terms of the total amount 21 of cables and pipes, et cetera, that the city received 22 as a result of the tram project. So there was a lot 23 more utilities put in than were originally anticipated, 24 because utility companies would look at the condition of 25 gas pipes or water pipes and choose to upgrade them when 132 1 the city was dug up. 2 Q. To broaden the question out a little, do you consider 3 that you had a good understanding throughout your time 4 on the Council, at least before Mar Hall, of what the 5 position was with the utility diversions and any 6 difficulties and delays that were being experienced? 7 A. Not at the level of individual sections. Only at the 8 macro level. 9 Q. And I think we've heard reference to at Mar Hall, the 10 consortium explaining the difficulties that still 11 existed in, I think, Shandwick Place. I think 12 Mr McGougan said that came as a surprise to him. Do you 13 remember becoming aware of that at Mar Hall? And 14 whether that caused you any surprise or not? 15 A. I don't think it necessarily did. The work that was 16 started in utilities commenced before my time. What 17 happened with utilities was that they were originally 18 being managed by Alfred MacAlpine. They were taken over 19 by Carillion. 20 They seemed not hugely committed to expediting 21 progress at the pace that was required. 22 There were huge issues with utilities. Underground 23 caverns and old air raid shelter between the Caledonian 24 Hotel and the other side of the road, also Haymarket, 25 200 skeletons found at Constitution Street in Leith, and 133 1 lots of voids, obstacles in the way. 2 That was actually what was a concern, I think, on 3 the part of Bilfinger Berger, was that the problems in 4 Princes Street where there had been a lot of sub-ground 5 difficulties, would be replicated in Shandwick Place. 6 Colin Smith post mediation undertook ground 7 penetrating radar surveys of Shandwick Place which 8 showed that it was a particularly complex area with lots 9 of tightly packed utilities. Picardy Place was the 10 same. There were several sections where it was 11 difficult because you had to co-ordinate action to move 12 some BT cables from Scottish Water pipes, et cetera. It 13 was very messy and complex. 14 Q. Can you remember, after Mar Hall, after the settlement, 15 was ground penetrating radar undertaken on all of the 16 on-street sections? 17 A. I think that would be a question for Colin Smith. 18 That's my understanding. The section from certainly 19 Haymarket to Shandwick Place, that would be the case. 20 CHAIR OF THE INQUIRY: You mentioned Picardy Place. That 21 was outside the settlement area -- 22 A. No, there's -- work was undertaken on utilities right 23 down Leith Walk. So, you know, the utility diversion 24 work needed to be completed for the core 600 metres -- 25 600 millimetres by 2 metres tram bed track to be laid. 134 1 And that took place all the way down to Lindsay Road as 2 far as I'm aware -- 3 CHAIR OF THE INQUIRY: Even after Mar Hall? 4 A. No, not after Mar Hall. Not after Mar Hall. This was 5 work that had been done previously. I'm simply saying 6 that in particular sections along the route, there were 7 real challenges, and there was a -- I remember well the 8 chap who ran the carpet shop on Leith Walk complaining 9 because the road had been dug up on three separate 10 occasions because they had to work on the bespoke 11 solution to get some pipes around the bend. 12 CHAIR OF THE INQUIRY: If we can come back to Picardy Place, 13 was there an issue about agreeing what was to happen at 14 Picardy Place before you could do the utilities in -- 15 A. There was -- Picardy Place was one of three areas where 16 there were third party agreements required because there 17 were development proposals. The St James Centre. So 18 I worked with Henderson Global on their plans. They had 19 proposed to put a gyratory in, and they were looking 20 through a Section 75 Agreement to pay for the tram stop 21 down there. We also had discussions with the Catholic 22 Church, who were keen that the gyratory, which was the 23 proposed location for the Thistle Hotel to be relocated, 24 to go. So there were a lot of discussions about how 25 Picardy Place would be dealt with back in 2009/2010. 135 1 CHAIR OF THE INQUIRY: In short, was Picardy Place ever 2 dealt with? 3 A. Well, I'm not entirely sure -- I think it was overtaken 4 by events in the sense that the mediation could only 5 afford to take the tram as far as York Place. So 6 I don't know where things now stand with GIA(?) 7 Henderson and the Council in relation to what's proposed 8 in this proposed next section. 9 CHAIR OF THE INQUIRY: Do you think Mr Smith might be able 10 to tell us -- 11 A. I don't think he would on Picardy Place, your Lord, 12 because he came in, in January 2011, when Dame Sue came 13 in, and was focused on mediation, and what was called 14 the priority works. These were dealt with under two 15 Minutes of Variation, MoV4 and MoV5. 16 So MoV4 related to sorting out Princes Street. MoV4 17 also was sorting out Haymarket Yards. And MoV5 dealt 18 with Shandwick Place and the rest of the on-street. 19 CHAIR OF THE INQUIRY: There's been a suggestion that there 20 were a significant number of conflicts still in 21 existence between York Place and Newhaven. Do you know 22 anything about that? 23 A. I don't know the entirety of the diversions that have 24 taken place. Certainly some parts of Leith Walk, there 25 have been utilities diverted. There should be 136 1 a straight line down there. But whether all of that 2 work was completed, I'm not entirely clear. 3 Certainly in all my experience mainly since, on 4 other projects, utilities are particularly complex, and 5 even if one has ground penetrating radar, it's a bit 6 like an x-ray. If you saw a tumour inside a body, you 7 wouldn't know whether it was benign or where exactly it 8 was located. So it can give you a good high level view 9 of the likely risks, but not the detail. 10 CHAIR OF THE INQUIRY: Thank you. 11 MR MACKENZIE: Thank you. It's a point of detail, 12 Mr Anderson. You mentioned three areas where third 13 party agreements were required because of development 14 proposals, and one was St James and Picardy Place. What 15 were the other two areas? 16 A. Forth Ports and I think the airport. 17 Q. Thank you. Another matter -- 18 A. I beg your pardon. There may have been Murrayfield. 19 I think there were works under way at Murrayfield with 20 the SRU at the time. 21 Q. I understand. I think you had also mentioned in your 22 statement that you considered tie's exchanges with the 23 consortium were opaque. Can you explain what you meant 24 by that, perhaps with reference to examples? 25 A. I think when I use that phrase, they weren't clear to 137 1 me. I wasn't privy to direct discussions between the 2 two parties. I was reliant upon third party feedback on 3 how those discussions had gone, how they'd played out. 4 Either by David Mackay or by Richard Jeffrey. 5 Q. Thank you. Go then please to your statement at page 60. 6 The question (e) at the bottom, we asked: 7 "Did you have any concerns as to whether the minutes 8 fully and accurately recorded what was discussed at 9 meetings of the TPB?" 10 You set out there: 11 "The minutes were not as comprehensive a record of 12 discussions as I would have expected given the sums of 13 public money in question. They were certainly briefer 14 and more anodyne than the discussion of the key issues 15 that took place around the TPB table. On occasions 16 I got frustrated that key points made by Board Members 17 would be omitted, glossed over or recorded in a rather 18 blander or more neutral way. Action points were not 19 always followed up in a disciplined manner. It was 20 evident that when it came to recording any figure that 21 could be commercially sensitive there was a sensitivity 22 about it becoming a hostage to fortune in future 23 negotiations with Infraco. That said, I do not believe 24 there was any attempt to mislead Board Members about the 25 status of the project and once Richard Jeffrey took over 138 1 as CEO the Board certainly received an open account of 2 the challenges the project was facing." 3 Can you remember who was responsible for the minutes 4 of the Tram Project Board -- 5 A. Steven Bell, I think, but it was Alistair -- gosh, 6 I have forgotten his surname -- who took them. I'm 7 afraid the surname has gone. 8 Q. Presumably the usual practice of bodies is for the 9 previous minutes to be approved by the next meeting of 10 the body. Was that the practice of the Tram Project 11 Board? 12 A. I can recall the chair typically saying, you know: do we 13 accept the minutes are taken as read? I don't think we 14 particularly challenged that. 15 So -- I do recall on one occasion insisting that 16 a point I made was minuted, and my concern was that 17 there would be quite a lot of discussion, particularly 18 around how risk was being managed, where the nuance of 19 the discussion wasn't necessarily being reflected. 20 I think the key area of concern on tie's part, and 21 indeed the Council's, was the provisions of the Freedom 22 of Information Act and anything that appeared to expose 23 a weakness in tie's position being, you know, grist to 24 the mill in terms of the contractor. 25 Q. Can you remember what was the point you insisted was 139 1 minuted? 2 A. I'm afraid I can't. But I can remember being quite 3 angry about a particular point and insisting that it was 4 put on the record. 5 Q. Would it be fair to say that if you had any ongoing 6 concerns about the minutes, you were in a position to do 7 something about it? 8 A. Yes. I mean, I certainly, you know, made my views known 9 to Richard at the time, that I felt we needed to have 10 more comprehensive minutes. 11 There was also a tendency in Board meetings to spend 12 quite a lot of time on the Health and Safety Report, 13 which don't get me wrong, is very important. We 14 delivered a safe tram. But that took up rather more 15 time and reduced the time for discussion around some of 16 the commercial issues in dispute. 17 Q. I think you mentioned that you made your views known to 18 Richard, that's to Richard Jeffrey, that you felt a need 19 to have more comprehensive minutes. Did that happen? 20 A. I think over time it did. The quality of the reporting 21 towards the end of the project, I think, did improve, 22 both in terms of the risk register and the minutes. And 23 probably also to be fair, my understanding of, you know, 24 where we were with the various issues. 25 Q. On a separate matter, please, the question of reporting 140 1 by Council officers to members. You noted in your 2 statement that you felt between a rock and a hard place 3 in relation to commercial confidentiality on the one 4 hand and, on the other hand, the need to be open with 5 members. Can you explain that a little, please? 6 A. My previous experience in Scottish Enterprise on 7 projects such as Loch Lomond Shores, we would give our 8 board full and open disclosure, warts and all, of where 9 we were in relation to development. 10 I think at the heart of this project, and this is 11 a key issue, from a governance perspective, was you had 12 a split in the administration. And indeed, a split at 13 Holyrood in relation to the project. 14 My sense was that the administration were keen for 15 there not to be a playing out of issues in Council 16 committees. The Tram Sub-Committee rarely met, and we 17 replaced that with a series of briefings for each of the 18 party groups, and of course all the groups, excepting 19 the SNP, had a place on the TPB. 20 Q. Now, you mentioned in relation to the Loch Lomond 21 project that there was "full and open disclosure, warts 22 and all"; disclosure to who? Who were you reporting to? 23 A. To the board in that case of Scottish Enterprise 24 Dunbartonshire, and the Scottish Enterprise Board. 25 Q. Does it follow from what you have said that overall you 141 1 don't consider that there was a full and open 2 disclosure, warts and all, to members of Edinburgh 3 Council? 4 A. I think there was an understanding on the part of those 5 members who attended the TPB because they were privy to 6 the same information as I was as a non-Executive 7 Director. 8 In relation to, you know, other members of Council, 9 I think there were times when they weren't aware of the 10 latest state of play. The reporting tended to be at key 11 points in the project, where there was an overall update 12 given, but there wasn't a realtime expose of 13 developments as they were unfolding. 14 Q. Thank you. 15 Now, that's the general questions. I would like 16 now, please, to move on to some particular documents and 17 events. 18 Starting, please, with a report to Council on 19 1 May 2008, the document number will come up. It's 20 CEC00906940. This was a report to Council by 21 Mr Aitchison, the Chief Executive, and we can see in the 22 paragraph 1.1 the purpose was: 23 "To notify the Council of the progress on the suite 24 of contracts ..." 25 We will come back to the representations shortly in 142 1 the report. 2 But we can see, for example, at page 2, in 3 paragraph 3.5, we can see in the first sentence 4 a reference to crystallisation of the risk transfer to 5 the private sector as described in the Final Business 6 Case. 7 Now, just to pause for a minute and stand back, to 8 what extent at this time do you consider you had managed 9 to get on top of all of the issues in relation to the 10 tram project? 11 A. I would say not at all. I mean, I joined the Council 12 10 March 2008. I had a pre-arranged one week off at 13 Easter. I had two or three days when I was away on 14 business, Council business. And when I met Tom, he told 15 me that Andrew Holmes would -- because he'd been 16 intimately involved in the project for some considerable 17 time, would deal with the Council report. 18 So other than sitting in Council when Tom presented 19 this report, I had no involvement in it. 20 Q. Can you remember what your recollection was at this 21 time, and also up until before contract close on 22 13/14 May 2008, in relation to the price, the extent to 23 which the price was a fixed price, the extent to which 24 it may be subject to variations or Notified Departures 25 after contract close? 143 1 A. I didn't have a clear understanding of the issues which 2 subsequently emerged at that point in time. I did see 3 that -- the late claims for additional monies by the 4 consortium at that time. They were explained as being 5 about contractor mobilisation, supply chain issues, and 6 I think some form of compensation if line 1b didn't 7 proceed for work already undertaken. 8 So I understood that additional claim, but I didn't 9 really have an idea of the Employer's Requirements and 10 the extent to which the contract price was a fixed -- 11 you know, sum price or largely fixed sum price. 12 Q. Could we also then please digress to your statement at 13 page 25. In the text in bold, a third of the way down, 14 you can see, in the last sentence, we asked the 15 question: 16 "Do you consider that the report to the Council 17 presented an accurate picture to members?" 18 You replied: 19 "I don't know." 20 The last sentence, you say: 21 "Without the inclusion of an explanation of 22 Schedule 4 the report presented an incomplete picture 23 to members and was therefore not wholly accurate." 24 Now, to pause there, did there come a time when you 25 did become aware of Schedule 4 and its contents? 144 1 A. I think with the first Hunter adjudication, this was the 2 time that the -- the ruling, as it were, on Pricing 3 Assumption 1 became clear. And I'm not entirely sure 4 when I became clear about the claim by BBS that only 5 60 per cent of the designs had been completed in the 6 previous November, I think it was, 2007. 7 So it took some time because I missed two or three 8 Tram Project Boards in the autumn of 2008 for the 9 previous reasons I have given. For me to really get an 10 understanding of the fact that this wasn't in 11 Richard Jeffrey's words, you know, it was 12 a three-wheeled car we were buying here. 13 Q. Can you explain just what you mean by that last comment? 14 A. Well, my understanding is that the contract was based 15 upon the Base Date Design Information, as at 16 25 November 2007. The claim by BBS was that the 17 drawings they received represented only 60 per cent of 18 the design for the group -- for the route, rather; and 19 I think the question that is at the heart of this 20 dispute is were the contractor required to deliver the 21 Employer's Requirements in full, a tramline from the 22 airport to Newhaven, or was their price based only on 23 the drawings received at that point in time. 24 Q. Did there ever come a point where you read Schedule 4 25 for yourself? 145 1 A. I went through Schedule 4 with -- with Richard, I think 2 round about the time of Richard Keen's ruling. 3 Q. Did you form any views on Schedule 4 or any aspects of 4 it when you read it? 5 A. I thought it was commercially absurd as a schedule. 6 I mean, the notion that you can find yourself in 7 a situation where the employer specifies requirements 8 for building a tram from airport to Newhaven, then 9 transferring risk for ongoing design development to the 10 contractor to complete, save Notified Departures where 11 the client instructs change, to find oneself in 12 a position where the contractor is then controlling 13 things because they -- the pace at which they advance 14 the designs determines the pace at which the programme 15 gets built, they're also able to frustrate the programme 16 by not giving estimates in time, or producing designs in 17 time. 18 It did seem to me that that was a commercially 19 absurd contractor -- contract, if interpreted in that 20 manner. 21 Q. Had you ever seen similar pricing provisions in other 22 contracts you'd been involved in? 23 A. No. 24 Q. Now, I take it -- 25 A. I beg your pardon. Can I qualify that? In relation to 146 1 provisional sums, and exclusions, I had. I mean, those 2 are fairly standard in civils contracts, that, you know, 3 if there are certain structures that we don't yet have 4 a fixed price for, they are allowed for as an assumed 5 provisional price, and also exclusions. 6 Q. So what were the particular aspects of Schedule 4 that 7 you considered unusual, compared to other contracts 8 you'd been involved in? 9 A. Well, this fact that there seemed to be a view that the 10 contractor wasn't pricing for the full length of the 11 contract, but only for the Base Date Design Information. 12 Q. I see. Now, I take it there came a point when you 13 considered you did have a reasonably good understanding 14 of Schedule 4; is that fair? 15 A. I don't think that I ever had a really detailed 16 understanding. I'm not a lawyer. I was reliant upon 17 the advice of Nick Smith in particular, and the 18 Council's Legal Service, and that was managed by 19 Jim Inch and not by me. 20 Q. Let me rephrase the question. A better question 21 perhaps: there obviously came a time when as a matter of 22 fact you became aware of the existence of Schedule 4 and 23 its contents. 24 A. Correct. 25 Q. Now, did members of the Council at any time, were they 147 1 ever made aware of the existence of Schedule 4 and its 2 contents? 3 A. Certainly all the councillors who were representatives 4 on the Tram Project Board would have been made aware of 5 that, and my sense is there were a series of briefings 6 in the wake of the initial adjudications to advise the 7 groups of why this interpretation had been placed on 8 Pricing Assumption 1 in Schedule 4. 9 Q. Were you involved in these briefings? 10 A. I was, yes. 11 Q. So can you recall -- sorry, do you recall members being 12 expressly told about Schedule 4 and its contents? 13 A. This was a time when Richard was saying we have only 14 priced for a three wheeled car. So that became a fairly 15 commonly understood phrase within the Council. 16 Q. But was that Mr Jeffrey's own view or was that his 17 summing up of the consortium's view? 18 A. That was his summing up, I think, of the consortium's 19 perspective backed up by the interpretation given in the 20 early adjudications. 21 CHAIR OF THE INQUIRY: I think you said something about 22 relying on Nick Smith for advice about the contract. 23 Did he seem to have any difficulty in understanding it? 24 A. I didn't experience any lack of understanding on Nick's 25 part. 148 1 MR MACKENZIE: Another point, please. Back to the report of 2 1 May 2008, if I may. 3 Page 3, please. I should ask, do you remember, were 4 you present at the meeting on 1 May 2008? 5 A. I can't honestly recall. 6 Q. Was it your practice to be in attendance at Council 7 meetings? 8 A. If this is a Council meeting, I would have been there, 9 yes. 10 Q. It is a Council meeting. 11 Then, please, the bottom of the page, at 12 paragraph 6.1, we see under 6.1: 13 "It is recommended that the Council: 14 note the imminent award of the two contracts with 15 a final price for the ... Network of GBP508 million ..." 16 Over the page, please, the top of the page, we see 17 also it's sought to: 18 "Refresh the delegated powers already given to 19 authorise [Mr Aitchison] to instruct tie ... to enter 20 the contracts ..." 21 Now, going back to the previous page, please, the 22 bullet point at the bottom, we see the reference to 23 a final price of GBP508 million. 24 Do you recall, were you aware either before or at 25 the meeting that the consortium had sought a further 149 1 price increase? 2 A. No, I think I discovered that subsequent to this 3 meeting, when Willie Gallagher emailed Tom to say they 4 had put a further claim for particular items. 5 Q. I would like to move on, please, to the next meeting. 6 There was a meeting of the Policy and Strategy Committee 7 on 13 May 2008. I think in your statement you say you 8 don't think you were present at that meeting because you 9 were at the Tram Project Board meeting; is that correct? 10 A. I think that's correct. I think Donald attended the P 11 and S and I went to the Tram Project Board. 12 Q. Could I also please go to page 30 of your statement. 13 In paragraph (f) -- now, this is a reference in the 14 question to a note we have looked at with other 15 witnesses where yourself, Mr McGougan and Ms Lindsay 16 signed a note stating it was appropriate for 17 Mr Aitchison to authorise tie to enter into the 18 contracts. We asked if you had any concerns, et cetera. 19 I should ask, did you take any steps before signing that 20 note to satisfy yourself that it was appropriate to sign 21 the note? 22 A. No, it was presented to me in a meeting that Tom chaired 23 within the boardroom. Donald and Gill had signed it. 24 I was there and asked to sign that. 25 I proceeded on the basis that if Legal and Finance 150 1 were comfortable, that their suite of contract documents 2 was in shape and the commercial arrangements were there, 3 my role from that perspective was policy lead on 4 transport, that I should sign that. 5 Q. Was this a special meeting to consider signing the note 6 or was it a meeting that had been arranged in any event 7 for other -- 8 A. My recollection was it was a specially arranged meeting. 9 It wasn't an IPG meeting. 10 Q. And how long approximately did the meeting last? 11 A. It was a very short one. 12 Q. Were we talking about -- 13 A. My recollection is it was specifically for that purpose. 14 I was called up to the boardroom, asked to sign it off, 15 and it was a formality, as it were, endorsing the 16 decision that had been taken by Council and then 17 endorsed by P and S with the adjustment in the budget. 18 Q. So is what you are describing a meeting lasting minutes? 19 A. I would say 10, 15 minutes, yes. 20 Q. So on the face of it, no, perhaps, discussion or 21 questioning of the risk arising from the contract and 22 what have you? 23 A. No. 24 Q. Did you consider at the time -- put it this way. 25 Did you have any concerns at the time about signing 151 1 this note in these circumstances? 2 A. At the time probably not. I mean, I think one has to 3 assume competence and integrity going into any new job, 4 and that your predecessors have done a certain amount. 5 The technical detail involved in this, it would have 6 taken me the best part of two or three weeks to read my 7 way into all the contract documentation. So on the 8 basis that Legal were of the view that the contract 9 terms were satisfactory, and that Finance were of the 10 view that it was affordable within the Scottish 11 Government grant funding and Council available funding, 12 I signed it. 13 Q. Looking back, with the benefit of hindsight, do you have 14 any views on whether you wish you had done anything 15 differently in this regard? 16 A. This was the item in the evidence that gave me most 17 disquiet personally. Looking back, you know, I can see 18 that my signature is there, and I accept responsibility 19 for that. 20 Q. I understand. 21 Now, in the answer in the statement you say, halfway 22 through the first paragraph: 23 "At this stage I was not properly aware of the 24 Pricing Assumptions within Schedule Part 4." 25 Then the next paragraph you say, towards the end: 152 1 "I didn't like the idea that the Council appeared to 2 be getting bounced in to approving a deal but I was also 3 aware that a lengthy period had passed since Bilfinger 4 had been identified as preferred bidder." 5 That concern about the Council appearing to be 6 bounced into approving a deal, was that a concern you 7 had at the time or later? 8 A. If I go back to my time as Senior Director with 9 Scottish Enterprise, I was aware of how big a political 10 potato the tram project had been. I was at events with 11 the city's business community when the tram was being 12 lobbied for because there was this dispute at Holyrood. 13 The point I'm specifically referring to here, 14 however, was the last-minute manoeuvring by the 15 contractor to look for the additional 12 million or 16 whatever the figure was. 17 Q. I think, just to complete this point, your statement at 18 page 121, I think you say: 19 "With hindsight I should certainly have sought 20 further information before signing the note to 21 Mr Aitchison." 22 Is that correct? 23 A. Yes, that's absolutely correct. 24 Q. Just for completeness, what sort of further information 25 do you think in hindsight you should have sought? 153 1 A. Well, ordinarily I would have wanted my transport team 2 to give me their perspective on the proposed contractual 3 arrangements, also the technical solutions being 4 proposed for the contract, and in particular, I think, 5 the issue of management of design. I was aware that 6 there had been a lengthy period with, I think it was 7 Parsons Brinckerhoff, where design wasn't being 8 progressed under tie's direct management, and then it 9 was being managed by -- novated to SDS. 10 Duncan Fraser was the only relatively senior officer 11 embedded in tie at that time, and Duncan had expressed 12 some reservations about where design stood, but just to 13 put this in context, when I started on 10 May -- 14 10 March, there was no Head of Transport in post until 15 Marshall arrived at some point in April. 16 So we've got a situation of about six or seven weeks 17 where I'm in this new post. I have no Head of 18 Transport, in other words professional adviser, and 19 I wasn't getting the visibility that one would expect as 20 a director on issues that would normally be escalated 21 for the Director's consideration. 22 Q. You mentioned Mr Fraser. Did you ask him if he had any 23 concerns about entering into the contract? 24 A. No, as I say, you know, my understanding of, you know, 25 the technical completion of financial close is that the 154 1 various agreements are in place, and ready to be signed 2 and both parties are content with that. 3 When I was presented with that in the meeting, 4 I signed it on the basis that both parties had reached 5 an agreement. 6 Q. Thank you. 7 There's also, I think, reference to the Tram Project 8 Board meeting on 13 May 2008. I think you explain you 9 thought you were at that one rather than at the P and S 10 Committee. 11 Do you have any recollection at all of what happened 12 at the Tram Project Board meeting on 13 May 2008? 13 A. I think this was the second TPB I had attended. I think 14 I attended one in April. I was still getting familiar 15 with the faces round the table. I didn't know people 16 like Graeme Bissett and others. 17 My recollection is that there was quite considerable 18 concern about the way in which BBS had late in the day 19 sought to put additional claims on the table, and the 20 general sense was that there was a breach of faith from 21 the perspective of tie that they thought they had 22 secured an agreement only to be hit with, you know, 23 further claims. 24 Q. Thank you. 25 Could I stick with your statement, please, at 155 1 page 32. At the very bottom of the page, we had asked 2 for your understanding of various matters at contract 3 close, including (a) the difficulties that had been 4 experienced with design, et cetera, we will see over the 5 top of the next page. 6 We can read the question for ourselves. In the 7 answer, you say: 8 "I had very little understanding of the difficulties 9 experienced with design. Willie Gallagher had advised 10 me that the designs were not fully complete and that 11 responsibility for completion of the design work was to 12 be novated to SDS and managed by Infraco. I never saw 13 the contract documentation between tie and BBS." 14 Now, when you say Mr Gallagher had advised you of 15 that, was that before financial close? 16 A. That would have been, and my understanding of this, you 17 know, in projects I have worked with elsewhere, the 18 Royal Institution of British Architects has got seven 19 design stages from initial brief through to concept 20 design, to developed design and technical design. 21 My understanding of the conversation I had with 22 Willie was that whereas not all the drawings -- and 23 there were 40,000 or more drawings -- were complete at 24 that point in time, Bilfinger had agreed to take on risk 25 for completion of the design for the balance, and that 156 1 was where the Chief Exec's reference to 95 per cent of 2 the cost now being fixed came. That was also, I think, 3 his understanding. 4 Q. Just to complete this point, if we scroll down under 5 question and answer (c), we can also see what is set out 6 there. We see the final sentence in this answer is: 7 "However, the clear impression from tie at that 8 stage was design costs would only increase if tie 9 instructed changes." 10 What was your understanding at this time, if any, in 11 relation to which party bore the risk for any further 12 SDS delay? 13 A. Well, my understanding was that in relation to the 14 development of detail from outline to developed design 15 stage, progressing the works on the design of the 16 tramway lay with Infraco, except if tie had instructed 17 changes, in other words for engineering or structural or 18 other reasons it had become necessary to find 19 a different technical solution to a particular part of 20 the tramway, that they would as client instruct changes. 21 I didn't understand at the time. I came to an 22 understanding that tie were also on the hook for delays 23 in planning. I came to that understanding probably in 24 June or July, where I was exhorted by Willie to chase 25 the planners to expedite speedier consents. 157 1 Q. Did you have any views when you were told that tie were 2 on the hook for delays in planning, when you first 3 became aware of that? 4 A. Well, my view was if that's the case, you know, let's 5 make sure we get a taskforce to minimise those delays. 6 You know, it was a statement of fact that if that were 7 to be the case, then we needed to ensure that both for 8 planning and building control, and indeed highways, that 9 our teams were responding as efficiently and speedily as 10 they could. 11 Q. There appears to have been a long delay between contract 12 close and thereafter in actually completing design and 13 obtaining all of the approvals and consents. 14 A. Mm-hm. 15 Q. What's your understanding of why there continued to be 16 delays in that regard? 17 A. It would be inaccurate to say I had a clear 18 understanding of where the problems lay. As I said 19 earlier, there seemed to be a mix of problems with the 20 production of the designs, problems with the management 21 of production of the designs, problems with issuing by 22 tie of instructions to complete the designs, and then 23 occasional bottlenecks in planning. 24 So I think it would be wrong to point to a single 25 source. There was a -- you know, as I say, 40,000 158 1 design drawings. 2 I do recall, again in a conversation with 3 Duncan Fraser, when I asked about a particular area, and 4 it may have been Picardy Place, but I can't recall, 5 where we had received drawings from different offices of 6 SDS, Birmingham, Southampton and I have a feeling it was 7 Philadelphia, and when the designs arrived together, 8 they simply didn't fit into the city. They didn't take 9 account of existing structures. 10 So whether that was a problem in SDS or tie, I'm not 11 clear, but it was typical of the kind of problems we 12 experienced. 13 Q. To what extent, if at all, did you consider that the 14 Council caused or materially contributed to these 15 delays? 16 A. Well, my understanding at the time, and my understanding 17 generally when I've been working on projects elsewhere, 18 is that developer is responsible for producing compliant 19 designs, that are accepted by the planning service, that 20 can be validated, that have the appropriate reports, 21 flood risk assessments, et cetera, attached to them. 22 So from the perspective that the design was novated 23 to SDS, to Infraco, who were to manage SDS, they were 24 responsible for getting compliant designs to the Council 25 to be approved. 159 1 However, if the instruction that came from tie led 2 to them producing the wrong designs, one could argue 3 that in some instances it may have been tie's either 4 inaccurate instruction or lack of instruction that 5 caused the problem. 6 Q. Can we go on, please, to the question of value 7 engineering. We've looked at Schedule 4 previously and 8 seen a reference to various value engineering items. 9 In your statement, I think, to summarise, you say 10 firstly that you were unaware of the proposed value 11 engineering savings at contract close, and you also say 12 that if you had been aware of the value engineering 13 proposals, you would have interrogated the assumptions 14 being made. Is that a fair summary? 15 A. I think so. I mean, value engineering is a common 16 practice. You know, we did quite a lot of that at 17 Loch Lomond Shores. Any big civils contract will have 18 elements where the contractor can take savings that 19 don't impact materially the design, that then bring 20 benefits to the project at lower cost. 21 Q. Did there come a time when you were aware of the value 22 engineering proposals and if so, did you take any steps 23 at that time to see if they could be achieved? 24 A. No, I mean, I didn't see that was my responsibility. 25 I was running a department with 750 staff. I was 160 1 dealing with the Royal Commonwealth Pool, the EICC, the 2 Usher Hall, Braid Burn flood works, a whole host of 3 other projects; and the tram project probably accounted 4 for 5 per cent of my total time. 5 Q. I have asked other directors too, do you consider that, 6 given all of your other duties and responsibilities, you 7 had sufficient time to devote to the tram project? 8 A. Personally, I would have liked more time. I think, you 9 know, with the benefit of hindsight, there were key 10 points where, if I had had more time to get under the 11 bonnet and understand the problems, perhaps I could have 12 intervened earlier. 13 Q. Any particular points? 14 A. Well, I think any time from the Princes Street -- well, 15 before the Princes Street to stand off, from late 2009, 16 it was quite evident that this wasn't just about slow 17 mobilisation on the part of the contractor. There were 18 underlying difficulties with the project. And I think 19 if I'm self-critical, I would say I should have taken 20 some time out to really interrogate that in a more 21 rigorous way. 22 Q. If you had done that, what might have been the outcome? 23 A. I'm not sure that materially there would have been 24 a huge difference, given the way the adjudications 25 subsequently went. We were working with a flawed 161 1 contract. 2 Q. Just to finish off the issue of the value engineering 3 savings, and it may be this isn't a matter that would 4 have come across your desk, can you recall if there was 5 any discussion with tie or within the Council regarding 6 who would have to do what and when to achieve these 7 savings? 8 A. I can't recall that. 9 Q. Is that something you would have been aware of or would 10 that have been dealt with by others? 11 A. It would certainly have been dealt with by others. 12 Q. Any names or departments or sub-departments? 13 A. Well, from a transport engineering viewpoint, 14 Andy Conway was embedded within tie. Duncan Fraser was, 15 but retired fairly on in the process. 16 These were primarily issues for tie, I'm bound to 17 say. You know, they had brought in supposedly subject 18 matter experts to deal with these issues. 19 Q. Thank you. Moving on, please, to the Princes Street 20 dispute. I think you say in your statement we had 21 asked -- 22 CHAIR OF THE INQUIRY: Mr Mackenzie, is this a convenient -- 23 MR MACKENZIE: My Lord, this would be a convenient time to 24 pause. 25 CHAIR OF THE INQUIRY: If we have 15 minutes, will we still 162 1 be all right for time? 2 MR MACKENZIE: We will, my Lord, yes. 3 CHAIR OF THE INQUIRY: We will now have a break for the 4 shorthand writers. We will have a break for 15 minutes 5 and resume again at 3.25. 6 (3.10 pm) 7 (A short break) 8 (3.24 pm) 9 CHAIR OF THE INQUIRY: You're still under oath, Mr Anderson. 10 MR MACKENZIE: Thank you, my Lord. Mr Anderson, turn to the 11 Princes Street dispute, in your statement you say you 12 were first aware of the dispute when you read it in the 13 Scotsman newspaper; is that correct? 14 A. No, it's one of the corrections I have made. My 15 recollection of that was actually the image of 16 David Mackay with a tin helmet shown in Princes Street 17 in the Evening News. I think it was because it was such 18 a vivid recollection, the 50 to 80 million. But David 19 had briefed Tom and myself and certainly others, 20 possibly, in the tram IPG, I would say a couple of days 21 before that, about the figures Bilfinger were looking 22 for. 23 Q. I understand. What did Mr Mackay say in that regard? 24 A. Well, he had a very robust view of tie's position. He 25 believed that the obligation on the contractor was to 163 1 build to the contractor's requirements, for the 2 Employer's Requirements, rather, for the full length of 3 the tramway. 4 Q. Can we go, please, to a report to Council on 5 30 April 2009. It's CEC02083772. We can see this is 6 a report to Council on that date, 30 April 2009. Go to 7 page 10, please. We can see the report is by yourself 8 and Mr McGougan? 9 A. Yes. 10 Q. At page 2, please, in paragraph 3.3, I will let you read 11 for yourself what's set out in that paragraph, including 12 the final sentence as well. 13 A. Yes. I can understand that. 14 Q. I think in your statement you say that your 15 understanding changed at some point in relation to 16 whether this agreement did represent a further transfer 17 of risk to the public sector or not; is that correct? 18 A. Well, at one level it didn't. This came about because 19 of the subterranean conditions around the Mound in 20 particular, where I think the contractor was concerned 21 that the amount of additional work that would have to be 22 done to provide the base for the tramway was above and 23 beyond what they would have regarded as normal 24 development. 25 Princes Street hadn't previously had the utilities 164 1 removed. So this was being done, as it were, in 2 realtime. And BSC were always of the view that they 3 wanted utilities diverted and then they had a clear path 4 to lay the tramway. 5 So I wasn't party to the discussions here, but 6 I know that David Mackay had high level discussions with 7 the consortium about finding a mechanism that would, 8 from their perspective, alleviate the risk and from the 9 project's perspective, allow the work on Princes Street 10 to proceed. 11 February 2009 was the start point for that because 12 I think it was a nine-month programme, and there was 13 a concern on the part of elected members about the need 14 to have the street available again for the Christmas 15 shopping period and for the winter festivals. 16 Q. Could we go, please, to your statement, to page 55. 17 In question (c) we can see what's set out there, 18 a reference to the paragraph we just looked at. Then in 19 question (d) we asked: 20 "Did your understanding in that regard change at any 21 time ..." 22 You said: 23 "Yes I began to realise that if getting on with the 24 work also required revisions to design then tie would be 25 on the hook for necessary design changes." 165 1 A. Yes. 2 Q. When approximately did you begin to come to that view? 3 A. I think the Princes Street problem illustrated this 4 because it was a test in a sense of what is normal 5 design development work, and what is abnormal conditions 6 that would be reasonable. 7 As I say, because the utilities in Princes Street 8 hadn't been previously diverted, the work on 9 Princes Street was being done just ahead, the utility 10 diversion work, just ahead of the civils work. 11 So this flushed that issue out for me, but I can't 12 say there was a moment when I had a eureka moment. 13 Q. Then in question (e) we had asked tie's reporting in 14 relation to Princes Street dispute, and in general in 15 relation to the dispute with the consortium, and you 16 replied: 17 "Not as open and transparent as they should have 18 been. There was a growing wariness in tie about 19 sensitive commercial matters getting into the hands of 20 politicians who might then brief the press potentially 21 undermining tie's position in negotiations. I feel tie 22 continued to portray the situation as being due solely 23 to an exceptionally aggressive commercial stance being 24 adopted by Infraco (Bilfinger in particular) and that we 25 were not getting the full picture about weaknesses in 166 1 the contractual position and delays in design that were 2 attributable to tie." 3 Then you go on: 4 "However, I do not believe that the Council was 5 getting the full information it needed at that stage." 6 In terms of timing, do these comments, again, really 7 start around Princes Street and then continue or what? 8 A. February 2009, and this figure of 50 to 80 million which 9 was discussed within the Council, somehow or other got 10 into the press. And David Mackay was very concerned 11 that that figure was out there. The politicians were 12 equally concerned the figure was out there. And it was 13 in effect a target to shoot for. 14 So because we had had this delay in getting on with 15 the Princes Street works, this was an issue that very 16 quickly became escalated to Tom Aitchison. You know, it 17 was perceived to be a gun to the city's head. We needed 18 to get on with the work in February, to complete for 19 late November, to give the retailers the opportunity for 20 a decent Christmas in the midst of a major recession. 21 So there was a high degree of sensitivity about 22 that, and I think tie certainly were reluctant with 23 elected members to be as open as they might otherwise 24 have been in a conventional -- within the confines of 25 a commercial situation. 167 1 Q. Thank you. 2 I would like to move on, please, to events in 2010. 3 If I can go, please, to your statement at page 87. 4 In question 111 we can see reference to: 5 "On 24 June 2010 the Council were given an update on 6 the tram project by means of a joint report by yourself 7 and Donald McGougan." 8 A. Yes. 9 Q. Just to pause there, we see: 10 "The report further stated that "The essence of the Infraco 11 Agreement was that it provided a lump sum, fixed price 12 for an agreed delivery specification and programme, with 13 appropriate mechanisms, to attribute the financial and 14 time impact of any subsequent changes." 15 Is the latter half of that sentence really 16 a reference to Schedule 4 and its contents? 17 A. It is. 18 Q. I may be corrected, but I think this is the first time 19 we see in a report to Council any reference to that. 20 Previous reports refer to the contract having been for 21 a lump sum fixed price, full stop, whereas here, I think 22 we at least see the beginnings of a recognition of 23 Schedule 4 and its contents. 24 Would that generally tie with in with your 25 recollection that it was around that time that members 168 1 were told a little more about the price of the contract? 2 A. I think it would be fair to say that this is the first 3 time when there was a formal reporting to Council in its 4 entirety of this particular difficulty. 5 Q. What I think I haven't seen, I think, in any of the 6 reports to Council is a reference to it having been 7 known at contract close that there would be at least one 8 Notified Departure and therefore price change 9 immediately upon contract close, and also that 10 Schedule 4 states expressly that the price is based on 11 Pricing Assumptions, some of which are known not to be 12 true. 13 Can you recall whether these matters were ever 14 reported to members? 15 A. On that latter point, I don't know the position, to be 16 perfectly frank. I mean, I think the Council were aware 17 of the difference in interpretation of Schedule 4 part 4 18 Pricing Assumptions. They were also aware of the 19 findings of the two Hunter adjudications, but those 20 finding were criticised by Richard Keen QC in terms of 21 their lack of clarity, and his view was, as I stated 22 earlier, there was still a belief that the consortium 23 were to deliver to the Employer's Requirements. 24 Q. Now, when you say members were aware of the two Hunter 25 adjudications, how were they made aware of that? 169 1 Because we didn't see any reference to them in the 2 reports to Council and also we've heard evidence that at 3 least the rank and file members were not given access to 4 the adjudication decisions. 5 A. Yes, I think that's the case. I mean, what was 6 happening from late 2009 onwards, when we started with 7 the Hunter adjudications, was that tie were receiving 8 the adjudication findings. In the case of the Hunter 9 one, the perception was that Hunter was an engineer, and 10 that, you know, it needed to be tested by law, by 11 lawyers. And typically what was happening during that 12 period was that tie were responding to adjudications 13 initiated by both sides, and then there was a delay 14 after the results arrived, to say what does this mean in 15 terms of the broader legal principles around how this 16 contract should work. 17 So there was certainly a murky period from late 2009 18 until this report came in June 2010 about, you know, 19 what is the meaning of Schedule Part 4, do we rely upon 20 tie's view of it, or do we rely upon the BBS view of it. 21 Q. It's just when you say that members were aware of the 22 findings of the two Hunter adjudications, we don't see 23 a reference to that in reports to Council. Are you 24 referring to members who sat on the Tram Project Board 25 being made aware of these decisions, or are you 170 1 referring to briefings to particular members in relation 2 to these decisions, or what? 3 A. Can you first of all direct me to the text you are 4 referring to? 5 Q. Yes. I'm looking at your transcript. I'm afraid I have 6 the benefit, Mr Anderson. I can see that, and you 7 can't. 8 A. Right, okay. I did not see any reference to the 200 9 adjudications. 10 What happened, clearly those conveners from each 11 party who were responsible for transport sat on the TPB, 12 with the exception of the SNP who did not take their 13 post up, and the Greens rarely attended because of work 14 commitments. So if you like, the Conservative, Liberal 15 Democrat, Labour, members of TPB were pretty much always 16 there. 17 In relation to what happened post Hunter and Wilson, 18 my recollection is that there was a round of party 19 briefings which Richard attended. This was at the time 20 when it was evident that things were going awry 21 seriously. 22 Q. Just sticking with the reporting to the Tram Project 23 Board of the adjudication decision, you of course sat on 24 the Board. Were you content with the reporting by tie 25 staff to the Tram Project Board of the adjudication 171 1 decisions? Did you have any concerns in that regard? 2 A. I had implicit trust in Richard Jeffrey's judgement, and 3 Richard would tend to talk us through the gist of the 4 adjudications at the start of TPB, and would use 5 PowerPoint presentations to bring us up to speed on the 6 programme. 7 I didn't have the time or opportunity to drill into 8 the adjudications but after Hunter and Wilson, I did 9 spend some time with Richard understanding -- 10 Richard Jeffrey understanding Richard Keen's advice. 11 Q. Just sticking with this part of your statement, the 12 report to Council of June 2010, can we see in the second 13 paragraph there's a quote from the report, in the second 14 part of the paragraph: 15 "The outcome of the DRPs in terms of legal 16 principles, remains finely balanced and subject to debate 17 between the parties." 18 Did that represent your view as of June 2010? 19 A. I'm not entirely clear where that phrase "finely 20 balanced" came from, whether it was something that came 21 from Nick Smith in the legal -- earlier stage of the 22 drafting. I think by this time my view is that that 23 wouldn't have been an accurate description of the state 24 of play. What happened after the first four 25 adjudications was, on the Howie adjudication, Hilton 172 1 Hotel Car Park, I think it was fairly agreed that tie 2 won that; on the two Hunter adjudications it was clear 3 that tie lost those; on the Wilson adjudication, there 4 was a bit for both parties to claim success. 5 So if I can be colloquial, my sense at that stage 6 was they scored two tries, we have got a try and 7 a penalty. 8 But as the adjudications proceeded, I think we got 9 to a stage where effectively it was 9-2 found in favour 10 of the contractor. 11 Q. Sticking at this stage, and over the page in your 12 statement, please, blow up the top answer, please. You 13 say: 14 "I didn't draft this section of the report ..." 15 You then go on to say: 16 "In terms of adjudication opinions, tie was losing 17 the battle." 18 Then: 19 "The description is inaccurate." 20 So from your answer it appears to be the case that 21 at that time in June 2010, you would have regarded what 22 was said in the report about the adjudications as 23 inaccurate? 24 A. Yes. I mean, the report would have been drafted the 25 previous month, and what tie had told us about the later 173 1 adjudications, I'm not sure that the Council would have 2 had the information on some of those adjudications, the 3 Coutts and other adjudications at that stage. 4 So if you were to ask me in February, was the 5 position finely balanced, then on my reading of the 6 advice given by Richard Keen QC on legal principles, and 7 I'm not a lawyer, it did seem that tie had not 8 completely lost the battle. 9 Who put "finely balanced" in that report, I don't 10 know. You know, whether tracked change versions are 11 available, but I don't think by the time the report went 12 to Council, it constitutes an accurate description of 13 the state of play. 14 Q. But it's your joint report in a sense -- 15 A. Correct, and I accept responsibility for all Council 16 reports that have my signature on them. 17 Q. So in short, is it your position that looking back, you 18 would have known at the time that what was said about 19 adjudications was not correct? 20 A. No, I wouldn't have said that because the latter 21 adjudications would not have been known to me in 22 May 2010 when this report whereas being drafted. 23 tie were delaying the results of the adjudications 24 to -- in some cases more than one Tram Project Board 25 after the result had come out. So we were being told 174 1 about them in a time delay, typically because tie wanted 2 to take their own legal advice on what the adjudication 3 meant for the wider application of the contract. 4 Q. Just to check the date of your signature of the report, 5 if we have that, the report is CEC02083184. 6 If we go to page 14, I'm not sure where the 7 signature -- let's look at page 14, please. We have 8 a signature, but not a date. 9 A. No, there's no date. 10 Q. So do you know when this is likely to have been signed, 11 given the meeting was on 24 June 2010? 12 A. Well, the last date at which members should have had the 13 committee reports was full seven working days in advance 14 of Council, which means that the drafting of this report 15 would probably have started in late May, with Alan -- 16 I beg your pardon, Alan Coyle and Nick Smith appear to 17 have been the two officers who have put the report 18 together for editing by myself and Donald. 19 Q. But when you saw the report, the final version which 20 let's assume was on or around 17 June -- middle of June, 21 let's put it that way? 22 A. Yes. 23 Q. Would you have known at that time that it wasn't 24 accurate to say that the outcome of the DRPs in terms of 25 legal principles remains finely balanced and subject to 175 1 debate between the parties? 2 A. My recollection of that time is if we track back to 3 Hunter, which was, I think, November 2009, and then 4 Wilson, there was debate in the Tram Project Board in 5 February about the first four adjudications. I can't 6 recall when the other adjudications then came in to the 7 Tram Project Board. They certainly weren't in the 8 public domain at that time. But in any event, I think 9 there's a distinction that needs to be made between the 10 outcomes arrived at, which, you know, are quite clear, 11 and the legal principles; and the point here is that 12 from both Richard Keen and I recall McGrigors, there was 13 a view that tie had not lost the battle entirely in 14 relation to legal principles. 15 Q. In the middle of June 2010, what would your view have 16 been on the outcomes of DRPs, whether they were finely 17 balanced? 18 A. Well, the outcomes of the first four are quite clear. 19 They weren't finely balanced. As I said earlier, my 20 view is if one were to convert this into rugby language, 21 it would be two tries to a try and a penalty on the 22 first four, but then the subsequent ones, Coutts and 23 others, also found in favour of the contractor. 24 Q. I think we see essentially the same wording in the 25 report to Council of 14 October 2010. 176 1 A. Mm-hm. 2 Q. What was your view at that time whether the -- that 3 wording remained accurate? 4 A. Clearly it wasn't accurate by that time. 5 Q. So do you accept that wording shouldn't have appeared in 6 the report? 7 A. I do. I accept responsibility of my signature was on 8 that report. 9 Q. Are you able to explain how that wording did come to 10 appear in the report? 11 A. There's a danger of angels dancing on the head of pins 12 here. When I'm looking at reports, you know, the 13 planning committee alone would receive hundreds of 14 reports, I would be casting my eyes over. This was 15 a particularly important report. I'm sure that I would 16 have read it carefully. The nuances of finely balanced, 17 I may not have picked up on, and if that was the case, 18 then I accept responsibility for that. 19 Q. Now, I think you also mentioned that come the end of -- 20 later on, the score was essentially, to stick with the 21 sporting metaphor, 9-2 in favour of the contractor. So 22 on one view that's bit of a drubbing, to stick with 23 a sporting metaphor? 24 A. I would say so. 25 Q. The more serious point perhaps is: were members ever 177 1 advised at any time of the true position in relation to 2 the adjudication results, and if so, when and by what 3 means? 4 A. They were advised of the general state of play through 5 party briefings. One of the issues, and this is where 6 I refer to rock and a hard place, was that I took my 7 guidance in relation to when to call a Tram 8 Sub-Committee from the Transport Convener, 9 Gordon MacKenzie. 10 So officers respond to the direction of politicians. 11 There was not a desire to hold a formal Tram 12 Sub-Committee, at which each of the party groups would 13 have been represented to discuss the adjudications. 14 So all the briefing was done through the individual 15 party groups, and typically that was done by tie working 16 with senior Council officials. 17 Q. Were any records kept of these briefings? 18 A. There ought to be records certainly of the presentations 19 that Richard Jeffrey made, but they weren't minuted 20 meetings. They were opportunities to give elected 21 members a full view as to where the contract lay. 22 I think, again, this is with the benefit of 23 hindsight, there may have been an element of optimistic 24 bias in the reporting. So, you know, the reporting was 25 through the lens of tie's view of the world. So even 178 1 although it was 9-2, they may not have exactly expressed 2 it as being quite such a drubbing, to use your analogy. 3 Q. I think I have suggested to other Council officers, 4 I should suggest to you, that on one view, when one 5 reads the various reports to Council in relation to the 6 tram project, it may be suggested that in general 7 matters were reported over-optimistically, and perhaps 8 in a rose-tinted view, that difficulties and delays 9 affecting the project were either under-reported or in 10 some cases not reported at all. Any comments on that 11 suggestion? 12 A. I think the Council's position was always informed by 13 legal advice. I don't think we were deluded in relation 14 to there being mechanisms within the contract that could 15 have bettered tie's position in this. 16 But we were only seeing one side of the picture, and 17 because we had no direct relationship with the 18 contractor, we were not privy to their view of the 19 world. So we were having, as it were, almost like 20 a language being interpreted by one party only, and we 21 weren't hearing the views from the other side. 22 Q. Now, you mentioned in relation to briefings to members 23 and to party leaders, presentations by Mr Jeffrey on 24 occasion. Did Council officers have any notes of these 25 briefings, for example, a speaking note they may have 179 1 prepared in advance, or a briefing note? 2 A. In almost all the instances I can remember, there were 3 PowerPoint presentations produced, and they were the 4 same PowerPoint presentations used for each of the party 5 briefings. So there was consistency. 6 Because there were five separate groups. The 7 briefings, you know, had to be the same message going to 8 each of the groups. 9 There were occasions when they were more informal. 10 I can remember Marshall Poulton and myself meeting with 11 the Green Party. They had a particularly small office 12 in City Chambers. There were only three of them. On 13 that occasion, I think we simply used speaking notes to 14 update them. 15 Q. Thank you. I would like to move on, please, to Mar Hall 16 mediation in March 2011. 17 Can you recollect what the Council's position was 18 going into Mar Hall? What was the outcome they had 19 hoped to achieve? 20 A. The position was set out very clearly in Dame Sue's 21 opening address. There was clearly concern that the 22 project was in the position it was in. The aim was to 23 secure an asset for the city that could be of value to 24 the city, and to do so to the right quality within the 25 lowest possible price, and the fastest possible time. 180 1 So I think those were the primary objectives. 2 Q. Thank you. Could we then please go to your statement at 3 page 101. At the top of the page, question 134, we drew 4 your attention to: 5 "On 20 December 2010 you provided Richard Jeffrey 6 with comments on his Project Resolution Report." 7 We asked about: 8 "Can you confirm what your main concerns were?" 9 The final sentence, you say: 10 "Whilst I believed some aspects of BSC's behaviour 11 to be unacceptable, tie also had failings and I wanted 12 to see a mature recognition of this." 13 Can you explain, please, the aspects of the 14 consortium's behaviour you considered to be 15 unacceptable, and then separately, what you considered 16 to be tie's failings? 17 A. Okay. Well, with regard to the consortium, they were in 18 my view claiming excessive amounts for designs. They 19 were failing to expedite designs in a timely manner. 20 They were late in mobilising their subcontractors. They 21 delayed for the best part of two years before they got 22 their subcontractor network fully in place. 23 They generally had a view that they were in 24 a position to control the pace of the contract. There 25 were large sections of the route that were available and 181 1 open for work. They could have worked on the off-street 2 sections, and they weren't doing that. So there were 3 huge frustrations about the consortium's behaviour. 4 But I would like to single out Bilfinger, because my 5 experience of dealing with CAF was first class. They 6 delivered their element of producing the rolling stock 7 on time. Didn't have a difficulty there at all. And 8 likewise, Siemens were reasonable people to deal with. 9 So I wouldn't -- although they were part of the same 10 consortium, I would separate out the -- my views of 11 them. 12 With regard to tie, the sense I gained was that over 13 time tie became embattled and Steven in particular was 14 under huge pressure as programme director. 15 I felt he was overly pedantic. I think one of the 16 things that one needs, and I have been there in other 17 projects, is a degree of pragmatism to solve problems 18 together when you encounter them. I think we were 19 getting an entrenchment of attitudes on both sides that 20 were unhelpful. 21 Q. In relation to the consortium, Mr Foerder is coming on 22 Tuesday and can no doubt explain the consortium's 23 position, but in short it may be suggested on their 24 behalf that all they were doing was following the 25 contract and given the adjudication decision, they were 182 1 shown to be correct? 2 A. They were. Bizarre though the contract seems, and 3 I have made my views on the contract known, from 4 a technical viewpoint, the adjudication decisions went 5 in their favour. 6 Q. Again, in respect of Mr Bell, others can speak on his 7 behalf, but his position may be that there were other 8 more senior people in tie and the Tram Project Board, 9 et cetera, and he was simply following what was an 10 agreed approach. 11 A. Well, I think the difficulty in relation to this was 12 what was happening, as it were, down in the trenches, 13 because a lot of this was being played out in relation 14 to disputes about individual aspects of design. 15 There's no way in the world that Richard Jeffrey or 16 David Mackay or anyone else would have been, you know, 17 getting into that level of detail. 18 It seemed to me that we were failing to progress 19 adequately a sensible way of resolving the problems. 20 There had been an earlier attempt at mediation. It 21 seemed to bring a short-term improvement. Richard put 22 great stall on David Darcy's involvement. When he 23 engaged with him, again, there seemed to be a short 24 improvement, but again, things progressed. 25 Q. Can we move on to Mar Hall itself. Were you there? 183 1 A. I was at the mediation. We stayed in the Gleddoch House 2 at Langbank, but I was at the mediation for the 3 duration. 4 Q. I think you explain in your statement that discussions 5 and negotiations were led on behalf of the Council and 6 tie by Sue Bruce, Vic Emery and Colin Smith; is that 7 correct? 8 A. Correct. 9 Q. You also say in your statement, "all of whom had less 10 than three months' experience of the project". Was that 11 a good thing or a bad thing going into the mediation? 12 A. I think you could give two answers to that. It was 13 a good thing in the sense that fresh eyes coming into 14 the -- you know, what was clearly a quite a vexatious 15 entitlement would be helpful. It was certainly helpful 16 that Vic, who had a -- contractor experience from 17 British Aerospace and had a lot of commercial skills, 18 would bring that to the party. 19 Likewise, Colin Smith had surveying skills that 20 would be of value in terms of understanding the quantum 21 of materials and cost of various things. 22 I think where the downside perhaps lay was there was 23 a fairly limited time for briefing Dame Sue and Colin 24 and Vic on the project, and my sense was that, you know, 25 perhaps there was a danger of falling back into the 184 1 traps that had occurred before the contract was agreed 2 first time round. 3 Q. What were those traps? 4 A. Essentially, putting contractor in the position where 5 the contract favoured them substantially in terms of the 6 profit they were able to make out of the contract. And, 7 you know, risks were minimised on their side, and held 8 by the client. 9 Q. What was your involvement in events at Mar Hall? 10 A. I was in the plenary session where Dame Sue gave her 11 exposition of the contract from tie's perspective and 12 the Council's perspective. And Richard Walker gave his 13 response from the consortium. 14 I was asked by Dame Sue on one occasion to take 15 notes at one of the meetings where she was discussing 16 a particular element of the contract with 17 representatives from the consortium, but I can't recall 18 now the detail of that. 19 Then on day 3, when the Heads of Terms had been 20 drawn up, I was asked to take a look at new governance 21 arrangements going forward, the joint Project Board, 22 which I did, modelling those on Prince 2 best practice 23 principles. 24 Q. I think we've heard evidence that initially, perhaps, on 25 day 3, there were agreed key points of principle which 185 1 were -- we've heard evidence negotiated and agreed by 2 the principals from each side; is that correct? 3 A. Yes. 4 Q. I think the principals perhaps left and others remained 5 behind or decamped elsewhere to then flesh that out in 6 Heads of Terms; is that correct? 7 A. That's correct. Yes. 8 Q. Can we bring up the document, please, CEC02084685. We 9 can see this is headed, "AGREED KEY POINTS OF 10 PRINCIPLE". We can see in paragraphs 1 and 2 the 11 settlement sums in respect of the off-street and then 12 the target price for the on-street works. 13 Do you know how these sums were arrived at? 14 A. No. This was entirely Dame Sue, Colin Smith and 15 Vic Emery in discussion with the principals of the 16 consortium. 17 Q. Did you have a view at the time, or even later, as to 18 whether these sums were reasonable? 19 A. I think there was genuine surprise when the headline 20 price came back at 776, and it did seem to me that that 21 was at the top end of -- of expectations, given that it 22 was only to St Andrew Square. In fact, to Haymarket, 23 I believe. 24 So we've got a situation in which, if you go back to 25 the original budget of 375, we've got a delivery that's 186 1 covering three-quarters of the route for twice the 2 price. 3 Q. Also at page 106 of your statement, you make certain 4 observations as well. Go to page 106, please. Towards 5 the top of the page. 6 A. Yes. 7 Q. We can see under (b) the answer there. What did you 8 mean by "the realpolitik of the situation"? 9 A. Well, from my perspective as Director of City 10 Development, we had been in an embattled environment for 11 about 18 months. The city was dug up in multiple 12 locations. I was spending a lot of my time assuaging 13 the concerns of Gordon Drummond at Harvey Nichols and 14 other key retailers, the west end retailers. There was 15 a sense in which it was better to get an asset that they 16 could put in the books, rather than abandon the project 17 with GBP4 million spent and 540 million committed. 18 So ... 19 Q. Under (c) you say: 20 "The mediation outcome seemed to give almost 21 everything they were looking for." 22 That's a reference to the consortium. 23 A. Mm-hm. 24 Q. Then also under (f), if we can go down to (f), please, 25 you say: 187 1 "It seemed to me that the price agreed was higher 2 than it should have been possibly by between 3 GBP50 million to GBP75 million given the figures 4 produced following Tony Rush's analysis of Project 5 Carlisle." 6 So presumably your view in that regard, as you set 7 out, is based on Mr Rush's figures; is that correct? 8 A. Yes. I mean, I think -- well, there were a number of 9 factors that I was taking account of here. One, looking 10 at the benchmark price information for tramways in 11 cities like Manchester and elsewhere, typically 12 13 million per kilometre is seen as a kind of benchmark 13 price in the UK. 14 Secondly, we were, as a result of the discussions in 15 August 2010, some nine months previous, Tony Rush, who 16 has a background in cost consultancy, had produced 17 a tram to St Andrew Square which was considerably short 18 of 776 million. 19 Even allowing for three years' delay, with 500 staff 20 working on it, and 50,000 a pop, you would be talking 21 about 75 million extra. 22 So I just felt intuitively, I hadn't done the 23 analysis, that this was a very expensive settlement. 24 Q. Just to complete this point, I think you also, in your 25 statement, say that you were aware that the final 188 1 settlement meant that the Edinburgh Tram system would 2 become the most expensive in the world measured by cost 3 per kilometre; is that right? 4 A. Correct. 5 CHAIR OF THE INQUIRY: In answer (f) you say that your 6 recollection is that Mr Rush's figures excluded the cost 7 of remedying the tracks in Princes Street which the 8 consortium agreed to do at their expense as a mark of 9 their commitment to the mediation agreement. 10 Did they not accept any responsibility for the -- 11 A. What was agreed, Lord Hardie, in relation to the Minute 12 of Variation was that there was a recognition of a need 13 for trust building measures on both sides, and that one 14 of the requirements set by Dame Sue was that they 15 recognised that responsibility, and they repaired that 16 at their cost. 17 CHAIR OF THE INQUIRY: So -- 18 A. It was their responsibility, as set out in the 19 Employer's Requirements. 20 CHAIR OF THE INQUIRY: Yes. They had -- it was their defect 21 that they had to remedy? 22 A. Yes. 23 Q. So? 24 CHAIR OF THE INQUIRY: So it's not exactly magnanimous of 25 them to remedy their defect. 189 1 A. No, I would agree. 2 MR MACKENZIE: Thank you. If we go back, please, to the key 3 points of principle document in CEC02084685, in point 9, 4 if we can blow up point 9, we see: 5 "CEC Planning Approvals. Three weeks for CEC to 6 confirm acceptance of outstanding issues on Technical 7 and Planning Informatives." 8 Now, what was the problem there in relation to 9 outstanding issues? Why were these issues outstanding 10 and why had they not been able to be resolved? 11 A. There were 320 in total over the course of the project 12 planning approvals, and there were some outstanding 13 issues in relation to information that was required to 14 purify the planning consents. 15 So there were still 20 that were outstanding. 16 Now, I don't know whether they were outstanding 17 because the consortium hadn't produced compliant designs 18 or tie hadn't provided instructions. But there were 20 19 that were still outstanding; notwithstanding the Design 20 Review Panel, you know, working to expedite those. 21 Q. Go to a separate document in this regard, please. It's 22 CEC02083973. We can see this is a report on the 23 progress since completion of Heads of Terms to 24 8 April 2011. We can see it's prepared jointly by 25 Colin Smith and Mr Foerder of the consortium. 190 1 If we can go to page 118, please, and if we can blow 2 up the table we see, thank you. 3 So in short, we see a column, second one in, "Open 4 Technical Approval Comments". We can see how as at 5 24 March 2011 there were 2,782 of those. We can see in 6 our very short timescale at the bottom of that column, 7 that there were only 85 left by 5 April 2011? 8 A. Yes. 9 Q. Do you know what explains that fairly dramatic closure 10 of what had previously been open technical approval 11 comments? 12 A. Yes. In particular, the highways team were focusing 13 purely on getting those technical comments through. 14 I was not aware of the extent to which these 15 comments were outstanding, so Andy Conway and others 16 were assigned to a task group to close those out. So 17 there was a lot of overtime working over that period, 18 focused on this alone. 19 Q. Do you know why it had not been possible to make that 20 sort of progress earlier? 21 A. I don't. 22 Q. I'm trying to avoid using a pejorative term, but bear 23 with me. Whose fault was it this hadn't been done 24 earlier? 25 A. I think it's programme director responsibility within 191 1 tie. That's not to say that there weren't 2 responsibilities on the other side, but if you're in the 3 role of Programme Director, and there are technical 4 issues that need to be cleared to allow approvals to go 5 forward, and you've got a critical path, then you should 6 be on top of that. 7 Q. Thank you. On a separate matter, but again arising from 8 the Mar Hall mediation, in your statement you explain 9 that you drafted a revised governance model based on 10 Prince 2 guidance, and proposed a joint Project Board 11 and agreed independent certifier. Did that involve 12 changing the governance model set out in the contract? 13 A. It would have. 14 Q. So that's -- is that an answer to why that hadn't been 15 done before? 16 A. Sorry, I'm not quite with you. 17 Q. I'm just wondering, if the governance model was changed 18 to reflect Prince 2 guidance -- 19 A. Right, sorry. 20 Q. Why hadn't that been done earlier? 21 A. Well, the governance arrangements that were set up were 22 that we had an arm's length company, tie. We had the 23 future operator, TEL. And that the Tram Project Board 24 became the body where strategic discussion took place 25 around the programme. 192 1 What there was never in this project is a single 2 authoritative leader responsible for delivery of 3 a programme to a set timetable. Prince 2 guidance 4 involves a series of decision gateways from business 5 planning through to, you know, the Final Business Case, 6 and then delivery. 7 So you've got someone who can pull things together 8 and be authoritative in expediting progress. 9 What I think we got coming out of this was an 10 arrangement whereby Colin Smith effectively held the 11 ring and there was a joint Project Board where matters 12 would have been discussed by both parties when there 13 were problems. 14 Q. Now, when you say what there had never been in this 15 project was a single authoritative leader responsible 16 for delivery of the programme to a set timetable, is 17 that essentially a reference, using OGC terminology, to 18 the senior responsible owner? 19 A. Yes. 20 Q. Now, there is reference to post Mar Hall an agreed 21 independent certifier who I think was Mr Smith; is that 22 correct? 23 A. Correct. 24 Q. How could Mr Smith be described as independent, given he 25 was advising the Council? 193 1 A. I think that's a question that you would need to put to 2 Dame Sue. My understanding is that both parties at 3 Mar Hall agreed that Mr Smith would be a suitable person 4 to carry that role out, but I think I wasn't privy to 5 that decision. 6 Q. In other projects have you come across an independent 7 certifier? 8 A. Not one who is also effectively SRO for one client. 9 Normally the notion of independence is they are 10 independent of both parties. 11 Q. But that is a recognised role, independent certifier, 12 that you have come across in other projects? 13 A. It's not a term I've had personal familiarity with. 14 Q. I understand. 15 Can you recall when and how members of the Council 16 were first advised of what had been agreed at Mar Hall? 17 A. My recollection is that Dame Sue asked me to write 18 a report for May Council, following the mediation in 19 March, setting out the broad process of this -- two 20 Minutes of Variation, the first being, as it were, 21 a kind of trial period to test that the working 22 relationship could be made to be successful, followed by 23 MoV5, which was then about building it to 24 St Andrew Square or Haymarket, I think it was initially, 25 for a guaranteed maximum price. 194 1 Q. Now, there was indeed a report to Council on 2 16 May 2011. So that must have been the first report to 3 Council in relation to Mar Hall. But had there been any 4 briefings with any members before that report? 5 A. My recollection is that Dame Sue organised briefings. 6 She was very good at doing that. 7 Q. Now, we've heard about Minute of Variation 4. And 8 certain sums paid under that. 9 Can you recollect what the purpose of Minute of 10 Variation 4 was? 11 A. I think I say in my evidence that my role post mediation 12 was changed quite significantly. My role post mediation 13 became looking at the changes within tie that were 14 necessary to move to the joint Project Board. tie was 15 being downsized. I was asked to manage that process, 16 working with an employment law solicitor in 17 Alastair Maclean's department; and my principal task was 18 to ensure a smooth transition from tie to new 19 arrangements. 20 So in the period up until July 2010, I was asked to 21 get tie down from a head count of just under 60 to about 22 30 staff, and I did that working with Susan Clark and 23 Steven Bell, to work out which posts needed to be 24 retained. 25 I was then in Berlin on holiday in July, and 195 1 a decision was taken to remove tie from the equation 2 entirely and to bring in Turner & Townsend. So when 3 I came back from holiday, I then had a slightly 4 different scenario in which I had to ensure that members 5 of the tie staff could stay on for long enough to 6 transfer knowledge about the programme to 7 Turner & Townsend. 8 CHAIR OF THE INQUIRY: Was compensation paid to the tie -- 9 A. It was. 10 CHAIR OF THE INQUIRY: So -- 11 A. There was a month's salary paid for each year of 12 service. The average length of service was three years. 13 CHAIR OF THE INQUIRY: Would that then feature in the 14 ultimate cost of the trams? 15 A. It would have done. 16 MR MACKENZIE: Now, in relation to Minute of Variation 4, go 17 to a document, please, CEC02086876. It's not come up on 18 the screen yet. 19 CHAIR OF THE INQUIRY: To go back to that question, I said 20 ultimate cost of the trams. That would be a sum of 21 money. Would that be in addition to the figure that was 22 agreed at Mar Hall? 23 A. No. No, I think that would have been accommodated 24 within the 776. 25 CHAIR OF THE INQUIRY: Thank you. 196 1 MR MACKENZIE: Thank you. Now, this document, the email at 2 the bottom, is an email -- if we can blow it up, the 3 second half -- from yourself, dated 3 May 2011, to 4 Steven Bell. 5 Now, it's in relation to an email and letter from 6 Mr Bell we looked at this morning with Mr McGougan. 7 I have managed to lose the document reference. I can't 8 bring it up right now. 9 A. Okay. 10 Q. But in short, this is you here saying: 11 "Steven, thank you for this request. As agreed by 12 all parties at our meeting on 28 April (note attached) 13 the planned payment is to be made to the understanding 14 that MoV4 and the associated certification arrangements 15 are in train and that all the outstanding matters will 16 be concluded quickly." 17 So I think in short we looked before lunch with 18 Mr McGougan at Mr Bell had sent a letter relating to 19 a proposed payment of GBP27 million to the consortium on 20 3 May, which is set out in the draft MoV4, but without 21 the MoV4 having been signed and agreed. I think Mr Bell 22 in short was just checking with the Council officers 23 that they were happy that that payment be made. 24 As I understand it in this email, you are saying 25 yes, that can be done, and it was previously discussed 197 1 and agreed at a meeting. I'll give the doc ID for the 2 meeting note. It's CEC02086882. 3 Now, do you have any recollection of this matter? 4 A. My recollection was that Dame Sue, Vic Emery and 5 Colin Smith had agreed that -- to get the consortium to 6 move on Shandwick -- was it Haymarket Yards and -- 7 the -- what were called the priority works, that in 8 effect, a fresh mobilisation payment was to be made to 9 them. That was discussed and directed, and I was asked 10 to confirm that Colin Smith, as the independent 11 certifier, had certified that the claims being made by 12 the consortium were valid and that payment was due. 13 Q. I think there may have been at least two aspects to 14 Minute of Variation 4. I think one aspect was to 15 reimburse Siemens for materials, and I think a second 16 aspect, and there may be others, but a second aspect 17 was, I think, as you mentioned, for mobilisation 18 payments. 19 A. Correct. 20 Q. I think, from recollection, the 27 million may perhaps 21 have been mainly in relation to Siemens -- 22 A. Thank you for prompting me. You are correct. 23 Colin Smith had proposed that because the intention was 24 in due course to look to extend to the line to Newhaven, 25 and because there were -- there was value in the tram 198 1 rails and overhead cables and various other materials, 2 that a payment was to be made, Siemens had advance 3 purchased those materials. They had them awaiting in 4 their stock, and that they were to be acquired. 5 If memory serves right, they were looking to store 6 them at some warehouse in West Lothian. 7 CHAIR OF THE INQUIRY: Mr Mackenzie, is the document you are 8 looking for, is it CEC02086879? 9 MR MACKENZIE: I'm grateful, my Lord. Could we go to that 10 one, please? 11 CHAIR OF THE INQUIRY: That's CEC02086879. 12 MR MACKENZIE: Thank you, my Lord. I'm grateful for that. 13 So my apologies, Mr Anderson. If I could perhaps 14 start with this, the bottom email here, we will see an 15 email from Mr Bell, 3 May 2011, to yourself, copied in 16 to others. 17 Mr Bell states: 18 "Further to my email earlier this morning, and our 19 conversation a few minutes ago, please find attached 20 a letter confirming the arrangements discussed at the 21 meeting held in Waverley Court on Thursday 28 April." 22 Go to page 3, I think, we'll see the letter from 23 Mr Bell dated again 3 May 2011. For the attention of 24 yourself. I'll let you just read to yourself, please, 25 the first two paragraphs. (Pause) 199 1 My question in short is: why do payments appear to 2 have been made under Minute of Variation 4 when that 3 minute was still in draft form and before the Council 4 had approved the overall Settlement Agreement? 5 A. My recollection, as I was working under instruction from 6 Dame Sue as Chief Exec at that time, and the agreement 7 was that the MoV had been substantively agreed by both 8 sides, but not signed. 9 Q. Now, I think Mr McGougan this morning, his view was that 10 these payments were in any event due under the existing 11 contract or previous contract, however we describe it. 12 Do you have any recollection of that? 13 A. Well, certainly the payments for the tram rails and 14 overhead lines would have been part of the original 15 contract. So Siemens were in a position where they were 16 saying if we conclude this to Haymarket or to 17 St Andrew Square, then we have got 5 kilometres worth of 18 cables and rails that we will no longer require; and my 19 understanding is that at mediation, it had been agreed 20 that the Council would purchase those and store them for 21 subsequent extension of the line. 22 Q. Do you know whether members were advised that payments 23 were being made to the consortium under the draft MoV4? 24 A. No, I don't. I mean, I think the May report would have 25 explained the MoV4, MoV5 paper. So just remind me of 200 1 the date of this, the timing of this. 2 Q. The date of this letter, I think, is 3 May? 3 A. And the Council meeting of May? 4 Q. Yes, sorry, it's 16 May. 5 A. So there's a gap. Quite clearly there is a gap. There 6 may have been a draft in -- you know, at that time, that 7 was under way. The Chief Exec may have agreed with the 8 leader, but I'm certainly blindsided on that issue. 9 Q. If we go then to the report of 16 May 2011, it's 10 CEC01914650, I think when we go through the report, 11 I think we will certainly see reference to MoV4. Just, 12 I think, I couldn't for myself see any reference to the 13 particular payments. CEC01914650. 14 If we go to page 4, please, let's try the next page. 15 So here this appears to be the report of 16 16 May 2011. We'll come to the last page in due course. 17 But if we go to paragraph 1.1, you'll see the purpose of 18 the report, updating the Council on key outcomes. If we 19 then please go to paragraph 3.6, I'm sorry, I don't have 20 the page number. In paragraph 3.6 we see a reference -- 21 I'll let you read that for yourself. There's 22 a reference to MoV4, including that the main provisions 23 will be summarised -- are summarised in an appendix. 24 We can also perhaps then see 3.7, please. Just to 25 finish this, also, please, paragraph -- over the page to 201 1 see the end of that paragraph. It must be page 7. Yes, 2 thank you. 3 So what's being told to members, and again then 4 finally, I think, paragraph 3.8. 5 Then, please, go to paragraph 7.1. Let's try 6 page 12, please. There's page 10. Thank you. 7 We see: 8 "Council is asked to ... a) To note the outcomes of 9 the mediation process to date." 10 So on the face of it, the Council's agreement is not 11 being sought to approve MoV4? 12 A. Yes. 13 Q. Nor the proposed payments. If we then please carry on 14 until we find Appendix 1 to see the summary. Thank you. 15 We see -- this is at page 12. Priority works, 16 minute of variation, summary of key terms. 17 We see under "Payment": 18 "Payments will be issued in the amounts certified by 19 an independent certifier who will have a duty of care to 20 the Council, tie and the Infraco." 21 A. Yes. 22 Q. So I think in short, Mr Anderson, just looking at this 23 report, it's not clear that members were advised that 24 payments have in fact already been made to the 25 consortium under the draft MoV4. Do you have any 202 1 recollection of these matters at all? 2 A. Well, I -- I recollect Dame Sue having asked me to 3 produce the report and the subsequent one, and just 4 looking at the style of this report, it looks as though 5 it's one that I have personally written, as opposed to 6 being drafted by -- by others. 7 In relation to the timing of the drafting, and the 8 timing of the payment, I can't account for the 9 difference other than there was a clear desire by 10 Dame Sue and others to be able to progress things. 11 Donald may well have been correct that the payments for 12 the materials were due to Siemens in any event, and 13 therefore didn't arise specifically out of MoV4. They 14 were simply being purchased. 15 The balance of the work was in effect about getting 16 on with a restart to work, because the city had been 17 effectively mothballed across a range of sites at this 18 point in time. But there does appear to be a timing 19 issue. 20 Q. On another point, please, in your statement you refer to 21 members receiving information in the form of 22 a confidential appendix to this report. 23 A. Mm-hm. 24 Q. Now, I think the Inquiry doesn't appear so far to have 25 a copy of that, albeit I may be corrected. Can you 203 1 recall what information was in this confidential 2 appendix? 3 A. I suspect I've been confused. I had thought that the 4 MoV was subject to confidentiality, but my recollection 5 was that Dame Sue agreed with consortium that those 6 terms could go in the public domain. 7 So begin with, when we were drafting this report, 8 I think we were looking at keeping the detail of the 9 terms of Mar Hall separate until such time as Council 10 had agreed it. 11 In practice, both sides agreed that these terms 12 could go into an appendix that wasn't exempt. 13 Q. Now, there's a further report to Council by yourself on 14 30 June 2011. I'll simply note the reference in passing 15 without going to it. It's CEC02044271? 16 A. Yes. 17 Q. I would please, though, then, like to go to the report 18 to Council by yourself on 25 August 2011. It's 19 TRS00011725. 20 A. Yes. 21 Q. There's a particular matter I would like to ask you 22 about, please, at page 4. 23 In paragraph 3.16 there's reference to: 24 "In order to achieve the most robust possible cost 25 estimates, Faithful+Gould have worked with Council 204 1 officers to validate the base budget for the works from 2 airport to York Place and have also completed thorough 3 testing and validation of the proposed risk allowance. 4 A confidential schedule summarising the findings of 5 Faithful+Gould Review has been prepared and will be 6 shared on a confidential basis with elected members." 7 Now, I think, the Inquiry, as far as I'm aware, does 8 not have a copy of that confidential schedule. Can you 9 recall what it said? 10 A. Well, firstly, I would like to say this report was 11 certainly written by Alan Coyle. I'd been in Berlin in 12 July. 13 The June report was written almost exclusively by 14 me, with input from my economic development team and 15 Alan. 16 By this stage in the project, Colin Smith had 17 effectively assumed the role of SRO and I had said to 18 Dame Sue that my focus needed to be on helping her with 19 the transition of tie. So I'd stepped down from this. 20 It's a Council convention, or it was at that point in 21 time, that all reports go in the name of directors. 22 Dame Sue actually changed that shortly after this, but 23 in relation to the detail of this report, I had no 24 involvement in drafting it. And although my name was 25 still notionally on it because the practice and 205 1 convention remained that directors' names should be on 2 the report, I saw this very, very late in the day. 3 Q. So is it correct to say you yourself can't recall what 4 was in this confidential schedule summarising the 5 findings of Faithful+Gould? 6 A. I recall Alan Coyle saying that he'd asked F&G to do 7 some work to determine whether or not the 8 Shandwick Place estimates given by the consortium 9 represented value for money. 10 Q. I think also we had then shown you the Faithful+Gould 11 report. In your statement you replied: 12 "I was not aware of the Faithful+Gould report at the 13 time. During my absence a number of decisions were 14 taken." 15 I think you said that undermined any authority you 16 had left? 17 A. Yes. 18 Q. I take it by undermining any authority you had left, you 19 mean in relation to the tram project? 20 A. Yes, yes. 21 Q. We don't have to go to it, but we have seen previously 22 the full Faithful+Gould report in August 2011 in short 23 described the costs for the on-street works as grossly 24 inflated. Was the first time you were aware of the full 25 Faithful+Gould report when the Inquiry sent it to you? 206 1 A. I was aware of it after this Council meeting took place. 2 And I was aware of it demonstrating the costs were 3 excessive for that particular section. 4 That was the point in time where personally I felt 5 that I couldn't fulfil any SRO role responsibility 6 because all the decisions were being made by Colin Smith 7 with Vic Emery, with Sue, with Alastair Maclean. 8 Q. Do you know whether members were made aware of the views 9 of Faithful+Gould that the cost of the on-street works 10 were grossly inflated? 11 A. Alastair Maclean arranged for a document suite of all 12 relevant documents to be made available to elected 13 members to view. So before MoV5 was enacted, all the 14 background information was put into a room at 15 Waverley Court. I think by this time Alastair had 16 engaged Ashursts, who had some experience in tram and 17 light rail, and I do recall during August being involved 18 in a number of meetings with Ashursts and Alastair, 19 determining what documents councillors would need to see 20 to be able to make an informed decision about the new 21 price and MoV5. 22 CHAIR OF THE INQUIRY: Can I just ask, as far as this 23 schedule is concerned, it may be just a schedule 24 summarising the findings of the report that Mr Mackenzie 25 has been speaking about. 207 1 A. Mm-hm. 2 CHAIR OF THE INQUIRY: Would that confidential schedule or 3 should that confidential schedule still be in existence? 4 A. If the confidential schedule was there, it should be in 5 existence, yes. 6 CHAIR OF THE INQUIRY: And what about your records or the 7 notes that you took at Mar Hall? What happened to them? 8 A. They will be somewhere in a bin, but because I wasn't 9 involved in the sessions where the principal terms of 10 the settlement were agreed, I was an observer to a large 11 part, with the exception of the notes I took in the 12 specific principal session where Dame Sue invited me to 13 come in. 14 CHAIR OF THE INQUIRY: Those notes that you mentioned 15 earlier -- 16 A. I suspect they would have been passed on and taken -- 17 what happened after day 3, I think it was, was that the 18 lawyers decamped to -- I think it was McGrigors' office, 19 to write up the terms of the two Minutes of Variation. 20 The rest of the people who were at Mar Hall, there was 21 a period of time of inactivity where we didn't really 22 have any useful role, and then on the final day, 23 I certainly know that I spent the morning working on the 24 governance model that I thought was appropriate going 25 forward. 208 1 CHAIR OF THE INQUIRY: So generally speaking, were the 2 records kept by the Council generally detailed and 3 reliable and easily accessible, if the Inquiry wanted 4 access to them? 5 A. Anything that is held electronically, one would expect, 6 would still be there. Whether there are manuscript 7 notes taken by individual officers, I doubt they would 8 be there. But any document that is of a commercial or 9 legal nature, I would expect to still be retained by the 10 Council. 11 CHAIR OF THE INQUIRY: Thank you. 12 MR MACKENZIE: Thank you. I have a final question, 13 Mr Anderson. 14 It appears to be the case that the project ran 15 reasonably smoothly after the Settlement Agreement. Is 16 that correct? And if so, why ie what had changed? 17 A. Well, one thing that had changed was that the risk was 18 taken away from the contractor and made explicitly on 19 the part of tie and the Council, and indeed the Scottish 20 Government. 21 We also had the involvement of Ainslie McLaughlin 22 from Transport Scotland. I have to say, his 23 contribution was exceptionally helpful throughout. 24 I think the project was quite clearly in the 25 spotlight of Ministers, and the expectation that 209 1 something would be delivered for the city was there. So 2 there was an absolute political imperative at every 3 level that this wasn't left abandoned. I think that 4 helped in any project; having a sponsor, you know, who 5 is very clear about what they're looking to achieve is 6 key. 7 Colin Smith's role as independent certifier provided 8 a mechanism for early resolution of any points of 9 difference in terms of disputes around value of claims, 10 et cetera. So we assigned one of my colleagues, 11 Bob McCafferty, to work with Colin. Bob was from the 12 transport service, and they spent quite a lot of time 13 moving in with, effectively, Martin Foerder and his team 14 at Bilfinger. So the co-location on the consortium's 15 portakabin offices in Edinburgh Park, I think helped; 16 the fact that they were physically together, if there 17 were problems, they were resolved more speedily. 18 Dame Sue, I have to say, also brought in 19 Turner & Townsend. They provided valuable subject 20 matter expertise in terms of project management. There 21 were weekly early morning meetings where the whole team 22 came, and there was no excuse for slipping up every 23 week. Dame Sue expected that, you know, progress should 24 be made. 25 MR MACKENZIE: Thank you. I have no further questions. 210 1 A. Thank you. 2 CHAIR OF THE INQUIRY: I don't think there are any 3 questions. 4 Thank you very much, Mr Anderson. That concludes 5 your evidence. You're still under citation. So it 6 would be possible for you to be recalled if that were 7 thought necessary. Hopefully it won't be necessary, but 8 thank you for your attendance. 9 A. Thank you, my Lord. 10 (The witness withdrew) 11 CHAIR OF THE INQUIRY: We will adjourn until Tuesday at 12 9.30. 13 (4.36 pm) 14 (The hearing adjourned until Tuesday, 5 December 2017 at 15 9.30 am) 16 17 18 19 20 21 22 23 24 25 211 1 INDEX 2 PAGE 3 MR DONALD MCGOUGAN (continued) .......................1 4 5 Examination by MR MACKENZIE (continued) .......1 6 7 Questions by CHAIR OF THE INQUIRY ...........103 8 9 Examination by MR FAIRLEY ...................105 10 11 Examination by MR DUNLOP QC .................110 12 13 MR DAVID ANDERSON (sworn) ..........................115 14 15 Examination by MR MACKENZIE .................115 16 17 18 19 20 21 22 23 24 25 212