1 Friday, 6 October 2017 2 (9.30 am) 3 MR JIM HARRIES (continued) 4 Examination by MR MACKENZIE (continued) 5 CHAIR OF THE INQUIRY: Good morning, you're still under 6 oath. 7 A. I am. 8 MR MACKENZIE: Good morning, my Lord. 9 A. Good morning. 10 Q. I would like to take you to a document from 11 January 2007. It will come up on the screen. The 12 reference number is CEC01811257. 13 Now, these are the slides of a review by 14 David Crawley in January 2007, and if we go over the 15 page, please, we can see from the first bullet point 16 that the scope of Mr Crawley's review was the design 17 review process. If we can go to page 11, please. 18 If we can see your name at the top, Mr Harries, do 19 you remember this interview at all? 20 A. I have a vague recollection of somebody sitting down 21 with me and saying: be completely blunt and honest and 22 we'll write it down. 23 Q. Just -- 24 A. But I can't remember who that was. 25 Q. Indeed. Take a minute yourself just to read the various 1 1 bullet points here. (Pause) 2 A. I have read it. 3 Q. Does that generally ring any bells? 4 A. I think every single bullet point rings a bell. 5 Q. Does that reflect how you felt about the project at the 6 time? 7 A. Yes, in terms of the areas that we needed to improve. 8 Obviously it doesn't touch on the areas that were going 9 well. 10 Q. I understand. Just for the avoidance of doubt, which 11 areas were going well at this time? 12 A. The interactions between individuals within the 13 engineering team and with the related counterparts in 14 CEC. 15 There was a really good common understanding about 16 what we needed to do technically. 17 Q. Technically; is that in relation to the engineering 18 aspects and perhaps the structural aspects, as opposed 19 to the planning approval side of things? 20 A. Yes, this is just within the technical assurance and 21 design process. 22 Q. I understand. In relation to the points on this slide, 23 I won't read each of them in the interests of time. 24 Can we see about four bullet points up: 25 "Chance of meeting the programme overall? "zero"." 2 1 Do you remember, was that in relation to the design 2 programme, the overall programme for the project, or 3 both? 4 A. I cannot recollect. 5 Q. I understand. 6 In terms of the two solutions that you appear to 7 have suggested, the first one was to align tie across 8 the middle managers. Anyone external to the project 9 should not see the join between people from tie, TSS, 10 SDS and Transdev. Do you recall suggesting that as 11 a solution? 12 A. I don't recall suggesting it, but it is the sort of 13 thing I would have expected myself to have said in those 14 circumstances. 15 Q. Why is that? 16 A. Because unless tie as a whole, which obviously includes 17 TSS, SDS and Transdev, is seen as having a common view, 18 the chances of other people being able to interact 19 effectively with tie is very slim. 20 Q. So essentially tie, TSS, SDS and Transdev required to 21 take an integrated one team approach? 22 A. Absolutely. I'm not quite sure why I didn't put CEC on 23 that bullet point as well. 24 Q. I understand. Then the last -- second suggested 25 solution: 3 1 "Enforce the discipline of change control." 2 What does that relate to? 3 A. When a design is developed, if something comes along 4 that causes a change to that design to be necessary, 5 it's absolutely vital that all of the consequences of 6 that change are understood before that change is agreed. 7 There was a lack of understanding of the 8 consequences of change, both technically, commercially 9 and in terms of programme, and without the discipline of 10 a proper process to assess change, the risk is that 11 changes will not be for the better. 12 Q. Would it be fair to suggest that at this time, there 13 were too many changes occurring in an uncontrolled 14 manner? 15 A. Yes. 16 Q. Changes from or by whom? Who were making these changes? 17 A. There was input from all sorts of people, from CEC, and 18 from different parts within tie, because tie itself 19 wasn't a very joined-up organisation, and I think 20 I mentioned silos somewhere. Not in this, but 21 elsewhere. 22 So tie did not always have a common view on changes. 23 Q. Yes. I think in the third bullet point from the bottom 24 you say: 25 "Tram project culture? "not unified, even within 4 1 tie where silos exist”." 2 Again just for clarification, what were the 3 different silos, what teams or different departments 4 comprised these different silos? 5 A. That's quite a hard question for me this time after the 6 event. But within tie there was a procurement team, 7 a project delivery team, an engineering team, an 8 approvals team, and those teams didn't always work well 9 together and have common goals. 10 Q. Thank you. I would like to put that document to one 11 side now, please, and turn to another issue. 12 We've heard some evidence in relation to 13 a misalignment between the SDS design, the employer's 14 requirements, and the bidders' civils proposals. 15 Is that an issue you have any recollection of? 16 A. Yes. Very much so. 17 Q. Can you explain, please, what the issue was, how it had 18 arisen and what the effects of it were? 19 A. So SDS were developing a design for the system, and tie 20 was developing a document called employer's 21 requirements, which was sent to the bidders for them to 22 price against. 23 The concept was that the SDS design was going to be 24 novated to the contractor. So the contractor then would 25 have two different designs, one as required by the 5 1 employer's requirements, and one as delivered by SDS. 2 If these two did not align, I felt that the 3 contractor would have a potential claim against tie in 4 order to make them align. 5 The development of the employer's requirements from 6 recollection when we started to see them, they were not 7 well structured. They were difficult to understand. We 8 were asked to review them, and I found documents that 9 show that we -- I think I -- the Transdev team had over 10 700 comments at one stage on the employer's 11 requirements, which gives us a flavour of a lack of 12 alignment. 13 Q. Did matters improve at all during 2007? 14 A. From my -- I cannot really recollect what happened, but 15 from looking at the documents, there was certainly work 16 done on trying to align the SDS, the contractor and the 17 employer's requirements. 18 I can remember spending a lot of time and getting 19 very frustrated by the process, but I cannot recollect 20 where it ended up. 21 Q. Thank you. We will go to some documents in that regard 22 shortly. 23 If I could first go back to your statement on this 24 issue. It's TRI00000128, and page 13, please. 25 In question 19, middle of the page, you refer to an 6 1 email, 14 February 2007, from David Powell in tie, and 2 Mr Powell wrote that the problem was that it was 3 difficult to see how the ERs, the Parsons Brinckerhoff 4 design and the Infraco bidders' proposals relate to each 5 other, and we had asked you: 6 "What was the problem? How had it arisen?" 7 You replied: 8 "This was due to TIE adopting an approach that was 9 not fully integrated across the ERs, PB's design and the 10 bidders' proposals. If I recollect correctly, the 11 engineering team had little input into the Ers, and the 12 Infraco procurement exercise was also done somewhat 13 remotely from the engineering team." 14 We asked: 15 "What effect would this have on the project?" 16 You replied: 17 "Cost and delay would be incurred in order to align 18 the three strands." 19 To pause there, Mr Harries, should that alignment 20 have taken place before or after the Infraco contract 21 was awarded? 22 A. That's a very key question. There are two competing 23 issues. There is we need to get this project over the 24 line and get it done because we are running late, and 25 the alternative then is to delay the project in order to 7 1 get greater alignment first. 2 I'm a simple engineer. So I like things to be clear 3 and set and decided. That was not the approach that tie 4 took. And it was one that at the time I was 5 particularly concerned about. 6 Q. Why were you concerned about it? 7 A. Because of the consequential cost and risk implications 8 to the project. 9 CHAIR OF THE INQUIRY: What would be the normal order of 10 events? Would the employer's requirements be prepared 11 with an engineering input prior to procurement, prior to 12 the contract? 13 A. In the ideal world, that's one of the first things you 14 do when you set up a tram project. We decided exactly what 15 we want, and then you develop the design up to a point 16 where you can then go to the market to get someone to 17 build it. 18 What we were doing here is developing effectively 19 two different concepts and trying to sort them out after 20 the event. 21 MR MACKENZIE: And presumably, in terms of an ideal world, 22 once the bidding process has been triggered, and that 23 would take perhaps a number of months, presumably in an 24 ideal world one would also wish to ensure that the 25 design and employer's requirements continued to be 8 1 aligned; is that correct? 2 A. Well, in the ideal world they would be aligned before 3 you went to the market and they then would not get 4 changed. In the real world there are always changes 5 that happen. 6 Q. Why do these changes happen in the real world? 7 A. Because of unforeseen events, new requirements, and 8 that's where you need to have a risk element in the 9 contract so that those changes can be adequately funded. 10 Q. I understand. Back to your statement in sub-question 11 (c), we asked: 12 "Was the issue resolved?" 13 And you said: 14 "I do not believe that this issue was resolved prior 15 to me leaving the project in February 2008." 16 I would like, please, to look at some emails. 17 Before we do that, if we go to page 14, please, of your 18 statement. 19 At the bottom of the page, question 23, there's 20 reference to an email you sent to Alastair Richards on 21 3 April 2007. If we could go to that email, please, at 22 CEC01644493. We can see this is an email from yourself 23 to Mr Richards on 3 April 2007. You explain: 24 "The most recent progress in developing the 25 Employer's Requirements came to a close on Friday 9 1 30 March. We understand that issue of these to the two 2 Infraco bidders is ongoing." 3 Then the third paragraph: 4 "It is clear that since our previous comments, tie 5 has many changes to the Employer's Requirements. It is 6 apparent that some of these changes have been made 7 without a process to check that all changes that have 8 been made are appropriate in the overall context of the 9 document." 10 Two paragraphs down: 11 "We must state therefore that we are unable to 12 endorse the document as it now stands ... We do 13 recognise that the document is significantly improved." 14 Down a bit more, please. The bottom paragraph 15 states: 16 "We believe therefore that it would be appropriate 17 for Transdev to review the Employer's Requirements 18 complete, from scratch, yet again." 19 Put that to one side, please, and go back to your 20 statement, please, at page 15. Top of the page, you 21 say: 22 "The ERs were a document that should reflect the 23 overall project requirements, but as stated in [the 24 email we just looked at] it was not adequately 25 controlled and managed. Ownership of the document was 10 1 with TIE. Transdev were asked to review it at various 2 times, but due to the structure of the document, reviews 3 were only partially effective." 4 Then below that we asked you about your concerns at 5 the time, and you explained: 6 "My main concern was that the ERs did not fully 7 integrate with the emerging design. From recollection, 8 the ERs were the basis of the Infracos' bids. Cost and 9 time would be required to converge the two. I think 10 I left the project prior to this being resolved." 11 If we then look, please, at another email, the 12 reference number is CEC01630498. This is just to get 13 a flavour of your concerns at the time. 14 If we could go, please, to page 3, we can see, top 15 of the page, email from yourself, Mr Harries, dated 16 25 April 2007. Subject matter is, "Transdev Review of 17 4th Infraco Information Release on 30 March", sent to 18 Geoff Gilbert and others in tie. 19 You say: 20 "Fellow team members, we have now concluded our 21 review of the Infraco 4th Information Release ... 22 that has been issued to the Infraco bidders ... 23 We are concerned that, yet again, very poor quality 24 information has been released to Infraco bidders with 25 insufficient checks prior to its release. Our reviews 11 1 of previous Infraco documentation releases are 2 summarised below ..." 3 Then scroll down the page, please, to that table 4 headed "Key Issues", and key issues in outline. We see 5 the first one on the left-hand column is: 6 "The documentation cannot have been checked prior to 7 issue to Infraco and ownership of the documentation 8 within tie is not clear to us." 9 There is a reference to a set of generic 10 presentational issues. 11 Go over the page, please. About three boxes down 12 states: 13 "There are many instances of internal conflicts 14 within the package and inappropriate duplication of 15 information. It is the large number of these instances 16 that is of particular concern." 17 The importance column to the right is "H"; is that 18 high? 19 A. Yes. 20 Q. Then scroll down, please, to the box saying: 21 "The complete range of elements that make up the 22 total project are unevenly described. Inconsistent and 23 variable level of detail from different authors within 24 the package is evident. This reflects a lack of overall 25 editorial ownership and understanding." 12 1 Then below: 2 "Still not aligned to what SDS is doing. Novation 3 risk will fall on tie. There is the separate issue of 4 alignment with the Functional Specification." 5 Then two down: 6 "We wonder to what extent Transdev's previous 7 comments on this section have been considered by tie." 8 I go to that, Mr Harries, just by way of 9 illustration of the sort of problems there seem to have 10 been at that time. Is that a fair illustration of these 11 matters? 12 A. I believe so. 13 Q. To what extent, if at all, did these matters improve 14 during the course of 2007? 15 A. I honestly can't recollect. I have referred back to the 16 reports that Transdev gave to tie and this issue was 17 still raised towards the end of 2007. 18 CHAIR OF THE INQUIRY: The impression gained from that might 19 be that tie were rushing to get documents out without 20 properly ensuring that they were accurate and -- 21 A. Yes. I think that's -- that's true. They were being 22 driven by programme requirements in order to get 23 information out there so that the procurement could be 24 undertaken, but in doing so, issuing documents of this 25 sort of standard actually introduces future cost and 13 1 risk. 2 CHAIR OF THE INQUIRY: Yes, you have explained that there 3 may well be a future problem about aligning that 4 document further. 5 A. That was my concern. 6 CHAIR OF THE INQUIRY: And that would necessarily, or would 7 probably, rather, result in a contractors' claim. 8 A. Absolutely. 9 MR MACKENZIE: Thank you, my Lord. 10 If we then please jump to December 2007, to document 11 CEC01480075. 12 We can see from the top of the page this is an email 13 from Andy Steel of TSS dated 3 December 2007, and it's 14 sent to Geoff Gilbert, somebody else in TSS, Mr Crawley, 15 Damian Sharp, Susan Clark and Roger Jones of Transdev. 16 So I think this email wasn't sent to you, 17 Mr Harries, but I think Mr Jones, was he just below you 18 in the Transdev team? 19 A. I worked with Roger Jones, yes. 20 Q. Thank you. I think you were aware of these issues 21 because you have just described them to us. 22 This email, Mr Steel at the top said: 23 "Geoff, I am afraid I find myself at odds with both 24 the philosophy and practicalities of the majority of the 25 clauses of the extract you sent us below. Please see my 14 1 comments in red text." 2 We see the subject matter was SDS novation plan. 3 If we go down and look at Mr Gilbert's email of 4 3 December 2007, he had sent this to Toby, Andy, David, 5 Damian: 6 "Please could you get together and review section 9 - 7 Technical below (this is an extract from the SDS 8 Novation Plan as drafted by tie based on discussions 9 with BBS) ..." 10 I'm interested in Mr Steel's comments in red, if we 11 could scroll further down under 9.1, technical, it has 12 been stated in a tie document: 13 "The Infraco Employer's Requirements, Infraco 14 Proposals, Tram Vehicle Employer's Requirements, Tramco 15 Proposals and SDS Design ... must align with each other 16 at novation. This does not mean that each must contain 17 the same statements but that the documents must not 18 conflict with each other." 19 To which Mr Steel has replied: 20 "This is a practical impossibility. To begin with 21 BBS have not used SDS design in its entirety either in 22 terms of principles or details. tie has accepted these 23 deviations where they have been declared. However SDS 24 design has moved on at varying rates and with equally 25 variable levels of information being shared with tie. 15 1 This has produced further deviations only some of which 2 are necessarily opaque if not invisible to tie and BBS. 3 Therefore the best that will be achieved is alignment 4 between ERs and Infraco Proposals." 5 Can you recollect whether that would have concurred 6 with your understanding of matters at the time? 7 A. Generally, yes. Andy Steel and myself held pretty 8 common views and we worked together a lot. 9 Q. I understand. I think we may hear evidence that the 10 employer's requirements were based on the preliminary 11 design in late 2006 and were issued to the Infraco 12 bidders, but at the same time as that procurement 13 process was taking place, SDS were advancing and 14 changing the design from the preliminary design. So we 15 may hear evidence that there were perhaps two processes 16 taking place, the SDS progression of their design and 17 then the procurement exercise with the discussions and 18 changes between the tie procurement team and the Infraco 19 bidders. 20 Would that accord with your general recollection or 21 were these really not matters you were involved with? 22 A. Generally, yes. 23 Q. Just also at 9.2, the first two bullet points, 24 Mr Gilbert's document stated: 25 "Alignment of the SDS design and Employer's 16 1 Requirements means ..." 2 First: 3 "The SDS design should not conflict with the 4 Employer's Requirements." 5 Mr Steel replied: 6 "They do and will as SDS are continuing to design 7 taking no account of the Infraco Proposals." 8 The next bullet point states: 9 "That the SDS designs completed to date will deliver 10 the requirements of the Employer's Requirements." 11 To which Mr Steel had replied: 12 "This is a definite non starter for the reasons 13 given at 9.1 above." 14 I won't read out the various other bullets. We can 15 read them for ourselves. But if you go over to page 3, 16 please, in paragraph 9.5, Mr Gilbert's document stated: 17 "It is not expected that these changes will be 18 extensive." 19 To which Mr Steel had replied: 20 "Hm!" 21 Which I think detects perhaps a degree of scepticism 22 on Mr Steel's part, is that correct? 23 A. That would be a fair interpretation of his comment. 24 Q. Would that have reflected your views at the time as 25 well? 17 1 A. Yes, but I'm naturally pessimistic when it comes to 2 these matters. 3 Q. Why are you naturally pessimistic? 4 A. Say again? 5 Q. Why are you naturally pessimistic in these matters? 6 A. I suppose it's my engineering background. If things can 7 go wrong, they will. 8 Q. Very finally, a very short document on this matter, if 9 we may. The document is TIE00039586. This is the 10 document -- email from yourself dated 24 December, 2.23, 11 Christmas Eve, subject, "Design Review - Systems and 12 Communications". This is sent to Tony Glazebrook and 13 Damian Sharp, and you have said: 14 "Tony and Damian, just to support Roger's thinking, 15 Given that 1. BBS's offer is not aligned to SDS's 16 design in respect of Systems and Communications; 2. tie 17 is amending the Employer's Requirements such that BBS's 18 design is compliant with the ERs and 3. SDS's design is 19 not fully aligned with this version of the ERs, we need 20 proper direction from tie on how to address SDS's 21 design." 22 So I think to pause there, that I think summarises 23 the -- where things stood at that time and the problem; 24 is that a fair way to put it? 25 A. Yes. I can see this email, but I cannot recollect the 18 1 circumstances in which it was sent. 2 Q. I understand. 3 Then below that you say -- you said: 4 "Without this direction, we risk: 1. Wasting 5 precious time for SDS, Tie, TSS, CEC and Transdev; 2. 6 Wasting CEC's money; 3. Generating confusion and the 7 consequential potential for future "changes" with both 8 SDS and BBS; and 4. Procuring a system that does not 9 work effectively. 10 I think we need to "park" all of SDS's work on this 11 subject, and constrain SDS's work to the Civil 12 Engineering interfaces of this design." 13 Then in the last paragraph you say, in the last 14 sentence, second-last sentence: 15 "This is a matter that needs joined up thinking 16 across the project. There are other aspects of the 17 design that need similar consideration (power, overhead 18 line equipment, and track form come to mind)." 19 So that's where things stood at December 2007; is 20 that correct? 21 A. As I understood it at the time, yes. 22 Q. I think we know that you left the project in 23 February 2008, and you said in your statement by that 24 stage you understood there continued to be 25 a misalignment? 19 1 A. Yes. 2 Q. Just pausing, are you aware why there continued to be 3 a misalignment when you left in February 2008, given 4 that the issue had been identified at least one year 5 before that? 6 A. To have a strategic review and work out an appropriate 7 contractual management process to resolve this matter 8 would have been a large task and it would probably have 9 involved stopping the procurement process for a while 10 until that could be resolved. 11 I suspect the pressure on tie was to carry on 12 regardless and the consequences of that decision would 13 be addressed later. 14 Q. Putting the tram project to one side for a moment, and 15 considering what should happen either in an ideal world 16 or as a matter of good practice, you have mentioned 17 before at the beginning making sure the design and 18 employer's requirements align. 19 Would it be correct to say that obviously the design 20 will change and things will change, but that one should 21 have several stages throughout a design process where 22 one should have agreed baselines before going on to the 23 next stage? 24 A. Yes, normally the design process is that you develop an 25 initial design and then you develop into a preliminary 20 1 design and then it's developed into a detailed design, 2 and then you go out and build it. At each of the stages 3 it is reviewed by those people who need to review it, so 4 that you have a series of agreed stages in the 5 development of the design, and that process reduces the 6 risk of having to do a lot of rework. 7 Q. Because at each stage of the process, all interested 8 parties have agreed and therefore bought in to that 9 particular baseline? 10 A. Yes. And having agreed, you can't change that. 11 Q. I understand. 12 Going back now to your statement, page 14, in 13 question 21, I apologise if we've covered this already, 14 but we had referred to a number of emails in 15 February 2007, and in question b. Were these issues 16 addressed, you said: 17 "I cannot recollect ..." 18 But it's the next sentence: 19 "In my view, the key message is a lack of overall 20 project management by TIE." 21 Could you explain that a little? 22 A. Whilst I cannot recollect exactly what the key issues 23 were, many of them are ones which should have been in my 24 view resolved earlier so that there was a clear way 25 forward reducing the overall level of risk. 21 1 Why that didn't happen, I suspect, is because of 2 the -- my perception of the silos within tie where 3 different groups didn't have clear ownership of certain 4 issues. 5 Q. Looking at that a little, presumably it would be for the 6 individual in charge of these different groups to sort 7 that issue out? 8 A. Yes. I do have recollections of going to see relatively 9 senior people within tie and expressing my concern on 10 these, but it was a very frustrating process, and 11 getting someone to say: yeah, I understand that, I will 12 sort it, but I would like you to help me by doing 13 whatever; just didn't seem to happen. 14 Q. When I refer to the individual in charge of these 15 different groups, I was thinking of the Tram Project 16 Director, but we know in this project that there were 17 a number of Tram Project Directors. I think Mr Kendall 18 was Tram Project Director in the job roughly March/April 19 2006; and Andie Harper was interim Tram Project Director 20 until, I think, December 2006; and then Matthew Crosse 21 was Tram Project Director throughout 2007 until roughly 22 February 2008; and then Mr Steven Bell was Tram Project 23 Director. I just wonder whether having all these 24 different individuals as Tram Project Director, might 25 that cause any problems? 22 1 A. It might do. I know all of those individuals and I've 2 worked with and spoken with them all during my time with 3 tie. 4 It is always good to have a degree of continuity at 5 the top because then it's very clear where the 6 responsibilities lie. But that did not happen in this 7 case. 8 Q. Thank you. Again, sticking with your statement, please, 9 at page 18, if I may, in question c., towards the 10 bottom, we had asked: 11 "What was your understanding of how the Infraco 12 contractor could provide a fixed price, and how design 13 risk could be transferred to the private sector, given 14 the delay in design, approvals and consents ..." 15 You replied: 16 "Infraco would be likely to either add a generous 17 risk premium to their offer, or rely on TIE issuing 18 changes to address any changes that develop after the 19 contract is put into place. The former approach would 20 make their offer less attractive to TIE, so I would have 21 expected Infraco to adopt the latter approach." 22 What I wondered was whether -- is that answer based 23 on the benefit of hindsight, knowing what happened in 24 the tram project, or is that answer based on your 25 general experience in the industry? 23 1 A. General experience and common sense. If you ask someone 2 to deliver something to you and it's clear that there 3 are going to have to be a number of changes, then you 4 either put your price up and say: I will absorb the 5 changes, and give you a fixed price; or I'll give you 6 a low price in the anticipation of being paid for the 7 changes. 8 Q. Thank you. Another matter, please, in your statement, 9 sticking at page 18, at the very bottom, we asked: 10 "Were you involved with the value engineering 11 process on the tram project?" 12 You replied: 13 "Sadly, yes." 14 Why do you say: 15 "Sadly, yes." 16 A. The value engineering workstream came very late on in 17 the overall design development process. Value 18 engineering as a concept can bring value to a project if 19 it is done in the right way and at the right time, and 20 the right time is early in the project, and the right 21 way of doing it is to make sure that you fully 22 understand the implications of the changes that you wish 23 to make. 24 I have my doubts on both of those aspects in terms 25 of what happened within tie. 24 1 Q. Can you expand upon that a little? What are those 2 doubts? 3 A. In terms of timescale, in my view it was too late. So 4 much work had been done on developing the design, that 5 then doing value engineering would result necessarily in 6 having to redo the design. 7 And the process by which value engineering 8 opportunities were identified from my perspective with 9 my perfect world engineering hat on was not one that 10 fully and properly considered the overall implications 11 on the project as a whole in terms of not only just 12 capital cost, but programme issues and ongoing 13 maintenance costs and safety and reliability, et cetera. 14 Q. When you say in an ideal world, value engineering should 15 be done at an earlier stage, do you mean during the 16 preliminary design stage? 17 A. Yes. 18 Q. Over the page in your statement, please, at page 19, we 19 can read for ourselves your answer in b., and also 20 under c. as well. We can read that for ourselves. The 21 one query I had under c. was the middle paragraph in 22 blue, where you say: 23 "The value engineering process appeared to have 24 a life of its own and it was understood to be 25 inappropriately incentivised." 25 1 What do you mean by that, inappropriately 2 incentivised? 3 A. I got the feeling that the process was being driven 4 forward regardless of anything else. It seemed to have 5 a life of its own, rather than being an integrated part 6 of the tie's management of the project. And I was 7 wondering why that might be. 8 CHAIR OF THE INQUIRY: A view has been expressed that value 9 engineering was used at a late stage to try to amend 10 structures or what have you, to endeavour to keep the 11 project within budget; is that the impression that you 12 had or was that a different -- 13 A. Yes, it was an attempt to reduce cost, and that is 14 a good thing. But it is making sure that those changes 15 are fully and properly understood in the complete 16 context of the project as a whole that I felt was 17 missing. 18 CHAIR OF THE INQUIRY: This was the consequences of the 19 change, you say, weren't really taken into account. 20 A. I mean, you can save money by taking the overhead line 21 out of the tram system, by not having to build it, but 22 then you can't run your trams. That's a simple example 23 of having to properly think through the entire 24 consequences of any change. 25 CHAIR OF THE INQUIRY: I think an example that I have seen 26 1 in some document or other was if, for instance, 2 you narrowed a bridge, the consequence of that might 3 be -- have safety implications for people if the 4 original bridge had a walkway to keep people clear of 5 the trams operating across the bridge. 6 Is that a fair example? 7 A. That would be a very good example, where clearly, by 8 removing the walkway, you're going to save capital cost, 9 but the consequences of that need to be thought through. 10 It might be the right thing to do. It might not. 11 CHAIR OF THE INQUIRY: Thank you. 12 MR MACKENZIE: Thank you. 13 Then please go to page 22 of your statement. In 14 question b), towards the top, we asked: 15 "What were your views on the tram project when you 16 left in February 2008?" 17 You replied firstly: 18 "The project would not be delivered to the intended 19 programme." 20 Can you just sum up your reasons for having held 21 that view? 22 A. I think we've probably touched on those adequately so 23 far, unless there's anything that you feel I should be 24 adding to that. 25 Q. No, I understand. 27 1 Second view: 2 "Costs would escalate and be out of control." 3 Can you expand upon your reasons for saying that 4 a little? 5 A. Cost escalation, we have touched on a potential reason 6 for cost escalation. To be out of control, that's 7 probably saying a bit too much really, because you can 8 have escalating costs and have them under control. And 9 the last line, I think, stands for itself. 10 Q. I'm not sure it does. What sort of retribution were you 11 thinking of? 12 A. We are here today. 13 Q. Yes: 14 "... and the victims would include the innocent." 15 Who did you mean by innocent, whether individuals or 16 parties or organisations? Who were the innocent? 17 A. When a project goes wrong, regardless of how the various 18 parties and individuals behave within that project, they 19 are all tarred with the same brush, regardless of their 20 efforts and what they did during the project. 21 Q. Also, to use the word "innocent" suggests there are 22 guilty parties. Did you have anybody in mind in terms 23 of the guilty? 24 A. Absolutely not. 25 Q. Thank you. 28 1 Now, another matter, a document I would like to put 2 to you I think you haven't seen before, and you had no 3 involvement in it, but I'm interested in your views as 4 a very experienced engineer, and your understanding of 5 this clause. 6 Can we go, please, to USB00000032. This is Schedule 7 Part 4, the pricing schedule of the Infraco contract 8 dated May 2008. 9 I don't think you've seen this before, Mr Harries, 10 have you? 11 A. I don't recollect seeing it. 12 Q. Just simply three pages I would like to take you to. 13 Firstly, page 3, please. In paragraph 2.3 we see 14 a reference to the base date design information: 15 "... means the design information drawings issued to 16 Infraco up to and including 25 November 2007 ..." 17 So keep that date in mind. 18 Then, please, go to page 5. I would like to show 19 you one of the pricing assumptions under the contract. 20 Paragraph 3.4, towards the bottom, in short, this 21 document sets out 40 pricing assumptions upon which the 22 Infraco price was based. The first pricing assumption 23 concerns design. What I would just like you to do is 24 take a couple of minutes to read the first part of this 25 pricing assumption which is set out on this page, and 29 1 when you've finished reading that, let me know and we 2 will go on to the second part, which is over the page. 3 What I would like to ask you at the end is whether 4 you have an understanding as to what this means. 5 (Pause) 6 A. Okay. 7 Q. Over the page, please. If we can highlight the first 8 numbered paragraph and then the paragraph below that, 9 thank you. (Pause) 10 A. Yes. 11 Q. If it helps, Mr Harries, I think we can place both parts 12 together on the one screen. Would that help? 13 A. It would. 14 Q. Can we do that, please. Are you able to read that okay, 15 Mr Harries? It's quite small. 16 A. Just about. 17 Q. So having read that pricing assumption, what's your 18 understanding of what it means? 19 A. Okay. I'm no lawyer. I'm reading it not necessarily in 20 context. But it seems to me that the Infraco is 21 accepting risk of change as a result of requirements by 22 approval bodies and third party agreements, which is 23 a brave thing for the contractor to do. 24 Q. If you had been asked at the time as an experienced 25 engineer whether you had a clear understanding of what 30 1 this meant, would you be able to say a clear 2 understanding? 3 A. I'm sorry, but I would need to look at the whole 4 document in greater depth. 5 Q. I understand. Okay. We can put that to one side. Back 6 to your statement to finish off with one or two 7 questions, please. At page 22, under the heading, 8 "PROJECT MANAGEMENT, GOVERNANCE AND MAIN CONTRACTORS", 9 in relation to tie we had asked: 10 "What were your views on TIE as project managers?" 11 You responded: 12 "Mixed. There were some very good people, but the 13 organisation was too big, poorly regulated and unwieldy. 14 Integration across the organisation was poor, silos 15 existed, and some members of TIE appeared to be there 16 solely for their own ends." 17 In terms of members being there solely for their own 18 ends, what's that a reference to? 19 A. There were constant changes in tie. People came and 20 went. From my perspective it was never really clear to 21 me who did what. Couldn't lay your hands on job 22 descriptions easily. And I was just generally confused 23 by what some individuals were there to do. 24 Q. Thank you. Then the question d. at the bottom, we 25 asked: 31 1 "How did TIE's project management of the tram system 2 compare with the project management of other projects 3 you had worked on?" 4 At the top of page 23, please. You responded: 5 "TIE had a very challenging task in a challenging 6 city. Lack of alignment with CEC created difficulties. 7 CEC appeared not to want the tram system. TIE was 8 a huge organisation when compared with other tram 9 promoters in the UK. TIE was immature in its systems 10 and in its approach." 11 In relation to "CEC appeared not to want the tram 12 system", is that something you've covered already in 13 your evidence or is there more to tell us? 14 A. I don't think I said much about that, other than when 15 a tram project is delivered, the people who are the 16 promoters are normally absolutely 100 per cent behind 17 the delivery of the scheme. There were tensions between 18 CEC and tie which led to that not appearing to be always 19 the case. 20 Some people in CEC were absolutely 100 per cent 21 behind the scheme and would move mountains to help the 22 scheme forward, but I felt that in some cases, their 23 hands were tied because CEC was expecting tie to serve 24 the tram system on a plate to CEC, but actually CEC has 25 real knowledge and value that it can add to the 32 1 development process. Getting that knowledge and value 2 into the scheme was hard work. 3 Q. In the other tram projects you've been involved in and 4 have experience of, did the promoter deliver the project 5 themselves or set up a body like tie to deliver it on 6 its behalf? 7 A. Manchester, Transport for Greater Manchester, basically 8 set it up itself, but Transport for Greater Manchester 9 is run by all the authorities in Greater Manchester 10 coming together as a whole. So public sector 11 organisation letting contracts to help promote the 12 scheme, and it has worked really well. 13 Nottingham, similarly, the local authorities in 14 which the tram operates come together, set up a separate 15 organisation, which in Nottingham is very lean and mean, 16 to deliver both phase 1 and phase 2 of the Nottingham 17 system. 18 Birmingham is similar to Manchester. And -- well, 19 Sheffield is a long time ago. 20 Q. In terms of Nottingham setting up a separate 21 organisation which is very lean and mean, could that be 22 perhaps a slimmed down version of tie? 23 A. It could be a very slimmed down version of tie, but they 24 tend -- they have awarded their contracts in a different 25 manner. Phase 1 was a PFI project, very hands off by 33 1 the promoter: deliver us a tram scheme, it's all yours; 2 we will help you in terms of planning approvals; here is 3 the specification. 4 And that was issued and really did not change 5 throughout the construction of the system. 6 Q. Presumably even in a non-PFI model, the local authority 7 or groups of local authorities could set up a delivery 8 vehicle like tie, but keep it reasonably small and rely 9 on external experts, for example in project management, 10 to project manage the project. That would be another 11 option? 12 A. tie did do some of that. They brought Transdev in to 13 help in a particular area. They brought SDS in to help 14 in a particular area. And as I have said before, 15 Edinburgh is an exceptionally challenging environment. 16 Q. But I think in Edinburgh the actual project management 17 of the tram project, I think, was undertaken by tie 18 itself, rather than appoint an external consultancy to 19 do it; is that correct? 20 A. I believe so, yes. 21 Again, I'm not fully familiar with what tie did 22 after I left. 23 Q. Yes. You also said in this answer: 24 "TIE was immature in its systems and in its 25 approach." 34 1 Could you explain that, please? 2 A. When you have an organisation with a large number of 3 people, it's very important that there's a good 4 understanding about how information flows and matters 5 are managed within that organisation. 6 Those procedures and processes which I regard as 7 basic requirements were not well embedded. In terms of 8 roles and responsibilities, organisational structure, 9 change control, for example, I didn't feel were 10 adequately documented and understood across the 11 organisation. 12 Q. Presumably all of these factors are essential 13 ingredients or requirements for good project management? 14 A. That's generally understood as good practice, yes. But 15 that is very hard when you are starting with a brand new 16 organisation. Unless you resource up to put those 17 processes in place right from day 1, it's very hard to 18 play catch-up after the event. 19 Q. Thank you. 20 CHAIR OF THE INQUIRY: Do you have any experience of other 21 tram systems contracts where a completely new 22 organisation was set up and diverse people were brought 23 in? 24 A. I suppose I do. Manchester, the first project was set 25 up by what was then the Passenger Transport Executive, 35 1 and they had a very small group, again, of people who 2 led that process. Probably 20 tops. 3 That was to build the tram system that was not 4 20 miles long, 32 trams. So similar in terms of overall 5 scale, through the city centre of Manchester, which 6 isn't as challenging as Edinburgh, but still had its 7 challenges. 8 Nottingham, as I have said before, very lean and 9 mean organisation at the client end. But you have to 10 set that organisation up to deliver the type of contract 11 that you want to deliver and the more that you need to 12 do to manage the contractor, the more resources you need 13 to do that. 14 Whether tie got the balance right or not is probably 15 a question that needs to be asked of people who are more 16 senior than I am. I just genuinely don't know. 17 MR MACKENZIE: Thank you. Back to the statement, please, 18 Mr Harries. In question c., in the middle of the page, 19 we asked: 20 "Did you have any concerns at any stage in relation 21 to the performance of the Tram Project Board ..." 22 You replied: 23 "I recollect that there was an absolute requirement 24 in TIE that information provided to the Tram Project 25 Board had to support the ongoing project. Consequently 36 1 matters such as programme slippage and risk may have 2 been reported in such a way that did not give the 3 fullest picture to the Tram Project Board." 4 We can check ourselves the reports to the Tram 5 Project Board to see the extent to which these matters 6 were reported, but I'm interested in the first sentence, 7 where you say: 8 "I recollect that there was an absolute requirement 9 in TIE that information provided to the Tram Project 10 Board had to support the ongoing project." 11 What's the basis of that sentence? 12 A. It's probably the case on any project that within the 13 organisation, the organisation there is to deliver the 14 project. Therefore, it has to deliver the project. And 15 there is always a degree of suppressing bad news. 16 I'm not saying that's happened more in tie than 17 elsewhere. It is just a cultural thing across that type 18 of organisation. 19 Q. I think we have seen previously some OGC guidance on 20 project management and it's referred to the need for 21 independent assurance. Was that something you were 22 aware of? 23 A. It's outside my knowledge. 24 Q. I understand. 25 A separate matter, please. Back to your statement 37 1 at page 24. At the top of the page, we had asked 2 a question in relation to -- we had asked: 3 "What were your views on decision taken around July 4 2007 that Transport Scotland should play a lesser role 5 in the governance of the project ... not be members of 6 the Tram Project Board?" 7 You replied: 8 "At the time I was surprised. I felt that 9 Transport Scotland were distancing themselves from 10 a project that was not going well. In my view, their 11 experience in governance of major transport projects 12 would have helped in forcing key issues to be 13 addressed." 14 What were the sorts of key issues that you consider 15 required to be forced to be addressed? 16 A. I think we've talked a lot about the accuracy of the 17 employer's requirements. It's issues like that, where 18 a third party asking the right questions might have 19 caused the project to maybe have that pause and 20 say: we're going to sort this out, we're going to get it 21 right, and then we're going to move on and we will take 22 the pain and consequences of the delay. That might have 23 been a better course of action. 24 I don't know if it would have been a better course 25 of action. But it may be that an organisation like 38 1 Transport Scotland could have influenced that. 2 Q. Presumably they would have had the clout both in terms 3 of their experience, but as the major funder? 4 A. Yes. 5 Q. Again, page 24 of your statement, please. Question 6 38a, we asked about your views on the governance 7 arrangements, and in your reply, towards the end, you 8 said: 9 "The governance process did not ... take appropriate 10 control of TIE's ever expanding organisation and enforce 11 appropriate rigorous processes within TIE to deliver 12 basic project management tasks such as the management of 13 change and have an integrated approach across the 14 project." 15 I think you explained your views on these matters 16 already; is that correct? 17 A. I believe I have nothing to add to that. 18 Q. The next question, please, on this page, under b., we 19 had asked: 20 "Do you consider that the duties, responsibilities 21 and reporting requirements of the different bodies were 22 sufficiently clear?" 23 I think that first paragraph of those in black text, 24 I think that is your reply; is that correct? 25 A. It looks like it. 39 1 Q. You say: 2 "With hindsight, if CEC as the most significant 3 client, did not provide clear leadership and had not 4 consistently shown that CEC wanted the tram system ..." 5 I wonder if maybe you were -- it's a halfway drafted 6 reply, perhaps? 7 A. It looks as if there's an extra word in there: 8 "With hindsight CEC as the most significant client 9 did not provide clear leadership ..." 10 Q. I see. In the last sentence you say: 11 "Much of this relates to having a lack of 12 experienced people in senior positions who understand 13 the complex nature of interfaces on a tram project." 14 The question of senior positions, is that in tie or 15 is that in various of the organisations involved? 16 A. That was within tie. Tram projects are genuinely really 17 complicated. It's a bit like putting a new railway 18 project, which is in itself hugely complicated, and then 19 putting that on the city streets, where you have to deal 20 with pedestrians, people, planning, buildings, and all 21 of the issues that go with running a city. They are one 22 of the most complicated projects that you can have. 23 And having people who actually understand those 24 matters at a senior level throughout the senior team, 25 I believe, reduces the risk of things going wrong, and 40 1 the overall level of understanding of tram projects that 2 was there, obviously it improved during the time there, 3 but early on some of the basics that I thought should 4 have been there in terms of knowledge clearly weren't, 5 and Transdev and my colleagues in SDS did spend quite 6 a lot of time trying to bring that understanding up to 7 date. 8 Q. Thank you. Go back to your statement, please. Top of 9 page 25. We asked, d.: 10 "Which body or organisation do you consider was 11 ultimately responsible for ensuring that the tram 12 project was delivered on time and within budget?" 13 You say: 14 "TEL, in my view." 15 A. That is clearly an error. I don't know how I managed to 16 write that. I intended to say "tie". 17 Q. I understand. Then back to the statement, please, again 18 at page 25, we'd also in question 39 asked for your 19 views on the main contractors in the project, and under 20 39a you replied: 21 "SDS performed well in a difficult environment of 22 a fluid project with multiple difficult stakeholders. 23 There were issues with programme delivery, process and 24 quality, but these were addressed and have been 25 addressed in the above questions." 41 1 The rest we can take as read. 2 Then finally, please, we see final thoughts towards 3 the bottom of the page, and we had asked how your 4 experience in Edinburgh compared with other projects you 5 had worked on, and you explain the other projects you 6 have worked on. 7 You then said that Edinburgh Trams looking back was 8 generally different in the following ways. 9 I think we can -- you explain that in most of these 10 matters already. 11 The second last bullet point: 12 "Lack of feeling been effectively led ..." 13 Which body or bodies would have required to have 14 provided that leadership? 15 A. Well, that leadership, I would have expected to come 16 from tie. When Mr Crawley appeared, we suddenly had 17 someone who was taking control and leading the 18 engineering team really effectively, and he was a very 19 welcome addition to the team with Mr Glazebrook. 20 But apart from that, up to that point I would have 21 expected to be sort of driven in a project management 22 sense to say: have you reviewed that; what are you doing 23 next week; show me, show me. 24 But it was not present to the extent that I had 25 expected. 42 1 Q. In the last bullet point you say: 2 "Lack of understanding of tram projects at a senior 3 level within the client body ..." 4 Just for clarification, who do you mean by "the 5 client body"? 6 A. tie in particular. You can't expect City of Edinburgh 7 Council to have a lot of understanding about trams, but 8 tie should be there to help CEC in the same way that CEC 9 should be there to help tie in terms of the interfaces 10 with the city. 11 Q. Sorry, if we turn over the page we see there's a comma 12 there, and over the page, we do see the word "tie". 13 So that was the right answer. 14 Then finally, under question b., we asked: 15 "Do you have any views on what were the main reasons 16 for the failure to deliver on time ..." 17 We can read that for ourselves. Just the last 18 bullet point, though: 19 "Lack of integrated programme management by TIE." 20 Can you explain that a little? 21 A. The overall visibility of the programme for what tie was 22 doing was not clear to me. It might have been there, 23 but it wasn't something that was obvious, and without 24 that detailed programme in terms of the steps on a month 25 by month and a week by week and a day by day basis, 43 1 there is a serious risk that things are just not going 2 to happen. 3 Q. Thank you. I have no further questions. 4 CHAIR OF THE INQUIRY: Could I -- 5 A. Can I just add something? 6 MR MACKENZIE: Please. 7 A. I believe that what Edinburgh has now is an excellent 8 tram system. It operates well. It's reliable. And 9 technically it is good. So I think Edinburgh is in 10 a good place now. 11 So I like to think I have been party to helping that 12 along the way. 13 Questions by CHAIR OF THE INQUIRY 14 CHAIR OF THE INQUIRY: Could I ask about two things. 15 First of all, you said towards the end that you 16 thought that tie was ultimately responsible for ensuring 17 that the tram project was delivered on time and within 18 budget. Can I just be quite clear about your thinking 19 in that regard. Is that simply because tie had or was 20 supposed to have the technical expertise that the city 21 fathers didn't have, or why do you not say that the city 22 was ultimately responsible? 23 A. That is also -- ultimately it's the funders who need to 24 be sure the project is a success. 25 Then there is a series of steps down until you get 44 1 to tie. tie was set up with the expertise and the 2 systems to be able to deliver it. So in my simple world 3 it was up to tie to deliver it with appropriate guidance 4 and monitoring by CEC. 5 CHAIR OF THE INQUIRY: The other thing I wanted to raise 6 with you, if you're able to comment on this, you will be 7 aware that there is in prospect an extension of the 8 tramline -- 9 A. Yes. 10 CHAIR OF THE INQUIRY: -- to Newhaven. To what extent would 11 the integration of a new line depend upon using the same 12 system such as Siemens' systems? Or could they have 13 other systems that would fit in? 14 A. Certainly the easiest thing to do is to buy more of the 15 same because the alternative might be to have to throw 16 away everything you've got in that area and replace it, 17 and that is always very, very hard to do. 18 So sticking with the same control system is probably 19 the preferred engineering option. 20 CHAIR OF THE INQUIRY: Is that preference increased or 21 reduced if, as part of the settlement, the city were 22 required to buy GBP19.5 million of equipment that 23 Siemens had pre-purchased? 24 A. I really don't want to be drawn on that. That's a very 25 difficult question to put to me at short notice. 45 1 But, as I said before, I do believe that the system 2 that you have now is sound and a good basis for 3 expansion. You do have sufficient trams to put on the 4 route. You know the route. A lot of the utilities 5 works has been done. So it should be a straightforward 6 process. 7 CHAIR OF THE INQUIRY: That may be a question properly for 8 somebody else, to ask about the prudence of that part of 9 the settlement. 10 I don't think anyone else has -- 11 Examination by MR DUNLOP QC 12 MR DUNLOP QC: My Lord, an issue does arise from an exchange 13 between my learned friend and the witness about half an 14 hour ago, not prefaced in the witness statement. 15 It relates to this. The witness was asked about his 16 understanding, admittedly not as a lawyer, of Schedule 17 Part 4. To be absolutely fair to the witness, he did 18 say: I'm not a lawyer and (b) I need to look at the 19 document as a whole. But the answer which he gave might 20 be thought to be potentially misleading. I'm either 21 content to leave it on the basis that your Lordship 22 would have to look at the document himself, but if 23 your Lordship is minded to pay any heed to what the 24 witness said as to what he as an engineer would have 25 made of the document, then in my submission it would be 46 1 helpful to spend a couple of minutes taking the witness 2 through the points of the parts that matter. 3 CHAIR OF THE INQUIRY: I don't think you need bother 4 yourself about that, Mr Dunlop. I would anticipate that 5 in closing submissions, Counsel may well address that 6 matter, and certainly I will have to consider the 7 interpretation of the contract. 8 MR DUNLOP QC: Indeed so, I'm obliged. 9 A. I did feel uncomfortable when I was put with that 10 question. 11 CHAIR OF THE INQUIRY: We don't want you to be 12 uncomfortable, Mr Harries. Thank you very much indeed 13 for your attendance. I'm sorry it spilled over to into 14 a second day. You're still technically under citation 15 and may be recalled if it was required, but I don't 16 anticipate that. 17 A. Thank you, my Lord. 18 CHAIR OF THE INQUIRY: Thank you very much for your help. 19 (The witness withdrew) 20 MR MACKENZIE: My Lord, the next witness is Alec Macaulay. 21 CHAIR OF THE INQUIRY: Mr Mackenzie, we will get this 22 witness started, but if you could find a point around 23 about 11 o'clock for the benefit of the shorthand 24 writer. 25 47 1 MR ALEXANDER MACAULAY 2 CHAIR OF THE INQUIRY: Mr Macaulay. 3 A. Good morning, Lord Hardie. 4 (Witness affirmed) 5 Examination by MR MACKENZIE 6 CHAIR OF THE INQUIRY: I appreciate you have given evidence 7 on many occasions. Could I ask you to speak clearly 8 into the microphone and sufficiently slowly so that the 9 shorthand writers can keep up with you. 10 If you listen to the question and answer it 11 directly, if it's capable of a yes or no, then that 12 should be your answer. Subject of course to any 13 qualification that you may then want to add. 14 MR MACKENZIE: Thank you, my Lord. Good morning. 15 A. Good morning. 16 Q. Can you state your full name, please? 17 A. Alexander Macaulay. 18 Q. And your current occupation? 19 A. Retired. 20 Q. Now, you have provided a CV, Mr Macaulay. I'll take you 21 to that. 22 A. Yes. 23 Q. It's CVS00000004. We can see in the right-hand column 24 you have a degree in civil engineering, towards the top, 25 we see that, top right-hand column. Degree in civil 48 1 engineering. 2 If we now go to the bottom right of this page, 3 please, we can see membership of various professional 4 bodies. 5 We can also see at the very bottom two lines, you 6 are a past chair of the Institution of Civil Engineers, 7 and also a past chair of the Institution of Highways & 8 Transportation. Are these UK-wide or Scottish bodies? 9 A. Scottish bodies. 10 Q. Then if we can go over, please, to page 3, to look at 11 your experience, we can read that for ourselves. Up 12 towards the top of the page, please, we can see then on 13 page 2 -- that's the wrong document, perhaps. 14 Yes, there we go. At the bottom of page 2, we see 15 from 1994 to 1996, at Lothian Regional Council, you were 16 the Depute Director of Transportation, et cetera. 17 Then if we go up that page a little and stop there, 18 we see between 1996 and 2000 you were the Head of Local 19 Area Services and Special Projects with Edinburgh City 20 Council. We can see that included in the next 21 paragraph, Waterfront Edinburgh, and the redevelopment 22 of that area. And also we see a reference to various 23 other matters, including development of a major 24 programme of urban streetscape in the city centre, 25 et cetera. At the top we see between September 2000 and 49 1 April 2002, you were Project Director for the new 2 transport initiative. We can read for ourselves what is 3 then set out. 4 If we could then please carry on up the page and 5 then over to the first page, we can see at the bottom of 6 the page, between April 2002 to July 2006, you were 7 employed by tie Ltd and you explain that having set up 8 tie, you moved to the company as Projects Director. 9 Just to pause there, Mr Macaulay, as a point of 10 detail, were you projects Plural Director at tie or 11 Project Director, so I can refer to the correct title? 12 A. Plural. 13 Q. We can see what is set out there. Scrolling down the 14 page, to finish off, we see that you were then, in 15 July 2006, you were Director of SEStran. When did you 16 stop that role? 17 A. I stopped at the end of June 2016. I'm now retired. 18 And in terms of the right-hand column, I am no longer 19 a member of the Institution of Civil Engineers. I am 20 still a member of the Institution of Highways & 21 Transportation. I'm no longer a Director of 22 Partnerships UK, nor One Ticket Limited. But I am 23 a non-elected member of the Strathclyde Partnership for 24 Transport. 25 Q. Thank you. You've also provided a statement to the 50 1 Inquiry. I think you may have a hard copy in front of 2 you. I'll also bring it up on the screen. Our document 3 reference number is TRI00000053_C. I should formally go 4 to the last page, please, page 51. We can see 5 a signature, the date 7 December 2016. Can you confirm, 6 please, this is your signature and this is the written 7 statement you have provided to the Inquiry? 8 A. It is my signature, and it's the written statement that 9 was provided to the Inquiry at that date. It was 10 a written statement to the best of my recollection at 11 that time, and I would take the opportunity to correct 12 a couple of points in it later on, if you give me the 13 opportunity. 14 Q. It might be easier to do that now, Mr Macaulay, if it's 15 fresh in your mind? 16 A. Yes, I can do that now. 17 If you go to paragraph 5 of my statement, which is 18 on page 3. 19 Q. Perhaps we can put that up on the screen? 20 A. Yes. I state in there that I had never seen 21 a particular organisation chart before, and also on 22 page 6, I also state in there that I had not seen 23 a particular memorandum from Michael Howell. I can only 24 suspect that my memory was not fully in gear when I was 25 doing that at the time. I do now recall both 51 1 Michael Howell's memorandum and the associated 2 organisation chart which in my statement I had 3 misinterpreted as what it was. Michael Howell's 4 memorandum talked about a programme of work to 5 reconfigure the business of the company, and the chart 6 referred to in paragraph 5 is an organisation chart for 7 how that programme of reconsideration and 8 reconfiguration of the company would be carried out. It 9 doesn't represent a definition of the responsibilities 10 at that time within the company. It represented the 11 responsibilities for moving the project forward. 12 So apologies for that, my Lord. I had to correct 13 that, but memory is never perfect. 14 Q. Thank you for clarifying that. I think in fact you said 15 the memorandum was page 6. I think it's paragraph 6. 16 If we go to page 4? 17 A. Yes. Apologies. Paragraph 6. 18 Q. Yes. We see in paragraph 6, reference to the note of 19 a memorandum from Mr Howell you referred to. So thank 20 you for clarifying that, Mr Macaulay. 21 I should say on my part that your evidence to the 22 Inquiry will comprise both the written statement and 23 what you say today as well. Thank you. 24 CHAIR OF THE INQUIRY: Before we go on, I see from your CV 25 that when you were with -- while you were the Projects 52 1 Director at tie, there's reference to congestion 2 charging as being one of the sources of funding for the 3 various projects. 4 Can I just be quite clear. Was that a concept that 5 was in mind when tie was set up? 6 A. Absolutely, my Lord. The initial concept of setting up 7 tie was in the context of the congestion charging 8 legislation which the Scottish Government had 9 introduced. I can't remember the exact date of it. It 10 might have been -- I won't speculate on the date. 11 But as a result of that the City Council and indeed 12 prior to that, there was work done by the Regional 13 Council, took the view that the opportunity of 14 introducing congestion charging within Edinburgh would 15 have two major advantages. One being contributing to 16 reduction of congestion, the second being to generate 17 a revenue stream against which further investment could 18 be set. 19 I think I go in my written statement later on to 20 explain the background to that, as to why there were 21 advantages in having it off-balance sheet as far as the 22 Council was concerned. There were advantages in 23 addressing the public perception of whether or not the 24 City Council could deliver such a major programme of 25 work. And other issues as well. 53 1 But I think I cover them later in the statement. 2 CHAIR OF THE INQUIRY: The effect of that would be to use 3 the funding from congestion charging to carry out 4 transport projects within the city. 5 A. Correct. 6 CHAIR OF THE INQUIRY: Including the tram. 7 A. Correct. The legislation in fact required a number of 8 issues. The first being that any income from congestion 9 charging should be genuinely additional to the funding 10 available to the local authority, and not be offset by 11 cuts elsewhere in the local authority's budget. And the 12 funding that comes in from congestion charging should be 13 ring-fenced for transport investment, and the original 14 New Transport Initiative documentation laid out, 15 I believe, as an appendix, a fairly extensive programme 16 of the types of investment that congestion charging 17 could be used to implement. 18 The other advantage of it in that it became -- it 19 potentially would have become an independent revenue 20 stream, independent of the Council. Once that revenue 21 stream was established, it could actually potentially be 22 used as collateral, if you like, for borrowing to take 23 over -- to deal with peaks and troughs in any particular 24 investment programme. 25 So it was a big opportunity for the City Council. 54 1 In the event it didn't go ahead as a result of the 2 referendum. 3 CHAIR OF THE INQUIRY: Thank you. Sorry to have taken that 4 out of context, but I wanted to get clear in my own mind 5 what the position was. 6 Could I also say, as I should have said in the 7 beginning, I apologise for bringing you here today as 8 opposed to Tuesday, but I was unavailable for 9 circumstances beyond my control that I couldn't be here. 10 Is this a convenient point? 11 MR MACKENZIE: My Lord, this may be an appropriate place to 12 stop. 13 CHAIR OF THE INQUIRY: We will adjourn for 15 minutes to 14 give the shorthand writers a break, and we'll resume 15 again about 11.15. 16 A. Okay. 17 (10.59 am) 18 (A short break) 19 (11.15 am) 20 CHAIR OF THE INQUIRY: You're still under oath, Mr Macaulay. 21 MR MACKENZIE: Thank you, my Lord. 22 Mr Macaulay, I would like now to look at your main 23 duties and responsibilities with a particular focus on 24 the tram project. We can find that, I think, at page 3 25 of your statement, in paragraph 3. 55 1 It will come up on the screen shortly. 2 You explain there that: 3 "Whilst employed by TIE my job title was projects 4 director responsible for a range of projects including 5 the tram project." 6 You say: 7 "My duties and responsibilities in relation to the 8 Tram Project included developing the project from 9 concept through to the stage where it could achieve 10 parliamentary approval and, in doing that, to procure 11 the necessary technical, legal and financial advice that 12 would get us through to a parliamentary approval and 13 confirmation of the Bills and Acts of Parliament." 14 That was your primary responsibility with the tram 15 network and you also had other responsibilities in 16 relation to other tie projects. 17 Now, I think Royal Assent for the Bills and Acts was 18 achieved in April 2006, about then; is that correct? 19 A. I'll take your guidance on that. 20 Q. Thank you. 21 Now, we also know that in 2005, in the tram project, 22 the design contract was procured and let. I think it 23 was awarded in September 2005. 24 Is that something you had any involvement with? 25 A. It's not. I think we need to be clear in terms of the 56 1 division of responsibilities within the company. 2 My -- as it says in here, in paragraph 3, my primary 3 role was to focus on the parliamentary process. When we 4 first started on the -- on the tram project that was not 5 necessarily the case, but I do recall a meeting of the 6 staff. Unfortunately I can't remember the exact date of 7 that, when the Chief Executive advised the staff that 8 I was not going to be involved in the implementation 9 programme and would be focusing, as far as the tram was 10 concerned, purely on the parliamentary process. 11 Now, it's worth clarifying paragraph 3 here, that 12 while initially we set out that I would be responsible 13 for all these procurements, there is one set of 14 procurement that I didn't take responsibility for, which 15 is the procuring of legal advisers, and the reason for 16 that is quite simple. My wife was and still is 17 a partner in one of the firms that was potentially 18 tendering for the work. That therefore created 19 a potential conflict of interest on my part, 20 and I withdrew from all of the procurement of DLA, 21 Dundas & Wilson, BDB, as legal advisers to the tram. 22 The lead for that was taken by the Chief Executive 23 supported by other staff within the company. 24 Q. Thank you. You do explain that in your statement, 25 I think, to be fair to you. 57 1 A. Yes. 2 Q. You explain very clearly. 3 Now, in relation to the procurement of the design 4 contract, we also know that Ian Kendall was Procurement 5 Director at tie between, I think, September 2003 and 6 July 2005. And that Mr Kendall was then Tram Project 7 Director between, I think, August 2005 to May 2006. 8 So would it have been Mr Kendall who was responsible 9 for procuring the design contract? 10 A. That's correct. The last contract procurement that 11 I was involved in, which did stray into the 12 implementation stage, was the procuring of Transdev as 13 the operator. And that, I believe, from memory, was 14 early 2004, that we appointed Transdev as the operator. 15 From there on in, the subsequent procurements were 16 the primary responsibility of Ian. 17 Q. Now, where did Mr Kendall sit in the organisational 18 structure in relation to you? Was he beneath you? Was 19 he to the side of you or what? 20 A. It's unclear. Initially when he arrived, and during the 21 period that we were involved in the procurement of 22 Transdev, Ian did defer to me as necessary in terms of 23 the work he was doing. 24 Thereafter it changed as I focused much more 25 seriously on the parliamentary process. 58 1 I would love to find the exact date at which it 2 changed, but I don't have access to the documents 3 associated with that. 4 So we have a situation where Ian was effectively the 5 Procurement and Implementation Director of the tram. My 6 job title still remained Projects Director in plural 7 because I had other projects under my responsibility, 8 but there was an evolution during the process where 9 Ian's degree of autonomy increased gradually. He did 10 come to the company as -- with the experience of having 11 built the tram in Croydon, and therefore his background 12 in that area in terms of the implementation was much 13 more relevant than mine. 14 Q. Did Mr Kendall ever report to you in terms of the 15 reporting structure within tie? 16 A. In terms of the reporting structure within tie, up 17 until, I think, about mid-2004, he would have reported 18 to me. Thereafter it was made quite clear to me by the 19 Chief Exec that he wanted me to not be involved in 20 implementation, but be involved in the statutory 21 process. 22 Q. And at or about that time, did Mr Kendall perhaps then 23 report to the Chief Executive? 24 A. Yes. 25 Q. Now, if we then please go to page 4 of your statement 59 1 and paragraph 7, this is all just by way of overview. 2 In paragraph 7 you explain that you left employment with 3 tie in July 2006. You found a new job as Director of 4 SEStran which was closer to your areas of expertise and 5 experience. It was all about transport policy and 6 transport strategy, rather than implementing 7 construction of a project: 8 "So that fitted my own areas of interest more 9 appropriately." 10 You also say: 11 "I have to say I was not particularly happy at that 12 time working in TIE. I did not like the way the company 13 was evolving ..." 14 Just by way of overview, what was it about the way 15 the company was evolving that you didn't like? 16 A. There were a number of things. Firstly, my view of tie 17 was that -- the initial concept of tie was that we were 18 a programme management organisation, and as such would 19 procure the necessary project management and technical 20 and legal services and financial services in order that 21 the programme of works could be delivered. 22 That was the initial concept when we set it up under 23 the New Transport Initiative. 24 Over time I felt that the company was moving much 25 more closely to a project management organisation, but 60 1 not fully to a project management organisation. There 2 was potential in my view for conflict of interest 3 between the tie staff who were directly employed by tie 4 and their professional advisers, and it would leave gaps 5 in the firmament between the two in terms of 6 decision-making. 7 In my view, if you want to be a project management 8 organisation, the organisation would have had to have 9 been significantly larger than tie was, even at its 10 peak, whereas as a programme management organisation 11 you're managing the input from experts in their field. 12 So that was one area where I wasn't particularly 13 comfortable. The other area that I wasn't particularly 14 comfortable relates to your earlier question, where 15 I referred to the memorandum from Michael Howell about 16 the restructuring or reconfiguration of the company, 17 which I referred to in paragraph 6 of my statement. 18 One of the key messages that was in that was that 19 business development would not be part of the 20 reconfiguration of the organisation. The net result of 21 that being that the opportunity for the company to, if 22 you like, spread its risk among a range of different 23 clients and a range of different projects was 24 effectively being removed and the company was going to 25 focus in my view solely on the delivery of the tram; in 61 1 that I was not involved in the delivery of the tram, and 2 the projects which under that scenario would not be 3 continuing, or indeed no new projects, because business 4 development was not part of the review. It was not 5 going to feature in future. 6 So that was another reason why I wasn't particularly 7 happy there, and it seemed the right time to consider 8 going. 9 Q. In relation to the first of the matters you mentioned, 10 the question of original intention of tie as programme 11 managers but not project managers, and you say initially 12 it was intended that tie would be programme managers and 13 would, I think, instruct external experts as project 14 managers; is that correct? 15 A. Yes. 16 Q. These external experts may be perhaps civil engineers 17 who have experience in project management; is that 18 correct? 19 A. Yes. 20 Q. You say over time that changed towards, but not wholly, 21 tie being a project management organisation. Just for 22 the avoidance of doubt, when you say not wholly, is that 23 because you say tie wasn't big enough? Even though it 24 expanded, it wasn't big enough to be a proper project 25 management organisation? 62 1 A. I think there was the potential for confusion in that 2 within the contracts that had been awarded or were going 3 to be awarded to professional advisers, there would 4 obviously have been a responsibility to project manage 5 their work and to project manage the work which they 6 subsequently would be procuring. 7 On the other hand, we had staff within tie who 8 apparently were having the same level of responsibility, 9 and it looked to me at the time as a recipe for: this is 10 not my fault, it's your fault and so on, a bounce back 11 between them. 12 So that was my -- if they were going to be, on 13 a project of this scale, project managing it in detail, 14 they would have been checking effectively every nut and 15 bolt on the contractor's delivery, and that was 16 certainly not, as I could see, the role of tie. 17 Q. Thank you. I would like to take you to a document 18 I don't think you have seen before, but it illustrates 19 how tie grew in size. 20 If we can go, please, to TIE00899954. We can see 21 from the cover first page, under the heading we can see: 22 "Extracts From the Directors Reports and Audited 23 Financial Statements Lodged with Companies House". 24 So the information we are about to look at, I think, 25 has been taken from the reports and accounts lodged at 63 1 Companies House. 2 Page 2, please, we can see a table which is headed 3 "Summary of Directors Emoluments and Staff Costs 4 Published in the Annual Director's Report and Audited 5 Financial Statements". 6 We can see the left-hand column, the year ended. We 7 can then see in the far right-hand column the number of 8 staff excluding seconded and contracted staff, and then 9 two columns in from that we can see employment and other 10 staff costs, and then to the right of that, seconded and 11 contract staff. 12 I think this may give an illustration of how tie as 13 a company grew. So we can see, for example, at year 14 ended 31 March 2003, the employment and other staff 15 costs were about GBP183,000. Seconded and contract 16 staff were about GBP469,000. And the number of staff 17 excluding seconded and contract staff were 7. 18 In the next financial year to 31 March 2004, we can 19 see the employment and other staff costs rising to 20 GBP760,000, the figure for seconded and contract staff 21 staying about the same at 486,000, and the number of 22 staff creeping up a little to 13. Then the year ended 23 31 March 2005, we see a big increase under employment 24 and staff costs. It's now just over GBP1.5 million. 25 Seconded and contract staff are about GBP675,000. The 64 1 number of staff has doubled, excluding second and 2 contracted, to 27, and finally we can see the year ended 3 31 March 2006, the employment and other staff costs are 4 just under 2.2 million. We don't see anything for 5 seconded and contracted staff, and the number of staff 6 excluding seconded and contracted staff has jumped to 7 48. 8 Does that broadly accord with your recollection, 9 Mr Macaulay, of how the company grew over that period? 10 A. In terms of the numbers of staff or numbers of people 11 involved, that broadly reflects my recollection of it up 12 until, obviously, 2006, which is when I left the 13 company. 14 You're quite correct. I haven't seen this document 15 before, and therefore the actual costs figures that are 16 in there are new to me. 17 Q. You may not know the answer to this, but it may just be 18 a point of detail. We can see for the year ended 19 31 March 2005, if we add together the employment and 20 other staff costs figure of about 1.5 million and then 21 the seconded and contract staff of 675,000, we get 22 a total of approximately 2.2 million, which is for 27 23 staff excluding seconded and contracted. We see in the 24 next financial year that number of staff has gone to 48, 25 and yet the total employment and other staff costs 65 1 remains at about 2.2 million. I couldn't work out why 2 that may be. Do you have any thoughts on that or is 3 that simply not something within your knowledge? 4 A. That's not within my knowledge. 5 Q. I understand. Thank you. 6 We can put that document to one side -- 7 CHAIR OF THE INQUIRY: Before we do, do we see that 8 directors' emoluments go from 15,000 on 31 March 2003 up 9 to 288,321 on 31 March 2010? We see that -- 10 A. Can I explain that, my Lord? Is that what you're 11 asking? 12 CHAIR OF THE INQUIRY: Yes. 13 A. When we originally set up tie, as far as I recall, the 14 emolument to appointed directors as opposed to elected 15 directors was of the order of 15,000 a year. 16 As far as I recall, there were only one of the 17 non-elected directors who actually accepted that. The 18 others decided to waive their fee, if you like. 19 So that would explain it up to the end of 20 March 2006. Thereafter, just before I left, we had 21 a new chairman appointed who was an executive chairman, 22 and effectively took over the role of Chief Executive 23 when Michael Howell left the company, and that may 24 explain the kick-start in the level of payments. But 25 that's my speculation only at this stage because by 66 1 31 March 2007, obviously I was away from the company. 2 CHAIR OF THE INQUIRY: We can ask somebody else who was 3 around at that time. Thank you. 4 MR MACKENZIE: Thank you, my Lord. 5 Mr Macaulay, I should now ask you about the creation 6 of tie. We know that tie was created in 2002. And 7 we'll go to some documents in that regard shortly. 8 Just by way of overview, what were the main reasons 9 for the creation of tie to deliver the Council's New 10 Transport Initiative? 11 A. I do cover these in my written statement, but I'm happy 12 to review them again. 13 The context of the development of the New Transport 14 Initiative was a step change in terms of scale of 15 potential investment and scale of numbers of projects 16 that were potentially going to be delivered. 17 In the run-up to the establishment of tie, the team 18 involved in the New Transport Initiative, which I led, 19 carried out a very extensive public participation 20 exercise, and from memory that probably still ranks as 21 the biggest public participation exercise the city has 22 ever carried out. 23 It was critically assessed and evaluated by 24 academics and the results were published as background 25 information to the Council in terms of their 67 1 decision-making process to go ahead with the NTI. 2 One of the issues that came out of that public 3 participation quite strongly was a disbelief, if you 4 like, from the general public that the City Council 5 would be in a position to deliver a project of this 6 scale. So that was one issue. 7 The second issue related to -- and I think 8 I referred to it earlier, my Lord -- the legislative 9 requirement that any income would be additional, 10 genuinely additional, and would be ring-fenced for 11 transport investment, and there was a lot of doubt in 12 the public's mind that the ring-fencing would not happen 13 if the City Council progressed with it and money would 14 simply be siphoned off budgets elsewhere in order to 15 create savings or whatever. 16 So what we wanted to do was set up a company which 17 was patently obviously separate from the City Council, 18 would have its own set of accounts and would have its 19 own reconciliation of those accounts and would produce 20 a clear path between the income and the investment. 21 So that was another reason for it. 22 Q. Just to pause there, Mr Macaulay, and sorry to 23 interrupt, would that in some way -- perhaps by public 24 acceptance of what might otherwise be an unpopular 25 measure such as road congestion charging, the public 68 1 could see the money was going into positive transport 2 initiatives for the city? 3 A. I think at that time there was overwhelming support for 4 congestion charging and the New Transport Initiative. 5 But in examining the results of the public 6 participation, we obviously took note of the concerns 7 that had been raised by members of the public in their 8 responses. 9 The other issue related to availability of staff, 10 and at that time I recall it was very difficult for 11 local authorities to appoint new staff, and I seem to 12 recall we needed ministerial approval to increase the 13 staff establishment of a local authority, which meant 14 the opportunity to respond quickly to changing 15 circumstances in a major programme was being potentially 16 constrained in terms of the time it would take to get 17 the necessary approvals for additional staff. It was 18 seen at that time, if it was an arm's length company, 19 that flexibility would be much greater. 20 There was another one. 21 Q. I think you also refer in your statement to 22 Scottish Executive having wished this to be delivered by 23 an arm's length company; is that correct? 24 A. If -- my comments earlier related to the establishment 25 of tie in the context of the new Transport Initiative, 69 1 and tie was established in the context of the New 2 Transport Initiative and was a legal entity and was 3 operating as a company before we were appointed to 4 deliver on the tram scheme, and I recall the letter from 5 Wendy Alexander who was a Minister at the time saying 6 that when awarding the grant to the City Council, it was 7 conditional upon them using an arm's length company. 8 But the arm's length company was already there, 9 which is why the City Council put the work towards tie. 10 Q. Thank you. We will come to that later, very shortly, 11 but I think you explain in your statement in short that 12 you have no doubt at all the Council had made up its own 13 mind to deliver the New Transport Initiative Projects by 14 an arm's length company, even before the Scottish 15 Ministers said that was also what they wanted done? 16 A. Correct. 17 Q. Thank you. If we could then go to that letter. The 18 reference is USB00000232. This starts with a report to 19 Council on 2 May 2002. We see that from the top. We 20 can see the purpose of the report in paragraph 1.1: 21 "To advise the Council on progress on the New 22 Transport Initiative and to seek agreement for a number 23 of steps required to take the initiative forward, 24 including the legal framework and budget needed to 25 finalise the establishment of the arms-length delivery 70 1 company." 2 If we can go to page 2, please, and try not to dwell 3 on this, but we can see that paragraphs 3.6, 3.7 and 3.8 4 all explain a little more in relation to the 5 establishment of the arm's length company, and you 6 explain that -- the report explains: 7 "On 18 October 2001, the Council approved in 8 principle the establishment of an arms-length company 9 to develop and deliver the ... initiative ..." 10 If we then please go to page 10 of this report, 11 I think you will see the letter from the Minister we 12 referred to earlier. Page 10. We can see it's dated 13 25 February 2002. It is from Wendy Alexander, the then 14 Minister for Enterprise, Transport and Lifelong 15 Learning. In the second paragraph, we see the Minister 16 stated: 17 "As you know I firmly believe that the private 18 sector has much to contribute to this process 19 and I strongly support the principle of an off-balance 20 sheet company to progress the Council's plans." 21 So there's a meeting of minds, essentially, on the 22 way to deliver these projects. 23 Now, could we also please, stick with this document, 24 go to page 51. We can see this is described as an 25 Application to Scottish Ministers for Approval in 71 1 Principle for the Integrated Transport Initiative for 2 Edinburgh and South-East Scotland. It's dated 3 October 2001. 4 If we then please go to page 64, we can see in 5 section 11, "Delivering the Initiative - a new approach", 6 I won't read it out, but I think we can see for 7 ourselves the various reasons set out for delivering the 8 initiative by means of an arm's length company. Is that 9 correct? 10 A. Yes, that's correct. 11 Q. Thank you. Finally, over the page, please, the 12 discussion continues. On the first half of the page, 13 and then just finally, if we look at the diagram, we can 14 see ENTICO, which became tie. Above that is CEC, and 15 above that again is Scottish Executive. 16 To pause here, Mr Macaulay, this seems a fairly 17 simple diagram. Does this also show the reporting 18 structure in that was it envisaged at this time that tie 19 would report directly to the Council? 20 A. It would effectively be in partnership with the Council. 21 I think in that same report, there is a description of 22 the levels of responsibility and involvement that the 23 Council wished to keep unto itself, which were policy 24 issues, strategy issues, statutory approval issues. 25 ENTICO would be their agent company for the delivery 72 1 of the programme of the New Transport Initiative, but 2 the content of the programme would be decided by the 3 City of Edinburgh Council. 4 So it was envisaged that the direction of 5 ENTICO would come from the City of Edinburgh Council as 6 the owner of the company, as the strategic transport 7 planning organisation for the city. 8 As a result of that, in that the City Council 9 retained those responsibilities and owned the company 10 100 per cent, it would be inevitable that ENTICO would 11 be reporting to the City Council, not necessarily on the 12 detailed implementation, but certainly where it impinged 13 upon those areas that the City Council kept unto itself. 14 Q. Thank you. We can put that document to one side. If 15 I could return to your statement, please, to page 8, 16 paragraph 14. This relates to the issue of how the 17 Council exercised control over tie, and you explain 18 that: 19 "It was envisaged that CEC would exercise control 20 over TIE primarily through their representation on the 21 board of TIE." 22 Now, would that be representation by members or 23 officers or both of the Council? 24 A. That was elected members. 25 Q. You also say at the bottom of this paragraph, as you've 73 1 just said: 2 "It was always envisaged that it would be 3 effectively a partnership operating between the two." 4 You explain the division between policy and strategy 5 and the operation or implementation. 6 Now, in paragraph 15 in the same page, if we can go 7 to that, please, we may have touched upon this earlier 8 this morning, towards the bottom, you say: 9 "One needs to set in the context of the 10 establishment of TIE the promotion of the NTI, which was 11 generating potentially multi-million pounds of income. 12 Having established that income stream, it would then be 13 able to operate much more as an arm's length 14 organisation and use that income stream as the lever for 15 other commercial arrangements with other third parties." 16 Is the income stream -- let me ask you this. What 17 would have been the source of that income stream? 18 A. Congestion charging. 19 Q. Just congestion charging? 20 A. Yes. At that time, yes. 21 Q. At the time of the establishment of tie? 22 A. Yes. 23 Q. I'm sorry if we've touched upon this already, but what 24 was the relevance of that income stream to the 25 establishment of tie? 74 1 A. It comes back again to the transparency of accounting. 2 The income stream under the legislation required to be 3 additional to any other investment that the City Council 4 would normally have carried out in transport, and it had 5 to be ring-fenced for transport projects, which is why 6 there is an indicative list at the end of the document 7 of the types of projects that could potentially be 8 funded by making use of the income stream or indeed by 9 using the income stream to secure levels of borrowing. 10 Q. How important was that income stream to the reasons 11 behind the establishment of tie? 12 A. I think it was pretty fundamental. 13 Q. Now, if there were to come a time when tie were no 14 longer in receipt of that income stream, and also had 15 only one or two projects to deliver, would that call 16 into question whether tie remained an appropriate 17 delivery model for the Council? 18 A. It is one element that obviously would have changed. 19 The other reasons for the establishment of tie that 20 I outlined earlier still would prevail. And on balance, 21 the view at the time was that it should continue as 22 a delivery organisation. Arm's length from the Council. 23 Q. Yes. We know that the road charging referendum took 24 place, I think, in early 2005. And the result of course 25 was not to proceed with that. 75 1 Was there any discussion either within tie or with 2 the Council around that time as to whether tie remained 3 the most appropriate delivery vehicle for the tram 4 project? 5 A. I honestly don't recall any major discussion of that 6 nature. The major change that took place at that time 7 was that we discontinued the development of tram line 3, 8 which was identified as requiring the income stream in 9 order for tram line 3 to proceed, and since we didn't 10 have the income stream, we couldn't demonstrate to the 11 Parliament that there was a robust financial case for 12 it, and therefore we abandoned the proposal to take 13 tram line 3 into the Parliament. 14 CHAIR OF THE INQUIRY: Tram line 3 was going to go to the 15 Royal Infirmary; is that correct? 16 A. It was going to go -- well, now, past the Royal 17 Infirmary, my Lord. It came out to the Royal Infirmary 18 and split into two, and one heading towards -- going up 19 the old A7 and the other one heading across further west 20 to the major retail park that's there. 21 The names of these things escape me at the moment. 22 MR MACKENZIE: Thank you. 23 We asked you various questions in relation to the 24 procurement model, Mr Macaulay. There's only one aspect 25 I would like to ask you about in that regard. If we can 76 1 go, please, to page 25 of your statement, there's the 2 question of utility diversions on page 25, and towards 3 the bottom third of this answer we see the sentence 4 beginning: 5 "Other key issues were that there was always a risk 6 with public utilities in gaining statutory approvals, 7 delays with utilities, and the discovery of utilities 8 that the companies do not know are under the road ..." 9 What we wanted to do was de-risk these areas, which 10 is why we separated out the utility contract. The other 11 big risk with utility contracts is, if there are half 12 a dozen different utilities, one cannot control the 13 programming of the works. So for the first time in the 14 UK, we considered looking at a combined utility contract 15 with one experienced utility contractor doing all the 16 main trunk service diversions: the game plan was to get 17 those done and dusted and get the utility contractor 18 off-site before the main contractor came on site." 19 To pause there, presumably that was primarily 20 a matter Ian Kendall was involved in; is that correct? 21 A. He would have been involved in awarding the contract and 22 managing the contract, yes. 23 Q. But you certainly had an awareness of these issues? 24 A. I did, because I was involved in the early 25 considerations of alternative procurement strategies, 77 1 which was a range of at least half a dozen different 2 alternatives which were evaluated at some length by the 3 procurement workshop, and the net result of that, as far 4 as utilities is concerned, is what's recounted there in 5 my statement. 6 In other words, because of the fact that the main 7 contracts were going to be expensive and the utilities 8 in terms of their proportion of the main contract was 9 relatively small, but the risk associated with delays on 10 the utilities contract, if they had knock-on effects on 11 the main contract, were substantial; and the risk of 12 lumping the utilities in with the main contract would 13 have meant that delays in the utilities potentially 14 would have significant knock-on delays in the main 15 contract, which is why we separated them out; and as it 16 says here, the game plan was to have the trunk 17 utilities, not the local services into individual 18 properties, but the trunk utilities all diverted and 19 done and dusted before the main contractor came on site. 20 Q. I was going to ask you what you meant by the trunk 21 utilities? 22 A. The trunk utilities would be, for example, 12-inch water 23 mains or similar-sized sewers or main communications 24 networks. What it wouldn't necessarily include is the 25 half-inch water pipe that goes from the main pipe into 78 1 the property, or the cable TV connection that goes into 2 a house adjacent. 3 It was primarily the trunk services which was -- 4 were perceived as being the major risk to -- with 5 potential delays and potential cost impacts. 6 Q. Thank you. Now, I quite understand the philosophy of 7 getting the utility work done in advance. I quite 8 understand the philosophy of only digging up the road 9 once, to do all the utilities at the same time. 10 One just wonders whether, in relation to only 11 digging up the road once to minimise disruption, whether 12 that could have been done by tie and/or the Council 13 co-ordinating works in such a way that the road or 14 a section of the road was dug up once; then the onus was 15 on each utility company to undertake their own works. 16 Would that have been an option? 17 A. It is an option. There is no question that it's an 18 option, but my own experience and experience of others 19 as well is that if we leave it to the utility companies 20 to do the diversions, you cannot necessarily have 21 control over the timescale in which they'll do it. That 22 was a consideration going for a directly appointed 23 utilities contractor. 24 Q. Why is it you don't have control over the timescales? 25 A. Because it's their services and it's their diversion and 79 1 if they're doing the diversion, you don't have direct 2 control over when they'll do it. 3 Q. They have certain statutory rights, I think, as well? 4 A. Yes, of course they do. 5 Q. Thank you. Another matter, please, leaving that to one 6 side. Go, please, to look at design at page 26 of your 7 statement. 8 In paragraph 48 you stated: 9 "My view on the importance of achieving a transfer 10 of design risk to the private sector was that it was 11 fundamental." 12 Can you explain why it was fundamental? 13 A. Well, there is -- I'll take you back to the concept of 14 the procurement. It was envisaged this would be 15 a design and build contract, and in awarding a design 16 and build contract, one has the option of simply lumping 17 the design and the implementation into one contract and 18 dealing with it as a totality. 19 We were going through a World Heritage site. We 20 were going past several thousand front doors of property 21 in the middle of Edinburgh. So therefore it was viewed 22 at the time of the procurement workshop that design was 23 a significant risk. In other words, if at the stage of 24 going for a design and build contract, the tendering 25 organisation didn't really have a good definition of 80 1 what they were tendering for, then there was a potential 2 for inflated costs in their tender price. 3 So having the design carried out in advance was seen 4 as a major benefit. Having done that, there was -- the 5 whole issue of integration between the different 6 elements that were being procured, and it was 7 intended -- I don't know whether it ever happened, but 8 the objective was that the design company would transfer 9 to the successful design and build contractor, thereby 10 providing continuity of knowledge of the various design 11 problems and issues that had come up during the design 12 period, and at the time that the main contractor was 13 tendering, they would have sight of a fairly well 14 advanced, hopefully 100 per cent well advanced, design, 15 and would then be able to provide a much firmer price in 16 his tender. 17 So in my view, the two elements of it were 18 fundamentally important. The first one is to get as 19 much of a design as possible done in advance before the 20 main contract was awarded, and secondly, having awarded 21 the main contract, to transfer that design risk to the 22 main contractor. 23 In the same way that we were aiming to transfer the 24 integration risk between the tram vehicles supplier and 25 the main contractor. 81 1 Q. Thank you. I think on the question of how much of the 2 design would be complete, if we can go, please, to 3 page 27 of your statement, to the paragraph at the top 4 of the page. We see in the last sentence, you say: 5 "Having the design virtually complete at the time of 6 tendering the main contract was always envisaged as part 7 of the process." 8 So that was your understanding while you were with 9 tie? 10 A. Correct. It was my understanding while I was involved 11 in that element of the tram in tie. As I've said, when 12 it moved on to much more detailed implementation, others 13 were deciding how to move forward. 14 Q. Thank you. 15 We go, please, to page 11, and it's back to the 16 issue of project management. 17 Paragraph 18 starts off: 18 "Consideration was given to instructing an external 19 expert body to act as project managers for the Tram 20 Project." 21 I just wondered, when was that? Was this when tie 22 was created? Was this some time later on? 23 A. Well, we did actually employ externals in terms of the 24 civil engineering contractors that were involved -- 25 civil engineering consultants that provided the bulk of 82 1 the input to the parliamentary process. I think that 2 was what I was referring to. 3 Q. So is it project management of the parliamentary process 4 part of the project? 5 A. It certainly -- it's interesting. The project 6 management of an engineering consultant is -- was at 7 that stage the project managing their own element of 8 work, such that they were in a position to produce cost 9 estimates, preliminary designs, other technical 10 information, which was necessary for the parliamentary 11 process. 12 The project management of the parliamentary process 13 itself was initially carried out by Bircham Dyson Bell, 14 legal advisers, who were parliamentary agents, well 15 experienced parliamentary agents, dealing with the 16 Westminster statutory processes. 17 They produced the draft Bills, so their legal input 18 was there in the draft Bills. But they were also acting 19 as parliamentary agents to make sure that the process 20 through Parliament was being conducted appropriately. 21 We did have difficulty with that halfway through the 22 parliamentary process, I think as a result of remoteness 23 with their headquarters being in London, and I had to 24 take -- I had recourse to change that and move it across 25 to Dundas & Wilson, who were able to respond much more 83 1 quickly to questions that were coming from the 2 Parliamentary Committee. 3 Q. On the wider question of the project management of the 4 tram project, you have explained how -- your concerns in 5 that regard and how it had initially been envisaged tie 6 would be a programme management organisation, rather 7 than project management, and that your concerns were 8 that tie became a sort of halfway house towards project 9 management, and there may be an overlap or confusion of 10 responsibilities between those in tie and those 11 externally. 12 But on a separate point, did you have any concerns 13 about tie taking on the role of project managers for the 14 tram project, when as an organisation, tie had no 15 experience of procuring and delivering a tram system? 16 A. I certainly had concerns about tie taking on the project 17 management of the implementation of the tram. 18 As far as the parliamentary process was concerned, 19 there was nobody anywhere in the world who had taken 20 a Bill through the Scottish Parliament for a tram, and 21 we were as well equipped to do that as possible, which 22 is why we procured the expert advice that we did. 23 As far as my initial concept early on with the 24 establishment of tie, having a project management 25 company to assist the programme management company would 84 1 have been quite consistent with that concept. 2 As it turned out, tie, as we've said earlier, grew 3 very rapidly and took on that role. 4 CHAIR OF THE INQUIRY: I think not only did nobody in the 5 world have experience of a tram Bill, my understanding 6 was that this was the first Bill -- first Private Bill 7 going through the Scottish Parliament. So nobody had 8 any experience of that at all. 9 A. That's correct, my Lord. The two Bills that we 10 submitted were the first Private Bills that the Scottish 11 Parliament considered. 12 I understand the legislation in terms of what type 13 of Bills can be put forward to the Parliament now has 14 changed, with the hybrid bill concept, but the hybrid 15 Bill concept wasn't there at the time, which was 16 potentially another reason why Scottish Government were 17 comfortable or wishing to see the project progressed by 18 an arm's length company. 19 CHAIR OF THE INQUIRY: Thank you. 20 MR MACKENZIE: Thank you. 21 Another point, Mr Macaulay. If we can go, please, 22 to page 15 of your statement, we had asked you various 23 questions about the different initial estimates for the 24 tram project. I'm quite happy to take that as read as 25 set out in your statement. 85 1 But in paragraph 28, just a point of clarification. 2 You say: 3 "In the early stages I had no concerns about cost 4 increases or cost estimates increasing ... and also 5 bearing in mind that we were dealing in Edinburgh with 6 a pretty unique situation and there was no benchmark 7 elsewhere in the UK to compare with. For example, none 8 of the other tram schemes had been built on 9 a World Heritage Site and that was a major issue in 10 terms of timescale for approvals and in terms of how we 11 would need to deal with the sensitive area that we were 12 going through." 13 You have touched upon that this morning, but 14 am I correct in thinking what you've set out there about 15 Edinburgh being fairly unique and the question of 16 timescale, is that something you were aware of at the 17 time or was that something you say with the benefit of 18 hindsight? 19 A. No, no, we were aware of that at the time. 20 What we did endeavour to do at the time was to 21 benchmark the cost estimates that were coming from our 22 consultant engineers, against published information on 23 a cost per kilometre basis for other tram schemes that 24 had been delivered in the UK. 25 If anything, we were in the upper range of the cost 86 1 per kilometre. That gave us a degree of comfort that 2 our consultants were actually doing their job properly, 3 but the fact always remained that we were in 4 a World Heritage site. We had a context where the 5 City Council's planning enthusiasm was very great. They 6 were very careful in guarding the World Heritage site 7 and the number of listed buildings and so on that are 8 within the city centre, and therefore it was always 9 expected that there could potentially be significant 10 delays in getting statutory approvals. 11 One reason why the design was intended to be done in 12 advance of the main contract. 13 Q. Thank you. I would like to turn to another issue and go 14 back to the question of the reporting by tie to the 15 Council. I think you deal with it at page 31 of your 16 statement. Page 31, in paragraph 57, and you explain: 17 "CEC's senior officers received information and 18 updates from TIE from all the board reports and the 19 briefings by the chief executive and there were 20 information meetings in addition to that as necessary. 21 They were well briefed on what was going on. I had no 22 concerns about TIE's reporting to CEC ..." 23 Can you recall who were the senior officers in the 24 Council who tie reported to? 25 A. That depends how senior you want to go, but the key 87 1 officer was the Director of -- was he Director of City 2 Development at the time, Andrew Holmes? And that was -- 3 as far as I'm aware, that was our main contact. He 4 obviously had staff within his organisation. He had 5 appointed staff who would report back to him in terms of 6 progress on the individual tram lines. I can't remember 7 what the job title was that he gave these members of 8 staff, but certainly we -- I had no concerns about how 9 we were reporting back to the City Council. 10 Q. In terms of the mechanics of how that reporting took 11 place, during your time at tie, between 2002 and 12 July 2006, was there regular reporting to the Council or 13 was it on an ad hoc as and when required basis? 14 A. It generally was of an ad hoc as and when required 15 basis, and I think you will see from the documents, 16 there were various different draft interim business 17 plans prepared and so on. There were various reports 18 coming back from technical advisers, all of which would 19 be advised to the City Council. But over and above 20 that, there was the regular board meetings of tie at 21 which the City Council was represented. 22 From memory, not only were the three board members 23 there, but officers of the City Council would attend the 24 board meeting as observers at the same time. 25 Q. Thank you. 88 1 Now, did there come a time when you were at tie that 2 the reporting procedures or practices changed in any 3 way? 4 A. Not as far as I'm aware. 5 Q. What I'm thinking of is there came a time when the Tram 6 Project Board was set up, and tie's Tram Project Manager 7 then I think reported to the Tram Project Board. It may 8 be that was after your time at tie. I'm not sure. 9 A. When you look at the date of some of the diagrams 10 relating to that, I think I was still there, but I was 11 unaware of the existence of a Tram Project Board. It 12 was viewed very much as an implementation mechanism, not 13 my area of work. 14 Q. Thank you. Now, you also have mentioned in your 15 statement certain other projects delivered by tie. Go 16 perhaps to page 33. 17 A. Yes. 18 Q. In paragraph 64 you refer to different projects being 19 successfully delivered. You refer to the West Edinburgh 20 Busway. Were there any problems in the delivery of that 21 project? 22 A. There are always problems in a civil engineering 23 project. However, any problems that we did have were 24 overcome. The project was delivered ahead of schedule 25 and under budget. 89 1 Q. The Ingliston Park and Ride, we've heard evidence from 2 someone in the Council's Finance Department who thought 3 there had been problems with that project, in particular 4 with another -- I think the Hermiston, perhaps, Park and 5 Ride Scheme which was delivered in-house by the Council. 6 Do you have any comments on that suggestion? 7 A. Obviously I have no comments to make about Hermiston 8 because I was not involved in it. 9 As far as Ingliston Park and Ride was concerned, 10 there was an outstanding claim from the design and build 11 contractor. It was a technical issue in relation to 12 a particular retaining wall at the entrancing to the 13 park and ride site. I don't think that that outstanding 14 issue had been finally resolved by the time I left tie, 15 but that was the only significant issue related to 16 Ingliston Park and Ride. Otherwise the contract went 17 very well. 18 Q. If we then go back to your statement then. The other 19 project I should ask you about is the 20 Stirling-Alloa-Kincardine railway. 21 At paragraph 65 at the bottom, the last sentence: 22 "There were concerns about TIE's project management 23 of the Stirling-Alloa-Kincardine railway." 24 Over the page, please. You go on to explain that 25 you need to put that into context. tie went into this 90 1 project at a late stage and the role that tie had was to 2 tidy up the concerns that were associated with the 3 delivery of that project late on in its delivery: 4 "A lot of the decisions in relation to increased 5 costs had already been made." 6 So in short, Mr Macaulay, what was tie's role in 7 that project? 8 A. Well, my understanding of it is that tie took on 9 a project management role for that project quite late on 10 in the evolution of the project, when the project had 11 started to have problems, and Clackmannanshire Council, 12 I assume in association with Scottish Government, 13 decided that they would want to pull in tie to help 14 resolve those particular problems. 15 I have to say that that is an arm's length view 16 because you may be aware that there was a Rail Director 17 appointed in tie at the time, Paul Prescott by name, and 18 Paul -- the Project Manager for 19 Stirling-Alloa-Kincardine reported to Paul, and then on 20 to the Chief Executive, rather than via me. 21 Q. Thank you. Then finally, please, back to your statement 22 at page 50. In paragraph 96 you say: 23 "Out of a number of issues, the one that I was most 24 uncomfortable with was the high levels of bonus being 25 paid. I was uncomfortable with high levels of 91 1 remuneration being paid ..." 2 You've touched upon that earlier. I think we've 3 also touched upon a number of these points: 4 "If TIE was to continue as a business, it needed to 5 spread its own business risks ..." 6 We can understand the reasons why you left. You 7 have explained that already. 8 When you left, Mr Macaulay, in July 2006, did you 9 have any concerns at that stage in relation to the tram 10 project? 11 A. I have been quoted in the past of saying that it was all 12 going swimmingly when I left. And certainly we had 13 successfully achieved parliamentary powers, and work was 14 progressing in terms of the procurement of the other 15 elements of the tram. 16 So my only concerns are those that I had previously 17 expressed in terms of: was this the right structure of 18 a company to take forward the project. 19 So other than that, no. 20 MR MACKENZIE: Thank you. I have no further questions. 21 CHAIR OF THE INQUIRY: I don't think anyone has intimated 22 any questions. 23 Thanks very much, Mr Macaulay. 24 A. Thank you. 25 CHAIR OF THE INQUIRY: That is all. You're still 92 1 technically under your citation and may be recalled, but 2 I hope that's not necessary. 3 In the meantime, I hope you have a good holiday. 4 A. Thank you. I hope so too, my Lord. Can I take this 5 with me? 6 CHAIR OF THE INQUIRY: No. Thank you very much. 7 A. Thank you. 8 (The witness withdrew) 9 MR MACKENZIE: The next witness is Trudi Craggs. 10 MS TRUDI CRAGGS (affirmed) 11 CHAIR OF THE INQUIRY: Ms Craggs, if I could ask you to 12 listen to the question and answer it as concisely as 13 possible, and then to add any explanation that you feel 14 necessary. 15 Could you speak clearly into the microphone so 16 everyone can hear, and also relatively slowly so the 17 shorthand writers can keep up with you. 18 Examination by MR MACKENZIE 19 MR MACKENZIE: Good afternoon. 20 A. Good afternoon. 21 Q. Can you state your full name, please? 22 A. Trudi Craggs. 23 Q. And your current occupation? 24 A. I'm a self-employed reporter for the Scottish Government 25 and I'm on various boards. 93 1 Q. Can we look, please, at the CV you have provided. It's 2 CVS00000076. We can see towards the bottom of the box 3 section, you qualified as a solicitor in 1998. We can 4 see you were then an associate with Dundas & Wilson 5 between September 2002 and August 2005. Between 6 September 2005 and April 2007 was the period we're 7 interested in, you were a senior associate at Dundas & 8 Wilson. In the box up we can see that between 9 March 2006 and April 2007, you were seconded to tie Ltd 10 as the Director of Approvals and Consents; is that 11 correct? 12 A. That's correct, yes. 13 Q. We can read for ourselves that you then became a partner 14 in Dundas & Wilson, and in due course CMS Cameron 15 McKenna. 16 At the top of the page then we can see, as you 17 mentioned, sitting on various boards and also as 18 a self-employed reporter for the Government's Department 19 of Planning and Environmental Appeals Division. 20 Thank you. 21 We can put that CV to one side. 22 I think you have previously provided a written 23 statement to the Inquiry. I think there may be a hard 24 copy in front of you. 25 A. I have it. 94 1 Q. We can also bring it up on screen. The document is 2 TRI00000029. I should formally go to the last page, 3 page 113, please. We can see a signature dated 4 31 May 2017. Can you confirm, please, that that is your 5 signature and this is the written statement you provided 6 to the Inquiry? 7 A. Yes, that's my signature. It is my written statement 8 for the Inquiry. 9 Q. Thank you. Your evidence to the Inquiry will comprise 10 both your written statement and the evidence you give 11 today. 12 Now, if we can go back to page 1 of the statement, 13 please, to look at your role at tie. In the 14 introductory paragraph at the beginning you explain that 15 you started advising tie and the Council on the tram 16 project in about the middle of 2004. Your initial role 17 was to manage the parliamentary process, et cetera. You 18 did that for two years until both Bills got Royal 19 Assent, which I think was about May 2006? 20 A. I think the final stage debates of Parliament were, yes, 21 March 2006. I think the Royal Assent was end of April, 22 beginning of May for both Bills. 23 Q. Thank you. You then say: 24 "I was seconded to tie on a full-time basis from 25 March 2006 until about March/April 2007, when I think 95 1 I stopped working in the tie office on a daily basis. 2 I did, however, continue to have considerable 3 involvement in the project until around March 2008, 4 although after that my involvement became more ad hoc. 5 My job title on secondment was Director of Design, 6 Consents and Approvals." 7 Then go to page 2 of your statement to see your 8 duties and responsibilities in that role. In 9 paragraph 2, you explain your key role on secondment at 10 tie was to make sure that the commitments and 11 undertakings that came out of parliamentary process were 12 properly captured and fed into the procurement process: 13 "That morphed, when Andie Harper came in as Project 14 Director ..." 15 That was approximately May 2006, when he came in: 16 "... into the role of Director of Design, Consents 17 and Approvals." 18 Just to pause there, it may be thought that a lawyer 19 may not be best placed to fulfil that role rather than 20 a designer or engineer. Do you have any comment on that 21 suggestion? 22 A. I can see the argument that it's maybe not the best 23 person to fulfil that role. But I think my knowledge of 24 the project overall, my knowledge of the consents 25 processes in relation to getting planning permission, 96 1 draft regulation orders, consents from the airport, my 2 knowledge of the land acquisition process, I think, all 3 that then augmented the team we had, and below me there 4 were engineers, there were designers, and so having that 5 global knowledge of the entire team, I think this is 6 where Andie was trying to get a team that could do all 7 aspects of it. 8 I wasn't holding myself out to be a designer or an 9 engineer. But I think my knowledge, my project 10 management skills, were supplementing what tie designers 11 already had on their team. 12 CHAIR OF THE INQUIRY: Could you slow down, because the 13 shorthand writers have difficulty in keeping up. 14 A. Sorry. 15 MR MACKENZIE: Could you also please speak into the 16 microphone for my benefit as well, please. 17 A. Do you want me to say anything more on that? 18 Q. I'll just check if the shorthand writer has captured all 19 of that. 20 I think I should start again. In short I have 21 suggested it may be thought that a lawyer may not be the 22 best person to be the Director of Design, Consents and 23 Approvals rather than, for example, a designer or 24 engineer? 25 A. Okay. I'll give the answer again. 97 1 I can accept the argument that a lawyer was perhaps 2 not best placed to take on that role. But I think 3 I have to look at it in the context of what the role 4 was. It was a wider role than just managing a design 5 team. It was a wider role than approving engineering 6 drawings. Really it was looking at the whole process of 7 the various elements of consents, approvals that had to 8 be obtained in addition to the Parliamentary Acts. 9 So, for example, there was the planning approval 10 process, the draft regulation order process, the land 11 acquisition process, getting licences from third 12 parties, getting other consents from third parties in 13 terms of the side agreements entered into through the 14 parliamentary process. But it was also not managing the 15 design team, but almost co-ordinating the inputs to help 16 the design, and below me there were engineers, there was 17 the SDS design team. 18 So I think if you take the whole team, and all the 19 expertise in that team, actually I probably supplemented 20 that and brought my project management skills and my 21 wide-ranging legal knowledge. 22 Q. Thank you. Back to your statement, please, in 23 paragraph 4. You explain your role did not involve 24 actually managing SDS. That was for SDS to do: 25 "Nor did I manage the SDS contract." 98 1 I'll come back to that shortly. Just sticking then 2 with your statement, please, at page 4, in paragraph 8 3 you explain that you reported to whoever was the Tram 4 Project Director. I think Mr Harper was the Tram 5 Project Director from May 2006 to September 2006; does 6 that seem right? 7 A. That's right. The first Project Director was 8 Ian Kendall that I worked to. Then it was Andie Harper. 9 Then it was Matthew Crosse. I think latterly it was 10 Steven Bell. 11 Q. Thank you. You also say in paragraph 8, about halfway 12 down: 13 "Ailsa McGregor came in as the SDS Project Manager 14 in about the Summer of 2006. No one had done that role 15 prior to her arrival. It was not anticipated that SDS 16 would require to be managed in the way that it was 17 eventually was. I think it was anticipated that SDS 18 contract management would be minimal." 19 Now, you say no one had done that role prior to 20 Ms McGregor's arrival. What did Ms McGregor's role 21 involve? So when Ms McGregor came in as SDS Project 22 Manager, what were her duties and responsibilities 23 generally? 24 A. Generally she was managing the interface between tie and 25 SDS at a contractual level, not an everyday output 99 1 level, but contractually she was managing the outputs. 2 So she would monitor the outputs against the programme. 3 If there were contractual concerns from SDS, she would 4 respond to that. Any issues between the two parties 5 again contractually, she would deal with those kind of 6 issues. 7 Q. Thank you. Now, you had said that -- you said: 8 "I think it was anticipated that SDS contract 9 management would be minimal." 10 Do you know why that was? 11 A. I think given the nature of the contract, it was 12 anticipated that tie would enter into the contract. SDS 13 would design a tram. tie would get the design. And we 14 would then deliver a contract, and the tram would be 15 constructed. I don't think people had anticipated or 16 had the experience of managing this type of contract, 17 and anticipated the level of management it may require 18 to ensure that the parties were fulfilling their 19 obligations. 20 I also think the contract from memory was such that 21 the risk and the obligations were all passed to SDS, 22 with tie and the Council -- the Council were fairly 23 silent in the contract, but tie having a very minimal 24 role and just expecting outputs to be delivered in 25 accordance with the programme, had the contract worked 100 1 as it was meant to. 2 Q. Thank you. We will come back to some of these 3 provisions, I think, in the contract if we have time. 4 Could you go to one, please. So the doc ID 5 reference is CEC00839054. It's at page 39. We can see 6 at the very bottom, clause 10, management of the 7 services. We can see 10.1: 8 "The Client's Representative shall ..." 9 Over the page, very top: 10 " be responsible for the day to day supervision 11 of the Services to be performed by the SDS Provider." 12 Do you know, Ms Craggs, who was tie's client 13 representative under this clause prior to your 14 involvement with the tram project as Director of Design, 15 Consents, et cetera? So prior to your secondment, did 16 you know who was tie's client representative? 17 A. I don't know. I assume it might have been the Project 18 Director, but I don't know for sure. 19 Q. Who was the client representative during your secondment 20 to the tram project? 21 A. I think at that point -- I think Andie Harper might have 22 been the client representative to start with, and then 23 I think Ailsa was given that responsibility. 24 Q. Were you ever the client representative under the 25 contract? 101 1 A. No. 2 Q. Do you know whether during your period of secondment, 3 there was day-to-day supervision by the client 4 representative of the services provided by the SDS 5 provider? 6 A. It's difficult to say what's meant by supervision. 7 There wasn't a supervision in that the designers 8 reported on a daily basis -- basis to a person in tie, 9 reporting on their progress, because they did have 10 someone at SDS at senior level who took on that role of 11 co-ordinating the design teams. 12 If it was meaning day-to-day contact, liaison 13 between SDS and tie, then there was people in tie who 14 did have day-to-day contact, but I think it's difficult 15 to say that there was day-to-day supervision. 16 I'm just not quite sure what that contract intended 17 by use of those words. 18 Q. Thank you. Perhaps related matter. Coming back to your 19 statement, please, at page 5 in paragraph 11. You say 20 in paragraph 11: 21 "The role of Director of Design, Consents and 22 Approvals did not exist before I joined tie. 23 Andie Harper created the structure." 24 Do you know who within tie was responsible for these 25 matters before your appointment? 102 1 A. Possibly no one, because the risk of getting the 2 consents and approvals had been passed from tie's point 3 of view to SDS. 4 Q. Thank you. 5 A. I should probably add also that until you have the two 6 Acts of Parliament, you probably don't focus much on the 7 additional consents you require, because there's no need 8 to, until you know you have actually got your main 9 consent which was your Act. 10 Q. Thank you. Then in paragraph 12, on the same page, 11 there's reference to the DPD sub-committee. I should 12 pause and ask, I think you attended this committee 13 certainly for a period; is that correct? 14 A. I did, yes. 15 Q. Were you aware this sub-committee was a sub-committee of 16 the Tram Project Board? 17 A. Yes, I was. 18 Q. You also say that, towards the bottom of the page: 19 "Also, I had chosen not to attend many of these 20 meetings because I did not feel that we were reporting 21 accurately." 22 We will come back to that later on in your 23 statement. 24 Also on page 6, just to finish this overview, in 25 paragraph 13 you explain that you think you worked in 103 1 the tie office every day at the start of your 2 secondment, but you spent less time there from about 3 March/April 2007 when you think you stopped working in 4 the tie office on a daily basis. It coincided with you 5 being made a partner at D&W from 1 May 2007: 6 "… but I was also doing less for tie because the 7 relationship was getting uncomfortable. I was 8 uncomfortable with the way things were going and I had 9 made my views known. I think there was a feeling that 10 I was not helping the project. I was not being invited 11 to meetings ..." 12 We will come back to that. That's just to provide 13 some context, I think, for your lesser involvement after 14 about March/April 2007. 15 Now, move on to the question of the procurement 16 strategy, please. We'd asked you various questions 17 about that. If we can go to page 8, please, of your 18 statement, in paragraphs 19 and 20, paragraph 19 you 19 say: 20 "I think in principle at that point in time 21 (December 2005) the procurement strategy was quite 22 sound. The difficulty arose in implementing it once we 23 started hitting delays. In my view, there was not 24 enough thought put into evolving the strategy or 25 re-programming to take account of the delays which 104 1 undermined the strategy." 2 In paragraph 20: 3 "Had there been someone brave enough to delay the 4 procurement to allow design to catch up, the strategy 5 probably could have been kept whole and been executed 6 more effectively." 7 Now, to pause there, why was procurement not delayed 8 to allow delay to catch up? 9 A. I don't know for sure why it wasn't delayed. What I can 10 guess, and with hindsight, that there was some impetus 11 to reach -- achieve the milestone for entering into the 12 contracts and having a tram running. 13 Therefore, that date was not allowed to be moved, 14 allowed to be delayed. Whether that was a political 15 imperative or -- I don't know, to be honest, why that 16 date wasn't delayed. 17 Q. What were your views at the time as to whether 18 procurement should be delayed to allow design to catch 19 up? 20 A. I think it's well-documented in my statement that on 21 several occasions, I felt the project should be paused 22 to allow the design to catch up, to keep the procurement 23 strategy whole. And to start the procurement strategy 24 on a proper footing. 25 Q. Yes. Just by way of explanation, who did you make these 105 1 views clear to? 2 A. The first time I raised it was at the Tramco Gateway 3 Review, which was in May 2006 on the day that 4 Andie Harper started as Project Director. And I was 5 asked a question at that time what I thought the issues 6 were, and what my recommendation would be. At that 7 point I suggested the project should be delayed by 8 a month. 9 So that was said in the presence of Andie Harper and 10 the review team. 11 I think I then again said it late 12 September/October 2006, just before tie started 13 procurement of the Infraco contractor because at that 14 point, I felt the documentation that was going to go out 15 to potential tenderers wasn't fit for purpose, and 16 a design was at such a stage that it wasn't clear 17 necessarily what we were asking the tenderers to bid 18 against. 19 At that point, given where we were, and the status 20 of the preliminary design, the design review process and 21 preliminary design 2, which is all set out in my 22 statement, I thought at that point there should be 23 a three-month delay to allow the project to catch up. 24 Then before the elections in May 2007, there was 25 discussion before the purdah period about the Minister 106 1 at the time digging a hole, effectively, to move some 2 utilities; I guess to show that the project had reached 3 a point where you were into construction phase. Let's 4 call it that. 5 Again, at that point, I was concerned that by 6 triggering the construction phase of the MUDFA contract, 7 and coming out of the pre-construction phase, you are 8 entering into a different phase with different 9 obligations, that that could lead us into difficulties. 10 Again I suggested at that point, just have a picture 11 with the Minister with a spade holding an Act of 12 Parliament or a contract. It was all publicity, it's 13 all press, rather than actually dig the hole, and again 14 pause at that point, use the purdah period sensibly, 15 when you can't make political decisions, to catch up 16 quietly; and then I think was that the last time 17 I said -- I think I said again when Dave Crawley did his 18 review. I think that was in January 2007. I think he 19 came in -- I actually can't recall the session I had 20 with Dave Crawley. But I think he came in and we were 21 asked to comment on what our key issues were. 22 At that point again I suggested a hiatus in the 23 project, another pause. I don't recall if I gave a time 24 limit at that point or not, to be honest. But there was 25 at least four occasions where I made it known to key 107 1 staff and the core of the Project Director at tie that 2 the project should be paused. 3 Q. Yes. On that point, you said that the May 2006, the OGC 4 review, Andie Harper was there on day 1 of his job. You 5 also mentioned secondly in late September/October 2006, 6 just before the Infraco tendering documentation went 7 out. 8 Again, you suggested a pause. 9 Who did you make that suggestion to? 10 A. It was late one evening. I do recall this very clearly. 11 It was a meeting with tie. Andie Harper was there. 12 Geoff Gilbert was there. Susan Clark was there. 13 I imagine Alastair Richards was there from TEL. Some of 14 the design team may have been there, but I can't be 15 definite about that. But the key parties, Andie Harper, 16 Geoff Gilbert and Susan Clark, were definitely there, 17 when I made the comment. 18 Q. On that occasion you mentioned to David Crawley in 19 January 2007, and the fourth one, just before the 20 May 2007 election, you referred to the minister with 21 a spade. 22 So just before the May 2007 election, who was the 23 suggestion made to at that stage? 24 A. It was Matthew Crosse and Susan Clark. 25 Q. What response did you get back on each of these 108 1 occasions to your suggestion? 2 A. At the Tramco Review in May 2006, there was no real 3 response back to that, because it was done in the 4 context of that review. To be fair to Andie Harper, 5 he'd just that day arrived on the project, so probably 6 wasn't in a position to comment on whether that was 7 a good recommendation or not. 8 So there was no real feedback at that point. 9 At the point of time when it was before the Infraco 10 contract, I think Andie Harper may have had some 11 sympathy over the suggestion, but there was a clear 12 kickback from the rest of the team, and I know from 13 Andie Harper that we would not be pausing the project. 14 We had to go out to procurement on that day this October 15 and it was non-negotiable. 16 At the David Crawley Review, again that was 17 inputting into his report to, I think, Project Director. 18 So I had no feedback at that point. 19 Then in the March 2007 before the -- for the MUDFA 20 contract, and the digging the hole, again, I was told 21 under no circumstances would there be a delay to the 22 project or a pause. 23 Q. Told by who? 24 A. Matthew Crosse and Susan Clark. 25 CHAIR OF THE INQUIRY: Was the hole actually dug? Did the 109 1 Minister dig a hole? 2 A. There was a hole dug outside Stanley Casino, and from 3 recollection, either no utilities were found when we 4 expected some or more utilities were found than we 5 expected, which is probably another issue. But a hole 6 was dug and filled in quite quickly afterwards. 7 MR MACKENZIE: Now go back, please, to paragraph 20 in your 8 statement. It's still up on the screen. The last 9 sentence you say: 10 "However, part of the problem with that is, if 11 progress is not being reported accurately in the first 12 place, then it becomes harder and harder to make that 13 call." 14 Can you explain what you mean by that sentence, 15 please? 16 A. On the project there was -- I say monthly, but it was 17 actually four-weekly, 20-day period reporting on the 18 project, and that's railway periods. That was why it 19 was not monthly. 20 There was reporting to the DPD and then obviously 21 reports went up to the Tram Project Board. 22 If you're reporting at that frequency, that there's 23 no big issues with the project, that there's no 24 slippage, that everything seems to be on track, if you 25 suddenly out of the blue then say you are going to pause 110 1 the project, that comes as a big shock to those people 2 you've been reporting to, saying everything is on track. 3 So therefore I think it does become harder and 4 harder to be brave enough to say to your sponsors and 5 your funders: we now need to pause this project for all 6 these reasons, which we haven't told you before. 7 Q. While you were on secondment to tie, and in particular 8 when you were working on a daily basis in the office, so 9 from May 2006, was it starting -- 10 A. Yes, it was, April/May 2006. 11 Q. April/May 2006 to, was it February/March 2007? 12 A. Yes. 13 Q. About then. 14 A. About that time. 15 Q. During that period, did you have any concerns as to 16 whether design issues were being accurately reported 17 both to the DPD Sub-Committee and the Tram Project 18 Board? 19 A. What do you mean by design issues? 20 Q. Any difficulties and delays with the design. 21 A. I think sometimes there had been reported, but perhaps 22 the severity and the implications of those were maybe 23 not always being reported as clearly as they may have 24 been. 25 Q. Thank you. 111 1 Now, going back to the SDS contract, we've heard 2 various evidence about the design programme. We haven't 3 actually looked at that in the contract. So it may be 4 helpful to do that at this stage. 5 I quite appreciate that you -- the contract is dated 6 September 2005. So you weren't involved in that; is 7 that correct? 8 A. I was not involved in the negotiation or the drafting of 9 the contract at all. 10 Q. But presumably, when you were seconded to tie in this 11 role, you required to get to grips with the contract and 12 what it required of the parties? 13 A. To a certain extent. I think you've got to appreciate 14 where we were when I first went on secondment in that 15 initially I don't think there was any inkling as to how 16 bad things were going to get. And people were not 17 contractual when I first went on secondment. And 18 actually I think it's a sign of a good contract when 19 you're not looking at it on a day-to-day basis, because 20 it's actually working. If you are poring over the 21 contract and all the clauses and having to implement all 22 the clauses of the contract, I kind of feel there's 23 something far wrong with it. 24 So I first went on secondment, we weren't at that 25 stage of poring over the contract terms to try and get 112 1 resolution of points. So it wasn't until later on that 2 we started looking at different clauses of the contract. 3 But I wouldn't say with all honesty that I read it from 4 start to finish and knew it inside out and back to 5 front. 6 Q. On the question of programme, when you were seconded to 7 tie, did you understand there to be an agreed programme 8 for the delivery of design by SDS? 9 A. Yes, I did. 10 Q. What was that programme? Where was it to be found? 11 A. There was a programme attached to the contract, there 12 was a contract schedule, from memory, and then every 13 reporting period SDS provided an update to that 14 programme. 15 Q. Thank you. If we can then now look at the contract and 16 see what it says about the programme, and the reference 17 number again is CEC00839054. 18 If we can go, please, to page 30, top of the page 19 under clause 7, "Progress", we see 7.1, a reference to 20 "Master Project Programme, Programme Phasing Structure 21 and Programme". 22 We can see in clause 7.1.1 that provides: 23 "The SDS Provider shall progress the Services with 24 due expedition ... to achieve timeous completion of the 25 services ... and its other obligations under this 113 1 Agreement in accordance with the Master Project 2 Programme ..." 3 Could we then please jump to page 13, to the 4 interpretations section to see what is meant by "Master 5 Project Programme". 6 Three definitions from the bottom, we see: 7 "Master Project Programme" means project programme to 8 be prepared, maintained, updated and amended from time 9 to time by tie and notified to SDS ..." 10 I'll come back to that later. 11 If we go then to page 30, and in clause 7.1.2, 12 towards the top, it provides: 13 "Within 30 days of the Effective Date, the ..." 14 To pause, that is defined as being the date of 15 signature of the agreement: 16 "... the SDS Provider shall update the Programme 17 with detailed programme information and shall thereafter 18 maintain, update and amend the programme in accordance 19 with the requirements set out in paragraph 4 of 20 Schedule 1 (Scope of Services) ... Any updates or 21 amendments to the programme shall be approved by the 22 Client ..." 23 Pause there. On the question of the master 24 programme, are you aware whether a master programme was 25 produced by tie and sent to SDS? 114 1 A. There was a master programme with high level milestone 2 dates. I do recall that. I assume it must have been 3 sent to SDS either prior to signing the contract, around 4 signing the contract or shortly thereafter. So there 5 definitely was a master programme. 6 Q. Who within tie was responsible for producing the master 7 programme? 8 A. Tom Hickman was the planning or programming person, as 9 in who kind of pushed the buttons. Not being flippant, 10 but he kind of formatted programme, can interrogate the 11 programme, and I think Susan Clark would have been his 12 line manager in the context of that. 13 Q. Thank you. If we can just go to another document in 14 this regard, please. It's CEC02085580. It may be this 15 is a matter I have to follow up with others, but I would 16 be interested in knowing your understanding of these 17 matters, if any. 18 So what in short this is is a document produced by 19 Parsons Brinckerhoff, and it's claim for additional 20 costs, et cetera, and you see the date is May 2007. 21 If we can go, please, to page 7 of this document, at 22 the bottom of the page, under paragraph 1.9, it's headed 23 "Failure to update the Master Project Programme", and 24 what Parsons have said here is that tie is obliged to 25 issue the master project programme, which shows the 115 1 programming interfaces for all tram network contracts. 2 PB has only been issued with one version of the master 3 programme, (dated 19 February 2007), and this has 4 impacted resource planning through the resulting lack of 5 clarity on project overall requirements." 6 So in short, Ms Craggs, we see in the SDS contract 7 the reference to the Master Project Programme, but on 8 the face of it, Parsons seem to be saying here that they 9 only received one version, at least at this date, dated 10 19 February 2007. I just wonder which is correct. 11 A. I've never seen this document before, but I know when 12 I was at tie on secondment -- so that is kind of 13 April/May 2006 until April/May 2007 -- I was aware that 14 there was a project programme, a Master Project 15 Programme, and I would have thought that would have been 16 shared with SDS. 17 From the programmes that tie got back from SDS, 18 which were very detailed, four to eight pages long, 19 I had assumed they would have got the certain milestone 20 dates from information provided by tie. So the key 21 milestone dates must from come from tie, except just 22 reading what they had there on the previous page, that 23 perhaps it didn't have -- I think it was referred to as 24 the contract interfaces on the previous page of that 25 document. 116 1 Q. Yes. We can go back to the previous page if that helps, 2 at the bottom. 3 A. It says there that the Master Project Programme which 4 shows the programming interfaces for all tram network 5 contracts. It may have been the case that the Master 6 Project Programme didn't show that, I'm not sure what is 7 meant by programming interfaces. Reading the context of 8 this, and -- on the previous -- the next page, the 9 reference to the MUDFA contract, it may have been that 10 whilst the tie project programme had key milestones, it 11 didn't necessarily show, for example, the interface 12 between the SDS outputs and the MUDFA outputs and how 13 those related to allow SDS to then structure their own 14 outputs to meet those interfaces. 15 That may be a criticism. I don't know if that's 16 what they are getting at, but with hindsight and 17 recollection, that may have been where there was a gap. 18 Q. While you were on secondment with tie, who within tie 19 was responsible for issuing the Master Project Programme 20 to SDS? 21 A. I don't know. I suspect the Project Director. 22 CHAIR OF THE INQUIRY: You mentioned Susan Clark earlier. 23 Did she have something to do with this? 24 A. She would have been involved in putting the programme 25 together, and informing that process, but I think the 117 1 interface between tie and SDS would have been through 2 the Project Director rather than Susan Clark. 3 CHAIR OF THE INQUIRY: Is this a convenient time? 4 MR MACKENZIE: My Lord, I have a few questions about 5 programme which may take about five minutes. I'm happy 6 to complete that or stop now. 7 CHAIR OF THE INQUIRY: We will stop. We will have a break 8 for lunch and resume again at 2 o'clock. 9 (12.59 pm) 10 (The short adjournment) 11 (2.00 pm) 12 CHAIR OF THE INQUIRY: Good afternoon. You're still under 13 oath. 14 I should have said when you started, I apologise for 15 inconveniencing you on Tuesday, but it was something 16 beyond my control. I appreciate you've got family 17 commitments, so I appreciate you coming in today. 18 A. No problem, thank you. 19 MR MACKENZIE: Thank you, my Lord. 20 Now, sticking with the question of programme and 21 looking at the contractual provisions, I should just say 22 my only purpose in doing this is I'm trying to clarify 23 whether a programme for the production of design was 24 agreed at the time the contract was signed or, if not, 25 whether a programme was agreed later. So that's why I'm 118 1 asking these questions. 2 If we could go back, please, to the contract, the 3 reference again is CEC00839054. Go to page 30 of the 4 contract, please. Picking up where we left off before 5 lunch, we had looked at clause 7.1.1, which referred to 6 the Master Project Programme. I had then read out the 7 next clause, 7.1.2, which referred to the programme to 8 be provided and updated by the SDS provider. 9 To understand what programme means used in that 10 clause, we should then go to the interpretation section, 11 to page 15. We see the word "programme" in the middle 12 of the page means: 13 "... the programme set out in Schedule 4 (as 14 maintained, updated and amended from time to time by the 15 SDS provider in accordance with this agreement) as may 16 be extended in accordance with clause 7.5 of this 17 agreement ..." 18 Clause 7.5, I think, deals with extensions of time. 19 If we could stick with programme and look next at 20 Schedule 4 to see what's set out there, we will find 21 that at page 248. We see this page is headed "Schedule 22 four programme". If we then please go on to the next 23 page, 249, it's quite hard to see, but if we start by 24 blowing up the very top of the page to try and see the 25 title at the very top of the page, I think we can 119 1 vaguely make out that says: 2 "Edinburgh Tram Network - Line One - System Design 3 Services - Outline Design Programme". 4 If we could then please go to the very bottom line 5 in the middle, we will see a reference to page numbers. 6 The very bottom of the page, very bottom, we can see the 7 bottom row, the very bottom row, in the middle, we can 8 see it says page 2. 9 Thank you. 10 We can vaguely see page 2 there. Just to explain 11 that the copy we have been provided with, and it was the 12 best copy we can get, starts at page 2, rather than 13 page 1, but I don't think it actually matters in the 14 bigger scheme of things. 15 If we stick with the very last line, go to the 16 bottom left, if we can try and blow that up, please, and 17 see the date, it is the very last line, not the numbered 18 rows, the very bottom line, far left-hand corner. 19 Again, it's hard to see, but I think we can just see 20 that says 12/05/05. So on the face of it, the programme 21 contained in the contract dated September 2007, 22 programme appears to be dated May -- I'm sorry. 23 CHAIR OF THE INQUIRY: Is it 2005 or is it 2006? 24 MR MACKENZIE: I think it's a 05, my Lord, because, for 25 reasons we'll come on to see, the contract of course is 120 1 signed in September 2005. I think this is a reference 2 to May 2005, and if we then go up to numbered line 74 by 3 way of example, if we can find numbered line 74, it's 4 towards the top. I apologise for the copy. We have 5 tried to get a better copy. It's the best we've been 6 given. 7 So, for example, line 74 states: 8 "Constitution Street to Ocean Drive". 9 If we go further over to the right, if we -- maybe 10 we find it hard to blow it up, perhaps. Thank you. 11 So in row 474, this is to get an overview of this 12 section, Constitution Street to Ocean Drive, we see 300 13 and something days. It's perhaps 68, it may be 88 days. 14 But just to the right of that, is it possible to 15 blow it up any further? No, that's the best we can do. 16 Just to the right of the days, it's a reference 17 to -- almost, I'm afraid, illegible. My printed copy is 18 oddly enough better, and the date is 1 July 2005. It 19 may be what we can do is try and have another look at 20 producing a better copy to go into the public record. 21 Maybe we could try another one if it's more legible. 22 This is for the start date. 23 In short, if we go again to the very second top 24 line, second top row, we can see a heading in the 25 middle. So if we blow up that, please. Thank you. 121 1 We see duration, number of days, start, finish. So 2 it's that start column we are looking at. For example, 3 even there -- it's not easy to see what that says. 4 But if we could then go back to numbered row 87, 5 please, and see if this is any more legible, and try and 6 find the start date for that, we can see, I think it 7 states 1 July. So 01/07/05, and in short, when one 8 looks at this programme attached to the contract, one 9 sees a number of start dates for the various sections 10 which are July 2005, namely a number of months before 11 the signature of the contract in September 2005. 12 So in short, from looking at the programme appended 13 to the contract, it appears as though the programme was 14 out of date at the time the contract was signed; is that 15 something you had any awareness of? 16 A. I wasn't aware of that. I wasn't involved in obviously 17 the negotiation of this contract. 18 All I can think that's happened is that they've 19 added into the contract the programme that was provided 20 as part of their tender. So they've accepted the tender 21 with this programme forming part of it and they have 22 just put that into the contract with the obligation to 23 provide an updated programme from 30 days of signing. 24 Q. When you started in your role as Director of Approvals 25 and Consents in around March or April 2006, in 122 1 March 2006, did you understand there to be an agreed 2 programme in place for the production of design? 3 A. Yes, at that time there was an agreed programme that was 4 produced monthly. My understanding was there was key 5 milestone dates for when preliminary design would be 6 produced, detailed design would be produced. And every 7 month they provided a similar programme to this Gantt 8 chart, with a more detailed line by line analysis, but 9 the key milestones were agreed. I can't remember if 10 that was in the requirements definitions stage document 11 that was produced as part of their contract, which 12 formed part of the master programme as well. But my 13 understanding was the key milestones were agreed, 14 although I think there was recognition that the work to 15 get to that milestone was kind of up to SDS and that 16 they might -- some things might slip, provided they hit 17 the big milestone, individual work packages on this line 18 by line basis might move slightly, but there was those 19 agreed dates, yes, when I started as the Director. 20 Q. I understand. So your understanding was that these key 21 milestones for production of requirements definition, 22 design, preliminary design and detailed design, these 23 dates have been agreed, and then the detail -- the level 24 of detail below that was perhaps a matter for SDS. 25 A. That was my understanding. It was the key dates that 123 1 were of importance to tie. How SDS managed their 2 day-to-day workloads, I think is for SDS to manage, 3 provided you're still hitting the overall milestone of 4 producing the design. 5 Can I just add something to an answer I gave 6 earlier. It was an answer to the question that you 7 asked about: was it odd that a lawyer should take on the 8 role of Director of Design, Consents and Approvals. To 9 be fair, I was maybe slightly not expecting that 10 question, but I have thought about it a little bit over 11 lunch. 12 I just want to set the context of that role. It 13 wasn't a role because I was a lawyer. It was because 14 I had the unique knowledge of what had happened through 15 the parliamentary process. The unique knowledge of all 16 the consents and the approvals processes. The side 17 agreement with third parties with the constraints and 18 the obligations, the knowledge of the limits of 19 deviation. 20 CHAIR OF THE INQUIRY: Can we just slow down. 21 A. The knowledge of the route. All of that I think was why 22 Andie Harper created the role, not because I was 23 a lawyer, and I was probably in a very unique position. 24 I was perhaps the only person who had that knowledge, 25 that corporate knowledge, to allow what had come out of 124 1 the parliamentary process to go into the procurement 2 process. I just want to set the role in context, to 3 give a bit more explanation. 4 MR MACKENZIE: Thank you. 5 Just the last point on the question of the 6 programme. Can we then go back, please, to page 30 in 7 the contract. 8 In clause 7.2, this may be a reference to what you 9 mentioned earlier: 10 "The SDS Provider shall carry out the Services 11 required in respect of the Requirements Definition 12 Phase, the System-Wide Preliminary Design Requirements, 13 the Preliminary Design Phase, and the detailed design 14 phase in the order of "criticality" ... sequence and 15 dates shown in the Programme Phasing Structure." 16 With a qualification after that. 17 We can see it's worth, I think, going to the 18 Programme Phasing Structure which gives us other dates. 19 It's at page 112. This is Appendix to Programme Phasing 20 Structure. The dates are easier to read, I think, 21 thankfully. 22 We can see in the left-hand, two columns in from the 23 left, the description of the different sections of the 24 line, Airport - Gogarburn. We can follow that through to 25 the right, and we can see preliminary design approved by 125 1 28 February 2006, and detailed design approved by 2 30 September 2006. 3 We also then go one down. The section from Depot - 4 Haymarket, we see part of that section, the preliminary 5 design to be approved by 30 November 2005, and detailed 6 design by 30 March 2006. 7 I won't read them all out, but at least for the 8 phase 1b section of the line, I think we see dates for 9 detailed design to be approved by between I think 10 March 2006 and May 2006, and September 2006. 11 In short, those dates seem ambitious, given the 12 contract was signed in September 2005. I wonder whether 13 that is another indication that some time after contract 14 signature, the programme dates changed, including the 15 dates for production of the milestones you mentioned, 16 the requirements definition, the preliminary design, and 17 the detailed design. Does that seem correct, that at 18 some point after contract signature, the dates for these 19 milestones changed? 20 A. Yes, they did. 21 Q. Do you know when and how they changed? 22 A. I don't. Sorry. 23 Q. But when you arrived -- 24 A. When I arrived, the date for the preliminary design 25 delivery was 30 June 2006. And that was for the whole 126 1 of -- I think my recollection is the whole of phase 1a. 2 Q. Do you remember the date for detailed design when you 3 arrived? 4 A. I don't off the top of my head, sorry. 5 Q. It may be something I can explore with the Parsons 6 witnesses perhaps as well? 7 A. Possibly, yes. 8 Q. Thank you. 9 Put that document to one side. 10 Now, again, sticking with programme, I go back to 11 your statement, please, at page 10. This is a reply in 12 relation to a letter of June 2006 from Scott Wilson 13 Railways, the TSS provider to Andie Harper, and that's 14 what we've asked you to comment on here. 15 In paragraph 28 you say, a few lines down: 16 "I do, however, agree that the programme SDS had at 17 that point was insufficient in that it seemed to be 18 difficult to track progress or delays from one month to 19 the next as there did not appear to be a baseline to 20 compare updated programmes against." 21 To pause there, is your reference to the programme 22 SDS provided, is that similar to the very detailed 23 programme we've just looked at which formed part of the 24 contract? 25 A. Yes, it was the detailed Gantt chart that was about 127 1 48 pages. 2 Q. Thank you. Again, a similar theme. Can we go, please, 3 to page 75 of your statement. 4 In paragraph 196, the context of this, you referred 5 to Mr Crawley conducting a review in January 2007 of the 6 design. One of the individuals Mr Crawley spoke to was 7 Daniel -- I forget his surname just now -- Persson. 8 That's the context of this. 9 I think you had been asked to look at Mr Persson's 10 comments, and in paragraph 196 you say, about halfway 11 down: 12 "There also appeared to be no contractual penalty or 13 remedy for missing a deadline other than to terminate 14 the contract for breach of contract." 15 In the last sentence: 16 "SDS were churning out their programme month on 17 month but did not adhere to it; and tie had their 18 over-arching procurement programme which they were 19 bashing on with regardless of deadlines being missed, 20 and it was not all being drawn together." 21 I think that those two passages I have referred to, 22 I think, set out your position on the question of SDS's 23 programme unless there's anything you would like to add 24 to that. 25 A. I don't think there's much I can add to that, other than 128 1 to say that there was no way of easily tracking 2 slippage, and I understand the implications of that from 3 either programme. 4 There was a kind of silo approach to the design 5 programme and then the procurement programme. That's 6 all I was really trying to get across. 7 And the fact there was no penalty other than 8 termination means there's not really a stick to hit your 9 contractor with. There's nothing you can really pursue 10 against them at that point in time, other than to keep 11 pushing them to try and deliver against a programme. 12 But other than termination, which is quite a major step 13 to take at this point in a project, you are left with no 14 real remedy. 15 Q. When you left there were no penalties, is that because 16 the contract didn't contain, for example, a liquidated 17 damages clause if the programme wasn't met? 18 A. My recollection is it didn't contain that type of 19 clause. That might be one type of remedy you could have 20 imposed. 21 Q. Thank you. If we could put that to one side, please. 22 I would now like to look at the different milestone 23 phases. So firstly the requirements definition 24 deliverables. This was before you joined tie, but 25 I think that was delivered in December 2005. Does that 129 1 accord with your recollection? 2 A. It seems vaguely right, yes. 3 Q. Okay. Then moving on to 2006, we should -- you have 4 mentioned your involvement in the parliamentary process. 5 We should, I think, now go to page 31, if I may, of your 6 statement. You say in paragraph 77: 7 "I think that the SDS design contract was signed too 8 early. The SDS procurement must have started 9 Spring/early Summer for the contract to be awarded in 10 September 2005. We were still going through the 11 parliamentary process when the contract was signed. 12 I do not know for sure, but I assume SDS priced their 13 bid, which was accepted on the parliamentary plans and 14 sections. We were dealing with detailed route/design 15 issues in Parliament during the Summer/Autumn 2005 and 16 there were various route/alignment amendments promoted, 17 including key ones at Haymarket Yards, Newhaven and the 18 Gyle. At Haymarket yards, the route changed 19 completely." 20 Scrolling down the page, please, towards the right, 21 about ten lines from the bottom, you say: 22 "That process was not concluded until around 23 Christmas 2005 so at that point the baseline was not 24 fixed." 25 We know that the SDS contract was signed in 130 1 September 2005: 2 "The amendments were not passed by the Parliament 3 until the end of March 2006. As far as I was aware, 4 there was no constructive liaison with SDS about what 5 was coming out of the parliamentary process." 6 Over the page, please, to complete this, continue 7 this, in paragraph 78 you say: 8 "When I joined tie on secondment ..." 9 So this is in March 2006? 10 A. March/April 2006, yes. 11 Q. "... I met with the SDS team and did a brain dump ..." 12 You then pick it up again. The brain dump, which 13 was really a workshop: 14 "I took them "virtually" round the route and told them 15 everything they needed to know such as: the commitments 16 given to Parliament; key stakeholders; changes made in 17 Parliament to the original plans and sections; changes 18 to the limits of deviation; and third party agreements. 19 I think that was in March or April 2006 so around six 20 months after the SDS contract had been signed and so 21 with hindsight it is questionable what had been achieved 22 and whether around six months of the design and 23 consequently the project programme had already been 24 lost. I believe that no one appreciated that at the 25 time. With hindsight, if SDS had spent those six months 131 1 engaging with the Council to find out what their 2 priorities were at parts of the route ... that would 3 have been constructive use of that time but I don't 4 think that was done. I am not sure what they had done 5 up to that point. In my view, it was not until the 6 brain-dump that they set off on the right path, yet the 7 preliminary design was due in June 2006, only two/three 8 months later." 9 So in short, when you said the contract was signed 10 too soon, is that because in your view you don't think 11 it properly took into account changes through the 12 parliamentary process? 13 A. Yes, because from memory, SDS were designing a tram 14 within its limits of deviation. So until you fix the 15 limits of deviation, you don't have a baseline from 16 which you are starting your design. So arguably you're 17 varying the contract because you haven't started from 18 the right base point. 19 The route changes were quite significant. So 20 I would have thought that the contract should have been 21 signed once that was firmed up and approved. Even if 22 had been done January 2006, before final approval by the 23 Parliament, we were still fairly certain those would be 24 the new routes of limit of deviation, albeit you're 25 awaiting the final approval. 132 1 So I do think it was signed too early. 2 CHAIR OF THE INQUIRY: You really advocate waiting until the 3 legislation had gone through Parliament and even had the 4 Royal Assent before you started asking people to -- 5 A. No, I think it could have started before Royal Assent. 6 When you were confident that the route was in more or 7 less its final form. You do get an indication of that 8 as you're going through the Parliament. 9 Or a point where the initial -- the requirements 10 definition stage might have been done in a period prior 11 to Royal Assent. Knowing that you're kicking off the 12 preliminary design phase once you are very certain of 13 your parameters, your route, your commitments, your 14 limits of deviation. 15 So I don't think you have to do everything totally 16 sequential. I'm not sure starting a design team off in 17 September 2005 with two key areas under consideration 18 was perhaps prudent. 19 MR MACKENZIE: Thank you. Just finally on this point, you 20 refer to the meeting, the brain-dump with SDS in March 21 or April 2006. 22 When you advised the SDS team of the parliamentary 23 changes, was that something they were aware of or what? 24 A. From memory, no, I don't think they were aware of them. 25 My recollection at the time was that when they had 133 1 entered into the contract, they got past the 2 parliamentary plans and sections which had the limits of 3 deviation on them. They got past, I think, copies of 4 the state of the agreements with third parties. And 5 then left to get on with it. But I don't think they 6 were appraised, you know, on a weekly basis or a basis 7 of the changes that were coming through the Parliament 8 which would feed into and affect their design. 9 Q. Thank you. 10 Just moving on, I think we know that the preliminary 11 design deliverables were delivered at the end of 12 June 2006, which I think was in accordance with the 13 agreed timescale; is that correct? 14 A. The agreed revised timescales at that time, yes. 15 Q. Thank you. I think I won't go to it, but I think under 16 the contract tie had 20 business days to respond. I'll 17 give the reference in passing. It's contained in 18 Schedule 9 of the contract. The review procedure at 19 page 290. 20 I think in the event no comments were made within 21 that 20-day period, and if we, for example, go to 22 a letter at CEC01794964, we can see this is a -- blow it 23 up a little -- letter from Parsons Brinckerhoff dated 24 26 September 2006, addressed to Ailsa McGregor, who 25 I think by this time was in post and was the SDS 134 1 Contract Manager, is that correct? 2 A. That's correct. 3 Q. We can see it states, the second paragraph, that: 4 "The SDS Preliminary Design was submitted on 5 30th June 2006. The agreed review response period, in 6 accordance with our Agreement, ended on 28th July 2006." 7 That's 20 business days: 8 "No formal response comments were received from tie 9 by this date. 10 "Any late review comments which result in the 11 re-working of documentation will have a disruptive effect 12 on the delivery of our main programmed works." 13 Now, you do then in your statement go on to explain 14 what happened when Preliminary Design was received at 15 the end of June 2006. If we then go back to your 16 statement, please, at page 13, to look at that. 17 Towards the bottom of paragraph 34, a sentence 18 commences "From memory": 19 "From memory at the end of June 2006 when SDS 20 delivered the preliminary design to tie, CEC were only 21 given a week to approve the preliminary design which 22 comprised over 300 drawings and associated documents 23 without having had any meaningful input into the process 24 prior to that. From memory, such a short timescale was 25 required so that tie could comply with the sign off/no 135 1 objection timescales in the contract." 2 I think that's again a reference back to Schedule 9 3 of the review process and the contract. 4 But you go on again, please, to explain this 5 further. If we then go to page 35 of your statement, 6 about two thirds of the way down paragraph 85, you 7 mention again: 8 "From memory, I think CEC were given a week to 9 approve the preliminary design outputs, although I do 10 not think it was clear whether they would be approving 11 the designs as promoter or also as the planning and 12 roads authorities. That meant that people who had no 13 previous involvement in the evolution of the design were 14 expected to look at and understand the designs in that 15 very short time frame." 16 Then: 17 "My recollection is that the contract built in 18 a process for tie to approve the design but that there 19 was not a specific process for obtaining sign off from 20 CEC. On receipt of the preliminary design, there was 21 kickback from CEC. They felt that the time frame for 22 approving it was insufficient and there had been no 23 account taken of any of their concerns as ... CEC were 24 of the view that what had been produced was simply not 25 acceptable." 136 1 So, in short, what happened next? 2 A. What happened next? The Council came back not very 3 pleased with the preliminary design, and there was 4 a view, I think under the contract review procedure, 5 that a review form could be filled in with comments and 6 that be passed back to SDS as part of the approval or 7 sign off no objection process, but the level of comments 8 were so extensive that there was no way you could start 9 with that process. 10 So there was discussion at that point, I think at a 11 higher level between Andie Harper and Andrew Holmes as 12 to how to get through the stage in the preliminary 13 design, because obviously you had to close out the 14 preliminary design in some way, to move on to the 15 detailed design. 16 And at that point comments weren't passed to SDS, 17 although from recollection, I would say they were aware 18 of the issues that were ongoing between tie and CEC 19 regarding the design, and what came out of this whole 20 process was the design approval panels and this 21 evolution of Preliminary Design 1, as it was then 22 called, to Preliminary Design 2, which allowed parties 23 to discuss the design, add in their comments, and SDS to 24 have another iteration in effect of the preliminary 25 design. 137 1 Which wasn't foreseen in the contract at all. 2 Q. We will come back to that in a little more detail 3 shortly. Going back to your statement, please, another 4 passage at page 36, in paragraph 86. You mention: 5 "A protocol was entered into, and as long as CEC 6 were provided with the type of drawings they wanted, 7 they turned everything around within the agreed time 8 limits. In my opinion, once the process was up and 9 running and the CEC planners were bought-in, it ran 10 quite smoothly. Prior to that, the problem had been the 11 lack of thought as to what was required. I think that 12 is why the problems arose and both tie and SDS were 13 responsible." 14 Where you talk about this protocol being entered 15 into, when was that roughly? 16 A. I'm not sure when that was, and that protocol related to 17 the prior approval process rather than the actual 18 preliminary design process. So it was in that context 19 that the protocol was entered into, to allow that 20 process to be smoother and to allow SDS to understand 21 the type of drawing that was required in the context of 22 planning approval process, as opposed to an engineering 23 drawing. So that's the context that comment is made in. 24 As opposed to in relation to the preliminary design. 25 Q. In terms of timing, do you think that was late 2006 or 138 1 some time in 2007, or you're not sure? 2 A. That probably sounds about right, because you wouldn't 3 be thinking about getting prior approval consents until 4 you're through your preliminary design process, because 5 prior approval relates to the aesthetics and the 6 details. So you don't get that until you are in 7 a detailed design stage. So it seems right that was 8 discussed and entered into late 2006/start of 2007, when 9 parties were thinking of progressing hopefully into the 10 detailed design process. 11 Q. Thank you. 12 Another page in your statement, please, page 15. At 13 the very top, paragraph 38, the first sentence. This is 14 in relation to an email dated June 2006. You say: 15 "The email was sent around the time when the 16 preliminary design was delivered, which was when 17 everyone realised the design process was so broken that 18 something drastic was needed to fix it." 19 By the design process being so broken, is that 20 a reference to the Council not having previously been 21 involved in the process or what is that a reference to? 22 A. It's -- it should probably be a reference to the design 23 review process. And the acceptability of the 24 preliminary design, that the whole anticipation that 25 could happen in 20 working days was not going to happen. 139 1 Q. Just for the avoidance of doubt, when you say something 2 drastic was needed to fix it, I assume that in short was 3 a greater involvement by the Council in the process? 4 A. Greater involvement by the Council as both planning 5 authority and the roads authority, and the promoter, and 6 what ownership by the Council. 7 Q. How was that done? 8 A. It was done through a couple of things. The design 9 approval panels, which got all the key stakeholders 10 round the table to discuss their concerns with the 11 preliminary design, and also by co-locating Council 12 employees within the tie offices. 13 Q. Did these things take place from June 2006 onwards? 14 A. I would say probably from the August 2006, because 15 prelim design was 30 June. July was probably spent 16 discussing the whys and wherefores for the state of the 17 preliminary design. So I think it was August/September 18 time, again after the summer break as well, when people 19 started co-locating and the design approval panel 20 started. I think they may have started, yeah, 21 August/September 2006. 22 Q. Thank you. I think we've also seen reference to various 23 charrette meetings. Was that something else that took 24 place in the second half of 2006 to try and ascertain 25 CEC's preferences for various design options? 140 1 A. Yes, and they were related to key distinct parts of the 2 route. So St Andrew Square, for example, was subject to 3 a charrette. The structure going through into 4 Edinburgh Park was subject to a charrette. It was -- 5 parts of the route where the Council had key concerns 6 because it was maybe a World Heritage site issue or the 7 entrance into the city for other people. So there were 8 very discrete elements of the route, whereas the design 9 approval panel looked at key sections of the route. 10 So they happened at the same time, effectively, two 11 separate processes. 12 Q. Thank you. I'll come back to that a little, but so 13 I don't forget, can I clarify one thing, please, at 14 page 37 of your statement. It's in paragraph 87, the 15 first sentence, where you say: 16 "Arguably, the attempts to resolve the problems 17 meant that a lot of the risk was taken back from SDS, at 18 least implicitly, if not expressly." 19 What did you mean by that? 20 A. What I think I meant by that was there was an 21 expectation that I think SDS would design -- it was 22 almost a box-ticking exercise for getting the approval 23 or sign off from tie. Then SDS did detailed design and 24 it was constructed. 25 Here what is happening is the Council are to 141 1 a greater extent influencing the design and the outputs 2 from SDS. So ultimately, for example, if the Council as 3 promoter wanted a certain structure at going into 4 Edinburgh Park, the Edinburgh viaduct, which ultimately 5 didn't get prior approval, arguably that risk would sit 6 with the Council because they had influenced or dictated 7 the design. 8 So those are the kind of examples I'm meaning, where 9 the risk was transferred back to the Council. 10 That's not to say that that was necessarily a bad 11 thing. Because risks do sit with the party who is best 12 able to manage it, and in some respects some of these 13 issues were being led by the planning authority. So the 14 risk was actually less if you expected to get prior 15 approval for the changes that were coming from the 16 Council, but the risk was moving slightly. 17 Q. Thank you. 18 If we then just refer to two documents during this 19 period by way of illustration. 20 Firstly, CEC01829874. It's simply to try and give 21 a flavour of what was happening during this period. 22 We can see, towards the top, this is a letter dated 23 30 November 2006 addressed from Parsons to 24 Ailsa McGregor. I should have paused to ask, did 25 Ailsa McGregor report to you? 142 1 A. Yes, she did. 2 Q. We can see the heading of the letter is "meeting with 3 CEC for charrette area comments", and Parsons say here: 4 "We write with reference to tie progress with 5 resolution of design issues which have formed the basis 6 of the series of charrettes and the planning summits. 7 Through this process SDS had understood that the 8 proposed solutions for Foot of Leith Walk, Leith Walk, 9 Picardy Place, St Andrew Square, Shandwick Place and 10 Haymarket had been discussed and resolved in concept and 11 that the proposed design presented and agreed at the 12 planning summits could be developed into detailed 13 design." 14 Then a reference in the third paragraph to a meeting 15 on 28 November, and the paragraph after that states: 16 "At this meeting CEC advised that contrary to the 17 decisions made at the planning summit and the advice 18 received at the meeting of the Tram Design Working Group 19 on 22 November 2006, several areas covered by charrettes 20 would receive a red status ... (ie could not proceed into 21 detailed design)." 22 That was a reference to Leith Walk and over the page 23 you see a reference to Picardy Place, and fourth -- it's 24 Picardy Place, St Andrew Square, Shandwick Place. 25 The second last paragraph: 143 1 "In general, SDS were extremely disappointed at the 2 comments received, and that they were not highlighted at 3 earlier opportunities with the amount of detailed 4 dialogue that has occurred on the areas in recent 5 months. The designs have been progressed in good 6 faith ..." 7 CHAIR OF THE INQUIRY: Mr Mackenzie, could you slow down? 8 MR MACKENZIE: The designs have been progressed in good 9 faith in co-ordination with the outcomes of the 10 charrettes and in close co-ordination with CEC during 11 the developments." 12 I think, in short, a concern about not being able to 13 progress on to detailed design because the Council had 14 still not completely decided what they want in relation 15 to these areas; is that fair? 16 A. I think that's fair from that letter, that that's how 17 SDS felt. I think from the Council's perspective, 18 I think it's very difficult to understand what you're 19 going to get until you see a design. Because the limits 20 of deviation are just that. They're two lines generally 21 pavement to pavement that the tram is going to go in, 22 and within CEC, they do wear various hats as promoter, 23 planning authorities, roads authority, and I think they 24 did find it difficult in some respects to get 25 a consensus as to what the priorities were, whether it 144 1 was cycling, whether it was parking, whether it was 2 public realm, and that, I think, did have an impact on 3 how SDS could progress, which I think is captured in 4 that letter. 5 Q. Yes. 6 CHAIR OF THE INQUIRY: Were all of these not represented at 7 the charrette process? 8 A. Sorry? 9 CHAIR OF THE INQUIRY: Were all of these different 10 disciplines, if I put it that way, within CEC not 11 represented at the charrette? So in other words, could 12 you have somebody from CEC at the charrette, saying: 13 yes, that's fine, and then it goes on to further work 14 and goes back to CEC Planning Department or somewhere, 15 who say it's not fine. 16 A. I think from memory -- and this really is racking my 17 brains, I think the charrettes were a higher level in 18 that it was Andy Harper and Andrew Holmes. I think 19 there was probably guidance given at that level as to 20 what the priorities were, and what the design needed to 21 incorporate, whether it was a cycle path or a wider foot 22 pavement or work parking. When it came down to the 23 design approval panels, you've got the next tier of 24 Council representatives at those meetings, who perhaps 25 once they saw the drawings maybe had an expectation 145 1 there was going to be more parking or a wider footpath 2 or a better cycle way. 3 So I think it was maybe managing expectations within 4 the Council, perhaps, as to what would come out of the 5 design. But I can see it seems a bit odd that you agree 6 something at a charrette process that perhaps later on 7 is not acceptable. It does make it quite difficult for 8 SDS. 9 CHAIR OF THE INQUIRY: It probably involves more work, and 10 therefore a claim for extra payment, does it? 11 A. Potentially, but being devil's advocate, if they perhaps 12 engage sooner in the process, they would have a better 13 understanding of what the Council's priorities were, and 14 their expectations of what they wanted to see in certain 15 areas. St Andrew Square for the Council is a key 16 location. At the time of the tram project, they were 17 public realms projects, already been considered. They 18 were trying to tie the two together. Had there been 19 better engagement on both parties' parts, early on, 20 perhaps from September through the early part of 2006, 21 you shouldn't have ended up in the situation where 22 you're trying to bottom out key design issues through 23 this kind of process. 24 CHAIR OF THE INQUIRY: So the difficulties that SDS were 25 experiencing, you say, were really a function of their 146 1 failure to engage and the city's failure to engage with 2 them much sooner? 3 A. I would say so. I think both parties should have been 4 engaging a lot sooner. It was the Council's tram. It's 5 the Council's city. They obviously had an idea in their 6 mind what they expected to see. Unless you communicate 7 that to the designers, they'll have their own vision of 8 what they want to do and it's very much an engineering 9 vision because they are engineers. Whereas the Council 10 were coming at it from more of a design softer public 11 realm angle as well. So yes, I think both parties 12 should have engaged a lot sooner to understand and 13 manage those expectations. 14 CHAIR OF THE INQUIRY: Thank you. 15 MR MACKENZIE: Just on the question of claim for the 16 charrettes work, could we please go to document 17 CEC01629062. 18 The email in the second half of the page is from 19 Ailsa McGregor, on 23 July 2007, to Geoff Gilbert. 20 I think you are copied into this one, Ms Craggs. 21 The subject is SDS Claim/tie counterclaim. 22 What Ms McGregor does here is summarise various high 23 level events that led to delays to the project, as we 24 see. 25 Over the page, please, page 2, in paragraph 13, we 147 1 see a reference to the charrette deal of GBP600,000, and 2 the two interchanges changes at approximately GBP100,000 3 each included for all preliminary and detail design 4 associated with these elements. 5 So on the face of it, it looks as though tie agreed 6 to pay SDS GBP600,000 in addition to the charrette work; 7 is that correct? 8 A. I think that's correct, yes. 9 Q. That on the face of it would suggest that SDS have to 10 undertake a reasonably significant amount of work, in 11 that regard. Would that seem fair? 12 A. Yes, there was a significant amount of work, yes. 13 Q. Thank you. We can put that document to one side. 14 Just to finish off with the preliminary design 15 phase, if we can go to another document, please, which 16 is in December 2006, the reference is PBH00026782. We 17 can see it's a report produced by Scott Wilson, the TSS 18 supplier. Preliminary design review report dated 19 6 December 2006. 20 It's quite a chunky document, but if we can go, 21 please, to page 5, to look at the Executive Summary, and 22 the last two paragraphs I'll read out. It states: 23 "The engineering aspects of the project seem 24 generally to be on course with the structures a notable 25 exception. These elements have been subject to recent 148 1 interest and decisions are outstanding on certain design 2 aspects. This is not something that SDS can be held 3 wholly responsible for. Away from the hard engineering, 4 a number of the softer issues would appear to be 5 outstanding. It is clear that these will require to be 6 addressed in early course given their impact throughout 7 the project." 8 To pause there, is the reference to softer issues to 9 do with the planning aspects? 10 A. Can I just ask what date this document is? 11 Q. Sorry, yes. It is dated 6 December 2006. 12 A. I think that is a reference to the planning aspects and 13 probably the softer design elements. 14 Q. I think we have heard from engineering witnesses that in 15 many ways it was easier to pin down the engineering 16 aspects because they were more specific, whereas 17 planning aspects involved aesthetics and matters of 18 subjective opinion and judgment? 19 A. I think that's correct, yes. 20 Q. Just returning to this report, the last paragraph -- I'm 21 not sure I read out the last sentence, the second-last 22 paragraph stated: 23 "It is clear that these will require to be addressed 24 in early course, given their impact throughout the 25 project." 149 1 The last paragraph: 2 "Our overall conclusion is that the bulk of the 3 Preliminary Design submission is now either acceptable 4 or acceptable given the responses from SDS." 5 So I think to summarise or paraphrase, I think in 6 short this report was given a qualified acceptance to 7 the preliminary design. Would that be a fair -- 8 A. That's a fair summary. 9 Q. If we go then to page 7, to look at simply one sentence. 10 In the paragraph commencing: 11 "By mid-October it became clear ..." 12 So that's a reference to mid-October 2006: 13 "... that the overall review process was in somewhat 14 disarray and required to be closed out with SDS." 15 Would you have agreed with that description of the 16 overall review process as being somewhat in disarray? 17 A. Yes, I would agree with that. 18 Q. Just lastly, so we can note in passing that without 19 going to it, if we can go -- we will go to, if not read 20 it out, page 87, please. If anyone wishes any more 21 detail beyond the executive summary, we can see on this 22 page and the following page a little more is said about 23 the conclusions relating to each discipline. So, for 24 example, track is set out, structures is set out. 25 Over the page, we see the heading "Roads", and 150 1 "Traction Power". 2 Then I should also please go to another email from 3 Steven Bell. The reference for this is CEC01672004. 4 It's an email at the bottom of the page from 5 Steven Bell, dated 20 December 2006. The subject is 6 "Review of TSS report on SDS preliminary design". 7 I think Mr Bell was a Director of Engineering and 8 Procurement at this stage; is that correct? 9 A. I think so, yes. 10 Q. Mr Bell states: 11 "Having reviewed the TSS report on SDS Preliminary 12 design, it raised a number of important issues." 13 Then two more paragraphs down: 14 "Having carried out the review and considered 15 Douglas's initial response, I do not consider 16 Preliminary Design closed out to tie and TSS 17 satisfaction, principally because of the following 18 outstanding items." 19 Over the page we can see various bullet points. 20 I'll simply go to the first four. One is: 21 "No utility designs have been included within the 22 review." 23 Secondly: 24 "Track section ..." 25 No drainage design, and then structures are not at 151 1 a satisfactory stage. 2 So that's where things were left then. 3 Again, just to complete, 2006, if we go to 4 a separate document, please, it's TIE00040947. 5 We can see this is headed, "The Tram Project SDS 6 Contract Reporting Period 15 to December 2006". 7 It's simply the three circles in the very middle, 8 performance by phases. 9 If we look at the one with red, if we can blow up 10 the detailed design, we can see at this stage detailed 11 design had been planned to have completed 71.9 per cent, 12 and in fact 28.3 per cent had been completed. 13 Putting to one side the precise accuracy of those 14 figures, is that general picture recollect with your 15 understanding of how things were at that time? 16 A. Yes, it does. 17 Q. Thank you. 18 Now, in terms of how all of this could have been 19 avoided, can we go, please, to page 38 of your 20 statement. In paragraph 89 you explain: 21 "The problems could have been avoided if: SDS had 22 started the design process from the right baseline." 23 Is that a reference to waiting until the 24 parliamentary changes had been finalised? 25 A. Yes, it is. Where the rate changes were finalised as 152 1 part of that process. 2 Q. And continuing: 3 "There had been a better understanding by both 4 parties of what the design and consents outputs would 5 look like; there had been a period of proper engagement 6 at the outset; all parties had clearly understood and 7 respected CEC's role and that this was reflected in the 8 contract; and CEC had properly engaged with the project 9 from the outset. I think it was all totally avoidable." 10 When you set it out that way, it all seems very 11 simple. Do you agree? 12 A. It does with the benefit of hindsight. And it does seem 13 very simple. I accept that back in 2006/2007, it was 14 a very, very busy hands on project. There was a lot of 15 things happening. So it is easy for me to put that down 16 now, with hindsight. 17 But I still think that with hindsight, had some of 18 these points been taken on board, and there was time to 19 do that from the signing of the SDS contract, even if it 20 had been signed in September, which I think is a bit 21 early, through to the end of the parliamentary process, 22 there was time to engage. There was time to take on 23 board CEC's comments. There was time to manage what 24 outputs would look like. There was time to get an 25 understanding of what CEC wanted and required in terms 153 1 of parking, public realm. There was time in the process 2 to do that. 3 Had the parties, I think, understood that ultimately 4 this was CEC's tram, they were the promoter, albeit they 5 were procuring it through their arm's length company, it 6 was still their tram. And they were more than just 7 a key -- a stakeholder to tick the box because you have 8 gone and met them a couple of times and got some views. 9 They were central to what was going to be acceptable, 10 and I do think that had this been done, some of the 11 problems would have been avoidable. And there was time 12 to do that. 13 Q. Thank you. 14 I would like to park that issue there just now, and 15 move on to something else, please. If we can go to an 16 email, the reference number is CEC01797628. 17 A. Sorry, can I say one supplementary point to my last 18 answer. 19 Q. Sorry, please, yes. 20 A. I should also probably, to be fair to all the parties, 21 say that that presupposes that the Council were going to 22 engage, and would have been open to that engagement and 23 taken ownership and responsibility for being part of 24 that process too. So it had to be a two-way 25 relationship, not just -- I'm not trying to say SDS 154 1 didn't do it. The Council had to come forward at that 2 time as well. 3 Q. Yes. Something we have seen from other documents 4 witnesses is the need for an integrated one team 5 approach. It sounds like the sort of thing you are 6 describing; is that right? 7 A. Yes, it is. 8 Q. Thank you. This document is an email you sent on 9 20 November 2006 to Geoff Gilbert and Andie Harper. 10 Subject, OGC concerns. I think you were due to meet 11 with the OGC panel, and you say in the second paragraph: 12 "However I would have thought that they would also 13 want to discuss progress to date, the ITN and the bid 14 process to date." 15 I think that's in relation to the Infraco 16 procurement: 17 "As you know I have various concerns about the 18 procurement process to date and in particular the 19 following." 20 The first point concerns the quality of the ITN and 21 the ability to get a robust price from the 22 ITN/employer's requirements. What were your concerns in 23 that regard? 24 A. Well, if we go back to go when ITN went out, which was 25 October, I'd already made my feelings clear that the 155 1 project should be paused because I didn't think that ITN 2 was fit for purpose. 3 If you want to get a good price or best price from 4 your tenderers, you can be very clear and precise as to 5 what you are procuring, and given the state of the 6 design at that stage, which hadn't been closed out, and 7 the vagueness of some of the aspects of the employer's 8 requirements, which could have been open to 9 interpretation, and therefore open to different pricing, 10 I felt that was a weakness in our process which meant 11 that by the time you get the tenders back, you may not 12 be comparing apples and apples in pricing, which makes 13 it very, very difficult then to assess the bid you are 14 getting and to find out which is potentially preferred 15 bidder. That was really my concern there. 16 Q. Thank you. 17 If we can go to your statement to see the response, 18 at page 24, please, in paragraph 59. Halfway through, 19 you say: 20 "My recollection is that I had discussions 21 throughout that time and I was consistent in what I was 22 saying about the procurement process in that we were not 23 ready to start it. I think there was perhaps an 24 acknowledgment from Andie Harper that my concerns were 25 valid however, it was made clear to me by Andie, 156 1 Susan Clark and Geoff Gilbert that we had to keep to the 2 programme despite the status of the design." 3 I apologise if I have asked you this already, but 4 why was it that you had to keep to programme despite the 5 status of the design? 6 A. I think because ultimately the end date for awarding the 7 contract, allowing a construction period and then 8 operating the trams wasn't moving. 9 So if that wasn't moving, you had no option but to 10 either start your procurement as you planned to, or 11 reduce your procurement time frame, which didn't seem to 12 be palatable either. 13 CHAIR OF THE INQUIRY: Do you know why the end date was 14 fixed and unable to be changed? 15 A. I don't know if it was political. There was a slogan at 16 one time about having trams for Christmas. 17 CHAIR OF THE INQUIRY: We heard -- 18 A. I can't remember which Christmas it was. 19 CHAIR OF THE INQUIRY: 2010, I think it was, yes. We heard 20 from one witness this week that that was achieved in the 21 sense of one tram on Princes Street. 22 A. I don't think it was a running tram on Princes Street. 23 CHAIR OF THE INQUIRY: It moved two revolutions each way 24 just to stop it seizing up. 25 A. I don't know if it was a politically driven deadline, 157 1 or, as I have said before, because we had not been 2 reporting that there are serious issues with the 3 programme, it was almost too late now to start opening 4 that debate up. So therefore it was very much we will 5 keep to our programme. 6 Also I think perhaps we may have factored into the 7 thinking that when you start a procurement process, you 8 set out in the outset in your ITN the timescale for that 9 process, because bidders are entering into 10 a procurement, and bidding usually not getting any costs 11 for taking part in that process. They don't get bid 12 costs generally. 13 So they want to know that the procurement process is 14 managed, well managed, not tight process but sufficient, 15 but they still want to know the key parameters, and when 16 contracts might be awarded. And once you put that out 17 to the tenderers, you are almost driven to try and 18 achieve that programme, unless you go out and change it. 19 But then that could undermine confidence in your 20 process. 21 MR MACKENZIE: Perhaps one final document to you from 2006. 22 That is CEC01796724. We can start at the bottom of the 23 page, please. We see an email from Geoff Gilbert dated 24 23 October 2006 to Richard Walker, Mr Dalton, et cetera, 25 of the consortium. 158 1 Then over the page, please, we can see it's copied 2 into Bob Dawson and to yourself. The subject matter is 3 detailed design priorities. 4 Mr Gilbert sets out: 5 "Further to our recent discussions I enclose our 6 proposed priority for the preparation of detailed 7 design. Could you review this to advise any adjustments 8 to this prioritisation with a view to providing price 9 risk critical design information first." 10 So in short, I think what's happening here is that 11 Mr Gilbert, as part of the commercial or procurement 12 team, is discussing with the bidders the change in the 13 priority for the preparation of detailed design. 14 Over the page, please, to page 1, the next email is 15 from yourself, dated 23 October 2006. Responding to 16 Mr Gilbert, saying: 17 "Geoff, thanks for this - how did we come up with 18 this list - does it reflect what all the bidders 19 require? Has Andie seen this? Have we considered the 20 impact this may have on MUDFA? What timescales would 21 this require to be delivered to? 22 I think we need to bottom out these issues asap - 23 this seems to be a case of the tail wagging the dog 24 again." 25 What is the reference to the tail wagging the dog? 159 1 A. It's the procurement tail wagging the design dog 2 effectively. Rather than allowing SDS to complete the 3 detailed design in accordance with the programme, we're 4 reprioritising, I felt at this point without having any 5 regard as to what SDS thought about it, and therefore 6 you're changing the parameters for SDS continually. 7 Purely for the procurement process, not necessarily for 8 the betterment of the design or trying to close out the 9 design process or the consents. 10 Q. What difficulties, if any, did that cause for SDS or for 11 the design programme more generally? 12 A. From recollection, I think what happens is SDS then have 13 to reprioritise their work, and they are working to 14 obviously their own work plan to try and hit deadlines. 15 That gets reprioritised. Things may not be then done in 16 the right order to allow them to do interdisciplinary 17 checks or could have an impact, as I have said there, on 18 MUDFA design, so MUDFA could be digging up in accordance 19 with one design which then changes through detailed 20 design. 21 So I think they then -- SDS then have to totally 22 restructure what they are doing to fit in with our new 23 list of priorities. 24 Q. You refer in your email to a case of the tail wagging 25 the dog again. So it had happened at least on one 160 1 previous occasion; is that correct? 2 A. Yes, I think I used that term in an earlier email, 3 I think in relation to the reprioritising of the close 4 out, the preliminary design, in order to get certain 5 drawings to Infraco, I think. I did use it in a similar 6 context previously in an email. 7 Q. And to continue with the metaphor, did the tail keep on 8 wagging or stop? 9 A. I'm -- I think probably the tail did keep on wagging for 10 a certain amount of time, and then probably stopped as 11 you get further through the procurement stage. 12 MR MACKENZIE: Thank you. My Lord, that may be a suitable 13 time to take a pause. 14 CHAIR OF THE INQUIRY: We will have a break of ten minutes, 15 I think, if we can. Are we all right to finish this 16 witness? 17 MR MACKENZIE: My Lord, I may be about another -- between 30 18 and 45 minutes. I'll certainly finish today. It's just 19 a question how close to 4 o'clock I can finish. 20 CHAIR OF THE INQUIRY: We will give you 15 minutes then. 21 3.25. 22 (3.10 pm) 23 (A short break) 24 (3.26 pm) 25 CHAIR OF THE INQUIRY: You're still under oath, Ms Craggs. 161 1 MR MACKENZIE: Thank you, my Lord. 2 We had referred to a review carried out by 3 David Crawley in January 2007. If we can go to that 4 document, please. It's CEC01811257. 5 Now, I think you mentioned you have no recollection 6 of this review; is that correct? 7 A. That is correct. 8 Q. So what I would like to do, please, is go to page 8. 9 This is a record by Mr Crawley of his interview with 10 you. All I would like to do is to give you a minute to 11 read that, and let us know whether, although you can't 12 remember the interview, this is likely to have accorded 13 in general with your views at the time. (Pause) 14 A. That does reflect my thinking at the time, yes. 15 Q. Thank you. I would like then to move on to another 16 document. CEC01826622. This is an email from yourself 17 dated 9 February 2007 to Matthew Crosse. The subject 18 matter is a "TEAM LEADERSHIP MEETING". I think Mr Crosse 19 must have been relatively recently appointed as the new 20 Tram Project Director around this time; is that correct? 21 A. That's correct, yes. 22 Q. We see under issues this week, in the second half of the 23 page, under 2: 24 "SDS/programme/priorities et cetera - 25 you know what the position is here. Re programme, 162 1 I understand that some members of the team are asking 2 SDS to prioritise/de-prioritise work to expedite eg 3 utilities. This is being done in isolation and could 4 prejudice other work streams. This and the point below 5 have to stop if we are to stick to one programme and 6 deliver." 7 Is this another example of what we were discussing 8 just before the break of the tail wagging the dog? 9 A. Yes, it is. 10 Q. Do these instructions appear to be coming from the 11 utilities team in tie? 12 A. From recollection, I don't think it was just an issue 13 around utilities. I think SDS are being instructed by 14 various people on different aspects of the design. 15 Q. We also then see in paragraph 3, procurement, you go on 16 and say: 17 "This is another example of not sticking to 18 programme, diverting SDS, et cetera. This has to stop - 19 we can't be reactive to bidders." 20 Is that an example of what we were discussing just 21 before the break? 22 A. Yes, it is. 23 Q. Thank you. Could we look then -- continuing on the 24 matter of Infraco procurement -- at a document at 25 CEC01793907. We can see this is an email from yourself 163 1 dated 1 March 2007 to Geoff Gilbert, subject Infraco 2 procurement. In the second paragraph you say: 3 "I am becoming increasingly concerned that the 4 position we are conveying to the bidders deviates from 5 the procurement strategy and I'm not sure we have 6 authority to do that. In addition, I feel that 7 sometimes the position we are adopting does not 8 represent the view of the team - eg in relation to 9 prior approvals I understand that we have advised one 10 bidder that tie will take this risk - I have explained 11 why this is not appropriate and I worry that there is 12 sometimes a lack of understanding." 13 What did these concerns relate to? 14 A. It relates to being reactive to what bidders were 15 requiring us to do. So in that situation clearly when 16 the bidders didn't want to take on the risk of the prior 17 approvals, which at this stage in the process the 18 process may have started on prior approvals, but it may 19 not have done. 20 So clearly Infraco are saying we don't want to take 21 that risk, and what I was trying to say was that 22 represented a departure from the SDS contract, because 23 it's their scope to get the prior approvals. 24 Therefore, how does that impact on the proposed 25 novation of the SDS contract into Infraco? How do you 164 1 square off how that risk sits, where you have given 2 different parties an indication of who was doing what. 3 It was also my concern that whilst we said that to 4 one bidder in the course of a bidding meeting during the 5 tender process, my understanding at that time was we 6 hadn't actually conveyed the same position to the other 7 bidder. So therefore again, you're not comparing apples 8 and apples when you get to price, because you are 9 pricing different risk allocations and different scopes. 10 I was also, I think, not everyone, I think, 11 understood some of the consenting processes, how they 12 related to design, how they then related to the 13 construction. So it's a whole panel of concerns that 14 I was trying to convey to Geoff at that point. 15 Q. Thank you. 16 Then two paragraphs down you said: 17 "In addition there appears to be no management of 18 the next drop of information nor a coherent plan of what 19 we are trying to achieve. I just feel we are losing our 20 way with this." 21 With this, is that a reference to the Infraco 22 procurement process? 23 A. I think so. It's hard just reading that quote now. But 24 it probably was a reference, yes, to the procurement 25 process and the fact that we should be driving the 165 1 process, not just responding to, you know, what bidders 2 are looking for from us. There should be some purpose 3 and intent to what we're trying to do and we retain the 4 control of that. That is what I was trying to get at 5 there. It's slightly difficult, with hindsight, because 6 it's quite bland on the face of it, but I think that's 7 what my concerns were. 8 Q. Then, second last paragraph, you say: 9 "You may have views on this." 10 Do you remember whether Mr Gilbert did speak to you 11 about this? 12 A. From recollection I think we might have had a phone call 13 discussion on it. I couldn't say for certain, but 14 I think we may have had a phone call discussion on it. 15 Q. What did Mr Gilbert say? 16 A. I think from recollection, he tried to reassure me that 17 everything was under control and not to worry. But I'm 18 not sure that satisfied me. I thought there were still 19 concerns there. 20 Q. You go on to say: 21 "I am going to speak to Matthew about this." 22 That must be Matthew Crosse. Do you remember 23 whether you did speak to Matthew Crosse about that 24 around that time? 25 A. I can't remember, to be sure. 166 1 Q. Thank you. 2 Just to continue a little in time, can we go back to 3 your statement, please, to page 28. 4 CHAIR OF THE INQUIRY: Before leaving that email, it seems 5 that you're apprehensive that he might take it the wrong 6 way, as it were. Was that a reasonable apprehension to 7 have in respect of Mr Gilbert? You say: 8 "... you won't see this as interference, and it is 9 not intended to be critical. We're all busy, but we 10 can't afford to get this wrong." 11 Finally you say, well, you offered to speak to him 12 first before going to Matthew Crosse: 13 "Please don't take this in the wrong way. I'm 14 trying to help." 15 Reading that, is there some underlying impression 16 that you might have been apprehensive or 17 am I misinterpreting that? 18 A. No, I think it's a fair trade back from what I have 19 written there. I think I have said elsewhere in my 20 statement that around this time my input wasn't always 21 welcomed. Probably because I wasn't going along with 22 maybe the party line and where things were going, and 23 I was raising concerns, and whilst I wasn't part of the 24 legal team advising on the procurement process and 25 running the procurement process, I felt given my role, 167 1 I had duties to the client to voice concerns where 2 I thought there were concerns, but they weren't always 3 welcomed or received with the right intent, I felt. 4 So to try and get Geoff to engage with some of this, 5 I was trying to soften it a little bit to make it clear 6 I wasn't trying to interfere. Everyone was busy. 7 I think everyone was trying their best, but I was trying 8 to be constructive and avoid problems which I could see 9 or foreseen may happen if we carried on down a certain 10 route. 11 MR MACKENZIE: Thank you. I think on a similar vein, 12 page 28, please, of your statement, in paragraph 70, 13 picking up on the point you've just mentioned, you say: 14 "From around September 2006, I was probably viewed 15 by the Project Director and others at a senior level 16 including Geoff Gilbert and Susan Clark and perhaps 17 Willie Gallagher as being quite negative and critical. 18 I was challenging what was happening and I think Geoff 19 sometimes took it personally - ie that I was having a go 20 at his strategy. That is not what I was doing. I felt 21 that to do my job and advise tie properly, I had to 22 challenge things that I thought were not right. It was 23 not always comfortable for me, but to retain my 24 integrity and to advise tie and CEC properly, I could 25 not just go along with it because someone was saying 168 1 this is the strategy and I do not want to hear it." 2 To pause there, why was it not always comfortable 3 for you at that time? 4 A. Because it felt I was a lone voice. And it's very hard 5 when you're a lone voice, and people don't want to hear 6 that, to continue trying to push back on it. And no one 7 was very receptive to it at that point in time. 8 Q. How about this other angle in the sense that you at this 9 time, you weren't, I think a partner in your firm; you 10 were a senior associate? 11 A. I was senior associate. 12 Q. Presumably you were seconded to tie, and presumably tie 13 must have been a client of your firm? 14 A. tie was a client of the firm. So were the Council. So 15 were Transport Scotland. 16 Q. Did you have any concerns that there might be negative 17 feedback from senior members of tie back to senior 18 members of your firm? 19 A. No, that honestly didn't cross my mind, to be honest. 20 I never really thought about that until you just said 21 it. 22 As I said, I think my own professional integrity, 23 and if I continue a relationship professionally with 24 these clients, I had to be seen to be advising them 25 credibly, whether I'm on secondment or not, and being 169 1 part of a team which includes your clients like tie, CEC 2 and Transport Scotland, I felt I had to retain that 3 position. And not just go along with what people were 4 saying because that was maybe the easier option or where 5 the team thought was best to go. 6 Q. Thank you. Just continuing with this, in the next 7 paragraph, paragraph 71, you say: 8 "Matthew Crosse took more of an interest in 9 procurement later on so I do not think I spoke to him 10 about the content of my email. I had heated discussions 11 with Geoff Gilbert throughout, but I do not remember if 12 I discussed the specific concerns in my email. Geoff 13 was running the procurement process and it very much 14 felt that it was his way or no way." 15 Finally, just the start of the next paragraph, 72: 16 "I felt that lip-service was paid to my concerns. 17 I never felt that they were addressed. I cannot 18 remember if what I said in that email was addressed. 19 With hindsight, I think there was an acceptance on my 20 part that Geoff was not going to do anything about what 21 I was saying." 22 Stop that there. And then one last email in that 23 regard, please. If we can go to CEC01791722. This is 24 an email from Matthew Crosse of 15 March 2007 to various 25 individuals in tie, including yourself, saying: 170 1 "Yesterday Trudi and I discussed priorities for her 2 new role in project strategy. This is an important 3 support function to the entire organisation. These are 4 the immediate tasks we have agreed for Trudi." 5 Now, to pause here, we know that David Crawley and 6 Tony Glazebrook had joined tie in about January or 7 perhaps February 2007 to job share the role of 8 essentially Engineering Director. Was that the reason 9 for a change in your role in tie, do you know? 10 A. Yes, I think it was. Yes. I think probably at that 11 point, there were processes in place for the consents 12 processes. The land, I think, had probably all been 13 acquired at that point in time. There was a TRO team. 14 So there was separate work streams all in place now for 15 the consents. 16 The design had evolved to a point where you really 17 are going to the next stage in the process, which is 18 getting to engineering and the construction elements. 19 Q. We can see that in the longer term, one of the first 20 bullet points: 21 "Supporting the negotiations with Infraco and 22 advising Geoff in our strategy/tactics to meet our deal 23 objectives." 24 Did you in fact end up fulfilling that role? 25 A. No, I didn't. I think I cover this in my statement, 171 1 actually. I can't think which paragraphs, but no, 2 I didn't. 3 Q. It may be thought from what you have said and what's 4 contained in your statement that there may be a certain 5 irony in giving you the role of advising Mr Gilbert in 6 the strategy and tactics, given that you seem to have 7 certain concerns with the approach that was being 8 adopted. 9 A. Yes, I think that's summed up by Matthew saying: please 10 provide Trudi with all the support she needs to fulfil 11 these tasks. I couldn't do it without others allowing 12 me to do it. 13 So when I -- looking back on this, when I was 14 producing my statement, I don't think I did any of these 15 things because people really didn't want me to get 16 involved in that way at that point in time. 17 Q. On the question of your statement, if we could please in 18 that regard go to page 107. This deals with this email, 19 and you say, about seven lines down: 20 "At that point in time, my role involved reacting to 21 requests that came to me for input in relation to, for 22 example, consents and approvals. It was very reactive 23 as opposed to doing/being allowed to do anything 24 strategic. That is because I was drifting away from the 25 project and also because people did not want me to get 172 1 involved. For example, Geoff Gilbert would never have 2 asked me to get involved in the Infraco negotiations ... 3 It may seem strange for the project director to 4 circulate an email around the team about my tasks and 5 for me not to then carry them out. My view was that 6 Matthew was trying to find a role for me but that my 7 involvement was less welcome by others in the team, and 8 therefore it was difficult to carry out these tasks as 9 I need co-operation from others. When I did give views 10 or advice, it was often unwelcome and so I became less 11 inclined to carry out these roles and, as I say above, 12 I drifted away from the project." 13 So it would be correct to say around the time of 14 this email in March 2007, were you no longer the 15 director of design, consents and approvals from around 16 this time? 17 A. Yes, probably around February/March time, yes. 18 Q. On the separate question of MUDFA, did you have any 19 responsibility for the MUDFA works or utilities design? 20 A. Not me personally. The land acquisition team, who were 21 led by Geoff Duke, he would report to me and he was 22 involved in getting the land rights to allow the MUDFA 23 contractor to go on to various land where they had to do 24 utility diversions. 25 From a design point of view, Alan Dolan, I think, 173 1 from SDS led that, and there was a MUDFA group which 2 comprised, I think, Alan Dolan, the MUDFA contract 3 manager and others who were managing that process more 4 in more detail, rather than myself. 5 Q. But did you have a general awareness of the state of 6 play of the MUDFA design and works? 7 A. Yes, a general awareness, yes. 8 Q. Could I then please take you to an email, TIE00000255. 9 It's an email from yourself dated 24 October 2006 to 10 Andie Harper. The subject is issues from CEC meeting. 11 It starts: 12 "Andie, you will have seen my email re MUDFA issues 13 which arose from my meeting with CEC yesterday. Here is 14 a note of the other issues." 15 It's simply the point, MUDFA: 16 "The Council said that we were "being mauled" by 17 MUDFA. We’re not managing the contract, we are not in 18 control, we are reactive, et cetera. I didn't put this 19 in my earlier MUDFA email, but you may want to raise it 20 with Susan." 21 I wasn't sure what you meant by: 22 "The Council said that we were "being mauled" by 23 MUDFA." 24 A. I think they felt that the MUDFA contractor had the 25 upper hand. They were dictating what we should be 174 1 doing, dictating how they were programming the works. 2 We were very reactive, and when we weren't getting the 3 rights and times, for example, if we didn't get 4 a licence in time for the MUDFA contractor to start, 5 which was tie's responsibility, if the MUDFA contractor 6 had mobilised, they were looking for us to meet costs 7 and things like that. 8 So I think there was a feeling from the Council that 9 perhaps MUDFA were taking advantage of the contract, but 10 we weren't managing that contract and fulfilling our 11 obligations under it. 12 Q. I think the MUDFA contract was signed in October 2006. 13 So if that's correct, this seems to be at a very early 14 stage of that contract these things are happening. 15 A. I think that's probably right, yes. It's probably maybe 16 indicative also of the state of the design as well. 17 Q. What do you mean by that comment? 18 A. At that stage we're still in the preliminary design 19 process, coming up to what I call PD2. And if you think 20 of the design as being iterative, and interconnected, 21 you can't do a utilities design in isolation, without 22 knowing where your track is going to go, where your 23 poles are going to go, where your equipment boxes are 24 going to go, where your tram stops are going to go, 25 because all of them have an impact on ultimately where 175 1 you're going to run your utilities, if you want to 2 minimise in future the risk of digging up utilities. 3 I think at this point there was perhaps a disconnect 4 between some of the drawings coming out from MUDFA, and 5 again, I think they were taking advantage of that 6 a little bit from CEC's perspective. 7 Q. Now, you mentioned before the question of PD2. I should 8 have asked you to explain that a little. What does PD2 9 mean? 10 A. Under the contract there was a concept of preliminary 11 design, and then detailed design, and because of what 12 had happened after the Preliminary Design was issued in 13 that there was no comments or sign off by tie within the 14 20-day period, and because of the extent of the issues 15 from the Council, and from tie, we introduced the 16 concept of PD2, Preliminary Design 2, which was meant to 17 be Preliminary Design 1 incorporating all the comments 18 that were received through the design approval process, 19 the charrettes, the planning summits which would then 20 form PD2 as the agreed baseline for then moving into the 21 detailed design stage. 22 Q. Thank you. Finally, in this email, you mention "you may 23 want to raise it with Susan". Is that a reference to 24 Susan Clark? 25 A. Yes, it is. 176 1 Q. Did Susan Clark have responsibilities in relation to 2 MUDFA at this stage? 3 A. Yes, she did. 4 Q. Thank you. 5 Sticking with MUDFA, the next document, please, is 6 CEC01815022. 7 Over to page 2, please, I'm sorry, if we can go back 8 to the very bottom of page 1 to see the date of this. 9 Go back to page 1, the very bottom, we see an email from 10 yourself dated 26 February 2007. Then please back to 11 page 2. We can see at the top it's sent to 12 Matthew Crosse and Susan Clark, subject MUDFA issues. 13 You say: 14 "I am becoming increasing concerned about MUDFA - it 15 may be that I'm out of the loop so apologies for butting 16 in if I am." 17 Then: 18 "I know that Graeme Barkley is joining tie. This 19 week? - however, if we are to start the trial works on 20 2 April, we need to ensure that the following is in 21 place." 22 Certain things are set out. 23 Now, if you are not primarily responsible for MUDFA, 24 why send this email? 25 A. Because of things that required to be in place to allow 177 1 MUDFA to do this trial pit, were the responsibilities of 2 my team, and they had raised concerns and therefore 3 I was raising them with Susan, who was managing the 4 MUDFA contract, to make sure we were in a position to do 5 what we wanted to do on 2 April, and that we'd met our 6 obligations as the employer. 7 Q. Then if we go back to page 1, please, and we can see 8 Susan Clark by email of 26 February 2007 says: 9 "Let me try to put your mind at rest." 10 And lists certain matters. Then you respond at the 11 top of the page: 12 "Thanks Susan - I just worry and the Council are also 13 raising concerns. But if it's all under control, that's 14 fine." 15 Were you -- was your mind put at rest by that 16 response? 17 A. No, it wasn't. 18 Q. Why not? 19 A. Then the context, this was the first time under the 20 MUDFA contract we are breaking ground, effectively. 21 It's the first trial pit. 22 If you look at the response from Susan in relation 23 to point 2, access rights, we are saying there: for the 24 trial we are looking to use BT powers. So immediately, 25 on the first trial pit, we are not following the right 178 1 process under the contract to get access rights. We are 2 relying on a third party's powers to do so. 3 So to me, we're almost -- we are not starting the 4 way we should be starting in the contract. We're 5 already know there's an issue and we are trying to find 6 a way to fix it. I'm not saying it's wrong to try and 7 find a way to fix an issue, but you want to start in a 8 good way when you are setting out the contract, not be 9 trying to retrofit solutions at this point in time. 10 Then in relation to point 3, advanced signage which 11 is in relation to the TTROs, we are saying it's not in 12 the MUDFA contract. 13 That's a big chunk of work which is outwith the 14 MUDFA contract, so needs to be priced and carried out by 15 someone. Again, we are almost behind the curve before 16 we are starting a process, and there's issues arising at 17 a point where we should be trying to do something about 18 it, not flippantly kind of saying we will use someone 19 else's powers, we have asked MUDFA to tell us what the 20 price might be and to cost it. It just felt we were 21 already setting off on the wrong foot. We are not in 22 control of the process. We are not on top of it. We 23 are not managing the contract very well at this point in 24 time. So the answer is whilst they may try to resolve 25 some of the issues, they don't show that we are in 179 1 control. 2 CHAIR OF THE INQUIRY: You are saying this was the first 3 trial pit that was being dug. Are you aware of whether 4 there was a full survey of the line, including the use 5 of ground radar and slit trenches and trial pits done to 6 get a better idea of what was underground before the 7 MUDFA contract was let? 8 A. There was definitely radar surveys done. 9 CHAIR OF THE INQUIRY: Of the full -- 10 A. I think of the full line. I think more than once 11 perhaps actually over the full line. I'm not sure if 12 I know that there was any trial pits or boreholes done. 13 But there was definitely surveys done. 14 MR MACKENZIE: Thank you. The next document, please, is 15 CEC01623417. Again, an email from yourself dated 16 12 April 2007 to Matthew Crosse and Geoff Gilbert, 17 headed "MUDFA worries", and you say: 18 "I worry that MUDFA and the advance works are 19 becoming out of control and we run the risk of being 20 exposed at the Tram Project Board." 21 Then third paragraph: 22 "The advance works at the depot and P&R - are 23 these a works order or a change to the contract? On 24 what basis has the cost been calculated? What are the 25 contract terms? Have we inadvertently misled the Tram 180 1 Project Board on previous occasions?" 2 What's the reference to the advance works at the 3 depot about? 4 A. It was basically digging the hole at the depot to put 5 the depot in. The depot is obviously sunk down, and so 6 you had to dig down, I think from memory, between 8 to 7 10 metres in the ground, which was a huge excavation in 8 itself. 9 So I suppose to save the Infraco a bit of time, it 10 was decided that those works would be done in advance of 11 the Infraco contract starting. 12 Q. When you say "they" were digging a hole, who was digging 13 a hole? 14 A. The intention was, I think this was done, it was the 15 MUDFA contractor who was awarded these advance works. 16 Q. Why were the MUDFA contractor digging a hole out at the 17 depot, rather than undertaking the utility diversion 18 works along the route? 19 A. Possibly because -- I can't totally remember. Possibly 20 because there was some delay to the MUDFA contract. 21 Possibly because to get them involved in advance works 22 as part of their work scope perhaps meant we didn't need 23 to procure it, which was a concern I had, that we should 24 have been procuring it separately. 25 I don't know if there was commercial pressure from 181 1 the MUDFA contractor, because we may -- have been delay 2 to give them further work. I don't know. It was just 3 suggested that they should be doing the advance works at 4 the depot, and that the park and ride -- which is what 5 the P&R refers to. 6 Q. Just for the avoidance of doubt, what was your concern 7 when you say "we run the risk of being exposed at the 8 Tram Project Board"; and when you asked the question, 9 "Have we inadvertently misled the Tram Project Board on 10 previous occasions?" what did these concerns relate to? 11 A. I think from memory, we perhaps hadn't been explicit in 12 the Tram Project Board that there were already issues 13 with the MUDFA contract. And there were commercial 14 issues outstanding at this point in time. I'm not sure 15 that had been conveyed to the Tram Project Board, 16 because my concern was on the one hand you've got 17 commercial issues or disputes with the contractor. Yet 18 you are giving them extra work packages to do. It 19 doesn't sit very well necessarily. 20 Q. I'm not sure if you're able to comment on this 21 suggestion or not, but it may be suggested in due course 22 at some point in the Inquiry that the reason the MUDFA 23 contractor was digging a big hole at the depot was 24 because tie weren't in a position to have the MUDFA 25 contractor start the utility diversion construction 182 1 works, and this was a way to prevent or reduce claims by 2 the MUDFA contractor. 3 Now, if that were to be suggested in due course, do 4 you have any comments on that? 5 A. It wouldn't surprise me this if that was the case, but 6 I think that -- if that was the case, that should have 7 been made very clear to the Tram Project Board. 8 Q. Thank you. 9 Back to your statement, please, at page 34. This is 10 just to finish off another couple of points in relation 11 to MUDFA. 12 In paragraph 82 you said: 13 "The SDS outputs did not seem to tie in with the 14 requirements and timing of the MUDFA contract. As 15 I said previously, it was difficult to progress and 16 finalise distinct elements of the design eg the utility 17 drawings as all of the elements were all so linked." 18 I think you have made that point today as well? 19 A. Yes, I have. 20 Q. The last point under MUDFA, if I may, please, at page 21 51, in paragraph 123, you say: 22 "In my view, the completion of work under MUDFA 23 totally depended on design work under the SDS contract. 24 SDS were designing all of the utility diversions." 25 A few sentences down: 183 1 "It was difficult for SDS, because it was not always 2 practicable to design the utility diversions ahead of 3 the rest of the tram design but the designs were 4 required in advance of other elements of the design to 5 allow the MUDFA contractor to start and complete the 6 utility diversion works ahead of Infraco starting. This 7 resulted in SDS having at times to do several iterations 8 of the utilities design. I note that the original 9 programme anticipated that the preliminary design would 10 be completed before the MUDFA contract was awarded which 11 would have made sense." 12 But as you have explained, I think, here, if the 13 MUDFA contract was awarded in October 2006, we've 14 discussed how preliminary design was not complete at 15 that stage? 16 A. Yes, that's correct. 17 Q. Thank you. 18 We can leave MUDFA. I simply have a few final 19 questions in relation to management and governance 20 issues. 21 I think we can deal with them by going to various 22 parts of your statement. If we could start, please, at 23 page 74. 24 These first comments are in relation to points made 25 by other individuals as part of Mr Crawley's review. 184 1 You comment on them as follows. So in paragraph 195, 2 I think somebody had commented that tie were 3 under-resourced. You said: 4 "I would say that they were under-resourced in the 5 design team." 6 You go on: 7 "However, people could have been more effective if 8 the organisation had been better structured/managed and 9 if people had worked more efficiently. The way it 10 worked in tie was similar to little kids playing 11 football and all going for the ball irrespective of 12 their position. In tie everyone would be round an issue 13 when it came up, even although there were another ten or 14 so issues, for example, which required similar urgent 15 attention." 16 Just for the avoidance of doubt, does that comment 17 relate to -- which period does that comment relate to? 18 A. Probably throughout my secondment. 19 Q. Then, please, page 77. In paragraph 203, in the second 20 line, you say: 21 "The project directors who came in [to tie] seemed 22 to have sufficient experience of running a big project. 23 I think, however, that most of tie had not been involved 24 in actually delivering a big project ... It would have 25 been a better organisation if there had been more people 185 1 with that experience, as that could have dovetailed with 2 the technical experience of TSS." 3 Then you go on to make the issue -- mention the 4 issue of the lack of clarity as to what people were 5 doing. And also the lack of consistent leadership may 6 also have been a factor. 7 Then, please, at page 78, again dealing with the 8 management issues, in paragraph 208, you say: 9 "Tie thought that they were an informed client, but 10 I think that they did not really know how to manage 11 contracts. I think Jim also felt that they were not 12 willing to take on the benefit of others experience and 13 knowledge to become an informed client." 14 Page 82, I would like to ask you about something you 15 mentioned in paragraph 229, when you say: 16 "There seemed to be a lot of people working in tie, 17 but I'm not sure what each individual contributed. 18 There might have been fewer people, or slightly 19 different people (in terms of expertise), if they had 20 taken a top down approach focused on specific 21 skills/expertise rather than from the perspective of 22 finding roles for people already employed in tie." 23 I wasn't sure what you meant by that comment of 24 rather than from a perspective of finding roles for 25 people already employed in tie. Can you explain that 186 1 a little? 2 A. What I think I meant there was during the lifespan of 3 the tram project, there are other projects that tie were 4 involved in which came to an end. So, for example, the 5 Edinburgh Airport rail link. Stirling-Alloa-Kincardine 6 rail link. The people then employed on those projects 7 were subsumed into the tram team, but it was not -- not 8 always obvious that there was a gap that they could 9 fill, or they had a skill set that was required on the 10 tram project. Or it was just we had a body, therefore 11 give them some kind of role in the tram project. 12 Q. Thank you. Then three final passages in your statement, 13 if I may. 14 At page 105, please, going back to the question of 15 programme at page 105, in paragraph 292, you say: 16 "The management culture in tie was that programme 17 was king and had to be adhered to even if it was 18 unrealistic or unachievable. The team reported that the 19 project was on programme. However, milestones either 20 came and went or were not properly completed; but the 21 procurement dates did not seem to reflect that. Those 22 in charge of the programme did not want to hear about 23 issues which could put the programme at risk. That 24 meant that a large number of issues were swept under the 25 carpet and became bigger issues at more critical points. 187 1 My feeling was that people had a good handle in the 2 early stages about what the cost was going to be. 3 I think, however, that there was not such a good 4 understanding of the hidden costs that would flow from 5 changes." 6 Is that what you set out in the last two sentences, 7 is that a view you held at the time or subsequently with 8 the benefit of hindsight? 9 A. I think I always had a concern that there were going to 10 be hidden costs because certain elements weren't 11 developed enough. Probably with hindsight I have 12 reinforced that view. But I still think I had that view 13 at the time. 14 Q. Just for the avoidance of doubt, when you say "those in 15 charge of the programme did not want to hear about 16 issues which could put the programme at risk", who were 17 those individuals? 18 A. I would say it was Susan Clark, Geoff Gilbert in the 19 context of procurement, and ultimately the project 20 director at the time. 21 Q. Thank you. Then at page 108, please. In paragraph 303 22 I'll try not to read all of this out. It's quite a long 23 paragraph. It goes into the next page, but essentially 24 you start off by saying: 25 "I cannot remember precisely when I stopped going to 188 1 the DPD subcommittee meetings. I think it was around 2 March/April 2007 ... I said that matters were not being 3 fully reported because it felt to me that there was 4 a positive spin put on what was being reported. That 5 was the case across the board. It felt a bit 6 disingenuous. Generally, people were presenting their 7 papers with a positive slant on matters. For example, 8 Susan Clark reported on the programme. On one level it 9 was right to say that SDS were on programme; however, 10 I have explained the problem with the SDS programme 11 before, and to simply say that it was on programme was 12 not really giving the full picture." 13 Over the page, please, you say: 14 "There must have been a collective feeling 15 (consciously or unconsciously) that that was the way to 16 present matters. Looking back, I think it was 17 intentional, but not in a bad way - it was intentional 18 that people wanted to report positively ..." 19 Then I should perhaps also take you to what's said 20 in paragraph 304. You say: 21 "I cannot remember exactly what I raised at the 22 meeting ..." 23 Is this a meeting of the DPD? 24 A. Yes, it was. 25 Q. "... after which Willie Gallagher shouted at me. 189 1 I think I raised the concerns around what was happening 2 with the MUDFA contractor being given the advanced work 3 packages ..." 4 Can you just please describe in your own words what 5 happened at this meeting and afterwards? 6 A. Okay. We were all at the meeting. And it's in my 7 statement, but the meeting, there was obviously -- 8 Willie Gallagher, I think, chaired it at that time. 9 There were representatives from CEC, Transport Scotland, 10 Lothian Buses, SDS, I think, had a representative there. 11 And there were various people from tie that -- kind of 12 the senior management team in tie came along to the 13 meeting to report on the various issues. 14 From memory, I think the first issue on the agenda 15 was programme. And as I have said there, there was 16 a positive slant. I felt that we were on programme. 17 That was the message we were given. 18 I think in the context of that reporting, I made the 19 comment or perhaps pointed to parts of the programme 20 which maybe weren't on track at that point in time. 21 Immediately from the body language, I knew that 22 wasn't well received by Willie Gallagher. Then I'm 23 pretty sure the second thing on the agenda was the 24 advance works packages, and some of the concerns I put 25 in my email, I raised in the context of the DPD, because 190 1 I felt it was only fair to raise those concerns because 2 they were concerns that I still had, and it was things 3 about should we procure it, why are we giving them 4 advance works packages, and again, as I have raised the 5 comments, I could tell that that wasn't well received. 6 Then after every agenda item, Willie Gallagher asked 7 me quite sarcastically at the end of the presentation 8 and the questioning, whether I had anything else 9 I wanted to say or raise, and often I did, and I did 10 raise it, but the meeting did become more and more 11 uncomfortable. 12 I left the meeting and was followed out by the 13 representative from Lothian Buses, the Council and 14 Transport Scotland, who made the comment about although 15 I was a girl, I was the only one who had balls in the 16 room to raise some of the comments that I'd raised. 17 I then went back across to CityPoint, tie's offices and 18 Willie Gallagher took me away from my desk and told me 19 never again to do that in a meeting, which is why 20 I chose not to attend the future meetings, because 21 I didn't think it was right to not raise concerns that 22 I had in that forum. 23 Q. You say in your statement you mentioned Mr Gallagher 24 shouting. Was this the occasion on which he shouted at 25 you? 191 1 A. Yes, he did. 2 Q. Standing back a little, would it be fair to say that you 3 didn't feel that constructive criticism was welcome 4 within tie? 5 A. Yes, I think that's fair. I think they maybe felt I was 6 breaking rank. I think they wanted to convey the 7 impression that everything was fine on the project. 8 Now, I can understand that to a certain extent. But if 9 I was a funder or a stakeholder on this project, this 10 project was so big, it's such a difficult project, that 11 actually I would be more concerned that there weren't 12 issues. 13 Because something must be happening in a project 14 this scale that is a problem or concern or needs to be 15 addressed. It was huge. It was a huge project. But 16 I can understand why they want to convey to these 17 parties that they were in control, that it was going 18 well and they were managing it well. But I didn't think 19 I could be party to that in my role. 20 Q. Trying for a moment to put the tram project to one side, 21 we can see from your CV that you are a board member of 22 various bodies, including on the board of management and 23 auditor risk committee. Putting the tram project to one 24 side, what can bodies or organisations do to create an 25 avenue for people working within a project who may have 192 1 concerns about it to ensure any serious concerns can 2 find their way to, for example, people sitting on 3 a board? 4 A. Well, some organisations that I'm a board member of have 5 whistleblowing policies, which might encompass that. 6 Personally, I think it's a cultural thing. The 7 culture in an organisation has to be one that allows 8 people to feel they can raise issues, and there's not 9 going to be a blame culture. There's not going to be 10 finger pointing. And there wasn't that culture within 11 tie. It's a difficult one because going to that -- 12 going to a board, you want your board to think positive 13 of the organisation they are the board for. But I think 14 of the board -- I know on a couple of boards I'm on, we 15 often have presentations from staff on tricky issues, 16 because we are there to try and help them and try and 17 find a solution. It's not a criticism of them if there 18 are things that are issues. But to be a board -- to 19 effectively discharge your role as a trustee, you need 20 to understand what the issues are, and give people 21 confidence to raise them. 22 Q. Presumably, if one is to create a culture within an 23 organisation where employees feel they can raise issues 24 and that there's not going to be a blame culture, that 25 must be a matter of leadership from the very top; is 193 1 that fair? 2 A. That is fair, yes. 3 Q. Now, finally, one last document, very briefly, if I may. 4 It's CEC02084810. 5 This, I think, is a lessons learnt paper you 6 produced in June 2008 to Mr Duncan Fraser of the 7 Council. I think the context is what could have been 8 done differently in relation to tram line 3, were that to 9 have been built. 10 If I can go, please, to page 3, under "Engagement", 11 you say: 12 "There should have been greater engagement with the 13 Council and key stakeholders from the outset." 14 You have discussed that in your evidence. You then 15 go on to say: 16 "In our view ..." 17 When you say "in our view", is this really your 18 view? 19 A. Yes. I probably signed the paper as Dundas & Wilson, as 20 opposed to me personally, which is why it's our view, 21 a collective firm view. But yes, I drafted the note. 22 So yes, it was my view. 23 Q. You explain: 24 "In our view this lack of engagement may have cost 25 the project 9 - 12 months during the design 194 1 stage ..." 2 Just finally, one last matter I should clarify with 3 you in the next and last bullet point. Under 4 "Programme", you said: 5 "This needs to be realistic and not based on bonuses 6 if milestones are reached." 7 What was the basis for you saying that? 8 A. There were various rumours on certain milestones being 9 reached on the project, certain bonuses had been paid to 10 members of the project team. So for example I think 11 there was a rumour that the bills had to be in 12 Parliament by December 2013 before Christmas, and if 13 that was achieved, bonuses would be paid to the project 14 team dealing with the bills at that point in time. 15 My understanding, from what I'd heard, again 16 rumours, was that the bonuses would be paid on signing 17 the Infraco contract on a certain date, and I just felt 18 that if you tie achieving key milestones like that to 19 bonuses, you may drive the wrong behaviours and may end 20 up signing a contract kind of at all costs at that point 21 in time, in order to achieve bonuses. 22 I think bonuses are awarded on an overall 23 performance basis, based on objectives and outcomes, not 24 just on milestones on a project. 25 MR MACKENZIE: Thank you. I have no further questions. 195 1 CHAIR OF THE INQUIRY: I don't think anyone else has. 2 Thank you very much, Ms Craggs. You're free to go 3 now. You're still under your citation, in case we need 4 to recall you, but hopefully that won't be necessary? 5 A. Thank you, my Lord. 6 CHAIR OF THE INQUIRY: We will adjourn until Tuesday at 7 9.30. 8 (4.22 pm) 9 (The hearing adjourned until Tuesday, 10 October 2017 at 10 9.30 am) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 196 1 INDEX 2 PAGE 3 MR JIM HARRIES (continued) ...........................1 4 5 Examination by MR MACKENZIE (continued) .......1 6 7 Questions by CHAIR OF THE INQUIRY ............44 8 9 Examination by MR DUNLOP QC ..................46 10 11 MR ALEXANDER MACAULAY ..............................48 12 13 Examination by MR MACKENZIE ..................48 14 15 MS TRUDI CRAGGS (affirmed) ..........................93 16 17 Examination by MR MACKENZIE ..................93 18 19 20 21 22 23 24 25 197