1 Thursday, 12 October 2017 2 (9.30 am) 3 MR STEVE REYNOLDS (continued) 4 Examination by MR MACKENZIE (continued) 5 CHAIR OF THE INQUIRY: Good morning. It's been announced 6 that because of the overrun of the witness, Mr Fitchie, 7 we are going to sit tomorrow at 9.30 to finish the 8 evidence this week. 9 You're still under oath. 10 MR MACKENZIE: Thank you, my Lord. 11 Good morning? 12 A. Good morning. 13 Q. Mr Reynolds, I would like to turn now to the question of 14 the various approvals and consents that required to be 15 obtained for the tram project. 16 Now, we know, I think, under the SDS contract signed 17 in 2005, Parsons as the designers were required to 18 obtain the various approvals and consents. Now, is that 19 normal in the industry for a designer to have to secure 20 these things? 21 A. Yes, is the straightforward answer. I think as time has 22 moved on, there's perhaps more of a recognition these 23 days that there's a joint responsibility. So you could 24 argue that the contract was overly specific in the 25 obligation it placed on SDS. 1 1 But yes, there's certainly a heavy responsibility on 2 the designer for securing approvals and consents. 3 Q. Thank you. Could I ask you perhaps to speak into the 4 microphone just so I can hear you quite clearly, please? 5 A. I beg your pardon. 6 Q. In this project did this cause any difficulties? 7 A. The real difficulty was the conditions attached to those 8 approvals, where there was a requirement to satisfy the 9 needs of the approval bodies, and this was something 10 that we changed, or we got agreement to change at 11 novation because the reality was the needs of the 12 approval bodies could change, but there was still 13 a contractual obligation on SDS to meet those changed -- 14 changed needs, and this is what we found was happening, 15 that there was, if you like, changes to what people 16 thought they needed, and then we were expected to change 17 our designs to accommodate those late changes. 18 Q. Thank you. We've not yet looked at the provisions in 19 the design contract in relation to approvals and 20 consents. I think it would be helpful just to briefly 21 look at those. So we will bring up the contract which 22 is CEC00839054. Go to page 29, please. We can see 23 clause 5.1, under "Consents", states: 24 "The SDS Provider shall (at its own cost and 25 expense): obtain and maintain in effect all Consents 2 1 which may be required for the construction ... of the 2 Edinburgh Tram Network as is consistent with, required 3 by or contained within the services." 4 If we could also then please go back a page, 5 clause 4.8 provides: 6 "If it should be found that the Deliverables do not 7 fulfil the requirements of this Agreement or the needs 8 of any Approval Bodies, the SDS Provider shall at its 9 own expense amend the Deliverable." 10 Then, please, if we can go to page 87, and paragraph 11 2.6.1.2 -- sorry, 6.2.2.1 provides: 12 "The SDS Provider shall: ... produced the detailed 13 design of the Edinburgh Tram Network ... such that the 14 detailed design has full approval of the Client and the 15 relevant Approval Bodies." 16 CHAIR OF THE INQUIRY: Where are you -- which box? 17 MR MACKENZIE: It's paragraph 2.6.1.2. That's the one 18 that's blown up. 19 CHAIR OF THE INQUIRY: Yes. 20 MR MACKENZIE: 2.6.2.1. There are too many numbers for this 21 time in the morning. I'll read that again. The SDS 22 provider -- I'm confusing myself. It is 2.6.1.2. It is 23 in fact that one, thank you. 24 The SDS provider is required to have: 25 "... produced the detailed design of the Edinburgh 3 1 Tram Network ... such that the detailed design has full 2 approval of the Client and the relevant Approval 3 Bodies ..." 4 So that's that one. 5 Then lastly in this regard, if we can go over the 6 page, please, to page 88, we see under "Key Design 7 Elements", I should say this is Schedule 1, the services 8 to be provided by the SDS provider, under 2.7.1, it 9 provides: 10 "The SDS Provider shall design: the route from 11 Haymarket to Ocean Terminal via Princes Street so as to: 12 provide a look and feel that is at one with its 13 surroundings whilst not detracting from the design 14 elsewhere on the Edinburgh Tram Network." 15 We can read the other bullet points for ourselves. 16 In short, I think, Mr Reynolds, under, for example, 17 there, the clause we are looking at, these are pretty 18 vague requirements. I do suggest that because of that 19 vagueness, it really is essential that the designer 20 engages with the approval body at the earliest possible 21 stage to obtain clear guidance of what will be required. 22 A. That's certainly one aspect of it. 23 If I can take you back, if I may, to clause 4.8, 24 which I think is the nucleus of this -- 25 Q. That's at page 28? 4 1 A. That's right. Okay, thank you. This is what I was 2 referring to a couple of minutes ago: 3 "If it should be found that the Deliverables do not 4 fulfil the requirements of this Agreement ..." 5 Yes, absolutely fine. No problem with that. We are 6 obviously obliged to deliver to meet the requirements of 7 the agreement: 8 "... or the needs of any Approval Bodies, the SDS 9 Provider shall at its own expense amend the 10 Deliverable." 11 Now, the problem that we experienced was that the 12 needs of the Approval Bodies, as described in 13 Clause 4.8, that's a very open-ended obligation. It 14 doesn't say at which point in time the needs of the 15 Approval Bodies, and what we were finding was that the 16 project became bogged down because new needs of the 17 Approval Bodies could be introduced essentially at any 18 time. 19 So what happened was that the preliminary design was 20 delivered. The Approval Bodies then had second thoughts 21 from our point of view, and that introduced the need for 22 change, against what in our estimation was something 23 that was compliant with the requirements of the 24 Agreement. 25 So you see these two apparently consistent 5 1 obligations, but the way they were applied to the SDS 2 Agreement resulted in delay, and that impacted the 3 programme going forward. 4 So whilst what you say I would absolutely agree 5 with, there's an obligation on the designer for early 6 engagement with the Approval Bodies, there's equally an 7 obligation on the programme manager to ensure that you 8 don't get protracted debate on the deliverables, and 9 that is what we found, that the programme manager, ie 10 tie, didn't perhaps work as effectively as we would have 11 liked with CEC to ensure that any review of the 12 Deliverables and the requirements didn't become 13 protracted to the extent the programme was itself 14 protracted. 15 That was our view. 16 4.8 is an absolutely key clause, and it's that 17 clause that I personally ensured was changed before we 18 signed the Novation Agreement, where the overriding 19 importance of complying with the requirements is the 20 driver. Should anybody wish to change beyond that, yes, 21 fine, but understand the impact, understand the 22 consequences of introducing change. 23 CHAIR OF THE INQUIRY: You speak about the obligation of the 24 programme manager, tie. Is that written into the 25 contract or is that a custom -- 6 1 A. It's tie -- it was tie's responsibility to enforce the 2 master programme, and you can argue therefore this is 3 consistent with that obligation, because any -- any 4 delay in order to meet the revised needs of the Approval 5 Bodies would impact the master programme, and tie was 6 the holder of that responsibility. 7 So the programme manager would usually be the body 8 who was there to ensure that the parties understood the 9 impact of any changed requirements that may be 10 introduced. 11 CHAIR OF THE INQUIRY: It might be argued, I suppose, that 12 the failure of SDS to satisfy the requirements of the 13 Approval Body was the cause of the delay to the 14 programme. 15 A. But I would argue that that was because those 16 requirements changed. For example, requirements for 17 tram stops changed subsequent to the production of the 18 preliminary design. So from our point of view, we 19 produced a preliminary design that was compliant with 20 the requirements, and at that point the client started 21 to review and reconsider some of those requirements, 22 which then necessitated additional design work which 23 took longer, and that was the main impact. Yes, you can 24 obviously produce revised designs, but the client then 25 not recognising the impact on the programme going 7 1 forward. 2 CHAIR OF THE INQUIRY: Thank you. 3 MR MACKENZIE: Thank you. We've also heard, Mr Reynolds, 4 that it's good practice to obtain agreement or approval 5 for one design stage before going on to the next design 6 stage. Is that something which in principle you agree 7 with. 8 A. Absolutely. 9 Q. That may be another way to address the problem or 10 difficulty of people changing their mind or 11 requirements, than if agreement is reached at the 12 requirements definition stage and then the preliminary 13 design stage, and one has a fixed agreed baseline before 14 going on to the next design stage; is that correct? 15 A. Which was indeed the basis of this contract, and that 16 was one of the problems, that the preliminary design 17 having been produced, there was an obligation on tie to 18 review and come back on that design within 20 days, and 19 tie failed to do that. 20 There was then a companion clause, if you like, 21 which allowed us then to deem acceptance of that 22 preliminary design, and then work moved forward into 23 detailed design. But exactly what you say is exactly 24 what I would have expected and what should have happened 25 but didn't. 8 1 Q. I think we have heard evidence that some issues in the 2 requirements definition phase required to be addressed 3 in their preliminary design phase? 4 A. Correct. 5 Q. Is that correct? 6 A. That's correct. 7 Q. And equally, in this contract, some -- a number of 8 issues that arose in the preliminary design stage were 9 rolled over and addressed in the detailed design phase; 10 is that correct? 11 A. That's what happened, but the preliminary design was 12 completed on schedule at the end of June 2006. As 13 I say, what should have happened, that preliminary 14 design should either have been accepted or comments 15 received against it within a 20-day period. That didn't 16 happen. So what happened in order to keep the job going 17 was preliminary design revisions were accommodated as we 18 moved into detailed design. 19 Q. Presumably by stopping at each stage and approving each 20 stage, agreeing each stage before moving on to the next 21 stage, that's a way of keeping control of the process? 22 A. Precisely. 23 Q. If one doesn't do that, one is likely to lose control of 24 the process? 25 A. Exactly right. 9 1 Q. Sticking with the SDS contract, looking at the question 2 of responsibility for stakeholder engagement, if we can 3 go to page 92, please. Paragraph 3.3, we see 4 "Stakeholder Management". Clause 3.3.1 states: 5 "The SDS Provider shall assist the Client to 6 minimise the adverse impact of the implementation of the 7 Edinburgh Tram Network on stakeholders (both statutory 8 and non statutory) and general public. This shall 9 include: securing, implementing and incorporating into 10 the design all necessary Network Rail, BAA and other 11 third party agreements." 12 The third bullet point: 13 "liaising with CEC ... and others as required by the 14 Client in relation to the performance of the Services." 15 Does this clause, do you know, address the question 16 of obtaining approvals and consents? Is that part of 17 the stakeholder liaison that is referred to? 18 A. It's closely linked to it. The primary body for 19 approvals and consents was CEC. But given the 20 dependence or the interaction with other stakeholders, 21 then yes, it's closely linked with it. 22 I think a keyword in this 3.3.1 is the obligation on 23 the SDS to provide -- to assist the client. What that 24 doesn't spell out perhaps as clearly as it would have 25 been helpful is the balance of responsibilities between 10 1 ourselves and the client, but certainly interacting with 2 all the various third parties, interacting with the 3 approvals bodies, yes, it's -- that's setting out the 4 context, if you like. 5 Q. Whatever this clause means, I think on any view it must 6 mean there is a joint responsibility on tie and SDS to 7 liaise with stakeholders; is that correct? 8 A. Correct, yes. 9 Q. Now, can I go back to your statement, please, at 10 page 23. In paragraph 78 you say: 11 "We were, as the SDS Provider, the party primarily 12 responsible for obtaining the views of the various 13 stakeholders so they could be incorporated into the 14 design." 15 Just pausing there, I just wondered if that was 16 consistent with the clause we've just looked at in the 17 contract. 18 A. I think primarily responsible for ensuring the views of 19 the stakeholders could be reflected in the design as it 20 was developed. So the joint responsibility for actually 21 engaging with those stakeholders is as you said. The 22 product of liaising with those stakeholders, we would be 23 the ones who had the view on how that could be 24 incorporated to deliver the optimum design. I think 25 that's what I was trying to get over in that paragraph. 11 1 Q. Then the next paragraph, 79, please. Again, you say: 2 "It was our responsibility to obtain the views of 3 the various stakeholders. That was spelt out in the SDS 4 contract. With regards to industry practice, that 5 responsibility would usually be assigned to the best 6 party who was able to obtain the views of the different 7 stakeholders. In the case of the Edinburgh Tram Project 8 the best person able to do that was the programme 9 manager (which was TIE). On the Manchester Tram Project 10 it was the same ie it is the programme manager who 11 undertakes this role." 12 In the last sentence you say: 13 "It would usually be a client responsibility, having 14 regard to good industry practice, to secure those 15 views." 16 Just for the avoidance of doubt, why would it 17 usually be a client responsibility? 18 A. To ensure that the balanced view is taken of those 19 requirements. The client has the authority to ensure 20 that unreasonable requirements aren't carried forward 21 into the project so that you've got the bigger picture. 22 You're not looking for perfection, necessarily, which 23 may impact programme performance, so that the client has 24 the relationships locally. It's often the case the 25 client has the understanding of the local politics, the 12 1 geography, the people. 2 The designer would have the understanding of the 3 optimum way to deliver a comprehensive design. So it 4 is, as you say, the two working together in reality. 5 CHAIR OF THE INQUIRY: So should that have been written into 6 the contract? 7 A. I think this would be one of the lessons learned, 8 exactly how you apportion those different 9 responsibilities and how you take advantage of the 10 different specialisms if you like and ensuring that, 11 yes, a state-of-the-art design is delivered, but 12 ensuring that that state-of-the-art design can be fitted 13 to the particular characteristics of the local 14 environment, if you see what I'm saying. 15 MR MACKENZIE: Thank you. I would like now to move on, 16 please, Mr Reynolds, to around February 2007, when you 17 started as Project Director. 18 A. Yes. 19 Q. On the question of programme, you've mentioned in your 20 statement that one of the concerns we had was that the 21 master project programme was not being maintained. 22 Could you explain that comment, please. 23 A. This comes back to the point that when I arrived in 24 February 2007, clearly the project was in delay, and we 25 were responsible for producing the SDS design 13 1 programmes, but given, as I said, we'd produced the 2 preliminary design on time, but then the programme had 3 gone off to address change, to address revisions, and 4 that master programme in our view wasn't being 5 maintained by tie, such that the impact of those changes 6 could be forecast going forward. 7 Now, had that been done in mid-2006, it comes back 8 to, well, if the various stakeholders wished to see 9 a different design going forward, that has got to be 10 weighed in the balance against how long is that going to 11 take to implement by the designer. 12 So the master programme should have set that out 13 in -- with the clarity that everyone could have 14 understood, yes, you can't keep changing, it is going to 15 delay the end date. 16 Q. The master project programme, that was something that 17 tie were obliged to maintain; is that correct? 18 A. That's correct. 19 Q. Now, what sort of detail would be in it? We know, for 20 example, at the very highest level we have heard dates 21 for completion of each of the design stages, 22 requirements definition, preliminary and detailed. Is 23 that all the master project programme would contain, 24 those dates, or would it contain more detail? 25 A. What you would expect to see is a tiered document. So 14 1 at the headline level, you would expect a pretty 2 condensed version of the programme. 3 But that would derive from the more detailed 4 elements of the different levels beneath that. 5 So you would be looking at a detailed design 6 programme. You would be looking perhaps at a detailed 7 roads integration programme that may come from 8 elsewhere. You would be looking at a detailed traffic 9 modelling programme. 10 They would roll up and be combined in the master 11 programme such that you could then deliver a top level 12 view which the major stakeholders could appreciate, and 13 you would be able to look at that, and say: well, yes, 14 I can make changes at this detail level; but then at the 15 top bar level, which might be each of the sections, so 16 not many bars on that programme, you could say: that is 17 going to impact this particular section or delivery. 18 You can then take a view: is that a problem, is that 19 critical path? And, depending on that assessment, that 20 will determine how you take on board the request for 21 change. 22 Q. So the clue really is in the name. It's a master 23 project programme for the project overall, not just for 24 design? 25 A. Correct, which you can then filter, depending on your 15 1 audience, to be able to paint a picture that that 2 audience can appreciate. That's the real skill from 3 a master programme management capability. 4 Q. So in the case of the Edinburgh Tram Project, one may 5 expect the master project programme to include the 6 design works, but also the MUDFA works and perhaps the 7 procurement of the infrastructure contract and the tram 8 contracts. One can see how all of these interrelate? 9 A. That's right. And as I say, traffic modelling. Traffic 10 modelling was always a key aspect because of the 11 particular characteristics of the City of Edinburgh, and 12 if you pull them all together and then see how they 13 relate, then you can present a number of views that take 14 on board those different aspects, and that means that 15 you don't have the problem where one particular aspect 16 may override other aspects of the delivery. 17 Q. This master project programme, is that the sort of thing 18 that Parsons produced in the Manchester Project in their 19 role as programme managers? 20 A. Yes. 21 Q. Now, without such a programme, does the project manager 22 really know what's going on in the project? 23 A. It's -- again, you've got this balance between 24 monitoring and control. So the programme from the 25 various different inputs, as you say, from the various 16 1 different aspects of the project delivery, allows the 2 monitoring. It allows you to look at the criticalities, 3 the real sensitivities. That then allows you to go 4 back, having made that assessment, and control -- and at 5 the end of the day, say whether you're prepared to 6 accept a request for change or not. 7 Q. So does the master project programme help, say, the 8 designer to plan their works? 9 A. Yes. Yes, because a key aspect is the resourcing to 10 deliver the obligation, and depending on the interaction 11 with the other aspects of the programme from our point 12 of view, that would determine when resources were needed 13 to actually produce the designs. 14 Q. Yes. We had looked with an earlier witness at a clause 15 in the contract which obliged the SDS Provider to 16 progress the services with true expedition, and in 17 accordance with the master project programme. 18 Do you say that in this project, you had concerns 19 that the master project programme was not being 20 maintained? 21 A. Correct. 22 Q. What were those concerns based on? 23 A. That we weren't seeing any evidence of it. So we 24 weren't -- the bigger picture wasn't being communicated 25 to us. So we didn't -- from our point of view, we 17 1 weren't seeing evidence that that master programme -- 2 master project programme was being maintained. 3 Q. Thank you. 4 Now, moving to a different aspect of the 5 programming, if we can go to page 15 of your statement, 6 please. At paragraph 52, I think we had asked about the 7 design programme in place, and you say in paragraph 52: 8 "There was a new programme put in place following my 9 arrival. There were regular updates to the 10 programme ... There is a later programme which sets out 11 the requirements definition as being completed by the 12 end of 2005 and the preliminary design being completed 13 by mid-2006. I cannot recall when the detailed design 14 was due to be completed by." 15 On that point, if we go to another document, please, 16 CEC01821403. This is the Draft Final Business Case 17 which went to the Council in December 2006. It will 18 come up on the screen. 19 We are trying to find a date for when detailed 20 design was due. That's the only reason I go to it. We 21 can see this is the Draft Final Business Case dated 22 November 2006. It went to the Council in December 2006. 23 Go, please, to page 164. We can see at the top it's 24 headed "Programme summary". If we can then please go to 25 page 167, we see a table headed "Design and Traffic 18 1 Regulation Orders Milestones". We can see, I think, 2 completion of detailed design for phase 1a and phase 1b 3 by 4 September 2007. 4 If we go down a few lines, we can see completion of 5 approvals and consents for phase 1a, again the same 6 date, 4 September 2007. 7 In short, Mr Reynolds, is that the date you were 8 working towards when you first arrived in February 2007 9 for completion of the detailed design? 10 A. I certainly would accept that was -- that was what was 11 in the Draft Final Business Case, and the -- in my 12 statement it was just when I was being interviewed, 13 I didn't have the dates in front of me, which is why 14 I said I didn't recall. They would be entirely 15 consistent, yes. 16 Now, as to whether -- when I joined those were the 17 dates we were aiming for, I think in February 2007, it 18 was already clear there was a very high risk that that 19 September date for completion of detailed design 20 wouldn't be met. But that was the target, yes, most 21 certainly. 22 Q. So do you remember having a view around that time when 23 you started as to whether, assuming those were the 24 target dates, they were likely to be met? 25 A. Well, this is in part what introduced the need for the 19 1 critical issues reviews, because, as I say, it was clear 2 that there was a high risk that the programme was 3 becoming repeatedly prolonged, and the critical issues 4 had to be addressed in order to achieve certainty in an 5 end date. Whether that end date was going to be 6 September 2007 is open to question. But what was 7 required was certainty, rather than the circumstances at 8 the time, the design programme was running out month on 9 month. 10 So we had to introduce a change of culture to make 11 sure people were focused on achieving certainty of end 12 date. 13 Q. I'll come back to that shortly. Just to finish off this 14 document, if we may please go to page 165, just to 15 remind ourselves what the intended date of the Infraco 16 award was. 17 We can see at the very bottom of the page, "Infraco 18 milestones", and over the page, please, page 166 -- 165, 19 we can see the top, "Award of Infraco contract following 20 CEC/TS approval + cooling-off period 11 October 2007". 21 So that was the date, I think, tie were working 22 towards at this stage, albeit we know that was then, 23 I think, changed to January 2008? 24 A. Correct. 25 Q. And eventually became May 2008. 20 1 A. Correct. 2 Q. So we can leave that document. 3 You mentioned the question of the critical issues 4 and need for a change in the change culture. 5 I think we can take this quite shortly, because we 6 have heard quite a lot of evidence that essentially in 7 early 2007, there were around 80 unresolved critical 8 issues, which meant that it was not possible to 9 meaningfully progress detailed design. Do you agree 10 with that, broadly? 11 A. Yes, indeed. 12 Q. We've heard from Mr Crawley that in fact Parsons had 13 stood down parts of their design team. I think he 14 described them as having been sent back to Birmingham. 15 Is that correct? 16 A. I did actually see that in the statement that I read 17 online. We didn't send people back. We did suspend 18 work for a very short period, but that was in July 2007 19 when we were waiting for instruction. So we didn't 20 actually send people back to Birmingham. But I can 21 understand why David might have said that with the 22 passage of time. There was a very short period of: 23 look, we can't proceed on the basis of the uncertain 24 instructions; therefore we are going to stop and focus 25 attention on getting the correct instructions. 21 1 As I say, that was a very short period, a matter of 2 days. 3 Q. We had also previously looked at a letter from you in 4 July 2007. It might be worth us bringing it up 5 actually. PBH00003595. You can see this is dated 6 11 July 2007. It's from yourself to Tony Glazebrook, 7 and the first paragraph states: 8 "We can confirm that SDS has now remobilised those 9 areas of design activity which have been held awaiting 10 resolution of the Critical Issues." 11 The impression is that that is for more than just 12 a few days, but what's your position on that? 13 A. It was a very short period. If it was two weeks, that's 14 all it was. It was a matter of days because the -- in 15 some respects, this was to focus attention -- I think 16 this is partly what I was saying yesterday, arguably we 17 should have done this earlier to focus attention on the 18 impact of the continual going round the circle on 19 several of these issues. 20 So let's make sure that we have got a crystal clear 21 foundation on which to move forward, and the reality is, 22 after this, the performance against forecast improved 23 dramatically because we were able to proceed on the 24 basis of clear instruction. 25 Q. I think whatever the details of how long the designers 22 1 had been stood down, I think you agreed with the 2 proposition that because of these outstanding critical 3 issues, it simply hadn't been possible to make 4 meaningful progress on detailed design? 5 A. That's right. There was -- shortly after I arrived and 6 it was coincident with Matthew Crosse's arrival and 7 David Crawley shortly after that. There was a meeting, 8 it must have been February, at the very latest 9 March 2007, which did a thorough programme review, and 10 it was that meeting that I think Matthew Crosse 11 concluded there was probably the need for a five-month 12 delay, and then, you know, immediately following that, 13 or even coincident with it, we started the focus on the 14 critical issues. 15 So we ran through, what, March, April, May. It 16 became apparent those issues still weren't being 17 resolved. The programme was still going backwards, and 18 that's what really led to my thoughts being expressed in 19 this letter that we have got to move this forward, 20 otherwise we risk the whole programme being cancelled. 21 Q. We saw a chart, I think produced by Mr Crawley, showing 22 the critical issues reducing from about 80 in 23 February 2007 to, I think, all but being resolved by 24 about June 2007; does that accord with your general 25 recollection? 23 1 A. Substantially. The reality is there were still issues 2 outstanding come probably even January 2008, but 3 certainly that change in culture that was brought about 4 under Matthew Crosse's project directorship and with 5 David Crawley's experience coming into play, that 6 certainly introduced a step change in the way this 7 project was being delivered. 8 Q. Thank you. Could we then go back to your statement, 9 please, at page 54. Paragraph 173, the first sentence, 10 you say: 11 "We did undertake detailed design between July 2006 12 and March 2007 but that process was frustrated to 13 a certain extent." 14 Then the next page, please, page 55, paragraph 177, 15 you say: 16 "The changes, whether as a result of the charrettes, 17 change orders or informal discussions, in late 2006 and 18 early 2007 substantially resulted in the detailed design 19 being required to be redrawn during that period." 20 A. Correct. 21 Q. Then back, please, to page 32, paragraph 107. The third 22 sentence, you say: 23 "There was a minimum of six months delay introduced 24 by CEC's changes. It could have been as much as a year. 25 That was the whole period between June 2006 and 24 1 June 2007. I am on record in June 2007 as saying in 2 relation to these and similar topics, we have been 3 iterating the design and there is little to be gained by 4 continuing to do so. We need to agree that we are 5 moving on. It was a pivotal point in the whole 6 programme. It would not be stretching it to say that 7 there was a year's delay introduced because of the 8 revisiting of the scheme fundamentals. The revisiting 9 of the design fundamentals by CEC and the difficulties 10 with getting the third party agreements agreed cannot be 11 pulled apart from one another." 12 So I think that sums up your view in respect of the 13 effect this process had on the design programme; is that 14 fair? 15 A. Yes, that's fair. 16 Q. Thank you. Now, you did then say that following the 17 step change, it did result in some progress improving. 18 Look, please, at page 34 of your statement. In 19 paragraph 110, it's in relation to an email exchange 20 between yourself and Mr Crawley on 2 July 2007, and on 21 page 34, towards the top, you say, second line: 22 "In summary, we were informing TIE that we had been 23 through a whole year of going round the houses and that 24 we could not continue. I am saying that if we continued 25 in this manner then the programme would be absolutely 25 1 blown out of the water. As it was, we had already gone 2 beyond the point where it was impossible to complete 3 100% SDS design prior to novation in any 4 sensible time frame." 5 To pause there, so this was dealing with July 2007. 6 Was it your view at July 2007 that things had already 7 gone beyond the point where it was going to be possible 8 to complete 100 per cent of the design before novation? 9 A. If you go back to the original question with the 10 programme outlined in the Business Case for Infraco 11 procurement, that's exactly right. By that point it was 12 clear we weren't going to meet that September date. 13 You can take two views, can't you? There's the 14 requirement for novation. Ideally on 100 per cent SDS 15 design. But also at a point in time. 16 So am I going to focus on achieving 100 per cent 17 design, or am I going to focus on novating at a point in 18 time? And where is the balance? 19 Now, if we were going to continue to focus on 20 a September end date or a September completion date, we 21 couldn't have been 100 per cent complete by that date. 22 How much longer would it have taken to achieve 23 100 per cent completion? That's what we then turned our 24 attention to, because that was still my focus under the 25 terms of the contract, to deliver 100 per cent complete 26 1 SDS design. 2 The real worry in my mind as expressed in the letter 3 was we were running out so much that, as I say, the 4 entire scheme could have been in jeopardy. That was 5 what I was trying to get through to tie, and 6 Dave Crawley obviously agreed with me. 7 Q. What do you mean by the entire scheme could be in 8 jeopardy? 9 A. Well, there was pressure, there was a political 10 environment at the time. I know Willie Gallagher was 11 under extreme pressure. We had to be giving everybody 12 confidence that things were moving forward to a positive 13 conclusion, and the months immediately prior to this, as 14 I say, February, March, April, the design programme was 15 running out because of its dependence on others taking 16 decisions. Had that continued, people would have lost 17 confidence that we were going to get to an end point in 18 my view, or there was a risk that people would lose that 19 confidence. 20 Q. Thank you. Go on to page 51 of your statement, please. 21 Paragraph 165 in the last sentence. The last sentence 22 states: 23 "When the various critical design issues were 24 resolved they were simply carried forward to and 25 reflected in the detail design." 27 1 Now, going back to a discussion we had earlier, in 2 an ideal world, would the various critical design issues 3 have resulted in the preliminary design being revisited 4 and agreed before then moving on to detailed design? 5 A. Ideally, yes. I think in the circumstances the calibre 6 of the people that we had addressing these issues meant 7 there was that broader perspective of the integration of 8 the critical issue resolutions with the rest of the 9 design. 10 The reason you would go back to preliminary design 11 in the textbook, as it were, would be to make sure that 12 everything remained consistent, even having resolved the 13 critical issues, but I think there was, you know, 14 sufficient senior focus on this to take on board -- take 15 on board as part of resolving those issues that they 16 were consistent with what was out there. 17 So I think at the time it was -- that was the only 18 way to go, really, to make sure progress was maintained. 19 Q. I can understand why that was done to meet the 20 procurement timescale, but again, in an ideal world, 21 does that not run the risk, if one does that, of further 22 and future change, if one doesn't have an agreed fixed 23 baseline one can refer back to and say this was agreed 24 and approved; so if you're making further change to 25 that, it's going to have cost and time implications? 28 1 A. Correct. 2 Q. Could I also then, please, look at page 85 of your 3 statement. Paragraph 250, it's in relation to a meeting 4 of the Design, Procurement and Delivery Sub-Committee on 5 2 August 2007, where David Crawley had explained the 6 concept of just in time delivery and the fact there was 7 no margin for error. 8 Then about five lines from the bottom, you said: 9 "It was not like we were suddenly working to 10 a sensible programme, we were working to a programme 11 that was as a consequence of previous delays." 12 Could you just explain what you meant by that, 13 please, that "it was not like we were suddenly working 14 to a sensible programme"? 15 A. I think it comes back in part to what you have just 16 said. If you're following the textbook, you would 17 backtrack as issues were resolved. You would make sure 18 they were consistent with the rest of the design. You 19 would make sure the periods for consideration of those 20 changes, for the integration of those changes, were 21 sufficient. 22 In reality we were working hard to minimise the 23 impact on programme going forward. So we were juggling 24 to incorporate change in the design whilst continuing to 25 produce design. 29 1 So in that sense it wasn't sensible from an optimum 2 technical standpoint, but, as I say, within the 3 political environment we were operating in, it was 4 pretty essential to keep the job moving up to the point 5 where Infraco came on board as preferred bidder. 6 Q. Now, when you say political environment, is that with 7 a big P or a small P? 8 A. That's with a big P. That's having regard to the 9 ultimate stakeholder, as it were. So Scottish 10 Government, City of Edinburgh reputation, the need to be 11 moving forward. 12 Q. Now, in terms of -- we have heard it described as 13 a political imperative to drive forward the programme. 14 Was that a view you had come to yourself, that there was 15 a political need to make progress or was that a view you 16 had heard from others? 17 A. That's a good question. I suppose it was a view that 18 I developed through working fairly closely with 19 Willie Gallagher on and off through that period, that 20 there was clearly a need to maintain confidence from the 21 major political stakeholders. Particularly in an 22 atmosphere where not all of the parties in government 23 were backers of the tram scheme. So we needed to be 24 demonstrating that the project team could deliver 25 something of value. 30 1 Q. Because the Inquiry may hear evidence from Mr Swinney in 2 due course, who was the Minister responsible at the time 3 for finance, and his evidence may be that he had made 4 a commitment to Parliament in around June 2007 that 5 funding would be made available up to the cap of 6 500 million, and he would keep to his word. 7 So what is perhaps slightly puzzling is why after 8 that commitment had been publicly stated in Parliament, 9 parties were still concerned about the political 10 background to all of this. 11 A. Well, I think the word "cap", you can take that as key 12 to that debate, because the -- one of the biggest 13 reasons a cap gets exceeded is because of prolongation 14 of the programme. So what needed to happen was this 15 programme needed to be delivered on time to maintain 16 that political support. 17 Q. It's perhaps not a question for you. Again, 18 Mr Swinney's position may be that he had stated the 19 support for the project. It wasn't -- conditional on 20 certain things, but not very many things. I think we'd 21 better leave that for other witnesses. 22 Just on page 87, please. Just above paragraph 254, 23 this was in reference to an email exchange in July 2007 24 involving Jason Chandler, and you referred to Jason's 25 response as basically criticising misplaced procurement 31 1 programme pressure. Why do you say this was misplaced 2 procurement programme pressure? 3 A. Sorry, could you just take me back to the beginning of 4 that, 253? 5 Q. Yes, go back to the previous page at paragraph 253. So 6 it's David Crawley's email of 19 July 2007. An email of 7 19 July 2007 from Jason Chandler to Andy Conway. I'll 8 give you a minute to read it yourself. 9 A. Yes. 10 Yes, so this is -- this goes back to what I was 11 saying a little earlier about the traffic modelling: 12 "In an ideal world we would wait for all modelling 13 to be complete before completing the design but this 14 would add unacceptable delays to the programme and 15 delivery unfortunately this would mean that the design 16 would be completed later and the design for the whole 17 route would land for review and approval in one ..." 18 Tranche, would it be? Could we move forward now to 19 page 87: 20 "... one package which would be a very tall order." 21 So the email in response to an email from 22 Andy Conway. So if we're talking misplaced procurement 23 programme pressure, I think this is the consequence of 24 the pressure building to that point where everything 25 comes in one package. 32 1 Q. It's simply your use of the word "misplaced", I was 2 interested in. The fact you say "misplaced procurement 3 programme pressure". 4 A. Mis -- I can only think, reading it now, that it would 5 be misplaced because it was focusing on the delivery of 6 everything without perhaps recognising the pressure that 7 would put on the approval body. So it may have been 8 better to have it drip-fed. Whether that would have 9 been acceptable at this point in time, I cannot say. 10 Q. Did you have a view at the time as to whether the need 11 to procure the Infraco contract was putting undue 12 pressure on the design programme? 13 A. No, I think if you turn that round, we understood the 14 urgent need to maintain realistic Infraco dates. So it 15 was then more a matter of: well, what's the risk 16 assessment associated with the fact that we may not be 17 complete ahead of those dates, how does that impact the 18 scheme going forward? 19 Q. So in short, Parsons were trying to deliver as much of 20 the design as they could within the time available? 21 A. Yes, we tried to appreciate the bigger picture and we 22 tried to work hard to at least complete the critical 23 aspects of that work that was outstanding at the time. 24 Q. Thank you. Can we now look at another document. It is 25 PBH00014489. We see from the top of the page it's an 33 1 email from Carla Jones of Parsons, dated 2 21 November 2007, in relation to the weekly deliverables 3 tracker. 4 Ms Jones explains that of the 344 deliverables on 5 the tracker, two lines down: 6 "SDS have delivered 227 deliverables." 7 Simply a point of detail in passing, Mr Reynolds. 8 The 227 out of the 344, I think from my calculations, 9 was about 66 per cent. So about two-thirds. So it's 10 really just to try and note in passing that according to 11 Ms Jones' email, about two third of the deliverables had 12 been delivered as at November 2007. 13 I'll ask you to keep that thought in your head, and 14 simply to compare that with something you say in your 15 statement. If we then go to that, please, in your 16 statement at page 116. 17 About five or six lines down from the top, it's in 18 relation to a reference to -- at the top of the page: 19 "... 23 November ... of the 344 design deliverables, 20 236 have been delivered, representing 63 per cent of the 21 tram system design. 66% of phase 1a detailed 22 design is now complete ..." 23 After the quote in italics, you say: 24 "The percentage completed figure in this document is 25 low. It was not as low as 63%. It was more 34 1 between 70% and 80%." 2 It may be a point of detail, but simply from going 3 to Carla Jones' email in November 2007, it does appear 4 that the figure of about 66 per cent is correct as at 5 that time. Are you prepared to accept that? 6 A. I think if you just go further down that quote on the 7 screen at the moment, I say near the bottom: 8 "I think the percentages are understated. TIE are 9 saying there were 344 packages. I would say there were 10 325 on the log that we were using." 11 What you have to, or what I have to explain more 12 clearly, the programme would have been set up with 13 a number of design packages. Through the course of time 14 some of those packages would actually have been removed, 15 but they would still have been on there as a programme 16 statistics. Some of them would have been combined. 17 So reviewing it when I was asked the questions here 18 for the statement, I had 325, that there was the 19 substantive number that we were working to. 20 The other point to make numerically, yes, I'm not 21 going to argue with you obviously. It's a statement of 22 fact. But the percentage complete is purely 23 a mathematical assessment of the number of packages 24 versus the forecast. There's no weighting in that 25 percentage as to the substance of those packages. 35 1 So a package that may have taken five months to 2 complete would still be one package, and a package that 3 may have taken one day to complete would be one package. 4 So just with that note of clarification. 5 Q. I understand. And you do explain that in your 6 statement. 7 A. Thank you. 8 Q. Now, moving on, please, to December 2007, another 9 document. PBH00032472. 10 Now, this is a -- what we've called a weekly report 11 that you prepared. Can you just perhaps, because it's 12 the first one we've looked at, explain what the purpose 13 of your weekly reports were. 14 A. As I said yesterday, when I was appointed in 15 February 2007, reporting to Keith Hawksworth in 16 New York, because of the very high profile of this 17 project, because of the importance of it to PB, I was 18 asked by Keith to prepare a report every week, to 19 summarise the various different aspects of our 20 engagement. So I did that diligently from February 2007 21 certainly all the way through May 2008. So that's 22 the -- that's the -- as you say, the first example we 23 have seen. It's an internal document. It's reporting 24 matters of fact and matters of opinion as they may be 25 useful to my senior management. 36 1 Q. Thank you. Most of the reports are dated. This one 2 doesn't have a date on the face of it. But I think we 3 have otherwise established that it's 7 December 2007? 4 A. Okay. 5 Q. What I'm interested in is page 3, please. Under 3.3, 6 "Procurement", the second paragraph there, you said: 7 "Speaking with Willie Gallagher on the pricing, he 8 is relatively comfortable that presentations can be made 9 to Council which will secure acceptance of the current 10 offer. I understand from talking separately with BBS 11 that whereas tie had been demanding a 97% fixed 12 price for next week an offer of no more than 13 75% fixed will be provided. Willie appears to 14 be working on the basis that he has a sufficiently 15 positive presentation to make to Council and that 16 assuming the contract can be started well with 17 significant progress made over the first nine months or 18 so the question will have moved from the price for this 19 offer for Phase 1a of the scheme to questions over 20 affordability and funding for subsequent phases." 21 Just to pause there, you refer to having been 22 talking separately with BBS. Did you have separate 23 discussions with them around this time or what? 24 A. Well, following BBS's appointment or confirmation of 25 preferred bidder, which was late in the October 2007, 37 1 then increasingly we came together with BBS, we had an 2 obligation to do that, to work with BBS to clarify the 3 integration of the SDS design; and then it must have 4 been from around that December 2007 point on, certainly 5 through intense joint negotiation sessions with BBS 6 ourselves and tie on the meetings that ultimately led to 7 the Infraco contract being signed. 8 So yes, we had to work closely with BBS to ensure 9 there was a commonality of understanding. 10 Q. From what is stated in your report, there seems to be 11 a gap or a bridge between what Mr Gallagher was wanting 12 and what Bilfinger Berger Siemens were prepared to 13 offer; is that a fair way to put it? 14 A. Yes, it is, because, you know, to be fair to Willie, the 15 procurement strategy outlined in the Draft Final 16 Business Case had been for a fixed price, from my 17 recollection now, for the Infraco. But BBS, as the 18 Infraco was concerned that they weren't able to provide 19 a fixed price because of certain aspects of the design 20 being incomplete, so I think you can see both points of 21 view there. Yes, there was 75 per cent that could be 22 fixed. The balance would be up for review. 23 Q. If we could then, please, go back to your statement, if 24 I may, to page 117. Paragraph 325, there's a reference 25 to the quote I just read out. You then say: 38 1 "It was not a direct concern that Willie would be 2 presenting the 97% because that had not come to 3 me from Willie. It would have been a concern that the 4 presentation to Council, whilst it could have been 5 positive, may not have been presented in a risk-assessed 6 way." 7 Is that a concern you had at the time? 8 A. Yes. 9 Q. Why? 10 A. Again, from my point of view, looking at the bigger 11 picture, it's always -- the one thing that's paramount 12 on all of these schemes is everyone's reputation. So it 13 was a concern to me that whilst there may be a perfectly 14 reasonable explanation for the pricing scenarios that 15 we've talked about there, that they've got to be 16 presented properly to ensure that people are aware that 17 where the risks lie, and then people can take account of 18 those, react appropriately for the good of the scheme. 19 Q. Thank you. Over the page in your statement, please. 20 Paragraph 326, you say: 21 "All I can really comment on is BBS's stance. Their 22 stance was that there were a number of risks and 23 deliverables which could not be priced to a sensible 24 fixed price." 25 In the last sentence: 39 1 "I would say that, at that time, a 97% fixed 2 price would have resulted in a very high price because 3 it would have accommodated an awful lot of risk." 4 To pause there at that last sentence, is that a view 5 you held at the time or is that a view with the benefit 6 of hindsight? 7 A. That was at the time. Now, to an extent that's a worst 8 case, because you could say: well, if the parties put 9 the various issues on the table, then you could take 10 a view of that risk pricing; but acting in isolation, if 11 BBS were to put risk against every item still wasn't 12 fixed, then it would produce a very high price. So yes, 13 that was my view at the time. 14 Q. So what were the sort of risks that would have been in 15 your mind that would have resulted in a very high price 16 in order to get a 97 per cent fixed price? 17 A. Well, the key example from the time was the trackform 18 development where there was a significant difference of 19 opinion from BBS versus our view. Again, it's not just 20 the substance of the design. It's the time period over 21 which any changes to the BBS offer would have to be 22 implemented. 23 Q. What do you mean by that last sentence: 24 "It's the time period over which any changes to the 25 BBS offer would have to be implemented." 40 1 A. Well, taking that example with the trackform design, in 2 our view there was a need for a more complex design for 3 the trackform, and that would probably have led to 4 a correspondingly longer construction period. So you've 5 immediately got the duration over which the construction 6 is taking place. You've then got the interaction with 7 other aspects of the design that would have to integrate 8 with that trackform, and the programme becomes longer. 9 CHAIR OF THE INQUIRY: Whose view prevailed about trackform 10 design? 11 A. Well, interestingly, I think you could argue that we 12 did, because much later on in the process, we were being 13 pressured by tie to accept a much cheaper, much simpler 14 trackform design, and we pointed out the risks inherent 15 in doing that, and subsequently, when Princes Street was 16 excavated, we were proved to be right. So the need for 17 the more robust trackform design was proven then. 18 Now, that ensured quality of delivery, but what that 19 did mean was that the original BBS offer couldn't be 20 implemented. It had to be the more robust solution. 21 CHAIR OF THE INQUIRY: And that would involve additional 22 cost. 23 A. Yes. 24 MR MACKENZIE: Just on the question of trackform, could you 25 explain to us what you mean by trackform? 41 1 A. Trackform is the rails and the immediate foundation for 2 those rails, and out in the country the so-called grass 3 track, where you've got grass in between. 4 The trackform through the city is on concrete 5 foundation, but it's the immediate sub-base plus the 6 rails and the various points and so on and so forth. 7 Q. And in short, what trackform had SDS proposed and what 8 trackform had the consortium proposed in their offer? 9 A. In short, we defined what's known as full depth 10 reconstruction, which is excavation of the base, the 11 putting in place a sub-base underneath the immediate 12 foundation for the trackform. So you're going down 13 significant way into the roadway, using that as the 14 example, whereas BBS had come up with an offer that was 15 using a prefabricated trackform which would only require 16 planing off, in their words, of the immediate surface 17 and then insertion of that prefab trackform in place. 18 So it was a much simpler solution. 19 CHAIR OF THE INQUIRY: So did BBS start with the -- their 20 form of trackform. 21 A. Yes. Now, from memory -- I stand to be corrected if I'm 22 wrong -- that's what initially was used on the first 23 Princes Street excavation. As I say, I may be wrong on 24 that, but that was the -- BBS certainly pursued 25 something initially that then had to be changed for our 42 1 design later on. 2 CHAIR OF THE INQUIRY: Could that explain resultant faults 3 in Princes Street alongside the line cavities? 4 A. The cavities were there as a characteristic of what was 5 there before excavation started. The faults that 6 I think you're referring to with the initial 7 implementation of the trackform, yes, because a part of 8 the trackform design, just to amplify what I was talking 9 about there, is the so-called shoulders that run 10 alongside the rails, and our preference was for concrete 11 shoulders to contain the trackform, as it were, whereas 12 the initial BBS offer didn't have those concrete 13 shoulders. 14 That then resulted in problems with the heavy 15 traffic on Princes Street cutting across the track, the 16 buses and so on and so forth, and then you got the 17 cavities that you were just talking about. 18 CHAIR OF THE INQUIRY: Thank you. 19 MR MACKENZIE: So in short, Mr Reynolds, why wasn't it 20 possible to build the consortium's proposed trackform on 21 Princes Street? 22 A. In our view it wouldn't have been safe because a further 23 characteristic of the trackform design necessary for 24 inner city circumstances like Princes Street, you need 25 what's called void spanning, because you've got to 43 1 anticipate that there will be cavities under the 2 roadway, and subsequently when Princes Street was 3 excavated, that's exactly what we found. You will get 4 drainage channels. You will get all sorts of reasons 5 why the sub-base may have moved, may have resulted in 6 voids. 7 So you need the trackform to be capable of spanning 8 those voids so you don't get rail breakage, and 9 obviously if you get rail breakage in an inner city 10 environment, you get a derailment. That's particularly 11 unsafe. You need to be able to avoid that, obviously. 12 Q. So at the time of contract close or just before it, tie 13 chose the cheaper option; is that correct? 14 A. This is interesting because this was flagged up before 15 contract close, and it was actually one of the bullets 16 noted in the so-called Schedule Part 4. And that was 17 tabled for resolution in the design development 18 workshops which were scheduled very shortly after 19 contract close. So that was a specific issue that was 20 noted for resolution post Infraco contract award. Then 21 that was -- there must have been eight or ten issues 22 that were noted. 23 Q. We will come back to those workshops. Maybe it's an 24 unfair question to you, and I suppose you don't know on 25 what basis the consortium priced. We should ask other 44 1 witnesses about that? 2 A. That's exactly right. I don't. The only -- with -- 3 just to develop that Schedule Part 4 issue, we were -- 4 because we had the right, and you could argue the 5 obligation, to have been aware of all the terms of the 6 Infraco contract before we signed up for novation. 7 Schedule Part 4 was clearly part of that Infraco 8 contract, but we had to press quite hard to be shown it 9 at all, and speaking now, I'm still not -- I wouldn't be 10 confident that we ever saw the totality of Schedule 4. 11 We saw what we needed to see as it impacted the design 12 development going forward. But you're absolutely right, 13 it's not for me to say how that was priced. 14 CHAIR OF THE INQUIRY: Who was reluctant to give you the 15 full schedule? 16 A. I suppose logically that would have been tie, because we 17 were requesting it through tie as part of the novation 18 negotiations. So they were reluctant. And as I say, 19 come the end, we saw what we needed to see to be able to 20 ensure that our design obligation wasn't overly onerous, 21 but I am not convinced we saw the whole thing. 22 MR MACKENZIE: Thank you. Moving on to a different point, 23 please, to a different document, if I may. PBH00033339. 24 We are moving on to January 2008. We can see the top of 25 the page, an email from yourself to Greg Ayres, 45 1 7 January 2008, headed "Novation planning". About 2 halfway through the second paragraph, you say: 3 "The sensible course of action which everyone except 4 tie understands is to delay novation to the point where 5 the design is nearer 100% complete - to be fair 6 even Gallagher sees this as a potential option. The 7 likes of Crosse and Gilbert though are being more 8 blinkered - driven largely by their desire to be clear of 9 Edinburgh as soon as the BBS ink is dry on the deal." 10 I'm interested in you say: 11 "The sensible course of action ... is to delay 12 novation to the point where the design is nearer 13 100 per cent complete." 14 Why was that the sensible course of action? 15 A. This is an interesting debate, and this is one where, 16 with the benefit of hindsight, you could say there would 17 be a different course of action that may have been 18 better. 19 But I think you referred to it yesterday, with the 20 adversarial nature of the procurement and contract 21 structure, that from my point of view, the novation 22 terms had been defined before we started in 2005. So 23 they were defined on the basis that the SDS design would 24 be 100 per cent complete. 25 And there were certain obligations on the SDS for 46 1 indemnification of the Infraco, which would have been 2 absolutely fine had the design been there as a product 3 on the shelf. 4 In the circumstances of that design not being 5 complete, then they were -- they were onerous to the 6 point where they represented a serious risk to us. So 7 from my point of view, talking it through with 8 Willie Gallagher in January 2008, my preference against 9 that contract framework was to have a 100 per cent 10 complete design. 11 Now, sitting here now, ten years -- getting on for 12 ten years on, you could say a better course of action 13 would be to revise the contract terms to develop more of 14 a collaborative approach for all parties to deal with 15 the fact that the design wasn't 100 per cent complete. 16 Q. Did you discuss with Mr Gallagher around this time, in 17 early 2008, that it would have been more sensible to 18 delay novation until nearer the point where design was 19 100 per cent complete? 20 A. Yes, I did. Now, that's not to say that the Infraco 21 contract needed to be delayed. The Infraco contract 22 could have been awarded and then the design could have 23 been novated subsequently. 24 I think that was the arrangement with CAF, the CAF 25 contract was novated at some point after Infraco 47 1 contracts award, from memory. But in any event, that is 2 what I discussed with Willie, that there was no need to 3 have the novation coincident with the Infraco contract 4 award. 5 Q. What would be the advantage in completing the Infraco 6 contract award but delaying design novation until later? 7 A. Because there were certain aspects of the Infraco 8 contract that could have been delivered in the absence 9 of a 100 per cent complete design across the board. 10 Indeed, there was an advanced works contract. So the 11 Infraco was working on the scheme in advance of the 12 formal Infraco completion. 13 So it would have allowed work to continue, but it 14 would have -- it would also have ensured that the design 15 could be completed to my satisfaction, continuing to 16 work with tie. 17 Q. What was Mr Gallagher's response to the suggestion? 18 A. He took it on board. We had a very constructive 19 conversation about it. He went away to think about it. 20 We had more than one meeting on it, and it was certainly 21 something that was considered for a time, but ultimately 22 it was decided to go with the Infraco award and the 23 novation together without 100 per cent complete. 24 Q. Thank you. 25 I then want to go to another document, please. 48 1 PBH00015934. Again, it's towards the top, we can see 2 it's sent by yourself on 21 January 2008 to 3 Jason Chandler, subject "Where we are". You start 4 saying: 5 "As much for my benefit as anything else I thought 6 I'd try and get my thoughts straight after Friday's 7 events." 8 Just in passing, you refer to a Susan Clark 9 outburst. Do you recall what that was about? 10 A. It was just one of those things that, I suppose, gets us 11 all occasionally. It was a Friday morning, it was the 12 weekly critical issues meeting, and I think Susan was 13 particularly frustrated for some reason and gave vent to 14 her feelings. It was one of those things. 15 Q. So not a matter of any consequence for us? 16 A. No, I think it was frustration at lack of progress. 17 I suppose it was just a different way of showing it. 18 I suppose in many respects everybody else was frustrated 19 about lack of progress. 20 Q. The second paragraph, however, you say: 21 "On the other issues I feel that tie is completely 22 disorganised and a number of very key issues are just 23 being allowed to float." 24 Can you recall why you consider tie was completely 25 disorganised at this time and what were the very key 49 1 issues that were just being allowed to float? 2 A. There were -- from memory, there were three things, two 3 of which are described here. The Employer's 4 Requirements and the critical issues, but there was also 5 the concern about the conduct of the clarification 6 meetings with the Infraco consortium, where in the 7 period, what, November/December, so slightly prior to 8 this, my feeling was that tie was allowing BBS to direct 9 proceedings, rather than the other way about. 10 So that to my mind showed disorganisation, lack of 11 control over BBS. 12 But then that sort of led into the issues with the 13 Employer's Requirements, where there was a lack of 14 organisation and a lack of focus on resolving what was 15 a significant issue, but something that could be 16 resolved with appropriate control. 17 Q. Thank you. I'll come back to the question of the 18 Employer's Requirements and the Civils proposals, but 19 just sticking with this email, towards the bottom: 20 "Then there was the fiasco that was the Critical 21 Issues Meeting on Friday ..." 22 I'm interested in the sentence where you say: 23 "I was frankly dismayed that so many of the things 24 we talked about were the same as the issues on the table 25 six months ago." 50 1 Is that a reflection of issues being re-opened? 2 A. In part. There's a table on one of the other document 3 references which shows the position about this time, and 4 it shows the majority of those issues requiring action 5 by people other than SDS for resolution. 6 So yes, some of them would have been re-opened. 7 Some of them hadn't been resolved in the intervening 8 period, which was the comment I made a little while ago, 9 about yes, you were absolutely right, the critical 10 issues initiative did see the resolution of a 11 significant number of those critical issues, but not 12 all, and then the remaining ones seemed to take a very 13 long time to address, and that was the position here in 14 January 2008, I was looking at. 15 Q. Also, I'm lastly interested in the third line from the 16 bottom of that paragraph, where you say: 17 "Especially with novation upon us and these very 18 issues likely to be the major cause of construction 19 programme disruption. And tie seemingly devoid of ideas 20 or even common understanding at their management team 21 level. Probably I need to alert Willie." 22 The question of common understanding at their 23 management team level, what is that a reference to? 24 Common understanding of what? 25 A. Common understanding of the impact of some of those 51 1 issues still being outstanding. I know there was 2 still -- I think there was still an issue with the 3 Scottish Rugby Union Agreement, for example, but that's 4 just one example from that table I reference. I think 5 there was still issues with Forth Ports. So the common 6 understanding, certain people were just focused on 7 trying to get resolution, but failing to, but the common 8 understanding was, well, this is going to impact the 9 construction programme, if these issues are not resolved 10 prior to Infraco award. 11 Q. Thank you. 12 We can leave that, please, and go back to look at 13 another of your weekly reports, please. PBH00035854. 14 We will see from the bottom right-hand corner, this one 15 is dated 29 February 2008. 16 If we go, please, to page 3, we can see the second 17 paragraph states: 18 "With regard to the technical scope, tie concluded 19 from a separate meeting on Thursday convened to review 20 the Civils proposals that the current state of the BBS 21 Offer was seriously incomplete and therefore 22 unacceptable. BBS's commercial manager stated that for 23 BBS to comply fully with the SDS design could inflate 24 the offer price by an amount in excess of 25 GBP10 million." 52 1 Then the next paragraph states: 2 "An attempt was then made to water this statement 3 down but in separate discussions with Richard Walker he 4 has mused that if tie understood the likely true cost of 5 building the scheme then it would be cancelled. This is 6 not idle chat:- it is Richard's view of the strategy he 7 has adopted to retain as much flexibility pre-contract 8 with a view to securing substantial variations post- 9 contract. On a related note, Richard has also informed 10 me that he and his manager (from Wiesbaden) have seriously 11 discussed withdrawing from the bid. The main factor 12 preventing this is the desire to build a business in the 13 UK and the ETN contract would be the foundation for any 14 future developments. Against that BBS has other 15 emerging opportunities and is becoming increasingly 16 frustrated at the time and cost impact of the current 17 bid process." 18 Presumably, Mr Reynolds, this reflects something 19 that -- matters you had heard at the time; is that 20 correct? 21 A. That's correct. 22 Q. In particular, from Mr Walker himself? 23 A. Yes. 24 CHAIR OF THE INQUIRY: Can I just be quite clear on what 25 that means. Looking at this or from that conversation, 53 1 was the strategy of BBS to come in low, as it were, and 2 reach agreement, and thereafter maximise the extras, as 3 it were, after the event? 4 A. I'm sorry, I just missed the -- 5 CHAIR OF THE INQUIRY: So maximise additional costs? 6 A. I think the context of this was that the Civils 7 proposals, we hadn't actually seen any Civils proposals 8 until fairly late on. Clearly before the end of 9 February 2008, but certainly significantly after the 10 preferred bidder declaration. When we did see Civils 11 proposals from BBS, they weren't comprehensive at all. 12 They were very, very high level. So the concern was, 13 well, this is not reflecting the SDS design, and then 14 you get on to this statement. Well, if we were to 15 deliver the SDS design in full, it would be high price. 16 I suppose the question then comes: was the intent to 17 close that gap by staying within the envelope or was the 18 intent to take advantage, if you like, of that gap and 19 take further variations? 20 I suppose I'm really not qualified to give you 21 a direct answer on that. It was, again, from my point 22 of view, there was the risk that if -- if you moved away 23 from the sort of collaborative approach, then that gap 24 as it existed in February 2008 could be the basis for 25 significant price increase. 54 1 CHAIR OF THE INQUIRY: Did you become aware of when BBS 2 entered into subcontracts for delivery of the project? 3 A. We were aware that an advance contract had -- advance 4 works contract had been awarded. Sitting here now, 5 I can't remember exactly when that was, but it was 6 earlier in 2008, from recollection. 7 CHAIR OF THE INQUIRY: Thank you. 8 MR MACKENZIE: Thank you. You said that it is Mr Walker's 9 strategy he has adopted to retain as much flexibility 10 pre-contract with a view to securing substantial 11 variations post-contract. Why was he sharing that 12 strategy with you? 13 A. Because we were going to be novated to BBS. So he 14 needed to understand my view on the SDS product. So 15 this is where you come back again to my views on their 16 Civils offer. So debating with Richard or discussing 17 with Richard how that would be taken on board. 18 Now, this, whilst it was February 2008, whilst it 19 was beyond the January 2008 target for Infraco contract 20 award, this was at a time when the -- there was -- there 21 were regular meetings. There was clearly a divide 22 between the parties. And I suppose to be fair to 23 Richard, he was making sure he was protecting BBS's 24 interest and maintaining flexibility against a backdrop 25 of potentially a more onerous design being -- a more 55 1 onerous construction being required than they'd allowed 2 for. 3 But there was -- there was a developing -- and there 4 had to be. There had to be a developing close 5 relationship between ourselves and BBS to ensure that we 6 were working closely together immediately we were 7 novated. 8 Q. Given the state of matters at the time, did it surprise 9 you from a commercial point of view that that was 10 Mr Walker's strategy? 11 A. I suppose you could say that some of it was positioning 12 to ensure that BBS came away with the best deal that 13 they could secure in the circumstances. 14 So from that point of view, not surprise. But 15 something that had to be taken on board and to an extent 16 countered to make sure that the final solution was 17 a sensible one that was fair to them, fair to us. 18 Q. Do you know whether that strategy was shared with tie? 19 A. I don't. And I suppose you would have to go back to 20 Schedule 4, how the negotiations on -- Schedule 4, if 21 you like, was the incarnation of -- the consequences of 22 this strategy being pursued. How that was negotiated, 23 we weren't there. That was between BBS and tie solely. 24 Q. In all of your discussions with tie, from really late 25 2007 up until signature of the contracts in May 2008, do 56 1 you know whether tie were aware of the risk of there 2 being substantial variations post contract? 3 A. They were aware -- on the specifics, Willie 4 and I discussed, as it happens, the trackform. Now, 5 that may sound like a detail. I was discussing that 6 with the Exec Chairman. But it was a significant part 7 of the overall scheme. The trackform runs end to end. 8 So it was a significant element. It is a significant 9 cost element. So Willie and I did discuss that. To 10 what level of detail, I can't recall. 11 But the consequences of where we were at were 12 enshrined in the Infraco contract, and this is where you 13 come back to the design development workshops that were 14 obligated on everybody. 15 So there was an awareness that elements had to be 16 completed, but of course that doesn't automatically say: 17 well, there's going to be a price increase. Some of 18 those discussions could have resulted in a price 19 reduction, potentially, if you'd found a better 20 solution. 21 So it was outstanding items that were going to be 22 addressed and closed out post-contract. 23 Q. Thank you. I'll come back to the question of 24 misalignment and the workshops. 25 Just two final pages in your statement, if I may. 57 1 Page 139. Now, about ten lines down, after the quote, 2 which we looked at in the weekly report, so after the 3 numbering in bold, you say here: 4 "Richard's comment came in an atmosphere of trying 5 to stay within a budget sum. This is where you come 6 back to the concern about a programme for doing one 7 thing and a price for doing another (which was largely 8 in relation to the value engineering)." 9 Just to pause there, what do you mean by that, the 10 concern about a programme for doing one thing and 11 a price for doing another? 12 A. In very simple terms the price depended on securing 13 reductions through value engineering but the -- for 14 example, the design, the additional design required to 15 realise that value engineering wasn't included in the 16 programme. At a very high level that's a simple 17 explanation of my concern. 18 Q. You then say: 19 "There were things that might have to be done which 20 were not either programmed or costed eg no allowance was 21 made from a time or cost point of view for a potential 22 requirement for full depth reconstruction. There were 23 concerns within Parsons that BBS was putting forward 24 a solution that would not really be fit for purpose. 25 I do recall talking with Willie Gallagher about 58 1 trackform and Willie informing me that trackform had 2 been a key part of the competitive assessment between 3 BBS and Tramlines." 4 So just to pause there, and going back to the 5 question of trackform, was it essentially agreed to 6 leave that matter until after contract award to take 7 a final view on what trackform would be required? 8 A. Ultimately, it was, that's right. 9 Q. The question of trackform, would that be an 10 insignificant sum if that had to be changed, or 11 a significant sum or what? 12 A. It's a significant sum, and at the end of the day, it 13 could be a substantial sum if you were looking at long 14 sections of route that had to be amended. Certainly as 15 a minimum from our point of view, you would likely be 16 looking at the city centre sections. You wouldn't be 17 looking at, for example, the sections out beyond 18 Haymarket, which were on ballasted track alongside 19 Network Rail, but certainly the city centre sections 20 which were a significant part of the overall scheme, 21 yes, you are looking at an issue that could be serious. 22 Q. If the more extensive full depth construction trackform 23 you had proposed or rather SDS had proposed, if that had 24 been required rather than the shallower consortium 25 proposal, is that the sort of thing that could add 59 1 millions to the cost of the scheme? 2 A. Yes. 3 Q. For simply the build cost, there might be an effect on 4 the design programme to design that? 5 A. Certainly an effect on the design programme. Yes, the 6 build cost and, again, there, to be fair, you would -- 7 the proper estimate would come from the construction 8 contractor, but yes, from my background, millions is the 9 right sort of order of magnitude. 10 CHAIR OF THE INQUIRY: It would involve deeper excavation 11 and wider excavation because of the wings that you have 12 described. 13 A. Yes. That's right. 14 CHAIR OF THE INQUIRY: And would the railtrack itself 15 require to be different or -- 16 A. Yes, and that is actually an important part of it, 17 because the BBS offer, whilst it was essentially 18 prefabricated trackform, and on the design concept, you 19 would think, yes, that's a nice straightforward way to 20 go, you just drop in that prefab trackform, the 21 corresponding requirement for the foundation was pretty 22 onerous. 23 So you've then got a sort of compete -- you've got 24 a conflict really. You are saying the requirement for 25 the foundation is more onerous, but I am proposing just 60 1 to plane off the surface. Actually, I'm going to need 2 to focus more on the foundation than perhaps I would 3 have done with a traditional construction. So you've 4 got a number of factors in play, but certainly it was an 5 issue that had to be addressed in more detail than it 6 had been at that point. 7 CHAIR OF THE INQUIRY: Okay. Is this a convenient point? 8 MR MACKENZIE: My Lord, perhaps just two final short points, 9 if I may, to finish this chapter off. 10 At the very bottom of the page, please, Mr Reynolds, 11 you say: 12 "We flagged this up to TIE. We were aware that BBS 13 intended to inflate their offer post-novation ..." 14 I was just wondering what that was a reference to. 15 Was that a reference back to the weekly report we have 16 just read, the strategy, or is that something else? 17 A. That's right, yes. 18 Q. I understand. And then finally, if I may -- 19 CHAIR OF THE INQUIRY: Well, sorry, which was it? The 20 result of the weekly report or -- 21 A. Yes. It's that same issue that was outlined in the 22 weekly report. 23 MR MACKENZIE: That's a reference to Mr Walker's strategy? 24 A. I suppose what you could say is we were aware that 25 BBS -- that's a bit definite, isn't it; I think we were 61 1 aware of the potential, building from the weekly report, 2 of the potential for BBS to inflate, because, as I say, 3 logically it could have gone the other way. Having had 4 clarification on all these issues, it could have 5 resulted in a reduced overall solution. Unlikely. So 6 the risk was that everything was going to become more 7 expensive as a result of the trackform issue. 8 Q. Why do you say it was unlikely to have gone the other 9 way? 10 A. Well, because of what you have said there. The costs 11 associated with the trackform are likely going to 12 overwhelm any savings that you might make elsewhere. 13 You might make savings, for example, in OLE bases 14 because you have been able to do something clever with 15 the trackform. Because of the proportion associated 16 with the trackform, it is unlikely that your savings are 17 going to overcome that. Therefore the chances were post- 18 novation or post-Infraco contract award, the price was 19 going to go up. That was the risk. 20 Q. And in general, in the commercial world, do contractors 21 in general seek to claim additional sums after contract 22 close or less? 23 A. Well, that's again a very good question. If you were 24 asking me that now, in relation to the climate in the 25 construction industry, I think there is, as we talked 62 1 about yesterday, there is now more of a focus on 2 collaboration. There's more of a focus on recognising 3 that everybody's reputation suffers if things go wrong. 4 Back in 2007 I think you could say, yes, there was 5 more of an appetite for what you have just described. 6 Q. And finally -- this is finally -- page 141, please. 7 Paragraph 378, you say: 8 "In terms of whether anyone in TIE or CEC was aware 9 of BBS's strategy to go in low and then claim on 10 variations further down the line, you only have to look 11 at schedule 4 to appreciate that that was BBS's 12 philosophy." 13 To pause there, can you explain briefly what you 14 mean by that? 15 A. It's an inference. When you look at the -- as I say, 16 bearing in mind I have not seen all of Schedule 4, but 17 when you look at the aspects of Schedule 4 as they 18 relate to the design, and you pick up the concerns about 19 trackform, about OLE, then you would infer from that 20 that there were going to be variations associated with 21 those particular elements. 22 Now, as I say, to caveat that, because I wouldn't 23 like to accuse anybody of trying to do something 24 untoward, they may deliver savings elsewhere in the 25 overall scheme. But Schedule 4 was certainly providing 63 1 an avenue for change and price change, be that up or 2 down, subsequent to the Infraco contract award. 3 So I think the key factor here is Infraco contract 4 award didn't convey the certainty that people might have 5 expected it to. 6 Q. When you say in the first sentence of paragraph 378 that 7 you only have to look at Schedule 4 to appreciate that 8 that was BBS's philosophy, is that a view you held at 9 the time or is that a view expressed with the benefit of 10 hindsight? 11 A. That was a view at the time, and I think it's fair to 12 say through that period of negotiation from January 13 through May, there was -- there were some difficult 14 times. The relationships between the parties were 15 strained at times. And the perception we had of 16 Schedule 4 through that period was that it was a vehicle 17 for future change. As I say, ten years on, you could 18 look back and say it was a reasonable de-risking 19 process, but through that period, as I say, there were 20 some strained relationships. 21 MR MACKENZIE: That may be an appropriate time, my Lord, to 22 pause. 23 CHAIR OF THE INQUIRY: We will have a break for the 24 shorthand writers. We will resume again at 11.25. 25 (11.10 am) 64 1 (A short break) 2 (11.29 am) 3 MR MACKENZIE: Mr Reynolds, I would like to continue looking 4 at a number of weekly reports you produced in the period 5 up to contract close. The next one is dated 6 7 March 2008. It is PBH00017343. 7 If we can go to page 2, please. About halfway down, 8 commencing: 9 "I didn't on this call tell tie that a PCG ..." 10 Was that parent company guarantee? 11 A. Correct. 12 Q. "... would not be forthcoming. What I did do was take 13 the opportunity in Willie's presence to remind tie that 14 despite declaring BBS as Preferred Bidder more than four 15 months ago, (end October 2007), a Civils Offer had only 16 been delivered on 26 February. In these circumstances 17 it was unreasonable to be expecting signature on an 18 Agreement next week. Willie then suggested he had some 19 sympathy with my stance on LDs ..." 20 Is that liquidated damages? 21 A. It is. 22 Q. "... and also commented that in light of the absence of 23 a clear definition of scope it was unlikely that we 24 would be in a position of full agreement by Wednesday 25 next week." 65 1 What was the reference to a clear definition of 2 scope? 3 A. That refers back to the Civils Offer being -- from 4 Bilfinger Berger Siemens being very high level, and 5 therefore the detail scope arising from that had yet to 6 be defined. 7 Q. Was there a clear definition of scope in that regard 8 before contract close? 9 A. To -- yes, but with the caveat that there were things 10 held over to be finally resolved in terms of design 11 integration, as we've said. But yes, there was at least 12 a definition -- a clear definition of what was known and 13 there was a definition of what was yet to be agreed. 14 Q. In terms of the things held over, is that a reference to 15 the misalignment causes we will come on to shortly in 16 the SDS Novation Agreement? 17 A. Yes. 18 Q. Thank you. Then at the bottom of this paragraph: 19 "One final point worthy of note. Despite the Civils 20 Offer received on Friday not being an agreed document it 21 is BBS's declared final basis of pricing - this I picked 22 up from a discussion with Richard Walker on Friday 23 evening. I asked him about the assertion that agreement 24 had been reached with tie and he told me that the only 25 agreement that had been reached was on a final price - 66 1 caveated by the content of Schedule 4, the Civils Offer 2 and the other contract documents. So, the Civils Offer 3 should be treated more as a set of pricing assumptions 4 and should any aspects of the offer have to be amended, 5 BBS's price will change." 6 So to pause there, that presumably was your 7 understanding based on your discussion with Mr Walker; 8 is that correct? 9 A. Correct. 10 Q. Had you in any event reached that view independently 11 from reading Schedule 4 when you did see it? 12 A. The first time I saw a draft Schedule 4 I think was in 13 February. The main focus here was the Civils Offer 14 which dealt with roads, embankments, all the various 15 Civil aspects of the scheme, and as I have said, they 16 were treated at very high level. So it was certainly 17 not a clear definition of the scope of work to be 18 undertaken. 19 But perhaps in this instance, more than with the 20 trackform, it's feasible that there would have been 21 savings through value engineering on some of the Civil 22 construction. So it was perhaps less of an issue than 23 the major example of trackform. But it was still an 24 open-ended commitment, if you like. 25 Q. Over the page, please, page 3. 67 1 Top of the page states: 2 "The Civils Offer contains the same major departures 3 from the SDS design as it did at first draft, notably 4 that the Roads design is a much simpler lower quality 5 offering." 6 To pause there, is the reference to Roads design 7 a reference to the trackform issues or is that something 8 different again? 9 A. No, that's the highways design which the trackform 10 integrates with, but it's over and above -- it's 11 alongside trackform. It's different. 12 Q. So that's a separate issue? 13 A. Yes. 14 Q. Thank you. 15 "tie's view is that we should now carry out an 16 exercise to determine the degree of misalignment between 17 that Offer and our Design. In my view there is 18 insufficient detail to allow us to do that and that will 19 be subject to debate on Monday. But, more importantly, 20 the philosophy adopted by BBS is radically different 21 from the SDS designs which have already been through 22 informal consultation with CEC and, in some cases, been 23 submitted for formal technical approval. I have been 24 making the point to tie since the issue of misalignment 25 with the Requirements ..." 68 1 That must be a reference to Employer's Requirements; 2 is that correct? 3 A. Yes. 4 Q. "... first emerged that in addition to achieving 5 alignment, tie must manage the stakeholders to ensure no 6 surprises in future. From informal discussions over the 7 last few weeks with senior members of CEC it would 8 appear that this has not been done. So, in the position 9 we now find ourselves (which is frankly indefensible 10 from tie's point of view - an incomplete Civils offer so 11 late in the process), I believe the first action, rather 12 than Parsons Brinckerhoff undertaking an assessment of 13 misalignment, should be for tie to put the BBS proposals 14 in front of CEC to see if they are acceptable. If CEC 15 declares itself content, that is the time for 16 Parsons Brinckerhoff to embark on the misalignment 17 assessment. To do so before receiving this endorsement 18 would incur unnecessary cost and would simply move the 19 real problem - the likely refusal of CEC to approve the 20 revised design - some weeks beyond novation. That 21 would introduce all sorts of contractual and commercial 22 problems." 23 Do you know whether the Civils Offer proposals were 24 put to the Council at this stage for their approval? 25 A. No, I don't formally. This paragraph covers a number of 69 1 significant issues clearly, and that was a major 2 concern. Let's not focus on the -- bearing in mind that 3 we'd been through months and months and months of 4 refinement to satisfy CEC, and then here we are late in 5 the process with an offer that is clearly less than 6 where we'd got to. So the notion that we were going to 7 be focusing on that rather than maintaining the CEC 8 requirement was misplaced, in my view. 9 Q. Is the issue of potential problem in short that if the 10 consortium's proposals are accepted, that may require 11 design already carried out by Parsons to change, and the 12 design that had already been carried out by Parsons had 13 at least been through the CEC process, whether formally 14 or informally, and if the Parsons design was to change, 15 it may not have the acceptance of the Council? 16 A. Spot on, yes, that's right. 17 Q. Do you know whether post financial close that came to 18 reality? Was that a problem? 19 A. I can't say. I haven't got anything that I can hold up 20 and say: here is an example of CEC or the approval body 21 refusing to approve a change. But the conduct of the 22 scope beyond novation, there was certainly -- and the 23 trackform is the best example in my mind where we did 24 work to ensure the compliant solution, as it were, were 25 implemented. 70 1 Q. So what you're expressing here is a risk? 2 A. Yes, and as I say, the focus -- you can understand why. 3 There was a set of requirements, there was a design that 4 had been prepared against those requirements, there was 5 now an offer from BBS that didn't comply with those 6 requirements. 7 The temptation was somehow to work with that, but, 8 as we said, through months and months and months, the 9 overriding focus here was to make sure the approval 10 bodies were going to be happy. Were they going to be 11 happy with the BBS offer? Highly unlikely in certain 12 instances. Okay, it may be there's good reason for the 13 approval bodies to change their stance, but they have 14 got to be made aware of it to make sure that everything 15 moves forward without problems downstream. 16 Q. In short, introduces a risk of design change after 17 financial close? 18 A. Yes. 19 Q. Now, I propose to move on from this document, but you 20 had mentioned this paragraph raising a number of 21 important issues. Is there anything else you would like 22 to draw attention to before I move on? 23 A. I think we have probably covered them there. I think 24 it's just almost an end-to-end summary, if you like, of 25 some of the significant issues from our point of view. 71 1 Q. Thank you. Could we then dip back into your statement, 2 please, at page 147. 3 Paragraph 390. You note that: 4 "By email dated 26 March 2008 Jim McEwan sent you 5 a draft of schedule 4." 6 Also in the email dated 27 March 2008, Bruce Ennion, 7 who I think was employed by Parsons? 8 A. Yes, he was. He worked in our engineering team. 9 Q. He noted that he had "grave concerns as to which way 10 this is going!". And he attached a draft of Schedule 4 11 with his comments, et cetera. What I'm then interested 12 in is a bit later down, where you say: 13 "We had various meetings with TIE where we discussed 14 technical issues and civils. In those meetings we did 15 advise persons at TIE of our concerns in relation to 16 schedule 4. There was a continuing negotiation to 17 secure the INFRACO contract award on the basis of 18 a clear definition of scope. TIE's response to our 19 concerns regarding schedule 4 was that they were 20 continuing to engage with negotiations and it was not 21 yet available." 22 I think we should also read that paragraph with 23 another paragraph in your statement at page 157, please. 24 In paragraph 414, at the very bottom, last sentence, 25 where you say: 72 1 "I am pretty sure I expressed my concerns 2 surrounding the price on the table but I cannot 3 honestly, with the passage of time, explicitly say 4 I told Willie Gallagher or Jim McEwan. I think with 5 schedule 4 there, it was self-evident that there were 6 risks surrounding the agreed price." 7 Now, you told us just before this morning's break 8 that the view within Parsons at the time was that 9 Schedule 4 was a vehicle for change. Do you remember 10 discussing those types of concerns with anyone in tie 11 before contract close? 12 A. As part of giving the statement, I was racking my memory 13 to try and recall saying something explicit as I have 14 said there, but in all honesty I can't. But the 15 circumstances of the time, with the issues that we were 16 working on, you know, at that point still delivering to 17 tie and the way that the caveat had been spelt out in 18 Schedule 4, and almost more importantly, with the Civils 19 Offer, it was there on the table, but I can't sit here 20 now and say: yes, I actually put the red flag up 21 directly with Jim or with Willie. 22 Q. I understand. I would like to go to a separate 23 document, please, another weekly report. We are now on 24 to 28 March 2008. The reference is PBH00036973. 25 CHAIR OF THE INQUIRY: While we are waiting for that, 73 1 could I just clarify in my own mind. You spoke about 2 the clarification meetings in November and December, and 3 your feeling that tie was allowing BBS to direct 4 proceedings. 5 A. Correct. 6 CHAIR OF THE INQUIRY: Rather than the other way about, and 7 you've subsequently mentioned tie's approach to the 8 receipt of the Civils, that Parsons Brinckerhoff should 9 determine any misalignment between the Civils and your 10 design. 11 Is that an illustration of the same point or is that 12 something different? 13 A. No, that is definitely in the same context, with tie 14 sort of responding to an initiative from Bilfinger 15 Berger rather than -- Bilfinger Berger Siemens, rather 16 than insisting on the tie perspective being the point of 17 reference. 18 CHAIR OF THE INQUIRY: So it's really the client, as it 19 were, allowing the contractor to run the show? 20 A. Correct. 21 CHAIR OF THE INQUIRY: Thank you. 22 MR MACKENZIE: Thank you, my Lord. 23 I will come back to this point in a little more 24 detail, but just while we are on it, I think we have 25 heard evidence, or you say in your statement, that in 74 1 relation to the misalignment between the SDS design, the 2 Employer's Requirements and the Civils Proposals, we 3 will hear evidence, I think, that the Employer's 4 Requirements were watered down, were made more general, 5 so that the Civils Proposals could align with them. Is 6 that your understanding? 7 A. Yes. 8 Q. So that seems to be an example of the Employer's 9 Requirements changing to meet the offer by the bidder; 10 is that correct? 11 A. That's correct. 12 Q. Do you have any views on whether that is a usual 13 practice? 14 A. No, it's not a usual practice at all. I mean, 15 inevitably there will be certain aspects of an offer 16 that may present a better solution against an overall 17 need, which then may be reflected in a change in 18 a requirement. But it would be ringfenced. It would be 19 a small part of the whole. 20 The way this was being done was almost to take the 21 offer, as I say, as the reference point and to amend 22 everything else around it, be that the requirements, our 23 design, or at the end of the day, even the requirements 24 of the approval bodies. 25 Q. So in short, here the Employer's Requirements were 75 1 changed to meet the offer; is that correct? 2 A. Yes. 3 Q. Also it turned out the SDS design was changed to meet 4 the offer? 5 A. To -- I suppose what you could say is the requirements 6 were changed to meet the offer. The SDS design was then 7 changed to meet the requirements, which was why I had to 8 then confirm compliance with the requirements, but that 9 was compliance with those changed requirements, rather 10 than the requirements we'd been working to up to that 11 point. 12 Q. Thank you. 13 So looking at the weekly report, we can see the 14 bottom right-hand corner of the page, I think it's dated 15 28 March 2008. 16 The first paragraph explains: 17 "Having set a target of 29 March for the award of 18 the Infraco Contract, tie has now had to acknowledge 19 that with negotiations continuing the target cannot be 20 met." 21 Then the next paragraph deals with novation 22 meetings. About a third of the way down, the sentence 23 begins: 24 "The programme review only touched on the topic of 25 timescales required to accommodate design revisions 76 1 suggested by the BBS Offer so it remains the case that 2 tie has a price on the table which assumes approximately 3 GBP12 million of value engineering improvements will be 4 delivered and a construction programme which does not 5 reflect the design effort required to deliver those 6 improvements." 7 To pause there, is that the point you made earlier 8 about the design programme not reflecting any changes as 9 a result of value engineering? 10 A. That's absolutely correct. 11 Q. What effect might such change have on the design 12 programme? 13 A. It would in all probability lengthen the overall 14 programme because depending on the complexity of the 15 value engineering that was agreed, the design could 16 be -- you know, could be significant. A major 17 structures redesign would take a period of time, would 18 have to be reapproved. So you could be looking at 19 a significant impact on programme. 20 And if that happened to be on a critical path 21 element, then that would impact the programme overall. 22 That was the worry. 23 Q. So it's not just change in design, of course. It's also 24 obtaining any statutory approval and consent? 25 A. That's right, yes. 77 1 Q. Now, picking up again your weekly report, you go on to 2 say: 3 "tie appears comfortable with the state of affairs 4 and has suggested that changes will be instructed on day 5 one of Infraco contract to address the imbalance. I do 6 not believe the major stakeholders, including CEC are 7 aware of the position and we must ensure that the 8 Novation Agreement is worded such that it protects PB 9 from any accusations of deception which could be 10 levelled at tie in future." 11 Why did you use the word "deception"? 12 A. The concern was that we were part of the team delivering 13 to that milestone. So there was -- there was going to 14 be a product in place at that novation and Infraco 15 contract award milestone, and I was anxious to ensure 16 that the substance of that product was appreciated by 17 everybody involved. So we didn't want to be in 18 a position where people thought this was a product with 19 all the characteristics required, when in fact there may 20 have been things that were going to have to change. 21 The strategy that there were going to be changes 22 instructed on day one, I was anxious to make sure 23 everybody who had an interest was aware of that. 24 Otherwise it could be viewed as, well, you're selling as 25 one thing, but in reality it's not the full shilling, if 78 1 you see what I mean. 2 Q. Thank you. I would like to leave that document and go 3 on to the next weekly report, please. It's 4 4 April 2008, and the number is PBH00017966. 5 The first paragraph, please. You refer to your 6 weekly meeting with Willie Gallagher: 7 "... concentrated on accelerating the process for 8 securing Prior and Technical Approvals from CEC. The 9 Construction Programme is critically dependent upon the 10 achievement of Approvals dates." 11 Pausing there, what were your views at the time on 12 the likelihood of achieving the planned approval dates? 13 A. We were making progress. Technical approvals on the 14 major structures elements, we didn't have a problem 15 with. They were proceeding pretty well, from memory. 16 We did have an air of problem with roads associated 17 approvals. So roads, drainage, and so on and so forth. 18 But we were making progress, and Jason Chandler had 19 instituted an initiative with CEC to try and accelerate 20 progress. So the report I put together immediately 21 prior to novation had the status on prior and technical 22 approvals. The contract changes we instituted at 23 novation made it more likely that the forward programme 24 would be less risky. So it wasn't a major issue in my 25 mind going forward. We were clearly in the position 79 1 where there were not as many prior approvals as should 2 have been achieved at that point in time, looking 3 backwards. 4 Q. Just again sticking with this, at this point in time, in 5 early 2008, it may be suggested that the whole history 6 of the design process was one of delay. 7 A. That's -- the whole history up until that point in 8 mid-2007 when David Crawley and I agreed we were going 9 to do things differently and everybody was going to sign 10 up to making progress. Up until that point, yes, there 11 had been a year of delay, let's be honest, between the 12 preliminary design submission in June 2006 and that 13 point in July 2007 when things started to move. Beyond 14 that, we were making significant progress on many 15 aspects of the design. There were still issues. The 16 one that sticks in my mind is the approval of tramstop 17 designs, where there were delays in my view due to an 18 overly pedantic approach to an approval of tramstop 19 detail. 20 But yes, if you encapsulated it, standing back from 21 the project as a whole, yes, up until that point the 22 characteristic would be in design delay. But largely 23 due to the lack of clear instruction to allow design to 24 proceed. 25 Q. Even from July 2007 when things on any view picked up, 80 1 from July 2007 on to early 2008, there was still some 2 delay and slippage in that the target deliverables were 3 still not being met? 4 A. There was. That was principally the tramstops, where, 5 as I say, there was an overly pedantic approach to 6 looking at level of detail that in my view was 7 inappropriate. 8 There were also agreed slippages on some of the 9 structures designs that wouldn't be required until later 10 on in the process, particularly when people were talking 11 about value engineering for major structures, once BBS 12 were able to look at the designs from a construction 13 optimisation point of view. Because you will always get 14 to the point, you will have a design package, but 15 depending on which construction contractor is selected, 16 they will have a preference for certain aspects of how 17 it's to be constructed. 18 So it was agreed by everybody that certain of the 19 structures would be slipped back on that programme. 20 CHAIR OF THE INQUIRY: You referred to value engineering for 21 major structures. I think there's been a suggestion 22 from an earlier witness that value engineering should 23 come in at the earliest stage of design, and shouldn't 24 just be concentrating on structures. Is that a fair 25 comment. 81 1 A. That's a very fair comment, yes. I think you're 2 absolutely right. You will try and design 3 a state-of-the-art design, but you do then come to: 4 well, is the construction contractor going to, like 5 a prefabricated approach, off-site prefabrication or 6 construction on site, at a particular tiling solution 7 that that contractor may have, for example. So there 8 will be the opportunity for further value engineering 9 when it comes to construction. 10 CHAIR OF THE INQUIRY: So in the early designs by 11 Parsons Brinckerhoff, did that take account of value 12 engineering at that stage? 13 A. I suppose I can't say explicitly, but we would always -- 14 the company philosophy would have been to design to the 15 state of the art, for want of a better word. So one of 16 the accusations levelled against us on trackform was 17 that we were overengineering and it was somehow 18 gold-plated. But as I have explained previously, that 19 was looking at it from a safety point of view as much as 20 anything else. You needed a robust solution. So you 21 get to that question of: well, robustness versus 22 cost-effectiveness, where is the balance? 23 CHAIR OF THE INQUIRY: Finally, on the question of 24 trackform, I should have asked earlier. The effect of 25 requiring your design of trackform was, I think, we 82 1 established, deeper excavations, but also wider 2 excavations to account for the concrete shoulders. 3 A. That's correct. 4 CHAIR OF THE INQUIRY: Would that -- could that impact upon 5 the diversion of utilities if you're going wider and 6 deeper? 7 A. You would still be within the limits of deviation, 8 I think it's fair to say, with the concrete shoulders. 9 That is worth double-checking. And you've also got the 10 issue of the tram envelope that you've got to take 11 account of. But given that the shoulders are at road 12 level, I don't think that would affect the tram impact. 13 So I think you would be okay. You would still be 14 within the swept path that would have been allowed for, 15 for utility diversions. 16 CHAIR OF THE INQUIRY: Thank you. 17 MR MACKENZIE: A theme seems to run throughout the design 18 evidence that the Council's approach was to require 19 a very high standard of design. By that I mean they 20 wanted every detail to be in place before considering 21 whether to grant an approval or not, on the one hand; 22 and other parties perhaps, designers saying, that was an 23 unduly onerous standard. 24 Would you agree, broadly, with that theme? 25 A. Yes. 83 1 Q. So I just wonder if that was the Council's approach, and 2 that was well known by early 2008, what reasonable 3 belief or basis would there have been for thinking that 4 was going to change? 5 A. If for no other reason than the Clause 4.8 of the 6 revised SDS Agreement was changed to change the order of 7 priority to conformance with the Employer's 8 Requirements. So conformance to the Employer's 9 Requirements was over and above any needs of the 10 approval bodies, and to the extent that the needs of the 11 approval bodies were outwith the requirements, then that 12 would be cause for change. 13 Now, that doesn't stop you changing but it makes you 14 stop and think: well, do I really want to make these 15 changes? 16 Q. I can see how that would protect Parsons' position and 17 interest. But if the Council maintained their previous 18 approach of requiring every last detail to be in place, 19 and wanting a particular standard for whatever design, 20 whether it's structures or old junctions or planning 21 matters, the Council could still delay the programme? 22 A. It's a very fair point, and I think the reality, looking 23 back, is that that approach only really changed with 24 Colin Smith and Sue Bruce's intervention post Mar Hall. 25 There was -- if there were a step change previously, 84 1 there was a cliff edge change post then which a large 2 part of that change was to address what you've just 3 described there and remove those constraints. 4 Q. So given the Council's approach at the time, I just 5 wonder if you have any views on whether it was sensible 6 to proceed with a construction programme which was 7 critically dependent on the achievement of approvals 8 dates? 9 A. Well, we'd certainly made BBS very much aware of our 10 concerns over CEC performance to date, which is why we 11 got full backing from BBS to change that order of 12 priority on satisfying the requirements. 13 You can only go so far. There was a requirement to 14 get that contract signed, and the fact it was signed 15 with a different set of conditions helped not just SDS, 16 but helped BBS as well. 17 Because the other thing to remember is whilst the 18 SDS was responsible for, you know, the large parts of 19 the design, we weren't responsible for all of the 20 design. An obligation on the Infraco was to carry out 21 design on other aspects of the scheme. 22 So the approvals risk didn't just impact the SDS 23 component. It was project-wide. 24 Q. Thank you. Just two final weekly reports to look at, if 25 I may. 85 1 The second last one is dated 18 April 2008, and the 2 number is PBH00018333. In paragraph 1.3, please, we 3 see: 4 "Richard Walker indicated to me on Friday that he 5 has concerns ..." 6 I think on the bottom right-hand corner of the page, 7 we see the date is 18 April 2008. Back to 8 paragraph 1.3: 9 "Richard Walker indicated to me on Friday that he 10 has concerns over the presentation of the Infraco 11 Contract deal to Council. Some weeks ago I had 12 expressed my concerns that the price on the table from 13 BBS did not align with the programme contained in the 14 offer. For example, the price assumes that value 15 engineering savings will be made whereas the programme 16 has no allowance for the design and approvals time which 17 would be required. I had suggested that tie would have 18 to be careful in the form of presentation so as not to 19 mislead CEC." 20 Pausing there, did you discuss these matters with 21 tie at all, Mr Reynolds? 22 A. I'm sorry, I really can't remember. I can't. It's so 23 long ago. 24 Q. Carrying on: 25 "Richard is now expressing (to me) similar concerns 86 1 and has suggested that he will take this up with tie 2 separately. To a large extent the current position is 3 one of BBS's making where the offer is dependent upon 4 a set of pricing assumptions which can be interpreted by 5 the informed reader as a basis for price increase and 6 programme prolongation. It may be that Richard is 7 belatedly expressing worries which have more to do with 8 his concern over working with tie as a client or may 9 even be due to friction between Bilfinger Berger and 10 Siemens. Whatever the reason I detect an air of 11 uncertainty and last minute concern over whether BBS 12 should be taking the job." 13 Is there anything you wish to add to what is set out 14 there? Does that adequately reflect matters at the 15 time? 16 A. I think it is fairly clear opinion at the time, if you 17 like. So what value it is to Lord Hardie is obviously 18 for him to consider. But I think everything -- you can 19 see the concerns that I had, I think, being expressed 20 fairly clearly. 21 Q. Thank you. Then over the page, please. Page 2. I'll 22 try not to read it all out, if I can. It's the top 23 bullet pointed paragraph which refers to Parsons having 24 worked hard to issue two reports on the misalignment 25 between the BBS Civils and Systems Offers and the SDS 87 1 Design by 27 March. And tie providing a draft response. 2 About halfway down you say: 3 "The lack of response from tie has meant that 4 uncertainty remains over construction scope of work." 5 A. Yes. 6 Q. There's then a reference to proposed compromise is to 7 have a detailed design workshop to define the scope to 8 the level of detail required prior to construction. 9 Then: 10 "With an early May target for contract award such 11 a workshop would have to be held post novation: The 12 alternative is to hold the workshop first and delay 13 Infraco contract award until such time as the scope of 14 work, price, and programme are all defined more 15 accurately." 16 To pause there, by deciding to have any workshop or 17 workshops after contract close, does that mean that the 18 scope of work, price and programme were not accurately 19 defined? 20 A. Correct. 21 Q. Presumably in an ideal world, one would hold any such 22 workshop before contract award, in order to accurately 23 define the scope of work, price and programme? 24 A. That's right, yes. 25 Q. Did you have any discussion with tie that that was the 88 1 better course of action? 2 A. I'm sure we did as part of the negotiation meetings. As 3 I say, they went on January through May. Again, 4 I haven't got a record that says this is what we said, 5 but it would have been as part of those negotiations 6 when would be best to hold the -- hold these meetings. 7 Q. This isn't a matter for you, Mr Reynolds, but if one 8 were the client in this position, how can one quantify 9 these unknown matters before contract award and make 10 sense of a risk allowance? 11 A. It's really down to having a comprehensive quantified 12 risk assessment. So being able to, you know, assign 13 limits to the consequences of not having these things 14 defined, and then working within the contingency 15 provisions to ensure that the scheme can go ahead from a 16 financial standpoint. 17 Whether that was done by tie, I don't know. 18 Q. We will have to explore that with tie. 19 Then the last, please, weekly report, if I may go to 20 PBH00018873. 21 Go to the bottom right-hand corner of the page, we 22 will see the date is 2 May 2008. 23 If we then go to page 1, I'm interested in all 24 that's said on page 1, but I'll try not to read it all 25 out. 89 1 In the first paragraph it states: 2 "The plan devised by tie two weeks ago to ensure 3 substantial completion of all contract documentation to 4 allow a recommendation to be made to Council on 1 May 5 was working well and Willie Gallagher had arranged to 6 meet with the CEO of the Council privately on the 7 evening of Wednesday 30 April to brief him ahead of the 8 formal debate in Chamber on Thursday." 9 The next paragraph refers to a meeting internally 10 within Bilfinger Berger chaired by the CEO in Wiesbaden, 11 where there appears to have been a commercial review of 12 the pricing schedules which apparently showed 13 a significant shortfall in comparison with revised cost 14 estimates prepared by Bilfinger Berger in Germany. 15 Bilfinger's decision was to advise a price increase, and 16 Mr Walker contacted Mr Gallagher on Wednesday morning to 17 inform him that the price had to be increased by 18 GBP12 million. 19 To pause there, is that information that came from 20 Mr Walker? 21 A. I can't be definite. It was either Mr Walker or 22 Mr Gallagher. I can't remember, sitting here. It could 23 have been either. 24 Q. Thank you. You then refer, if we can go to the next 25 bullet point, please, the first bullet point states: 90 1 "A paper had been prepared two weeks ago for 2 submission to Council ..." 3 Then a few more bullet points down: 4 "The decision must have been taken to proceed with 5 the tabling of the Council Paper ..." 6 Then you had two observations at the bottom. One: 7 "tie has sponsored a paper which was materially 8 incorrect at the time when it was presented to CEC." 9 Pausing there, I assume, Mr Reynolds, that's the 10 view you arrived at yourself at the time? 11 A. That's very fair comment, and I have said, bearing in 12 mind this was an internal document that was -- that was 13 my view. But yes, that's fair. 14 Q. Then the second bullet point states: 15 "The price increase proposed by BBS would result in 16 an overall price of GBP520 million in comparison with 17 the overall funding limit of GBP545 million. This is 18 without any allowance for costs to cover changes to 19 scope and programme necessary to bring about alignment 20 of the BBS Offer and the SDS Design." 21 We've touched upon that. Presumably there's also 22 the point we mentioned about value engineering works may 23 have an impact on the programme? 24 A. That's absolutely right. So you can see even allowing 25 for contingency, you're closing the gap to the funding 91 1 limit beyond what would have been desirable. 2 CHAIR OF THE INQUIRY: So is the inaccurate information 3 related to the GBP12 million? 4 A. Reading this now, I think what I was inferring at the 5 time was the paper had already been prepared so it would 6 have had to -- it would have had to have been 7 a supplement to that paper. But I haven't got that 8 information in front of me. So I think it's probably 9 better to ask somebody else that question. 10 CHAIR OF THE INQUIRY: It seems from this that the paper 11 that had been prepared was tabled anyway, although on 12 the Wednesday, the additional sum of GBP12 million had 13 been advised. 14 A. Certainly reading this, the paper was presented on the 15 Thursday. But obviously I wasn't there. So hopefully 16 the context was revised to allow for the changing 17 circumstances. But I think what I was suggesting there 18 was that the wording of the paper was no longer 19 accurate. But I haven't got that paper in front of me. 20 So perhaps that was an unwarranted assumption. 21 MR MACKENZIE: Thank you. Before we come back to the question 22 of the misalignment between the design, Employer's 23 Requirements and proposals, there's one issue I would 24 like to clarify, please. It arises in the first 25 statement you provided to the Inquiry, which is 92 1 reference TRI00000124. It's at page 31. 2 It's simply as a point of clarification I take you 3 to this. 4 Do you see, please, in paragraph 3.114 you say: 5 "Considering pricing, my understanding is that pre 6 contract tie removed a sum of GBP7 million for systems 7 integration, but failed to agree on responsibility for 8 systems integration. tie were trying to reduce the 9 cost, but the failure to deal with the consequences gave 10 rise to a scope gap." 11 Can you explain that paragraph, please? 12 A. Yes. This comes back to the SDS contract. We were 13 design provider for a defined part of the works. There 14 was a whole area of systems engineering that was going 15 to be the responsibility of the Infraco, and in this 16 particular example it would have fallen on Siemens. 17 Our view was that this sum was removed pre-contract 18 under the false assessment that we were somehow 19 responsible for that part of the works, which we 20 weren't. So that meant that our design, even had it 21 been complete, wouldn't have included this particular 22 part of the overall scheme. So post contract that meant 23 there was a gap. 24 Q. Did you discuss that matter with tie at the time? 25 A. I can't remember exactly when it came to light. We 93 1 would have discussed it when it came to light, and it 2 would probably have been when we were looking at the 3 split of responsibilities going forward. It certainly 4 was a key part of the discussion with BBS, which would 5 have been post contract, to look at the consequences of 6 closing that gap or look at the ways to close that gap. 7 Q. So this sum of GBP7 million, presumably this work had to 8 be done. So that sum should either have been in the SDS 9 Contract or it would have to be allowed for in the 10 consortium offer? 11 A. Which is where under the procurement strategy it should 12 have been, because the systems engineering aspects were 13 viewed as being the responsibility of the Infraco, and 14 that's part of the Infraco design obligation that I was 15 talking about earlier, was the systems aspect of the 16 scheme. 17 Q. So we should perhaps explore that with the Bilfinger and 18 Siemens witnesses? 19 A. Indeed, yes. 20 Q. Thank you. 21 Returning now, please, to the question of the 22 misalignment between the SDS design, the Employer's 23 Requirements and Bilfinger offer, I think we've talked 24 about that quite a lot already. 25 Could we look, please, at a document PBH00003634. 94 1 We may have touched upon this issue. We see at the 2 top it's an email from yourself, Mr Reynolds, dated 3 23 January 2008, to Mr Gallagher. The subject is 4 finalisation of the Employer's Requirements. You then 5 refer to -- you say: 6 "Thank you for meeting with me today. As discussed, 7 I think there may be merit in taking a different 8 approach to the consolidation of a number of outstanding 9 matters concerning the Employer's Requirements, in order 10 to raise confidence that by Financial Close all parties 11 will have a common understanding of the scope definition 12 for the Infraco contract. I believe five key topics 13 need to be addressed." 14 You set them all out there concerning the various 15 alignment/misalignment. 16 Then in the paragraph beginning: 17 "PB has a wealth of experience ..." 18 Towards the end of that, you say: 19 "By delaying now for a short period and given that 20 the advance works contract is already in place, as 21 I understand it with the Infraco there is no reason why 22 the overall programme should suffer. Indeed, by 23 attending to these matters now we can also look to 24 reduce risk for all parties in the future." 25 What did you mean by that last sentence? 95 1 A. Well, this is where, if you look at the paragraph 2 immediately following the bullet points there: 3 "Given the special circumstances of the heritage 4 city environment ... it is important that the design 5 matches the expectations of the approval bodies." 6 So this is me going into writing with Willie, to say 7 whatever we come out of the Employer's Requirements 8 exercise with, it's essential that the main stakeholder, 9 the City of Edinburgh, is signed up to it. And having 10 got that buy-in from CEC, that's a key part in reducing 11 risk going forwards, that what's planned to be delivered 12 will actually be what's expected. 13 Q. I asked you about this before but didn't press you on 14 it. 15 Do you know whether as a matter of fact the Civils 16 Proposals and any changes to the Employer's Requirements 17 were put to the Council for their approval? 18 A. No. I don't. 19 Q. Do you mean that you don't know if it happened? 20 A. I don't know if it happened. By going to Willie with 21 this, I was raising it to the highest level with my 22 client. It wouldn't have been right for me to take it 23 any further or to question Willie after the event. 24 Q. Thank you. 25 Now, again, sticking with this issue of 96 1 misalignment, I said I'd finished with the weekly 2 reports, but there's one more we should look at, please. 3 It's PBH00034982. We can see the bottom right-hand 4 corner of the page again, please. It's dated 5 15 February 2008. 6 If we then please go to page 2, paragraph 2.1.1, 7 "Employer's Requirements", if we could zoom back out, 8 please. 9 I'll leave that report for now. We may come back to 10 it. 11 If we could also please then go on to a different 12 document. It's PBH00019148. 13 Now, here, Mr Reynolds, an email from yourself dated 14 27 March 2008 to various people in tie. So I think in 15 short here Parsons have considered the BBS Civils Offer 16 and you are sending tie a commentary on the offer; is 17 that correct? 18 A. That's correct. 19 Q. I'm not going to look at the commentary in detail, but 20 I'll give the reference number in passing so people can 21 see the comments that were made. It's PBH00019149. 22 Then please go back to your statement. The main 23 statement at page 148. 24 I think it's page 137. Paragraph 371, at the very 25 bottom, we have touched upon this already, I think, but: 97 1 "The response was, nevertheless, to change the design 2 to align with the BBS offer. That was what was 3 ultimately agreed." 4 Is that correct? 5 A. That's correct, yes. 6 Q. Then if we can please go to page 164. In paragraph 432, 7 about halfway down, you say: 8 "This is the instruction for us to carry out work 9 required to make our design align with TIE's revised 10 Employer's Requirements." 11 Just to pause there, that work, I think, was carried 12 out after contract close; is that correct? 13 A. That's correct. 14 Q. You say: 15 "This resulted in a instruction of roundly 16 GBP1 million to achieve that. This is not something 17 that is usually done so late in the day. Usually the 18 Employer's Requirements would hold and the offer would 19 be amended to align with them." 20 You then go on to refer to some minor revisions. 21 If I could then please go to another document on 22 a similar theme. PBH00018764. We see at the very top 23 of the page an email from yourself dated 30 April 2008, 24 to Chris Atkins and Jason Chandler, where you say: 25 "We need to include as part of the alignment pricing 98 1 for the potentially lengthy debate with BBS re already 2 delivered designs." 3 So on the face of it you appear to be anticipating 4 that any design change required post financial close to 5 align with the offer may be potentially lengthy; is that 6 fair to say? 7 A. Could you just take it to the start of that chain. 8 Q. Scroll to the bottom of the page, please, yes? 9 A. Just to make sure we're talking about the same thing, 10 because the title is to do with construction support. 11 If you could just -- 12 Q. The middle email as well may help. 13 We can see you're concerned in the second paragraph 14 of the middle email, there may be the expectation that 15 Parsons Brinckerhoff should rework at its cost designs 16 which have already been submitted? 17 A. Yes, that's right, because the construction support 18 activity was to do with ensuring that what was built was 19 as per design intent, and was to a required level of 20 quality. So if we then go back to the lead email on 21 that, if we're talking about construction support in 22 a -- in a climate of change, so we're looking at 23 revisions to the SDS design, which may impact those that 24 have already been delivered, then that would have 25 a knock-on effect to that construction support activity 99 1 which was looking at what was constructed against those 2 now changed designs. So that's what I'm talking about 3 there. 4 CHAIR OF THE INQUIRY: The middle email refers to your 5 concern or the expectation that Parsons Brinckerhoff 6 would rework at its cost designs which have already been 7 done. 8 A. That's right. So that we needed -- and this is 9 30 April. So we're still a couple of weeks ahead of 10 final signature. So that was a topic that had to be 11 closed out with Steven Bell, which we did. We resolved 12 that. 13 CHAIR OF THE INQUIRY: But before contract close. 14 A. Yes. 15 MR MACKENZIE: Just for the avoidance of doubt, the topic 16 that had to be closed out before contract close was to 17 ensure Parsons were paid for any work that would be 18 required after contract close to revise or rework the 19 design? 20 A. Paid for the -- alignment with the requirements, that's 21 right, yes. So we got the payment beforehand. That's 22 absolutely right. 23 Q. And if in short -- if there had been alignment between 24 the SDS design, the Employer's Requirements and the 25 Bilfinger offer before contract close, then there 100 1 wouldn't have been a need to spend GBP1 million to 2 correct that later? 3 A. No. There would have been a need to spend the money 4 beforehand, but yes, not later on. 5 Q. But if the misalignment hadn't been allowed to happen in 6 the first place, then it must follow that money wouldn't 7 be required to be spent to correct any misalignment? 8 A. Correct. 9 Q. And just in short, what was the cause of this 10 misalignment? 11 A. The cause of the misalignment was essentially the BBS 12 commercial offer taking a different approach to 13 delivering the scheme from what was there in the 14 Employer's Requirements. So in simple terms, it was 15 a non-compliance with the requirement. That then left 16 tie with two options, either to enforce compliance or to 17 change the requirements, which then had the knock-on to 18 change the design which is what happened, which then 19 resulted in the roundly 1 million additional work. 20 Q. If tie had said to Bilfinger: we're not going to change 21 the Employer's Requirements or our design, you will have 22 to change your proposals; then that's a sum of money 23 that tie wouldn't have had to spend? 24 A. That's right. Yes. 25 Q. Thank you. Now, moving on to financial close, we know 101 1 that took place on 14 and 15 May 2008. I would like 2 please to look at the SDS Novation Agreement. If we can 3 bring that up, please, it's CEC01370880. We haven't 4 looked at it before. So I'll take you to some of the 5 main clauses. It's dated 14 May 2008. If we can go to 6 page 7. 7 In clause 4.6 we see reference to tie having 8 received a report from SDS setting out the misalignments 9 between the deliverables completed prior to date of this 10 agreement and the Employer's Requirements, and tie has 11 issued initial instructions to SDS to address these 12 misalignments; et cetera. 13 Then, please, if I can go on to clause 4.7, we see 14 a reference here that: 15 "As soon as reasonably practicable, the Parties 16 shall commence and expeditiously conduct a series of 17 meetings to determine the development of the Infraco 18 Proposals and any consequential amendment to the 19 Deliverables (the "Development Workshops")." 20 I think by deliverables, that means essentially the 21 SDS design? 22 A. It does, yes. 23 Q. We see then reference to the matters to be determined at 24 the Development Workshops are set out in the report 25 annexed at Part C of Appendix Part 7, the Misalignment 102 1 Report, et cetera. 2 Then order of priority. We can see some of the 3 matters that are misaligned. We see 1, Roads and 4 associated drainage, et cetera, and vertical alignment 5 with the objective of minimising the extent of full 6 depth reconstruction, et cetera. And 2, we can see 7 structures value engineering, and 3, OLE Design. 4, 8 Trackform. 9 Over the page, we can see 5, Sub-station buildings, 10 and then after that: 11 "The following to be reviewed at the end of the 12 Development Workshop to identify any issues arising from 13 the above items." 14 I won't read out what is listed, but in short is 15 this essentially saying that changes to the five numbers 16 listed, roads, structures, value engineering, et cetera, 17 may have knock-on changes or impacts on these other 18 seven matters listed? 19 A. That's right. 20 Q. We can leave that, please, and go on again. Page 8, 21 clause 4.8. We can see this provides, at the very 22 bottom: 23 "For the avoidance of doubt, the Infraco and tie 24 agree that any amendment to the Deliverables completed 25 prior to the date of this Agreement as set out in this 103 1 report will be a Mandatory tie Change under the Infraco 2 Contract, and a Client Change under the SDS Agreement." 3 Is that simply a reference to any amendments to the 4 deliverables before 14 May 2008? 5 A. Correct. 6 Q. Then, please, at page 10, we see in clause 8.2 there's 7 a reference to: 8 "tie and SDS acknowledge that tie has paid SDS in 9 respect of its existing claims for prolongation ..." 10 I'm going to come back to consider the claims and 11 the payments made, but in short, was it a condition of 12 the SDS Novation Agreement that any outstanding claims 13 by SDS against tie would be settled? 14 A. Yes. That was a longstanding part of the Agreement. 15 Q. Thank you. 16 CHAIR OF THE INQUIRY: The provisions of Clause 4.8 that you 17 referred to, is that the change that you referred to 18 earlier to the original 4.8? 19 A. The change on -- 20 CHAIR OF THE INQUIRY: On -- 21 A. No. 22 MR MACKENZIE: I'll come to that, my Lord. 23 A. It's within that, but it wasn't that point that was 24 highlighted just then. 25 CHAIR OF THE INQUIRY: I understand. Counsel is going to 104 1 refer to that. 2 Okay. 3 MR MACKENZIE: Thank you. 4 Then go to clause 8.8, please. It's a question of 5 incentivisation payment. We see: 6 "tie shall pay to the SDS Provider the 7 Incentivisation Payment ..." 8 Which is earlier referred to as a payment of 9 GBP1 million: 10 "... 14 days after the provision of the last 11 required issued for Construction Drawing save that the 12 Incentivisation Payment shall be reduced by the sum of 13 GBP8,928.57 in respect of each occasion that the SDS 14 Provider does not achieve the provision of IFC 15 Drawings ..." 16 I think in short there was a GBP1 million 17 incentivisation pot, and each time one of the 18 outstanding deliverables was delivered on time, 19 a payment would be triggered, but equally, if a date was 20 missed, then a payment would not be received; is that 21 correct? 22 A. That's correct, and this was occasioned by the fact that 23 we were now going to implement the Novation Agreement in 24 a completely different set of circumstances from what 25 had originally been contemplated, and had we novated as 105 1 originally intended, all the IFC drawings would have 2 been complete and there on the shelf. The fact that 3 they weren't, introduced this significant additional 4 risk and that was countered by what we were trying to do 5 was get to a reasonable agreement of how to deal with 6 that, and this commercial framework was the solution. 7 Q. Thank you. Simply to note in passing, if we go to 8 page 14, please, we see it's headed "APPENDIX PART 1 9 SCHEDULE OF AMENDMENTS TO THE SDS AGREEMENT". If we 10 then please go to page 15, under "Design Delivery 11 Programme", it's stated to mean: 12 "The document in Appendix Part 2 to the Novation 13 Agreement as amended or updated from time to time ..." 14 So I think in short a new programme is put in place. 15 I think we have actually had a copy supplied to us. 16 We're missing Part 2 of the Appendix, and we are taking 17 steps to recover that, but I think it may be version 31 18 of the Design Programme; does that seem correct? 19 A. It's the regular monthly update which at this point was 20 version 31, yes, indeed. 21 Q. Thank you. 22 Now, just in passing, I give a reference to 23 version 31, without going to it. It's CEC01311101. 24 Sticking with this document, please, page 20. We 25 can see under 4.8 -- I think this is a reference back to 106 1 4.8 of the SDS Contract dated September 2005 we looked 2 at earlier. We can see various amendments are set out. 3 And in fact there are various amendments to Clauses 4 4 and 5 of the original agreement set out in the SDS 5 Novation Agreement at these pages 20 to 22. I'm not 6 going to go to them in the interests of time, but 7 I think in short the change was made from there being an 8 absolute duty on the part of SDS to secure approvals and 9 consents, to move towards something which was 10 reasonable. 11 A. This was absolutely -- if I achieve nothing else in all 12 the time I was in Edinburgh, this was vitally important 13 from our point of view in turning what was applied in an 14 unreasonable fashion into a clause which was far more 15 reasonable from everybody's point of view. 16 Q. Thank you. Could we move on, please, to page 85. This 17 simply sets out the status of the design deliverables, 18 et cetera, at 13 May 2008. If we blow up the various 19 boxes, we can see 13 May, the outstanding deliverables, 20 and then we read for ourselves the outstanding prior 21 approvals and technical approvals. 22 I should just pause to ask, does this relate just to 23 phase 1a or did it also include phase 1b? 24 A. It will, in the totality, because the total number of 25 packages from a detailed design point of view would have 107 1 included 1b; come this time there wouldn't have been any 2 prior approvals going forward. It's possible there 3 would have been some prior approvals already achieved 4 for phase 1b before it was suspended, but ... 5 Q. So just for clarity, in terms of the total -- total 6 number of packages, 329, did that include both phase 1a 7 and 1b? 8 A. Yes. 9 Q. And of the 33 remaining to be delivered, was that all 10 phase 1a or would that have been some in 1b? 11 A. There are a number of deliverables which come right at 12 the end, which are so-called system-wide packages. Now, 13 in the circumstances that we were then working in, 14 phase 1b would have been taken out of that system-wide 15 assessment. So in effect they would have been phase 1a 16 only. 17 Q. Thank you. Similarly, in relation to the prior 18 approvals and technical approvals, of those that 19 remained to be approved, were they only phase 1a? 20 A. Yes, they were. 21 Q. Also the question of utility design, was that included 22 within the figures we see on this page or is that 23 something considered separately? 24 A. That's a very good question. I can't remember. I'm 25 sorry. It should be a simple check. You can see from 108 1 the titles on the package register. They may have been 2 in those total number of packages. 3 Q. Thank you. If we then please go to page 53. 4 This is "APPENDIX PART 2, CONSENTS PROGRAMME AND 5 DESIGN DELIVERY PROGRAMME", but it sets out "PART A 6 PROGRAMME ASSUMPTIONS AND CONSTRAINTS". 7 If we can go to page 55, please. I just wondered in 8 short whether the -- this contents or index page helps 9 us in identifying the design deliverables and items 10 which were outstanding. Whether it's high level listing 11 of the outstanding matters. Just take a minute to have 12 a look at that, Mr Reynolds. 13 A. No, that's absolutely right. It was Jason Chandler who 14 pulled this document together, and I know you will be 15 asking him questions. But yes, you are absolutely right 16 in that assessment. 17 Q. It is a high level indication of the outstanding 18 matters. 19 A. That's right. 20 Q. For completeness, look at the next page as well. 21 I think, without taking up too much time, it perhaps 22 includes things like structures, system-wide 23 deliverables, electrical systems, OLE and tramstops? 24 A. Yes, correct. 25 Q. Anything else? 109 1 A. Earth -- well, as it says there in section 6, general 2 comments on earthworks, drainage. But yes, the 3 different categories of design deliverable which is as 4 you said. 5 Q. One final page for just now in this document. Page 97, 6 please. This is a point of clarification. If we turn 7 that round, thank you. 8 This is part of Appendix 4, which I think set out 9 the outstanding design and deliverables status, and we 10 can see a reference to capability split. I wasn't sure 11 what this table showed. We can see, for example, 12 a column for BBS and a column for SDS. Does it show 13 which party is responsible for these works or what? 14 A. This is looking forward, and this is trying to address 15 the fact that the SDS design was incomplete, but it was 16 also looking at the optimum way to apportion effort to 17 conclude or to complete the Infraco design. So you are 18 looking at an overall design requirement, part of which 19 would be done by SDS, part of which would be done by 20 BBS, but taking advantage of the current circumstances, 21 looking at who is best equipped to deal with those 22 remaining elements. So where do the competences lie now 23 in the broader organisation. 24 So it's not just SDS anymore. It's SDS and BBS, who 25 has got the best man for the job, as it were, looking 110 1 forward. 2 Q. This table runs to some 35 pages? 3 A. That's right. 4 Q. Does it show only outstanding matters or does it also 5 include matters which have already been done? 6 A. It's -- it's trying to present an overall view. So to 7 that extent it would look at matters already -- but it 8 is a capability split so-called. So as I say, it's 9 looking at -- on that page, who has got the competence 10 to be dealing with a Civils bridge design. Well, it's 11 SDS. You will find other examples in there of where 12 it's agreed BBS would have the greater capability. 13 So as I say, it's looking forward at the split of 14 works, but based on a competence framework. 15 Q. Thank you. 16 Another matter arising at financial close. If we 17 can go, please, back to your statement to page 170? 18 CHAIR OF THE INQUIRY: Before doing that, can we stick with 19 this document, please, and go back to page 20. 20 Clause 4.8 is where the original clause 4.8 is 21 amended, and you say that that was the biggest issue 22 that you were anxious -- 23 A. From my point of view, yes. 24 CHAIR OF THE INQUIRY: -- to sort. 25 This paragraph -- in the Novation Agreement the 111 1 actual Clause 4.8 between you and tie, can you remember 2 where that is, Mr -- 3 MR MACKENZIE: Yes, my Lord. That is page 8. 4 CHAIR OF THE INQUIRY: Go back to page 8 then. 5 Again -- yes, it's 4.8 of that. 6 Now, can I just understand what is intended here. 7 At the bottom it says: 8 "For the avoidance of doubt, the Infraco and tie 9 agree that any amendment to the deliverables completed 10 prior to the date of this agreement as set out in this 11 report will be a mandatory tie change under the Infraco 12 contract, and a client change under the SDS Agreement." 13 Did that mean that where there had been change due 14 to the planning authority seeking change, that you would 15 now get paid for it? 16 A. No. I see what you're saying. It wasn't retrospective 17 looking back at events that had already occurred. It 18 was looking at changes to design packages which had 19 already been delivered. So if a package was there 20 having been delivered, and as a result of the 21 development workshops that package had to be changed, 22 that would be the mandatory tie change. 23 If in somebody's opinion approval had been 24 unreasonably withheld at some point in the past, this 25 didn't confer the right to go back and review that 112 1 decision. 2 CHAIR OF THE INQUIRY: Thank you. 3 MR MACKENZIE: Thank you. Yes, please. So your statement, 4 if I may, at page 170. We can take this point 5 reasonably shortly. 6 In paragraph 454 this concerns the issue of in 7 Schedule Part 4 of the Infraco contract, the Base Date 8 Design Information was described with reference to 9 Appendix H, but when one went to Appendix H there wasn't 10 a list of drawings. And simply, I think, one sentence 11 stating it was all drawings available to Infraco up to 12 and including 25 November 2007. 13 You go on at the bottom of this page to say this is 14 a little bit sloppy, et cetera. 15 Over the page, please, on paragraph 455, I think in 16 short, Mr Reynolds, your position is that it would have 17 been possible from Parsons' perspective to have 18 identified all of the design drawings and information as 19 at 25 November 2007 by looking at Parsons' records; is 20 that correct? 21 A. That's correct, yes. 22 Q. So it would have been possible to do that? 23 A. Yes. 24 Q. Now, I think we have perhaps heard evidence that the 25 design information delivered to the consortium was 113 1 contained on a number of CDs. It's possible that's 2 where the problem arose, I don't know. But certainly 3 you're quite clear from your point of view that if tie 4 had come back to you, for example at the time, and 5 said: we would like to identify by a list of all the 6 drawings and design information as at 25 November 2007, 7 can you provide us with that; could you have done that? 8 A. Yes, we could. 9 Q. Thank you. I would now like to look at events after 10 financial close. We remember that I think you came in 11 part time, about two days a week roughly in the 12 Edinburgh project? 13 A. Thank you for pointing that out. That's absolutely 14 right. 15 Q. The question in short is: why did it take so long to 16 complete design and obtain all approvals and consents 17 after financial close? 18 A. I'm not sure there's a simple answer to that. 19 Some of them were programmed to be completed 20 several -- certainly several weeks, probably several 21 months after, because of the complexity of the 22 structures designs, and as I say, some of those 23 structures designs will be dependent on what was 24 concluded from the development workshops. So I suppose 25 one question is how quickly did the development 114 1 workshops convene and conclude, and sitting here now, I 2 am not sure what the answer to that is, but there was 3 a dependence on the outcome from those workshops. 4 There was then this issue to resolve the gap caused 5 by the systems engineering aspects being removed and the 6 need to work out with BBS how that gap would be filled. 7 Were there continuing issues with approvals? I'm 8 not sure. I think you would have to ask BBS on that, or 9 even BSC as it became. 10 Q. Yes, and I will cover some of these matters with 11 Mr Chandler tomorrow, given his continued full-time 12 involvement. 13 A. And that as well, yes. 14 Q. Can I put two documents to you, please, in this regard. 15 The first is CEC01149381. The top of the page is an 16 email dated 30 October 2008 you sent to Mr McEwan on 17 project issues, and you say: 18 "Jim, it was good to talk earlier. I don't have too 19 many project issues to highlight, but each of them is 20 significant in my view." 21 A reference to absence of a Siemens trackform 22 design, absence of a Siemens OLE design: 23 "Both of these in the context of a supposed 24 design freeze at the end of November 2008." 25 Is that perhaps a mistaken reference to 2007? 115 1 A. No, that would be 2008 because again you come back to -- 2 just looking at these two examples there, they were not 3 an SDS responsibility. They were a Siemens 4 responsibility. So you're looking at design post- 5 Infraco contract award, and it was November 2008 that 6 that composite Infraco SDS design was supposed to have 7 been frozen. 8 Q. I see. So that's in terms of the design programme at 9 the time, and there was some -- 10 A. This was now in terms of the Infraco programme as 11 incorporating the SDS design programme, but also 12 including the Infraco design obligations. 13 Q. So just to explore this a little further, does that 14 suggest that at financial close and SDS Novation in 15 May 2008, it was intended that all outstanding design 16 matters would have been completed by the end of 17 November 2008? 18 A. At -- the original intended SDS design should have been 19 complete pre-novation. It wasn't. There would have 20 been then the development workshops and the design 21 freeze date wouldn't have been defined until those 22 development workshops had been concluded. 23 As regards the Infraco design tasks, I don't know 24 what date was programmed for those, but certainly the 25 key elements were Siemens trackform and Siemens OLE. So 116 1 it looks from this as though November 2008 had been 2 agreed. At what point that date was agreed, I can't 3 recall. 4 Q. I understand. So the reference to the design freeze at 5 the end of November 2008 is in reference to the 6 consortium designs? 7 A. Correct, yes. 8 Q. Then there's a reference to a lack of an overall 9 construction programme, et cetera. And low volume of 10 activity on BSC design development, with several 11 instances of previously granted approval conditional 12 upon ultimate design completion by BSC. What is that 13 a reference to? 14 A. That's where you'll get a provisional approval pending 15 final endorsement once the whole thing has been done, 16 and because as you move forward beyond Infraco contract 17 award, there would have been certain things that 18 required a BSC input to close out the product 19 completely. 20 Q. Thank you. Another document, please. Go back to 21 May 2009. The document is PBH00003626. We can see in 22 the top left-hand corner, the date is 6 May, and it's 23 a letter from yourself, Mr Reynolds, to Martin Foerder 24 at Bilfinger Berger. 25 It's headed "Project Management Prolongation", and 117 1 you go on to say: 2 "The SDS Contract Novation Agreement ... was signed 3 on the basis of Version 31 of the Design Delivery 4 Programme. Appendix Part 4 to the Novation Agreement 5 presented the current status of each of the phases of 6 the SDS Contract. The status of Phase III, the Detailed 7 Design Phase, was described with reference to the 8 schedules for submission of the Prior Approvals, 9 Technical Approvals, and Detailed Design Packages. The 10 final Detailed Design Package was programmed for 11 submission on 20 January 2009. The Agreement also 12 focused on the submission of IFC Drawing packages, with 13 the date for submission of the final package being 14 21 January 2009. 15 Several Change Instructions have been issued under 16 the SDS Contract in the period since Novation with the 17 result that completion of Phase III has been delayed." 18 To pause there, I think phase 3 is a reference to 19 the outstanding design deliverables under the SDS 20 contract. Is that right? 21 A. Yes, that's right. That refers back to the novation 22 agreement, from memory. Yes. 23 Q. Then going on: 24 "As a result of this delay, PB has had to retain 25 project management staff ..." 118 1 Then the next paragraph: 2 "It is now clear that the scope of work to be 3 provided under the novated SDS Contract is significantly 4 different from that envisaged at Novation. Changes are 5 still being instructed and it is currently not possible 6 to define an end date for Phase III." 7 To pause there, and just for the avoidance of doubt, 8 we have seen under the SDS Novation Agreement that 9 I think 296 out of 329 deliverables had been delivered. 10 So there was a relatively small proportion outstanding 11 at that stage. 12 But in this letter you are saying that it is 13 currently not possible to define an end date for 14 phase 3, and in these circumstances, it is proposed that 15 the SDS management staff impacted by the delay to 16 phase 3 completion should be charged on a certain basis. 17 So in that paragraph at the beginning where you say: 18 "It is now clear that scope of works ... provided 19 under the novated contract is significantly different 20 from that ... Novation ..." 21 What is that a reference to? 22 A. This -- well, this would in part be changes occurring as 23 a result of the design development workshops. And that 24 is reflected in the need to maintain our management team 25 beyond. 119 1 I think from memory what would have happened, we 2 would have been paid the design elements of those 3 packages, but the -- you would wait until you'd got 4 a overall view of the overall impact on programme, 5 because the management team has got to be there until 6 the end. The design packages can be quantified and 7 valued in their own right, but the management team above 8 the prolong programme is calculated separately, and 9 that's what this is doing, looking at the management. 10 Q. Thank you. 11 Now, standing back, we know that an important and 12 fundamental dispute or disputes arose between the 13 consortium on the one hand and tie on the other. 14 Did that dispute have any effect on the completion 15 of design after contract close? 16 A. I think in all honesty, I think you would have to ask 17 BSC because you come back to the point, by this stage, 18 we were just a part of the design activities, and at 19 some point the balance of design obligation could well 20 have been greater on BSC than it was on SDS at some 21 point in the programme. 22 Q. There is a suggestion in a tie document called a Design 23 Audit Report in April 2010 that there was little 24 evidence that Infraco had properly managed the design 25 process in a timely manner. Do you have any views on 120 1 that suggestion? 2 A. Again, that would cover the Infraco design obligation as 3 distinct from the SDS obligation. So no, I'm afraid 4 I don't. 5 Q. Is it the case that after novation, SDS were just 6 getting on with things in a similar fashion to before 7 novation, or did anything change? 8 A. It was under the terms of the Novation Agreement, and 9 that was what was spelt out, the remaining packages, the 10 remaining approval. So we continued with the obligation 11 working for BBS under the Novated Agreement. 12 Picking up on that point earlier, there were certain 13 tasks which were required to be delivered by BSC where 14 it made sense to involve SDS or Parsons Brinckerhoff in 15 assisting in that design have delivery. But that was 16 over and above anything that was in the original SDS 17 Agreement. 18 So the SDS Agreement was the provision of a design 19 by a design provider. As we started to work more 20 closely with BSC, you could argue that role was like 21 a design build designer, but the two were separate. But 22 obviously interlinked. 23 Q. Thank you. Another document to go to, please, is 24 TRI00000011. This is an agreement between Bilfinger and 25 Parsons in February 2010. 121 1 A. Yes. 2 Q. If we can go to the recital at letter A, please, about 3 halfway down. 4 CHAIR OF THE INQUIRY: Mr Mackenzie, are you going to be 5 some time with this document? 6 MR MACKENZIE: No. Thank you, my Lord. 7 We can see under recital A it states: 8 "BBUK requires the SDS Provider to provide 9 some additional design services and resource in 10 connection with the completion of the design for the 11 Edinburgh Tram Network in order to comply with Infraco's 12 duty to mitigate under the Infraco Contract and SDS have 13 agreed to provide those services." 14 Perhaps then zoom back out. I think you did sign 15 this agreement, go to page 4, please, on behalf of 16 Parsons. 17 A. Yes. 18 Q. Are you able to just briefly give an overview of what 19 this -- the purpose of this Agreement is and what it 20 did? 21 A. This -- this is related to what I was just talking 22 about, that you had the SDS -- the supply of the design 23 under the SDS Agreement, that was ringfenced, that was 24 a product. 25 Then working with Bilfinger Berger Siemens, BSC 122 1 subsequently, partly as a consequence of this systems 2 engineering scope gap, there were aspects of the whole 3 programme which were the Infraco responsibility to 4 design and deliver, where it made sense to employ 5 Parsons Brinckerhoff to assist in that design 6 completion. 7 So this is where we took on what we called the 8 Civils Design Completion Scope, which was over and above 9 anything from the SDS Agreement, but was the optimum way 10 to deliver to satisfy -- for BSC to be able to satisfy 11 their obligations under the Infraco contract. 12 So that's what this was about. 13 Q. Is this to -- what does this Agreement do? 14 A. This Agreement was for us to provide additional design 15 services direct to BSC, to deliver scope that was 16 outwith what we've been contracted to deliver under the 17 SDS Agreement. 18 MR MACKENZIE: Thank you. My Lord, this may be a suitable 19 point. 20 CHAIR OF THE INQUIRY: We will adjourn for lunch now, 21 Mr Reynolds. We will adjourn again at 2 o'clock. 22 A. Thank you. 23 (1.00 pm) 24 (The short adjournment) 25 (2.00 pm) 123 1 CHAIR OF THE INQUIRY: Good afternoon, Mr Reynolds. You're 2 still under oath. 3 A. Thank you. 4 MR MACKENZIE: Thank you, my Lord. Mr Reynolds, were you 5 still involved in the project in 2011? 6 A. Very peripherally. I did attend at Mar Hall at the 7 conclusion of those events to hear the outcome. 8 I wasn't involved in the discussions. So -- 9 and I maintained an interest working with Martin Foerder 10 occasionally on commercial issues from the project 11 delivery. But peripherally. 12 Q. Could we go, please, to a document CEC02083973. I don't 13 think you have seen this before. This document is 14 headed "Report on Progress since Completion of Heads of 15 Terms to 8 April 2011". We can see it's prepared by 16 Colin Smith of HG Consulting, and been reviewed by 17 Mr Foerder. 18 If we can go, please, to page 118, we can see it 19 contains an email dated 5 April 2011 from Andy Conway of 20 the Council. It's giving an update on approvals. If we 21 then scroll down and look at the table, we can see that 22 the open technical approval comments have reduced from 23 2,782 on 24 March 2011 down to 85 by 5 April 2011. 24 In short, do you know why such rapid progress was 25 able to be made in clearing these items over that short 124 1 period? 2 A. I don't have any knowledge of the detail. 3 Jason Chandler would, I know you are seeing. As I said 4 before, I know there was a distinct change in approach 5 on CEC's behalf, but which rippled through the rest of 6 the participants. So subsequent to the Mar Hall 7 Agreement, there was a different approach to clearing 8 outstanding issues, and I think that reflects the 9 success of that. The detail, no, I wasn't involved. 10 Q. Thank you. It has been suggested by another witness 11 that it was a tactical decision by the consortium not to 12 close these matters out while parties were still in 13 dispute, but that once an agreement had been reached at 14 Mar Hall, the consortium were able to resolve these 15 matters quickly and easily. 16 Do you have any comments or views on that 17 suggestion? 18 A. That's actually the first time I have heard that 19 assertion. So no, I'm sorry. 20 Q. Thank you. I would like now to put that to one side and 21 move on to two final matters. One is a longer matter, 22 another is shorter. 23 The longer matter is the question of payments made 24 to Parsons Brinckerhoff, including claims. I would like 25 to start, please, with a claims document which is number 125 1 CEC02085580. We can see the document is entitled "SDS 2 CONTRACT CLAIM FOR ADDITIONAL COSTS FOR ADDITIONAL 3 MANAGEMENT AND SUPERVISION SERVICES" in the period 4 3 July 2006 to 9 April 2007, and the date is 5 31 May 2007. 6 Did you have any involvement in the preparation of 7 this document? 8 A. Yes, I was responsible for preparing this document, 9 obviously with support from the team, but it was me who 10 finalised it and then negotiated with the client, 11 principally Geoff Gilbert, in those days. 12 Q. Thank you. Could we then please look at page 4 of the 13 document. We can see under paragraph 1.1, "Overview", 14 a reference to: 15 "During September 2005 PB entered into 16 a Contract with tie for a fixed price of [just over] 23 17 and a half million pounds based on the services set out 18 in Schedule 1 of the Contract." 19 It then goes on: 20 "In fulfilling its obligations PB has been 21 required to provide additional services for which 22 PB is entitled to be paid." 23 These additional services are then set out in this 24 document. We can see in summary the first bullet point: 25 "PB claims an extension of time of 40 weeks at 126 1 9 April 2007." 2 Also, PB claims additional payment of just over 3 GBP2.2 million to the same date. 4 A. Yes. 5 Q. It's then beneath that said that: 6 "Completion of the Detailed Design Phase remains 7 dependent upon the resolution of a number of Critical 8 issues ..." 9 There may be a further claim. 10 What I would then like to do is simply read out the 11 claim headings without going into the detail. 12 We can see 1.2 refers to changes due to Charrettes 13 with CEC/tie and TEL. 14 If we could then please go over the page, we see 15 a claim in relation to changes due to additional third 16 party agreements, and also changes required by tie. 17 Over the page, please, consents, changes due to 18 EARL. And tie's failure to accept and review the 19 preliminary design in a timely manner. 20 1.8, Changes due to Third Party Developers' Emerging 21 Designs. And failure to update the master project 22 programme. We discussed that earlier this morning, 23 perhaps we should blow that up to look at it. 24 We see: 25 "tie is obliged to issue the Master Project 127 1 Programme which shows the programming interfaces for all 2 Tram Network contracts." 3 Is that what we discussed this morning? 4 A. It is indeed, yes. 5 Q. "PB has only been issued with one version of the 6 Master Programme, (dated 19 February 2007), and this has 7 impacted resource planning through the resulting lack of 8 clarity on project overall requirements." 9 Is what is set out there consistent with your 10 evidence this morning? 11 A. Correct, yes. 12 Q. Thank you. 13 Now, the rest of the document simply sets out these 14 different heads in more detail. I'll simply take that 15 as read, given our limited time. 16 That document can be put to one side, please, and 17 then look at another document which is PBH00025674. We 18 can see halfway down the page this, is an email from 19 Greg Ayres dated 15 June 2007 to yourself, Mr Reynolds. 20 Then over the page, please, page 2, we can see under 21 5, CLAIM, I think this must be a reference to the claim 22 document we have just looked at; is that correct? 23 A. That's correct. 24 Q. I think this is following a meeting between Mr Ayres and 25 tie. Mr Ayres states: 128 1 "the prolongation was acknowledged as well presented 2 and worthy of consideration. Gilbert is taking legal 3 advice. We were asked not to run the FINAL through 4 document control until after the Audit Scotland report 5 is submitted to Cabinet mid next week." 6 To pause there, do you know why that request was 7 made? 8 A. Not directly. Clearly the Audit Scotland audit was 9 going on. I suspect tie wanted to have that concluded 10 before embarking on something which may have resulted in 11 that being revisited in some way. But that's an 12 interpretation rather than a definite fact. 13 Q. It may be suggested that that request by tie was an 14 attempt to conceal the claim from Audit Scotland while 15 they were carrying out their review; is that a matter 16 you would have any knowledge of? 17 A. That would -- that would be one possible interpretation. 18 You could, I suppose, also view it as not being of 19 sufficiently high priority to divert attention away from 20 the priorities in the Audit Scotland review, which was 21 looking across the board on the whole project. It may 22 have been viewed that a design claim was less important 23 than the other aspects of that document. 24 Q. So it is a claim for over GBP2 million? 25 A. Yes, it is. It's a significant figure and, as with all 129 1 claims, it also says something about the relationships 2 on the project, but, again, I wasn't involved in the 3 decision not to -- to do what's said there, obviously. 4 Q. I understand. 5 Next document, please, is PBH00003596. This updates 6 us on the claim. 7 We can see this is a letter dated 7 August. I think 8 it's from yourself, Mr Reynolds, to Geoff Gilbert. We 9 see the first paragraph: 10 "Thank you for arranging to meet with PB on 11 Wednesday 25 July to discuss the commercial issues ..." 12 Then three main paragraphs down: 13 "Enclosed with this covering letter is an attachment 14 which has been structured to provide a record of the 15 discussions held at the meeting ... and to set out our 16 understanding of tie's current position." 17 If we go then to page 3, please, it's just to note 18 the heading at the top. This is the attachment. We see 19 the very top, it states: 20 "Record of Discussions at the tie/PB meeting held on 21 25 July 2007. Without Prejudice." 22 On page 4, please, under paragraph 4, "Review of the 23 tie Response to the Heads of Claim", under 24 paragraph 4.1, overview, states: 25 "We note that: tie sees merit in the claim arising 130 1 from delays in reviewing the Preliminary Design." 2 And: 3 "tie sees merit in the claim arising from the impact 4 of the Critical Issues." 5 Then: 6 "We note that tie considers items 5, 6, 7 and 8 from 7 the list above to be grouped under the general heading 8 of Critical Issues." 9 If we could go back a page, please, to see that 10 list, we see Heads of Claim towards the bottom of the 11 page. I think in short, from what we have just looked 12 at, tie had indicated they saw merit in items 3 to 8 13 inclusive on the list; is that correct? 14 A. That's correct. 15 Q. Thank you. 16 That's that. Then on to page 5, please. We see 17 under paragraph 5, "Review of Counter Arguments tabled 18 by tie". So what appears to have happened is that tie 19 made certain counter arguments; is that correct? 20 A. Yes. 21 Q. Over the page, please, in fact page 7, paragraph 5.3. 22 One of these counter-arguments was in relation to late 23 provision of survey information and ground investigation 24 data. You note, this document had noted tie's position 25 was: 131 1 "Survey Information has been provided late and the 2 provision of Ground Investigation data has been 3 particularly poor, to the extent that tie has been 4 unable to transfer ground risk to the Infraco 5 contractor." 6 Then Parsons' position is: 7 "For the purposes of this settlement dialogue, PB 8 acknowledges that there may be merit in the tie 9 counter argument. However, PB is not presently in 10 a position to assess tie's position concerning transfer 11 of ground risk." 12 So in short, had survey information been provided 13 late, and/or was the provision of ground investigation 14 data particularly poor? 15 A. It's -- provided late against the original programme, 16 yes, but various things had slipped. So was it provided 17 late and was that a significant problem in itself, no, 18 I don't believe so. 19 Particularly poor, that's a little bit of an emotive 20 term. Was it absolutely perfect? Maybe not. It was 21 then a matter of dealing (a) with the negotiations of 22 claim against that item and the original claim sum was 23 reduced, partly in consequence, you could argue, but 24 then looking forward, right, how are we going to move 25 forward with transferring ground risk? And inevitably 132 1 we didn't want to get involved in a lot of to and fro 2 with tie, but there were reasons why all the surveying 3 ground investigation work couldn't be carried out as 4 originally envisaged due to constraints imposed on 5 access, as I understand it. I wasn't there in 2006, but 6 that's what I was told. 7 Q. In respect of the ground investigation data, I think you 8 said that there were respects in which it may have been 9 lacking. Can you explain that a little? 10 A. No, because I wasn't -- I wasn't intimately involved 11 with that ground investigation data. What I'm saying is 12 if tie's view was it had been poor, it wouldn't have 13 been all bad. Okay, perhaps it wasn't all to the 14 required standard, but it was a matter of dealing with 15 the gaps, as it were, which we had to do jointly going 16 forward. 17 So beyond that point it didn't have a significant 18 impact, and as I say, it was settled as part of the 19 overall claim settlement and then we moved forward. 20 CHAIR OF THE INQUIRY: Is this data that was required for 21 the Civils? 22 A. Ultimately it would have been, yes. 23 CHAIR OF THE INQUIRY: Did it include data that would have 24 been required by the MUDFA contract? 25 A. I can't answer that, I'm sorry. Alan Dolan will be able 133 1 to answer that one directly. 2 MR MACKENZIE: Just to finish this point, if there had been 3 any gaps or deficiencies in the survey information or 4 ground investigation data, this is August 2007. So 5 there was still time to plug or fill or remedy any 6 matters in that regard before entry into the Infraco 7 contract; is that correct? 8 A. Precisely my point there about taking that further about 9 not presently in a position to assess tie's position 10 concerning transfer of ground risk, but we will help in 11 the current circumstances in making sure that's 12 addressed, exactly, as you say. 13 Q. Thank you. I should also just for completeness look at 14 the next point on this page, please, the next 15 counter argument by tie is 5.4, headed "Inadequate 16 performance on project risk management". I think this 17 comes back to the services to be provided by Parsons 18 under Schedule 1 of the SDS contract in 2005. We can 19 see tie's position at this point was that: 20 "Performance on project risk management has been 21 poor. This is a duty which was allocated to PB but 22 which has not been delivered effectively in tie's view." 23 Over the page, please, Parsons had reviewed and 24 responded as follows: 25 "For the purposes of this settlement dialogue, 134 1 PB acknowledges that there may be some merit in the 2 tie counter argument. However, it is clear that 3 incomplete control of the Master Programme by tie has 4 also impacted adversely on the effective implementation 5 of the risk management processes defined by the 6 Contract." 7 Starting with the question of Parsons' performance 8 on project risk management, what was that a reference 9 to, and had it been poor? 10 A. I think this is another area where there's a joint 11 responsibility, and PB had an obligation to identify 12 risk heads, if you like. So where risk may arise. 13 But it was then tie's obligation to take account of 14 those potential areas of risk, and adjust or manage 15 within the master programme as appropriate. 16 So it certainly wasn't the case that it was wholly 17 down to PB, but again, for the purposes of reaching 18 a settlement, okay, perhaps we weren't perfect, but it's 19 a shared responsibility, and the -- having identified 20 areas of risk, which I would argue that we did, it's 21 then, well, what are you going to do with the programme 22 to take account of those, mitigate them, do something 23 else? That was a tie responsibility. 24 Q. Thank you. The next document I think shows us the 25 settlement reached in this claim. If we can go please 135 1 to PBH00036744. The second email on the page is from 2 yourself, Mr Reynolds, dated 6 September 2007, to 3 Geoff Gilbert, without prejudice. The first paragraph 4 says: 5 "I am pleased to advise that PB is in general 6 agreement with the principles for settlement as set out 7 in your email of 24 August." 8 If we can then scroll down the bottom of the page to 9 look at that, please, we can see the bottom of the page, 10 an email from Mr Gilbert dated 24 August 2007 to 11 yourself. We see it's headed "SDS Prolongation and 12 Disruption Claim". 13 Over the page, please, we see under paragraph 1, 14 "Basis of Claim Settlement": 15 "The agreed payment in the sum of GBP2.5 million is 16 to be in full and final settlement of all issues raised 17 in your claim letters dated ..." 18 We can see it's up until 18 August 2007; is that 19 correct? 20 A. That's correct. 21 Q. Could you also please check under paragraph 3, it says 22 "Payment Of The Settlement Sum. It appears to be 23 intended it would be paid in four tranches or 24 instalments. Is that what happened? 25 A. Yes, that is what happened. 136 1 Q. Thank you. You can leave that document. 2 I should also have asked, in agreeing the figure of 3 GBP2.5 million, to what extent, if at all, did that 4 figure take into account any counterclaim that tie may 5 have had against Parsons? 6 A. That's again a very interesting question. Early on in 7 the negotiation process, it must have been shortly after 8 the claim was submitted, there was a suggestion from tie 9 relayed by Geoff Gilbert that tie may well have 10 counterclaims against PB which could in fact be greater 11 than the claim being submitted by PB. 12 In the event and I think this had to do partly with 13 new staff coming into tie, different perspective, people 14 like Tony Glazebrook, David Crawley, in the event when 15 we got to August/September, the claim was settled and 16 there were no counterclaims articulated by tie. 17 Q. Remember we saw reference to tie's counter-arguments in 18 relation to ground investigation data? 19 A. Mm-hm. 20 Q. And the other matter. I just wonder, in the settlement 21 at 2.5 million, to what extent, if at all, did 22 settlement of that amount take into account even any 23 counter-arguments that tie may have had? 24 A. The settlement certainly took into account 25 counter-arguments. I think from memory, the initial 137 1 claim, when you pull it in all together and quantified 2 it, was approaching 4 million. Now, you are not going 3 to be expecting 4 million. There are certain things 4 that you've got to take off anyway, but certainly the 5 2.5 sum in settlement was significantly less than the 6 mathematical calculation. That took account of those 7 counter-arguments. 8 Q. Thank you. We have also heard evidence from 9 Damian Sharp, who I think arrived in tie in 10 October 2007. I think he was involved in then settling 11 a further claim, figures of either GBP1 million or 12 GBP800,000. Do you have any recollection of that 13 matter? 14 A. There were some supplementary claims as things went 15 further into delay. So yes, there were some of the sums 16 claimed and settled, but the foundation, if you like, 17 the framework for those claims was really set with that 18 April or May 2007 document as to how to go about the 19 negotiations. 20 Q. Thank you. The next document, please, is CEC01294745. 21 CEC01294745. 22 We can see this is a letter, in the top right-hand 23 corner, dated 8 May 2008 from Greg Ayres to 24 Willie Gallagher. We can see in the first three 25 paragraphs, this is intimating a further claim 138 1 essentially. 2 Paragraph 1 states: 3 "Dear Willie, I understand that the May 2008 target 4 date for award of the Infraco Contract has not been 5 achieved. According to my records, this was the sixth 6 target date since 28 January 2008. As you are aware, we 7 have maintained the Parsons management team strength in 8 Edinburgh ... 9 I would like to draw to your attention the 10 interruption which has occurred ..." 11 In the next paragraph: 12 "As a consequence, PB has incurred additional costs 13 to date as follows." 14 Firstly, management time and expenses of just under 15 GBP40,000 a week. 16 After that, costs of inefficient working of the 17 design teams in excess of GBP1.5 million. I think in 18 short, that's a further claim being intimated; is that 19 correct? 20 A. Yes, indeed. 21 Q. Was this further claim resolved? 22 A. Yes, it was. This was a difficult period, because the 23 reality was we'd been looking to achieve novation long 24 before this point, and to be honest with you, I'd been 25 trying to maintain our position without having to put 139 1 any additional claims in, but we got to the point where, 2 as Greg describes, we had to get recognition of the 3 position. 4 Q. Thank you. The next document, please, is CEC01295126. 5 We can see at the top, this is an email from 6 Dennis Murray in tie. So just before financial close. 7 The email is dated 13 May 2008, to yourself, 8 Mr Reynolds. Mr Murray states: 9 "I attach a copy of the Account status at Novation 10 as discussed and agreed yesterday." 11 Was that right, was there a discussion and agreement 12 reached on these matters at that time? 13 A. Yes, this was putting together to satisfy the terms and 14 conditions of the Novation Agreement that a final 15 account had to be prepared which could be signed off. 16 Then all payments had been made and everyone was able to 17 sign off. 18 Q. Thank you. We will come shortly to look at the table of 19 figures in the actual SDS Novation Agreement. But just 20 sticking with this email just now, we can see the amount 21 due at novation is a gross certified amount less 22 previous payments. Construction support and consents 23 support are included as provisional sums as discussed. 24 We will go back there in a second. 25 "Incentivisation is not an Infraco amount and will 140 1 be dealt with by tie direct." 2 Is that a reference to the GBP1 million 3 incentivisation pot? 4 A. It is indeed, yes. 5 Q. Thank you. Over to the other document, the attachment, 6 which is CEC01295127. 7 What I would like, Mr Reynolds, if I may is to ask 8 for your help in trying to understand what some of these 9 figures relate to. 10 So if we start, we can see three main columns, C is 11 anticipated final account. So that must be a projection 12 into the future, an estimate in the future? 13 A. That's the full contract value. So if you look at that, 14 the contract sum, the 21.882 million, that was the full 15 contract value. 16 We'd had certified for payment at that point 17 18.97 million. Therefore there was a balance of 18 2.9 million due on the contract for later payment. 19 Q. Okay. Now, just coming back to -- coming down to row 2, 20 variations agreed, we don't have to blow it up. I think 21 we're okay. We can read it. 22 Do we see the figure of 776,172. Has that figure 23 been paid? Because if we go to the far right-hand 24 column, the balance is zero. 25 A. Yes, that's been certified. Yes. So that has been 141 1 paid. 2 Q. Okay. Then under that we see agreed 1,726,171. 3 A. Yes. 4 Q. Then reading across again, does it look as though some 5 of those agreed variations have been paid, but there's 6 an outstanding balance of just over GBP500,000? 7 A. That's right. What you're looking at here is a gross 8 certification. So we need to make sure that we have had 9 that gross certification actually paid into the bank. 10 The balance is yet to come, yet to be delivered, and yet 11 to be certified and then paid. 12 Q. So I'm sorry, does the reference to balance mean after 13 novation has taken place? 14 A. Yes, that's balance of outstanding works at that point. 15 Q. Okay. 16 A. So we wouldn't be looking for payment for that at 17 novation. We would be looking to ensure we'd been paid 18 everything that had been certified. 19 Q. Then coming down to the sum of GBP800,000, do you know 20 what that relates to? 21 A. That was further variations through that period up until 22 novation. So it's again design -- additional design 23 services in comparison with the original contract 24 schedule. 25 Q. So when Damian Sharp had told us about a sum of 142 1 GBP1 million or GBP800,000, it may be that sum, put it 2 no higher? 3 A. I think that would be right, yes. 4 Q. Thank you. I think then we recognise the sum of 5 GBP2.5 million. That must be in terms of the settlement 6 we looked at earlier? 7 A. That's correct. 8 Q. Now, what's the next sum for? Further additional 9 services agreement, 450,000? 10 A. There was -- in, I believe, early 2008, there was 11 a supplementary prolongation claim after the 12 GBP2.5 million which came to 450,000. 13 There was then the -- one of the consequences of the 14 Greg Ayres email at novation, that GBP300,000 beneath it 15 was an agreed sum to cover some of the additional costs 16 we'd incurred through novation being delayed. 17 Q. Thank you. We then see a reference to 4, Employer's 18 Requirements Alignment agreement, GBP900,000. 19 A. That's what we were talking about earlier, talking about 20 it as roundly 1 million. It's actually 900,000. 21 Q. Thank you. We see the subtotal. Then carrying on down 22 under row 6, "Construction Support (Provisional Sum)" of 23 GBP1 million, what does that relate on? 24 A. Well, the original SDS contract on the basis that 25 everything would be wrapped up prior to novation, had 143 1 four phases. There was the requirements definition 2 phase, the preliminary design phase, the detailed design 3 phase, and what was called construction support, but in 4 the circumstances of everything having been delivered, 5 that construction support would have been minimal. 6 What Bilfinger Berger Siemens saw they needed in the 7 absence of a complete design was more detailed 8 construction support, which is what I talked about 9 earlier, making sure that the design intent had actually 10 been constructed, and adding to that, I suppose you 11 could say, making sure that the quality of the 12 construction was what was required. 13 So Richard Walker and I had discussed the need for 14 that through the negotiations. It wasn't possible to 15 define absolutely how much effort would be required. So 16 provisional sum was set against that activity, and the 17 other one, the consent support, it's actually wrongly 18 termed. It was more to do with design assistance with 19 some of the Siemens aspects of their design, which would 20 have to be integrated with our Civils Design. 21 Again, it wasn't possible to say exactly how much 22 effort would be required in May 2008. So again, 23 a provisional sum was put against it. 24 Q. Thank you. 25 CHAIR OF THE INQUIRY: Are these payments that -- or sums 144 1 potential liabilities for tie in the sense that tie were 2 going to pay you directly? 3 A. No, they were going to be paid by Infraco. So they were 4 construction support and consents support, they would be 5 paid by Infraco. 6 CHAIR OF THE INQUIRY: Yes. 7 MR MACKENZIE: Thank you, my Lord. 8 CHAIR OF THE INQUIRY: Because you were taking over part of 9 their obligations? 10 A. That's right, yes. 11 MR MACKENZIE: Would the sums above the yellow line 5, 12 subtotal, would everything above that be paid by tie? 13 A. The -- as I said, the gross certification at novation, 14 so the certification that, yes, we'd actually delivered 15 those services, that had to be paid by tie. So there 16 had to be the cheque, the 25,922,313 had actually been 17 paid; the balance, the 3,412,000 would then be paid by 18 Infraco as those services were delivered post-novation, 19 along with the provisional sums, however they turned out 20 for construction support. 21 Q. Now, you had discussed earlier the question of the need 22 to address the misalignment between the SDS design and 23 the consortium's offer or proposals, and we -- you 24 mentioned workshops to be carried out after novation. 25 Where would that be covered, SDS's fees for that? 145 1 A. That's where you go back to, if you remember, that it 2 would be a tie -- a tie change, as far as Bilfinger 3 Berger Siemens were concerned, and it would be a client 4 change as far as SDS was concerned. So there was no 5 forecast at this point as to what those sums might be, 6 because they could have been zero. To the extent we 7 were talking about align with the revised ERs, that's in 8 the GBP900,000 figure, but we didn't try at this point 9 to forecast what might come out of those design 10 development meetings. 11 Q. Thank you. That's very clear. We can leave that 12 document. 13 CHAIR OF THE INQUIRY: What is number 9, "incentivisation 14 (Non Infraco)"? 15 A. That's the sum associated with the outstanding -- sorry, 16 issue for construction drawings. So that's what we 17 talked about earlier, where there was the sum for each 18 drawing which would be paid, but on the other side of 19 the coin, should we be delayed, then that was subject to 20 LDs. So it was a maximum of 1 million, and it's noted 21 as "Non Infraco". That was going to be paid direct by 22 tie. 23 CHAIR OF THE INQUIRY: Thank you. 24 MR MACKENZIE: Thank you. 25 If we then please go to the SDS Novation Agreement 146 1 we looked at earlier. The number is CEC01370880. Go to 2 page 94, please. We can see the table at the bottom, 3 cost to complete. I think we can recognise some of 4 these figures. 5 We can see there's a balance to complete of 6 GBP4,983,815. For the avoidance of doubt, which party 7 was to pay that sum? 8 A. That would have to be Infraco, provided the million 9 incentivisation isn't in that figure. So that would be 10 an Infraco payment. 11 Q. Yes, I should explain, Mr Reynolds, I think the figure 12 I just read out is then broken down by the four 13 components beneath that, and they do add up to the 4.983 14 million? 15 A. Yes, in that case -- thank you, yes, that's Infraco. 16 Q. And the million pounds incentivisation isn't shown in 17 this table? 18 A. That's correct. Yes. 19 Q. So I think the detailed design deliverables of just over 20 GBP2.2 million, that must be under the original SDS 21 contract. Those are the outstanding deliverables? 22 A. That's correct, and that construction support figure 23 there, that 1.1 million, that's the phase 4 that I was 24 just talking about. So that was the original 25 construction support figure then had to be supplemented 147 1 with those two provisional sums. 2 Q. Okay. So that reflects matters at that stage. 3 If we then please fast-forward to Mar Hall in 4 March 2011, what happened was shortly before Mar Hall 5 the consortium sent tie something called the Project 6 Phoenix Proposal which was essentially an offer to 7 resolve the dispute. 8 If we can go to that, please, it's BFB00053258. We 9 can see the letter is from Mr Foerder of the consortium 10 dated 24 February 2011, and we can see: 11 "Please find attached our Project Phoenix 12 Proposal ... which is submitted in the ambit of the 13 forthcoming Mediation." 14 If we go then to page 34, actually if I could 15 perhaps start at page 33, and if we could blow that up, 16 please. So this is part of the consortium's proposal of 17 prices given for the SDS fees and claims. 18 Then we can see that price on the next page, please. 19 We can see the bottom right-hand corner, the very bottom 20 right-hand corner of the table. We see the grand total 21 on the bottom right-hand corner is now up to 22 GBP15,140,795. If we then blow that out, please, to see 23 the ordinary size, can we times it times 1? One 24 enlargement up? Never mind. I think if we -- we can, 25 I think, just see under scope works, we see a column, 148 1 "Original Subcontract Work", and I think we can 2 recognise the figures there from the SDS Novation 3 Agreement, page 94 we have just looked at, where we saw 4 in the Novation Agreement that the balance complete was 5 anticipated to be GBP4,983,015. We can see that figure 6 there under "Original Subcontract Work". We can then 7 compare how things have changed. If we take it line by 8 line, the item 1, the PH3 detailed design deliverables, 9 they stay the same at just over 2.2 million. Item 2, 10 changes, we can see a completely new figure of 11 GBP4,234,948. Do you remember what that figure relates 12 to? 13 A. It will be on BSC's change control register. But it 14 would have been developing designs, obviously additional 15 design work. I think the BSC Change Control Register is 16 the best place to identify the make-up of that figure. 17 Q. Might that include the work required by Parsons in 18 relation to the misalignment -- 19 A. Yes. 20 Q. -- between the SDS design and the proposals? 21 A. Yes. 22 Q. I see. 23 A. Yes, that's exactly where that work will be. 24 Q. Item 3, design co-ordination. This is a new figure, 25 GBP495,000. Do you know what that relates to? 149 1 A. That's the one I'm slightly struggling with on this 2 table, I have to admit. I suspect it's the figure 3 associated with the agreement we were talking about 4 before lunch, which was the Civil Design Completion 5 Agreement as far as we were concerned. So picking up 6 the Infraco design obligation with additional services 7 from Parsons Brinckerhoff. I think that must be what 8 that figure refers to. 9 Q. Thank you. Items 4 and 5, you have already explained. 10 Item 4, the phase 4 Construction Phase, I think the 11 estimate had been just over 1.1 million? 12 A. Correct. 13 Q. That's come in at just over 1.2 million. So not a huge 14 variation there. 15 Under item 5, Design Support Team, the estimate had 16 been 675K and that's come in at just over a million? 17 A. Yes. 18 Q. Do you know why there's an increase there? 19 A. Well, I say that was always a provisional sum, depending 20 on how the Siemens design evolved. So that's the way it 21 worked out on an effort evaluated basis. Similarly the 22 Extended Construction Support. 23 That was -- a million was put in as a provisional 24 sum. I think that was always viewed as no more than 25 that, because the team was up to a dozen strong to 150 1 deliver that particular service. So the 3.9 million was 2 a reasonable figure. 3 Q. We see that under that item 6, Extended Construction 4 Support, that figure of 1 million has in fact almost 5 quadrupled to GBP3.921 million. 6 A. Yes. 7 Q. Do you know why that happened? 8 A. As I say, I remember discussing with Richard Walker 9 prior to novation Infraco contract award, and if you 10 took a worst case, you could have been up to 5 million 11 for extending construction support, depending on the 12 particular requirements of the work as it mapped out. 13 Q. Were tie aware of that before contract close? 14 A. I believe so. 15 Q. Who in tie would have -- 16 A. That would have been Steven Bell. 17 Q. How would he have been aware of that? 18 A. Through the discussion, because Steven Bell 19 and I discussed at length the need for extended 20 construction support. So I would think he was certainly 21 aware that, as I say, the million was no better than 22 a provisional sum. Worst case, best case, it would be 23 highly likely to be above a million, what would it get 24 to would be taken account of as the job started to be 25 delivered. 151 1 Q. Then we see a new item 7, Additional Technical 2 Resources, 355,795. What did that relate to? 3 A. I think that was mostly to do with dealing with 4 technical queries as they arose on site. 5 Q. Then item 8, Disruption Claim of half a million. Do you 6 know what that relates to? 7 A. That would have been a claim under the normal terms of 8 the SDS Agreement for disruption that we were subject 9 to, but now working for BSC. 10 Q. Then lastly, prolongation of just over GBP1.1 million? 11 A. Yes, which we have touched on with that letter referring 12 to delays to overall scheme delivery. 13 Q. The last document in this regard, please, is a one-page 14 document. It is SIE00000184. 15 If we can blow up the left-hand corner, please, 16 I don't think you'll have seen this -- sorry, the top 17 left-hand corner. I don't think you've seen this 18 before, Mr Reynolds, but we can see this is stated: 19 "Breakdown of amounts in Settlement Agreement, 20 Schedule Part 4 ..." 21 I think this is an internal Bilfinger Siemens 22 document showing the breakdowns in the Settlement 23 Agreement. 24 If we then zoom back out, please, to normal size, 25 and if we -- can we blow up the first three columns, 152 1 please? First four columns, better still. 2 That's fine. 3 We can see there, if we go to the bottom right-hand 4 corner, you can see the reference to the figure of 5 GBP362.5 million, and in short, Mr Reynolds, that was 6 the Settlement Agreement reached at Mar Hall between the 7 parties in relation to the price for the off-street 8 works and from airport to Haymarket, and we can see for 9 ourselves how that figure has been broken down. 10 In relation to the SDS part of the claim, which we 11 have seen from the Project Phoenix document, was the 12 15,140,000. Essentially there's been a relatively small 13 discount from that figure of GBP360,336 to arrive at the 14 GBP14,780,459. 15 I don't think you would have been part of this sort 16 of breakdown. Is that correct? 17 A. That's correct. I mean, I was aware of the final figure 18 that was agreed, but no, I have not seen the breakdown 19 there with the other discounts and the other parties. 20 CHAIR OF THE INQUIRY: Did you not have to agree the 21 discount? 22 A. Yes, for my figures, but I have not seen the Bilfinger 23 Siemens information before. 24 MR MACKENZIE: Just as a point of detail, to see this 25 settlement figure, the 362.5 million relates to the 153 1 off-street section of the works. And we see that, 2 according to the consortium, they had allowed for SDS's 3 fees and claims of 14.78 million. That's in relation to 4 off-street. 5 Did SDS have a separate claim in respect of the 6 on-street works or rather were all of SDS's fees rolled 7 up into the figure of 15.14 million? 8 A. That's the total figure from the previous document. So 9 that means it's all there. There wouldn't have been 10 anything additional to that. 11 Q. I see. So just trying to stand back from all of that 12 detail, we can see at financial close we had seen 13 a figure of just under GBP5 million as the balance to 14 complete. 15 A. Mm-hm. 16 Q. We can see how that's gone up to 2011. So we're not 17 even at complete completion yet. There's still further 18 design to carry on. But at this stage the figure has 19 gone up to just over 15 million. 20 Why? 21 A. As a consequence -- well, I think as we have seen the 22 breakdown there, partly as a consequence of the firming 23 up of the sums that had previously been declared as 24 provisional sums, but recognising yet further change on 25 the project, further prolongation, and I think as we 154 1 said before, the real change in culture perhaps didn't 2 come about until the Mar Hall Agreement. It was at that 3 point where there was a cultural change to design 4 acceptance. 5 Q. In terms of the increase of the figure that was 6 anticipated at financial close of just under 5 million 7 to, in 2011, of just over 15 million, is that 8 an indication of the amount of design work that was 9 carried out post novation? 10 A. Yes. And, I keep coming back to it, the solidifying of 11 the provisional sum totals. So if you took those off, 12 then the remaining figure would be an indication of the 13 additional design and the prolongation of the management 14 team. 15 Q. Would much of that GBP15 million have been avoided if 16 design had been complete at novation and all approvals 17 and consents had been obtained and there had been 18 alignment between the design, Employer's Requirements 19 and Infraco proposals? 20 A. I think you would have to say yes to that. Or I would 21 have to say yes to that. 22 Q. Thank you. 23 That was the big thing I had, Mr Reynolds. The much 24 smaller matter is a question of MUDFA and utility work. 25 I think Mr Dolan was heavily involved in that. So 155 1 I have a number of questions for him. 2 A. That's right. 3 Q. But if I could ask you one or two questions about that, 4 please. 5 Firstly, standing back, is it good practice when 6 intending to carry out utility diversion works to survey 7 all of the intended route? 8 A. It's certainly good practice to survey, yes. But 9 a survey won't deliver all the information that you 10 need. It will deliver information that will be right in 11 itself, but it still won't give you a complete picture 12 of the work to be undertaken. 13 CHAIR OF THE INQUIRY: What would a survey entail? 14 A. A survey would entail looking at records from the 15 utility companies, selective ground investigation, 16 looking at the condition of assets out there as they 17 stand at the moment, talking with the utility companies 18 to gain an appreciation of the history of those assets. 19 So yes, to basically increase confidence in an 20 understanding of the problem to be addressed with moving 21 utilities. 22 CHAIR OF THE INQUIRY: You speak about selective ground 23 investigations. What would that amount to? What's the 24 nature of them? 25 A. It's where you would -- again, Alan Dolan is probably 156 1 better equipped to answer the question, but looking at 2 particular pinch points of where you've got narrow 3 corridors, where you've got multiple utilities. So one 4 of the things we were responsible for was the so-called 5 critical design. Whilst there's no definition of 6 critical design in the contract, it's typically where 7 you will have a narrow access where you might have 8 telecoms, water, gas, everything coming together, and 9 you've got to look at how you will address those 10 utilities not in isolation from each other, but together 11 as a full set. So you will be looking at things like 12 that. 13 CHAIR OF THE INQUIRY: Would the investigation of the ground 14 conditions normally -- if you were investigating the 15 whole route, would they involve ground penetrating 16 radar? 17 A. Yes. 18 CHAIR OF THE INQUIRY: For the whole route? 19 A. It could do. It depends on, if you were out on green 20 field location, I don't suppose you would bother, but 21 where you're in an area like in the middle of the city 22 where you know the ground will have been disturbed, then 23 yes, that would be an area where you would do that. 24 But again, you're not going to pick everything up, 25 even with ground penetrating radar. What you are going 157 1 to do is increase your understanding of the problem, but 2 you are still going to have to do work beyond a survey 3 to really quantify the work that has to be carried out. 4 CHAIR OF THE INQUIRY: Would it involve doing slit trenches, 5 occasionally slit trenches and trial pits? 6 A. Yes. Now, as I say, Alan Dolan is the -- 7 CHAIR OF THE INQUIRY: He is the man. 8 A. Sorry, I'm repeating myself. 9 CHAIR OF THE INQUIRY: I'll ask him. 10 MR MACKENZIE: Mr Reynolds, did you have an understanding of 11 the main difficulties and delays encountered in 12 producing utilities design? 13 A. You will be familiar with a letter from me to 14 Steven Bell at some point in the programme which is 15 highlighting the delays to the provision of information 16 from several of the statutory utility companies. That 17 was certainly a key factor in delays to design 18 completion. 19 You've then got other issues which come to light. 20 It's one thing diverting a water main, for example, 21 where you can divert the pipework and the job is done. 22 Diverting a telecoms network is far more complicated 23 because you can divert the routing of the cabling but 24 then you are left with the problem of terminating all 25 those cables at either end. So it tends to be more 158 1 complex than people may have appreciated at the outset. 2 Again, I think it comes back to this was a task 3 which relied on the co-ordination of several different 4 providers. 5 Q. Thank you. If we can go to -- I don't have that 6 document at my fingertips. I have another one. 7 PBH00029220. 8 If we can go over to page 2, please, we see an email 9 from Thomas O'Neill. Was he the Head of Parsons? 10 A. He was the Head of Parsons Brinckerhoff International. 11 So yes, he was in New York. 12 Q. I think this is dated 5 October 2007. The subject is 13 "Gallagher meeting", and Mr O'Neill says: 14 "Men - Willie and I met for about two hours 15 yesterday. The meeting had one major point of focus - 16 utility relocations. Willie recognises that some things 17 are going well and much is improved over the last year. 18 But he is very concerned and frustrated with the 19 slippage and apparent lack of urgency regarding utility 20 relocations. He asked my help in getting the issue 21 sorted. I said that I would certainly pitch in, but 22 that it had to be a joint effort between SDS and tie. 23 He is not focused on who has responsibility for what, 24 but wants the problem to be addressed and solved." 25 Over the page we will see your response. On page 1 159 1 we see in the middle of the page an email from you, 2 Mr Reynolds, dated 9 October 2007. I'll just let you 3 take a minute to read that for yourself. 4 A. I'm familiar with that. 5 Q. So essentially that reflected your views at the time; is 6 that correct? 7 A. Correct, yes. 8 Q. And you -- 9 A. And as I say, whether it's companion -- I can't remember 10 the exact date, but the letter on file to Steven Bell 11 goes into more detail about how each of the utility 12 companies is abiding by its agreements or not, and 13 spells out in some detail, which then allowed 14 Steven Bell to pick up actions to address the problem, 15 working with me. 16 Q. So in short your position is that Parsons were 17 frustrated in producing design by delays on the part of 18 utility companies? 19 A. That's -- that's right. And there was a knock on impact 20 as well because what would also happen is all of 21 a sudden the information would become available and we 22 were expected to be able to turn that round in very 23 short order, whereas of course you don't have people new 24 waiting for information to arrive. You've got design 25 teams who will be engaged on other things if the 160 1 information required doesn't turn up according to 2 programme. So there was that sort of second order 3 effect as well. 4 Q. Thank you. 5 Two final points on MUDFA, if I may. Both of them 6 are contained in your statement. Could we go back, 7 please, to your statement at page 14 in paragraph 47. 8 This starts with quoting from the SDS contract in 9 September 2007 in relation to Parsons' responsibility 10 for undertaking utility design, namely it was 11 undertaking critical design, et cetera. You explain in 12 this paragraph that the contract did not envisage that 13 all utility design would be undertaken by Parsons. 14 Do you know in short what happened in practice in 15 terms of what utility design was undertaken by Parsons 16 and what design was not? 17 A. Yes. What happened after this, after this episode that 18 I relate there with Matthew Crosse, everything did get 19 back on to a more reasonable footing where we did take 20 on board the aspects where there was a need for multi -- 21 multi utility co-ordination, but where an individual 22 utility company would look after its own assets on what 23 might be, you know, standard design for a water main 24 connection, say. 25 So we did get to focus on what our view of our 161 1 obligation actually was on delivering the more complex 2 areas of design for MUDFA. 3 I think again, if we are talking lessons learned, 4 this is a whole area that could have been better defined 5 because this term "critical design" is not even 6 capitalised. It's not defined. What does it really 7 mean? There were agreements in place between tie and 8 the SUCs. Were they managed effectively? I think this 9 is a whole area of concern potentially. 10 Q. Thank you. 11 The last point on page 58, please, in paragraph 184. 12 This was in relation to a report to the Council's 13 Internal Planning Group in April 2007. In paragraph 184 14 you say: 15 "The key point is that the MUDFA programme was not 16 aligned with the SDS programme." 17 Can you just explain what you mean by that, please, 18 the MUDFA programme not being aligned with the SDS 19 programme? 20 A. I think this comes back in part to our points about the 21 master programme not -- certainly not being communicated 22 to us, and potentially not being defined to encompass 23 the different project programmes. So bringing together 24 the MUDFA programme and the SDS programme. 25 My view was the MUDFA programme was being focused on 162 1 in its own right, but the interfaces with the SDS 2 programme weren't properly managed. 3 I think it goes on to talk about there was 4 a suspension to MUDFA works while the Audit Scotland 5 exercise was going on. So again, that needed to be 6 accommodated within the overall master programme and it 7 wasn't, effectively. 8 MR MACKENZIE: Thank you. I have no further questions. 9 CHAIR OF THE INQUIRY: I don't think there are any questions 10 from anyone else. 11 Thank you very much, Mr Reynolds. You're free to 12 go. Technically you're still under your citation and it 13 may be that you could be recalled, but hopefully that 14 won't be necessary. 15 A. Okay. Thank you very much indeed. 16 (The witness withdrew) 17 MR MACKENZIE: This may be a suitable time for the break. 18 CHAIR OF THE INQUIRY: Yes. We will adjourn until 3.20. 19 (3.03 pm) 20 (A short break) 21 (3.20 pm) 22 CHAIR OF THE INQUIRY: Mr Mackenzie. 23 MR MACKENZIE: Thank you, my Lord. The next witness is 24 Alan Dolan. 25 163 1 MR ALAN DOLAN (sworn) 2 CHAIR OF THE INQUIRY: Have a seat, Mr Dolan. 3 Could I ask to you listen to the question and to 4 answer it as directly as possible before adding any 5 qualifications. In other words, if it's capable of yes 6 or no, then that should be the answer. But then you can 7 qualify it if you need to do so. 8 Would you speak clearly into the microphone and at 9 a reasonable speed so the shorthand writers can keep up 10 with you. 11 A. I shall. 12 Examination by MR MACKENZIE 13 MR MACKENZIE: Good afternoon. 14 A. Good afternoon. 15 Q. Can you state your full name, please? 16 A. Alan Hugh Dolan. 17 Q. And your current occupation? 18 A. I'm a design engineer. I am in position at Manchester 19 metro. 20 Q. Thank you. Now, you have provided a written statement 21 to the Inquiry, Mr Dolan. I would like to take to you 22 that. You should have a hard copy, I think, in front of 23 you as well. 24 Our reference number is TRI00000101. It's also up 25 on the screen. 164 1 Could you please go to page 45, the very last page. 2 We see a signature there dated 17 July 2017. Can you 3 confirm, please, that that is your signature and that 4 this is the written statement you have provided to the 5 Inquiry? 6 A. It is my signature. 7 Q. Is this -- 8 A. And if this comes with that, this is the statement 9 I made. 10 Q. I can confirm it does, thank you. 11 Your written statement, together with the evidence 12 you give today, will form your evidence to the Inquiry? 13 A. Thank you. 14 Q. Now, can we go back to page 1 of your statement, please, 15 by way of introduction. 16 In the heading, "Introduction", at the top of the 17 page, can we look at that, please. It says that you 18 took position as Interim Project Manager: 19 "... for the Edinburgh Tram Project from late 2006 20 when P McCauley, Project Manager, returned to his home 21 posting in the USA." 22 I wonder whether the reference to late 2006 should 23 be a reference to late 2005? 24 A. My apologies. You are correct. Actually Paul went back 25 in 2006. Jason turned up in 2006, and there was 165 1 a period that I took interim. My apologies for that, 2 but you are correct, sir. My apologies. 3 Q. No need to apologise, thank you. 4 Then further down, in the introduction, the box 5 section, we asked in question 1(1) about your 6 professional qualifications, et cetera. And I think 7 essentially we can see you are a qualified engineer, 8 member of a professional body, and you have then in 9 part 2 of the question experience in various light and 10 heavy rail schemes in both Asia and also, I think, 11 Melbourne, Australia; is that correct? 12 A. That is correct. 13 Q. And of course also the heavy rail experience closer to 14 home as well in the Channel Tunnel Project? 15 A. That is correct. 16 Q. Thank you. What I would now like to do is largely put 17 your statement to one side for just now, and look at the 18 question of your involvement in the utility diversion 19 works, and in particular the question of producing 20 design for the utility diversion works. 21 Just briefly, Mr Dolan, what responsibilities did 22 you have for the production of utility designs? 23 A. Ensuring that the utility SUCs provided to us 24 information to a C4 standard so that we could vertically 25 and horizontally confirm a swept path such that the tram 166 1 system design would have a clear run through. 2 SUCs did have agreements with tie based on 3 information that we would provide. They would do 4 certain design works. We would put forward combined 5 services drawings, take those combined services 6 drawings, and then use them in future, hand them over to 7 tie such that tie could procure a MUDFA installation 8 contract, and move services to create that swept path 9 vertically and horizontally. 10 Q. Thank you. On the question of investigations for the 11 MUDFA works, did Parsons Brinckerhoff have 12 responsibilities for carrying out the investigations for 13 these works? 14 A. Investigations in so much as surveys in the -- in 15 critical junction areas, and also to provide combined 16 services drawings either side or below the swept path, 17 such that we could allow the systemwide contract of the 18 Infraco to come through at a later date and install his 19 works. 20 Q. Thank you. 21 So what investigations were undertaken by or on 22 behalf of Parsons Brinckerhoff in that regard? 23 A. Various investigations. Slit trenching, soil testing, 24 the majority of the work done at junctions known at the 25 time where the swept path horizontally and vertically 167 1 were going to meet at critical junctions. 2 Q. Had there originally been an intention to undertake 3 survey works of the whole tram route, but that was then 4 restricted to critical junctions? Are you aware of 5 that? 6 A. No. Only to inform the design. You would do on tram 7 systems and alignment systems like this, you would take 8 the areas where you know there is either congestion. 9 You would get that information from the SUCs by their C4 10 drawings. You would see where your swept path is. 11 There would be no necessity for the whole route to be 12 surveyed to give that a swept path. Areas going out 13 from the Haymarket to the airport where you go rural, 14 there would be no need for that. Inside the city you 15 would put more work in that area, and that is normal on 16 transit systems like this. My apologies. I'm trying to 17 give you as much information as you need. 18 Q. Thank you. I can quite understand not undertaking 19 a survey of the whole route for the off-street section 20 from the airport to Haymarket. I just wondered about 21 the on-street section from Haymarket down to Newhaven. 22 Would it be good practice to survey the whole of the 23 on-street route? 24 A. Not in my experience. You would rely on C4 drawings 25 being given to you which would come from the SUCs. You 168 1 would identify the swept path you intend to use to that 2 SUC. He would then provide you C4 design information 3 showing you where those utilities were. 4 Where they were in a congested area, you would look 5 further. That's in my experience. 6 Q. Thank you. Can you just explain the reference to C4 7 drawings? 8 A. C4 is a level of design from the SUCs which give line 9 and level and within the realms of the statutory 10 obligations of measurement, where their assets would be 11 or should be to their latest or their last contractor's 12 as built drawing. 13 Q. Thank you. Now, again, sticking with the on-street 14 section from Haymarket down to Newhaven, you referred to 15 surveys being carried out at critical areas or critical 16 junctions. Are you able to just talk us through, 17 starting from either end of the route, I don't mind 18 which, identify those critical areas where surveys were 19 carried out? 20 A. I can't give you the names of them, no, but they would 21 all probably be the slit trenching works and the survey 22 works at each junction and roundabout, going down within 23 what was designated the swept path originally against 24 the original design drawings. 25 Q. So there would be a focus on road junctions and 169 1 roundabouts? 2 A. Yes. May I answer a little bit more than yes? Yes, on 3 the basis that normally, if there are distribution 4 systems coming down a main artery, like Leith Walk, the 5 utility companies do take the arteries and then move off 6 the junction. So that's where the slit trench work 7 would be, I think. 8 Q. Now, this may be a different type of survey, but we have 9 heard evidence about underground voids and cellars under 10 Princes Street and no doubt elsewhere on the road 11 network. Is the type of surveying we have been talking 12 about in respect of utilities, would that sort of survey 13 also be set up to detect things like underground voids 14 and cellars in Princes Street or is that a different 15 type of survey? 16 A. You would use different methods. You would use GRP or 17 different methods of survey. Again, the information 18 that we were provided, we would review that, and I think 19 at the requirement definition stage, we reviewed all the 20 information that we had in the data room. There were 21 identified areas of underground voids and we did set 22 a sub-consultancy survey GRP in those areas, and we did 23 detect in line with the information we were given, 24 underground works that we had to do design work, either 25 strengthen, take away to allow that swept path to be 170 1 determined. 2 CHAIR OF THE INQUIRY: You referred to GRP; is that ground 3 penetrating radar? 4 A. Yes, my Lord. 5 MR MACKENZIE: Excuse me if it's my ignorance, but you 6 mentioned firstly, we discussed the surveys I asked you 7 about from the utility diversion works, and then I asked 8 you separately about the sort of survey that may detect 9 voids or cellars under Princes Street, and you made 10 reference to GRP. I have divided the two types of 11 surveys in that way. In fact were they carried out at 12 the same time? 13 A. Two different sets of work would not -- unless we had to 14 take a temporary TRO to close an area or a junction, 15 would those two pieces of work have been done together? 16 Possibly. Am I aware that they were all done together? 17 No, I think they were done in two separate -- two 18 separate pieces of work. 19 CHAIR OF THE INQUIRY: Can I just clarify what you're saying 20 about the radar. Are you saying that the decision 21 whether or not to subcontract investigations of that 22 nature was dependent upon the information that you had 23 from the utility companies? 24 A. Both, my Lord. Utility companies and the drawings and 25 the information we were given in the data room to 171 1 provide our tender drawing. There was information there 2 that was possibly from history. Underground bunkers 3 from the war, there were tunnels, as we went under Leith 4 Walk, and what we wished to do was try and identify line 5 and level of these to see and make sure they did or they 6 did not interfere with the horizontal and vertical 7 alignment that we needed to keep clear for the tram 8 system coming through. 9 CHAIR OF THE INQUIRY: In a city such as Edinburgh, with its 10 historical connections and the awareness that there will 11 be all sorts of things under the ground, was any 12 consideration given to a full survey of the route, of 13 the on-street route, ignoring the off-street? A full 14 survey of that on-street route by ground penetrating 15 radar. 16 A. Not a full one, no. 17 CHAIR OF THE INQUIRY: Can you say why not? It's not 18 a criticism. 19 A. No, no, to do that you would literally have to go from 20 one end of the route on-street all the way through, and 21 cost-effectiveness of that against what you would find 22 would probably not be viable. 23 CHAIR OF THE INQUIRY: Thank you. 24 MR MACKENZIE: Again, sticking with this point, Mr Dolan, in 25 respect of the surveys for the purpose of trying to 172 1 detect utilities, I think I can almost see the logic 2 about restricting that to critical junctions and 3 roundabouts, but if one is seeking to detect underground 4 cellars or voids or whatever, they wouldn't be 5 restricted to particular junctions or roundabouts. So 6 in order to try and detect them, one would have thought 7 logically one would need to GRP the whole route, the 8 whole on-street route any way. 9 A. In my experience that's not done. 10 CHAIR OF THE INQUIRY: Some suggestion generally that 11 records of utility companies aren't always the best. 12 Are you happy with the records that you had? 13 A. In my experience there are good records, there are bad 14 records. You have to take the C4 information you are 15 given from the SUCs and work with it. If it's found not 16 to be correct, you would go back and discuss that with 17 the utility company, my Lord. 18 MR MACKENZIE: Thank you, my Lord. 19 Two documents I would like to look at, please, on 20 the same point. The first document will come up on the 21 screen. It's CEC01638353. 22 You didn't see this document at the time, but 23 I think it was sent to you by the Inquiry for the 24 purposes of your statement. 25 We will see the second email down is from Ray Dent, 173 1 who I think was in tie, and it's sent to Graeme Barclay, 2 who I think was the tie MUDFA manager or construction 3 director, and the date is 28 March 2007, and Mr Dent 4 starts off by saying: 5 "This is not intended to be an SDS bashing note, but 6 I am beginning to despair." 7 I'm interested then in the paragraph under "Site 8 Attendance and Design During Construction". Mr Dent 9 sets out: 10 "There appears to be an SDS tactic of avoiding doing 11 work now and accepting that it will have to be done 12 later where they expect to be paid, rather than use 13 current contract priced resources to do the job properly 14 now. Example, SDS want to do trial pits to 15 discover/confirm service positions/depth (despite the 16 fact that the contract and their own strategy document 17 requires that they 'investigate' where data is thought 18 not to be good)." 19 In bold text: 20 "SDS were going to do hundreds of trial pits, then 21 proposed tens of trial pits, then 3 and now zero. 22 All a strategy to minimise spend now and to use later 23 opportunity of doing the work with new money." 24 The bit in bold, "SDS were going to do hundreds of 25 trial pits", and down to zero, do you have any comment 174 1 on that suggestion? 2 A. I haven't from a point of view that I'm not aware of 3 other discussion with Ray regarding the hundreds of 4 trial pits, then proposed ten, then zero. I do remember 5 a discussion. 6 It wasn't regarding trial pits though. It was 7 regarding information on manholes positions and that 8 information should have been provided as by the utility 9 companies. If we would have had to have done trial 10 pits. What I don't understand is the -- they will be 11 paid later. We wouldn't have been paid later unless we 12 were asked to do something outside our contract. 13 I don't understand that, no, sorry. 14 Q. So in short, did SDS instruct trial pits as part of the 15 utility investigations? 16 A. Utility investigations, yes, for -- to identify 17 a clearance vertically and horizontally for a swept 18 path. 19 Q. And approximately when were these investigations carried 20 out? 21 A. They would have been done during or shortly after the 22 requirement definition stage, which would be late 2005 23 and during early 2006 when we were moving into the PD 24 stage. 25 Q. These trial pits were carried out at the critical 175 1 junctions roundabouts, as you explained earlier? 2 A. Yes, and if there was information, we were to seek to 3 ensure something that we would see in the preliminary 4 design. That information would have been requested 5 also. 6 Yes. 7 Q. Did you have any concerns at that time whether 8 a sufficient number of trial pits had been carried out 9 in the correct locations? 10 A. At that time, no, we were putting the contracts out to 11 do the survey work as the designing increased into the 12 preliminary design stage. 13 Q. Thank you. Just while we have this document, a separate 14 matter is a question of the designs for phase 1a. Can 15 we see the very bottom of this email. Mr Dent says: 16 "Despite the clear understanding that tie want SDS 17 to de-prioritise Section 3 designs ..." 18 That's the phase 1a -- 19 CHAIR OF THE INQUIRY: Phase 1b, isn't it? 20 MR MACKENZIE: Sorry, phase 1b, my Lord, thank you: 21 "... they continue to work on it as a priority on 22 the basis that tie have not instructed them otherwise. 23 Immediately it was known to tie that we should not..." 24 At the top of the page: 25 "... proceed at present with Phase 1b (Section 3) 176 1 ... Susan told SDS so, and later Ailsa wrote in similar 2 terms to SDS. Alan Dolan is now saying the SDS 3 recognise Ailsa's communication as informing but not 4 instructing them to prioritise other sections. Indeed 5 Alan proudly announced today that they are working hard 6 on Section 3 and would imminently deliver this design 7 (and PB are pushing Halcrow to that end) despite the 8 fact that tie don't need it." 9 Do you have any comments on what is set out there? 10 A. I haven't any comments regarding Ailsa's comments, but 11 what I can do is try and explain. The minute it was 12 indicated to us that tie wished us to close down certain 13 works in a certain area, it was cognisant and my design 14 teams would have asked for an instruction to do so such 15 that if there was to be any movement of personnel from 16 a design task, (a) it could be audited that they were 17 doing so. We did understand phase b was to take less 18 priority than 1a, and all I asked at that time was, 19 fine, would somebody, Ailsa, would somebody, Susan -- 20 I believe that Susan is Susan Clark because I remember 21 discussing this with Susan. And she said: Alan, you 22 know we don't want that work over there, but that's easy 23 to talk over a table. It's very difficult as a design 24 manager to take a verbal from somebody: please don't do 25 this, please do that. 177 1 All I asked for at that time was some form of audit 2 trail, variation instruction, to down tools in 3 a particular area. That wasn't given to me. 4 I think the word "proudly" is -- should not have 5 been used in that letter. I don't think I would have 6 proudly announced. 7 What I would have said is: we have a design team 8 working in Section 3. They are working in that at this 9 moment in time. I haven't got anything to move a design 10 team from A to B, because in the event that this verbal 11 instruction is rescinded and tomorrow you make 12 a different discussion with me and say: Alan, I'm sorry, 13 I told you to stop work. I move a design team, it is 14 not done overnight. There are design teams -- in 15 Section 3, if I can explain, the design team was in 16 Newcastle. We were the design team managers here. We 17 were looking after the interface with the client and 18 with outside parties. 19 We were passing information to our design teams in 20 Manchester and in Newcastle. We had Halcrow's design 21 team here doing work on-street in Section 1. For me to 22 move design teams, I objected to the word "proudly" 23 because that's not me. I would have discussed the 24 matter and asked for an instruction. The instruction 25 didn't come, and I obviously had been to a meeting to 178 1 say: I'm sorry, we still have a design team working in 2 that area. 3 I wouldn't have been proud for it because I'm 4 a design manager. If I've got guys who are doing wasted 5 work, I'm not happy about that because I'm spending my 6 own money. 7 That was a fixed price piece of work and I wouldn't 8 have been proud that we were doing work that should not 9 and was not required. It was required inside our 10 contract. It was required as a deliverable and we did 11 deliver it. 12 Q. I understand. So in short, your position is that you 13 required a formal instruction from tie to change what 14 was happening? Thank you. 15 Now, a separate document, please, CEC01540976. This 16 is back to the question of investigations. 17 Again, you won't have seen this particular document, 18 but it's the content I'm interested in. 19 What it is is an email from Sandra Cassels. If you 20 scroll to the very bottom of the page, we will see she's 21 a partner in DLA Piper Scotland LLP. 22 Back to the top of the page, please, we can see it's 23 dated 3 December 2011 to Andrew Fitchie, and copied into 24 Keith Kilburn. 25 Then in the second paragraph they are talking about: 179 1 "... strategy initially agreed with Tie was that DLA 2 were to review the legal basis of three potential claims 3 by Tie against SDS (dilapidation surveys, sewer surveys 4 and trial holes)." 5 Ms Cassels goes on to say: 6 "Each of these potential claims concerns an 7 interpretation of the scope of services contained in the 8 SDS Agreement and what services SDS were obliged to 9 perform. Tie are of the opinion that SDS were obliged 10 to carry out certain types of survey far greater in 11 scope than SDS actually carried out, whereas SDS are of 12 the opinion that they have fulfilled their obligations 13 under the SDS Agreement." 14 To pause there, Mr Dolan, were you ever aware of 15 there having been a dispute or disagreement between SDS 16 and tie as to the scope of the surveys that were to be 17 carried out? 18 A. Not in this detail, and I think Steve Reynolds took this 19 on board and -- can I just have a look at the date 20 again, please, on the letter? 21 Q. Yes. At the top of the page we see it's 22 3 December 2007. It's the context of claims. 23 A. Yes. I think Steve would have taken that on board, and 24 I think what he did, he took -- he took all of the SUC 25 Agreements. I remember Steve -- I don't remember this 180 1 particular piece of correspondence, but around that time 2 and around the claims discussions, Steve took all the 3 SUC Agreements that were originally in the data room. 4 They were unsigned, but we used them to understand where 5 the intended work was to be given to us prior to tender, 6 I think. And what our SDS interpretation of surveys was 7 to inform the design. 8 I believe Steve discussed this with Steven Bell. 9 I don't think after that discussion, this issue was 10 furthered. So whatever discussion was put in place 11 between the parties, I don't think that was ever pushed 12 through as a claim against us, because I think there was 13 an understanding once Steve checked the utility 14 documentation. I think he sat down with people from tie 15 and I don't think this issue went any further. 16 I don't recall it going any further. So I assume 17 that was closed out between Steve and, I would say at 18 that time -- that's why I was looking at the date. 19 Q. Thank you. 20 A. It would be -- it probably would have been Steven Bell 21 or -- it probably would have been the discussion with 22 Steven Bell at that time, after we reviewed all of the 23 utilities information and what they had to provide to 24 us, such that it informed our design such that we would 25 design in critical areas. 181 1 Q. I understand. 2 Just reading on in this email, it states: 3 "It was also noted by John that the invitation to 4 tender and SDS's offer was prescriptive in terms of the 5 types of surveys to be carried out, but that the scope 6 of services annexed to the SDS Agreement does not 7 include that level of information." 8 So, in short, if there was a dispute about this 9 matter, that may be a possible explanation for it? 10 A. It certainly may be, but I can't help you there because 11 I didn't help with the tender and I don't know which -- 12 if that was there or not. 13 Q. I understand. 14 A. But your reasoning there, it would be reasonable to 15 assume, yes. 16 Q. Presumably the answer to avoid such a dispute is to 17 specify clearly in the contract what's to be done? 18 A. I concur with that, yes. Yes. 19 Q. Thank you. 20 Now, that's that matter. The question of the 21 investigations. 22 I would like to move on, please. Can you give 23 a brief overview of the main problems that Parsons 24 experienced when trying to produce utilities design? 25 A. Manifold. Primarily, in my experience previous to 182 1 coming to Edinburgh, we take on board a fixed alignment 2 as best we can. We would prepare a strategy document 3 identifying the route, identifying the utilities in that 4 area, and as best we could, we would -- I think I used 5 information in my statement, KISS. Keep it simple and 6 keep it still, because the minute you start on a design, 7 be it the preliminary design stage or the detailed 8 design stage, the minute you start to move or wish to 9 move a tramstop or wish to add a tramstop in, move 10 a piece of asset which has a base inside or very close 11 to the external extremities, the information you will 12 have given to the SUCs, this is my swept path that 13 I require, it changes, and that kicks in a consolidated 14 piece of design work. 15 It's called configuration management. The minute 16 you move an asset, once you've determined what your keep 17 it still footprint is, you have to go through that 18 process. Check every one of the utilities. So that was 19 the basis of it. 20 I don't think the utility companies were brought on 21 board earlier, and as a strategy, I said I wasn't 22 involved in the tender. The strategy of giving the 23 designer the role that you give the designer here for 24 utilities is not one in the industry that I'm familiar 25 with that we have done elsewhere. It is new. It is -- 183 1 it's giving the designer a co-ordination role that 2 perhaps he can help with, but he can't command. 3 The only people who can command that are the people 4 who were the statutory authorities that can actually do 5 two things. Move the design themselves because the 6 assets belong to them, give information to a contractor 7 that they may move assets, but they need to be aware of 8 every movement that the infrastructure design team on an 9 ongoing basis is rolling with. 10 If they are outside this configuration management 11 regime, it's helpless until they receive the next set of 12 drawings showing the revision. 13 I think we took great -- we took great criticism 14 that SDS were giving drawings out time and time and time 15 again. It's because of this. 16 What the industry is used to, and what I'm used to 17 as a design team integrator, is preparing the swept 18 path, keep it still as best you can. There will always 19 be changes and you have to manage them. So you have to 20 understand. You go through configuration management. 21 But you give to the expert, the SUC authority, it's his 22 asset. He knows where it is. And if he doesn't, you've 23 given the asset manager, the owner, the responsibility 24 to -- it's your drawing, you're moving it. You take 25 responsibility if that drawing is wrong or not. And 184 1 move it out of that swept path. 2 That's the -- that's the template we use on other 3 projects. After I moved from this project straight down 4 to Manchester -- 5 Q. Mr Dolan? 6 A. It was automatic -- I'm trying to give you -- you can't 7 give a short answer to this, and I'm trying. 8 Q. Mr Dolan, I'm sorry to interrupt. I'm conscious that 9 I think we can finish your evidence by 4.30, but you 10 will have to give focused concise answers. So when 11 I ask what were the main difficulties experienced in 12 producing design, if you could just perhaps keep in 13 front of your mind focused, concise short answers? 14 A. My apologies. 15 Q. I apologise for interrupting. 16 A. I'm trying to give you as much information to explain 17 the difficulty factor in the contract being set up as it 18 was. It gave risk away from perhaps a management house 19 to a design house, when in fact the simple and cheapest 20 and easiest way was not to do it in that way. That's 21 the point I was trying to -- other models of transit 22 work don't do it like that. Why? Because it's 23 convoluted and you're giving the risk area into three 24 parties instead of you giving the risk area into one 25 party. Much cheaper. He owns the asset. He knows 185 1 where he's left it. You've told him where your swept 2 path is. He was the correct person to give that piece 3 of work to. 4 This contract didn't. Unfortunately it didn't, and 5 this is the evidence to say the difficulty factor grew 6 as the infrastructure kept continuously moving as the 7 design changes moved. We had to keep going back in 8 configuration management to reconsider the utility 9 drawings. 10 CHAIR OF THE INQUIRY: Can I just -- I realise what you said 11 about timing. But as far as the norm is concerned, 12 would the sequence be that you, as the designer, would 13 identify design swept path of the tram and give that 14 information to the utilities owner, as it were? And ask 15 them to move their utility -- 16 A. That's the model we -- sorry, my Lord, I didn't allow 17 you to finish. That's the model we're using in 18 Manchester and it works perfect. 19 CHAIR OF THE INQUIRY: How do you manage the situation where 20 obviously there are going to be a lot of different 21 utilities? So you have your swept path. Do you give 22 the plan to each of the utility companies and how do 23 they organise it so that the water board go in first and 24 the gas board go in second? Who arranges that? 25 A. The delivery partner that I'm working for in Manchester 186 1 have a team to assist each utility and that is 2 discussed. 3 It wasn't allowed here because it was in a different 4 form. The design model that we are using in Manchester 5 is different. We give each utility company: this is 6 where our swept path is, and then we go in combination 7 into each utility company, talk -- that wasn't allowed 8 inside this framework. It works in Manchester because 9 each utility company know how economically, 10 collectively, they can get in and out with a contractor 11 by doing certain works first, what works second, what 12 works third. 13 I know I'm taking time, but it's important that this 14 is understood. 15 One of the problems with the utilities section of 16 work was even after the design, unfortunately what tie 17 missed in their understanding of what they were trying 18 to do, there are certain utility companies, the large 19 boys, Mr Water, but in particular Mr Telecom, he was 20 probably the only SUC that stuck exactly to his 21 agreement, gave us exactly the C4 drawings that we were 22 requiring. 23 Not only that, I believe tie missed the fact that we 24 can draw it on a drawing, we can show it out of the 25 swept path. It went into the tie programme. What tie 187 1 missed, unfortunately, was when tie went back to that 2 utility company, said: yes, you can move a piece of duct 3 for me, or you can move a piece of concrete for me; but 4 it took a year after the designs were complete for tie 5 to integrate with telecom and get those utilities moved, 6 because they were the only people physically, by law, 7 that could actually make the connections. 8 We had that same situation with Scottish Power, and 9 to some degree, not so much with Scottish Water or gas, 10 because they have contractors that do that work. 11 But it was -- it wasn't a well thought out plan. 12 I didn't want to give personal -- personal opinion, but 13 from a lessons learned, moving forward, I know you're 14 going into the second phase soon of a tram system. It 15 would not be right for a lessons learned to be 16 understood. That section of thought process for 17 utilities didn't work. We were inside it. I had to 18 make it work for my company because we had a contract to 19 complete. 20 But the model was wrong. Your swept path is given 21 to the utility companies. Give them the opportunity to 22 move their assets, because if it's wrong, if it's in the 23 wrong position, if it's the wrong size, if it's falling 24 apart, the minute you open the trench, it's their 25 responsibility. They are the only people who can 188 1 actually make that call. A designer cannot make that 2 call. All I can do is show a line on a drawing, on 3 a CSD drawing -- sorry, combined services drawing is 4 showing water supply, electricity supply, telecoms 5 supply. I can give that on a drawing, but I cannot tell 6 you if the piece of asset that's being moved is in good 7 condition, bad condition. 8 The only person who can do that is the utility 9 company himself. 10 CHAIR OF THE INQUIRY: Thank you. 11 MR MACKENZIE: Thank you. I understand. 12 A. I'm sorry I'm taking a long time. This is the crux 13 of -- 14 CHAIR OF THE INQUIRY: Please don't -- 15 A. And the thought process behind this needs to be 16 understood. 17 CHAIR OF THE INQUIRY: Mr Dolan, please don't apologise. 18 I'm interested to know what the way forward might be. 19 A. I think the model used on the second part of the tram 20 system will be more akin to what I have just described. 21 I don't know, but I hope so. 22 MR MACKENZIE: That's a very helpful explanation, thank you. 23 I would like to turn now, please, to two documents 24 which I think may illustrate the sort of problems that 25 were encountered. 189 1 The first document will come up on screen. It's 2 CEC01800436. If we go to the last page, please, the 3 copy is not great. If we go to the last page, we can, 4 I think, see your signature and name there, Mr Dolan. 5 Do you see that? Back to the first page, please. 6 We see the date is 28 February 2007. 7 There's a lot of information in the letter. I don't 8 propose to read it all out, but in short, 9 could I perhaps ask you just to take a minute to read 10 that first page and confirm if this is a good 11 illustration of the sorts of problems that arose. 12 A. It is. It is. 13 Q. Do you recognise the letter in fact? 14 A. Yes. It brings in what I was describing where -- keep 15 it still. If you're moving it, understand why you're 16 moving it, and then understand the implications. 17 Q. For example, in the middle paragraph: 18 "SDS also express concern that the utilities team at 19 tie appear to be attempting to develop an early 20 programme of utility diversion works for MUDFA, for 21 early implementation (in road), in complete denial of 22 the consequence of utility apparatus diversion designs 23 that both our parties are developing and delivering 24 being out of sequence with the development of the 25 finalised roads and OLE design on which it should be 190 1 based." 2 Just pausing here, what of course happened was that 3 the procurement strategy was for an early MUDFA contract 4 to divert the utility works in advance. 5 Given all design is interrelated, it seems to an 6 outsider quite a hard thing to do, to on the one hand 7 have an early utility diversions based on utility 8 designs, but on the other hand, still be designing the 9 rest of the scheme, including the roads and positionings 10 of various things. It seems quite hard to do utilities 11 in advance while still designing everything else at the 12 same time; is that a fair point? 13 A. It is fair, and I'll answer from a point of view of 14 experience. 15 You can do that well. A bit later in my statement 16 I said only if you use the KISS principle of design. 17 Keep it simple. Keep it still. Don't do this unless 18 you've got an alignment that you already know has got 19 royal assent, has got the buy-in of all the stakeholders 20 that you will not be going through many, many redesigns 21 and thought processes. 22 If you're out in the sticks, and it doesn't matter 23 whether your alignment changes one metre to the left or 24 two metres to the right, it's not important. If you're in 25 the middle of a street process that we have here, it 191 1 wasn't a good strategy in my opinion. Would I have put 2 it forward? No. If that's the answer you're looking 3 for. 4 Q. Thank you. So in short, the more changes one has, the 5 more problems that will arise, and the more changes to 6 the other design, the more changes that will cause to 7 the utilities design; is that -- 8 A. And that configuration loop it brings in. Way, way, way 9 much pressure on the design teams that you've got, 10 because you've sent them three weeks ago an alignment. 11 You then go through a redesign for a reason. It may be 12 a charrette. It may be a change, a tramstop move, 13 because somebody wishes it for a particular reason. 14 Use this strategy where your design is already 15 cemented, not when you're starting off. And if you're 16 going to use that, make sure you programme correctly 17 a time when that MUDFA contract is going to come in. 18 Don't put it up front of works unless you have cemented. 19 Keep it simple. The major one I use is keep it still. 20 Q. Thank you. Over the page to page 2, please. You set 21 out in the five points, you say: 22 "This approach adopted by tie will inevitably have 23 the following consequences:" 24 (i) Delay to the SUCs' approval of the SDS’ Detailed 25 Design submissions; (ii) A very negative response from 192 1 the SUCs when they discover that they have been 2 requested to formally approve or they have already 3 approved submissions only for them to change later and 4 require re-approval. 5 (iii) The potential for costly re-work by MUDFA, 6 et cetera; and (iv) The potential for MUDFA to claim 7 standing time from tie, et cetera; and (v) A programme 8 mismatch between tie's programme for execution of MUDFA 9 works and SDS' ability to deliver updated IFC drawings 10 to MUDFA. 11 I think in short your position would be that these 12 matters could be avoided by following your adage of keep 13 it still, keep it simple? 14 A. Exactly. 15 Q. I understand. 16 A. Exactly. 17 Q. Then -- 18 A. I wasn't trying to teach anybody to suck eggs. I said 19 later in my statement also, lessons learned. It's 20 a lesson to learn. You can use this in its right 21 environment. To do it in the wrong environment, don't 22 do it. That's a designer's perspective. 23 Q. Thank you. Over the page at page 3, please. Again, 24 I think the initial five bullet points address the 25 problem of changes. Then underneath that, you say: 193 1 "Our prime concern is that tie are aware of the 2 consequences due to the separation that exists between 3 their project management of SDS' utilities design 4 their project management of the rest of SDS' 5 infrastructure design. More importantly, SDS holds the 6 view that we cannot be held liable for consequential 7 affects resulting from:" 8 The three matters we can read for ourselves there. 9 Thank you. 10 A. That's the configuration management loop that I was 11 describing earlier. Once you've moved something, you've 12 got to go back over, and we were going back to the 13 utility companies and, to be honest, they were getting 14 a little bit fed up with a designer walking in saying: 15 I know what I asked you three weeks ago, but can we just 16 move it to the left a little or can we move it to the 17 right a little; and you break down the relationship with 18 the utility companies that you actually know what you're 19 doing. 20 Q. It could be a never-ending cycle? 21 A. It is -- on that project it was. 22 Q. The second document, please, is PBH00003588. We can see 23 this is a letter. If we blow up the bottom left-hand 24 corner, please, dated 17 April 2007. It's from 25 Glazebrook at tie. Look at the last page, please, 194 1 page 5. I think we can see again your name and 2 signature there, Mr Dolan; is that correct? 3 A. That's my signature. 4 Q. Back to page 1, please. Again, I don't have time to 5 read it all. 6 A. It's okay. 7 Q. We can see it's headed "Utilities/MUDFA Programme", and 8 at the bottom of the page, states: 9 "We would advise tie that the late submission of 10 Sections 1A and 3B were due primarily to the late issue 11 (by tie) of C4 Notices to each SUC and the failure of 12 tie to complete Agreements and commercial negotiations 13 with each SUC. SDS has been unable to procure 14 sufficient and timely information from the SUCs in order 15 to further the detail design in accordance with the 16 agreed design programme between tie and SDS." 17 Is that an indication of the sort of problems you 18 experienced at that time? 19 A. Exactly so. 20 Q. Thank you. 21 A. And you have to as a designer, from a audit trail point 22 of view, it may not be a nice letter for my client to 23 have received. But again, it's lessons learned. You're 24 telling your client, if this is going to continue to 25 happen, the programme is only going to move to the 195 1 right. You've got to get it right. Keep it simple. 2 Keep it still. Once you've got an alignment, stay with 3 it as best you can. There will always be reasons, 4 technical reasons, why we have got to move a pole, but 5 not to go back and try to redesign something to look 6 better into the environment. 7 If you're going to do that, take a year before you 8 start to get it right. And then give it to a designer. 9 I think that's the lesson to be learned here. 10 Q. Yes. We have also, I think, heard evidence from other 11 witnesses that in general when designing something, it's 12 good practice to go through various stages, and at the 13 end of each stage or phase to stop and agree a baseline. 14 So, for example, agree a requirements definition stage, 15 agree the deliverables, and before then moving on to the 16 next stage and so on. Presumably if that sort of 17 approach is followed, that may then help the utilities 18 design if there is a fixed baseline to work from? 19 A. It is, and if that was put into the programme, it would 20 have helped, but that was not the case here. 21 Q. I understand. One last point in this letter, if we 22 scroll down a little bit more on this page we're looking 23 at, please, can we see at the second last sentence in 24 the main paragraph at the bottom we're looking at: 25 "At the end of the day the SUC approval period will 196 1 be whatever they decide and we have no option but to go 2 along with it. As this has become apparent, updates to 3 the SDS design programme have reflected this situation 4 and will continue to do so." 5 So is that really then the heart of the problem in 6 relation to the SUCs, that the approval period would be 7 a matter for them? 8 A. It is, as a rule of thumb, unless you put it into your 9 contract that -- the contract between tie and the SUC, 10 if they make an agreement and that there is a cost 11 associated with that agreement, and it is 20 business 12 days, my experience, if you put the designs to them in 13 the right way, in the right form, in the right programme 14 terms, such that they can review it, they know it's 15 coming, they know it's not going to change in three 16 weeks' time, they see it once. 17 The utility companies, they're conglomerates, but 18 the engineers that they've got are specialists and they 19 can do this. You keep going back, second month, third 20 month, fourth month, with the same set of drawings moved 21 from a position, and when they ask you why this has 22 moved, you give them an answer that somebody wished to 23 move a tramstop 300 ml or whatever, they don't take 24 kindly to it, then they say: I have looked at this 25 drawing once, it will go to the back of the queue. 197 1 You lose credibility with two engineers. The 2 designer can go, get a good relationship going, and 3 because of this, it falls down. 4 Certainly with Scottish Water, definitely with 5 Telecom, we didn't get a chance. They just stuck to it 6 and said: this is what you are getting. It's 40 weeks. 7 If you want me to look at that again, and they stuck to 8 that, and they absolutely annihilated the tie programme, 9 because of this event. 10 So yes. 11 Q. Now, I think the two companies you mentioned there were 12 Scottish Water and -- was it the Telecoms? 13 A. Telecom, Scottish Telecom. 14 Q. Were they the two SUC groups who you had the most 15 difficulty with in terms of delay? 16 A. To be honest, Scottish Water were very, very helpful in 17 relationship to seeing things time and time again, they 18 didn't enjoy that part of it. 19 I think the agreement with Scottish Water was later 20 agreed with tie, which didn't help us at the beginning 21 of the project, because there was a designer walking in, 22 trying to get drawings approved without an agreement in 23 place between two parties that we were working for one 24 party. 25 Telecom, completely different. We gave them an 198 1 alignment. They set off. They gave what I would say is 2 a reasonable C4, and they stuck to it. If there was an 3 amendment, it was difficult to get them to re-look at 4 it. They are a massive organisation, and if they do 5 a design, it isn't just a design dropping underneath 6 a swept path. You may find with telecom, they would 7 have to go back, three or four or even five major 8 manholes back, to make the design work to do whatever we 9 were doing, to change it. It had great consequences on 10 programme, yes. 11 Q. Thank you. There are two final matters in relation to 12 MUDFA I would like to ask you about, please. The first 13 one is to go back to your statement at page 23, if 14 I may. At page 23 of your statement, in question 27, at 15 the bottom half of the page, this refers to a letter of 16 April 2007 from Graeme Barclay, et cetera. Then your 17 reply in May 2007 stating it was unfortunate that the 18 MUDFA construction implementation programme started in 19 the one area where tie had placed the SDS infrastructure 20 design on stop. 21 Do you remember what this issue was? 22 A. Yes. Yes, I do. 23 Q. Can you briefly explain it? 24 A. I think earlier on you asked me about why the contract 25 didn't work. There were silos within tie. They had 199 1 some -- Graeme Barclay was a good solid engineer and he 2 tried his best to move a contract, but Graeme was 3 looking after the utilities and the MUDFA contract. 4 Susan had told me to stop work in a certain area, only 5 to find that Graeme was moving forward within tie, with 6 the risk and trade-off programme. 7 The risk and trade-off programme, if everything had 8 been still, it would have meant a contractor and tie 9 making a decision to do works before perhaps the 10 designer was happy. The utility company would be -- 11 have to be happy to have that utility and asset moved. 12 What Graeme didn't understand, and I tried to 13 explain verbally and when he wouldn't accept the verbal 14 discussion, I asked him for evidence of a stop notice 15 being recognised by Susan, and Graeme, you are now 16 making a utility diversion under a risk and trade-off 17 set of drawings without taking cognisance of the Infraco 18 changes in design. 19 I was aware because all of the three sections of 20 design came through me. I was aware that in that 21 particular area where he had chosen to start his risk 22 and trade-off and take a chance at getting the MUDFA 23 programme going, getting them to install works, I was 24 aware that the alignment had potential of not being 25 corrected at risk and trade-off drawing, and I said no 200 1 to him. I said (a) I haven't got time to review this, 2 I'm doing other work, but what I can tell you is you are 3 starting in the wrong area because I have just been told 4 down tools in that area. We are going to change the 5 alignment. 6 I believe this letter refers to the bottom of 7 Constitution Street going on to Ocean Drive. 8 Q. I see. So in short, what's required is a joined-up 9 approach by project manager? 10 A. Definitely. Susan wasn't understanding what Graeme was 11 doing. Graeme was trying to do something to move the 12 job forward. I applaud him, but you can only do that if 13 you've got cognisance of the whole design. The only 14 person that has that or had that at the time was the 15 SDS, because we were watching and moving the design. We 16 were doing the configuration management. If this moves, 17 it means that moves. And Graeme was trying to get 18 something going, and he was going to change a utility 19 when in fact the alignment was going to change. 20 So he could have been putting it in the right place, 21 but it would have been luck. It wouldn't have been good 22 design configuration management. He would have been at 23 large risk of making mistakes. 24 He was asking me to take time out of a precious 25 design schedule I was trying to keep, which I didn't 201 1 keep, and he was putting more work on my designers to 2 check things and we knew that that wasn't going to -- 3 that wasn't going to work. 4 Q. Now -- 5 A. I remember -- this is Constitution Street, I know it is. 6 Bottom of Constitution Street going into Ocean Drive. 7 Q. Thank you. The last matter in relation to MUDFA I would 8 like to ask you about, I have seen a reference in the 9 documents to trial holes having been dug in the 10 on-street sections in late 2007 and early 2008, very 11 shortly before the commencement of the on-street utility 12 diversion construction works. 13 A. Yes. 14 Q. Is that something you recollect? 15 A. Yes. To use the words "trial holes", I don't know 16 whether Duncan has given evidence yet, but in discussion 17 with CEC, Duncan was highlighting, in the past, there 18 have been fall-ins of the road, and as a strategy, 19 a good designer would take on board, it would be normal 20 to do this. As the road was taken up, we had an 21 infrastructure design which provided a tram system that 22 could have void spanning capability. 23 That void spanning capability had a dimension facet 24 to it. In the event that poor soil condition by old 25 broken drains or previous water leaks from 202 1 Scottish Water had taken the underneath away, we put 2 forward to tie and the informed contractors that were 3 pricing the job, we would have a rolling contract, and 4 we would have what Duncan called a suite of designs for 5 road make-up to protect this void spanning of our design 6 of tram, of tramway, and it was a metre in either 7 direction. 8 So if we found failed pieces of road underneath when 9 the Infraco came and took their soil away, they did soil 10 sampling, these trial pits that you refer to, we would 11 use the suite of road make-up in agreement that we 12 discussed with Duncan, because he was aware prior to our 13 time we didn't know Edinburgh. Duncan knew Edinburgh 14 very well. He knew where road weaknesses were, he knew 15 where roads were repaired years ago, and our interface 16 with him was particularly for that, because we need to 17 know history if there have been any weaknesses. 18 And those trial trenching that you're talking about 19 is as we roll the Infraco soil away, check what's 20 underneath, soil sample it, not only for failure of soil 21 condition; we were also asked to take on board 22 environmental issues. So the soil was tested for 23 contamination as well. Very little contamination was 24 found as we rolled away. We didn't find any brown 25 condition. 203 1 That's the slit trenching that's referred to, 2 I believe. 3 Q. So these trial holes, is it Duncan Fraser? 4 A. Duncan Fraser. He took us round. He took me round one 5 evening and we went to every area that he knew has been 6 in the past some form of -- 7 Q. In short, was the purpose of these trial holes to inform 8 the utility works or did they have a different purpose? 9 A. At that time it was to inform soil condition underneath 10 to support the Infraco design, and confirm that the 11 strategy of the one metre coverage could hold, and we came 12 up with a suite of drawings. If the soil trenching and 13 if the soil testing gave us a bad condition, we knew 14 immediately how the Infraco should deal with it. We 15 didn't have to take it away, do a design, and come back 16 to him. We already had the suite of drawings. We 17 discussed this with Duncan, and it was a strategy that 18 CEC were happy that we were taking on board, and the 19 soil trenching was for that information. 20 Q. So were these trial holes a way of testing whether the 21 proposed trackform design by SDS would work? 22 A. Not would work, no. Our design would work within 23 a design criteria. If we found that design criteria, if 24 that chasm underneath the road was larger, that piece of 25 road area was taken away and prepared better such that 204 1 the trackform that was designed with the one metre 2 criteria, we could span one metre on trackform if you had 3 a void underneath it. Anything larger than that, we 4 strengthened the area, and one area of good work with 5 Duncan and his team was coming up and discussing where 6 the weak areas were known to be from history, and 7 obviously we took cognisance of that, and did work in 8 that area. 9 But as a strategy, as the whole of the work that was 10 taken away, the soil was tested, ensured that it met the 11 criteria, and if it didn't, it was taken away, treated, 12 strengthened, such that the one metre span could work. 13 MR MACKENZIE: Thank you. My Lord, I'm content to take much 14 of Mr Dolan's written statement as read. There are two 15 final questions I would like to ask, which I think may 16 take about five minutes. 17 CHAIR OF THE INQUIRY: Yes. 18 MR MACKENZIE: If I may. Thank you. 19 A. I'm sorry for taking my time. I want the point to get 20 over. My apologies. 21 CHAIR OF THE INQUIRY: We were late in taking you, Mr Dolan, 22 because of activities earlier. 23 MR MACKENZIE: Thank you. 24 One matter I should ask you about, Mr Dolan. 25 Trudi Craggs. Do you remember her? She gave evidence 205 1 that changes had been made to the design for the tram 2 project in late 2005 during the parliamentary process. 3 That these changes had not been reflected in the SDS 4 contract signed in September 2005, and in fact had not 5 been taken into account in the design until she had had 6 what she referred to as a brain dump session with 7 Parsons designers around March/April 2006 and explained 8 these parliamentary changes which seemed to come as news 9 to Parsons. 10 Do you have any recollection of that? 11 A. Yes, I do. If you looked at the original contract that 12 was signed, I think it was signed round about 13 September 2005. It had a design programme in it. 14 The PD design was supposed to kick off January and 15 finish -- sorry, the PD design was supposed to be 16 started in 2005, I think, and carry through to 2006. We 17 didn't get royal assent until March or April 2006. By 18 then we were two third of the way through our PD design, 19 PD -- we called it PD1 eventually, but it was the 20 preliminary design. 21 Trudi came back. She'd satisfied royal assent and 22 she'd got rid of all the objections. Trudi was an 23 absolute fantastic servant of CEC. She did brilliant. 24 She came back. She gave us a brain dump of 25 everything that they'd discussed between going in and 206 1 coming out, but she gave us that information in round 2 about 1 April 2006. 3 We were two thirds of the way through our PD. There 4 were changes. Haymarket, airport, Gogar shopping 5 centre. I can't remember them all offhand, but if you 6 were to show me the documents, I could tell you where 7 they were. 8 She gave us the brain dump. We took it on board for 9 the last two months of our preliminary design stage as 10 best we could. 11 There was something called PD2 that you would find 12 in certain correspondence. PD2 was the wash-up of the 13 information that Trudi gave and any changes between us 14 starting PD, which was round about January 2006, and us 15 completing in June 2006. Any comments that were taken 16 on board during that period, we fastened into a PD2. 17 But our PD was delivered 2006. 18 We waited 21 days, and we took as much cognisance 19 that we could from Trudi on the brain dump between her 20 coming in and giving us the brain dump between April and 21 June. The rest was carried out during the year, and we 22 said we would take all changes into the detailed design 23 that we hadn't on PD1. But we actually called it PD2, 24 and we carried that on during June 2006 to the end. 25 Unfortunately the charrettes flew in round about 207 1 July and took all of the design time. 2 CHAIR OF THE INQUIRY: I think the charrettes are 3 a different issue. 4 A. I'm just giving you history of that time frame. But 5 Trudi did a brilliant job in conveying to us that 6 information. Should it have been given to use in 7 a better form from tie? Perhaps. But Trudi understood 8 and delivered it to us, and we were thankful for it 9 because we were designing on old drawings. We did get 10 updated drawings from tie, but not the true closure on 11 royal assent drawings. 12 MR MACKENZIE: I understand, thank you. 13 The final point I should put to you. If we bring 14 the document up, it's CEC02083973. We are now jumping 15 forward to 2011. You will remember that the Mar Hall 16 mediation took place in March 2011. And this document 17 we're about to see is reporting on progress shortly 18 after Mar Hall. 19 I don't think you've seen this before. We'll see 20 it's headed "REPORT ON PROGRESS SINCE COMPLETION OF 21 HEADS OF TERMS TO 8 APRIL 2011". It's been prepared by 22 Colin Smith of HG Consulting and reviewed by 23 Martin Foerder. 24 If we could jump, please, to page 118, we can see 25 this is an email from Andy Conway of the Council, dated 208 1 5 April 2011, headed "Tram - CEC Approvals". If we 2 look at the table and scroll down a little, please, we 3 can see that the open technical approval comments as at 4 24 March 2011 were 2,782, and within about two weeks, by 5 5 April 2011, they had been reduced to 85. Do you know 6 why that was the case? 7 A. Yes. I was party to the workload of what was done here, 8 and it was, as far as I'm concerned, it was a brilliant 9 effort between four parties: CEC's technical guys, SDS, 10 Bilfinger Berger, their input, and one guy that I have 11 not seen any letters from, Damian Sharp. Damian was 12 giving tie assistance in trying to close this out, and 13 what we did, we got the design team from SDS, the 14 technical team from Andy Conway. We stuck ourselves in 15 Bilfinger Berger's site office, and we just worked 16 through it and ground it. 17 We worked very, very, very collaboratively 18 eventually with CEC to reduce this, and it looks a lot 19 to start with, open technical approval comments, but if 20 I can help you by saying a lot of good work was done, 21 but the numbers may be a little bit misleading. 22 If you have a technical comment on a tramstop, and 23 it says this has the wrong dimension from here, it has 24 it the number of times that you have the number of 25 tramstops. 209 1 So there might be 2,782, but the minute you sit down 2 with CEC and understand that this 500 dimension should 3 be 520, the number of tramstops you've got, you change 4 one drawing. You configuration manage this 20-odd 5 times, you take away not one comment. You take 27 at 6 a time. 7 But Damian, Andy Conway's boys, my design team, and 8 to some degree Bilfinger Berger where they had input to 9 help, we just crashed it at the site and through a very 10 short period -- I don't know what period of time that 11 is, but a lot of good work was done, and that was 12 probably the best work that CEC and the SDS did 13 together. 14 Q. Why wasn't this done before? If it could have been done 15 this quickly, why wasn't it done earlier? 16 A. My answer I have to give, I think, is tie kept us at 17 a distance early on. And the minute we struck up the 18 relationship with CEC and their technical team -- and at 19 that time it was critical to the project and everybody 20 knew it. Even CEC knew that something special had to 21 happen. Damian put together: this is what we're going 22 to do. He was working on behalf of tie. I think Duncan 23 gave his chaps: guys, we've got to get this done, and my 24 design team and Andy Conway's technical team, we just 25 rammed through it. To be honest, they did a brilliant 210 1 job. 2 Q. Mr Sharp had told us in his evidence that he thought it 3 was a tactical decision by the consortium not to close 4 these matters out while the parties were in dispute, 5 despite the fact that these matters were capable of 6 being closed out reasonably quickly and easily once 7 agreement had been reached on the underlying dispute. 8 Do you have any comments on that suggestion? 9 A. I don't, but certainly from the SDS side we wanted rid 10 of those comments. We would have done anything, you 11 know, in our gift to try and get them down to less than 12 100 at that date because all our drawings were out there 13 and we were at risk at having fault. But they were tiny 14 comments that just had to be put together. They just 15 needed effort. 16 But certainly on SDS's side, I don't believe -- 17 I can't speak for BBS, but I don't believe so. There 18 was no evidence to me that that was the case. Certainly 19 from an SDS point of view, we wanted rid of those 20 comments and we wanted the job finished. 21 I didn't want to be there any longer. I wanted to 22 close that job out. 23 MR MACKENZIE: Thank you, Mr Dolan. As I say, you have 24 provided a helpful statement. I'm happy to take the 25 other matters in your statement as read. So I have no 211 1 further questions. 2 CHAIR OF THE INQUIRY: There are no questions from any 3 parties. 4 Thank you, Mr Dolan. Technically you're still under 5 citation and you could be recalled if any issues arise. 6 Hopefully that won't happen. Thank you very much. 7 A. Thank you very much. Thank you. 8 (The witness withdrew) 9 (4.40 pm) 10 (The hearing adjourned until Friday, 13 October 2017 at 11 9.30 am) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 212 1 INDEX 2 PAGE 3 MR STEVE REYNOLDS (continued) ........................1 4 5 Examination by MR MACKENZIE (continued) .......1 6 7 MR ALAN DOLAN (sworn) ..............................164 8 9 Examination by MR MACKENZIE .................164 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 213