1 Wednesday, 25 October 2017 2 (9.30 am) 3 MR STEVEN BELL (continued) 4 CHAIR OF THE INQUIRY: Good morning. You're still under 5 oath, Mr Bell. 6 Examination by MR MACKENZIE (continued) 7 MR MACKENZIE: Good morning. 8 A. Good morning. 9 Q. I would like to move on the question of the risk 10 allowance at contract close. Is that something you were 11 involved in or had any responsibilities for? 12 A. Directly we reviewed -- I reviewed the risk allowance 13 and one of my team, Susan Clark, dealt with the risk 14 management on a day-to-day basis using her risk manager. 15 That was Mr Mark Hamill. 16 Q. Did Susan Clark deal with that in terms of the procedure 17 of that or the substance of it? 18 A. She dealt with the process and she contributed to the 19 key elements, particularly on scheduling programme. 20 Q. Would it be fair to say that as Tram Project Director, 21 you would have required to have satisfied yourself at 22 contract close that the risk allowance was adequate? 23 A. Yes. I did review the risk allowance and the headings 24 that the items were identified against, in conjunction 25 with my colleagues as well. 1 1 Q. When exactly did that take place? 2 A. We reviewed it on a number of occasions between January 3 and May 2008, and certainly in the run-up to contract 4 close in May 2008. 5 Q. Who else was involved in that review exercise? 6 A. I would recall Mark Hamill as the Risk Manager, and 7 Susan certainly contributed from a programme 8 perspective. Dennis Murray, my Commercial Director, 9 myself, and Stewart McGarrity or his deputy, 10 Gregor Roberts, I'm pretty sure were also involved with 11 the finance leads. 12 Q. From what you have described, that sounds like a fairly 13 regular process of reviewing the risk allowance; is that 14 correct? 15 A. We dealt with it on a monthly or bimonthly basis, but we 16 particularly looked at matters when there was more 17 significant potential change during that contract close 18 period. So if there was a suggestion that a price 19 movement or a particular term was intended to be 20 amended, that was usually considered at that time, not 21 necessarily by all of those people, but certainly by the 22 relevant ones. 23 Q. So between, say, January and contract close in May, how 24 many of these reviews took place, roughly? 25 A. I would -- I would -- I certainly recall undertaking one 2 1 during March 2008, and we did undertake a review, 2 and I certainly reviewed the final version of that in 3 May 2008 with input from some of my colleagues. 4 Q. So you talk about a review in March 2008, and then you 5 reviewed the final version in May 2008. Did any further 6 reviews take place between the review in March and the 7 review in May? 8 A. There may well have been detailed risk assessment 9 sessions that Mark ran individually with some of the 10 project managers or individuals in the lead areas. That 11 was an ongoing process that he may have described to you 12 or to the Inquiry. And that continued throughout the 13 duration of my time at tie as a regular review process. 14 Q. You're quite sure you carried out a review, the final 15 version in May 2008? 16 A. I reviewed the consolidated numbers that were proposed 17 for risk in total in May 2008, yes. 18 Q. Just for the avoidance of doubt, did any of your 19 colleagues take part in that May 2008 review? 20 A. I'm sure they reviewed it. I can only recall myself 21 sitting and reviewing the numbers and the Schedule. I'm 22 sure they would have reviewed it in addition. 23 Q. Do you recall whether you suggested or instructed any 24 changes as a result of your review in May 2008? 25 A. I recall that we had made some amendments in -- I can't 3 1 remember if it was late April or early May 2008, 2 associated with roads reconstructions. And also to 3 finalise the -- to finalise the Project Control Budget. 4 However, that may have been -- that particular session 5 may have been after contract close. 6 Q. When you talked about the review you carried out in 7 May 2008, just to be quite clear, you're referring to 8 a review before contract close? 9 A. In relation to the likes of roads reconstruction items, 10 yes, I did, yes, reviewed that. 11 Q. I think you -- 12 CHAIR OF THE INQUIRY: Was it restricted to roads? 13 A. No. 14 CHAIR OF THE INQUIRY: It was a general review of risk? 15 A. Yes, the risk elements, including the non-Infraco 16 elements. So it included matters for MUDFA, for 17 example, and matters that were reserved for the Council. 18 Q. We also looked yesterday at Schedule 4 of the Infraco 19 contract. I think there were about 43 Pricing 20 Assumptions set out there, any one of which had the 21 potential to result in a Notified Departure, and I think 22 you explained yesterday that you did expect certain 23 Notified Departures after contract close. 24 I think you also yesterday explained that you had 25 reviewed the risk allowance in light of the expected or 4 1 anticipated Notified Departures. Is that correct? 2 A. Particularly in relation to Schedule, yes, but also 3 against all of the Pricing Assumption headings, we 4 reviewed those items, yes. 5 Q. So just to be quite clear, are you saying then that you 6 went through the risk allowance with reference to the 7 Pricing Assumptions in Schedule 4 to check that the risk 8 allowance was adequate? 9 A. I reviewed the Pricing Assumptions and the items 10 I considered were -- had the potential to have 11 a Notified Departure impact, and satisfied myself that 12 I considered the total risk allowance was adequate. 13 Q. That exercise you just described, when did that take 14 place? 15 A. I would suggest probably in the first or second week of 16 May. I would have looked at certain of the individual 17 elements before that as particular elements were 18 discussed at previous agreements. So I think when we 19 discussed some of the Schedule Part 4 elements in 20 March 2008, and talked about things like the V26 to V28 21 SDS design change, or a specific where we did some work 22 on roads reconstruction options, we certainly -- and the 23 commercial team did some analysis of that, and I think 24 we incorporated that between May and April -- sorry, 25 between March and April, and then certainly there was 5 1 an entry in there, as I recall, for the May 2008 2 conclusion. 3 Q. Just again to be quite clear, when you said in the first 4 or second week of May, you have reviewed the Pricing 5 Assumptions against the risk allowance, did that result 6 in any changes to the risk allowance? 7 A. In -- in total terms, no. I think we re-allocated some 8 of the risks and we certainly formalised that in 9 a session with Mark and others in late May 2008. 10 Q. I'm interested in before contract close. So when you 11 carried out the review in the first or second week of 12 May, did that result in any changes to the risk 13 allowance? 14 A. I don't believe it changed the totals, we understood 15 where the individual entry areas were intended to be 16 adjusted, and I don't think we reran the quantified risk 17 analysis at that point. 18 Q. Why not? 19 A. We -- I think we'd considered that the adjustments that 20 were being made were appropriate and discrete to the 21 entries, and from recollection, the overall adjustment 22 was circa GBP1 million, GBP1.5 million. 23 Q. I would like now, please, to go to look at the actual 24 figure of the risk allowance at contract close and try 25 and explore how that was made up. I think the best 6 1 starting point is the Close Report. If we can go to 2 that, please, it's CEC01338853. If we can go to page 5, 3 please. We can see in the middle of the page, we can 4 perhaps blow up "Risk Allowance at Financial Close", 5 32.3 million. So that's the figure to bear in mind just 6 now. 7 We see underneath that there that there has been 8 a further round of negotiations, and it then explains: 9 "The detail behind the final position reached has 10 been documented separately for CEC." 11 I will come back to that. I think there was one 12 final adjustment to this figure, but just to take it 13 step by step, bear in mind the GBP32.3 million. We can 14 then put that to one side. 15 I would like then, please, to go to a document, 16 CEC01245223. If we look at the second half of the 17 document, we will see an email from Stewart McGarrity of 18 15 April 2008 to Alan Coyle, and others in the Council. 19 He attaches two files, firstly: 20 "The cost analysis spreadsheet ... which I have 21 updated to reflect the very last knockings on Infraco 22 price but which does not change the budget." 23 If we can go to that spreadsheet, please, it's 24 CEC01245225. 25 If we can scroll down this page, please, to I think 7 1 line 313. 2 Sorry, 313. At the very bottom, you'll find a blue 3 box. That's it. We can see it's headed "Risk Allowance 4 Analysis". If we go to the bottom right-hand corner of 5 this box, we can see a figure, GBP32.3 million, which 6 seems to correlate with the GBP32.3 million figure we 7 saw in the Close Report. 8 Just sticking with the blue box, I think we have 9 looked at this before at the hearings, but in short, 10 I think the main headings of the various risk topics are 11 set out together with the sum allowed for them in the 12 risk allowance. 13 I think there's one mistake we discovered in this 14 table. Do you see, Mr Bell, at the top left-hand 15 corner, the reference to Infraco/Tramco Procurement? 16 A. I do. 17 Q. There's a figure given there for 6.8 million, but 18 I think what has happened, that should be zero because 19 this is the risk allowance at financial close. So where 20 we see in the right-hand column a zero, I think it has 21 been explained to us that that zero should be at the top 22 of that column and all the figures should drop down one. 23 So I think there should read -- 24 A. So the Infraco/Tramco Delivery item would be 6.8 million 25 and so on and so forth; is that -- 8 1 Q. Exactly, Mr Bell. Does that accord with your 2 recollection of matters? 3 A. It does, and an example of a couple of the areas that 4 were added into this over that period are shown at the 5 bottom, non-delivery of VE items, including in the 6 Infraco price, GBP2 million. And extent of road 7 reinstatement, a GBP2 million risk were examples of some 8 of the adjustments that had been made during 9 March/April. 10 Q. So am I right in thinking that where we see QRA total of 11 GBP27.937 million, is that the figure that's been 12 generated by the computer software? 13 A. The analysis based on the detailed individual line 14 entries, yes, and then there's been two additional 15 specific entries underneath that, one in relation to the 16 risk of non-delivery of value engineering that's 17 incorporated in the price, and one in relation to the -- 18 primarily one of the Pricing Assumptions associated with 19 road reinstatement. 20 Q. Yes. So in short, as I understand it, and tell me if 21 I'm wrong, the QRA total of 27.937 million has been 22 generated by the computer software, the quantified risk 23 allowance software, but then manually a human being or 24 beings have come to a judgment that there should be 25 additional sums added in relation to the non-delivery of 9 1 value engineering, the risk of that, and also the risk 2 relating to road reinstatement, and also unspecified 3 risks, but in short the GBP2 million plus the 4 GBP2 million plus the 409,000, et cetera, they have been 5 added manually; is that correct? 6 A. Yes, that's correct. 7 Q. Just again to deal with this, the extent of road 8 reinstatement, does that relate to the issue you told us 9 about yesterday in terms of the extent to which the 10 consortium were to reinstate the road and -- 11 A. And assumption around planning back and tying into 12 existing road structures, yes. 13 Q. To what extent, if at all, does that risk allowance 14 figure of 2 million deal with the risk that Parsons 15 might be right, that in fact there would require to be 16 a full depth excavation of the road, and a reinforced 17 concrete base for the track would require to be put in? 18 A. I think there may be an element of it, but it wasn't 19 intended primarily for that. 20 Q. Thank you. Just to be quite clear, do you know when 21 these additional sums of 2 million plus 2 million plus 22 409,000-odd were added in? 23 A. I expect that happened during either March or 24 April 2008. I believe you'd said this related to 25 a spreadsheet that Stewart McGarrity sent on 15 April. 10 1 So in that time window, from early March through to 2 mid-April, as a number of these matters were being 3 discussed in finalising Schedule Part 4. 4 Q. Why were these added items added in manually rather than 5 being identified as a risk and run through the computer 6 software QRA process? 7 A. It was a specific piece of work that the commercial team 8 looked at, based on the Infraco Proposals and drawings, 9 and did some quantity surveying work to size some of the 10 potential difference between Infraco Proposals and what 11 might be a more significant road reinstatement. So we 12 based that on some calculations from first principles 13 and drawings provided. 14 So that was that particular element. 15 On the Infraco price and the risk of non-delivery of 16 VE, I think it was an assessment made at that time that 17 not all of the value engineering elements may be fully 18 realised. Some of them have conditions around them, and 19 therefore it was considered appropriate to make an 20 element of allowance for that. 21 Q. Before leaving this, I would like you just to remember 22 the QRA total of GBP27.937 million. We will keep that 23 figure in our head, please, and go to a different tab. 24 The P80 risk allocation 1a plus 1b tab, please. 25 Now, do we see towards the top right-hand corner in 11 1 yellow, phase 1a allocation GBP27.937 million? 2 A. Yes. 3 Q. So I think what this tab does is give a breakdown of how 4 that sum has been made up; is that correct? 5 A. Yes, that is a carry forward number. 6 Q. Can we also see at the top left-hand corner of this 7 spreadsheet, this is in relation to the current period 8 end 1 March 2008? 9 A. Yes. 10 Q. So on the face of it, we saw that this was sent with an 11 email dated 15 April. So on the face of it, the QRA 12 hasn't been updated since the period ending 13 1 March 2008? 14 A. That was -- I think that was the basis that was used, 15 and then there was the additional manual adjustments 16 that you've described. 17 Q. Can we also please go to now another document, 18 CEC01506052. 19 We can see from the top, this is an email from Mark 20 Hamill dated 3 March 2008 to Duncan Fraser and others in 21 the Council. In this email Mr Hamill says that: 22 "Stewart asked me to send on the attached document. 23 Please note that this document is strictly work in 24 progress at this moment and should be regarded as being 25 for information only." 12 1 Now, I'll give the attachment in passing for the 2 record; it's CEC01506053. Without going to it, but 3 I have checked, Mr Bell, and the QRA attached to this 4 email of 3 March is exactly the same as the QRA we just 5 looked at that came to the GBP27 million-odd. 6 So in short, what appears to have happened is that 7 at least the QRA aspect of the risk allowance had 8 remained unchanged since 3 March 2008, when Mr Hamill 9 sent it to tie, saying it was strictly a work in 10 progress and should be regarded as information only; is 11 that correct? 12 A. Certainly my -- my reading of what you have presented 13 there looks correct, sir, yes. Yes, it looks correct. 14 I would perhaps amplify that you've seen some additional 15 entries included in a later version, but they're not 16 embedded within the QRA. 17 Q. We will come back to that, but just to be absolutely 18 clear, is it correct that the QRA aspect of the risk 19 allowance, which came to GBP27.937 million, had remained 20 unchanged since this version sent on 3 March 2008? 21 A. Yes. 22 Q. So does it follow -- 23 CHAIR OF THE INQUIRY: Sorry, I understood that the Schedule 24 that we looked at was based on a run of the programme on 25 1 March. So that was the latest -- looking at that 13 1 document at any rate, that was when it was run, was it? 2 A. Yes, I am sorry. I thought that's what Counsel to the 3 Inquiry had asked. 4 CHAIR OF THE INQUIRY: I'm just trying to get it clear in my 5 own mind. 6 So in fact what Mr Hamill is probably sending is 7 based upon the run of 1 March? 8 A. Yes, a week before this email, I would think. 9 CHAIR OF THE INQUIRY: Or even two days before. 10 A. Sorry. 11 MR MACKENZIE: Yes, thank you, my Lord, for clarifying that. 12 Again, just so there's no doubt at all, Mr Bell, as 13 the Chairman says, essentially the QRA part of the risk 14 allowance at financial close of GBP27.937 million was 15 based on a run of the QRA programme on or about 16 1 March 2008. 17 A. Yes. 18 Q. So does that mean that the QRA part of the risk 19 allowance did not reflect any changes that may have 20 occurred in the risk profile between 1 March and 21 financial close? 22 A. It hadn't been re-run at that point, and there hadn't 23 been any re-allocation of items within it. So it 24 wouldn't have been in -- it would have reflected the 25 base information included. 14 1 Q. So just to repeat the question, does that mean that the 2 QRA part of the risk allowance did not reflect any 3 changes that may have occurred in the risk profile 4 between 1 March and financial close? 5 A. Generally correct for the QRA portion, yes. Yes. 6 Q. You say generally correct. It must be correct. 7 A. Yes, for the QRA portion, sorry, yes. 8 Q. I would also, please, like to move on to another 9 document now, to look at the one change that I think did 10 occur to the risk allowance at financial close. 11 It's another document, please. It is CEC01338847. 12 I think we've looked at this yesterday. We can see from 13 the top, it's "FINANCIAL CLOSE PROCESS AND RECORD OF 14 RECENT EVENTS. 15 If we go, please, to page 6. I'm going to 16 paraphrase this page and then let you read it for 17 yourself, but I think in short there was a change in the 18 risk allowance to reflect the Kingdom Agreement we 19 looked at yesterday. So I'll let you just take a couple 20 of minutes to read the page yourself. Perhaps we can 21 blow it up a little, the text. Thank you. (Pause) 22 So I think the headline figure for us is three lines 23 from the bottom, where we see the risk contingency is 24 GBP31.2 million. So I take it that was the final risk 25 allowance at contract close? 15 1 A. It was, yes. 2 Q. So it's changed just a little from the figure of 3 32.3 million we saw in the Close Report down to 4 GBP31.2 million, and I think we can see from the text in 5 that paragraph that that came about by the risk 6 allowance being reduced by GBP1.8 million on the one 7 hand, but on the other hand being increased by 8 GBP1 million, resulting in a net overall reduction, 9 I think, of GBP800,000; is that correct? 10 A. Yes. 11 Q. Are you able to briefly explain the thinking or 12 reasoning behind, on the one hand, the figure reducing 13 by 1.8 million and on the other hand increasing by 14 GBP1 million? 15 A. There were some -- I think it's mentioned at the top of 16 the page. There were some explicit items that the 17 agreement capped under the contract. So there was 18 a GBP2 million allowance for roads reinstatement in our 19 original risk allowance that was capped in the final 20 agreement at 1.5. Therefore, we were able to remove the 21 GBP0.5 million or make that element of the adjustment. 22 That was an explicit item. 23 There was adjustments to the Infraco budget in 24 consequence, and we reviewed at the time the overall 25 elements associated with the completion of the novation 16 1 and the risk activities on schedule, and concluded in 2 overview that a net adjustment was merited in total. 3 Q. Thank you. Now, the net reduction was GBP800,000. 4 I think when one deducts GBP800,000 from the previous 5 figure of GBP32.3 million, one arrives at 6 GBP31.5 million. It's hard, I think, to reconcile that 7 31.5 million with the figure we see in the report of 8 31.2 million. 9 It sounds as though some final reconciliation was 10 required; is that correct? 11 A. Yes, I think it would have been some of the 12 non-attributed contingency item, but yes, that needed to 13 be reconciled to a final control budget. 14 Q. Could I then please put that document to one side and go 15 on to another document. It is CEC01288043. We can see 16 this is an email from Mark Hamill. It's after contract 17 close, 27 May 2008. Subject "Private - QRA at Financial 18 Close". Why was it private? 19 A. I don't know. 20 Q. We can then see it is sent to yourself, Mr McGarrity, 21 Susan Clark and Dennis Murray. 22 Sensitivity: confidential. Why was it confidential? 23 A. I don't know why Mark marked it in that way. 24 Q. Mr Hamill then says: 25 "Please see attached spreadsheet which I have 17 1 updated following our meeting last week." 2 I'll pause to give the reference for the record 3 there, going through the spreadsheet, I think it's 4 CEC01288043. 5 The reference by Mr Hamill to "our meeting last 6 week", were you at that meeting? 7 A. I'm sure I would have been. He wouldn't have -- sent it 8 to me on that basis. I recall reviewing this item for 9 the project control budget in late May. So I'm sure 10 that would be the meeting Mark refers to. 11 Q. So what was the purpose of the meeting and what was 12 discussed and what was the outcome? 13 A. As I recall the purpose of the meeting was to ensure 14 that the up-to-date project control budget, including 15 the risk elements, accurately reflected the final 16 financial close numbers that you alluded to earlier, and 17 that would enable each of the project managers within 18 our organisation to be allocated the appropriate area of 19 budget to manage to a conclusion, and then to identify 20 if there were any change control items to be raised from 21 that throughout the duration of the programme. 22 Q. Thank you. I'll read on: 23 "As agreed, Risk ID 343 ..." 24 I think in the QRA spreadsheet that's referred to as 25 general programme delay; does that sound right? 18 1 A. It does sound right, yes. 2 Q. "... which allows for delays has been reduced by 3 GBP1.3 million which means we now have GBP5.187 million 4 against this risk and, accordingly, the overall risk 5 allocation has reduced by GBP1.3 million to 6 GBP26.637 million. 7 "One thing which we all need to be aware of is that 8 it is not possible to reduce the value of one risk in 9 the QRA without affecting all the others. This is 10 because the P80 allocation is driven by the total mean 11 sum. Therefore, in order to get round this problem, 12 I have basically 'pockled' the spreadsheet and hard- 13 entered some values. This solves the problem and helps 14 us get the final result past CEC as I doubt they will 15 notice what I have done." 16 What do you understand Mr Hamill to mean by the use 17 of the word "pockled"? 18 A. He's made a manual adjustment to achieve the final 19 answer reconciled with the 1.3 million adjustment, 20 because the software wouldn't assure that it landed at 21 exactly the same number. 22 Q. Pockle, I think, means cheating or dishonesty, doesn't 23 it? 24 A. I believe that could be a dictionary definition. I'm 25 absolutely sure that's not the intent behind Mark's use 19 1 of that language. 2 Q. Put the word "pockle" to one side. That is exactly what 3 was happening here, wasn't it? A figure was being 4 manually inserted in the QRA spreadsheet to give the 5 appearance to the Council that that figure was included 6 in the programme, the figures produced by the computer 7 software? 8 A. I don't think that was the intention at all. It was to 9 confirm that the entire risk register matched back to 10 the final control budget based on the summaries that we 11 had previously agreed. 12 Q. Well, Mr Hamill refers to "this solves the problem". 13 What was the problem? 14 A. I assumed from his email to get the totals to match the 15 discussion that we'd already had. 16 Q. And how about his reference to "helps us get the final 17 result past CEC as I doubt they will notice what I have 18 done"? 19 A. I didn't read that into that what you appear to suggest. 20 For me, we had a project control budget to reconcile 21 against the approved Final Business Case. That was the 22 process we were closing off, and that -- that visibility 23 was shared with CEC at a budget level and I think with 24 Alan Coyle. 25 Q. Stepping back a little, the QRA computer programme or 20 1 process, that I think is based on the Monte Carlo 2 statistical method; is that correct? 3 A. I believe so, yes. 4 Q. Essentially, I think that involves the computer 5 undertaking multiple calculations to generate a range of 6 possible outcomes and by doing that, the software is 7 able to arrive at the probability of occurrence and 8 value identified risks; is that correct? 9 A. Yes. 10 Q. So -- and the software is set up in such a way that 11 there is a statistical validity to that method? 12 A. Yes. 13 Q. And that statistical validity is derived from the 14 computer -- I emphasise -- undertaking multiple 15 calculations to generate a range of possible outcomes; 16 is that correct? 17 A. I understand that to be its purpose, yes. 18 Q. So what Mr Hamill is doing for the programme figure in 19 the QRA is completely departing from that proven and 20 accepted statistical method involving many calculations 21 and just entering one figure. That's what he's doing? 22 A. He's adjusting this particular figure, yes. 23 Q. I can quite understand when we looked back at how the 24 GBP32.3 million manually adding figures outwith the QRA, 25 I can quite understand that, and that's perfectly open 21 1 and transparent, but what I suggest is not honest is to 2 change figures which are part of the QRA and present 3 them as though they have been produced by the computer 4 model? 5 MR FAIRLEY: My Lord, I hesitate to interrupt learned 6 Counsel to the Inquiry. I am conscious he was not 7 Counsel who took the evidence of Mr Hamill. And 8 respectfully, it seems to me that he's putting to this 9 witness matters which would probably better, if they 10 were going to be put to anyone, have been put to 11 Mr Hamill. But he appears now to be suggesting things 12 to this witness that should have been put to Mr Hamill, 13 if they were going to be put, and in particular he 14 appears to be suggesting that Mr Hamill has behaved in 15 a way which was dishonest. 16 I may be wrong, but I don't think that was the 17 gravamen of the examination by Counsel to the Inquiry 18 who took Mr Hamill's evidence. I think it may be 19 a little unfair to Mr Hamill to take that evidence from 20 a different witness when what the witness is being asked 21 about is something that Mr Hamill did and something in 22 an email written by Mr Hamill. 23 CHAIR OF THE INQUIRY: I think two things. 24 First of all, I think the Counsel to the Inquiry who 25 examined Mr Hamill took him to the spreadsheet which 22 1 seemed to be, from recollection, a readjustment of the 2 figures which had been produced by the QRA, a manual 3 readjustment. And I certainly remember putting to 4 Mr Hamill the interpretation of the word "pockle", and 5 so I think Mr Hamill probably was in no doubt as to what 6 was being suggested. 7 However, if you're concerned on behalf of Mr Hamill, 8 then you can make an application to have him recalled. 9 The other thing is that this witness is part of that 10 because he was in a superior position. He received this 11 email and I would certainly like to know what, if 12 anything, he did about it. 13 MR FAIRLEY: I certainly have no objection, my Lord, if 14 learned Counsel to the Inquiry's questions followed the 15 line that my Lord has just indicated, but it seemed to 16 me that that wasn't what he was being asked. If that is 17 what he was being asked, then I'll withdraw my -- it's 18 not an objection. I'll withdraw my observation. 19 But if the line of questioning is indeed as my Lord 20 has indicated it is, I have no objection to it. 21 CHAIR OF THE INQUIRY: Thank you. 22 MR MACKENZIE: My Lord, I wonder if I may respond to that. 23 CHAIR OF THE INQUIRY: I don't think it's necessary. 24 MR MACKENZIE: No. If I could just finish the line I have 25 started. I think my suggestion in short, Mr Bell, is 23 1 that what is being done here is dishonest, because it is 2 making a manual entry to what should be a computer 3 derived model and sum, and is then presenting or passing 4 off that manual entry as having been produced by the 5 computer model. Do you have any comments on that 6 suggestion? 7 A. I certainly don't believe it was intended to be 8 a dishonest or misleading action. I believe the reason 9 Mark adjusted the Infraco delay entry because it was 10 already a known entry in the risk log, ID 343, and rather 11 than make a manual adjustment outwith that, what he 12 adjusted was the particular entry in question. 13 I understand the comment that you make around the 14 transparency of that. I think it was very clear to the 15 parties who reviewed that that the intent was clearly to 16 make that adjustment identified against delay so that 17 was traceable, not to mislead anybody in relation to 18 QRA. 19 CHAIR OF THE INQUIRY: Mr Bell, I think the impression that 20 might have been given by Mr Hamill was that he was under 21 pressure to change the figures. 22 Do you have any comment to make? Were you aware of 23 that, that he was put under pressure to alter the 24 figures manually, and he was unhappy with that? 25 A. My recollection at the time was that everybody was in 24 1 agreement that we would reconcile the project control 2 budget back to the final close number. That confirmed 3 an adjustment to risk, and that Mark would undertake 4 that adjustment to the risk summary. 5 CHAIR OF THE INQUIRY: And he would use a method that wasn't 6 really appropriate in the sense that he was adjusting 7 a figure derived by -- rather, the computer programme, 8 to make it appear that that was the figure that the 9 computer programme had produced? 10 A. I think the intention behind -- 11 CHAIR OF THE INQUIRY: Is that what actually happened? 12 A. He adjusted that figure associated with the particular 13 risk that we had been talking about that we believed 14 merited the reduction. That happened to be a specific 15 item within the entries that had previously run through 16 the QRA. 17 CHAIR OF THE INQUIRY: He adjusted a figure that was in the 18 QRA. He manually adjusted the figure in the QRA to make 19 it appear that that was the QRA figure. If you look at 20 the Schedule, and you see the QRA output, and the figure 21 for that particular risk item has been manually 22 adjusted, and there's no note to that effect, then the 23 impression that you would get was that this was 24 a generation of the QRA programme; is that right? 25 A. I thought there was a note that had identified 25 1 adjustment to delay, general delay on the risk summary, 2 in a Schedule that I'd previously been shown that showed 3 the project control budget. 4 CHAIR OF THE INQUIRY: Perhaps we can go to the Schedule. 5 A. And there was an entry to say that, my Lord. 6 CHAIR OF THE INQUIRY: We will go to the Schedule after the 7 break. 8 MR MACKENZIE: So just finally this point, Mr Bell. Was 9 Mr Hamill's version of the Schedule, the QRA Schedule, 10 sent to the Council? 11 A. I believe it was. 12 Q. Thank you. Now, I would like to move on -- 13 CHAIR OF THE INQUIRY: Before you do that, look at the 14 email. What did you make of the email when he says: 15 "... helps us get the final result past CEC as 16 I doubt they will notice what I have done." 17 What did you make of that? 18 A. I considered that Mark was sharing the answer with CEC. 19 He made an observation around whether there would be 20 particular scrutiny of that. At that time I didn't give 21 it particular weight, my Lord. 22 CHAIR OF THE INQUIRY: What about the next sentence: 23 "I will revert to normal practice for future QRAs." 24 So did you recognise that that this was an abnormal 25 practice? 26 1 A. I think we were clear that he was making an adjustment 2 to reconcile this budget -- 3 CHAIR OF THE INQUIRY: Was that normal practice or not? 4 A. It was not. 5 CHAIR OF THE INQUIRY: And you knew that? 6 A. Yes, I did. 7 CHAIR OF THE INQUIRY: Why did you allow it? You were the 8 superior person in the department, weren't you? 9 A. I considered that it was a transparent adjustment to 10 reconcile to the total risk number. 11 CHAIR OF THE INQUIRY: Why did you allow a practice that was 12 not normal? 13 A. I considered in this particular circumstance, my Lord, 14 that we had transparently explained what we were doing. 15 CHAIR OF THE INQUIRY: And so transparently explained it 16 that it would get past the CEC without noticing what had 17 been done, and he then goes on, after reverted to normal 18 practice: 19 "However in this instance I think this is the best 20 way to do it in order to avoid unnecessary scrutiny from 21 our 'colleagues' at CEC." 22 What did you make of that? What did you think he 23 was saying there? 24 A. In recollection at that time, I believed that there was 25 a number of conversations that Mark had had over 27 1 a number of months where he felt there had been 2 amendments to some of his work that he'd shared, perhaps 3 not helpfully, and perhaps that's what he intended to 4 mean. But I didn't particularly go back and query with 5 him. 6 MR MACKENZIE: Thank you. 7 Mr Bell, I would like now to move on to the period 8 after contract close. And I'm going to ask you just 9 about particular matters in that regard, and largely 10 take your statement as read. 11 If we could, please, go back to your statement to 12 page 79. In question 61 we refer to the dispute which 13 arose and we asked: 14 "What were the main matters in dispute?" 15 You explained: 16 "I think there were three topic areas. The first, 17 which primarily drove the interpretation of 18 Clause 3.4.1, was "what is normal design 19 development?" ... 20 The second strand was that the value of estimates 21 produced was excessive ... 22 The third strand was the issue surrounding whether 23 the Infraco should be progressing with works while 24 Notified Departures and estimates were being agreed or 25 whether they were entitled to wait until an estimate had 28 1 been agreed." 2 In relation to the second strand, the value of 3 limits produced was excessive, can you expand upon that 4 a little, please? 5 A. When Infraco produced estimates and there was some delay 6 in doing so, generally for the items that were agreed as 7 a change, and we had an agreed value and signed change 8 order, it was finally agreed at a number, on average, of 9 circa 52 per cent of the original application from the 10 contractor, and this felt that this was excessive and 11 wrong. 12 This is an average over a number of, I think, 13 probably a couple of hundred change orders at this 14 particular point, or at that point in time, when we 15 undertook this analysis. 16 Q. What were your main concerns in relation to the 17 performance of the consortium after contract close? 18 A. I think there were three areas particularly. One was 19 the management and completion of the design and 20 associated works to then commence on site. So there was 21 a mobilisation and completion of design area. 22 When changes were identified or Infraco Notices of 23 tie change were notified, there was a reluctance from 24 the consortium to progress works until that change had 25 been finally agreed and signed off. 29 1 And where we had other factors that were not the 2 consortium's responsibility, such as MUDFA delays, there 3 was a reluctance to consider any mitigating actions from 4 their programme that could ease the effect on the 5 overall open for revenue service work for the tram. 6 Q. Do you know why it took so long to complete the design 7 and obtain all approvals and consents after contract 8 close? 9 A. I believe there were a variety of reasons suggested over 10 that period of time. These included completion of 11 design by SDS, incorporation of the Infraco proposals. 12 We touched yesterday on some requirements to align SDS 13 and Infraco proposals to meet the Employer's 14 Requirements, and there were outstanding technical and 15 prior approvals and completion of the conditions 16 associated with those prior approvals prior to the 17 Infraco completing works, commencing works. 18 Q. To what extent, if at all, did tie lose visibility over 19 and control of the design process after SDS novation? 20 A. The novation put the Infraco as client to the SDS, and 21 that was the intention, but there was a design review 22 process agreed as part of that contract suite in one of 23 the schedules, which was intended to ensure that there 24 was consistent visibility of progress in the area of 25 completion of design, progress against the necessary 30 1 approvals, and to identify if there were any key items 2 or issues that were causing a blockage or a hold upon 3 completion of the design, particularly if it was 4 a matter that tie could contribute to solving. 5 Damian Sharp, our design and consents manager, had 6 a particular focus on working with the consortium and 7 their designer to review progress in this area. 8 Q. So to what extent, if at all, do you consider that tie 9 lost visibility over and control of the design process 10 after SDS Novation? 11 A. We retained a degree of visibility through that process 12 and the reporting from the Infraco. There were 13 improvements that could have been made. So we did lose 14 some visibility on that, and the -- it took longer to 15 get to the root of any particular issues or problems, be 16 they tie, CEC or Infraco, SDS related. 17 Q. So do you accept there was some loss of visibility over 18 and control of -- 19 A. Yes. Yes, and the intention was that there would be 20 a change in control in that the client became Infraco, 21 and it was in Infraco's focus and responsibility to 22 manage that design to completion, including 23 incorporating the proposals. 24 Q. In relation to the misalignment workshops in relation to 25 the SDS design and Employer's Requirements, and also SDS 31 1 design and Infraco proposals, I think we heard evidence 2 from Mr Chandler of SDS that before contract close, he 3 had, I think, appointments in his diary, I think, for 4 these workshops to take place in the weeks following 5 contract close. But in the event these workshops didn't 6 take place until late 2008 and early 2009. 7 Was there a delay in these workshops taking place? 8 A. My recollection was it was late 2008 the workshops were 9 finally undertaken. I can't recall a primary reason for 10 that at this time. 11 Q. I think we have seen from documentation it was both late 12 2008 and early 2009, and some in fact were later. Your 13 position is you can't recall why there was a delay? 14 A. No. I wasn't aware of that question before today, 15 sorry. 16 Q. Did you have any involvement in any of the workshops? 17 A. No. One of my delivery managers, Bob Bell, was in the 18 lead for progressing those workshops, and I don't recall 19 a specific reason from that time as to why that was 20 later than Jason appears to have expected it to be. 21 Q. Mr Chandler also referred to a Value Engineering 22 Structures Workshop where his evidence was that he, 23 I think, turned up to the workshop being -- expecting to 24 have to justify and explain the SDS design, and 25 expecting the meeting to perhaps go over several days? 32 1 A. Yes. 2 Q. There were various meetings over several days, and 3 I think he said that what happened at this workshop was 4 that essentially Bilfinger, the consortium turned up and 5 accepted the SDS design without any discussion or 6 consideration of value engineering opportunities. And 7 that Parsons were baffled, but that you were present and 8 agreed to that. Do you recall that? 9 A. I don't actually. I don't recall that meeting. I do 10 recall looking, and we looked specifically at a number 11 of value engineering opportunities over the life of the 12 contract, and there were key conditions to be met in 13 order to instruct them, and that was part of the 14 Contract Schedules. 15 I don't recall that particular workshop. 16 Q. When you say you don't recall it, are you saying you 17 don't recall it but it may have happened as Mr Chandler 18 described it, or are you saying you don't recall it and 19 it's very unlikely to have happened as Mr Chandler 20 described it? 21 A. I genuinely don't recall it. 22 Q. Do you recall -- 23 A. My position would be I would be surprised not to be 24 encouraging any value engineering opportunity that could 25 be realised. That's where I would have expected to be. 33 1 Q. Do you recall whether there were discussions with the 2 consortium in relation to value engineering 3 opportunities for structures? 4 A. I believe there were on all topics, not just structures. 5 But I believe there were, yes. 6 Q. Do you recollect whether any value engineering savings 7 were made in relation to structures? 8 A. There was a detailed schedule for all of the value 9 engineering opportunities. Some were able to be 10 realised. Some were definitely not, and some elements 11 needed to be evaluated over the duration of 12 implementation. I don't think I saw final schedules. 13 I can't recall if there's a specific structures example 14 that springs to mind. But I'm sure that the Inquiry 15 should have records to demonstrate what change control 16 items were agreed on that basis. 17 Q. I would like to move on to another matter, please. If 18 we can go to document CEC00652924. 19 We can see these appear to be the minutes of a 20 meeting between tie and BSC, 16/17 December 2008. In 21 attendance, yourself, Stewart McGarrity, Richard Walker, 22 Michael Flynn. Then blow up the first bit of the table, 23 please, under 1. Princes Street. Thank you. 24 We can see that instructions are required for 25 certain items. For example, 1(c): 34 1 "Instruction required to implement modified track 2 slab/base designs to suit ground conditions with 3 a provisional sum to cater for cost and time if 4 necessary." 5 Then (d): 6 "Instruction required to prepare modified road 7 construction options to suit ground conditions ..." 8 I just wondered, Mr Bell, what was this meeting in 9 relation to? 10 A. We were looking -- from memory, it was two particular 11 elements. One was general progress and issues around 12 mobilisation on parts of the site, and also particularly 13 with regard to Princes Street, which was due to 14 commence, I think, about three months after that 15 meeting, with physical works on site; and there required 16 to be traffic management enabling works undertaken in 17 advance of that, because much of the Princes Street 18 traffic was going to be diverted on to George Street and 19 surrounding routes. 20 It also dealt with elements of Change Orders and 21 items that had been identified by BSC, and we were in 22 the process of resolving either with an agreed estimate 23 or confirming that we were not agreed on the principle 24 of the change. 25 Q. We've heard evidence, I think, from the Parsons 35 1 witnesses that when work started in Princes Street, the 2 ground conditions were found to be such that their 3 recommended track slab was required. 4 Do you agree with that? 5 A. That's my recollection, there certainly had to be 6 additional work to be done in Princes Street. 7 Q. Do you remember when it was discovered that additional 8 work was required to be done in Princes Street? 9 A. For that particular item or more generally? 10 Q. For that -- for the track slab. 11 A. I think it would have been round about this time, 12 because clearly there's been some discussion on -- some 13 intention to amend designs or at least have a design 14 ready if ground conditions were found to be more onerous 15 than originally expected. 16 Q. Yes. What I wondered in short was whether the reference 17 in 1(c) to "Instruction required to implement modified 18 track slab/base designs to suit ground conditions", if 19 it was known at this time that the ground conditions 20 were such that there would require to be modified track 21 slab and base designs, and that an instruction was 22 required for that to be done. 23 A. My recollection at the time was that we wanted to have 24 a design option available, so that if it was desired to 25 be implemented as we uncovered the ground and tested it, 36 1 then we didn't have extra delay of waiting for that 2 design to be completed. So it was a preparatory 3 measure, so that we had a design ready to implement if 4 required, as opposed to we definitely knew there was 5 a problem at that particular point in time. That's my 6 recollection. 7 Q. So do you know when it was known that this would be 8 required? 9 A. I think, as the excavations commenced of the existing 10 road and there was testing of the sub-surface and 11 inspection of the ground conditions. So as the access 12 was taken, is my recollection, we tested that as we went 13 along the particular route and confirmed whether 14 a modified track slab was required. 15 Q. When did that excavation take place on Princes Street? 16 A. I think we eventually started in August -- sorry, in 17 April 2009. Certainly the traffic management was set up 18 from March 2009, but we had a significant dispute about 19 whether the Infraco would start under the current terms 20 and conditions of the Infraco contract, and that -- and 21 advised us in February they would not do so. There was 22 a fairly public difference of views and that resulted 23 finally in a Princes Street Supplemental Agreement being 24 made, to deal with the expected circumstances for 25 Princes Street particularly. 37 1 I think that's referred to as the PSSA. 2 Q. When you say there "the expected circumstances for 3 Princes Street", I'm a little confused, because you say 4 that it wasn't known that the modified track slab and 5 base designs would be required until excavation started 6 in April 2009. You just referred there to expected 7 circumstances? 8 A. Yes, there were other matters that were expected/known 9 about in relation to some residual utilities diversions 10 to be addressed. These were matters that would fall 11 under the terms of the contract that would be changes, 12 and the Infraco -- my recollection at that time was the 13 Infraco were not prepared to undertake that work without 14 agreed change, or in alternatively of confirming that 15 they were going to recover their costs associated with 16 that work. 17 Q. In relation to the Princes Street dispute, can I just be 18 quite clear, please. What was your understanding of the 19 cause or causes of that dispute? 20 A. Primarily at the -- I think it would be round about 21 February 2009, Richard Walker and some of his colleagues 22 from Bilfinger, and Michael Flynn and a colleague from 23 Siemens met with Stewart McGarrity and I, and advised us 24 of a, in their view, the likelihood that the Infraco 25 contract was going to cost Infraco GBP50 million to 38 1 GBP80 million more than originally intended, and they 2 believed that that was a -- in the main, a tie 3 liability. 4 They also advised at that time they weren't prepared 5 to start on Princes Street without an agreement on 6 recompense for items they viewed as would fall under the 7 tie change clause, including matters such as utilities 8 diversions, but also any other items that would fall 9 under the Pricing Assumption Schedule. 10 As a consequence, they had confirmed to us they did 11 not intend to mobilise at the scheduled time to start 12 work in Princes Street unless we came to a different 13 agreement on how that would be valued. 14 Q. Did you have any involvement in the resolution of that 15 dispute? 16 A. I worked with my colleagues around understanding what 17 the key issues and concerns were and whether we could 18 propose a Supplemental Agreement that could be tested to 19 address those matters for the Princes Street section of 20 works, which was circa a kilometre or so worth of 21 on track work. And therefore still take advantage of the 22 access that had been negotiated with the Council between 23 April and November 2009. 24 Q. What was the price basis for the Princes Street 25 Supplementary Agreement? 39 1 A. The approach was to identify and agree the costs that 2 the contractor and their supply chain incurred, record 3 and measure those items, and identify and deduct the 4 core price that was already included within the Infraco 5 contract, so that elements weren't being paid for twice, 6 and that was in general terms a process put in place to 7 supply the records of plant, labour, materials and other 8 resources associated with all of those works, including 9 their supply chain, for that period of time. 10 tie would have visibility and review that on 11 a weekly basis with the Infraco, and confirm the 12 validity of these submissions or have them amended in 13 realtime in effect, and there would be, as I said, 14 a deduction for the element that was already within the 15 Infraco price. 16 Q. Now, I think we know the works were carried out between 17 April and November 2009, but there were defects 18 discovered and the works had to be redone later? 19 A. There were. 20 Q. What was your understanding of the cause of the defects? 21 A. Considered it was a -- fundamentally a solution that 22 didn't satisfy the Employer's Requirements, and the 23 installation of that by the Infraco had failed to 24 demonstrate that it did so satisfy the specification. 25 There were, I believe, some -- a range of technical 40 1 reports undertaken, and subsequent on-street sections 2 had amended detailing and design, particularly in the 3 rail and road interface. 4 Q. When you say there was a solution that didn't require 5 the Employer's Requirements, can you briefly explain 6 what you mean by a solution? 7 A. Sorry, the design that was -- and detailing that was 8 proposed by Infraco for Princes Street for that section 9 did not satisfy the performance characteristics and 10 criteria. There was subsequent cracking and 11 delamination gaps opening up between the rails and the 12 road surfacing, amongst other things. 13 Q. I think we've also read that the works were undertaken 14 during a period of very heavy rain. Was that 15 a contributory factor? 16 A. I think it would be fair to say that the works were 17 undertaken over a significant six or seven-month period. 18 There was inclement weather on some occasions, but 19 Infraco suggested that was entirely because of the rain 20 and nothing to do with any workmanship or specification 21 issues. tie didn't agree with that. 22 Q. Thank you. 23 I would like to move on to another matter, please. 24 I think after contract close in May 2008, and then in 25 the following months, many Notified Departures were 41 1 received by tie from the consortium. 2 One matter I would like to put to you, Mr Fitchie 3 has given evidence, at least in his written statement, 4 that he advised you from the summer of 2008 that tie 5 should take the impasse regarding Notified Departures to 6 dispute resolution procedure, but that wasn't in fact 7 done until well into 2009. 8 Do you remember receiving any such advice from 9 Mr Fitchie in the summer of 2008? 10 A. I don't know it was the summer of 2008, but I do 11 remember Andrew Fitchie suggesting that we should use 12 the dispute resolution mechanics under the contract. 13 Certainly I'm sure it was at some point in 2008, 14 I suspect the autumn of that point, as the volume of 15 items started to arise. 16 Q. So why wasn't that done at that time? 17 A. We were seeking to understand and support -- in effect, 18 understand and confirm whether or not we considered the 19 items raised by the Infraco were in fact changes. There 20 was some delay in achieving clarity on the argument or 21 the justification. We were making some progress in 22 a number of areas with Infraco at that time to try and 23 fully mobilise the works, and we believed that we could 24 agree without going to the formality of the DRP process, 25 an acceptable resolution. 42 1 From late 2008 onwards, I think it became 2 increasingly clear that the Infraco had a singular 3 position on matters such as design development and whose 4 liability that was. It was a position we disagreed 5 with, and we tried to mediate -- to have a session 6 through the -- a general mediation on issues in, 7 I think, the early summer of 2009, and when that was 8 unsuccessful, we commenced some of the more formal 9 specific DRP processes. 10 Q. I suppose it would have been possible, when you say that 11 from late 2008 onward, it had become increasingly clear 12 that the Infraco had a singular position on matters such 13 as design development and whose liability that it was, 14 it is possible to have a twin-track process to go to the 15 DRP processes while also seeking to achieve a mediation 16 settlement as well. Was any consideration given to that 17 twin-track process? 18 A. In essence, yes, because there was some preparatory work 19 to think around how would we resolve this process 20 through dispute resolution mechanics in the contract, 21 which had in essence a five-stage process for -- and 22 that is for myself and the Infraco representative to see 23 if we can come to a resolution. 24 If not, to take that up between the respective CEOs 25 of tie and the consortium, which was Richard Walker from 43 1 Bilfinger. 2 And then you can move into a formal DRP process of 3 either mediation or adjudication or eventually, if you 4 so wish, to litigation. 5 Q. With the benefit of hindsight, do you think tie ought to 6 have gone to formal DRP earlier? 7 A. Looking back then, there may have been some advantages 8 to crystallise the position sooner, yes. 9 Q. We've also heard reference to Project Pitchfork, which 10 I think may have begun in early 2010. Are you able to 11 give a brief overview of what Project Pitchfork was, 12 including, importantly, where did the name come from? 13 A. I have no idea where the name came from. The areas that 14 we were looking at under that particular project aimed 15 to understand what resolution options we had under the 16 contract, including using the formal Dispute Resolution 17 Processes. In parallel, are there any other 18 alternatives which might include consideration of 19 termination of the existing Agreement and reprocuring. 20 It also addressed the funding issues and options 21 that were becoming evident at that time, and clearly the 22 original funding envelope of 545 million was not going 23 to be able to be kept within, and elements such as 24 consideration of shortening of the scheme or alternative 25 funding scenarios were being tested. 44 1 These were areas that were discussed at the Tram 2 Project Board as a set of actions that tie should 3 progress and develop, in parallel with continuing to 4 seek to resolve matters through the Infraco contract. 5 Q. We've also heard reference to things such as Carlisle, 6 Project Carlisle negotiations and offers. Is that 7 something you were involved in or was that -- Tony Rush 8 involved in that? 9 A. Tony Rush was in the lead. So Tony was brought in by 10 Richard Jeffrey at that time, but certainly myself and 11 some of my colleagues such as Dennis Murray and 12 Susan Clark contributed to certain factual information 13 and tested some of the proposals that Tony was putting 14 forward, round what he could seek an agreement on for 15 completion of. I think Carlisle, definitely the 16 off-street works and then consideration of what approach 17 might be taken to on-street works. 18 Q. Thank you. 19 Now, we know that various matters were taken to 20 adjudication and various adjudication decisions were 21 issued between, I think, late 2009 and early 2011. 22 Did there come a point in time when you began to 23 form the view that tie were starting to lose more 24 adjudications than they were winning? 25 A. I think we reviewed the adjudication decisions as they 45 1 were made. We also resolved matters at mediation as 2 well in that time frame. 3 During 2010 I think we also had additional legal 4 input from Brandon Nolan of McGrigors, and Brandon, for 5 example, challenged what -- our interpretation and DLA's 6 interpretation of the Design Development Clause 7 particularly, and that was an area where we had been 8 consistent in our approach and he offered a challenge or 9 an alternative view to that. 10 There were a number of areas where we continued to 11 seek resolution of differences, whether it was around 12 extension of time entitlement or obligation to commence 13 work without tie change orders being made, and tested 14 certain provisions of the contract particularly, and 15 those were run, from memory, during 2010. 16 So I would suggest by late 2010, there was certainly 17 a mix of outcomes from the DRP process and some 18 challenge around some of the core tenets that we had 19 been relying on and utilising under the contract. 20 Q. Did it go further again by late 2010 in that around that 21 time, did you begin to form the view that tie was 22 starting to lose more adjudications than tie were 23 winning? 24 A. I think it's simplistic to call it winning and losing. 25 On certain points of principle, we were successful. On 46 1 a number of others the Infraco were held to be 2 successful by the adjudicator on that item. Generally 3 also there was -- if we had asked for a valuation, there 4 was a resolution that was nearer our estimate than the 5 Infraco's. 6 So I don't recognise it as winning or losing, but 7 there was certainly a number of adjudications where the 8 adjudicator found for the argument of principle with the 9 Infraco in late 2010, and probably one that springs to 10 mind would be Lord Dervaird on Murrayfield underpass, 11 where it was around our ability to instruct the Infraco 12 to progress works. 13 Q. At the risk of over-simplification, it may be suggested 14 that overall tie tended to lose on liability but have 15 some success on quantum. 16 A. That probably is a little bit of over-simplification, 17 but there are certain elements of truth in your 18 statement, yes. 19 CHAIR OF THE INQUIRY: Were tie ever guilty of 20 over-simplification about the outcome of these 21 adjudications? Did tie ever speak in terms of winning 22 and losing? 23 A. Personally, I didn't use the language of winning and 24 losing. From a tie perspective, I'm sure there were 25 conversations around what was a successful outcome and 47 1 not a successful outcome. 2 CHAIR OF THE INQUIRY: I'd certainly the impression from 3 stuff that I had read that the city were being advised 4 that tie were winning many of these adjudications. Is 5 that not -- was that -- were you not aware that that 6 message might have been conveyed? 7 A. We tried to give a very -- particularly in the formal 8 reports that were produced and the discussions at the 9 Tram Project Board and the like, we tried to give a very 10 accurate representation of what we knew at the time. 11 I would say that sometimes we should have followed 12 up with further amplification as more matters became 13 clearer, and I know we did in Tram Project Board 14 discussions, but there's probably areas that we could 15 have in the written reports amplified certain things 16 that would have made it more helpful for the less 17 informed reader. 18 MR MACKENZIE: Thank you. 19 Another document I should put to you, Mr Bell, for 20 your comments. If we can go, please, to CEC00013342. 21 What this is, you may not have seen it before. If 22 we can go to page 3, please. We can see it's a document 23 by Alastair Maclean who was Head of Legal and Admin at 24 the Council, 17 November 2010. 25 If we go back to page 1, please, the paragraph at 48 1 the top states: 2 "The purpose of this note is to report to the City 3 of Edinburgh Council monitoring officer concerns in 4 relation to tie which yesterday were raised with 5 Alastair Maclean ..." 6 We see at 2.1: 7 "Richard Jeffrey, the chief executive of tie 8 yesterday indicated that he had concerns in relation to 9 events at the time the tram contract with Infraco was 10 entered into." 11 The reason I'm putting this document to you is 12 simply because you were a senior officer in tie at that 13 time, and to get your comments on what is suggested 14 here. 15 2.2 says: 16 "Those events require to be investigated but there 17 is a suspicion that: ..." 18 I'll just give you a minute to read each of the 19 points set out there. (Pause) 20 Thank you. 21 What are your views on each of these concerns set 22 out? 23 A. It's the first time I have seen this type of document 24 set out. I can answer for myself that I absolutely do 25 not consider that I was incentivised to negotiate a deal 49 1 at a headline rate. 2 I don't believe that there was softening of other 3 positions from that perspective, certainly not in my 4 view. 5 Other provisions, I don't believe there was any 6 collusion with the Infraco that I was aware of. 7 After financial close, I think I became aware of the 8 point number 2.2.4 that was suggested that 9 Andrew Fitchie had been paid a bonus. But I had no 10 knowledge of that at the time. 11 With regards to contract being defective in a number 12 of respects, we were -- I was certainly not aware of any 13 defects in the contract at the time it was signed, and 14 that -- I can only answer that I don't believe that was 15 associated with any incentivisation or negligence from 16 my perspective. 17 In the closing report, I don't believe that was 18 misrepresentation. 19 I haven't spoken, I don't believe, with Andrew 20 since -- as part of any investigation if that was 21 carried out. I don't believe so. So I don't know the 22 outcome of that investigation. 23 Q. Just for -- 24 A. And if it was held. 25 Q. Did Mr Jeffrey discuss any of these concerns with you at 50 1 any time? 2 A. We certainly discussed the emerging fact base that there 3 were areas in the contract that appeared to be defective 4 to tie, compared to our understanding. So we definitely 5 discussed that, and the design development type point 6 would be an example of that. 7 I don't recall discussing any of the other items, 8 other than in passing the comment around his 9 understanding that there had been a bonus paid to 10 Andrew Fitchie. 11 And in the Close Report, I think, you know, 12 matters -- matters were read and entered at that time 13 with the understanding that the tie officers had of 14 those matters. 15 Q. Thank you. I would like to move on, please, to 16 Mar Hall, the mediation in March 2011. 17 Just by way of overview, what was your involvement 18 and role at the actual mediation discussions? 19 A. I was in attendance at Mar Hall. I had done some 20 preparatory work with Colin Smith, Tony Rush and others 21 who were also in attendance. The principals, I think, 22 were Sue Bruce and Vic Emery from CEC and tie 23 respectively, and clearly senior representation from the 24 consortium and also, I think, a representative from 25 Transport Scotland, Ainslie McLaughlin. 51 1 I presented a number of topics or positions from 2 tie's perspective during the mediation to -- and the 3 approach that was taken was that the seniors for the 4 relevant companies listened to key points or topics that 5 were being debated and the position was put forward 6 generally by Martin Foerder for the Infraco or myself 7 from tie, to understand the background of the difference 8 or the issue. 9 Then there was then subsequent discussions 10 follow-ups or negotiations. I tended to concentrate on 11 the Infraco-related matters. One of my colleagues, 12 Alastair Richards, was involved specifically for some of 13 the Tramco-related matters with CAF; and I would say 14 that was a very intensive first couple of days and then 15 there were some discussions that I wasn't particularly 16 party to from the sort of third day of the mediation 17 forward, and the representatives of the organisations 18 concluded, I think, on the Thursday, Thursday evening, 19 with a proposed form of agreement or way forward. 20 Q. Thank you. Now, we've heard evidence from 21 Alastair Maclean that agreement was reached in the 22 evening of day 2 regarding Heads of Terms, including an 23 off-street price and a target on-street price, and in 24 particular that agreement on behalf of the Council tie 25 side was led by Sue Bruce and Vic Emery. Does that 52 1 accord with your recollection? 2 A. It does, yes. 3 Q. In the Heads of Terms, the agreed price for the 4 off-street works were GBP362.5 million, and the target 5 price for the on-street works was GBP39 million. 6 I think that then increased before the Final Settlement 7 Agreement was reached in September 2011. 8 In short, what were your views on the sums agreed 9 and why? 10 A. It felt like an expensive final answer. In preparation 11 to Mar Hall, CEC and Vic Emery for -- who was the 12 Chairman of tie at this point, had asked for some work 13 to be done looking at the likely costings and various 14 options on that, and I would have to accept that this 15 was a negotiation led by CEC. So at the end of the day, 16 Sue Bruce was the primary decision-maker on what was 17 tolerable for her from a Council perspective, just as 18 the seniors from Bilfinger and Siemens were similar from 19 the Infraco's perspective. 20 But it felt like an expensive final resolution. The 21 approach that was proposed was a series of amendments 22 following on from those Heads of Terms, and then seeking 23 to achieve a final ratification or final agreement in 24 September 2011. I think the target was slightly earlier 25 than that originally. 53 1 Q. You've referred to undertaking various preparatory work 2 in the run-up to Mar Hall. Did that involve costing 3 various options on different scenarios? 4 A. It did, yes. 5 Q. From the work you had done in preparation for Mar Hall, 6 do you consider that the sums agreed could be considered 7 to be reasonable? 8 A. I thought they were expensive. 9 Q. Thank you. 10 Now, I think you then left tie in October 2011; is 11 that correct? 12 A. That's correct. 13 CHAIR OF THE INQUIRY: I think the question was: did you 14 consider them to be reasonable, and you said they were 15 expensive. I suppose things can be expensive and 16 reasonable, or expensive and unreasonable. 17 What is your position about the reasonableness of 18 the solution, of the figure? 19 A. My reflection at the time was that there was a number of 20 proposed changes to the contract as well as part of 21 that. The figures would be at the top end of any range 22 for me, and I felt that there was some weakening of the 23 client side terms and conditions. 24 However, I would acknowledge that CEC had a view 25 that they had considered a number of options, including 54 1 termination and reprocurement and the risks associated 2 with that, and they had certainly done some, in their 3 view, some scenario planning around what that might or 4 might not cost. 5 I assume that informed their ranging on their 6 figures, but it seemed, as I say, at the top end of 7 a range from my perspective. 8 MR MACKENZIE: Thank you. There's one final matter I would 9 like to go to, please, Mr Bell, in reference to two 10 short documents. 11 It concerns the question of bonuses because that has 12 been raised by other witnesses. 13 If we go, please, to CEC01491920. 14 We can see in the middle of the page, towards the 15 top, an email from Mr Gallagher dated 21 March 2008 to 16 Brian Cox and copied to others. 17 Mr Gallagher says: 18 "I would like to meet up in Edinburgh week after 19 next if possible to discuss the bonus options and issues 20 associated with contract close. In essence, the deal 21 has really been delivered by Jim McEwan, Steven Bell and 22 Andrew Fitchie - not Matthew. We had an incentive 23 agreement in place with the Procurement team which 24 I intend to alter to reflect the outcome and individual 25 contributions." 55 1 To pause there, do you know what Mr Gallagher is 2 referring to when he talks of an incentive agreement in 3 place with the procurement team? 4 A. No, I don't. 5 Q. Did you in fact receive a bonus for closing the 6 contract? 7 A. I -- I received a bonus, I think, in the -- about the 8 end of the first quarter of 2008 that ran from the 9 period from 2007 up to that point. It was prior to 10 contract close, and for the year 2008 through to 2009 11 there was a bonus entitlement assessed, and a number of 12 the tie executives, including myself, deferred that 13 bonus entitlement until open for revenue service after 14 a discussion with Richard Jeffrey. 15 Q. Do you know whether it was any part of receiving bonuses 16 that procurement milestones had been met? 17 A. In terms of -- for -- 18 Q. Yes, in terms of were -- let me rephrase the question. 19 Were bonus payments to any extent dependent on 20 procurement milestones having been met? 21 A. I don't know how it relates to the procurement team or 22 matters with regards to that or other executives. There 23 were about six headings that were quoted to me, 24 including works that I did in 2007, closing out of EARL, 25 some particular engineering work, progressing the 56 1 particular support to the tram procurement process, 2 including the evaluations, et cetera, and an anticipated 3 outcome, I think, within a range of financial values for 4 the tram which was within the overall funding budget. 5 That's my recollection. 6 Q. And the last document I would like to take you to in 7 this regard, please, similar point, CEC02084810. 8 This, Mr Bell, you won't have seen. It's a lessons 9 learned document produced by Trudi Craggs of Dundas & 10 Wilson in 2008. 11 If we can go to page 3, please, and under 12 "Programme" towards the bottom, Ms Craggs has said: 13 "This needs to be realistic and not based on bonuses 14 if milestones are reached (this impacts on quality as 15 the need to meet the deadline outweighs the need to get 16 it right)." 17 Do you have any comments on what is set out there? 18 A. I think programme does need to be realistic and the 19 milestones absolutely should be appropriate. The 20 milestones were amended a number of times during this 21 procurement process. I don't think there was a blind 22 affirmation or alignment with original milestones. 23 Q. Finally, do you know -- it may not be a matter within 24 your knowledge, but do you know whether bonuses paid to 25 senior tie staff were based to any extent on procurement 57 1 milestones being reached? 2 A. I can only comment about my own, which I have already 3 said. There was a procurement time frame and support to 4 that timetable, was one of six particular criteria. 5 Q. Thank you. My Lord, I have no further questions, but 6 there was the outstanding matter in relation to QRA 7 spreadsheet. I think we should check that over the 8 break, if we may? 9 CHAIR OF THE INQUIRY: I think actually an opportunity of 10 looking at -- I think, Mr Fairley, I overstated the 11 position about the adjustment of the figure and I was in 12 error when I said that Mr Hamill had adjusted the figure 13 that was produced by the QRA, in the sense of -- if the 14 impression that I gave and wrongly had was that he had 15 actually adjusted that figure, whereas in fact the 16 figure was adjusted in the sense of a deduction being 17 made in the Schedule. 18 MR FAIRLEY: Yes, I think that's right. I was intending to 19 ask Mr Bell, if permitted, some questions about this in 20 any event, and it was my intention to take him to the 21 Schedule. So I'm happy to do that if it saves the 22 Counsel to the Inquiry from doing so. 23 CHAIR OF THE INQUIRY: That's very helpful. 24 I think there have been intimations of questions 25 from Edinburgh and from you. I don't know what the 58 1 position is about Edinburgh. 2 MR BURNET: My Lord, I'm grateful, and I'm grateful to 3 Counsel to the Inquiry, and given his thorough 4 examination of the witness, I think he's covered the 5 areas that we indicated we would like to put to this 6 witness. So I'm not intending to proffer any additional 7 questions. 8 MR DUNLOP QC: My Lord, for myself, there are a couple of 9 follow-up questions I would like to put to the witness, 10 following on from the questions my learned friend, 11 Counsel to the Inquiry, has put, regarding knowledge and 12 mitigation of risk. I envisage no more than five to ten 13 minutes. I'm quite happy to do that before Mr Fairley 14 wraps up with this witness. 15 CHAIR OF THE INQUIRY: Well, I think we will adjourn for 15 16 and then we will start with Mr Dunlop and Mr Fairley. 17 We will resume again at 11.25. 18 (11.11 am) 19 (A short break) 20 (11.30 am) 21 Questions by CHAIR OF THE INQUIRY 22 CHAIR OF THE INQUIRY: You're still under oath, Mr Bell. 23 I think before Mr Dunlop asks you any questions, 24 could we go back, please, to the CEC01288043. 25 That's the email that we looked at before, and 59 1 attached to it was the spreadsheet that Mr Fairley is 2 going to ask you about. 3 In the second paragraph, Mr Hamill explains that you 4 can't alter one figure in the QRA without affecting the 5 others, and he then says: 6 "Therefore, in order to get round this problem, 7 I have basically 'pockled' the spreadsheet and hard- 8 entered some values." 9 So what did you understand by "hard-entered"? 10 A. He didn't run a calculation against that particular line 11 entry. He made a direct adjustment to that particular 12 risk ID. 13 CHAIR OF THE INQUIRY: He put in a predetermined figure? 14 A. Adjusted it, yes. So it resulted in the revised number. 15 CHAIR OF THE INQUIRY: Thank you. 16 Examination by MR DUNLOP QC 17 MR DUNLOP QC: I'm obliged, my Lord. 18 Mr Bell, if we leave to one side the difference 19 between what Mr Fitchie said and what you have said 20 regarding normal development risk, normal design 21 development, am I right in understanding that you 22 certainly knew that significant change in design was at 23 tie's risk? 24 A. Yes, it is beyond that normal design development, that 25 would be a client-related risk. 60 1 Q. And likewise delays in consents or approvals would be 2 a tie risk? 3 A. Yes, but I think with a certain minor caveat such as the 4 quality of submission. That was an Infraco and SDS 5 risk. Similarly, if matters had been associated with 6 Infraco proposals, that was not a tie risk. That would 7 have been an Infraco responsibility. 8 Q. If we have those two examples in mind, please, could we 9 look again at parts of a document we've seen but weren't 10 taken to. CEC01449100. 11 Do you remember looking at this with my learned 12 friend? This is Bilfinger's Design Due Diligence 13 Summary Report. I think you accepted seeing it at the 14 time; is that right? 15 A. Or certainly shortly thereafter, yes. 16 Q. Thank you. If we go to page 3 of that document, and if 17 we look at the top half of the page, I think you were 18 taken to the first paragraph, and we see that the 19 executive summary says: 20 "In order to determine the design status prior to 21 contract award a technical due diligence has been 22 carried out for the design of the ETN Project. The due 23 diligence process has been based on the relevant design 24 information received by [the consortium] by 25 14 December 2007." 61 1 If we could just look at the next paragraph, it 2 says: 3 "Contrary to the tie's original intention for this 4 project stage, the design is incomplete and will require 5 significant further development." 6 Is that correct? 7 A. It's what it says, yes. 8 Q. So significant further development, you were aware that 9 that was going to be at tie's risk? 10 A. The design was incomplete. The design that SDS were 11 completing is to achieve the Employer's Requirements, 12 Infraco understood what they were, as did SDS. So some 13 elements will be less progressed. So there's quite 14 a lot of work to do, but the end result was a clear 15 outcome in target, and therefore I would have expected 16 that the Infraco would have assessed what that normal 17 design development would have been. If it was beyond 18 that, then that would have been at tie's risk, but just 19 because it's early in the process doesn't mean that it 20 automatically falls to be automatically beyond normal 21 design development. You have to measure it against 22 where you start from in the process. 23 Q. Well, it's you that's used the word "significant" in 24 your own evidence. I'm just asking you to comment on 25 the fact that you must have been aware, from this 62 1 document, that significant further development of the 2 design was going to be necessary. 3 A. The design needed to be completed. So in terms of 4 volume of work, there was a more significant volume of 5 work than items that had still to be completed, but the 6 principles may well -- they are normally set out in the 7 outline design, and therefore I would have expected that 8 that would have been taken cognisance of by the Infraco 9 as part of that. 10 Q. In terms of to what extent it was completed, if we look 11 to the last sentence in that paragraph, we see that: 12 "According to the SDS document tracker more than 13 40% of the [DDI] has not been issued to BBS at 14 all by the above mentioned cut-off date." 15 Is that right? 16 A. That's what it says, yes. 17 Q. The importance of the above-mentioned cut-off date, 18 December 2007, was that Wiesbaden was tied to what was 19 apparent as at that date, wasn't it? 20 A. It was. However, the outline design information was 21 also available. So that's the earlier stage in the 22 process. So it was not unknown, the type of solution 23 that was there. What hadn't been issued in certain 24 circumstances was some of the detailed design drawings 25 or information in individual packages. 63 1 Q. Yes. Okay. On the question of delays in consents and 2 approvals, if you look down that document, please, and 3 if we see the third last paragraph on that page: 4 "For many areas the 3rd party approval status is 5 not clear. Formal tie/CEC design approvals are 6 generally outstanding. Not a single design element has 7 received final approval and has been issued for 8 construction." 9 So again, that was known. This is February 2008. 10 It was known that there was an outstanding issue with 11 regards to consents and approvals? 12 A. There was, and the lack of clarity on third party 13 approval status was highlighted there, yes. 14 Q. And consents or approvals, subject to the caveat you 15 mentioned earlier, were a tie risk? 16 A. If the -- yes, subject to the caveat around there needs 17 to be a quality submission with regards to that, and if 18 the third party or consenting authority required 19 a different change from that proposed, then that was 20 likely to result in a tie risk, yes. 21 Q. It was also known that a number of the Pricing 22 Assumptions in Wiesbaden carried forward into Schedule 23 Part 4 were incorrect, and that, as and when they fell, 24 there would be a Notified Departure? 25 A. I think we'd already talked extensively about the design 64 1 programme example. 2 Q. Yes. 3 A. The other regularly discussed example was the roads 4 reconstruction assumptions that Infraco had made, and 5 we've already talked about that specific pricing 6 assumption, and yes, that was identified. 7 The purpose of Wiesbaden was also to confirm the 8 value engineering approach, and those were elements that 9 were also clearly embedded within that Schedule. So 10 that was discussed. 11 Q. We can go back to it, if necessary, but it's perhaps not 12 immediately required. If you think about the email from 13 Mr Fitchie, 31 March 2008, do you remember that one 14 talking about the risk of Notified Departure? 15 A. Yes. 16 Q. Using the words like "all encompassing" and 17 "conservative" would be the approach of Bilfingers? 18 A. Yes. 19 Q. So from that email, you were aware, or tie generally 20 were aware, that there were going to be Notified 21 Departures, plural, once the contract was signed? 22 A. We did expect Notified Departures, and I think we 23 covered that yesterday. 24 Q. Yes. As you fairly indicated, you weren't able to say 25 with certainty how many there would be or to what extent 65 1 they were agreed? 2 A. Yes. 3 Q. Mr Fitchie suggested a mitigation approach, and we saw 4 the two responses, one from Mr Gilbert, one from 5 Mr McEwan, that perhaps suggested a difference of 6 approach in dealing with that. 7 Your evidence is that you, I think, largely heeded 8 Mr Fitchie's advice; is that right? 9 A. We undertook a number of mitigations or continued with 10 a number of mitigations, but there were some matters 11 that weren't fully resolved. 12 Q. As Mr Fitchie said in that email, the mitigation risks 13 were practical ones, rather than legal ones. They were 14 ones that you and Mr McEwan were best placed to deal 15 with; is that right? 16 A. I think in the main, yes. There were a number of 17 contractual or risk allocation items that were tweaked 18 that we touched on, I think, in the two stages of price 19 adjustment. One on 7 March and one on the 9th or so of 20 May. 21 So there was some contractual risk adjustment in 22 those examples, but many of the other things were about 23 delivery performance. 24 Q. Yes. Primarily you dealt with that by making risk 25 allocations, by making provisional sums and the like? 66 1 A. From a financial perspective, yes, but from an action 2 point of view, confirming that any mitigations were 3 being undertaken, or planning to do so. 4 Q. You will have told Mr Fitchie that you were acting in 5 accordance with his advice and taking steps to mitigate 6 the risk? 7 A. We certainly went through those mitigating actions and 8 reinforcement of those that I can recall with Andrew. 9 I don't think we went through every single item, but we 10 certainly covered a number of them. 11 Q. Yes. If we could go back, please, to the DLA advice 12 letter, CEC01033532. 13 You will recall looking at this. This is DLA's 14 letter of 12 May 2008, shortly before close? 15 A. Yes. 16 Q. If we go to page 3 of that, please. Paragraph 5 under 17 "Risk". You looked at this yesterday. I just want to 18 be clear. 19 My learned friend sought to suggest that the second 20 paragraph under "Risk" only alerted parties to one 21 possible Notified Departure. I think you were telling 22 his Lordship that the position was otherwise. 23 Can I just be clear; is that correct? 24 A. Yes, the point around management of Notified Departures, 25 plural, when and/or if any of the programme-related 67 1 Pricing Assumptions fall was the illustration that was 2 given there. 3 Q. Yes. Just to be clear, as at 12 May 2008, was there any 4 doubt that some of the Pricing Assumptions would fall? 5 A. We expected some of them to a degree. 6 Q. Yes, thank you. 7 That, you were telling his Lordship yesterday about 8 the conference call that you took part in with -- 9 I think it was yourself and Mr Fitchie and Ms Lindsay? 10 A. Yes, and there may have been others on the call, but 11 certainly that's my recollection. 12 Q. And the possibility of multiple Notified Departures will 13 have been part of that conference call? 14 A. We didn't -- I don't recall talking numbers of, but I do 15 recall about the principle of Notified Departures, and 16 that entitlement sits in the suite of documents. 17 Q. Yes. We've already spoken about things like the design 18 needing to be completed, consents being outstanding for 19 multiple items, and that remained something that was -- 20 was live in May 2008, didn't it? 21 A. It was, yes. 22 Q. If you could look, please, at CEC01347795. 23 That's the risk allocation matrix that I think you 24 were talking about yesterday with his Lordship. 25 A. Yes. 68 1 Q. You indicated that -- perhaps a previous iteration of 2 this, but these sorts of things will have again been 3 discussed in the conference call? 4 A. Yes. I think the purpose of the call was to really 5 highlight any differences from the previous version of 6 this, which from memory I think was produced round about 7 early March. 8 Q. Yes. Okay. So as far as you were concerned, Edinburgh 9 Council were, or Ms Lindsay at least, was fully sighted 10 on the risk allocation matrix if you wanted to make 11 clear any differences that there were? 12 A. Yes, and I think to be fair to Ms Lindsay, it was 13 an action arising from one of the Tram Project Boards 14 that -- to make sure that that tripartite discussion had 15 taken place. 16 Q. Yes. If you just look briefly at this document, please. 17 If we can turn to page 22 in the document. If we look 18 to the bottom half, just after the table break, we see 19 a number of items where public sector holds the risk. 20 The first is Pricing Assumption does not hold good; 21 is that right? 22 A. Yes. 23 Q. Five below that: 24 "Execution of Utilities Works or MUDFA works." 25 A. Yes. 69 1 Q. Then four again below that: 2 "Failure by tie to obtain any Land Consent, Building 3 Fixing Agreement, Consent, land agreement or TRO." 4 A. Yes, that's Traffic Regulation Order, yes. 5 Q. All at the public risk? 6 A. Yes. 7 Q. Again, if we turn on, please, to page 24 in that 8 document, if we see at the top, the third line in the 9 top part of the table, 80.14, that's referring to 10 Clause 80 in the contract, I think? 11 A. Yes. 12 Q. "Delay/costs due to a tie Change (save where the Infraco 13 could have prevented the need for the tie change)." 14 A. Yes. 15 Q. And again public sector risk? 16 A. Yes. 17 Q. Again, please, to page 26. Do we see there, again, 18 a reference to Clause 80. It's the second line after 19 the break: 20 "tie Changes, Mandatory tie Changes and Notified 21 Departures." 22 Again, noted as being public sector risk? 23 A. Yes. 24 Q. Thank you. 25 Matters such as Notified Departures you were telling 70 1 us earlier will have been discussed with Ms Lindsay in 2 the course of the conference call? 3 A. I expect so, because they're in effect the kind of 4 mandatory tie change Notified Departure part of that 5 line 80. 6 Q. Yes. You will have discussed at least at a level of 7 generality that tie were anticipating and assessing 8 anticipated Notified Departures and were making 9 mitigation or trying to mitigate this by making 10 contingencies; is that right? 11 A. I think we probably discussed two levels mitigating to 12 try and avoid the Notified Departure, but if that was 13 not able to be mitigated, then an appropriate 14 contingency or allowance for it, as we evaluated. 15 Q. Yes. On things like contingencies and allowances, 16 that's a technical or commercial matter rather than 17 a legal one? 18 A. Primarily, yes. 19 Q. Again, you will have discussed that with Ms Lindsay? 20 A. I'm sure we did in the generality of that principle. 21 Q. So if we think about a question that his Lordship asked 22 you yesterday, if someone -- let's say the Council -- 23 wanted to know what the exact price would be, then you 24 indicated you wouldn't be able to say: I can tell you 25 what the exact price would be. 71 1 A. Correct. 2 Q. Ms Lindsay would have known that she couldn't say what 3 the exact price would be? 4 A. I believe so because we did discuss, I'm pretty sure, 5 the description of the construction works price and what 6 that was made up of. 7 Q. Because frankly, at the point of contract close, no one 8 could know what the final price was going to be. Were 9 you hiding any of that from the Council? 10 A. No. 11 Q. Had you any reason to conceal that from the Council? 12 A. Absolutely not. 13 MR DUNLOP QC: Thank you, Mr Bell. I'm obliged, my Lord. 14 CHAIR OF THE INQUIRY: Mr Fairley? 15 Examination by MR FAIRLEY 16 MR FAIRLEY: Mr Bell, could I take you back to the early 17 part of 2008 when Mr Gilbert was discussing and 18 negotiating with Bilfingers over the Part 4 of the 19 Schedule and in particular the Pricing Assumptions. 20 At that stage, if I have understood correctly, 21 design was around 40 per cent incomplete; is that right? 22 A. Yes. I think we talked earlier circa two thirds 23 complete, but yes, between -- 24 Q. Somewhere of that -- 25 A. Between 60 and 70 per cent complete or 30 to 40 per cent 72 1 incomplete. 2 Q. Yes. Can I take you that that would have been known to 3 Mr Gilbert as a senior member of the commercial team? 4 A. Absolutely. 5 Q. Now, I think it's also fair to say that that created 6 a potential departure from the procurement process which 7 had been to ensure that there was 100 per cent design by 8 the time the contract was let to Infraco; is that right? 9 A. Yes. 10 Q. And again, I don't think it's contentious, but simply to 11 set the context of what I'm asking you about here, tie 12 evolved a strategy to deal with that, that essentially 13 had two limbs. The first being novation of the design 14 subcontract to Bilfingers and the second being 15 a transfer to Bilfingers of normal design development 16 risk; is that right? 17 A. Yes. The novation strategy was set though fairly early 18 in the process. So that was always the intent. 19 Q. Okay. I'm not going to ask you about the novation 20 strategy. I simply mentioned it in case I was accused 21 of being selective. 22 But I really just want to ask you about the transfer 23 of risk of normal design development. 24 When we talk about normal design development risk, 25 that's risk to cost and risk to time; is that right? 73 1 A. Yes. 2 Q. Again, how clear was it to Mr Gilbert in early 2008 that 3 the strategy of tie was to transfer normal design 4 development risk in terms of cost and time to the 5 consortium? 6 A. I think it was very clear. 7 Q. You've talked about meetings attended not just by people 8 from tie, but by external advisers, including DLA. How 9 clear was it to DLA that the strategy of tie in the 10 period early 2008 was to transfer normal design 11 development risk of cost and time to BBS? 12 A. I believe that was very clear, and I think we've covered 13 some email correspondence from Mr Fitchie to that effect 14 where he talks about it. 15 Q. Okay. 16 But the question that may beg, I suppose, is: what 17 is the meaning of normal design development? And that, 18 I think, ultimately came to be at the heart of a lot of 19 the disputes that tie ended up in with BBS. Am I right 20 about that? 21 A. It did, yes. 22 Q. You were asked yesterday by Counsel to the Inquiry for 23 an example of something that would fall outwith normal 24 design development, and the example I think you gave was 25 something like a change from a bridge to an underpass; 74 1 you said would go beyond the scope of normal design 2 development. Am I right about that? 3 A. That was the example I gave, yes. It's probably at the 4 extreme end of the spectrum. 5 Q. Yes. 6 Well, that's really why I want to explore this with 7 you in a little more detail. 8 I took from that, although you weren't asked about 9 the other end of the spectrum by Counsel to the Inquiry, 10 about what would fall within normal design development, 11 but I took from that an implication that it was changes 12 that were fundamental and perhaps also unforeseen or 13 unforeseeable. Am I right about that? 14 A. At which end of the spectrum? 15 Q. That would fall outwith normal design development? 16 A. Yes. They wouldn't have been foreseen by the concept of 17 the design or the normal completion of that design. 18 Q. Yes. So if there was a radical change that had not been 19 either foreseen or foreseeable at the time when 20 Bilfinger were fixing their price, such as a change from 21 a bridge to an underpass, that would constitute a change 22 to normal design development? 23 A. Yes. 24 Q. But I think we know that there were other sources of 25 information available to Bilfingers apart from simply 75 1 design drawings as to how this tram was going to be 2 built; is that right? 3 A. That's correct. 4 Q. We'll come on in a moment and I'll ask you about 5 Employer's Requirements, but just pausing here, at this 6 time was it tie's strategy then to pass on to Bilfingers 7 risk for normal design development, that being things 8 that were unforeseeable at the time when Bilfingers were 9 quoting their price? 10 A. I heard that question as normal design development 11 including unforeseeable matters; is that what you mean? 12 Q. Sorry. It's my fault. It's a bad question. 13 The strategy of tie at this time was to pass to 14 Bilfingers the risk for normal design development? 15 A. Yes. 16 Q. And tie's understanding of what normal design 17 development was, was it was everything apart from the 18 unforeseeable? 19 A. Particularly matters that could be moved to completion 20 from the current design status as viewed by an 21 experienced design and build civil engineering 22 contractor. 23 Q. As viewed by an experienced design and build civil 24 engineering contractor with information about what it 25 was he had to build? 76 1 A. Correct, which included the Employer's Requirements, 2 information such as the Tram Design Manual and other 3 guidance. 4 Q. So was that strategy one that Mr Gilbert was well aware 5 of? 6 A. Yes. 7 Q. Was that strategy one which DLA were well aware of? 8 A. Yes. 9 Q. So was it therefore tie's strategy that in addition 10 to -- sorry, that any changes additional to Base Date 11 Design Information that were consequent upon Employer 12 Requirements should fall to BBS as at their risk? 13 A. Yes, generally. Clearly if there's a specific example, 14 BBS intimated that we would review that on the base of 15 its individual facts, but generally you're correct. 16 Q. And the reason I ask that is we looked at a couple of 17 the Pricing Assumptions yesterday, I think it was 13 and 18 19, where there was a very specific area of work where 19 Bilfingers said: we are not taking risk for anything on 20 this beyond what is in the Base Date Design Information. 21 A. Yes. 22 Q. That might tend to suggest that in other areas where 23 that wasn't specifically catered for in those very 24 specific Pricing Assumptions, there was the prospect of 25 Bilfingers taking risk for things that went beyond Base 77 1 Date Design Information. Was that your understanding? 2 A. Correct, and I think that was debated in some of the 3 Dispute Resolution Procedures as well. 4 Q. Was that a clear understanding within tie, and in 5 particular on the part of Mr Gilbert, that that was what 6 you were trying to achieve? 7 A. I believe that was very clear, yes. 8 Q. Were DLA clear about that too? 9 A. I believe so, yes. 10 Q. Now, at any stage did Mr Gilbert say to you that the 11 words that he had negotiated with BBS did not achieve 12 that objective? 13 A. No. 14 Q. The same question in relation to DLA. At any stage did 15 anyone at DLA say to you: you haven't achieved that 16 objective of transferring risk for completing Employer's 17 Requirements, effectively, to BBS? 18 A. No, that wasn't stated. 19 Q. If we look just briefly at the Schedule Part 4, please, 20 which is document CEC01245224. 21 If we go in that document, please, to page 5, and if 22 you could enlarge the section at the foot of page 5, 23 3.4, Pricing Assumptions, just down to the foot of the 24 page is fine. 25 Now, just looking at this section in isolation, this 78 1 Price Assumption is to the effect that the design 2 prepared by SDS will not, and then there's a section in 3 parenthesis which I'll come back to, but if we leave the 4 section in parenthesis just now, it says it will not: 5 "in terms of design principle, shape, form 6 and/or specification be amended from the drawings 7 forming the Base Date Design." 8 Do you see that? 9 A. Yes. 10 Q. If we then read into that the section in parenthesis, so 11 the general proposition is that the designs prepared by 12 SDS will not differ in design principle, shape, form 13 and/or specification from the drawings forming the base 14 date design. That's the general principle. But the 15 exception in parenthesis is: 16 "... (other than amendments arising from the normal 17 development and completion of designs)" 18 Do you see that? 19 A. Yes. 20 Q. So thus far in this clause, what we have is a provision 21 that says that if it's normal development and completion 22 of designs, that is at BBS risk. Is that right? 23 A. Yes. 24 Q. That would be regardless of whether or not it was 25 a change to design principle, shape, form and/or 79 1 specification? 2 A. That's correct. That's -- 3 Q. So there could be changes to design principle, shape, 4 form and/or specification that were simply normal design 5 development? 6 A. Yes. 7 Q. Your understanding was that the strategy at tie was to 8 transfer all of that risk for normal design development 9 to BBS; is that correct? 10 A. That's correct. 11 Q. When we go on, however, in this clause, and if you can 12 just go over the page, please, could you enlarge the 13 section -- just the section, "For the avoidance of 14 doubt", please. This is the section right at the end of 15 this clause which I think we now know caused all the 16 difficulty because what it says is that: 17 "normal development and completion of designs means 18 the evolution of design ... 19 and excludes changes of design principle, shape and 20 form and outline specification." 21 That's exactly the opposite of the strategy that tie 22 was trying to pursue, isn't it? 23 A. Yes. 24 Q. Was that ever highlighted to you by Mr Gilbert in the 25 course of his drafting and negotiation of this document? 80 1 A. Not that I can recall. No. 2 Q. Did you notice this problem in the document when you 3 read it at the time? 4 A. I read it understanding it to enact the transfer of risk 5 that we identified for normal design development. 6 I didn't read it in the way that was subsequently tested 7 in a number of disputes, and highlighted the difficulty 8 in reading it, as did, I think I mentioned earlier, when 9 McGrigors reviewed it, this was a particular area of 10 concern they flagged in 2010. 11 Q. Yes. So it was really only when tie started losing 12 adjudications that the penny started to drop that 3.4, 13 pricing assumption 3.4 may not have fulfilled to any 14 extent the strategy that had been in the minds of 15 yourself and others at the start of 2008? 16 A. That we believed had been delivered through the 17 contract, yes. 18 Q. And that led to some fairly extreme results in certain 19 of the adjudications. In the Carrick Knowe 20 Adjudication, for example, there was, I think, an 21 argument about whether anti-pigeon measures on 22 Carrick Knowe Bridge were a Notified Departure. Do you 23 remember that? 24 A. I do remember that, yes. 25 Q. And in fact I think I'm right in saying that the 81 1 conclusion of that adjudicator was that these 2 anti-pigeon measures on the Carrick Knowe Bridge were 3 a Notified Departure because even though they were in 4 the Employer Requirements, they weren't shown on the 5 Base Date Design Information. 6 A. For example, that particular adjudicator had 7 a particular view on the interpretation of that. Others 8 had a different perspective. 9 Q. I understand that. I'm really focusing on the defect in 10 the contract as it was interpreted by those 11 adjudicators. But that certainly, if that adjudicator 12 was right, and that's the hypothesis on which we're 13 operating for the purposes of these questions, his 14 reasoning was that the reason that the consortium was 15 entitled to be paid more for anti-pigeon measures on the 16 bridge was that even though they knew that that was part 17 of the Employer's Requirements, and they knew from the 18 outset that that was what they were going to have to 19 build, because it wasn't specifically drawn on the Base 20 Date Design Information, it was a Notified Departure. 21 That was his conclusion? 22 A. It was. 23 Q. Was that extreme interpretation or result of the 24 contract something that you had anticipated? 25 A. No, it was not. 82 1 Q. Was it something that anybody, Mr Gilbert or anybody 2 else, had ever warned you about? 3 A. No, I can't recall any discussion of that type of 4 conclusion. 5 Q. Leaving that point now, Mr Bell, could I take you to the 6 Schedule of Risk Allocation that was mentioned in the 7 email that you looked at earlier, but you weren't taken 8 to it, so I'll do that, having undertaken to do so. 9 CEC01295329. CEC01295329. 10 Now, if you take it from me, Mr Bell, this is the 11 spreadsheet that was attached to the email you were 12 referred to earlier from Mr Hamill. I think I'm right 13 in saying that the figures shown there in red are the 14 adjustments that Mr Hamill had hard entered to this 15 Schedule. Is that your understanding? 16 A. That's my understanding, yes. 17 Q. Can I just, first of all, start below the line 321 that 18 reads "QRA Total". Do you see that? 19 A. Yes. 20 Q. So there's a line there that says "QRA Total" and 21 beneath that there are three other items. I think you 22 told us about each of these in your evidence earlier, 23 but these were pretty round figures that had been 24 included for respectively value engineering, road 25 reinstatement, and a less round figure for unspecified 83 1 risks, but these are all added after the QRA total? 2 A. Yes. 3 Q. So this is taking the QRA total which the computer 4 software has thrown up and it's adding in manually 5 additional allowance for risk; is that right? 6 A. Yes, it is. 7 Q. It was that that brought out the figure of 32,000. 8 Now, can I ask you, first of all, what was the 9 thought process behind adding in figures to the QRA 10 total? Surely if the QRA total is designed to do what 11 it's supposed to do, then you should just live with the 12 QRA total and you don't have to add anything else in? 13 A. That is based on the risk items identified and included 14 in the modelling. There were examples that you see at 15 the bottom such as non-delivery of VE and extent of road 16 reinstatement weren't included at the time of that March 17 review, but arose during the items where we were 18 confirming agreements with the Infraco on Schedule 19 Part 4. So we considered that in those examples that 20 there was the potential for a risk of non-achievement or 21 non-delivery of VE and that we should make an allowance 22 for that; and similarly, as I've touched on in my 23 earlier evidence, there was a difference between the 24 Infraco proposals on road reinstatement and what may be 25 required, depending on the CEC technical approval final 84 1 conclusion, which is why we had made that original 2 assessment of circa GBP2 million in each of these 3 categories. 4 Q. Would it be over-simplistic to describe this as a human 5 intervention in what would otherwise be an entirely 6 automated programme? 7 A. Definitely a human intervention. 8 Q. So you're applying your mind to whether or not the 9 number that the computer has coughed out is adequate? 10 There's clearly been a conclusion that additional 11 numbers need to be put in, and that has been done; is 12 that right? 13 A. That's correct. 14 Q. Now, you spoke about the extent of road reinstatement, 15 and I think you said in your evidence that there came 16 a point when the maximum liability for that was capped 17 off at 1.5 million. Did I understand that correctly? 18 A. That's correct. 19 Q. Is that what we see there in line 323, where 20 an allowance has been made of 2 million, but you have 21 then learned that the maximum liability is 1.5 million, 22 and so there's a manual reduction of that by 500,000 in 23 that same line, 323 in the deltas column? 24 A. That's correct. 25 Q. By the same token, if we go up above the VRA total line 85 1 to 316, under "General Programme Delay"? 2 A. Yes. 3 Q. There has been a manual reduction of 1.3 million in 4 relation to general programme delay. 5 A. That's correct. 6 Q. How was that assessed? 7 A. Again, that was assessed looking at the change in risks 8 and liabilities on quality of SDS design, and as part of 9 the final contractual discussions, the roads 10 reinstatement item and a series of four GBP1.2 million 11 incentivisation payments were identified. So there 12 would have been time elements associated with road 13 reinstatement that would have reduced a general risk, 14 and also there was a consideration that being 15 incentivised to deliver the key milestones with 16 a financial incentive on time would allow some reduction 17 of general programme delay. That's how we concluded 18 that GBP1.3 million adjustment. 19 Q. Is it fair to say that that is more a question of 20 judgment than the extent of road reinstatement saving on 21 risk of 500,000? 22 A. It is, yes. 23 Q. Did you and others exercise your judgement about whether 24 or not it was appropriate to make a reduction of 25 1.3 million in general programme delay? 86 1 A. Yes, we did. 2 Q. Were you satisfied that it was? 3 A. At that time, and with our understanding of the contract 4 and terms, yes. 5 Q. So were you making that reduction honestly and in good 6 faith? 7 A. Absolutely. 8 Q. Looking at the reduction for road reinstatement, that 9 wouldn't affect the QRA figures if they were re-run 10 because it's below the line; is that right? 11 A. That's correct, unless we amend the QRA and add in a new 12 risk ID for road reinstatement, and then incorporate it. 13 At this point in time, that hadn't been done. 14 Q. But any change to anything below the QRA total line is 15 not going to have an effect if you re-run the QRA 16 programme? 17 A. No, it's just going to be added afterwards. 18 Q. But something above the line is going to affect the QRA 19 programme, isn't it? 20 A. When it's re-run. 21 Q. When it's re-run. If I have understood Mr Hamill's 22 evidence on that correctly, it is not possible simply to 23 take GBP1.3 million out of general programme delay 24 because the computer doesn't understand that, and when 25 you re-run the figures, all of the figures change; is 87 1 that right? 2 A. Yes. 3 Q. This discussion over risk in the period leading up to 4 financial close, was this something in which City of 5 Edinburgh Council officials had been closely involved? 6 A. I don't think they were at the final meeting that we 7 discussed this item -- 8 Q. No, sorry, that wasn't my question. In the period 9 leading up to the point at which this spreadsheet was 10 produced, had there been discussions over a period of 11 weeks and months with City of Edinburgh Council about 12 risk allocation? 13 A. Yes, there had, and in particular some of the technical 14 items associated with things like road reinstatement and 15 the approvals risks, because they were intimately linked 16 to the City of Edinburgh's ability to perform in those 17 areas. 18 Q. Just taking one example out of this, if we look at the 19 Infraco/Tramco delivery risk, which is shown there at 20 6.872314 million, is that a figure that would have been 21 discussed with City of Edinburgh Council in the period 22 leading up? 23 A. I'm sure the summary that totalled up to the 32.347 was. 24 Q. Yes. 25 A. So each of the individual build-ups would have been 88 1 discussed, and, for example, things like TROs were very 2 much informed by the City of Edinburgh Council's 3 expertise on that process. 4 Q. Yes. 5 A. And we -- we relied on some key information from their 6 officers. 7 Q. So if we look at the figures in the AFC P1 column, from 8 line 313 down to 320, just the line above the total, do 9 I understand then that those are all figures with which 10 those in CEC would have been familiar as a result of 11 these earlier discussions? 12 A. Yes, and I would have expected that type of summary to 13 be part of what had been shared with Alan Coyle and his 14 colleagues back in March. 15 Q. So was the point that Mr Hamill was making in his email 16 effectively that if you try to deduct 1.3 million from 17 general programme delay in isolation, you're actually 18 going to change every single one of these figures if you 19 run the QRA again? 20 A. That's the risk, yes. 21 Q. It's not just a risk. That's the way the programme 22 works, isn't it? 23 A. Yes. 24 Q. That would have meant that the figures that you would 25 have then have been showing City of Edinburgh Council 89 1 for, for example, Infraco/Tramco delivery, would have 2 been different? 3 A. It would have been different. We don't know what it 4 would be, but it would have been different. 5 Q. But in point of fact, the risk profile of Infraco/Tramco 6 delivery had not, as far as you were concerned, changed? 7 A. We hadn't made a change too that at all. 8 Q. And similarly, I could go down through the risk, but the 9 risk profile for designs and consents remained at 10 3.301992? 11 A. Yes. 12 Q. And MUDFA 8644277; is that right? 13 A. Yes. 14 Q. So really what Mr Hamill was saying he was trying to do 15 was maintain the position on these other risks which had 16 not changed, so as to give City of Edinburgh the figures 17 that they were used to seeing? 18 A. Yes. 19 Q. Whilst at the same time taking 1.3 million out of 20 general programme delay? 21 A. Correct. 22 Q. There was no subterfuge involved in that. It was simply 23 a question of presenting figures that they'd already 24 seen? 25 A. Absolutely not. And any time that Alan Coyle or his 90 1 team sought to enquire on some of these matters, my 2 recollection is he got a very clear opportunity to work 3 through the detail. And as did some of his colleagues. 4 Q. Is it correct that when the human element becomes 5 involved in a risk assessment, there can be a level of 6 subjectivity in deciding what figures to put in? 7 A. Yes. 8 Q. That explains the 2 million additions that we see for 9 value engineering and 2 million for road reinstatement, 10 but it also explains the 1.3 million reduction? 11 A. They were -- had an element of subjectivity applied to 12 them. 13 Q. And in the Close Report -- I wonder if we could just 14 look finally at that. That's CEC01338847. 15 Can you go to page 6 of that document when it's on 16 the screen, please. 17 If you just stay on page 1 of the document so we can 18 see what it is. I think I have described it wrongly. 19 It's one of the financial close documents, but it's 20 the financial close process and record of recent events 21 document that you were shown. 22 Could you go to page 6, please, now. 23 In the fourth line of that page 6, there is 24 a reference to 4.6 million of exposures having been 25 removed, acknowledging that their evaluation is 91 1 judgmental. 2 Now, I know we're not talking about exactly the same 3 thing, but is that a reference to there being an element 4 of subjectivity when looking at risk exposure? 5 A. Yes, it is an element of subjectivity in that reference. 6 Q. But you are saying that in the report, in this report -- 7 A. Yes. 8 Q. -- which is part of the close papers? 9 A. At that time. 10 Q. And there is an element of subjectivity in that? 11 A. And it draws out where there are some explicit items. 12 Q. That was the next question. The 0.5 million is 13 explicitly reflected in the QRA; is that the roads 14 reinstatement? 15 A. Strictly speaking, it was in the line below the QRA 16 number, but as part of the overall risk summary, and 17 I think in this report, QRA was being used as shorthand 18 for the total risk. 19 MR FAIRLEY: Shorthand for risk. I see, I understand. 20 Thank you, Mr Bell. I have no further questions. 21 Questions by CHAIR OF THE INQUIRY 22 CHAIR OF THE INQUIRY: Mr Fairley, you referred Mr Bell to 23 the Schedule 01295329, which I also recognise, and that 24 was the Schedule which I mentioned before the break. 25 But as I understand it, the mechanism adopted by 92 1 Mr Hamill related to the QRA document CEC01288044. So 2 could you put that up, please. CEC01288044. 3 Now, this is the QRA assessment. I think if you -- 4 can we scroll down, please? I'm looking for a figure 5 under PB. Sorry, go back up. There's a column with PB. 6 Can you move it to the left, please. 7 If you go back then to P80, to the left. I'm 8 looking for a figure of 517. 9 Anyway, perhaps we can deal with this another way. 10 But I understood from material I have read that what 11 happened was that Mr Hamill took a figure here and 12 instead of the formula which -- the computer uses 13 a formula, instead of the formula for particular 14 figures, he put in the figure overriding the formula. 15 And he got a print-out showing the figure which then 16 adjusted. 17 Did you understand that had been done? 18 A. When we reviewed it and discussed it with Mark, we 19 utilised the summary sheet that we've just looked at 20 prior to this sheet. So this was around what 21 adjustments were to be made. 22 CHAIR OF THE INQUIRY: Yes. And then did he go on and 23 adjust -- 24 A. At the time I had assumed that he had gone on and dealt 25 with it within the individual line entry -- 93 1 CHAIR OF THE INQUIRY: Yes. 2 A. -- that was relevant to general delay. That was my 3 understanding of what he was going to do; it was one of 4 the reasons why we had flagged that in the summary sheet 5 to show that's what we had done in that particular 6 circumstance. 7 CHAIR OF THE INQUIRY: Would that involve adjusting the QRA 8 figure -- 9 A. I think -- 10 CHAIR OF THE INQUIRY: -- by substituting the figure that 11 you want for the formula? 12 A. My expectation was -- I don't know the mechanics of how 13 it would work -- that he would look at the relevant 14 total column and make that adjustment, rather than 15 trying to adjust matters within the min/max and most 16 likely values because he doesn't know what's going to 17 spit out accordingly. 18 So the column on the right-hand side in total for 19 that entry, I believe was the one he intended to make 20 a manual adjustment to. 21 CHAIR OF THE INQUIRY: So he would make a specific entry 22 relating to -- 23 A. Yes. 24 CHAIR OF THE INQUIRY: In the QRA relating to a particular 25 item of risk. 94 1 A. Against that particular item. 2 CHAIR OF THE INQUIRY: And that's achieved by overriding the 3 formula and putting in the figure that you want to see? 4 A. I believe that was the end result, subjective 5 conclusion, that that element within the QRA was 6 adjusted to the 5.7 number as opposed to its 7 predecessor. 8 CHAIR OF THE INQUIRY: Do you want to ask anything else, 9 Mr Fairley? 10 MR FAIRLEY: No, my Lord. 11 CHAIR OF THE INQUIRY: Thank you. 12 Thanks very much, Mr Bell. You're free to go. 13 You're still under citation, and it's possible you could 14 be recalled. But if that happens, we will be in touch. 15 A. Thank you. 16 (The witness withdrew) 17 MR MACKENZIE: My Lord, the next witness is Susan Clark. 18 MS SUSAN CLARK (sworn) 19 CHAIR OF THE INQUIRY: You are going to be asked some 20 questions by Mr Mackenzie. If you just listen to the 21 question and answer it as directly as you can, and if 22 you keep your voice up and speak at a measured pace, so 23 the shorthand writers can keep up with you. 24 A. Thank you, my Lord. 25 Examination by MR MACKENZIE 95 1 MR MACKENZIE: Good afternoon. 2 A. Hello. 3 Q. Can you state your full name, please? 4 A. I'm Susan Clark. 5 Q. And your current occupation? 6 A. I'm owner and Director of Great Glen Consulting. 7 Q. I would like to start by looking at the CV you have 8 provided to the Inquiry. It's CVS00000055. If we can 9 please start by going to page 3, we can see under 10 qualifications that you have a degree in chemical 11 sciences. You also have an MBA and you are a Prince 2 12 practitioner. 13 Could we please then go to page 2. We can see 14 towards the bottom, underlined heading that between 15 September 1989 and November 2002, a period of about 16 13 years, you had various roles in British Rail, 17 Railtrack and Network Rail. 18 What was the most senior position that you held 19 during that time? 20 A. That would be the Senior Commercial Manager, looking 21 after the Maintenance contract. 22 Q. During what period did you hold that position? 23 A. That would be from -- I recollect about 1999 to 2002. 24 Maybe 2000 to 2002. 25 Q. Thank you. Now, you also have referred to sponsors 96 1 agent, sponsor for various capital projects, and in your 2 statement, you mention a GBP25 million re-signalling 3 scheme at Cowlairs. Was that the biggest project in 4 terms of value in which you acted as sponsors agent? 5 A. It was, yes. 6 Q. If we carry on up the page, the next underlined heading, 7 between November 2002 and January 2004 you were 8 Commercial Manager for Scottish Water Scientific. If we 9 can carry on up, please, we then see between 10 January 2004 and August 2006 you were Project Director 11 for the EARL project while employed by tie Limited. 12 Can you explain the circumstances of your 13 appointment, please? Was this an open competition? 14 Were you approached or what? 15 A. I was approached by an old colleague. 16 Q. Who was that? 17 A. Paul Prescott, who I had worked with in the railway 18 industry. 19 Q. Was Mr Prescott in tie at that time? 20 A. He was, yes. He was actually Project Director for EARL 21 at that point. 22 Q. I see. I was going to ask you about that because 23 I think in your statement you explain you were two years 24 as Project Manager of EARL before then becoming Project 25 Director. I just wondered, you say in your CV you were 97 1 Project Director for EARL through January 2004 to 2 August 2006. Was there a period when in fact you were 3 the Project Manager for EARL? 4 A. That's correct, yes. 5 Q. So what should we take from it, that in January 2004 you 6 started as Project Manager for EARL; is that correct? 7 A. That's correct, yes. 8 Q. So when did you become Project Director for EARL? 9 A. I can't quite recall. I think it may have been about 10 18 months later, but I can't recall the exact dates now. 11 Q. Thank you. 12 Now, can we please go on to page 1. We see at the 13 bottom of the page underlined between August 2006 and 14 October 2011, you were Deputy Project Director for the 15 tram project while employed by tie Limited, and again, could 16 you explain the circumstances surrounding that 17 employment, please, in that did you apply for the post 18 in open competition or were you approached? 19 A. I was asked to transfer over from the EARL Project to 20 the tram project. 21 Q. Who by? 22 A. By Mr Gallagher. 23 Q. Thank you. Would it be fair to say that before the 24 Edinburgh Tram Project, you had no previous experience 25 at all in delivering a tram or light rail project? 98 1 A. That's correct. 2 Q. Would it also be correct to say that you had no previous 3 experience of diverting utility works in a city centre? 4 A. That's correct. 5 Q. Would it also be correct to say that you had no previous 6 experience of the issue of the planning consents and 7 approvals required for building a tram through a city 8 centre? 9 A. That's correct. 10 Q. Finally, just for the avoidance of doubt, is it fair to 11 say you had no engineering qualifications? 12 A. That is correct, yes. 13 Q. To what extent did you consider that your skills and 14 experience were relevant to acting as Deputy Project 15 Director for the trams project? 16 A. I think project management skills encompass a range of 17 skills which are all about managing people, managing 18 processes, and ensuring they have the correct skills 19 within the project team to deliver. And I think I had 20 those skills. 21 Q. Thank you. 22 Sticking with the CV, the first bullet point, you 23 explain: 24 "Responsible for programme, risk and project 25 controls leadership ..." 99 1 So obviously you were responsible for those matters; 2 is that correct? 3 A. My role changed over the duration of me being involved 4 in the tram project, but ultimately I was responsible 5 for a team that managed programme risk and the project 6 controls. 7 Q. So let's try and split it down a little. In terms of 8 the project having an overall programme, a master 9 programme, was that something that remained your 10 responsibility throughout your time as Deputy Project 11 Director? 12 A. Latterly it became my responsibility and I had 13 a programme manager who maintained that overall master 14 programme, yes. 15 Q. Thank you. I think in fact I'll deal with this when we 16 come to your statement, I think it's probably the better 17 way to deal with it. 18 You also, at the bottom bullet point, explain, you: 19 "Led a team of people responsible for the delivery 20 of all advanced works packages including utility 21 diversions, advance earthworks ..." 22 Did there come a point when that responsibility 23 changed? 24 A. Yes. So the advance earthworks were at the depot and 25 those moved over to the Infraco contract. And the 100 1 utility diversions, a project manager was brought in for 2 that, and that transferred away from my responsibility 3 as well. 4 Q. I think again, I'll deal with the timing of that when we 5 come to your statement, thank you. Over the page, 6 please, to page 2 of your CV. The first bullet point at 7 the top says: 8 "Responsible for all project reporting including 9 board papers and reports to Transport Scotland." 10 Is that a responsibility that remained with you 11 throughout your time as Deputy Tram Director? 12 A. So again, that became part of my team's responsibility 13 during the duration of my role, and that was my 14 responsibility by the time I left tie, yes. 15 Q. So when did that first bit become your responsibility 16 approximately? 17 A. I think approximately during 2008, when it probably 18 transferred from the finance team. 19 Q. Do you remember, was that before or after Infraco 20 contract close in May 2008? 21 A. I can't remember now. 22 Q. Thank you. We also then, in the fourth bullet point 23 down, see reference to "Budget, programme and risk 24 management requiring a detailed working understanding of 25 this complex contract". 101 1 The question of the project risk, was that 2 a responsibility you had throughout your time as Deputy 3 Project Director? 4 A. Again, that responsibility transferred into my team 5 during the course of my role as Deputy Project Director. 6 Q. Approximately when was that? 7 A. Again, I think that was probably in around 2008, but 8 I cannot recall the exact date. 9 Q. Okay. We can put the CV to one side, thank you. You've 10 also provided a written statement to the Inquiry. 11 I would like to formally go to that, please. It's 12 TRI00000112_C. I think you've got a hard copy on the 13 desk and there should also be a copy coming up on the 14 screen in a second. 15 I would like to go to the very back page, please, 16 page 72. We can see a signature dated 8 June 2017. 17 Could I just ask you please to confirm that is your 18 signature and this is the written statement you have 19 provided to the Inquiry? 20 A. That is correct, yes. 21 Q. Thank you. Your evidence to the Inquiry will comprise 22 your written statement in its entirety, together with 23 the evidence you give at the hearings today? 24 A. That's correct, yes. 25 Q. Now, sticking with the statement, can we go to page 2, 102 1 please, to try and get a better understanding of your 2 duties and responsibilities. At page 2 of your 3 statement, under question 2 sub-question 2, there is 4 a paragraph that commences: 5 "Programme Director/Delivery Director/Deputy Project 6 Director, Tram". 7 I understand the Deputy Project Director part of it; 8 can I just be quite clear, when you refer to Programme 9 Director, was that throughout the period you were Deputy 10 Project Director? 11 A. So my job title changed. I think I have explained that 12 my responsibilities changed and my job title changed 13 during the period. So I at various times was called all 14 those job titles. 15 Q. That sounds confusing. Is what you're saying that it 16 was -- they happened in sequence. So initially you were 17 Programme Director, you then became Delivery Director, 18 and you then became Deputy Project Director? 19 A. I believe that to be the sequence of events, yes. 20 Q. Are you sure about that? 21 A. Well, it's hard to recollect the exact sequence, but 22 I know I fulfilled all those roles during my time on the 23 tram project. 24 Q. I suppose what's perhaps confusing me is that in your 25 CV, you say between August 2006 and October 2011, you 103 1 were Deputy Project Director, but is that not correct? 2 A. I think in my CV I have tried to keep it very short and 3 summarise, rather than split it down into all the 4 timescales associated with being involved in the tram 5 project. 6 Q. But what we should understand is that initially in 7 August 2006, you were Programme Director for the tram 8 project? 9 A. I understand that, yes. That's my recollection. 10 Q. So when approximately did you become Delivery Director? 11 A. Again, I cannot recall the exact dates. I'm sorry. 12 Q. Do you know whether that was before or after Infraco 13 contract close in May 2008? 14 A. I believe that would be before, because I think that was 15 associated with delivering some of the early works 16 contracts which would be the -- the depot earthworks, 17 early environmental works, et cetera. 18 Q. When you were Delivery Director, did you still have 19 programme responsibilities? 20 A. I believe I did, yes. I think programme -- at one point 21 was managed through the TSS contract, but I think 22 I oversaw that, to begin with. 23 Q. I see. But just to be clear, when you became Delivery 24 Director, you still had some responsibilities in 25 relation to the programme? 104 1 A. Yes. 2 Q. Do you recall approximately when you became Deputy 3 Project Director? 4 A. I don't, I'm sorry, no. 5 Q. Do you think that was before or after Infraco contract 6 close in May 2008? 7 A. I can't recall, I'm sorry. 8 Q. Was there a Deputy Project Director in place before you? 9 A. Barry Cross was involved. I'm not sure what his role 10 was, and in fact Barry and I actually -- I transferred 11 over into his role and he transferred over into my role 12 in EARL in 2006. 13 Q. I don't wish to be unduly harsh, but it does sound as 14 though there was real confusion over your job title role 15 and responsibilities throughout this period? 16 A. I think my responsibilities changed over that period of 17 time. 18 Q. It may help if we perhaps come back to your statement to 19 follow that through, because you say here: 20 "Initially responsible for the management, through 21 the Programme Manager, of the overall Tram programme, 22 the utility diversion contract management, through the 23 MUDFA Project Manager and the procurement of early works 24 such as ecological works ... The MUDFA scope of works 25 then moved to another reporting line ..." 105 1 So to pause there, do you recall when approximately 2 that happened? 3 A. I think that probably happened in about end of 4 2007/2008, and my recollection is that that transferred 5 initially to Steven Bell. 6 Q. Thank you. But certainly from August 2008 until perhaps 7 late 2007, you had responsibilities in relation to the 8 MUDFA works? 9 A. That would be correct, yes, and we had a project manager 10 that managed those in my team. 11 Q. Who was the project manager? 12 A. So when I first got involved in the tram project, it was 13 Alistair Slessor and then Graeme Barclay. 14 Q. Similarly in relation to -- you say: 15 "The management of the Risk Manager, Third Party 16 Agreement Manager and Reporting Manager was transferred 17 to me." 18 I apologise if I have asked you this already, but 19 when approximately did that happen? 20 A. I can't be sure of the dates, but probably around 2008. 21 Q. Between August 2006 and the end of 2007, did you have 22 any involvement in the procurement of the Infraco 23 contract? 24 A. I was involved from the perspective of -- there was 25 a team pulling all the information together and I was 106 1 working with that team of people, trying to understand 2 the programme for pulling that together, et cetera. 3 Q. Was your involvement in relation to the process or 4 procedural matters of the procurement, or did it also 5 include substantive involvement? 6 A. It -- can you repeat that question, please? 7 Q. It's not a great question, is it? In short, there's 8 a difference between being involved in the procedure of 9 something and the process of something, and being 10 involved in the actual substance and taking substantial 11 decisions involving the merits, the matters of 12 judgments; and in relation to the Infraco procurement 13 between August 2006 and 2007, what I wonder is whether 14 your role was a procedural or managerial role, or 15 whether you were also rolling up your sleeves and 16 getting involved in making decisions and judgments about 17 the Infraco evaluation and procurement? 18 A. My role was primarily procedure, procedural, and 19 process. 20 Q. Thank you. 21 Now, returning to your statement, please, and again 22 sticking at page 2, if we can scroll down a little bit, 23 under "Programme Director Tram", we see you reported to 24 the Project Director. 25 A. That's correct. 107 1 Q. So that was when you were Programme Director. When you 2 were then Delivery Director and Deputy Project Director, 3 did you also report to the Tram Project Director? 4 A. I did, yes. 5 Q. Thank you. 6 Then just we will note in passing the bottom of the 7 page, we mentioned various meetings, in sub-question 4, 8 that you attended. We could highlight that perhaps. 9 Thank you. 10 There's a reference to the Design, Procurement and 11 Delivery sub-committee, the MUDFA sub-committee, and the 12 CEC/TIE Legal Affairs Committee, and over the page, 13 please, we will see your answer. You set out your 14 involvement in each of these committees and 15 sub-committees. 16 Could I then put that to one side, please, for now, 17 and move on to the issue of the master project 18 programme. 19 Is that something you were involved with? 20 A. It was, yes. 21 Q. Particularly between August 2006 and the end of 2007, 22 did you have responsibilities in relation to the 23 production of the master project programme? 24 A. I would have at some point. As I said, I can't be 25 exactly clear when I took on direct responsibility for 108 1 programme. The Programme Manager worked at first 2 through the TSS Project, but I think I always took an 3 overview of programme. 4 Q. Was that Tom Hickman? 5 A. It was, yes. 6 Q. And then at some point he transferred from TSS to being 7 employed by tie? 8 A. He did, yes. 9 Q. If I could bring up an example of the master programme, 10 CEC01626310. I refer to this purely for illustration. 11 Can we see the title at the very top of the page in 12 the middle box: 13 "Tram Full Programme". 14 And if we can zoom back out, please. 15 Is this essentially the master project programme for 16 the tram project? 17 A. It would be, yes. 18 Q. Yes. Again, I'm just going to go to this by way of 19 illustration. I think we see it includes the various 20 contracts; is that right? The various contract 21 programmes, rather? 22 A. It would do, yes. 23 Q. So if we go for example to page 5. 24 The dark blue line towards the top sets out 25 procurement strategy, and if we then zoom back out, 109 1 please, and if we go to the first pink line, we can see 2 "Infraco", certain dates set out there. 3 If we then please go to page 10 we can see, I think, 4 without zooming in, the green line, reference to SDS 5 Design? 6 A. Yes. 7 Q. So essentially it includes the SDS programme, and then 8 if we go, please, to page 28, I think we will see 9 reference to the MUDFA works and programme at page 28. 10 We see again the green line, "MUDFA Utilities". We 11 don't have to go into the details. Then lastly, if we 12 go to page 53, please, we'll see again the green line, 13 a reference to "Infraco Construction", and then the 14 pages after that, I think, are set out there the 15 intended Infraco construction dates. 16 So in summary, am I right in my understanding that 17 the master programme is compiled with reference to the 18 programmes of the other main contracts and works? 19 A. It is, correct, yes. 20 Q. So who within tie was responsible for producing this 21 master programme? 22 A. So Tom Hickman who was the programme manager would 23 actually produce this using programmes supplied to him 24 by either contractors who were in place, or using 25 knowledge of what we thought the construction programme 110 1 might be, without having the benefit of a tendered 2 programme at that point. 3 Q. How often was it compiled and updated and issued? 4 A. It would be reviewed every month, and used for reporting 5 every month. 6 Q. Was it shared with any bodies outwith tie? 7 A. Certainly it was reported through the tram project 8 reports. I think it was probably potentially shared 9 with the Council, and Transport Scotland at times. 10 Q. Was it shared with the contractors such as SDS? 11 A. I can't recall if we shared it back or took their 12 programme and put it in the master programme. 13 Q. Now, when you became Programme Director for the tram 14 project in August 2006, can you recall whether there was 15 a master project programme in place? 16 A. I can't recall that, no. 17 Q. Might Mr Hickman be a better witness to ask these 18 questions about? 19 A. He might be because he had been involved in the tram 20 project before I came along. So he might be able to 21 answer that, yes. 22 Q. We -- with the SDS witnesses, I took them to the SDS 23 Agreement which referred to SDS requiring to provide its 24 services in accordance with the master project 25 programme, which would be provided by tie. And the 111 1 evidence from the SDS witnesses was that the master 2 programme was very rarely sent to them, and indeed one 3 of their claims document, there's a reference to SDS 4 having only been issued with one version of the master 5 programme dated February 2007. Do you have any 6 recollection of whether that is correct or not? 7 A. I don't and I don't recollect them ever asking for 8 copies either. 9 Q. We also heard evidence from the design -- the SDS 10 witnesses that rather than being able to plan the 11 provision of their services in an orderly way with 12 reference to the master project programme, they received 13 unco-ordinated requests and instructions from different 14 teams within tie, ie the design, utilities, procurement, 15 commercial and programming teams -- to reprioritise 16 their work at different times. Do you have any 17 recollection of that? 18 A. Not direct recollection of them telling us it was 19 unco-ordinated requests. 20 Q. Do you disagree with the suggestion I just put to you? 21 A. I do recollect spending quite a lot of time with SDS 22 running through their programme and looking how it 23 linked into the master programme, particularly towards 24 the Infraco close date to try and align those 25 programmes, and I remember spending hours and hours in 112 1 a room with SDS, going through those programmes. 2 Q. You see, I think the point made by the SDS witnesses, 3 were really two things. Firstly, they didn't receive 4 a master project programme from tie to enable them to 5 plan their works, and secondly, they received requests 6 in an unco-ordinated way from different teams in tie, 7 which resulted in them having to reprioritise their work 8 at different times. 9 Are you in a position to dispute that evidence? 10 A. I'm not in a position to dispute that. I don't recall 11 that, and I don't recall the master programme going back 12 to them, but perhaps Mr Hickman can answer that 13 question. 14 Q. Thank you. Moving on to another point. Three of the 15 main contracts were the SDS contract entered into in 16 September 2005, the MUDFA contract entered into in 17 October 2006, and the Infraco contract entered into in 18 May 2008. 19 Now, in each of these programmes, included within 20 the contract was a programme which was known to be out 21 of date when the contract was entered into. Do you have 22 any recollection of that? 23 A. Do you mean each individual programme was out of date at 24 each different award? 25 Q. Yes. So for the SDS contract in September 2005, it 113 1 included a programme with dates which were obviously out 2 of date at the signing of the contract. Same thing with 3 MUDFA contract. Same thing with the construction 4 contract. 5 A. So if we start with SDS, I wasn't involved at the award 6 of that contract. So I can't answer that question. 7 In terms of MUDFA, I don't recollect the programme 8 being out of date by the time the contract was awarded. 9 And for Infraco, we understood there was an alignment 10 process to go through, and that was one of the first 11 Notified Departures with the Infraco contract. 12 Q. I'll come back to the MUDFA contract shortly when we 13 come to the MUDFA chapter. 14 But just as a generality, and let's step away from 15 the tram project, from a project management standpoint, 16 I assume it was good practice to agree a realistic and 17 achievable programme before a contract was entered into? 18 A. And sometimes in a contract -- so yes, that's ideal. 19 Sometimes with a contract award the contractor has to 20 submit a programme within two or four weeks after 21 contract award. 22 Q. Again, as a generality, what problems and difficulties 23 may arise if contracts are based on programmes that are 24 known not to be correct? 25 A. Well, it depends on the provision of those contracts 114 1 with the contractor being able to ask for variations or 2 compensation events. 3 Q. Does it give rise to any difficulties in drawing up 4 a master project programme if the individual works 5 programmes are incorrect? 6 A. It does, yes. 7 Q. Could I then turn to the question of the MUDFA works, 8 please. If we could start with the MUDFA programme, we 9 can see that if we go to CAR00005833. 10 I have the benefit of a hard copy, but bear with me. 11 We can see, I think, this is headed "Schedule 8" and 12 this is in relation to the MUDFA programme. If we can 13 over the page, please, we can see this is headed 14 "PRE CONSTRUCTION PROGRAMME", and I think in short the 15 intention was there would be two parts to the MUDFA 16 works. There would be pre-construction works and then 17 construction works. Is that probably correct? 18 A. That's correct, yes. 19 Q. Over the page again. If we could blow up the very first 20 item in the top left-hand corner, just by way of 21 example. It's "set up site office and compound and 22 mobilise staff", and we can see the starting date for 23 that is, I think, the week commencing 31 July 2006, and 24 if we scroll down the page a little, if we can zoom back 25 out, we can then see at row 16, "Receive SDS Designs". 115 1 Again, that's the same week commencing 31 July. 2 If we could then zoom back out, and if we look along 3 the very top line of the dates, I think we'll see one 4 about there, exactly, commencement 4 September 2006. We 5 can just note where that is with reference to the two 6 pink lines we see. 7 If we zoom back out, I think we will see that 8 a number, perhaps the majority of the activities for the 9 pre-construction works are programmed to commence in the 10 week beginning 4 September 2006. 11 Do you see that? 12 A. I do, yes. 13 Q. Now, we know the MUDFA contract was signed on 14 4 October 2006. So that's why I say that at the time 15 the contract was signed, the programme was out. Do you 16 accept that? 17 A. Yes. 18 Q. Then if we can also please look at the programme for the 19 construction works, if we go over the next page, please. 20 We see this is then "construction programme" and over 21 the page again, please, and under -- we will have to see 22 if we can blow it up. In row 1, in the very top 23 left-hand corner, if we can blow up the title. There is 24 perfect. 25 Can we blow it up again, the dates. We can see, 116 1 "Construction activities line 1". Then we see a start 2 and a finish date. 3 So I think we can see the start date is 4 2 March 2007; finish date, it's not easy to decipher, 5 but I think in my hard copy it's easier to see that it's 6 26 May 2008. Does that seem right? 7 A. From this, yes. 8 Q. Thank you. 9 Then if we zoom back out, that was in relation to 10 parliamentary line 1. We can also see what is said in 11 relation to line 2. 12 If we go down to row 74, if it's possible to find 13 that. Here we see "construction activities line 2", and 14 if we can try, please, to blow up the start and finish 15 dates, thank you. 16 Now, I think in short the start date is 17 22 October 2007, and the finish date is 18 11 February 2008. Do you see that? 19 A. I do, yes. 20 Q. So in short, taking both the lines 1 and 2 together, 21 there was an anticipated completion date at the time of 22 signing the MUDFA contract of 26 May 2008. Does that 23 seem correct? 24 A. That seems correct from the programme here, yes. 25 Q. I think we know from other sources that at this time the 117 1 intention was to start the Infraco works in early 2009. 2 So that would have allowed approximately a seven-month 3 gap between completion of the MUDFA works and the start 4 of the Infraco works. Is that consistent with your 5 general understanding around this time? 6 A. It is, yes. 7 Q. Thank you. We can put that to one side now. 8 CHAIR OF THE INQUIRY: Mr Mackenzie, is this a -- 9 MR MACKENZIE: This would be an appropriate time, my Lord, 10 yes. 11 CHAIR OF THE INQUIRY: We will adjourn for lunch and resume 12 again at 2 o'clock. 13 A. Thank you, my Lord. 14 (1.00 pm) 15 (The short adjournment) 16 (2.00 pm) 17 CHAIR OF THE INQUIRY: You're still under oath, Ms Clark. 18 MR MACKENZIE: Thank you, my Lord. 19 Can you tell us, please, what were the main 20 difficulties and delays experienced with the MUDFA works 21 between October 2006 and around June 2007? 22 A. I think there were a number of delays. First of all, 23 the state of the design to allow the utility diversions 24 to commence. And I think once we got started, the 25 amount of utilities that were found that hadn't been 118 1 anticipated. 2 Q. Anything else? 3 A. I think those are the main ones I can recollect at the 4 moment. 5 Q. Thank you. Could you go please to your statement to 6 page 13. In the text of question 20, three paragraphs 7 down, the paragraph commencing: 8 "We understand that at a meeting between TIE and 9 AMIS on 15 March 2007 the parties agreed that, as 10 a consequence of late designs and associated data, 11 a phased transition would take place rather than the 12 distinct completion of the pre-construction services 13 phase and commencement of the Construction Services 14 phase (which was noted to "provide the opportunity to 15 complete PCS in parallel with CS as design detail and 16 definition are made available"." 17 Do you remember that matter, this question that 18 rather than completing the pre-construction services 19 phase before moving on to the construction services 20 phase, that in fact the two phases would in some way run 21 parallel? 22 A. I do, yes. 23 Q. So why had the need for that arisen? 24 A. I think the original intent was that the MUDFA 25 contractor would take all the completed design, then 119 1 develop his work packages, and at the end of that 2 process, then start work to mitigate any further delays; 3 what they were going to do was would do those things in 4 parallel to allow them to get started in some areas. 5 Q. So was the main reason why it was not possible to 6 complete the pre-construction phase -- was because the 7 utility designs weren't available? 8 A. Yes. 9 Q. Thank you. 10 The next paragraph states that: 11 "A presentation on "MUDFA Commercial Arrangements" 12 made to the Tram Project Board on 19 April 2007 noted 13 that completion of the Pre-Construction Phase was "not 14 realistic" and a different approach to the MUDFA works 15 were proposed." 16 That presumably is a reference to what's set out in 17 the preceding paragraph? 18 A. Yes, that's correct. 19 Q. Then the last paragraph states: 20 "The presentation also noted that because of the 21 inherent risks in the utility diversion works ... there 22 was a need to undertake the utilities diversion works 23 "well in advance" of the Infraco work (to avoid 24 potential abortive costs of Infraco standing time due to 25 overrunning of the utilities diversion works)." 120 1 So clearly at that time, around April 2007, that was 2 a known risk? 3 A. That's correct, yes. 4 Q. We saw, I think, in the construction programme for the 5 MUDFA contract, just before lunch, that there was 6 something like, I think, a seven-month gap between the 7 anticipated MUDFA completion of 26 May 2008 and the 8 anticipated start of the Infraco works in early 2009? 9 A. That's correct. 10 Q. So presumably we see the reference to completing MUDFA 11 well in advance of the Infraco work, presumably that 12 roughly seven-month gap was assumed to be well in 13 advance? 14 A. That's correct, yes. 15 Q. Go to another document, please. It's CEC01638353. 16 Now, this is -- we see at the very top there is an 17 email from Ray Dent to yourself, dated 29 March, and 18 Mr Dent says: 19 "I'm blind copying you with a note I sent Graeme 20 yesterday raising some concerns ..." 21 We scroll down, please, to look at Mr Dent's email 22 to Graeme Barclay of 28 March 2007. The subject is "SDS - 23 Issues". What I'm interested in is the bit in bold 24 text about halfway down. Do we see it's set out in 25 bold: 121 1 "SDS were going to do hundreds of trial pits, then 2 proposed tens of trial pits, then three, and now zero." 3 Do you have any recollection of that issue? 4 A. Only a very vague recollection, and I don't know if it's 5 from reading papers since or whether it was 6 a recollection from the time. 7 Q. So what is your understanding of that issue? 8 A. I think I also said in my statement, I couldn't 9 recollect whether SDS were responsible for doing the 10 investigatory work to establish the whereabouts of 11 utilities, or whether that was for tie to do. 12 Q. Is that something you would have been aware of at the 13 time? 14 A. Yes, but I just can't recollect now. 15 Q. You can't -- you've no recollection of the issue that is 16 set out by Mr Dent that initially SDS were going to do 17 hundreds of trial pits, and now it was zero? 18 A. I -- I see the email in front of me. I can't recollect, 19 you know, yesterday I wouldn't have known if 20 I absolutely knew that when I wrote my statement, 21 I can't remember if I knew that or if I was just 22 assuming I knew it. 23 Q. Very well. Let's go to another document, please. 24 CHAIR OF THE INQUIRY: When you got that email, if it had 25 been tie who was supposed to be doing the trial pits, 122 1 would you have gone back to Mr Dent and said: actually 2 you're mistaken, we are supposed to be doing them. 3 A. I would, my Lord, if that was my understanding at the 4 time. 5 CHAIR OF THE INQUIRY: Did you do that? 6 A. I can't recall, my Lord. 7 MR MACKENZIE: Thank you. 8 The next document, please, is CEC00348328. 9 Now, this is the spreadsheet, we can see at the top 10 left-hand corner, "Utilities - Total Final Cost 11 Reconciliation", and it's dated April 2010, I think. 12 I'm interested in the footnote 1. If we scroll down to 13 that, please. Do you see a note with 1? 14 A. Yes. 15 Q. If it's possible to enlarge that. Thank you. 16 We can see a reference to: 17 "Depot excavation costs are cost and budget 18 GBP5.438 million. The CUS Certificate element of this 19 is GBP5.311 million." 20 What's the reference to the depot excavation costs? 21 A. Sir, there were some early works to excavate the soil at 22 the depot that needed to be taken out to construct the 23 depot. And from what I recollect, this contractor 24 carried out those early works. 25 Q. Now, my understanding is that these works were carried 123 1 out by the MUDFA contractor; is that correct? 2 A. That's correct. 3 Q. So why was the MUDFA contractor undertaking what appear 4 to be Infraco works? 5 A. I can't recollect the exact reason why we appointed the 6 MUDFA contractor. 7 Q. Was it related in any way to the delays and difficulties 8 with the MUDFA works? 9 A. I can't recollect if that was a reason behind it or not, 10 I'm sorry. 11 CHAIR OF THE INQUIRY: The impression I got from your 12 statement, or someone else, that that -- the allocation 13 of the MUDFA contractor to that activity was to avoid 14 wasting resources, that there weren't enough designs 15 ready for the MUDFA contractor to do what they should 16 have been doing, and that this was a way of using the 17 available labour. Does that ring a bell with you? 18 A. That would appear to be a very good solution, but 19 I can't recollect if that was the case or not. 20 MR MACKENZIE: Did you have any involvement at the time -- 21 so either in late 2006 or the first half of 2007 -- in 22 the decision taken by tie to instruct the MUDFA 23 contractor to undertake excavation works at the depot? 24 A. So I was responsible through the MUDFA Project Manager 25 for the MUDFA contract. But I can't remember that 124 1 decision being made. 2 Q. Because it may be suggested that the MUDFA contractor 3 was instructed to undertake those works as a means of 4 avoiding or reducing claims under the MUDFA contract, 5 because tie were not in a position to instruct the MUDFA 6 contractor to undertake the MUDFA works. 7 A. And again, I can't remember at the time what happened. 8 I'm absolutely sure there might be some paperwork, but 9 I can't recollect that at this point in time, a number 10 of years later. 11 Q. Would you be able to recollect whether there was any 12 tendering process undergone for these works? 13 A. Again, I can't remember. I do know that we went through 14 a process to identify early works to take place. And 15 I can't remember if we went through a tendering process 16 for that or not. Or whether we did and this contractor 17 was part of that tendering process. So I'm sorry, 18 I can't be specific about that. 19 Q. I would like to go to another document, please, 20 CEC01623417. 21 We can see this is an email from Trudi Craggs dated 22 12 April 2007 to Matthew Crosse and Geoff Gilbert, 23 subject matter, "MUDFA worries". 24 Ms Craggs starts by saying: 25 "I worry that MUDFA and the advance works are 125 1 becoming out of control and we run the risk of being 2 exposed at the Tram Project Board. 3 I discussed this with Geoff last night but I think 4 we need to sit down to go through the issues which 5 include - 6 - the advance works at the depot and P&R - are 7 these a works order or a change to the contract? On 8 what basis has the cost been calculated? What are the 9 contract terms? Have we inadvertently misled the Tram 10 Project Board on previous occasions?" 11 Then further down, the paragraph beginning: 12 "There is no-one policing this project as far as 13 I can see - Geoff, you are probably too busy to devote 14 enough time to that but we need to be policy, testing and 15 interrogating where we are going - we need to be 16 constantly re-assessing what we are doing to ensure that 17 we maintain best value." 18 I think the board is becoming suspicious of the way 19 we report to the board - while we need to highlight the 20 good news stories, we need to be honest about where 21 there are issues. The report for this month does not do 22 that." 23 So Ms Craggs in this email appears to be setting out 24 various concerns in relation to the MUDFA works and in 25 particular the advance works at the depot. 126 1 Were you aware of any of these concerns at the time? 2 A. I don't recollect having seen this email until just now. 3 So I can't recall Ms Craggs raising that particular 4 concern with me, no. 5 Q. Did you have any concerns in relation to the matters set 6 out in the email at the time? 7 A. I can't recollect why we issued the -- that piece of 8 work to this contractor. 9 Q. When Ms Craggs says that: 10 "There is no-one policing this project as far as 11 I can see." 12 Was it your role to police the MUDFA contract at 13 this time? 14 A. As far as I recall, around that time, I had a project 15 manager in place managing the MUDFA contract. So the 16 responsibility up from that would be mine, yes. 17 Q. Similarly, at the time would it have been your role to 18 police the excavation works at the depot? 19 A. Yes. 20 Q. But you're saying you can't help us with any of these 21 matters I've asked you about? 22 A. I can't recall if I did -- if I could recall, I would be 23 able to help you, but I can't, I'm sorry. 24 Q. I would like to move on, please, to another document, 25 PBH00003588. 127 1 Now, that is a letter by Alan Dolan of 2 Parsons Brinckerhoff. It's dated 17 April 2007, and it 3 is sent to Tony Glazebrook of tie. 4 Now, Ms Clark, you are not on the distribution list 5 of this letter. So I don't suggest you saw it at the 6 time. What I would like to bring to your attention is 7 one particular matter to see if you were aware of this 8 matter at the time. 9 If we can go over the page, please, to page 2, it's 10 not great text, but I see a paragraph we can try and 11 blow up beginning: 12 "Tie has entered into legal Agreements with the SUCs 13 which failed to define a response period for the 14 consideration of designs submitted to them for approval. 15 Given the co-operative nature of these Agreements and 16 the ongoing dialogue with the SUC representatives, the 17 SDS assumption of a 20 Business Day response period to 18 our designs seemed reasonable at the time the design 19 programme was drawn up. Tie confirmed agreement with 20 the SDS assumption ... and we assume, following the 21 relevant contractual discussions with the SUCs 22 themselves. At no time did tie indicate any 23 disagreement with the design review assumptions made by 24 SDS." 25 It is the next sentence I wish to emphasise: 128 1 "At the end of the day the SUC approval period will 2 be whatever they decide and we have no option but to go 3 along with it. As this has become apparent, updates to 4 the SDS design programme have reflected this situation 5 and will continue to do so." 6 Now, would you have agreed with that assertion at 7 the time, that at the end of the day, the SUC approval 8 period will be whatever they decide? 9 A. No, I think my view now is that SDS probably could have 10 done a lot more to engage with the utility companies to 11 try and agree approval dates. 12 Q. Are you aware of tie or SDS having any legal powers to 13 force the SUCs to respond within a set timescale? 14 A. I don't know. 15 Q. Are you saying there may or may not have been such 16 powers, or are you saying you don't think there were? 17 A. I don't know if there were. And at the time the SDS 18 Design contract was agreed, I wasn't involved in 19 accepting that programme. So I don't know if there are 20 powers to -- that could be used to force utility 21 companies into giving approvals within a set timescale. 22 Q. Is that something you are likely to have known at the 23 time? 24 A. I can't recall if I knew that at the time or not. 25 Q. You were responsible for the MUDFA works between 2006 129 1 and late 2007, I think you said. One of the main causes 2 of delay was late design, and Parsons are saying one of 3 the main causes of that was that the SUCs are going to 4 respond whenever they decide. So presumably during that 5 period, you would have wanted to make sure you had 6 checked to see if tie or SDS had any legal powers to 7 force the utility companies to respond within a set 8 timescale? 9 A. I cannot recall. Well, I cannot recall seeing this 10 letter, and I cannot recall what action was taken at 11 that time. 12 Q. Move on, please, to another document. CEC01638569. 13 Now, we see this is a MUDFA Sub-Committee Report, 14 papers for a meeting, and I think we see you're on the 15 distribution list, third name down the left-hand side. 16 Presumably this was a sub-committee you in any event 17 attended; is that correct? 18 A. I'm on the distribution list, so I would have to check 19 the minutes to see if I attended. 20 Q. We can put this particular meeting to one side. As 21 a generality around this time, did you attend meetings 22 for the MUDFA Sub-Committee? 23 A. Yes. 24 Q. Thank you. If we go then please to page 7. We can see 25 this is the Construction Director's Report dated 130 1 4 April 2007. So would that be a report by 2 Graeme Barclay? 3 A. That's correct, yes. 4 Q. Go to page 9, please. Under 4, "Programme", I'll just 5 read what's said: 6 "Programme early start dates and stakeholder 7 requirements were forwarded to AMIS ... on 13 March 2007 8 to use in the preparation of a revised construction 9 schedule. 10 AMIS issued Draft Revision 04 programme on 11 23 March 2007 for comment. This programme is currently 12 under review by tie." 13 Come back out, please. 14 Under 4.3, we can see: 15 "Key elements in AMIS Draft Revision 04 Programme 16 are: 17 "The trial site at Casino Square starts on 18 2 April 2007. 19 The main MUDFA works start on 2 July 2007 ..." 20 And then thirdly: 21 "The main MUDFA works on Phase 1a from Newhaven to 22 Edinburgh Airport show completion by early January 2009. 23 This is six months later than shown on Revision 03 24 schedule." 25 So to pause here, it appears that around this time, 131 1 April 2007, a new MUDFA programme has been produced 2 which is showing completion of the MUDFA works by early 3 January 2009; is that correct? 4 A. That would be correct at the time, yes. 5 Q. And assuming it remained the case that the Infraco works 6 were due to commence in early 2009, then that six or 7 seven months' gap or buffer has been lost? 8 A. That would be correct, yes. 9 Q. So that would have been known around this time, in 10 April 2007? 11 A. Yes, if nothing was done to try and mitigate those 12 delays, yes. 13 Q. Did that cause you any concerns that the six or seven 14 months' gap or buffer had been lost? 15 A. It would have done, yes, and that's why we would look to 16 mitigate those delays, working with the contractor. 17 Q. And by doing what specifically? 18 A. So I think there was a process called RATS to try and 19 speed up the process of getting work packages in place. 20 Q. And what does RATS stand for? 21 A. I can't remember. I wish I could remember, but it was 22 an acronym used by the contractor and it was a process 23 to bring people together and then try to accelerate 24 getting work packages in place. 25 Q. I may be corrected but it may be risk and trade-off? 132 1 A. It could be. I can't remember. 2 Q. What I wasn't clear was what that meant, whether it 3 meant that works would be undertaken without design, but 4 at the client's risk. Does that ring a bell? 5 A. I think it encompassed partly that, but looking at ways 6 to mitigate overall delays. 7 Q. Can you tell us exactly what taking a RATS approach 8 means? 9 A. So it may have been -- I'm kind of trying to recollect 10 here. But it may have been -- I'm trying to think of 11 a specific example to help, but I'm afraid I can't at 12 the moment. 13 Q. Let's move on to another report, please. CEC01566088. 14 Now, this you probably won't have seen before. It's 15 a Highlight Report to the City of Edinburgh Council's 16 Internal Planning Group of 31 May 2007. If you go to 17 page 2, please, it's just really to follow the update on 18 the MUDFA programme. 19 We can see, I think, under 2.1, MUDFA, and then 20 "Programme". We can see: 21 "The latest programme from AMIS, revision 5 shows 22 the end date for phase 1a being November 2008." 23 I think we can compare the last document, the last 24 document showed an end date of January 2009. And then 25 that's been drawn back a little to November 2008. Does 133 1 that ring any bells? 2 A. That specifically doesn't ring any bells, no. 3 Q. I think we can also see under "Progress", we can see 4 that: 5 "Works at the pilot site on Ocean Drive were 6 completed between 26 April and 4 May. 7 During the pilot, additional utilities were 8 uncovered that were not identified during the original 9 survey works." 10 Presumably that in itself wouldn't be unexpected, 11 there being additional utilities uncovered that were not 12 previously known about? 13 A. Not unexpected, no. 14 Q. That's a known risk? 15 A. Yes. 16 Q. Could I then please go to another document, which is 17 CEC01650422. We can see this is an email from 18 Stewart McGarrity. If we blow up the top, please, dated 19 20 June 2007, sent to John Boyle and yourself, copied 20 into Mr Gallagher, Mr Bell and others. 21 It starts by saying: 22 "Willie wants a letter by close of play tomorrow to 23 send from him personally to John Swinney to give comfort 24 on our utilities approach and why we are confident it is 25 deliverable to cost and programme." 134 1 Pausing there, were you confident at this time that 2 the utility contract was deliverable to cost and 3 programme? 4 A. It's hard to recollect what I thought precisely at the 5 time. We were aware of the risks of unknown utilities. 6 We did know about the slippage in design, and we were 7 trying to mitigate those delays. 8 Q. Reading on: 9 "This is in response to specific concerns voiced by 10 Mr Swinney on the radio today. 11 Please can John take the lead in drafting supported 12 by Susan to review and embellish. The key messages 13 would be at least those under 1-7 below." 14 And we can read the main headings for ourselves. 15 Number 1, we can see. Then over the page to page 2, 16 please. Again, we can perhaps just read for ourselves 17 the headings under 2, 3, 4, 5, 6, 7, 8. 18 Then blow up the paragraph under 8, please: 19 "We've managed programme slippage by keeping them 20 busy elsewhere (digging a hole at Gogar) but we're now 21 running out of such ideas." 22 Is the reference to digging a hole at Gogar 23 a reference to the excavation works we discussed 24 earlier? 25 A. It would appear to be, yes. 135 1 Q. What I don't understand is the reference to "we've 2 managed programme slippage by keeping them busy 3 elsewhere ... at Gogar". In what way would that manage 4 programme slippage? 5 A. I don't believe that would manage programme slippage. 6 Q. So all it might do may be to reduce any claims by MUDFA, 7 perhaps? 8 A. Perhaps, yes. 9 Q. Were you involved in drafting or reviewing the letter 10 that was sent to Mr Swinney? 11 A. I cannot recall being involved. I probably was. 12 I can't recall the exact involvement in that. I think 13 I recall from having read the letter that went, it was 14 very, very short. 15 Q. Did you have any views on that letter that was sent? 16 A. Not at the time because I think the letter also invited 17 a meeting so that Mr Gallagher could explain in more 18 detail to Mr Swinney. 19 Q. If we can go to the letter, please, it is CEC01677601. 20 You will see this is a letter, by Mr Gallagher, to 21 John Swinney, dated 21 June 2007. The first paragraph 22 states: 23 "In your media interviews yesterday you registered 24 utilities as a major concern. I agree. For that reason 25 our Multi Utility Diversion Framework Agreement (MUDFA) 136 1 programme has the highest focus within this company. 2 Let me tell you why I am confident that we can 3 manage the MUDFA programme within the budget." 4 Just pausing there, what did you understand 5 Mr Gallagher to mean by that sentence, that "I am 6 confident that we can manage the MUDFA programme within 7 the budget"? 8 A. So I can't recall seeing this letter before it went out. 9 So I don't know what my opinion would have been at the 10 time. 11 Q. The reason I ask is that Mr McGarrity in his email had 12 said that Mr Gallagher wanted a letter to give comfort 13 on the utilities approach, and why tie were confident it 14 is deliverable to cost and programme. I can understand 15 that, a confidence in MUDFA works being deliverable to 16 cost and programme, but that's not the wording that's 17 used in Mr Gallagher's letter. He talks about being 18 confident we can manage the MUDFA programme within the 19 budget. 20 So the focus there seems to be on the budget rather 21 than the programme. Does that seem fair? 22 A. It would seem fair reading it now, yes. 23 Q. Now, let's give you a minute to read the rest of the 24 letter yourself. (Pause) 25 Over the page, please. The paragraph at the top 137 1 states: 2 "I am writing to you privately in the hope that the 3 foregoing will allay the concerns you have expressed." 4 Now, in short do you consider that that letter 5 provided a full and accurate account of the position 6 regarding the MUDFA works and contract at that time? 7 A. Yes, I think I said in my statement that no, it didn't, 8 but what Mr Gallagher had offered to do was share that 9 privately, and I think the letter says that. 10 Q. I didn't see in his letter any reference to a meeting, 11 I don't think. 12 A. Can we go back to the page before? 13 Q. Of course, yes. 14 A. Sorry, "if I gave you this information privately". So 15 I have inferred from that that he's offering to meet, 16 and maybe that's wrong. 17 Q. Which passage in the letter are you referring to? 18 A. The very last paragraph: 19 "I noticed reference to a GBP200 million final cost. 20 This is not a number recognised by myself or indeed 21 anyone within the Tram Governance structure. As 22 Chairman of the tie Board I have been under immediate 23 pressure from my staff and external Board colleagues to 24 make this clear publicly. I feel that it would be more 25 helpful and constructive to all concerned if I gave you 138 1 this information privately." 2 Q. What information do you understand Mr Gallagher is 3 offering to give privately? Is it the final cost? 4 A. So I have assumed from the original email from Stewart, 5 from the final letter that went out, and from reading 6 this, you know, a number of years later, I've assumed 7 that Mr Gallagher was going to give information on 8 programme and cost to Mr Swinney. I don't know if that 9 happened though. 10 Q. Put that issue to one side. Just looking at the letter 11 by itself, do you consider the letter provides a full 12 and accurate account of the position regarding utilities 13 at that time? 14 A. No. 15 Q. And what is missing? 16 A. It doesn't talk about programme and it doesn't talk 17 about final outturn costs. 18 Q. It doesn't mention the difficulties and delays in 19 relation to utilities design? 20 A. No. 21 Q. It doesn't mention the difficulties and delays with the 22 statutory utility companies? 23 A. No. 24 Q. It doesn't mention the fact that it had not been 25 possible to complete the pre-construction phase before 139 1 moving on to the construction phase? 2 A. No. 3 Q. There's no mention of the MUDFA contractor being 4 instructed to undertake the earthworks at the depot? 5 A. No. 6 Q. There's no mention of any issue of uncertainty over the 7 number of trial holes that would be carried out and 8 when? 9 A. No. 10 Q. And, importantly, it doesn't mention that the date for 11 the completion of the utility works had slipped by 12 approximately five months, and there was now either 13 little or no gap between the completion of MUDFA and the 14 anticipated start of Infraco? 15 A. No. 16 Q. Then please go back to your statement at page 21. 17 In question 33, if we can highlight that, please. 18 This is a reference to: 19 "AMIS's Monthly Progress Report for November 2007 20 contained an Appendix 2, Live Work Order Progress, which 21 showed that only 8 work orders had been issued and 22 noted that approximately 197 trial holes were planned or 23 were under way." 24 Did you still have responsibilities for the MUDFA 25 works at this time, or had they been passed over to 140 1 Mr Bell? 2 A. I think by this point, they may have been passed over to 3 Mr Bell. 4 Q. I think, with Mr Bell yesterday, we looked at an 5 internal re-organisation document by Mr Gallagher of 6 31 October 2007 which set out everyone's duties and role 7 from that date. Might that be the date when your 8 responsibilities changed, around that time? 9 A. If there is that document, that probably reflects the 10 picture at that time. 11 Q. I think Mr Bell was the Tram Project Director designate, 12 I think, from that time, and also set out his duties. 13 I won't ask you any more about MUDFA then after that 14 date. 15 Other than this. We have seen the difficulties and 16 delays with the MUDFA works. Was any consideration 17 given to deferring the Infraco procurement to allow the 18 MUDFA works to catch up? 19 A. I cannot recollect precise conversations. I think we 20 would have always been looking to -- looking at that as 21 an option, but looking at the downside of that as well 22 in terms of what -- you know, what other costs might 23 have been accrued while that delay to the Infraco 24 contract was in place. 25 Q. And I think you were also aware of difficulties and 141 1 delays with the design works, certainly from when you 2 had tram responsibilities in August 2006 and all the way 3 through 2007; is that correct? 4 A. That's correct, yes. 5 Q. So similarly, was any consideration given to deferring 6 the Infraco procurement to allow the design works to 7 catch up? 8 A. And again, I'm aware concerns were raised, and this was 9 proposed to the Project Director at the time, and again, 10 I think -- well, I know I was against doing that because 11 I think there are -- there are downsides as well as 12 upsides to delaying the procurement process, and part of 13 my job was to try and drive everything forward in 14 parallel. 15 Q. We've also heard evidence from some witnesses that in 16 tie, the culture was one of programme is king. And what 17 I mean by that is that the witnesses felt that there was 18 an imperative to continue with the procurement of the 19 Infraco contract despite the difficulties and delays 20 that were being experienced with the design and MUDFA 21 works. Do you have any comment on that suggestion? 22 A. I don't think it was despite. My job was Programme 23 Manager. My job was to drive things forward. I think 24 we were always assessing the risks, and at the end of 25 the day it wasn't my decision to delay any of the 142 1 Infraco procurement. 2 Q. I think in her statement, Ms Craggs said that the 3 management culture in tie was that programme was king, 4 and had to be adhered to even if it was unrealistic and 5 unachievable. Do you recognise that? 6 A. I recognise that that was her view, and I think both 7 Ms Craggs and I had very different styles in terms of 8 management. 9 Q. What do you mean by that? 10 A. Well, I think she saw me driving things forward. She 11 was much more risk averse in her approach. 12 Q. Ms Craggs also said that she felt there was a positive 13 spin put on reporting. She felt it was a bit 14 disingenuous, and she felt that senior tie management 15 did not want to hear concerns. Do you have any comments 16 on those matters? 17 A. So my job was to listen to concerns along with the rest 18 of the team and try and put things in place to mitigate 19 those. 20 Q. I think the main thrust of the evidence from witnesses 21 that programme was king is this: that there was such an 22 emphasis or weight given to driving on with the Infraco 23 procurement, that it put the procurement strategy 24 fundamentally at risk; the procurement strategy being to 25 complete design in MUDFA before Infraco, by which means 143 1 one could get a fixed price for the Infraco contract. 2 That's the fundamental point that's made. Do you have 3 any comments on that? 4 A. All I can say is my job as programme manager was to try 5 and drive things forward. We were trying to do things 6 this parallel, and also trying to mitigate risks. And 7 it was not for me to make that decision on halting any 8 one part of the project. And in projects you're always 9 trying to mitigate risks and drive things forward in 10 parallel. 11 CHAIR OF THE INQUIRY: You said there were downsides to 12 waiting for the MUDFA programme to catch up before 13 closing. Can you just tell me what those would be? 14 A. So from my recollection, we had a team of people and 15 consultants in tie who were working on that procurement, 16 and had we halted that process, we would have had a lot 17 of people who we would have stood down or we would have 18 paid them for being -- doing nothing. So there would 19 have been costs incurred in that process. 20 So it's about understanding the disbenefits of doing 21 something, and looking at the benefits of doing them, 22 and taking a balanced decision on that. 23 MR MACKENZIE: In terms of taking steps to mitigate risks, 24 whether for MUDFA or design, these mitigation steps may 25 well, I don't know, have stopped things from being even 144 1 worse, but I don't think at any time did the design 2 programme, for example, get back on track and stay on 3 track, did it? 4 A. No. 5 Q. So to that extent any mitigation steps weren't 6 effective? 7 A. I believe I said in my statement that we -- we don't 8 know how much worse it would have been had we not done 9 anything. 10 Q. In relation to MUDFA, we have just seen from the 11 documents there was an initial slippage which resulted 12 in the MUDFA construction works being reprogrammed to 13 start in July 2007. 14 Presumably the real difficulties wouldn't be known 15 until one started digging underneath the -- underneath 16 the road surface; is that correct? 17 A. That's correct, yes. 18 Q. I think those particular MUDFA diversion works were, 19 I think, programmed to take place towards the end of 20 2007 and then into 2008; is that correct? 21 A. That's correct, yes. 22 Q. So one wouldn't know in relation to those works (a) what 23 problems were going to be encountered and (b) whether 24 any mitigation steps were going to be effective until 25 some time into 2008? 145 1 A. That's probably correct, yes. 2 Q. Although to be fair, I think you said you had no MUDFA 3 responsibilities after about October-ish 2007? 4 A. That's correct, yes. 5 Q. I won't ask you any more about that. Okay. 6 Now, a separate matter. We have heard that in round 7 about September 2007, the City of Edinburgh Council had 8 decided to instruct Turner & Townsend to undertake an 9 independent review of the risks arising from the tram 10 project and the Infraco contract. 11 I think let's go to a document, CEC01567757. 12 If we can go please to page 3, we can see an email 13 from Duncan Fraser dated 24 September 2007 to yourself, 14 subject "Turner & Townsend", states: 15 "The Directors of Finance and City Development 16 Department are in agreement with the appointment of 17 Turner & Townsend to enable the attached brief to be 18 provided to the Council. This will require a duty of 19 care letter from TT to CEC. Can you provide me with the 20 contact details so that I can set up an inception 21 meeting to agree the attached brief and progress this 22 commission." 23 Then over the page, page 2, we can see an email from 24 yourself dated 27 September 2007 to Malcolm Hutchinson. 25 He was the leader of the OGC team at this time. You 146 1 say: 2 "Malcolm, CEC had been looking for a separate review 3 of risk as part of their governance process for Tram and 4 prepared the attached brief. 5 Is this something that you would be able to cover 6 in your review next week?" 7 Do you have any recollection of this matter at all? 8 A. I recall vaguely this -- I recall the review team coming 9 in. So yes. 10 Q. Do you remember having diverted the review away from 11 Turner & Townsend and towards the OGC team? 12 A. I don't remember me personally diverting. I think what 13 happened was I suggested to the Council that we had this 14 team coming in to do a review anyway, and therefore it 15 might be an opportunity for them to undertake this piece 16 of work as opposed to commissioning and paying for 17 a separate piece of work. 18 Q. Did you come to that view yourself or did you discuss it 19 with anyone else within tie beforehand? 20 A. I can't recall. 21 Q. What did you see as being the advantages to the OGC 22 undertaking the review rather than Turner & Townsend? 23 A. Well, the OGC team had been involved in a number of 24 reviews previously. So they were external and would 25 come into the project to review. So they had some 147 1 knowledge of the project anyway. 2 Turner & Townsend were involved in the project 3 through the TSS contract. But I just thought that since 4 we had the OGC team coming into to do an independent 5 review anyway, it would make sense for them to pick up 6 this piece of work at the same time. 7 Q. Why was that matter for your input, given the Directors 8 of Finance and City Development and the Council had 9 agreed to appoint Turner & Townsend to undertake the 10 review? 11 A. I think probably I became aware of it when they asked me 12 for the contact details, and I probably suggested to 13 them that we could get the OGC team while they were 14 there to undertake this review, because I would be 15 co-ordinating the OGC team coming in to do that review. 16 Q. Why didn't you just say, well, if that's what the 17 Council want to do, that's up to them? 18 A. Well, it was all about managing cost. That would have 19 been an additional cost to the project, and I suspect 20 that, you know, was in my mind, and I was thinking about 21 not duplicating effort. 22 Q. So do you think you were having an eye to keeping cost 23 down when you made that suggestion? 24 A. An eye to that, but also if there was a review going on 25 anyway, we could incorporate it within that review, and, 148 1 you know, it was as simple as that. 2 Q. Then please go to page 1 of this email -- 3 CHAIR OF THE INQUIRY: You mentioned duplicating effort. 4 Did you think that the OGC Review and the Review that 5 Edinburgh wanted Turner & Townsend to undertake were the 6 same? 7 A. I think they would have covered similar issues and asked 8 similar questions, my Lord. 9 MR MACKENZIE: Did you have any views as to whether the 10 Turner & Townsend review would take place over a longer 11 period and go into matters in a greater depth of detail? 12 A. I didn't, no. 13 Q. Just to complete this, at page 1, please, we can see an 14 internal -- middle of the page email from Rebecca Andrew 15 to Jim Grieve, where -- middle -- second paragraph, 16 Rebecca Andrew says: 17 "I have concerns that the OGC review may be at too 18 high a level and that our need to have comfort over the 19 detail of the risks will not be met." 20 Did you have any views on that matter? 21 A. I think from the last email we saw that I passed the 22 remit from the Council to Turner & Townsend on to the 23 OGC team. So my view would have been they would have 24 been asked to do the same as the Turner & Townsend 25 Review, had that been carried out. 149 1 Q. I would like to move on, please, to the question of 2 Schedule 4 of the Infraco contract. This is something 3 we have heard quite a lot about. 4 Did you have any involvement in the discussions and 5 negotiations regarding Schedule Part 4 between 6 December 2007 and contract close in May 2008? 7 A. I think I have stated previously, my role in the overall 8 contract was one of procedure and process, as opposed to 9 any substantial involvement in negotiation of those 10 terms. 11 Q. Thank you. I would like to go to an email, please. 12 CEC01245274. 13 If we can go, please, to page 3, to see the start of 14 the chain. 15 Now, we can see this is an email from yourself, 16 dated 15 April 2008, to Andy Conway, subject "Infraco 17 Exclusions". 18 You say: 19 "I know that you have seen this in another form 20 today already from Stewart. This gives you a tidied up 21 version." 22 Then go to page 2, please. The second half of the 23 page, we see Mr Conway responds on 16 April 2008 to 24 yourself, saying: 25 "Thanks Susan. I have got a couple of specific 150 1 questions ..." 2 If we go then to page 1, we will see those questions 3 with your response, I think, in red. Here we go. So 4 I think then on 16 April, towards the last third of the 5 page, we see you responded to Mr Conway. In response to 6 his questions, first bullet point, he said: 7 "The scope of the works related issues refer to the 8 status of the design as of 25 November. Our concern is 9 that if the design has changed, or at least developed, 10 since then (and say a prior approval has been granted) 11 then a change will need to be issued. Have tie 12 undertaken an exercise to determine the extent and cost 13 of changes that will be required since the design freeze 14 in November?" 15 Then your reply in red is that: 16 "BBS are contractually obliged to construct to the 17 designs that SDS produce and get consented. We have 18 been identifying significant changes as design has 19 progressed to ensure that we have made financial 20 provision - eg Burnside Road. Normal design development 21 is a BBS risk as described in Schedule 4 of the Infraco 22 contract." 23 Now, in making that reply, is that a view you had 24 come to yourself or had you sought advice from others? 25 A. I would have written that email on the advice of the 151 1 people who were negotiating those clauses of the 2 contract. 3 Q. So that represented your understanding of the views of 4 those involved at the time? 5 A. Yes. 6 Q. Just for the avoidance of doubt, can you tell us who was 7 it that was negotiating those clauses of the contract? 8 A. I recollect that Geoff Gilbert was involved, along with 9 Steven Bell and DLA would be involved in that as well. 10 Q. Just to be quite clear about that last point, between 11 January and March 2008, did you attend any of the 12 meetings which took place to discuss and negotiate 13 Schedule 4? 14 A. I don't believe so, no. 15 Q. Just sticking with this point, and there is a reason I'm 16 asking you this I'll come to shortly, Andrew Fitchie of 17 DLA has given evidence that he advised tie before 18 contract close of the risks to tie arising from Pricing 19 Assumption 1, including in particular that it did not 20 transfer design risk to the consortium. 21 Do you have any recollection of that? 22 A. I don't, no. 23 Q. From what you've said, that is not something you would 24 have been involved in? 25 A. No. But I don't recollect it being communicated to us 152 1 either. 2 Q. The reason I ask you about this is that Mr Fitchie has 3 also given evidence that he said: 4 "I discussed the effect of Pricing Assumption 1 5 directly with tie once more on or around 9 April 2008. 6 I wanted to alert tie managers again to the magnitude of 7 the change in risk allocation. I said that tie should 8 consider stopping the procurement. They understood what 9 I was saying, and I repeated that advice to a full tie 10 management meeting, if not that day, 9 April, then the 11 next tie management meeting, probably Monday, 12 11 April 2008." 13 Now, did you generally attend tie management 14 meetings around that time? 15 A. I would, yes. 16 Q. Do you have any recollection of Mr Fitchie giving such 17 advice at a management meeting around that time? 18 A. No. 19 CHAIR OF THE INQUIRY: Do you remember the question of 20 postponement being raised by anyone? 21 A. Not at that point in time, no. 22 CHAIR OF THE INQUIRY: When was it raised? 23 A. Well, we've spoken earlier about general discussions 24 about postponing for SDS design to catch up and MUDFA to 25 catch up. But those were, I think, general discussions. 153 1 I don't recollect any particular meetings or discussions 2 about those, my Lord. 3 CHAIR OF THE INQUIRY: But in April 2008 were you still 4 waiting for SDS design -- 5 A. We were. 6 CHAIR OF THE INQUIRY: -- to catch up? 7 A. We were, my Lord. 8 CHAIR OF THE INQUIRY: So could the discussions have been 9 round about that time? 10 A. I think at that time, my Lord, we had a process in place 11 for dealing with the programme slippage as one of the 12 first Notified Departures in the Infraco contract. So 13 a discussion about halting the procurement was kind of 14 contrary to that, my Lord. 15 MR MACKENZIE: I'm just sticking with the period at 16 financial close or Infraco contract close, 17 14/15 May 2008. 18 Just before contract close, did you consider it 19 likely that the design deliverables, including all 20 outstanding approvals and consents, would be delivered 21 in accordance with the diversion of the design programme 22 then in force? 23 A. Can you just say that again, please? 24 Q. Yes. So just before contract close, did you consider it 25 likely that the design deliverables, including all 154 1 outstanding approvals and consents, would be delivered 2 in accordance with the design programme then in force? 3 A. I -- can I answer this in two pieces, if that's okay? 4 Q. Please do. 5 A. I think we had a process in place up until the award of 6 the contract to deal with programme delays up until that 7 point. Whether they were from SDS or MUDFA delays. 8 After the award of contract, we expected Infraco to 9 manage that design process and be responsible for 10 delivering that to programme. 11 Q. So what's the answer? If I can perhaps rephrase my 12 question to make it shorter. 13 In short, just before contract close, did you 14 consider the design programme would be met? 15 A. I suppose I was hopeful that, it having transferred 16 across to Infraco, they would find a way of meeting 17 that. 18 Q. You were hopeful, but tie hadn't managed to find a way 19 to meet the programme before contract close? 20 A. No. 21 Q. Does it really come down to this, that the programmes 22 were based on a hope rather than an expectation it would 23 be met? 24 A. Well, in my view the risk for that had then transferred 25 to Infraco in terms of the delivery of the programme. 155 1 Q. Was that your understanding based on the fact that 2 design contract had been novated to the Infraco? 3 A. It was, yes. 4 Q. The same question with regard to the MUDFA works. Just 5 before contract close, did you consider the MUDFA 6 programme would be met? 7 A. I think that we always understood that the MUDFA 8 contract would be difficult, and that continued to be 9 difficult. So I probably was not confident that the 10 exact MUDFA programme would be met, and we had 11 allowances in the risk register for that. 12 Q. Just to press you on this, does that mean then that you 13 did not consider the MUDFA programme would be met? 14 A. Yes, because we made risk allowance for it, as we did 15 for design. 16 Q. Thank you. 17 On the question of the risk allowance, did you have 18 any responsibilities for the QRA process or the risk 19 allowance at financial close? 20 A. So the QRA was done by Mark Bourke who was my risk 21 manager. He worked on my team, but he had 22 responsibility for running the QRA and for co-ordinating 23 that whole risk management process. 24 Q. I think then by the time of financial close in May 2008, 25 I think Mark Hamill had replaced Mark Bourke; is that 156 1 correct? 2 A. Sorry, Mark Hamill, yes. 3 Q. So when Mark Hamill was in post, did he report to you? 4 A. He did at that point, yes. 5 Q. So including as at May 2008? 6 A. Yes. 7 Q. Did you have any involvement in the assessment between 8 January and May 2008 of whether the risk allowance for 9 the Infraco contract was adequate? 10 A. So there's quite a number of people who have fed into 11 that process, and primarily that would be the -- the 12 assessment would be done by the commercial team really. 13 I managed the process through management of Mark. But 14 as a team, I think we'd be taking a view on whether we 15 felt those allowances were adequate or not. 16 Q. So is your position again that in relation to assessing 17 the adequacy of the risk allowance, your role was one of 18 process rather than substance? 19 A. Yes. 20 Q. If we go, please, to an email CEC01288043. We can see 21 this is an email from Mark Hamill dated 27 May 2008 sent 22 to various people, including yourself, subject "Private - 23 QRA at Financial Close". Do you know why he's marked 24 this private? 25 A. No, I can't recall. 157 1 Q. Sensitivity confidential. Then Mr Hamill sets out 2 there: 3 "Please see attached spreadsheet which I have 4 updated following our meeting last week. As agreed, 5 Risk ID 343 ..." 6 To pause there, I think that's the programme risk: 7 "... which allows for delays has been reduced by 8 GBP1.3 million which means we now have GBP5.187 million 9 against this risk and, accordingly, the overall risk 10 allocation has reduced by GBP1.3 million to 11 GBP26.637 million. 12 One thing which we all need to be aware of is that 13 it is not possible to reduce the value of one risk in 14 the QRA without affecting all the others. This is 15 because the P80 allocation is driven by the total mean 16 sum. Therefore, in order to get round this problem, 17 I have basically 'pockled' the spreadsheet and hard- 18 entered some values. This solves the problem and helps 19 us get the final result past CEC as I doubt they will 20 notice what I have done. 21 I will revert to normal practice for future QRAs 22 however in this instance I think this is the best way to 23 do it in order to avoid unnecessary scrutiny from our 24 'colleagues' at CEC. 25 Please confirm you are content with this approach 158 1 or otherwise by close of play Friday 30 May. I will 2 take no response as acceptance." 3 Do you have any recollection of the matters raised 4 in this email? 5 A. So I -- I don't recall the event. I can make, 6 I suppose, an educated assumption as to what happened 7 here, because we had a process for drawing down risk 8 which -- and I suspect that if we looked forward in time 9 at Tram Project Board reports, there would be a risk 10 drawdown paper that drew this risk down from the risk 11 funding into the core funding for the project. 12 Q. I think what Mr Hamill is referring to is that as part 13 of the risk allowance at contract close -- put it this 14 way, rather. The risk allowance contained two elements. 15 The first and main element was a QRA figure which had 16 been arrived at by using computer software. And there 17 was then secondly in addition certain sums had been 18 added to the total risk allowance manually. 19 I think what Mr Hamill is referring to is to pockle, 20 alter, the spreadsheet to hard enter some values; 21 although that may not be apparent to anyone else looking 22 at the spreadsheet who hadn't known it had been pockled. 23 Does that seem a reasonable interpretation? 24 A. I think the use of the word is unfortunate. I think 25 what he is referring to is a mechanical alteration he 159 1 has made which he talks about, I think, rectifying later 2 on. And I believe that we would have reflected this 3 drawdown in later drawdown reports to the Tram Project 4 Board. 5 Q. What do you understand the word "pockle" to mean? 6 A. Altered. 7 Q. Do you understand there to be any element of deception 8 going on here? 9 A. I don't think that was his intent for a minute. I think 10 he was probably concerned that to get this QRA altered, 11 he had to do this quickly, and he talks about updating 12 this in the normal fashion later on. 13 I don't think there was deceit intended at all, and 14 I think it was part of a process we were going through 15 and we would draw this down at Tram Project Board in 16 future. 17 CHAIR OF THE INQUIRY: Looking at the email, it says "As 18 agreed, Risk ID 343 ... has been reduced by 1.3 million". 19 So first of all, do you remember agreeing that that 20 risk should be reduced by 1.3 million? 21 A. I don't remember, my Lord, the exact meeting. There was 22 lots of meetings going on at the time. I agree that we 23 probably did meet and agree that that risk would be 24 reduced. That would be based on our -- I think a view 25 that we could reduce that risk because we had 160 1 transferred it over to the Infraco contract. 2 CHAIR OF THE INQUIRY: Mr Hamill says that he wasn't very 3 happy about being asked to do this because it wasn't 4 normal. If you look at the spreadsheet for risk ID 343, 5 it's been reduced, the figure has been reduced to 6 GBP5.187 million, but that figure was obtained by 7 putting that figure into the calculating box, as it 8 were, of the computer, as opposed to the normal formula. 9 Now, that -- if that's what happened, is that 10 something you would approve of? 11 A. I -- I can't recall the meeting. 12 CHAIR OF THE INQUIRY: I'm not asking you to recall the 13 meeting. If that is what happened, do you approve of 14 that? 15 A. I would have approved of reducing the risk figure. If 16 we felt that it was appropriate to reduce that risk 17 figure. So ... 18 CHAIR OF THE INQUIRY: Would you have approved of putting in 19 the figure into the computer so that the computer turns 20 out that figure, as opposed to reworking the schedule? 21 A. I wouldn't have approved of fabricating an answer. And 22 I, you know, feel that in this instance we felt there 23 was sufficient risk allocation here that we could draw 24 this down. 25 So I wouldn't approve of fabricating a figure, no. 161 1 MR MACKENZIE: My Lord, I only have a few final questions, 2 but it may be a suitable time to take a break. 3 CHAIR OF THE INQUIRY: We will have a short break of -- we 4 will resume then at 3.25. 5 (3.13 pm) 6 (A short break) 7 (3.28 pm) 8 CHAIR OF THE INQUIRY: You're still under oath, Ms Clark. 9 A. Thank you, my Lord. 10 MR MACKENZIE: Thank you, my Lord. 11 If we could go back to your statement, please, 12 Ms Clark and look at page 44. 13 In question 71, that refers to an email dated 14 10 July 2008 from Stewart McGarrity, which noted that: 15 "... Transport Scotland were very unhappy about 16 TIE's four weekly report in that, in particular, it did 17 not give them a clear picture as to how TIE were 18 addressing programme slippage." 19 What was the issue there and what steps, if any, 20 were taken to resolve it? 21 A. I can't remember what the exact issues were, but I think 22 we agreed to start meeting Transport Scotland on 23 a regular basis to take them through reporting to them. 24 Q. Was there a fundamental problem around this time that 25 tie weren't able to address effectively programme 162 1 slippage? 2 A. So in July 2008 we were dependent on Infraco supplying 3 us with updated programmes that we could accept, and we 4 were working very hard with them to try and get them to 5 provide us with those updated programmes. 6 Q. Even before Infraco contract close, looking back at it 7 now, were tie at any time able to effectively address 8 programme slippage? 9 A. We were trying to mitigate programme slippage. 10 CHAIR OF THE INQUIRY: I think the question was: was tie 11 ever effectively able to address -- or were tie ever 12 able effectively to address programme slippage. 13 A. So, my Lord, I think in hindsight we were not effective 14 in addressing programme slippage. 15 MR MACKENZIE: Thank you. 16 Another document, please, if we go to TIE00248213. 17 We can see at the top that this is an email from 18 Tom Hickman, dated 16 November 2008, to yourself in 19 relation to the Transport Scotland Programme Update for 20 Period 08. 21 The email starts: 22 "The live programme and the version we send to 23 Transport Scotland periodically are so far apart now 24 that I am experiencing great difficulty in preparing 25 a version for Transport Scotland." 163 1 Then in the next paragraph: 2 "Whilst understanding why we are reporting a 2011 3 OFRS date ..." 4 Is that open for revenue service? 5 A. It is. 6 Q. "... to Transport Scotland I am very uncomfortable that 7 I am to all intents and purposes fabricating a programme 8 to appease Transport Scotland that may not stand up to 9 close scrutiny by auditors. We have to get BSC to 10 provide us with a programme to completion before the end 11 of period 09 or generate one ourselves, but either way 12 we cannot continue to run two programmes that are so 13 different." 14 So what's the issue being raised in this email? 15 A. So we were reporting to Transport Scotland the open for 16 revenue service date, which was the contractual date in 17 the contract with Infraco. 18 We were also running scenarios in the programme to 19 look at what was likely to happen, given actual progress 20 on the ground, but we were also pressing constantly 21 Infraco to come back to us with a mitigated programme 22 which they were required to provide under the contract. 23 And I think it's Clause 65 of the Infraco contract 24 details the steps we need to go through before we can 25 agree a revised open for revenue service date. 164 1 So whilst we were correctly reporting this open for 2 revenue service date to Transport Scotland, and that 3 contractually was the date, we were also running 4 scenarios to look at what the programme slippage might 5 be and continually pressing Infraco to give us 6 a mitigated programme which they -- they didn't do for 7 a long time. 8 Q. So is the problem in short that you weren't able to 9 produce an accurate programme for Transport Scotland 10 until Infraco had produced their updated programme? 11 A. Correct, and one that we could accept and agree 12 contractually. 13 Q. Did tie say that to Transport Scotland, that we can't 14 give you an updated -- sorry, we can't give you an 15 accurate programme, because we are waiting for the 16 consortium to give us their programme? 17 A. I can't remember if we were explicit in saying that to 18 Transport Scotland. I understand that this information 19 was being communicated through the Tram Project Board 20 reports. 21 Q. Would this problem have been avoided if the Infraco 22 contract contained an accurate and up-to-date programme? 23 A. It wouldn't be the contract that contained the accurate 24 programme. It was the process within the contract for 25 Infraco to update that programme on an ongoing basis. 165 1 Q. I think there was a construction programme included in 2 the Infraco contract? 3 A. Yes. 4 Q. Which was accepted as being out of date because it was 5 based on version 26, the design programme. So I simply 6 wondered if the Infraco contract at contract close had 7 included an up-to-date and accurate construction 8 programme, whether the problem set out in this email in 9 November 2008 would have been avoided? 10 A. Yes. 11 Q. Now, moving on to another issue, please, in terms of tie 12 as an organisation, we have heard evidence that 13 witnesses have said it wasn't always clear who was 14 responsible for what. Did you have any concerns in that 15 regard? 16 A. Was that tie or was that in the tram project structure? 17 Q. Within tie, some tie witnesses have said that within 18 tie it wasn't always clear who did what. 19 A. I think at the time I was clear what I was doing. And 20 clear what the people around me were doing. 21 Q. Could we look, please, at page 13 of your statement. 22 Question 19 at the top of the page. 23 We say: 24 "You were the author of TIE's Project Management 25 Plan ... dated March 2007." 166 1 The document reference is given, ADS00015. We 2 asked: 3 "Very generally, what was the purpose of that 4 document?" 5 You replied: 6 "It set out the intended project management 7 arrangements for the delivery of the tram project 8 including governance, team structure and contract 9 structure. There were changes to the team structure and 10 individual responsibilities through the life of the 11 project - as I recall, however, this document was not 12 continuously updated and accordingly these changes would 13 not necessarily have been reflected in the document." 14 What you seem to be describing is that yes, there 15 was a project management plan in March 2007, but that 16 wasn't continuously updated. Was it ever updated? 17 A. I don't believe it was updated and I think we've spoken 18 previously about my job title changing, the 19 responsibilities I had changing, and I think my 20 statement also goes into the change of personnel through 21 the life of the project as well. 22 Q. Would it have been helpful to have updated the project 23 management plan as there were important changes in the 24 structure and individual responsibilities in tie? 25 A. I think it would have been helpful in that there would 167 1 have been a reference document always there. I think 2 people within the team were clear who was doing what, 3 but yes, that would have been a helpful reference tool 4 for people to go to. 5 Q. If that document had been updated, then people in other 6 teams in tie would perhaps have been clearer on what 7 others in tie were doing and were responsible for? 8 A. Perhaps, yes. 9 Q. It's perhaps likely, isn't it? 10 A. Likely then. 11 MR MACKENZIE: Ms Clark, I appreciate there are other 12 matters in your written statement, but I'm quite content 13 to take those as read. So I have no further questions, 14 thank you. 15 A. Thank you. 16 CHAIR OF THE INQUIRY: I think Edinburgh and Mr Fairley have 17 indicated questions. 18 MR BURNET: No, we don't have any further questions. 19 MR DUNLOP QC: My Lord, again, a matter has arisen today 20 which has taken me somewhat by surprise. It's with 21 regard to the April 2008 meeting and in particular the 22 witness has not been taken to a document which might 23 assist in that regard. I would welcome five minutes to 24 put that document to the witness before Mr Fairley winds 25 up, if he has any further questions to ask. 168 1 CHAIR OF THE INQUIRY: Very well. 2 MR DUNLOP QC: I'm obliged. 3 Examination by MR DUNLOP QC 4 MR DUNLOP QC: Ms Clark, you will recall my learned friend, 5 Counsel to the Inquiry, asking you about a meeting that 6 Mr Fitchie says happened in April 2008; yes? 7 A. Yes. 8 Q. Mr Fitchie was challenged on a great deal of matters in 9 his evidence. What he wasn't challenged on was evidence 10 that he gave that such a meeting did take place. And 11 there is a document that relates to that. I want to 12 take you to that, please. 13 His evidence is that there was a contemporaneous 14 note taken, and if we could have on screen, please, 15 document DLA00006319. Would you look at the second page 16 of that, please. 17 Just for the notes, this is referenced in 18 Mr Fitchie's statement at paragraph 7.320. We don't 19 need to go to that just now. 20 If you look -- if we could expand it to fill the 21 screen, please, it does bear the date 9 April 2010, but 22 I would suggest that must be wrong. If you look down, 23 we see the meeting includes Geoff Gilbert. He'd left 24 long before April 2010; is that right? 25 A. That's correct, yes. 169 1 Q. Now, the first point I want to bring to your attention 2 is it does appear from this that you weren't in 3 attendance at that meeting; that's correct? 4 A. That appears to be correct, yes. 5 Q. So Gilbert, McGarrity, Bell, Fitchie, McEwan and Murray, 6 all meeting at CityPoint on 9 April, but you weren't 7 there. Not being there, presumably you are not in 8 a position to dispute what is there recorded? 9 A. No. 10 Q. In particular, I just want to be clear that you're not 11 in a position to dispute that it is recorded, second 12 paragraph, there was a: 13 "Break out from negotiations with Bilfinger to 14 discuss commercial proposition by Bilfinger which 15 involves tie agreeing to further price increases, 16 approximately GBP9 million, to be split between value 17 engineering ..." 18 Now, there was a discussion you are aware of, 19 I think, about an extra 9 million; is that right? 20 A. I'm aware of that. But I can't confirm whether that 21 discussion took place during this meeting or not. 22 I wasn't there. 23 Q. You will see there underlined: 24 "Can tie close on this?" 25 That appears to be a contemplation as to whether or 170 1 not close can happen. Put it another way, whether or 2 not there needs to be a postponement; is that fair? 3 A. I have no idea what is meant by that statement. 4 Q. You're not in a position to dispute the fact that at 5 that meeting, there was a query as to whether or not tie 6 could close? 7 A. I don't know what they mean by close, whether it's close 8 on that agreement or close on the Infraco contract. 9 I just don't know. 10 Q. Likewise, just looking down, you see: 11 "AF [Mr Fitchie] ... Advised that this represented 12 a major procurement risk in the light of the very slim 13 price differential at PB appointment in December. Also 14 advised that Schedule Part 4 already contained numerous 15 relief/compensation/arguable risk allocation points for 16 BB - on civils work especially. Biased for Infraco. Risk 17 of BB exploiting Schedule Part 4." 18 Are you in a position to dispute the fact that that 19 is noted as having been discussed at that meeting? 20 A. I can't dispute that. I wasn't at the meeting. 21 Q. "Recommended tie have highest authority if want to 22 exceed ... position ... and that BB were made aware 23 plainly what their approach was doing in terms of risk 24 and best value for tie." 25 Again, I presume you are not in a position to 171 1 dispute that that was discussed? 2 A. No. 3 CHAIR OF THE INQUIRY: Mr Dunlop, I wonder if there is any 4 merit in putting this to this witness. 5 MR DUNLOP QC: My Lord, it's largely because my learned 6 friend put it to the witness that Mr Fitchie was wrong 7 about this meeting and took it from her that she would 8 have been there, without putting to her this document, 9 and I'm simply, in the interests of fairness, making 10 sure that we are all appraised of exactly what is noted 11 as having happened. 12 My Lord, I'm prepared to rest there. 13 CHAIR OF THE INQUIRY: I think the point could be made that 14 she's not noted as being there. 15 MR MACKENZIE: My Lord, could I perhaps just clarify, 16 I didn't put it to the witness that Mr Fitchie was 17 wrong. I simply put it to the witness what Mr Fitchie 18 said in his statement. 19 CHAIR OF THE INQUIRY: Yes. Mr Fairley? 20 MR FAIRLEY: Thank you, my Lord. 21 Examination by MR FAIRLEY 22 MR FAIRLEY: Ms Clark, you were asked by his Lordship about 23 a piece of evidence you gave about there being 24 disadvantages to delaying procurement of the Infraco 25 contract to allow design to catch up. Do you recall 172 1 that? 2 A. I do, yes. 3 Q. That's what I want to ask you about first. 4 You had mentioned tie costs, tie internal costs as 5 being one aspect of that. 6 We've heard evidence from other witnesses that in 7 fact by this stage I think there were really only two 8 parties, two consortia that were interested in this 9 project, one called Tramlines and the other the BBS 10 consortium that ultimately was awarded the contract. 11 Was there at that stage running up to early 2008 12 a concern that one of those potential bidders might drop 13 out, leaving tie with only one party interested in the 14 contract? 15 A. I recall that was a concern, yes. 16 Q. Were there also concerns at around that same time about 17 the possibility of cost increases to the overall project 18 cost and civils work resulting from what is described, 19 I think, as a collapse in the supply chain, or perhaps 20 also changes in exchange rates because materials were 21 coming from abroad? 22 A. That's correct, yes. 23 Q. So were those also factors which featured in the 24 thinking and the imperatives to try and keep moving 25 forward towards appointment of a contractor for the 173 1 Infraco works? 2 A. I believe they would have been, and it's all about 3 balancing up those disbenefits with the benefits, yes. 4 Q. Thank you. 5 Can I ask you now to look at a different issue. Can 6 we have on the screen, please, in front of you document 7 CEC00006490. 8 Is this a document that you recognise? 9 A. I believe so, yes. 10 Q. If my understanding is correct, this is a document which 11 was provided to City of Edinburgh Council or which 12 formed the basis of a document provided to City of 13 Edinburgh Council about DRP outcomes; is that right? 14 A. That's correct, yes. 15 Q. And am I correct in saying that the summary that we see 16 here was sent to you by a solicitor at DLA called 17 John -- I may mispronounce it -- Miezitis; would that be 18 right? 19 A. That would be correct, yes. 20 Q. To what extent did the advice about the DRP outcomes 21 that you received from Mr Miezitis form the basis of the 22 information about those that you then passed on to City 23 of Edinburgh Council? 24 A. That would be the core of the information I would send 25 on to City of Edinburgh Council. 174 1 Q. Can we also look then at one more document with the same 2 reference at the front, but with, instead of 90 at the 3 end, with 89 at the end. So the document in the 4 management system immediately before this one. 5 CEC00006489. 6 I think that this is an email from you dated 7 9 November 2010 to Nick Smith and Carol Campbell, both 8 of whom were solicitors within CEC legal; do you see 9 that? 10 A. I do, yes. 11 Q. The email is short, but simply says: 12 "DRP summary. Will put this on your site." 13 Do you see that? 14 A. I do, yes. 15 Q. Was that DRP summary taken essentially from the summary 16 that you had received from Mr Miezitis at DLA? 17 A. It was, yes. 18 Q. Put that document away now. 19 The last thing I want to ask you about is in the 20 evidence of Mr Ramsay from Transport Scotland, he 21 expressed a degree of either surprise or frustration 22 that in June of 2010 tie was reporting against 23 a revision 1 programme when BSC was reporting against 24 a revision 3A. I want to ask you a little bit about 25 that. 175 1 As at June 2010, had tie and BSC agreed BSC's 2 proposed revision 3A, or was that simply a programme 3 that BSC were putting forward for agreement? 4 A. I believe it was simply a programme they were putting 5 forward for agreement under the contractual mechanism in 6 the Infraco contract. 7 Q. You mentioned Clause 65 of the Infrastructure contract. 8 I think I'm right in saying there is a passage between 9 clauses 60 and 65 of the Infraco contract that provides 10 quite a detailed mechanism for programme change? 11 A. It does, yes. 12 Q. Was it the case that agreement with BSC to programme 13 change could result in additional cost to the programme? 14 A. It could, yes. 15 Q. For that reason was it important that tie control 16 carefully any changes that there were to the programme? 17 A. It was, yes. 18 Q. So as at June 2010, if I have understood your previous 19 answer correctly, there was not an agreed revision to 20 the programme numbered 3A. That was simply BSC's 21 unilateral version of what they wanted, or what they 22 said they wanted the programme to be? 23 A. That's correct. 24 Q. Is that the explanation then of why, in June 2010, tie 25 were reporting to Transport Scotland still on 176 1 revision 1? 2 A. That's correct. 3 Q. Is this in any way related to the point that we saw 4 referred to in the Tom Hickman email that we looked at 5 a little while ago, about there being difficulty in 6 getting adequate information from BSC to inform the 7 revision of the programme? 8 A. Yes. 9 MR FAIRLEY: Right, thank you. 10 I have no further questions. 11 CHAIR OF THE INQUIRY: Thank you very much, Ms Clark. 12 You're now free to go. You're still subject to your 13 citation. You could be recalled, but I think it's 14 unlikely. 15 A. Thank you, my Lord. 16 CHAIR OF THE INQUIRY: I'm sorry for the delay in getting 17 you into the witness box. 18 (The witness withdrew) 19 MR MACKENZIE: My Lord, the next witness is Tom Hickman. 20 MR TOM HICKMAN (sworn) 21 CHAIR OF THE INQUIRY: You are going to be asked some 22 questions initially at least by Mr Mackenzie. If you 23 just listen to the question and answer it as directly as 24 possible, and clearly and at a measured pace, so the 25 shorthand writers can keep up with you. 177 1 A. Okay, thank you. 2 Examination by MR MACKENZIE 3 MR MACKENZIE: Good afternoon. 4 A. Good afternoon. 5 Q. Could you state your full name, please? 6 A. Full name is Thomas John Charles Hickman. 7 Q. And your current occupation? 8 A. I'm a Project Controls Manager. 9 CHAIR OF THE INQUIRY: I wonder, Mr Hickman, if you could 10 come a bit closer to the microphone. 11 A. I'm a Project Controls Manager with Babcock 12 International. 13 Q. Could you look, please, at the statement you have 14 provided to the Inquiry. I'll give the reference 15 number. It's TRI00000147_C. I think you've also got 16 a hard copy in front of you as well; is that correct? 17 A. I do, yes. 18 Q. If you could go to the very last page, please, just to 19 confirm your signature, and wait for it to come up on 20 the screen. 21 Can you confirm, please, that this is your signature 22 and that this is the written statement you have provided 23 to the Inquiry? 24 A. Yes, that is my signature, yes, and it looks like the 25 statement I did submit, yes. 178 1 Q. Also just to confirm, Mr Hickman, your evidence to the 2 Inquiry will comprise both this written statement in its 3 entirety and the evidence you give today. 4 Now, before we leave this statement, there's one 5 part I should highlight in respect of page numbering. 6 We can see the last page is numbered 32; do you see 7 that? At the top of the page, and the last page is 32? 8 A. Yes. 9 Q. If we can go back one page, please, we can see this page 10 is numbered 38. So I think in short something has gone 11 wrong with the numbering, but I think if we look at, for 12 example, this page 38, we can see in sub-question 4: 13 "Do you have any comments, with the benefit of 14 hindsight ..." 15 So if we look at that, and then go on to the next 16 page, the last page of the statement, I think we can see 17 at the top, a duplication of that question and your 18 answer, and a duplication of the subparagraph 5, and 19 your answer. 20 So subject to that formatting error, I think you're 21 happy that this does represent the statement you 22 provided to the Inquiry? 23 A. Yes, I can see that, and I'm happy that it does. 24 Q. Then go back to page 1 of the statement, please, to look 25 at your qualifications and experience which you 179 1 helpfully set out in blue text. 2 We can see that you have been employed initially as 3 a planner and then as a planning engineer, with various 4 employers since 1981: 5 "I was Lead Planning Engineer with BP Grangemouth 6 between 1990 and 1999. I was then Zone Planning 7 Engineer with First Engineering from 1999 to 2001 with 8 responsibility for heavy rail maintenance activities." 9 You then worked again for BP Grangemouth from 2001 10 to 2006, and then from 2006 to 2007 you were a Senior 11 Project Control Engineer with Turner & Townsend before 12 being seconded to tie as a Project (sic) Manager. 13 I should ask, do you have any -- 14 CHAIR OF THE INQUIRY: I think it is a Programme Manager. 15 MR MACKENZIE: Sorry, Programme Manager, thank you. 16 Do you have any planning related qualifications or 17 membership of any professional bodies? 18 A. I don't, no. 19 Q. So you essentially have learned on the job? 20 A. That's correct, yes. 21 Q. Thank you. So in relation to your involvement with the 22 Edinburgh Tram Project, am I right in thinking that 23 initially you were involved with the programme for the 24 tram project while employed by Turner & Townsend? 25 A. Yes, initially I was employed by Turner & Townsend and 180 1 seconded to tie offices to support the tie Programme 2 Manager. 3 Q. So was it from 2006 while employed by Turner & Townsend 4 that you were first involved in the programme management 5 of the tram project? 6 A. Not so much in the programme management, but the 7 programme support and with the tie existing programme 8 manager. 9 Q. I see. So when you were with TSS, tie had a Programme 10 Manager? 11 A. That's correct, yes. 12 Q. Do you remember the name of that Programme Manager? 13 A. The gentleman was called Pat Lyden. L-Y-D-E-N, I think 14 it was. 15 Q. And you provided programme support? 16 A. To him, yes. 17 Q. Did there come a time when you left Turner & Townsend 18 and became employed by tie as their Programme Manager? 19 A. That's correct. I think that was May 2007. 20 Q. Thank you. If we could go over the page, please, to 21 page 2. You do in fact set that out in question 2.1, 22 exactly as you've said. Would it be fair to say that 23 before your involvement with the Edinburgh Tram Project, 24 you had no experience of programme managing trams or 25 light rail projects? 181 1 A. That would be correct, yes. Most of my career to that 2 date had been in oil and gas industry. 3 Q. And to what extent were your skills transferable to 4 programme managing the Edinburgh Tram Project? 5 A. I think a lot of the skills in programme management and 6 programme construction are transferable in that it's 7 understanding and a mindset of the sequence of 8 activities, and you deal quite a bit with the subject 9 matter experts to gain their experience and knowledge to 10 build a programme. So it becomes a robust and 11 integrated programme. 12 CHAIR OF THE INQUIRY: Sorry, Mr Hickman, could you lean 13 a bit forward to the microphone. You're quite soft 14 spoken. 15 MR MACKENZIE: Yes. If you could make a point of speaking 16 into the microphone as well. 17 A. I'll try. 18 Q. Page 3 of your statement, please, towards the top, 19 second line, we can see at tie you reported directly to 20 Susan Clark, et cetera. 21 Then at page 4 we asked you about the Master Project 22 Programme. In question 4, the last paragraph of your 23 answer, you explain that: 24 "The Master programme was an amalgamation of the 25 three programmes above." 182 1 SDS, utility and infrastructure: 2 "It replicated the SDS Primavera programme and 3 linked the utilities and infrastructure information into 4 it." 5 Now, you have explained that you joined tie as 6 Programme Manager in May 2007. Do you recall whether 7 tie had a master programme in place before you arrived? 8 A. They certainly had a programme of certain level at that 9 point in time. To what level of detail it was, I can't 10 actually recall. But there was certainly a programme in 11 place at the time, but that probably, I would think at 12 that point in time, was detailed in terms of the land 13 acquisition and the -- the things that went with that. 14 But probably the MUDFA and the Infraco part of that 15 would be indicative. I think SDS had had a programme, 16 a contract in place at that time. So their programme 17 would be the contract programme. 18 Q. I see. Now, I think that SDS contract was signed in 19 September 2005. So when you joined tie in May 2007, you 20 would have expected the SDS programme to have been 21 incorporated within the master programme? 22 A. I would have, yes, and I think it probably was. 23 Q. And the MUDFA programme -- sorry, MUDFA contract was 24 signed in October 2006. Do you recall whether it was 25 incorporated into the master programme when you joined 183 1 tie in May 2007? 2 A. There would have been an indicative level of programme 3 at that point in time, and it would have been integrated 4 into the logic of the master programme, but it wouldn't 5 have been the contractual programme as agreed with MUDFA 6 at the time because that contract hadn't been let at the 7 time. 8 Q. So if the MUDFA contract was entered into in 9 October 2006, why wouldn't its programme have been 10 integrated into the Master Project Programme when you 11 joined tie in 2007? 12 A. Sorry, I'm getting my years mixed up. If it was in 13 place in 2006, yes, it would have been included in the 14 master programme logic. 15 Q. I understand. When you joined tie in May 2007, did you 16 have any views on the adequacy of tie's Master Project 17 Programme? 18 A. Not that I can recall, no. 19 Q. Now, when you became responsible for the programme as 20 tie's Project Manager, in general, and by way of 21 overview, did you experience any difficulties in trying 22 to update the Master Project Programme? 23 A. We did -- in terms of updating it, we tried to break it 24 down into a much more lower level of detail, so we could 25 track it easier, and align it with the SDS programme, so 184 1 that the information we were receiving from SDS was 2 comparable in the master programme to the information we 3 were receiving from them. So it was an easy transfer of 4 data. 5 Q. If we can go to page 5, please, of your statement, in 6 the second paragraph from the top you say: 7 "TIE's role was to compile and update the Master 8 Programme based on the information provided by the 9 contractors on a monthly basis. The information tended 10 to be accepted as submitted (following review by the 11 appropriate members of the TIE team) imported to the 12 Master Programme and then the impact of the update 13 assessed. The SDS monthly update was frequently 14 received late, which caused issues when it included 15 forecast dates which had already passed." 16 Now, I think separately the Inquiry has heard 17 evidence that there were ongoing delays with both the 18 design programme and the MUDFA programme. Did the 19 delays in these programmes cause you any problems in 20 trying to keep up to date the master programme? 21 A. They would cause -- cause delays or issues in terms that 22 because it was integrated logic between all the 23 programmes, if one activity or part of the programme was 24 late in an earlier programme, so if the SDS programme 25 design was delayed for any reason, it would delay the 185 1 appropriate part in the MUDFA Utilities Diversion 2 Programme, which in itself would then delay or impact on 3 the Infraco programme. 4 Q. Then sticking with page 5 of your statement, in 5 sub-question 3 we asked: 6 "Approximately how many activities did the 7 programmes take into account ..." 8 Then we referred to an email in September 2007 which 9 attached a document summarising the evolution and 10 development of the master programme between 11 September 2006 and September 2007, which noted that the 12 programme had developed from 2,246 activities to 4,708 13 activities. 14 You replied: 15 "I do not accurately recall activity numbers but do 16 recall that the main programmes numbered many thousands 17 of activities that themselves had many thousands of 18 activities below them held in the contractor's 19 submissions." 20 Then we asked: 21 "What were the main challenges ..." 22 You said: 23 "One of the main challenges was being in a position 24 where we had robust, accurate and, most importantly, 25 up-to-date information from which to inform the master 186 1 programme. The level of detail required to monitor and 2 progress the many thousands of activities in the utility 3 and infrastructure programmes whilst being able to 4 summarise this at a presentable level was also 5 a challenge." 6 In terms of the number of activities in the Master 7 Project Programme, how did that compare with other 8 master project programmes you're used to dealing with? 9 A. It's probably one of the most detailed programmes and 10 the highest number of activities in any programme that 11 I have dealt with in my career. 12 Q. So if this is correct that there were perhaps 4,700 13 approximately activities in the Tram Project Master 14 Programme, approximately how many activities might you 15 expect to see in other master programmes you're used to 16 working with? 17 A. Sorry, that response on the 4,700, the response I meant 18 was in terms of the detail of what was below that was 19 the most activities that I have dealt with in my career. 20 So the utilities programme, for example, would be at 21 a level that we would have each of the different 22 disciplines, gas, water, telecom, whatever it was, in 23 a subsection. And below that, in the contractor's 24 programme, there would be each pipe or cable numbered 25 and monitored. So that kind of level of granularity 187 1 below it. 2 Q. That sounds a very difficult task to keep on top of? 3 A. It certainly was, yes. 4 Q. Was there too much detail? 5 A. At the time it didn't feel like there was too much 6 detail because we were trying to monitor it in such 7 a fashion that we knew exactly what was going on 8 everywhere, because of the intricacies that were 9 required between each of the different parts of the 10 contract, with utilities impact on the infrastructure. 11 But with hindsight, yes, there probably could have been 12 a higher level of programme breakdown that would have 13 made it easier to follow the programme. It was very 14 difficult to articulate what was happening in different 15 disciplines on the ground in a form that was easy to 16 understand and explain to everyone within the team. 17 Q. Did you ever feel on top of all these details? 18 A. In terms of the details, the details were managed by the 19 other planners within the team. But as they summarised 20 and fed into the master programme. So my role was to 21 understand all the different functions coming together 22 and how that affected the master programme. 23 Q. I see. So, for example, the details in the MUDFA 24 programme, that would be primarily a matter for tie's 25 MUDFA team? 188 1 A. They would manage the detail. They would progress the 2 detail. They would work with the contractor to 3 reschedule whatever was required to be rescheduled, and 4 that would be fed into the master programme. 5 Q. Thank you. 6 CHAIR OF THE INQUIRY: Would they monitor the activities in 7 the MUDFA programme as well or -- 8 A. Excuse me, my Lord? 9 CHAIR OF THE INQUIRY: Would they monitor the activities 10 in -- the progress? The MUDFA? 11 A. In terms of being out on the site and looking at them, 12 yes. 13 CHAIR OF THE INQUIRY: Would that be reported back to you or 14 did you have a separate monitoring? 15 A. That would be reported back to the MUDFA team, which was 16 managed from the office in Newhaven. And then that -- 17 the planning team there would feed that into the master 18 programme. So it was the same programme that we all had 19 access to. They would bring it to a level that allowed 20 it to be updated in the master programme. 21 MR MACKENZIE: Thank you, my Lord. 22 Mr Hickman, a separate matter I would like to ask 23 you about in relation to the Master Project Programme is 24 this. 25 We have seen in the design contract dated 189 1 September 2005, there was reference to SDS being obliged 2 to provide its services in accordance with tie's Master 3 Project Programme. But we've also heard evidence from 4 the SDS witnesses that the Master Project Programme was 5 very rarely sent to SDS, certainly between 6 September 2005 and, I think they say that February 2007 7 was the first issue of the master programme they 8 received. 9 Now, you weren't employed in tie during that period, 10 but do you have any knowledge of having seen tie's 11 Master Project Programme between the end of 2005 and, 12 say, February 2007? 13 A. I'm sure I would have seen it because I was working 14 alongside the tie Programme Manager. Whether that was 15 issued to SDS on a regular basis at that point in time, 16 I couldn't recall. 17 Q. But your understanding and recollection is that tie did 18 as a matter of fact have a Master Project Programme 19 between, say, late 2005 and early 2007? 20 A. I believe that they did have a master programme, but at 21 what level of detail, I couldn't testify. 22 Q. Thank you. Go back to your statement, please, to 23 page 8. This is under a general question in relation to 24 design. We asked in sub-question 2: 25 "What difficulties did slippage in the design 190 1 programme cause you as programme manager for the tram 2 project?" 3 You say: 4 "From recollection, main sections of the design 5 programme were subject to continual slippage thus 6 eroding any programme float that existed as a buffer 7 between completion of utility diversions and 8 commencement of infrastructure works." 9 We then asked at 3: 10 "In general, what were your views in 2006 and 2007 11 on whether the various revised design programmes 12 produced by SDS were realistic and would be achieved?" 13 You responded: 14 "It was widely recognised that to achieve the dates 15 being forecast in the SDS Design programmes would be 16 a major challenge. This was subsequently proven with 17 the continuous submission of SDS Design programmes 18 indicating month on month slippage. 19 I cannot recall if there was ever a time that I was 20 confident that a revised programme would be achieved as 21 from memory the infrastructure design continued deep 22 into the timescale of the Infrastructure programme." 23 Now, to pause there, during your employment at tie, 24 was there ever a time when you expected that the design 25 programme would be met? 191 1 A. I always expected it would be met, but being realistic, 2 and seeing the continual movement in the data, it was 3 obvious that there was certainly challenges that SDS had 4 in delivering that programme. 5 Q. When you say you always expected it to be met, do you 6 mean you always hoped it would be met, but whether you 7 expected it would be met is something different? 8 A. Well, through the ongoing discussions and the mitigation 9 that we were trying to put in place, we did expect that 10 at some point, we would be able to recover some of the 11 slippage. 12 Q. Do you know at what point it was expected that some of 13 the slippage would be recovered? 14 A. Well, each submission -- each submission detailed the 15 delivery of that programme, which was every four weeks. 16 So every four weeks we had a fresh set of dates that we 17 hoped SDS could achieve delivery upon. 18 Q. In the period between May 2007 and Infraco contract 19 close, here later in May 2008, during that period was 20 there ever a time when you were confident that the 21 design programme would be met? 22 A. The preliminary design was achieved on or about the 23 delivery date, I recall, which would have gave us some 24 confidence that the detailed design programme following 25 that would have had a -- I guess, a fighting chance of 192 1 being delivered. 2 What the dates that covered the delivery of the 3 detailed design part of the SDS programme, I can't just 4 recall just now. But I think it had to be finished 5 before we awarded the Infraco, which was early 2008. 6 Q. Moving on to the question of the MUDFA works, go on to 7 page 9 of your statement, please. We asked in 8 sub-question 2: 9 "What difficulties did slippage in the MUDFA 10 programme cause you as programme manager?" 11 You replied: 12 "From recollection, main sections of the MUDFA 13 programme were subject to continual slippage thus 14 eroding any programme float that existed as a buffer 15 between completion of utility diversions and 16 commencement of infrastructure works." 17 Then in response to the next question, you said: 18 "It was widely recognised that to achieve the dates 19 being forecast in the SDS Design programmes would be 20 a major challenge. This was subsequently proven with 21 the continuous submission of SDS Design programmes 22 indicating month on month slippage. 23 I cannot recall if there was ever a time that I was 24 confident that a revised programme would be achieved as 25 from memory the utility diversions continued deep 193 1 into the timescale of the infrastructure programme." 2 Does it follow from what you've said there that 3 between May 2007 and May 2008 there was never a time 4 when you were confident that the MUDFA programme would 5 be met? 6 A. Again, in terms of the information that was being 7 delivered on a four-weekly basis, we were continually 8 seeing slippage and the identification of further 9 utilities that weren't expected to be there which was 10 impacting the duration on each of the subsections and 11 subsequently extending the overall duration of the whole 12 project. So it became less and less likely that the 13 MUDFA programme was going to meet the programme dates. 14 Q. Could I also then please go to a separate email. It 15 will come up on the screen. TIE00248213. We can see 16 from the top of the page, this is an email from yourself 17 dated 16 November 2008 to Susan Clark. The subject 18 matter is "[Transport Scotland] Programme Update for 19 Period 08". 20 You say: 21 "The live programme and the version we send to 22 Transport Scotland periodically are so far apart now 23 that I am experiencing great difficulty in preparing 24 a version for Transport Scotland ..." 25 Then in the next paragraph you say: 194 1 "Whilst understanding why we are reporting a 2011 2 OFRS date to Transport Scotland, I am very uncomfortable 3 that I am to all intents and purposes fabricating a 4 programme to appease Transport Scotland that may not 5 stand-up to close scrutiny by auditors. We have to get 6 BSC to provide us with a programme to completion before 7 the end of period 09 or generate one ourselves, but 8 either way we cannot continue to run two programmes that 9 are so different." 10 What was the issue in this email? 11 A. I think the issue behind this email was we were 12 struggling to get information from the Infraco 13 consortium on how they were going to deliver the 14 programme. 15 So we were trying to fill the gap and piece together 16 the bridge between the utilities programme and the 17 infrastructure programme, so that we had a full master 18 programme that was robust, and at that point in time we 19 were having to second-guess, I think, what Infraco were 20 going to supply us with. 21 Q. Now, your reference to being very uncomfortable that you 22 were to all intents and purposes fabricating a programme 23 to appease Transport Scotland, why didn't tie simply say 24 to Transport Scotland: this is the difficulty, we can't 25 produce a realistic programme until we have the revised 195 1 programme from the consortium. 2 A. I didn't have any face-to-face discussions directly with 3 Transport Scotland other than the people mentioned there 4 that I dealt with. So if that discussion was required, 5 it would have been done with -- by somebody higher up 6 the management chain than I. 7 Q. So were you essentially being asked to produce 8 programmes even though you had the concerns set out in 9 your email? 10 A. Not specifically being asked to fabricate a programme, 11 but to develop a programme that brought the two parties, 12 the MUDFA and the Infraco, together in a -- as robust 13 a position as we could with the information available to 14 us at that point in time. 15 Q. Just in terms of how the problem had arisen, I think we 16 know that in the Infraco contract was included 17 a construction programme which was out of date because 18 it was based on version 26 of the design programme. Is 19 that correct? 20 A. I think that's correct, yes. 21 Q. But are you also referring to a further problem that the 22 MUDFA programme was by now out of date as well? 23 A. I think the MUDFA programme at that point in time was 24 revision 6, which I think was the one bound into the 25 Infraco contract. The point I'm making is that Infraco 196 1 were slow in providing us with a programme that 2 indicated that they were going to deliver their part of 3 the works and how we could knit that together with the 4 utilities programme, and that was the bridge we were 5 trying to close, trying to understand the sequencing 6 behind the Infraco programme. 7 Q. Is there an element of chicken and egg between all three 8 programmes, in that it might have been the consortium 9 may say, I don't know, that: our revised programme would 10 require to take into account the -- any revised MUDFA or 11 design programme. 12 A. I think at the point that Infraco were awarded the 13 contract, they knew as much as we did in terms of the 14 delivery of each of the utility diversions for each of 15 the subsections on the route. 16 Q. Would the problem set out in this email have been 17 avoided if an up-to-date and accurate construction 18 programme had been included in the Infraco contract? 19 A. It would certainly have given us a much clearer picture 20 of what the intended outcome may look like, yes. 21 Q. Is perhaps at least part of the problem that if one 22 includes in a contract a programme which is known to be 23 out of date, then that may create problems later for 24 programming purposes? 25 A. Can I just confirm which programme you're referring to? 197 1 Are you referring to the SDS Design programme or are you 2 referring to the Infraco programme? 3 Q. In the Infraco contract there was included 4 a construction programme which was based on an 5 out-of-date design programme. So certainly to that 6 extent, it was known that the construction programme was 7 out of date at contract close. 8 A. Mm-hm. 9 Q. Does that accord with your understanding? 10 A. Yes, I believe the contract was awarded on version 26 of 11 the SDS design programme, and by final close, I think we 12 had moved to version 31. 13 Q. Yes, indeed. Yes, there is that obvious and recognised 14 mismatch. But it also sounds from what you have said 15 that the MUDFA programme may have been out of date or 16 required revision certainly by the time of your email in 17 November 2008? 18 A. The MUDFA programme didn't undergo as many revision 19 changes as the SDS design programme. But it was a live 20 programme, so any formal revision would be recorded, 21 yes. 22 Q. Thank you. 23 Do you recall, Mr Hickman, whether the problems set 24 out in this email of November 2008 were solved, and if 25 so, how and when? 198 1 A. At the point of time that it was written, I can't 2 remember if it was resolved during November 2008, but 3 certainly on receipt of the Infraco programme, that then 4 would have been included in the programme logic, the 5 master programme logics for the entire tram network, and 6 that would have involved having a robust and full 7 programme for the full network at that point in time. 8 Q. There's one final matter I would like to ask you about. 9 Please go back to your statement, the very last page. 10 The one containing your signature. 11 The question at the top, we asked: 12 "Do you have any comments with the benefit of 13 hindsight on how the compilation, updating and reporting 14 of the master programme ... could have been improved?" 15 You responded: 16 "If the tram project had been a true joint venture, 17 then all the participants would have contributed to the 18 Master Programme and their contributions would have 19 improved the project as a whole. What the project 20 really needed was for everyone to be working together." 21 Now, we've heard that the procurement model in the 22 tram project was to disaggregate the design work, the 23 MUDFA work and the Infraco work. Do you think that was 24 a factor in the programming difficulties? 25 A. I think what I meant by that comment is that each of the 199 1 three parties, being SDS, MUDFA and ourselves, were 2 using the same planning software. So the data was being 3 transferred electronically, and imported into the master 4 programme. I felt that if each of the three parties had 5 been independently inputting it into the same programme, 6 the data transfer would have been easier and that the 7 delay between information being collated by one party 8 and inputted by another party would have been shorter. 9 Therefore, the current position would have been known 10 quicker. 11 CHAIR OF THE INQUIRY: Would that pose any risks to the 12 integrity of the master programme if you've got two or 13 three people -- 14 A. In terms -- 15 CHAIR OF THE INQUIRY: -- able to access it and to input it. 16 A. In terms of the software that was used, the software 17 used was Primavera planning software, and Primavera 18 planning software allows you to set up nodes at 19 different levels for each of the constituent parts of a 20 programme, which can be closed down in terms of access. 21 So that different people can see different levels of 22 access within the software. 23 So, for example, the SDS could only be given access 24 to the part of the programme that they were in charge of 25 delivering, although that information would have driven 200 1 the logic through the entire programme. 2 CHAIR OF THE INQUIRY: So if they put their information in 3 on the SDS section, the programme itself would work 4 through that and -- 5 A. It would automatically update the logic, yes, my Lord. 6 MR MACKENZIE: Finally, Mr Hickman, when you say that what 7 the project really needed was for everybody to be 8 working together, how did your experience in the tram 9 project compare with your experience in other projects 10 in that regard? 11 A. In terms of the tie team, the Council team, and to a 12 fair extent the SDS team, everyone in my opinion was 13 striving to deliver this project. I wouldn't say that 14 was the same case for the Infraco consortium. 15 MR MACKENZIE: I see. Mr Hickman, I'm content to take the 16 other matters in your statement as read. So I have no 17 further questions. 18 A. Thank you. 19 CHAIR OF THE INQUIRY: I don't think there's anyone -- thank 20 you very much, Mr Hickman. I'm sorry it's taken so long 21 to get you into the witness box, but you're now free to 22 go. You're still subject to your citation and could be 23 recalled, but it's unlikely we'll do that. 24 If that does happen, somebody will get in touch with 25 you. 201 1 A. Thank you, my Lord. 2 CHAIR OF THE INQUIRY: Thank you very much. 3 A. Thank you. 4 (The witness withdrew) 5 CHAIR OF THE INQUIRY: We'll adjourn now until tomorrow 6 morning at 9.30. 7 (4.30 pm) 8 (The hearing adjourned until Thursday, 26 October 2017 at 9 9.30 am) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 202 1 INDEX 2 PAGE 3 MR STEVEN BELL (continued) ...........................1 4 5 Examination by MR MACKENZIE (continued) .......1 6 7 Questions by CHAIR OF THE INQUIRY ............59 8 9 Examination by MR DUNLOP QC ..................60 10 11 Examination by MR FAIRLEY ....................72 12 13 Questions by CHAIR OF THE INQUIRY ............92 14 15 MS SUSAN CLARK (sworn) ..............................95 16 17 Examination by MR MACKENZIE ..................95 18 19 Examination by MR DUNLOP QC .................169 20 21 Examination by MR FAIRLEY ...................172 22 23 MR TOM HICKMAN (sworn) .............................177 24 25 Examination by MR MACKENZIE .................178 203