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Final Business Case for taking Trams to Newhaven now available for public reference

The Final Business Case for taking trams to Newhaven has been published today as part of papers for the upcoming Transport and Environment Committee later this month.

The full Final Business Case (FBC) for taking trams to Newhaven has been published as part of papers for the upcoming Transport and Environment Committee later this month. 

A report accompanying the FBC will be presented by the Trams to Newhaven project team at the Committee’s next meeting on Thursday 28 February.

The FBC sets out the robust strategic, economic, financial, commercial and management case for taking trams to Newhaven and outlines the project cost and timescales for councillors to base their final decision on when it goes to Council on 14 March.

Elected members have already been examining the FBC and supporting documents in a specially set up data room in the City Chambers, where members of the project team have also been on hand to respond to questions.

The FBC has been drafted following best practice for major capital projects from both HM Treasury (Green Book) and Scottish Government (STAG).

Having gone through a thorough tendering process, the FBC outlines that trams to Newhaven can be delivered within a budget of £196m, which includes a significant additional risk allocation on top of construction costs.

Costs have risen since the Outline Business Case (approved in September 2017) partly in response to changes to the design made after an in-depth consultation process with the local community and interest groups, as well as changes in the market to the way major infrastructure projects are priced following the collapse of Carillion.

The £196m also includes around £2.4m in funding to support local businesses through the construction process.

The cost reflects the outcome of a comprehensive procurement exercise and the inclusion of a six-month ‘Early Contractor Involvement’ (ECI) period to allow the project team and the appointed contractor to refine the construction programme and approach.

Even when the recommended percentage of ‘optimism bias*’ is added, in line with government guidance, which would take the project total to £207.3m, the project remains affordable and self-financing and would not divert funds from other Council services.

In line with government guidance a further optimism bias* has been accounted for, taking the total project cost to £207.3m. At this price the project remains affordable and self-financing and would not put any additional pressure on Council budgets.

The project would be funded through future tram fare revenues, along with a special dividend from Lothian Buses.

Almost 16 million passengers are forecast to use the completed line to Newhaven in its first year of operation - nearly double the patronage projected for the existing Airport to York Place line in the same year.

Transport Convener Councillor Lesley Macinnes said:

This is the next step in the decision-making process for this major project, giving the Transport and Environment Committee an opportunity to discuss and examine the Final Business Case ahead of Full Council’s final decision on 14 March. A crucial element of the FBC is that the project remains affordable without impacting on other Council services – something worth stressing given the entirely separate budget-setting process we have just concluded.

As custodians of this great and growing capital, Edinburgh’s elected members have a responsibility to make sure we plan properly for the city’s needs in the coming years and decades. Transport infrastructure is essential to this – indeed, public transport can be an enabler for sustainable development, allowing large numbers of people to get into and through the city centre for work, travel or leisure as well as opening up development and employment opportunities.

We are Scotland’s fastest growing city and although we already enjoy award-winning bus and tram services, we must work hard to evolve our whole public transport infrastructure and indeed public spaces. Trams are just part of the overall vision of an Edinburgh that truly has people at its heart – a more active, healthy and connected city with active travel and public transport at the forefront.

Vice Transport Convener Councillor Karen Doran said:

It’s been a hugely complex process getting us to this stage and the Trams to Newhaven project team are to be congratulated for all their hard work and expertise in producing a fully costed, fully scoped out business case for councillors to base their ultimate decision on next month. They’ve carried out months and months of extensive consultation on the designs and plans, updating and amending them in response to feedback so that they meet the community’s needs.

This report goes public on the same day as the next stage in our ambitious City Centre Transformation project. Both are aimed at responding to Edinburgh’s needs now and for generations to come. We have to respond to the pressures our growing city faces: managing congestion and improving air quality, making it easier to walk and cycle and creating an inclusive city for people of all ages and abilities.

If councillors agree to proceed with this on 14 March, trams to Newhaven will deliver real benefits to communities in Leith, Newhaven and right across Edinburgh.

Download and view the Final Business Case here (2.1MB)

*Optimism bias is a percentage added to an overall project cost in order to mitigate potential under-estimation of risk by a project team. The percentage applied to the take the project cost to £207.3m was calculated in line with government guidance.

Published: 22nd February 2018