GARL or Who Makes up These Contracts?

Well, I’ve not talked about politics and transport for a while, and here is a post which kind of combines both.

Just recently the SNP has announced its new budget; something that has caused much consternation was the cancellation of the Glasgow Airport Rail Link.

Now on the political side, the SNP hasn’t exactly done itself any favours. They must have known that this would be unpopular. The Greens are already complaining that a public transport initiative was cut while road building continues and Labour are claiming that the SNP are anti-Glasgow. Now, I will come to the reasons that the project is claimed to have been cancelled in a minute or so. First I’ll go over how this could have been better handled.

The SNP should have known this would be an unpopular decision, and so I would have suggested a good offence with this one. I still expect to hear is that Westminster has cut the Scottish budget, and so this is their fault, but I think they already know that argument has incredibly limited mileage, regardless of how much the Westminster labour government does seem to want to show up the SNP. (Still sore about loosing the Scottish parliament as their own rubber stamp service I guess) A good direction would have been to blame the Edinburgh trams, as they tried to shut down that white elephant but were blocked, and the project has now spiralled out of control, they could have argued that there would have been plenty of money to pay for GARL if the Edinburgh tram project could have been canned.

The actual reason given, although the SNP haven’t really been playing it to its full, a pretty poor move politically, is that the costs were becoming significantly greater than initially stated. This is actually an intriguing angle. If they played it as stopping another Scottish Parliament or Edinburgh tram wild overspend before it started, they may get some more understanding and support on the decision, after all, they would be wildly slated if the project ran wild on their watch.

What actually confuses me is this, how do these projects run wild?

I’m an engineer, and while studying my HNC we covered contracts in a little detail, much has sadly vacated my empty head, but the basic Tendering process and contract rules have not. The basic gist is this. Someone wants a big project undertaken, say a building built. The client will usually provide a specification, plus surveys and all the information a contractor needs to make an estimate. The contractors will then make up a document explaining how they would conduct the project, what timescale it would be completed in and how much it would cost. The contract types generally hold bonuses for early completion, and also some bonuses for coming in under budget. Similarly there are penalties for running late, and generally any cost over-runs must be covered by the contractor. This works because it keeps both sides honest (It’s actually more complicated with clauses for various possibilities of delay but this simple explanation should fit)

However for some reason Government projects seem to work differently. For these if a contractor runs over time or over budget, the Government covers the shortfall, and I’ve no idea why. Why should costs spiral for a tender when a contract has been agreed. If we are farming big projects out to private companies, particularly high profile ones such as Trams or a Parliament building, then we should basically say “Well you said you could do it for amount X, that’s what we gave you, now we want our building to spec, if you’ve under bid, that’s your problem.”

Now back to the SNP, if they could commission some works, and have them come in on budget and on time, they could build a reputation for better practice on bug projects. No spiralling costs with this government. Sadly, from how it’s been played so far, this may be the breaking of them.