Business Case for the Tram

FINAL TRAM BUSINESS CASE PUBLISHED

The Final Business Case for Edinburgh’s trams is published today (Thursday 18 October). The document has been prepared by tie limited, an arms-length company of the City of Edinburgh Council.

In an accompanying report, Council officials recommend approval of the Final Business Case which they state ‘re-affirms the viability of the tram in terms of economic viability, financial viability and affordability’ and shows that ‘expected benefits are shown to exceed costs.’

City of Edinburgh Councillors will discuss and vote on the recommendations at the meeting of the Full Council on Thursday 25 October.

tie limited is confident that everything is in place for Councillors to approve the Final Business Case and proceed with the construction of the tram system. If the Final Business Case is endorsed by a majority of Councillors, this will give the Council’s green light for the construction of trams.

The proposed tram route that will run from Newhaven to Edinburgh Airport has been costed at £498m, including contingency funding. This figure is significantly below the £545m funding already allocated.

The Final Business Case reconfirms the assertions of the Draft Final Business Case that was endorsed by the Council in December 2006. The document provides real clarity on costs following a two year procurement process, as well as extensive evidence of the economic, social and environmental benefits that trams will bring to Scotland’s capital. Audit Scotland's positive review of the project in Spring 2007 provided further evidence of the tram team's robust project management.

Willie Gallagher, Chairman of tie Limited, said: “I am extremely proud of our Final Business Case, it is an impressive, robust document and builds on the draft version that was approved by the Council last year. This business case is the culmination of two years hard work by a world-class team and we are confident that it puts forward the best possible solution for Edinburgh trams.

“I am particularly pleased that our commercial negotiations and rigorous procurement strategy have enabled us to cost the delivery of the tram line from Newhaven to Edinburgh Airport at £498m, including contingency; well below the £545m available funding. In our negotiations we have included an option to procure an extension of the route, Haymarket to Granton, at a fixed price up to March 2009. I am looking forward to working with our tram and infrastructure suppliers to ensure they deliver the quality tram system that they have already provided to other leading cities.

“This submission is a highly significant milestone for the project and we look forward to a positive outcome when the Final Business Case is considered by the Full Council later this month. The tram project processes and management have already been given a clean bill of health by Audit Scotland and significant financial commitment by Scotland’s new government; these endorsements plus best value commercial terms should give Edinburgh’s Councillors full confidence in the Final Business Case.

“Once we get the final go-ahead to build trams, Edinburgh’s residents, businesses and visitors can look forward to reaping the enormous benefits that modern tram systems have brought to other major cities around the world.”

Councillor Jenny Dawe, Leader of the City of Edinburgh Council said: “A thriving, expanding world-class city needs a world-class public transport system. Trams will provide Edinburgh with a modern, globally competitive, public transport infrastructure fully integrated with our excellent, but already burgeoning, bus service. Trams will attract the type of investment that brings new business, shops and prosperity. The reports evidence the rigorous scrutiny that has been applied to the business case for trams. The Council will, of course, give sustained and proper consideration to these reports. The business case does, however, appear to offer excellent value for money and I am delighted that it supports our vision for Edinburgh’s economic success. Trams should now become a reality, improving both our competitiveness and the quality of life for Edinburgh residents.”

Councillor Phil Wheeler, Transport Convener at the City of Edinburgh Council, said: “The analysis of tram benefits and costs has been meticulous and proves to be undoubtedly positive. I am confident that the overwhelming majority of my fellow Councillors will recognise this and vote in favour of proceeding. With all major contracts now in place or nearing completion and work started to divert utility cables and pipes from along the route, the time is absolutely ripe. Within four short years, Edinburgh will have a world-class, modern and efficient public transport system fit for a 21st century capital city.”

Neil Renilson, Chief Executive of Transport Edinburgh Limited (TEL), the company that will run Edinburgh’s integrated bus and tram network, said: “Trams will be an exciting addition to Edinburgh’s public transport network and the business case confirms that the new bus-plus-tram integrated system will operate without any public subsidy, just as the bus network currently does.

“While we are preparing for the introduction of trams we will continue to invest in the bus network and improve services so that passengers in all parts of the city, whether served by trams or buses, will have a first class public transport service option. We are already preparing for the arrival of trams and have recently installed 35 on-street tram-style ticket machines for the purchase of bus tickets. The branding of the new trams in line with the buses’ distinctive look gives visual confirmation of the integrated nature of the future tram and bus network.”


Ends 18 October 2007



Further information:
please contact Louisa MacKenzie, Media House on 0131 555 1015 or 07773592625, louisa@mediahouse.co.uk and Lynn McMath, City of Edinburgh Council on 0131 529 4428, lynn.mcmath@edinburgh.gov.uk


Notes to Editors:
The following spokespeople will be available for interview/pictures at 11am on Thursday 18 October at the City Chambers, High Street, Edinburgh:
Councillor Jenny Dawe, Leader of the City of Edinburgh Council
Willie Gallagher, Chairman, tie Limited
Andrew Holmes, Director of City Development at the City of Edinburgh Council
Neil Renilson, Chief Executive of Transport Edinburgh Limited
Councillor Phil Wheeler, Transport Convener at the City of Edinburgh Council
Copies of the City of Edinburgh Council report on the Final Business Case can be obtained from Lynn McMath, contact details above

Business Case
Preparation of a Final Business Case (FBC) is one of the conditions stipulated by the two funders of the tram scheme, City of Edinburgh Council (CEC) and Transport Scotland (TS) in order to release grant funding and authorise the award of the tram (TRAMCO) and infrastructure (INFRACO) contracts
A Draft Final Business Case (DFBC) was submitted to and approved by CEC in December 2006 and endorsed by the Scottish Minister in Spring 2007
The DFBC established the economic viability and financial affordability of the proposed tram system as well as the operational profitability of the integrated bus/tram network. These forecasts, originally based on professional estimates and market soundings, have now been validated by contract prices and programmes
The FBC marks the end of the procurement process and reflects verified costs and market-tested commercial terms
No significant changes have been made to the DFBC beyond necessary amendments to reflect the cessation of the Edinburgh Airport Rail Link project

Costs
The Scottish Government has committed £500m funding and CEC £45m, for tramline that will run from Newhaven to Edinburgh Airport via Princes Street and Haymarket
The updated costs outlined in the FBC for 1a (Newhaven to Edinburgh Airport) are £498m and for 1b (Roseburn to Granton) £87m

Economic benefits
Phase 1a is integral to the regeneration of Leith Docks. Some 18,000 new residential properties and over 106,000m2 of new office, retail and commercial development will be built by 2020, reflecting the growth in Edinburgh’s economy and population
Significant new development is also envisaged in West Edinburgh with some 250,000m2 of new office space, mainly at Edinburgh Park, and over 200,000m2 of other commercial space predicted to be built by 2020
Phase 1a will facilitate and encourage both of these forecast developments and provide improved public transport between new housing in Leith and new job opportunities in the West of the City
It is anticipated that at least 590 additional full time permanent jobs in the city will be generated or brought forward by the development impact of Phase 1a of the tram

Environmental benefits
Trams will help to reduce emissions and improve air quality in the city centre and en route to the airport
Trams are quieter than road vehicles
Trams are proven to achieve modal shift by encouraging car users onto public transport; by 2011 about 17% of tram passengers will be new to public transport, this figure rises to 20% by 2031

Social benefits
Around Leith Walk, Saughton and Balgreen in the west of the city are areas where employment, income levels and car ownership tend to be comparatively low. Opportunities for people living in these areas will be improved by direct connection via tram to the city centre and other employment areas including Granton, Leith, Edinburgh Park and the airport
Trams and tram stops will be fully accessible by people with mobility impairments, those travelling with small children and the elderly