Delayed ferries 'less than half built and £110m over budget'

Two new ferries for state-owned operator CalMac will cost an extra £110m and are a long way off completion after a dispute, MSPs have been told.

The ferry operator and the Ferguson Marine shipyard that won an initial £97m contract to build the vessels “came to loggerheads” in “a stand-off at the OK Corral”, trade union convener Alex Logan said.

Mr Logan, the convener of the GMB union at the Port Glasgow yard, spoke as Ferguson bosses told a Holyrood committee that more than four years after the contract was signed they were still “significantly less than half-built”.

Tim Hair, the turnaround director of Ferguson Marine Engineering Limited (FMEL), added design elements of the boats “have still not been approved” by all parties.

MSPs on the Rural Economy and Connectivity Committee have began taking evidence as part of an inquiry into the work on the CalMac vessels, which are delayed and over-budget.

The Port Glasgow shipyard, which was formally taken into public ownership by the Scottish Government last year, was awarded the £97m fixed-price contract to build the ships in 2015.

But Mr Hair confirmed to MSPs it would cost an additional £110m to finish the vessels, saying they are are “much further away from completion than they look from a distance”.

He told the committee the cost of simply scrapping the ships and starting again would not be “dramatically different” but said due to the time this would take Ferguson had “decided to pursue the option of completing the vessels”.

While the first of the ferries is in the water, he said it was “still a very long way off completion”.

Mr Hair told MSPs: “The number of £110m has been arrived at from a very detailed examination of the two vessels and an understanding of the work that needs to be done in order to bring them up to a viable standard.

“It is a very significant number but it is a number that has been based on as rigorous an assessment as we’ve been able to carry out.

“It’s one where I am confident we can deliver the two vessels for that amount.”

Tory MSP Peter Chapman demanded: “How the heck do you get to £110m, which is more than the original cost? It just seems incredible.”

He added: “There are assets there and the final figure is now another £110m.

“I can’t get my head round why it is costing so much more to finish these vessels.”

Michelle Rennie, the chairwoman of the programme review board at FMEL, said there was “quite a significant amount of work required just to being the vessels up to a standard where the guys in the yard can develop the build out to the finish”.

She added: “There is some work that has taken place I think as a result of the issues around the design and the design approvals which will have to be redone, so some elements will have to be redone just to facilitate other works.

“It’s not just quite as simple as picking something up and finishing it, actually there is a bit of unpicking to do.”

Mr Logan, the workforce representative on the programme review board, said design changes had been “constantly” made.

He said: “We’ve still not go a proper design, it’s still not complete the design after four years, it has never been finalised by CMAL or whoever.”

Mr Logan said CMAL – the body that owns the ferries, which are then leased to CalMac – and FMEL “came to loggerheads” during the work.

“They wouldn’t agree on the design so we couldn’t move forward, so it just came to a standstill,” he said.

“It was just a stand-off at the OK Corral, who was going to cave in first.”

Mr Logan said while the awarding of the contract in 2015 had been a “big boost” for the yard, he had had concerns about whether the site in Port Glasgow was large enough to build two ships of that size at the same time.

“In my opinion we could not facilitate to build two vessels of that size so close together because the ground wasn’t sufficient,” he told the committee.