The following entry is a record in the “Catalogue of Catastrophe” – a list of failed or troubled projects from around the world.
Organization: CalMac Ferries Ltd
Project type : Construction of two new ferries
Date : Sep 2022
Cost : £340 million
The services provided by state owned ferry operator CalMac Ferries Ltd sustain communities on 22 of Scotland’s islands. To ensure they continue to meet stakeholder needs CalMac’s fleet renewal program ordered two new boats in 2015. The £97M contract was awarded to local shipbuilder Ferguson Marine Engineering Ltd with the first ship to enter service in 2018. As of 2022 neither ship has entered service despite the budget ballooning to £340 million.
As a publicly funded project the so called ‘ferry fiasco’ has drawn the attention of the public and scrutiny from the press. The unraveling story points to the role politics can play in a government procurement process. In this particular case reporting from the BBC suggests that the bid process was biased to the local supplier (Ferguson Marine).
Awarding contracts to local businesses can of course be popular with the voters. It means the money stays local and it helps sustain jobs. Those pressures can at times cause politicians to distort how Requests for Proposals are written and how bids are evaluated. In CalMac’s case those distortions resulted in the contract be awarded to the local business despite them being the most expensive bid.
Granted cost isn’t the only factor when deciding who to award a contract such as this to. Other important factors include technical considerations that relate to the winner’s ability to actually complete the work, as well as financial arrangements. Unfortunately, despite deep roots in marine engineering available reporting suggests that Ferguson Marine had no recent experience building boats of the size required. Although Ferguson may have had the necessary people in the past, key resources had retired or moved on over the years. Ship building is a complicated process and requires a team with significant (and up to date) experience to pull it off. As such prior experience needs to be a significant factor used in deciding who to award a ship building contract to.
Having bitten off more than they could chew the winning of the contract soon turned sour and the failure to manage the project effectively resulted in Ferguson Marine going bust in 2019. To save the project (and local jobs) the Scottish Government nationalized Ferguson Marine and thereby continued to funnel money into the sinking project.
A subsequent BBC article (Ten things we learned about Scotland’s ferry fiasco) makes for some interesting reading that helps cast light on the backroom maneuvering that led to the disaster.
Contributing factors as reported in the press:
Lack of appropriate experience, politics influencing the procurement process, unclear roles and responsibilities, failure to stabilize design brief. Insufficient time allocated to draw up specifications and requirements.