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Sanjoy Sen is a chemical engineer. He contested Alyn and Deeside in the 2019 general election.
After what seems like an age the first of two long-delayed ferries, the Glen Sannox, finally entered service on the west coast of Scotland. What should have been a straightforward procurement exercise has proven calamitous for all concerned with a vast over-spend and lengthy delays.
Whilst SNP ministers have emerged unscathed, the taxpayer hasn’t been so lucky: costs have soared from £97 million to £450 million. Even that excludes written-off loans, keeping ageing vessels going another seven years and the impact on Western Isles businesses. Now, just to cap it all, latest figures show this low-emission ferry will actually pump out more greenhouse gases than a conventional diesel.
Infrastructure clearly matters: it’s vital governments keep committing to energy and transport investments. But putting politicians in charge of big engineering decisions doesn’t always go smoothly. Down south, Hinkley Point C and HS2 aren’t exactly on-budget or on-schedule, either. And even further down south, Australia is currently enduring a ‘ferry fiasco’ of its own with the giant Spirit of Tasmania IV laid up in Edinburgh until they can build a port big enough.
It would take an MBA thesis to unpick the tangled web of allegations and counter-allegations between the Scottish Government, Caledonian Maritime Assets Limited (CMAL, the client), Caledonian MacBrayne (Calmac, the ferry operator) and Ferguson Marine (the shipyard). But it’s clear this was a project over-loaded with technical, legal and financial risk from day one. Let’s pick out some lowlights and see how future pitfalls might be avoided. (Or to mangle our metaphors, let’s understand how this ship went off the rails.).
Unclear Goals, Unrealistic Expectations
CalMac’s fleet was ageing and there were new emissions regulations to be met. Dual-fuel vessels burning either liquefied natural gas (LNG) or marine gas oil (MGO) were already operating in Europe and were quickly identified as the answer here. But leaping to solutions without undertaking objective concept selection sent the project off on the wrong trajectory.
Almost immediately, design and fabrication headaches emerged. Complex LNG facilities ate up valuable space but with no increase in dimensions permitted, something had to give: Glen Lennox passenger capacity is lower than the outgoing vessel (852 versus 1,000). Much debate ensued on where the responsibility lay but there is a key learning here: set a realistic scope without mutually-incompatible targets.
The wrong way of picking the wrong company
Ferguson Marine lacked the track record and skill-set to deliver LNG-MGO. Simpler craft or factoring in time for a prototype learning curve might have been viable alternatives. But committing to deliver two large, complex vessels at once was setting up the yard up to fail. So, why Ferguson at all?
With Ferguson (the last major Clyde shipbuilder) entering administration in 2014, there was a clear desire to protect Scottish jobs. But the alleged shortcomings of the award process (including preferential treatment over experienced foreign yards) are potentially very serious indeed: ironically for the pro-Brussels nationalists, there could even be a breach of EU competition law. And with the standard contract requirement for a bank guarantee waived, over-runs were always destined to fall on the taxpayer.
Poor Project Management
Once construction began, things just got worse. Nicola Sturgeon might have suspected things weren’t quite right when she launched the ferry in 2017 with painted-on windows and a non-operational funnel. By 2020, a Scottish parliament committee had slammed the project as a “catastrophic failure” highlighting deficiencies in communication and the definition of responsibilities. And with milestone payments set around tonnes of steel installed, progress continued sub-optimally. Stuff got built before it was designed, resulting in expensive re-work further down the line.
Once again, we saw the sunk cost fallacy in action. Despite a report stating it would be cheaper to scrap the second vessel (Glen Rosa) and start again, ministers kept going. Even when the first vessel was ready to sail, further costs and delays were incurred commissioning its LNG facilities. Meanwhile, global LNG costs have spiked post-Ukraine and it has become a less secure energy source. Some LNG-only vessels are even being retro-fitted for MGO capability.
And what of future projects? Ernst & Young noted multiple state agencies created confusion over roles and responsibilities: well done if you can make sense of this flow diagram. A simpler procurement system could be implemented but there are more radical options out there including breaking up Calmac’s monopoly.
And what of those emissions?
The marine sector contributes 3% of global greenhouse gas emissions. And its pollutant emissions (sulphur and nitrous oxides) are much higher. In response, new technologies are emerging. Some of Calmac’s fleet have been re-powered with new, cleaner engines. Diesel-hybrids are also increasingly common whilst ‘pure electric’ ferries are catching on for short routes. Norway is even ordering hydrogen ferries.
Some of these concepts are likely to work much better than others in the Glen Sannox application. But the only way to identify the right option is to undertake a formal exercise, scoring each concept against objective criteria including cost, delivery time and emissions. Leaping to solutions can be a false economy.
And by emissions, that includes a life cycle assessment (LCA) from fuel production to its end-use on the ship (“well-to-wake”). Recent analysis shows once you factor in chilling Qatari gas to minus 162 degrees Celsius, shipping it to the UK, then trucking it north from Kent, the new ship turns out to be a bigger CO2 emitter than Calmac’s larger diesel vessel, Caledonian Isles. There’s a wider discussion to be had on what governments define as green before imposing solutions on the public.
Sympathy for governments?
Once voted in, governments need to get on with things sharpish if they’re going to get any credit come the next election. Politicians are also wary of unhelpful headlines about tax dollars frittered away on consultants instead of getting on with doing real stuff. But time and money invested up-front on getting concept selection right can be just about the best value out there. It might even save you from embarking on a dud project in the first place. Spending thousands to avoid wasting millions is money well spent indeed.
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