Ferguson Marine: Shipyard bosses fear £250m ferries will never be used amidst spiralling series of serious faults

New internal documents from nationalised shipyard firm Ferguson Marine admit a serious risk that CMAL may not accept the vessels for the ferry operator CalMac’s lifeline services to Scotland’s island communities.

CMAL, in the document seen by the Herald on Sunday, criticises management systems in place and said the most pressing risk issue was the "failure to completely understand the actual remaining works that must be completed in order to deliver each vessel".

Ferguson Marine analysis from April reveals highest level risk concerns in five key areas, with new project 'non-conforming issues' surrounding stability, the fuel system. and escape routes.

An April analysis by Ferguson Marine even raises concerns that a "mature" workforce were not buying into the bid to deliver the ferry project at the now nationalised shipyard firm.

Of the faults issues, CMAL states: "The resolution of these is considered crucial prior to vessel handover. The impact of which remains unknown and not factored into the vessel programme.

It said the yard process "continues to apportion no special priority" to the outstanding faults - termed as owner observation reports (OORs).

"The emphasis given over to statutory priority 1 issues should warrant far greater attention," their analysis states.

READ MORE: Ferries fiasco: £1m paid for Nicola Sturgeon's launch of Glen Sannox that hasn't sailed five years on

It has further emerged that Ferguson Marine has stated that it is to continue to work with bodies such as the Maritime and Coastguard Agency and maritime classification society Lloyds Register which oversee vessel seaworthiness to "derisk the design and agree acceptable concessions".

One MP has raised concerns over a "fundamental error" which has meant pumps are unable to deliver fuel to the the main engines.

It comes after it emerged ministers sanctioned a milestone payment running into millions for the successful launch of one of the ships by Nicola Sturgeon while a new row erupted as it emerged that CMAL became legally obliged to pay out 85% of the £97m initial price of both the ferry fiasco vessels Glen Sannox and the unnamed Hull 802 to the pre-nationalised Jim McColl-led Ferguson Marine in advance despite having serious concerns about its delivery.

Officially, Glen Sannox and Hull 802 will be delayed until at least next year – over five years later than planned while costs have at least doubled from £97m to £250m.

But an April risk assessment from the nationalised Inverclyde shipyard firm Ferguson Marine reveals that there was "no agreed solution" over OORs regarding one of the vessels, Glen Sannox which have to be rectified as part of the contract.

It revealed a serious risk that that if all OORs are "not agreed as closed" with CMAL that acceptance of the vessel "will be difficult to achieve". It was given a 250 risk score, understood to be the highest level.

Up to August 16, 2019, the date at which Ferguson Marine under tycoon Jim McColl entered administration, CMAL had issued 346 OORs to Ferguson Marine, faults which have to be rectified as part of the contract.

Of these, Ferguson Marine had resolved 180 and 166 were outstanding.

At the end of January 2022, there were 175 outstanding OORs including incomplete structural work – which will increase costs and delays – nine more than when the Scottish Government took control of the yard at the end of 2019.

According to a CMAL analysis in March, seen by the Herald on Sunday this has risen to 237.

 READ MORE: Revealed: Ministers' secret path to the controversial state takeover of Ferguson Marine

The March CMAL progress report said: "Yard-wide inefficiencies in onboard production supervision, project management's lack of understanding of the remaining project deliverables, and repetitive rework caused by inadequate construction design output all remain substantial risks that will cause further delays if allowed to continue unchecked. To remain objective, it must be stressed that the current management systems routine failure to recognise and control risk-based delays must be the subject of immediate detailed analysis."

It said further risk issues that need to be "seriously considered" included monitoring and reporting "key production metrics in support of sound project decisions making".

It also raised concern about the risk impact associated with "sustained high levels of rework driven by continued adherence to a policy that does not advocate in-house review of third-party design input".

Major faults uncovered in the Ferguson Marine checks included an issue with a valve block with "potential large cost" to rectify. Also listed is an issue with a diesel fuel system overflow venting arrangement.

There was also a "risk of late change due to design errors. These errors may be [a] mistake, missed scope or non-conformances to requirements/spec," internal papers reveal.

It has resulted in a plan for a complete review of plans with CMAL.

Nicola Sturgeon presided over the 2017 launch of Glen Sannox.

In the near seven years since the ferries contract was awarded, the yard has been saved from administration by the Scottish Government, and the estimated delivery of two vessels has been pushed back by over five years, along with an increase in costs from £97m to at least £250 million.

The Glen Sannox and the as-yet-unnamed Hull 802 are now not expected to be completed till between March and May 2023 and between October and December 2023 respectively at the earliest.

The nationalised Ferguson Marine has told Audit Scotland that if multiple issues with the vessels are not resolved "there is a risk CMAL "will not accept the completed vessels".

The two new dual-fuel ferries, which were meant to be identical, were once hailed as a step towards a greener future for Scotland's state owned CalMac ferry fleet as they were to be the first UK-built ships capable of running off liquefied natural gas, or LNG, as well as conventional diesel.

READ MORE: Ferguson Marine say ferry-building is "back on track" after four years of delay

The April assessment shows a new high risk issue involving modifications to the storage of liquefied natural gas fuel for use on the ships as facilities had not been created and risk assessments had not yet been undertaken. No ground has reportedly been broken on the £5 million contract for the bunkering facilities at Ardrossan and Uig which were due to be ready this year.

There were also risks associated with a "non-compliant" axilock - which is used to connect plain-end pipe lengths together with speed and ease without the need for gluing or fusion technology. Ferguson Marine has had to review the status of all axilocks on the ship and change them if needed and a further examination of the fuel system.

Another high risk factor was a "lack of buy-in from the workforce to deliver the plan and employee engagement sessions were put in place.

It goes on: "This includes the fitness of our workforce to deliver the challenge ahead (mature workforce).

It even reveals a supply chain issue because of the sanctions against Russia and Belarus in the wake of the war in Ukraine.

Former justice secretary turned Alba Party deputy leader and MP Kenny MacAskill said of the continued issues around delivery of the vessels: "You couldn't make it up."

He was particularly concerned about an emerging issue with the fuel tank pipework and the supply of marine gas oil to the main engines.

According to CMAL analysis, work has started on proposed modifications to "correct" the fuel system installation on Glen Sannox with the focus on fitting missing pipe and pipe supports.

"Progress is slow in all areas. The fuel oil piping and storage tank installation in the emergency generator space are still not complete," it said.

Mr MacAskill was told of issues with a fuel transfer pump being too far away from the tank, so that there was "no way" it could supply fuel. He was told a supplier has been asked to install inline pumps to aid the fuel delivery to main engines.

A source told him: "This is a fundamental error and could have serious issues going forward, they will not know the outcome until the commissioning starts.

"This is very basic marine engineering and if the designer cannot get this right from the outset how many challenges are they going to have with LNG and all other systems which are far more complex than fuel delivery."

In February, it emerged that issues with short cabling are set to further delay and increase costs.

Some of the electrical cable coils on Glen Sannox were too short to reach equipment. After a survey it was found that there were at least 400 problem cables - and a worse case scenario of 939 cables.

Mr MacAskill said: "This is yet another setback for the communities. But again it’s nothing to do with the quality of work at Ferguson’s and everything to do with procurement. Blame rests with CMAL who are not fit for purpose and should be scuttled.

"There are ships available that can be built and which are the right sort. They can be built in Scotland and for less than the current vessels. They’re wanted by communities and it’s time for radical change. CMAL and Ferguson’s current management must go. Communities must be able to choose the vessels, Ferguson’s to build them and the yard managed by people who know what they’re doing not government appointees on inflated salaries."

A CMAL spokesman said: “We are confident that outstanding issues can and will be rectified, and the vessels completed to enter service. "The appointment of a permanent chief executive at the shipyard has been a welcome development, and we have further strengthened collaboration between our senior teams via the secondment of our senior vessels project director, which will provide added experience and expertise and improve decision making. We will continue to work in partnership and remain committed to the completion of the two ferries.”

A spokesman for Ferguson Marine said: “We are aware of legacy issues and as such have factored them into the amended plan being driven by the new CEO with the support of management and working closely with workforce representatives and CMAL to ensure high standards of workmanship, health & safety compliance, and morale.”

A Scottish Government spokesman said: “The Economy Secretary has been crystal clear on what she expects from Ferguson Marine in terms of delivering the ferries, as well as turning the business around to be competitive.

“Until those vessels are serving the communities for which they were built, we will not let up in our drive and determination to get them finished and delivered. The Board recognises that and has been driving that improvement process within the business.

“A senior member of CMAL staff has recently been seconded to Ferguson Marine management to support delivery of the vessels and resolve any outstanding issues. Working alongside the new Chief Executive, this has driven significant improvements already.

“We remain fully committed to completing these vessels, and it is important that the workforce at Fergusons also know that we remain committed to this work.”