The consortium hired to build the tram system in Edinburgh is believed to require more money to fill a cash shortfall in the project.
Building work on the £500m tram system, which is already late and over budget, stopped in February when the consortium asked for extra money because of problems diverting utilities and contractual wrangles.
Edinburgh City Council is now taking legal action against the consortium for failing to meet contractual obligations.
“We have lodged formal dispute papers with the consortium. We are unhappy with the progress of the tram project,” said city transport convenor Gordon MacKenzie.
“We need to contain the costs. We need to improve the programme delivery.”
Edinburgh MSP David McLetchie from the Conservatives, who believe the council have mishandled the project from the start, said: “Reassurances must be given that work will continue and no more taxpayers’ money will be spent on the trams project.
“The trams saga is bearing all the hallmarks of the Scottish Parliament building fiasco. Over budget and over time.”