The Full Business Case for the project, that will see a new ferry built and upgraded harbours at Grutness and in Fair Isle, was approved by councillors in December.

This has recently also now been approved by the UK Government’s Department of Transport, meaning that contracts can be awarded and construction work is expected to get underway in the coming weeks.

Construction and civil engineering company BAM Nuttall has been awarded the £31.5m contract to complete the harbour infrastructure works, following a recent open tender process. Work is expected to begin at both sites in March 2025 with completion expected in December 2025 for Grutness, and in November 2026 for Fair Isle.

Works will include new tubular piling to extend the Grutness pier and a breakwater extension to create a more sheltered berth. In Fair Isle, the boat noust would be enlarged to accommodate the new wider, longer vessel and to a build a new slipway, boat cradle and winch house. Dredging will also be carried out in both harbours.

Shetland Islands Council has agreed to provide £18.6m of funding for the project, with the UK Government providing a grant of £26.8m towards the anticipated total cost of £45.4m.

Emma Macdonald, council leader, said: “I’m pleased to see these contracts awarded so that these important works can get underway to provide a new ferry for the Fair Isle community.  It’s been a long journey to prepare the detail of the Full Business Case, against a difficult economic backdrop and uncertain costs over recent years.

“After the decision by councillors in December to agree to fund the project, I’m grateful that the UK Government has also now agreed to commit their funding too. The ferry is a lifeline for so many aspects of life in Fair Isle and its replacement will serve the island for many years to come.”