"Good progress is being made in the preparations
for the 2012 London Games which will begin in 17 months. All
construction and infrastructure projects are forecast to be
completed on time, albeit in two cases with little room to spare
before the deadline for handover to LOCOG, the Games organizer, and
operational planning has improved.
“However, the final cost of
the Games to the taxpayer is inherently uncertain and as the Games
near there will be less flexibility to make savings in response to
any unforeseen financial pressures."
Amyas Morse, head of the National Audit Office, 16 February
2011
The preparations for the 2012 Olympic and
Paralympic Games are going well overall and, despite time
pressures, the Olympic Delivery Authority remains on course to
deliver its construction programme.
According to today’s report, the fifth such
NAO report on preparations for the 2012 Games, five of the 24 main
projects being undertaken by the Olympic Delivery Authority have
now been completed ready for handover, and on current projections,
the remaining projects will be delivered on time. However, the
timings on the Aquatics Centre and two elements of the Athletes’
Village are becoming tight for handover to the
London Organising Committee of the Olympic and Paralympic
Games (LOCOG) in July 2011 and January 2012. Progress with the
complex operational planning required for Games time has also been
strengthened since the NAO last reported.
The overall cost to the public purse of
security during the Games has increased from £600 million to £757
million. This is mainly because the government has now agreed to
provide £282 million from the £9.3 billion Public Sector Funding
Package for work to secure the perimeter of the Olympic Park and
venues during the Games, offset by expenditure on wider security
and policing which is now forecast to be £125 million less than it
was in March 2007. In its previous report the NAO had highlighted
the need to finalise the costs and funding responsibilities for
venue security.
The final cost of the Games is inherently
uncertain. While the responsibility for important areas of cost
(such as venue security) has been resolved, £498 million of new
scope has been added and there is now less contingency available to
manage risk. Of the original £2,747 million contingency in the
Public Sector Funding Package, £974 million remains. With almost 80
per cent of the Olympic Delivery Authority’s construction programme
complete and all known areas of uncertainty resolved, risks have
been reduced. However, as there can be no guarantee that the
remaining contingency will be sufficient to cover further unknown
risks to the Games, the Government Olympic Executive should have
plans for how it will meet any requirement for extra funding which
cannot be met from within the remaining contingency.
Progress has been made in firming up the
finances of LOCOG. However, as guarantor the Government has always
been financially exposed if LOCOG does not break even. As LOCOG’s
contingency is unlikely to cover the costs of all potential risks
between now and the conclusion of the Games, its risks and
contingency will need careful management. If LOCOG did not break
even, public funding for LOCOG would be required.
Today’s report also highlights that, regarding
the legacy of the Games, while the Government Olympic Executive is
accountable for the success of the legacy and has set out the four
strands of its work, it has not yet estimated the net benefits it
expects to accrue to the UK which can be directly attributed to the
Games. We recommend that it should do so.
Publication details:
HC: 756, 2010-11
ISBN: 9780102969474