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Preparations for the London 2012 Olympic and Paralympic Games – Risk assessment and management

Today’s report, which is the National Audit Office’s first on the preparations for London 2012, identifies six main risk areas which may impact on the Games:

  1. Delivering the Games against an immovable deadline.
  2. The need for strong governance and delivery structures given the multiplicity of organisations and groups involved in the Games.
  3. The requirement for the budget to be clearly determined and effectively managed.
  4. Applying effective procurement practices.
  5. Planning for a lasting legacy.
  6. The installation of effective progress monitoring and risk management arrangements.

Since London was chosen as the host city for 2012 some 18 months ago, the layout of the Olympic Park in East London has been finalised, nearly all the land has been acquired, and work on the physical site is underway. Progress has been made in putting in place the organisations to deliver the Games, including setting up the Olympic Delivery Authority, which will deliver the venues and infrastructure on the Olympic Park, and the London Organising Committee of the Olympic Games and Paralympic Games, which is responsible for staging the Games. The delivery structures are complex, however, and a key challenge going forward will be to achieve clear and quick decision making so that progress is not held up.

Today’s report concludes that a major risk at present to the successful delivery of the Games is the lack of a final agreed budget. This will inevitably have a detrimental impact on the Olympic programme if it is allowed to continue.

Substantial further public funding is likely to be required in addition to the public sector funding package of £2.375 billion agreed in 2003 and the £1.044 billion the Government is providing towards the costs of infrastructure on the site of the Olympic Park. In November 2006 the Secretary of State for Culture, Media and Sport reported that the cost estimates for the Olympic Park had increased by £900 million since the time of the bid, and a number of areas of uncertainty remain which need to be resolved quickly so that the budget can be finalised.

“The London Olympic and Paralympic Games may seem a long way away, but with a programme of this magnitude it is vital to keep the momentum up. There is a lot more to do and a variety of risks to be managed if the Games are to be a success. Failure in any one area will impinge on others. Finalising the budget should be a priority to allow the Olympic programme to move forward with greater confidence and certainty. “As well as learning from the experience of other cities that have hosted the Games, I have also arranged with my counterpart in China to learn lessons from the Beijing Games in 2008 that could usefully be applied to London.”

Sir John Bourn, head of the NAO

Notes for Editors

  1. Today’s report is the first in a series of National Audit Office reports on the preparations for hosting the London 2012 Olympic and Paralympic Games. It considers the progress that has been made since 6 July 2005 when the International Olympic Committee chose London as the host city for 2012, and identifies key risks and challenges going forward.
  2. Future National Audit Office reports will track progress in preparing for the Games. We will also be reviewing the work to establish the budget for the Olympic programme, with a view to reporting our findings when the budget has been finalised.
  3. There are three principal stakeholders in the delivery of the 2012 Games – the Government, the Mayor of London and the British Olympic Association. The primary focus of the National Audit Office’s work was the Department for Culture, Media and Sport, the lead government department for the Games, and the Olympic Delivery Authority, which has been set up to deliver the Olympic venues and infrastructure.
  4. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  5. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 850 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

PN: 06/07