London 2012 Olympics – May economic update published
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The London 2012 Olympic and Paralympic Games remain on time and within budget.
Figures from the London 2012 Olympic and Paralympic Games Quarterly Economic Report, published today by the Government and Olympic Delivery Authority (ODA), show a rise of £5m in the Anticipated Final Cost (AFC) of the part of the Games being delivered by the ODA - £7.267bn from £7.262bn since the last report, equivalent to an increase of less than 0.1 per cent and within the £8.1bn available to the ODA.
Potential cost increases are forecast in areas such as transport and infrastructure for the Olympic Village and Stratford City. The impact of these potential increases, if they occur, will be mitigated by savings and the continuing general reduction in risks to the programme.
Approximately £130m of savings have been achieved in the last quarter and in total around £600m in savings have been achieved by the ODA since the November 2007 baseline budget was agreed. The majority of these savings have been used to control the budget by offsetting cost increases in other areas of the programme.
The ODA has also announced today that work has been completed on time and on budget to deliver enhanced facilities at Eton College Rowing Centre for Rowing and Canoe Sprint events in 2012.
Minister for Sport and the Olympics, Hugh Robertson said: “Delivering a successful Olympic and Paralympic Games is one of my key priorities. These have been another excellent few months for the programme and this report clearly shows that we are on track to host a Games that inspires a whole new generation of young people to take up sport.
“The report also shows that, again, the ODA have made considerable savings through efficiency; approximately £130m in the last quarter. This reinforces why I have confidence that the savings we have asked for, as part of the wider Government savings outlined on Monday, will be achieved without compromising the project.”
Olympic Delivery Authority Chairman John Armitt said: “This report shows that the project continues to be on time and within budget. With the successful completion of work on the rowing facilities at Eton Dorney today we continue to hit all our milestones. The strong progress being made is now very visible on the Olympic Park as the venues take shape in the east London skyline.
“The ODA has worked hard to make considerable savings since the start of the project with £600m saved to date to keep us on track. With approaching 10,000 workers now on the Olympic Park and Village sites the year ahead is set to be our busiest yet. We are making good progress but are not complacent - there is still a lot of work ahead.”
The changes in the Anticipated Final Cost (AFC) are as a result of:
savings of £130m achieved in the quarter mainly on transport, logistics, and structures and bridges and highways;
forecast risks on the project continuing to reduce due to efficient delivery - a reduction of £49m this quarter;
potential increase in transport costs of £23m for Venue Transport Operations, the scope of which includes demand forecasting and testing, coordination of park & ride operations, direct coach parking, traffic management and parking controls around venues, blue badge parking and the installation of cycle parking at all venues, and for implementing and operating the Olympic Route Network (ORN);
and a potential increase in the costs if the infrastructure for the Olympic Village and Stratford City of £30m - this includes the adoption of roads and infrastructure after the Games, post-Games conversion work, the acquisition of land adjacent to the Olympic Park and payments for land to London and Continental Railways.
Other key points from the May quarterly report are:
the ODA budget has been adjusted to take account of the forecast reduction in receipts from the ODA’s right to share in the development returns of land adjoining the Olympic Village, which was explained in the Annual Report published in February;
This reduction is estimated at £150m and has been offset - by an expected associated saving of £45m in Corporation Tax and a further £30m of other savings achieved across the programme. The balance of £75m has been met from Programme contingency;
the gross allocation of contingency to date on the programme is £790m. There is almost £1.2bn of contingency available - more than the value of assessed risks;
the ODA has hit all of its build milestones to date, including the completion of the Olympic Stadium’s external structure and the lowering into place of the Aquatics Centre roof. All venues are on track to meet scheduled handover dates to LOCOG.
Agreements have now been signed between the Olympic Delivery Authority (ODA) and London and Continental Railways (LCR) over the post-Games development of land within the Olympic Village site.
Following the decision to only build what is needed for the Games in the Olympic Village, there are a number of plots in the Village site available for future residential development. The new land agreements see the ODA take ownership of these further residential plots allowing the existing and future development of the Village site to be planned and managed as one.
Following the ODA taking ownership of additional residential plots within the Village site, the ODA will no longer participate in the potential future profit arrangements from the commercial development of land to the south of the Olympic Village.
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Notes to editors
1. A copy of the London 2012 Olympic and Paralympic Games Quarterly Economic Report May 2010 is available on the DCMS website.
2. This report covers the period January 2010 - March 2010. This pre-dates the Government’s announcement on 24 May 2010 that the ODA will make £27m of in-year savings from the current financial year. Details of where these savings will be found will be published in the London 2012 Olympic and Paralympic Games quarterly Economic report for the current quarter, which is due to be published in July.
3. The public sector funding package for the Games announced in March 2007 was £9.325 billion. Of this £6.1 billion was identified as the Olympic Delivery Authority budget, with around £2 billion contingency and £1.2 billion for non-ODA activities such as wider security and support for elite and community sport.
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