Anticipated Final Cost of Construction Programme going down.
Figures from the Government’s July 2011 Quarterly Economic Report show that the overall funding package for the Games remains at £9.298bn.
The Anticipated Final Cost (AFC) of the ODA programme is £7.250bn. This is a decrease of £16m on May’s report, where the AFC stood at £7.266bn.
Construction of the venues and infrastructure for the Games is 88 per cent complete with five venues on the Olympic Park now finished. The Aquatic Centre will be completed and unveiled in time for one year to go on the 27th July. In total £870m in savings have been achieved by the ODA since the November 2007 baseline budget was agreed, including £33m in the last quarter.
Separate to the ODA programme, in the last quarter £1.5m was released from the public sector funding package to support crowd management and public safety at the sailing venue in Weymouth. An additional £0.8m was also released to dress two venues outside London and expand the installation of Olympic rings and Paralympic Agitos on buildings in the UK, while £3.1m was released for a small number of additional events as part of the London 2012 Festival.
Minister for Sport and the Olympics, Hugh Robertson said: “With one year to go to London 2012 the Games construction is 88 per cent complete and ahead of time and under budget. The ODA and the people who have worked on the venues have done a remarkable job to deliver top quality facilities in a challenging environment imposed by a fixed deadline and strict budget. Despite this they have continued to drive down costs which means we can celebrate one year to go with confidence and a real sense of excitement and expectation.”
Olympic Delivery Authority Chairman, John Armitt said: “As we near the end of the construction stage, we remain on schedule and within budget. A world-class platform has been created for the Games and strong foundations will be left to build a lasting legacy.
“We are not complacent as we continue to work hard towards the finishing line and pass the baton to LOCOG.”
As of June 2011 the gross allocation of contingency for the ODA programme was £1.069bn. The remaining balance of ODA contingency now stands at £426m. No programme contingency was released to the ODA during the last quarter. However, the ODA has returned £50m of excess contingency to the public sector funding package. This follows a reduction in the funding made available to the ODA at the 2010 Spending Review (SR). While the ODA has been working within the SR funding package since October 2010, it is now formally reflected in the ODA’s budget, bringing it into line with the funding available.
In addition to the remaining ODA contingency, there is £643.5m potentially available as contingency for other cross-programme issues that may arise, an increase of £56.5m since the Spending Review following a change in forecast costs and other savings. This contingency is part of the £9.298bn funding package, and reflects the increasing focus on operational requirements.
The latest ODA AFC is as a result of a number of changes including:
- £3m savings on Transport Capital Projects due to reduced potential cost pressures on rail and a switch of funds to operational expenditure to match expected works;
- anticipated reduction in costs of £10m on Logistics for Site Construction and £8m on Security for Park Construction
- potential cost pressure of £9m on Transport operating expenditure due to increased risks of providing sustainable transport options to ExCeL and football venues outside of London, in addition to any freight-related costs.
- increase in costs for Park Operations reflecting dredging works to improve Waterways in and around the Olympic Park for Games-time and legacy use, and a reallocation of maintenance costs on the Athletes Village site, which Park Operations will look after in Games-time.
Responsibility for transforming the Olympic Park venues and infrastructure for legacy use after the Games has now been passed from the ODA to the Olympic Park Legacy Company (OPLC). In the forthcoming quarter the ODA’s budget will be reduced and the OPLC will be funded to deconstruct temporary venues and structures on the Olympic Park, remove Games-time elements of permanent venues and reconfigure roads, bridges and other infrastructure for legacy-use.
Notes to Editors
This report covers the period 1 April 2011 to 30 June 2011.
The public sector funding package for the Games announced in March 2007 was £9.325 billion. On 24 May 2010, the Government announced that it would be reduced by £27m to £9.298bn.
The 2010 Spending Review made provision for all known Olympic programme cost requirements and pressures at the time. As we set out in the November 2010 Quarterly Report, contingency will continue to be strictly controlled and will only be released to meet costs that are essential for the delivery of the Games, where they cannot reasonably be met from existing budgets.
As was announced in the 2011 Annual Report in February 2011, following the finalisation of additional park operations responsibilities LOCOG will receive £67m from the Public Sector Funding Package for work such as venue operations, licensing and testing. LOCOG will also receive £36m from the funding package to contribute to the cost of using the Olympic Village and to meet costs arising from changes to venues that generated savings for the ODA. A further £27m is being retained by Government to cover further cost pressures that may arise in staging the Games.
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