A turbulent week in UK as Culture Secretary reports massive budget overruns on 2012 Olympic plans.
It was oh so predictable. Budget overruns on the 2012 Olympics was almost a given but no-one could have guessed the scale of the forecasts just one year into the seven year lead-in. The total cost of the development is spiralling up so fast that no reliable figure really exists at this point in time.
Parallels with the financially disastrous Montreal Olympics are already being drawn. Montreal is widely accepted as the most expensive Games ever and the debt is only being paid off this week, some 30 years after the event. Earlier this week it was revealed in the British press that the expected cost could be as high as £8bn but many believe this could this could
rise as high as £20bn by the time the Games are realised. French architect Roger Tallibert, designer of the 1976 Games forecast the cost of 2012 could top £15bn.
Later in the week UK Culture Secretary Tessa Jowell reported to MPs that the expected costs had risen by £900 million (more then the cost of the Sydney Olympics) but with regeneration costs of £1bn and a 60% contingency cost the total figure was now over £7bn.
The original budget of £2.4bn has now been shrugged off as a “mere concept”, a rough figure to secure the bid. Interestingly, a key component of the Olympic bids was the inclusion of a figure that was acceptable to both the Olympic Committee and the host Governments. Should this invalidate the UK win? Athens cost £6.3bn so how did the UK think it could deliver 2012 for less than half of the last games in 2004?
WAN reported in News Review 7 July that the cost had risen to £5bn which included £1bn for re-generation which has been ‘conveniently’ tagged onto the scheme.
So what is behind the increase? Clearly part of issue is that the initial budgets were highly speculative. Security costs had been grossly underestimated at £190 million. Athens should have provided a good yardstick at £650 million. An increase in threat has been used as an excuse as the 7/7 terror attack on the London Underground came the day after the UK won the bid but others argue that the security threat was always there and that an actual attack
shouldn’t have made a difference. . It is certainly not exotic architecture driving the costs up as WAN reported in News Review 10th November, that Richard Rogers has attacked the procurement process allowing developer led designs. Earlier criticisms of the cost of realising Zaha Hadid’s aquatic centre have been withdrawn.
The small matter of who will pay for the increases is also a hot topic. The original figure was funded by the London taxpayers (£625m) National Lottery (£1.5bn) and the London Development agency (£250m).
The key figures in the fiasco are also competing for quote of the week. Mayor Ken Livingstone said that, “I may not be around in 18 months so any guarantee that I give about what happens in 2012 is not the worth the paper it is written on.” But WAN’s favourite is from Tessa Jowell who this week said to MPs, “The Olympics will come in on time and on budget. The revised budget that is…”
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