Olympics costs 'could fall by £29m'

Buildings and infrastructure costs for the London 2012 Games may go down by £29 million to £7.232 billion, according to official figures released today.

The Government's spending review cut £20 million from the Olympic Delivery Authority's (ODA) budget, £7 million of which was found by abandoning plans unless a sponsor can be found for a much-hyped plastic wrap around the Olympic Stadium.

Combined with other efficiency savings, public sector funding for the Olympic project was pegged at £9.3 billion.

On whether London 2012 is on track to be the first Olympics to come in under budget Olympics minister Hugh Robertson noted: "I suspect that if I were to say that no doubt you would remember us bidding for it at £2.4 billion."

A revised public sector budget of £9.325 billion, triple the original £2.4 billion estimate when London successfully bid to host the Games, was announced by the then Culture Secretary Tessa Jowell in March 2007.

There is also the mystery surrounding the budget for the 2008 Beijing Games.

The latest attempts to control the 2012 budget in a balancing act involving trying to offset cost increases against the effect of the credit crunch were revealed today in the Culture Department's quarterly report on the Olympic project.

So far 75% of the project has been completed.

There is a potential cost increase of £11 million on the aquatics centre as work is speeded up to hit completion dates for next year.

Vital temperature control measures are needed at the aquatics centre to ensure conditions are ideal for athletes, including the Paralympians who will be competing in September 2012 when cooler Autumn temperatures may strike.

Slight delays at the aquatics centre can be pinpointed to the complexity of the 160m-long and 3000-tonne wave-shaped roof, according to ODA chief executive David Higgins.

He said: "It is accelerated costs. The roof was much longer than we expected. It was months. It is just a matter of making sure we hit the date in July 2011. The roof is complicated and it changed the work sequence."

Mr Higgins said they were working with "quite fine" temperature differences, looking "to get the temperatures right for the athletes in the period going into the Paralympic Games".

The estimated £20 million cut to the stadium costs could bring it down to £496 million, close to its original estimate three years ago.

Consultants, tasked with keeping the bill for the 2012 Olympics under control, are in line for a "forecast cost increase in performance management of around £10 million," according to the figures.

The report said: "This anticipates enhanced payments to the delivery partner CLM due to the strong progress of the project against agreed milestones and savings achieved.

"CLM's enhanced payments are based on performance and they are incentivised to drive down costs across the programme."

Another £8 million is also estimated on Stratford City Land and Infrastructure for payments due to the London Development Agency as part of the compulsory purchase order process and some additional infrastructure works, including a new pedestrian bridge.

In total £39 million of contingency was used during the last quarter covering areas such as early security works and seeking efficiencies in procurement, the ODA said.

There was also need for additional security facilities around the Olympic Park in Stratford, east London, the areas between the site and the Westfield Shopping Centre, and for security of IT systems.

There is £1.143 million of contingency available as £829 million had been released by September 30.

Olympic officials argue this will be enough to fund work needed at the Park given the potential risks that could be thrown up.

From April 2011, in light of the spending review settlement, around £0.5bn of the funding package, mostly held in the Treasury Reserve, will be left as contingency for cross-programme issues.

This reflects the programme's changing focus from construction to operational requirements, it was noted.

Mr Higgins said: "We have made savings as part of the spending review process without jeopardising successful delivery and in total have now saved over £750m since the start of the project to keep us on track.

"Today we are announcing that the roof of the handball arena is complete and across the rest of the Olympic Park progress is very visible with the velodrome set to be the first new venue on site to be finished early in 2011.

"With 75% of the programme to Games-time now finished we are in the home straight but are not complacent and are focused on maintaining progress in the months ahead."