London 2012 Olympics – Big Build still on track » Local Government » 24dash.com

The London 2012 Olympic and Paralympic Games remain on time and within budget, data published today by the Government and Olympic Delivery Authority (ODA) confirms.

Figures from the London 2012 Olympic and Paralympic Games Annual Report show a rise of £21m in the Anticipated Final Cost (AFC) of the programme being delivered by the ODA – £7.262bn from £7.241bn since the last report, equivalent to an increase of 0.3 per cent and within the £8.1bn overall ODA budget.

The report also details the significant progress made in getting ready for the Games. The Big Build is now over halfway through with key achievements this year including the completion of the Velodrome steel structure, the Aquatics Centre roof, the first three Olympic Village blocks and the main structure of the Olympic Stadium.

Changes in the AFC inevitably occur as a project of this scale progress, changes are the result of increases but also savings made elsewhere. Increases are the result of a reduction in the expected returns from future Stratford City land receipts that are now forecast to be lower due to the deterioration of the property market, additional funding required for Park management where the ODA have been asked to take on a range of additional work and increased security costs related to the development of the Olympic Village.

The savings that have been made are in, for example, infrastructure and the cost of the International Broadcast Centre and Main Press Centre, and in a reduction in forecast risks – in total these make savings of over £100m.

The majority, £1.25bn, of contingency remains unreleased and the ODA continues to make good progress in preparing the venues and infrastructure in the Olympic Park, with construction on all major venues well underway.

The Government has agreed a Memorandum of Understanding (MoU) with the Olympic Lottery Distributor (OLD). Under this MoU the Government will ensure that the OLD will receive a proportionate share, as laid down in the Grant Memorandum between OLD and ODA, of any income received in relation to the Olympic Village or other assets that were partly funded by lottery money.

Olympics Minister Tessa Jowell welcomed the continuing progress: “As we enter the busiest and most exciting phase of the Olympic project so far this report shows we are still on time and still on budget. This year, we have seen a part of East London transformed thanks to the immense progress made by the Olympic Delivery Authority and contractors.

“Because of this progress we are making savings; £390m in the last financial year, and where we have had challenges to meet we are, therefore, well placed to respond to them.

“We have maintained our focus on helping Britain come through the recession and as the economy recovers we will not become complacent. We will continue to ensure that the investment in the Olympics is an investment that brings benefits to the whole of the UK now, and for many years through business, skills, sport and culture.”

Olympic Delivery Authority Chairman John Armitt said: “We are continuing to make strong progress across the project. There are however still big challenges ahead as construction accelerates across the site and the workforce peaks. This will be our toughest year. We take nothing for granted but I am confident that the foundations for success are now in place.”

The changes in the Anticipated Final Cost (AFC) are as a result of:

* £13m of Funders’ Group contingency has been released to the ODA to progress the detailed planning, procurement, licensing and early works for the operation of the Olympic Park between 2011 and 2013;
* expected savings of £55m made on site preparation and infrastructure projects and venues;
* forecast risks on the project continue to reduce due to efficient delivery, a reduction of £54m has been achieved this quarter;
* expected savings of £13m on the International Broadcast Centre/Main Press Centre as a consequence of project reviews, performance to date and procurement gains;
* an expected increase in Olympic Village related costs to include increased investment in security for the site and legal and other fees associated with the completion of the pre-sale agreement for the affordable housing deal on the Village;
* a reduction in forecast receipts of £150m, partly offset by £45m savings on Corporation Tax, from the ODA’s right to share in the development returns of London and Continental Railways (LCR) owned land adjoining the Olympic Village;
* and an increase in programme delivery costs reflecting £9m performance payments earned by the ODA’s Delivery Partner relating to continued good delivery performance.

Other key points from the Government Olympic Executive’s second annual report are:

* the Olympic Board has now decided that the ODA will take on additional responsibilities, between 2011 and 2013, for areas such as venue security and operating the Olympic Park and venues to a level to support elite athlete training, test events and the Games. This new scope for the ODA is likely to require additional funding of between £110m and £160m to be allocated to the ODA, from within the existing overall £9.325bn budget;
* the gross allocation of contingency to date on the project is £715m, there is more contingency available than assessed risks;
* by the end of 2009, 9,164 people were employed on the Olympic Park and Village and all workforce targets were being met. Twenty per cent of workers were resident in one of the five Olympic Host Boroughs;
* 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.