OLYMPIC GAMES:The cost of building London's Olympic Park is likely to rise by at least €1.5 billion (£1 billion) and the total cost of staging the 2012 games could yet exceed the total €14 billion (£9.3 billion) budget announced in March, the British government said yesterday.
A detailed analysis of the Olympic budget, including the cost of building venues and infrastructure in the Olympic Park, has revealed that the Olympic Delivery Authority's budget is certain to rise from £6.09 billion to more than £7 billion.
Figures released yesterday by the Olympics minister, Tessa Jowell, also reveal that the security bill for the games has risen to £1.2 billion, six times the £200 million forecast in London's bid.
Jowell told the House of Commons that the details of the budget published yesterday demonstrated that the project was on track and in line with the figures announced in March.
"The statement show that after a thorough assessment of all the potential risks associated with a development of this scale, the budget is consistent with the funding package outlined," she said.
However, a detailed project-by-project analysis of the Olympic Park by the Government Olympic Executive (GOE) has established that at least £1.7 billion of the total contingency fund of £2.7 billion is likely to be swallowed up by the project.
The analysis showed that the base cost of projects overseen by the Olympic Delivery Authority (ODA) remains at the £6.09 billion forecast in March, a figure that includes £500 million of contingency funding.
An additional £600 million has been set aside for security, supplemented by a contingency allocation of £238 million.
With the ODA forecasting that its security costs will reach £354 million, the total security bill stands at almost £1.2 billion. The remaining contingency money has yet to be allocated, but the GOE's analysis has established that at least £1 billion will be required for construction costs in the Olympic Park, and the entire fund may yet be needed.
Until October, Olympic and government officials publicly maintained that they were hopeful that most of the contingency would not be spent, but they now concede that the majority will be consumed by the project.
"All the analysis that we have done suggests that there is an 80 per cent probability that we will need a further £1 billion of contingency, which would take the baseline costs of the Olympics to £7 billion, but at this stage I am not standing by that figure," said Jowell.
"We are open to the possibility of further risks, but the experts who have been working with us on this project are confident that those further risks will be covered by the remaining £1 billion of contingency."
Jowell refused to rule out the possibility of the budget exceeding £9.3 billion: "No one can confidently predict exactly what the final amount of contingency we require will be by 2012, but all the analysis we have suggests we are in a decent position."
The Conservatives criticised the budget announcement for a lack of detail, with the shadow Olympics minister, Hugh Robertson, claiming it still lacked transparency.
