Parliament’s spending watchdog warns about risk of cost rises and urges greater accountability

The country’s leading spending watchdog warns today that “significant levels of uncertainty” surround the cost of the Olympics.

The National Audit Office (NAO) says in a report published today that although the process for setting the budget has been thorough, the Olympic Delivery Authority (ODA) has to address issues over design alterations and contingencies.

It also calls on the ODA to produce a detailed schedule of the returns expected for the £9bn of public funding being put into the Games. This will serve as the basis for accountability to parliament.

It also warns that although the estimated cost of £9.3bn “was sufficient if the assumptions on which the budget was based held good”, this could be affected by factors such as uncertainty over the extent of remediation works needed and the timescale of planning approvals.

The NAO has issued a series of recommended actions for the ODA to manage the risk of further cost escalation, including:

  • Producing a clear statement of what is expected in return for the £9bn of public funding
  • Producing more robust estimates of contingency
  • Establishing a timetable for funding.

Meanwhile, it emerged this week that the organising body for the 2012 Olympics has drawn up a shortlist of cost consultants to advise on the £200m temporary works programme for the Games.

It is understood that LOCOG, the organising committee for the Games chaired by Lord Coe, is considering a shortlist of four to five bidders, none of which are working on Olympics projects.

These are thought to include Gleeds, Rider Levitt Bucknall and Franklin + Andrews.

The role will include cost management for the handball arena and the beach volleyball venue on Horse Guards’ Parade. It is understood an appointment will be made within weeks.
Construction unions are on the verge of signing a memorandum of agreement with the ODA over direct employment. Sources said a consensus had emerged that would allow some trades to use self-employed workers.

For more detail on the NAO report see www.building.co.uk/2012