Olympics budget takes a high jump

Days after Balfour Beatty was awarded the £303m contract for Zaha Hadid’s Aquatics Centre, a report from the public accounts committee criticised the government for failing to correctly estimate the amount of public sector spending needed for the games.

Around £500m of the £2.2bn programme contingency has already been spent and the government has admitted that the remaining cash is also likely to be spent. The report said there should be ‘no assumption’ that the money would be used and that it should only be spent in the event of ‘unforeseen costs’.

The report also said the Olympic Delivery Authority (ODA) should be given the right to access contractors’ books, to check costs and financial viability, and deliver incentives for meeting time and cost targets.

The Aquatics Centre contract award pushes the total cost for all permanent London Olympic structures to more than £1bn. The deal includes a main swimming pool, diving pool and training pool, plus a 250m bridge connecting to the adjacent Stratford City development.

The total sum is a four-fold increase on the original £75m aquatics budget estimate contained in London’s bid document. The ODA also announced last month that the Velodrome would cost £80m to build, twice the sum quoted in the Olympic bid, while Carillion’s contract for the £400m media centre still hangs in the balance until main backer Barclays Bank finalises a funding package.

It is believed Balfour will keep most subcontracting on the Aquatics project in-house, using Balfour Beatty Ground Engineering and Haden Young for piling works, ground improvement and M&E work.