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Stadium costs underestimated

The true cost of the showpiece venue for the 2012 Olympics was seriously underestimated by organisers of London's bid when they were campaigning to win the right to host the event, The Observer can reveal.

Sports and construction experts now predict that, despite the official cost of the planned Olympic Stadium being £280m, the final figure will be closer to £500m.

A spokesman for the Culture Secretary, Tessa Jowell, the Olympics Minister, last night admitted that the original price tag for the stadium would be revised when a new, final budget for 2012 is agreed by the government early next year. He also confirmed that the cost of converting the Olympic Stadium from an 80,000-seat venue during the Games to become a 25,000-capacity athletics arena afterwards had not been included in the £280m figure. It was mentioned in the London 2012 team's 'bid book' submitted to the International Olympic Committee in 2004 but not given a cost, he said. Experts say that task alone could cost tens of millions of pounds.

The Department of Culture, Media and Sport said last night that the stadium was in the bid book at £280m because IOC rules meant that construction costs had to be given in 2004 prices, not the likely overall cost by 2012. Inflation in the construction industry, currently running at 6.5 per cent, meant the venue was always going to cost more than the original figure, said a DCMS spokesman. The cost of all the Olympic venues would go up for the same reason, he said. He added that allowance for the increase above £280m had been made in the public sector funding package for 2012 building projects, which last week went up from £2.4bn to £3.3bn, but could not give a likely final figure.

One construction industry source said that the Olympic Development Authority, which is building the infrastructure needed for the Games, was in a weak position over the stadium because most major building firms did not tender for the contract, and because the need to have it finished by 2011 could lead to the contractor demanding extra money.

From: New 2012 row as bill for Olympics Stadium nears £500m, Denis Campbell and Ned Temko, The Observer 26 11 06

More at: Underestimate


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