20% chance of London 2012 overspend

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There is a 20% probability that the £7,095mn budget for the 50 London 2012 Olympic projects will be exceeded, the Olympics Development Agency (ODA) said yesterday.

This is due to risks that include the interdependency of projects on the Olympic Park, the impact of exchange rate fluctuations, unexpected ground conditions and the availability of materials.

There is a £968mn contingency, which could be used to avoid delays and therefore increased costs on other inter dependent activities, but this still needs to be approved by the Olympics minister.

No programme contingency has been allocated to date.

ODA chief executive David Higgins said "There will always be financial challenges on a multi-billion pound programme of this complexity and we are directly impacted by the credit crunch and the deteriorating  property market."
 
The ODA Annual Report and Accounts for 2007 -2008 showed a year of strong progress otherwise, with the ODA hitting the majority of its programme targets.

The milestones hit by the ODA in the past year include 192 buildings demolished, over one million cubic metres of soil excavated to shape the park, two six kilometre tunnels and 200km of cabling complete, contractors appointed to build the 'Big Four' Olympic Park venues and design work well-advanced, construction started on the Olympic Stadium three months ahead of schedule, construction started two months early on Aquatics Centre and construction started on the Olympic Village.

ODA Chairman John Armitt said: "We have created strong foundations and we are firmly on track to deliver but there is no room for complacency. This is a unique project with an immoveable deadline. It is one of the biggest business challenges in the world and one of the biggest projects in the construction industry.