The honeymoon is most definitely over.

After the slog of putting together London's Olympic bid and the euphoria of winning, we are now faced with the reality of delivering it, its impact on the construction industry and the enormous task of satisfying the aspirations of the regeneration legacy for swaths of east London.

A report by Davis Langdon, which is to be published next week, warns that the demand for construction services created by the Olympics will add 1% to inflation within the sector; this equates to an average rate of 6% from 2008 onwards. As well as adding to the cost of other construction projects, the Olympics may affect their quality. The report warns that, quite simply, there will not be enough good project teams to go round. And if those projects look risky, they will struggle to attract competitive or properly resourced bids: as the death toll mounts among traditional contractors, more and more are shying away from trophy projects such as high-rise towers and stadiums. The conclusion to be drawn from all of this is unambiguous: clients who have long-term development plans should start lining up their contracting partners now.

Then there is the most pressing problem of all: how are we to deliver the facilities promised in the bid book for the money available? The concern in the industry is that there isn't enough money to build everything that the bid team said it would. As we begin to tot up the costs, and new demands become apparent, it seems that a budget gap has opened up. The mutterings around Whitehall are that it may be in the region of £1bn.

So what happens now? Well the ODA and the government have three options. First, more public money could be made available. This would not be easy given the dire straits the NHS is in, or the fact that rate payers in London have seen their bills go up £20 to pay for the Games. Second, they could scale back their ambitions, and risk being accused of winning under false pretences. In reality, of course, the dichotomy is not so stark. Some extra money could be raised, and the odd footbridge or road could be shifted onto someone else's to-do list. The main thing is that we don't take fright and start value engineering the facilities into mediocrity - we either want a Zaha Hadid swimming pool or we don't.

The third option is to brush the problem quietly under the carpet. This is the least palatable for the industry, and in particular the "delivery partner" that will be responsible for programme managing the whole thing. Every working day will be lived under the shadow of headlines that it has failed to keep control of the budget. And who will be the villains of the peace? Egotistical architects, incompetent contractors, spendthrift QSs and, of course, programme managers who couldn't organise the assembly of a garden shed.