Drop in expected land receipts raises costs, but figure is well within £1.25bn contingency for the games

The cost of the Olympics has risen by £21m according to the latest report of progress on the project by the government.

The rises are due to a big drop in the expected land receipts from selling Olympic Land after the games, and works to plan and procure the operation of the Olympic Park between 2011-13.

However the increases are well within the £1.25bn contingency for the games and will have no impact on the overall £9.3bn budget, which includes non-construction costs such as security.

The increases take the expected spending of the Olympic Delivery Authority, the body in charge of building the games, to £7.3m, compared with an original ODA budget of £8.1m.

The £21m increase includes major cost reductions in some areas and large increases in others.

The ODA has managed to knock £13m off the price of the broadcast centre and £55m off the cost of infrastructure and site remediation. In addition £54m has been written off the expected spend because of reduced risks.

There are however still big challenges ahead as construction accelerates across the site

John Armitt, ODA

However, expected land receipts have fallen by £150m, and an extra £9m is being paid to programme delivery partner CLM for successfully hitting project milestones.

In a statement the DCMS said the ODA will be allocated up to an extra £160m from other parts of the £9.3bn budget to pay for the venue security, test events and operating venues for elite athlete training in advance of and after the games.

Building reported last year of the wrangle over the management costs for the venues before the games, which weren’t originally envisaged to be being undertaken by the ODA.

Olympics minister Tessa Jowell said: “We are making savings, so where we have had challenges to meet we are, therefore, well placed to respond to them. We will continue to ensure that the investment in the Olympics is an investment that brings benefits to the whole of the UK now.”

John Armitt, Olympic Delivery Authority Chairman, said: “We are continuing to make strong progress across the project. There are however still big challenges ahead as construction accelerates across the site and the workforce peaks.

“This will be our toughest year. We take nothing for granted but I am confident that the foundations for success are now in place.’