As estimates of the cost of the 2012 Games in London soar past £12bn neither the minister in charge nor the Olympic delivery committee appears to have any clear answers on finances

The latest cost estimate for the 2012 Olympics in London could be as much as £12bn, according to sources close to CLM, the delivery partner for the Games.

The news comes in a week of chaos for the Olympic delivery authority and Tessa Jowell, the culture secretary, neither of whom was able to give a clear answer to questions about the Games’ likely out-turn cost.

Confusion was created after Jowell told a parliamentary select committee on Tuesday that the cost of the Olympic park was expected to rise from the £2.4bn quoted in London’s bid for the Olympics to £3.3bn.

Jowell said £400m of that increase was a payment to CLM to deliver the Games on time and budget, and had not been factored into the original bid. She did not give a breakdown of the other £500m but she did say that a doubling of steel prices and construction inflation were partly to blame.

The Construction Products Association said that Jowell’s comments on steel did not make sense. Michael Ankers, the association’s chief executive, said: “Since the original Olympic bid was submitted, steel prices have gone down by about 8%.

In 2002-04 it was a big problem but she’s hit on the wrong example here.”

Ankers said other materials, including timber and concrete, had risen in price, along with energy, but that it was difficult to blame steel prices, especially as it was unclear how much steel would be used in the construction of Olympic facilities.

He said: “We think Tessa Jowell has added even more confusion and it is all terribly vague at the moment.”

The £3.3bn figure refers simply to the Olympic park and not the wider area that has been earmarked for regeneration, including Stratford City. Other unknown costs will be incurred by land remediation, interest rate hikes, inflation and security costs.

In the original bid, regeneration costs were put at £1bn but are likely to rise beyond that. The Olympic Delivery Authority has agreed that a £400m supplement should be paid for the 4,500 homes planned for Stratford City, because the two shortlisted bidders (Lend Lease and Bouygues) said otherwise they could not make the scheme work.

Ken Livingstone, the mayor of London, said last week that part of the confusion over the budget was because the Treasury wanted a 60% contingency fund, whereas the ODA wanted 30%. Jowell said the programme contingency should not be translated to mean that there would be extra costs for the building programme.