Accountant to validate delivery partner’s provisional budget
The Olympic Delivery Authority (ODA) has asked financial consultant KPMG to return and revalidate the budget for the 2012 Games.
A senior City source said a final budget was presently being calculated by CLM, the consortium that is acting as the ODA’s delivery partner for the Games. KMPG’s job is to separately verify those costs before they are handed to the Treasury next month.
It is understood that the construction budget will exceed the present estimate of £3.3bn. That costing, which is £900m more than the original figure, was validated by KPMG in a separate report last year.
The source said: “It’s all about benchmarking the costs, the CLM delivery partner has its view on figures and then it’s up to KPMG to produce a benchmark agreeing or disagreeing. There have been many areas of conflict but the process should be concluded by mid to late February.”
Once the figure is communicated to the Treasury, it will be followed by a period of intense negotiation between the ODA, the culture department and the Treasury as to how much costs can rise to accommodate the ambitions of the Games’ designers.
Once that figure has been established the ODA can sign off the designs for most venues and the tenders can be put out to construction companies.
He added: “No designs are final at this stage; even the Olympic stadium is only at concept stage. Once the culture department broadly supports the designs and the Treasury broadly supports the figures then the ODA and its team can crack on with the procurement. At this stage, though, nobody knows how long it will take the Treasury to sign off the figures.”
Doubts about final costs must be resolved if public confidence in the project is to be maintained
John Whittingdale MP
The ODA told Building that KPMG would be working with CLM to ensure that project costs met value for money criteria.
It is also understood that Gardiner & Theobald has been brought in to begin costing groundworks and cabling for a section of the Olympic estate.
The move comes as a report by MPs in the House of Commons’ culture, media and sport select committee criticised the government's handling of the rising costs of the Games.
The report said that the Treasury “could and should” have publicised its concerns about potential cost overruns before the original London bid was submitted.
The report also called for the terms of the ODA’s contract with CLM to be made public.
John Whittingdale, the committee chairman, said: “Doubts about final costs must be resolved if public confidence in the project is to be maintained. Costs are still rising and the time has come for the Treasury and others to share the burden of any increases.”
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