The Olympic Delivery Partner contract is estimated to be worth £200m, twice the figure suggested when it was awarded to the CLM consortium last week.
A senior figure close to the negotiations said CLM’s role was “80% scoped” after discussions with the Olympic Delivery Authority. He added: “It is going to be £100-200m, but £200m is nearer the mark.”
Salaries alone should cost at least £82m at 2006 prices on the assumption that there are 250 people working at the delivery partner at any one time. The typical salary is expected to be £55,000 to attract suitably qualified candidates over a six-year period.
A final valuation is likely to be made after 90 days, once the consortium has decided the payment structure and the construction programme.
During this time, four milestones must be reached.
The first is: “mobilisation”, that is, putting CLM’s back office systems and key personnel in place.
The second is assessing CLM’s relationship with the handful of contracts that have been let so far.
The third is finalising the programme for the major construction works and the fourth is making arrangements for matters arising from the construction programme.
CLM’s success in passing these tests will determine how much it is to be paid.
The negotiations are taking place against a backdrop of controversy over CLM’s appointment.
Don Foster, the Liberal Democrat culture spokesperson, has complained of Laing O’Rourke’s involvement. The company is understood to have spent millions of pounds sponsoring London’s bid for the Games, but the actual amount has not been disclosed. Foster argued that this created an appearance of a conflict of interest.
Higgins said last week that when CLM and Bechtel went head-to-head as the shortlisted bidders, the former “provided the best value for money”.
CLM is made up of Laing O’Rourke, Mace and CH2M Hill.
• Research by Gardiner & Theobald has found that the inflation premium on output prices attributable to Olympic activity would average 0.9% a year to 2015. G&T said that the impact would be restricted to London and the South-east.