The original cost for transforming the Olympic stadium from games to legacy mode was never properly scrutinised, leading to a massive cost overrun, a new report published on Friday (December 1) by the mayor of London said.
The independent report Moore Stephens Olympic Stadium Review by forensic accountant Moore Stephens was looking into the spiralling costs of transforming the stadium into the home of West Ham United football club.
The final cost has been put at £323M, which the report says is significantly higher than the “unrealistic” original estimate of £190M. Much of the cost has been shouldered by the tax payer due to a deal done by previous mayor of London Boris Johnson and new lease holders West Ham United football club.
The deal meant the taxpayer would own, transform and operate the stadium, effectively renting it to the football club. This left the public with liability for cost overruns.
In games mode, the stadium was designed to seat 80,000 with a permanent sunken, concrete lower tier structure and temporary upper tier and steel truss supporting the roof. In legacy mode, this steel was to be removed along with the upper tier and roof and the permanent lower tier retained with a much smaller roof and seating for 25,000 people.
However, after a series of negotiations after the games were completed, a decision was taken to transform it into a 60,000 seated football stadium. Under the new design, the ‘temporary’ upper tier would be retained and the permanent lower tier would be demolished to replace it with retractable seating allowing it to continue to be used in athletics mode. A new roof, which was larger than original, was also included in the new design.
The report found that the contracts were signed with West Ham United before the costs of conversion were properly understood. The annual cost to retract seats was budgeted at £50,000, which it said was believed to be far lower than for any comparable system in existence.
It also found that the seating added around £20M of costs due to problems with completion of design, component manufacture, delivery to site, management of materials on site, sequencing of work and assembly performance on site.
Works to strengthen the temporary steelwork to support the new larger roof also spiralled, with the perimeter compression truss joints requiring more work than originally envisaged. The problem was compounded by a deadline to complete the works in time to host the Rugby World Cup games in 2015. This it said, added “significant” extra delay and cost.
The report said: “In our opinion, the decision to transform the stadium and to contract with WHU [Consortium of West Ham United Football Club and London Borough of Newham] was made on incorrect financial estimates and an insufficient appreciation of the critical commercial and financial risks.
“It is our opinion that the financial estimates were incorrect not because they were estimates, but because there were errors in their calculation, compilation and presentation.”
Khan said he was now taking over control of the London Stadium to put it on a “more secure financial footing” and was working with the London Legacy Development Corporation (LLDC) to put a plan together to control costs going forward.