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Spending watchdog warns Olympics could still go over budget

The National Audit Office today said the construction of the Olympic Park remains on time and on budget, but warned that the £9.3bn of public cash set aside for the Games may not be enough.

The spending watchdog’s sixth progress report found that the Olympic Delivery Authority (ODA) remains on course to deliver its work on the Olympic Park on time, within budget and to the standard required.

But on current projections, however, it found that almost the whole of the £9.298bn public sector funding package for the 2012 Games is likely to be required, albeit with little scope for further unforeseen costs to emerge in the eight months left.

According to today’s NAO report, the construction project was 91.9% complete at the end of September 2011, against a target of 92.5%. Fourteen of the 26 construction projects have been completed and handed over and the remaining projects are on course. The Olympic Delivery Authority has also either completed, or is on course to complete, its transport infrastructure projects, such as increasing capacity on the Docklands Light Railway.

But outside of the ODA’s programme there are problems, the NAO found (see box).

Security and transport planning remain key risks to London 2012 success

On security, the likely cost to the taxpayer has nearly doubled in the last year with the latest estimate standing at £553M - an increase of £271M. This is becasue the London Organising Committee (LOCOG) had estimated that it would need 10,000 security guards. But the current estimate is for as many as 23,700, requiring LOCOG to renegotiate its contractual requirements and producing a significant recruitment challenge.

And in transport planning there have been delays to the full integration of some elements of the transport programme. Until this is completed, the NAO said it will not be possible to inform local authorities, businesses and individuals of the full impact of the Games on transport in London.

“The programme to deliver the venues and infrastructure for the 2012 Games remains on course, so it looks as if value for money will be achieved in this area,” said NAO head Amyas Morse.

“However, not everything is rosy. The government is confident that there is money available to meet known risks, but, in my view, the likelihood that the Games can still be funded within the existing £9.3bn public sector funding package is so finely balanced that there is a real risk more money will be needed.

“Moreover, important issues relating to the cost and staffing of venue security and restrictions on transport in London are still unresolved. The experience of spectators, visitors and Londoners in general would be diminished and the reputation of the Games put at risk if these issues were not sorted out.”

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