On 23/1/2009 the Olympic delivery authority asked the government for hundreds of millions of pounds in extra funding for the London 2012 games in order to keep building work on track. The 2012 funding shortfall has arisen as private investment in the media centre and olympic village has disappeared due to the credit crunch.
The extra money is likely to be drawn down from the £1 billion contingency fund. However this points to an extensive cost overrun in the long term given that the London 2012 games building program is only just over the halfway mark. Of note is that several bookmakers have stopped taking bets on London 2012 costing over £20 billion, which indicates that the bookmakers think it will almost certainly hit that figure, doubling the current budget, which is already three times that of the original estimate.
The media centre is £160 million short - a staggering figure alone, given that most of the expensive equipment will only be there just for the games and sold off or taken away thereafter. With regards to the olympic village the only bidder still has no sight of raising the extra £450 million it needs to hit its £900 million budget. As this is a key factor in the London 2012 games then if private industry does not come up with the money then the government will have to, biting very deep into the £1 billion contingency fund.
By halving the 2012 contingency fund at this early stage this is surely very worrying as it lays the way for other contractors to put claims in, after all why work hard to raise funding form the private sector when you know the government will bail you out. Not meeting the London 2012 deadline is simply not an issue, London 2012 has to be delivered on time.
London 2012 costs will surely go only one way. Up! For more news visit London 2012 news
by Richard Allen
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