Conclusions and recommendations
1. There has been substantial progress on
the construction of the Olympic Park and the Department has repeated
its cast-iron commitment to us that the Games will be delivered
within the £9,325 million budget.
As with any major programme problems are likely to emerge, and
with construction well underway, a little over two years until
the Games start and reduced contingency, there is limited room
for manoeuvre. Of the original £2,747 million contingency,
only £1,270 million is left for the Olympic Delivery Authority
and all but £194 million of this is currently earmarked for
known risks. If there is any chance of the budget being exceeded
then the Department must inform us immediately and should expect
to be recalled to give further evidence.
2. One of the main reasons for the increased
budget for the Games announced in March 2007 was the inclusion
of a funded contingency, but three years later there is still
no such contingency for LOCOG. As ultimate
guarantor, the Government is financially exposed if LOCOG fails
to at least break even. LOCOG must establish a funded contingency,
and the Department must satisfy itself that recognised quantified
risk assessment techniques are used to assess the amount of contingency
required.
3. Revenue from ticket sales is an important
part of how LOCOG will generate the money it needs, but it is
unclear how LOCOG will balance this against the need for affordable
tickets, which will go on sale in 2011.
LOCOG has committed to making the Games accessible and affordable
for the general public. LOCOG should publish now the principles
on which ticket availability and prices will be determined.
4. Putting on the Games will be a huge logistical
exercise in integrated security, transport and events management
involving multiple organisations, but there are still grey areas
where the responsibilities of organisations remain unresolved.
The Department should clarify straight away who is responsible
for what and who pays, and finalise plans for checking progress.
Delivery of the Games depends on consensus between a number of
organisations, but with deadlines approaching and financial pressures
increasing the Department should make clear who has overall executive
authority.
5. Despite our previous recommendations, plans
have not yet been made for viable long term uses of publicly funded
assets in the Olympic Park after the Games, in particular the
Main Stadium and the Media Centre. The
Olympic Legacy Company should set out the criteria by which it
will assess the value for money of any proposals for long-term
use of the assets on the Olympic Park. If there is the risk of
assets remaining unused after the Games there should be a clear
plan for minimising the cost of maintaining them.
6. The targets for employing local residents
and providing construction training and apprenticeships were not
in place from the outset and have not been challenging enough.
The Department should set more stretching
targets for the Delivery Authority, taking advantage of the increasing
numbers of people now required in trades where traditionally apprenticeships
are more prevalent.
7. This flagship programme could provide lessons
for other construction projects. The Department
and the Olympic Delivery Authority should take the lead in identifying
the lessons from the preparations for the Games. The Treasury
should identify who is best placed to take the lead in making
sure the lessons are applied to other public sector projects,
including the importance of setting employment and training targets
at the outset.
8. Delivering the Games within budget depends
on receiving £600 million receipts from the Olympic Village
development, and returning £675 million to the National Lottery
depends on future revenues from the Olympic Park.
The Department was not prepared to provide any guarantees about
the timing and value of future receipts. It did, however, guarantee
that there will be no further calls on the National Lottery to
fund the Games.
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