Huge project, budget goes horribly wrong. Not much of a surprise there given the track-record of many large projects in Britain, but I do love some of the details as to how the budgets for the 2012 London Olympics went wrong:
The Department for Culture, Media and Sport and the Olympic Delivery Authority (ODA) were criticised for omitting security, tax and contingency costs.
Security? It’s not as if you ever hear the Home Secretary worrying about security. Tax? Never heard of anyone having to pay such a thing. Contingency? Nothing ever goes wrong you know.
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6 Comments
As I said on my blog today, this is a shocking failure on the part of Tessa Jowell and her incompetent team (and Ken Leavingsoon for that matter).
The taxpayer forking out £9.3 billion for the Olympics is ridiculous enough, and I bet this isn’t the last price tag hike for the Games.
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And to think our MPs and GLA members support this rubbish.
If anyone thinks £9.3bn is the final bill they are deluded – there’s plenty more overspend to come. And then in four and a bit years time half of the infrastructure will be torn down.
An utter waste of money on an event that is riddled with corruption from top to bottom.
Yes, I mean, when everyone else pays tax, that tax goes to the government, but when the government pays tax, that tax goes to … er … um … ?
I mean, sure, the government are a bunch of incompetent lying cretinous jobsworths, but let’s not pretend that tax goes anywhere other than back to government. It’s the one expense of government projects that they can honestly discount.
Anyway, we know how much Olympics cost, there have been a few in recent years (you might even have heard of some of them!), and they all cost about £20bn. Don’t plan for anything less.
I am happy to have the Olympics in London but I am very concerned about the treatment of contingency in the Olympic budget.
Normally when you have a large programme of activity such as the Olympic Games (or even nowhere near as large) you allocate contingency to each of the constituent projects (plus a little bit for general stuff). So, for example, the Aquatic centre will have a separate pot of contingency from the Olympic village.
As each separate project delivers the contingency is either used or where not used the overall budget is reduced accordingly; this makes sense as the contingency available is reduced as the risk of not delivering to time or quality is reduced.
The proportion of contingency allocated to the Olympic budget is incrediably high; normal practice is to allocate 5-10%. Now, in the case of the Olympics because they cannot change the date they need to deliver it by it is fair to put a bit more in Don’t get me styarted on the time,cost, quailty triangle!!). But in the figures released last summer, if I remember rightly, contingency was running at about 40%. This is way, way too high.
When I questioned (I think it was Peter Deighton) the LOCOG team about this at last year’s conference, I expressed my concern at the move away from best practice and also asked them how they would deal with ‘unspent’ contingency for each projet. I assumed it would go back to the taxpayer or Big Lottery Fund. But it seems not.
As each constituent project delivers, their unspent contingency is being rolled back into the over all contingency pot. This means that those elements due to deliver later could overpsend by three or four times the original amount with no requirement for LOCOG to have to come back and ask permission. How convenient for the government…no more having to answer for cost overruns!
Frankly, the way this contingency budget is being put together is a project manager’s dream but a nightmare for those responsible for funding the thing.
For sure, near the end, in order to get things delivered properly there may well need to be some money thrown at something but how much? I predict some unwarranted profligacy in 2011/12 as a result of LOCOG’s and Labour’s approach.
If only our Government had the nouse to collect a fraction of the uplift in land values as a result of the 2012 announcement, they could have had a self-sufficient Olympics and enough left over to compensate all loosers from the 10p tax rate fiasco. Instead we have £9.3bn of public money being paid straight into the private pockets of developers and land speculators. What a load of bankers.
I believe that the collective noun for bankers is a “wunch”.