Saturday, February 24, 2007

Olympics- 4x Over And Counting

One way of blowing £1.8bn
So let's see...

Sydney was 2x over the original budget.

Athens was 4x over.

London is now officially 4x over, and there's still five years to go.

Needless to say, amidst all the buck passing and general spin, the actual facts are difficult to glean. But according to the BBC report, the main elements of the latest escalation are only too familiar to BOM readers:

  • Land decontamination- not allowed for at all originally, but now assessed at £1.8bn

  • VAT- not allowed for originally, but now assessed at £1bn (it may be a transfer from one government pocket to another, and Tess and Ken may find it a tricky distinction, but one pocket is labelled "spending", and the other "tax")

  • Security- not properly factored in originally, now put at about £1bn

  • Contingency- worldwide, 90% of all public projects over-run their budgets, and the Treasury is now sensibly insisting on a 60% reserve- which will be spent

Of course, there's also much blather about the sharp and unforseeable rise in steel prices, but given the scale of the escalation, that only accounts for about 35p.

And do bear in mind that this latest £9bn figure still excludes much of the hidden £10bn on-costs, like essential transport infrastructure, we blogged here.

Is it really too late for Bliar to phone Chirac and hoof the whole shebang over the Channel? That really would be a legacy to be proud of.

PS Tyler once had some involvement with the wild and whacky world of commercial property. And one thing you learn pretty quick is that a really really good way of losing shedloads of money is to acquire property that suffers from industrial contamination. It's like a game of pass the parcel, and you don't want to be holding it when the law suits come in. So if, say, someone offered you a zillion acres of old gas and chemical works in East London, and suggested you might like to build... oooh, I dunno, an Olympic Park, say, on it... your best bet would be to walk away. Sharpish. What a shame they didn't ask me. Or the junior assistant teaboy at any estate agents.

No comments:

Post a Comment