Page last updated at 23:01 GMT, Tuesday, 30 March 2010 00:01 UK

London 2012 Olympics budget 'worryingly tight'

The Olympic Park in east London
Construction work continues on the Olympic Park in Stratford, east London

The London Olympics project is facing a "worryingly tight" financial position, a Commons committee has warned.

The public accounts committee said building for the 2012 Games was on track, but unforeseen problems were putting pressure on contingency funds.

The Olympic Delivery Authority (ODA) has £1.27bn left from the original £2.75bn contingency fund, with much of this already set aside, the MPs said.

The ODA said its progress was "strong" but 2010 would be a tough year.

The public accounts committee (PAC) found that taking into account the amount of contingency funding already set aside to cover predicted risks, the ODA was left with £194m "headroom".

'Limited flexibility'

As an example, the PAC warned that a further £160m of contingency money could be needed to cover previously unplanned work to secure and maintain the Olympic Park in east London between the end of construction and when the official handover takes place.

But it was also possible none of these risks would materialise, it was noted.

The foundations for success are in place but we are in no way complacent
Olympic Delivery Authority spokesman

Speaking as the PAC published its report, committee chairman Edward Leigh said: "What's worrying is that the financial position is tight.

"Of the sum left within the Olympic budget for contingencies... most is currently earmarked for known risks.

"But unforeseen problems continue to emerge to place fresh demands on the contingency."

The £9.325bn budget for the Olympics is triple the original estimate for the project.

The PAC report concludes: "Staying within the budget also depends on receiving some £600m receipts from the Olympic Village development.

"So the position is tight, with no room for complacency and limited flexibility to respond to new problems as the Games approach."

'Risk potential'

An ODA spokesman said: "We are continuing to make strong progress and the latest budget forecast shows us delivering the construction programme within the available budget."

However, he added, there was still a long way to go between now and the Games and there was the potential for more risks to arise.

"[This year] will be the toughest year yet on the project as construction work accelerates and the workforce peaks," the spokesman said.

"The foundations for success are in place but we are in no way complacent."

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