Figures from the London 2012 Olympic and Paralympic Games Quarterly Economic Report published today by the Department for Culture, Media and Sport (DCMS) show a like for like decrease of £51 million ($78 million in the Anticipated Final Cost (AFC) of the part of the Games being delivered by the Olympic Delivery Authority (ODA) - from £7.267 billion ($11.117 billion) in May 2010 to £7.216 billion ($11.039 billion) in June.

The figure would have been even lower if it had not been an  increase in the level of VAT to 20 per cent from next January; changes to Employers’ National Insurance; and Insurance Premium Tax increases announced as part of the emergency budget, have added an additional £45 million ($69 million) to this figure taking June’s AFC to £7.261 billion ($11.108 billion) equating to an overall decrease of £6 million ($9 million).

Over £100 million ($153 million) of savings have been achieved in the last quarter, of which £27 million ($41 million) has been returned to the Government as part of the wider efficiency savings announced in May.

These £27 million ($41 million) were made through efficient delivery and procurement gains and comprised of £13 million (£20 million) construction site security, £11 million ($17 million) from the International Broadcast Centre (IBC) and Main Press Centre (MPC) and £3 million ($4.5 million) from smaller changes to the basketball arena and velodrome.

In total around £700 million ($1 billion) in savings have been achieved by the ODA since the November 2007 baseline budget was agreed.

The majority of these savings have been used to control the budget by offsetting cost increases in other areas of the programme and helping to fund the impacts of the credit crunch, thereby reducing calls on the contingency.
 
Minister for Sport and the Olympics, Hugh Robertson said: "As we approach two years to go until the Games, and with over two-thirds of the construction phase complete, we are in an excellent position.

"The ODA have done an excellent job thus far, delivering a complex project on time and within budget despite the credit crunch.

"Today’s report shows they have delivered £27 million ($41 million) of savings as part of the Government’s measures for reducing the deficit while keeping the whole Olympic programme intact.

"It also shows that the Anticipated Final Cost remains stable despite the impact of the forthcoming VAT and tax increases.

"Given we are halfway through the most complex year in construction terms this shows just how well this project is being run."

The changes in the AFC are as a result of a reduction in the forecast costs of £17 million ($26 million) on the Olympic Stadium through savings made by efficient delivery and procurement gains; forecast savings of £29 million ($44 million) on the IBC/MPC of which £11 million ($17 million) has contributed to the ODA’s £27 million ($41 million) budget saving; and forecast savings of £22 million ($34 million) on Olympic Park security of which £13 million ($20 million) has contributed to the ODA’s £27 million ($41 million) budget saving.

The ODA, however, are forecasting a potential cost increase of £7 million ($11 million) on the Aquatics Centre due to the complex nature of the project and a £31 million ($47 million) increase in the enabling works project due to an increase in the volume of materials being processed through the on-site soil hospital.

David Higgins, the chief executive of the ODA, said: "With a little over two years to go until the Games we are in good shape – on schedule and within budget.

"We have hit all our milestones for 2010 and announced the next set which will take us to next summer when the main venues and infrastructure needed for the Games will be complete.

"As we have done since the very start of the project we have made savings through driving greater efficiency on a range of projects.

"We have made a total of £700 million ($1 billion) savings in this way, most recently absorbing both the agreed £27 million ($41 million) reduction in the ODA’s budget and the impact of the Emergency Budget.

"We will continue to bear down on costs wherever possible whilst ensuring we deliver what is required for both a fantastic Games in 2012 and a lasting legacy afterwards."

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