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London 2012 and Copenhagen today … different approaches to tight deadlines

Posted on 16 December 2009 | 11:12am

There are so many grim headlines with bad numbers in them that this morning one which seemed to buck the trend leapt out at me from the Financial Times.

It was not the biggest story on the page – that went to ‘MoD makes cuts to plug budget hole’, alongside ‘Claims of ministry savings queried by NAO.’ Nor was it the most political, cited as it was alongside ‘Cameron reverses on MPs’ tax status.’ No surprise there then.

So, to the headline in question – ‘Olympic site underspend spurs Whitehall cash race.’ Wow! Come again…

‘A race for the spoils of a potential Olympics windfall is in prospect as confidence grows among the team responsible for building the games’ venues that a significant portion of the construction budget will not be spent.’

Now, we are still talking big bucks. But if it is true, as reported, that the Olympic Delivery Authority expects the final cost of construction to come in at £7.2billion, not the last budgeted figure of £8.1bn, then hats off to the ODA.

There was a wonderful little item on the regional BBC News last night, one of those ultraspeeded-up films of the main stadium’s development. For sports fans, infrastructure development followers, and people who just like to see big visions realised, it was a really exciting piece of film.

The usual rhythm of the Olympics is excitement, followed by anger and disappointment as everything seems to go wrong along the way, followed by excitement again as the Games takes place. London appears to be missing out much of the middle bit.

There will doubtless be rocky patches and the occasional setback. But there is a calm and steady progress towards London 2012 that is rather disproving the idea that Britain can no longer do the big projects well.

Calm and steady progress towards a deadline is not exactly how you would characterise the Climate Change Summit in Copenhagen. Then again, Summitry rarely does calm and steady. It tends towards over-excited and over-emotional, not helped in this case by under-organised.

I’d have thought any major event planner could have worked out that if you accredit 45000 people to an event venue capable of handling 7000, you might end up with a few organisational problems.

It is been very hard, trying to follow the Summit on the news, actually to discern the process by which any agreement is likely to be made.

But for all the activity of the tens of thousands, the final denouement will be down to the Prime Ministers and Presidents now on their way. I hope they can all get in. And I hope they can reach a meaningful agreement.

Reading it from afar, it doesn’t feel great. But perhaps a combination of the seriousness of the issues, the urgency of the leaders and the pressure from those queueing outside in the cold, will yet surprise us all.

Just how hard it will be though was symbolised by something else I noticed in the FT. According to an official Chinese local government website, the air quality in Beijing yesterday was ‘excellent.’ According to the US Embassy, which does its own monitoring, it was ‘unhealthy.’ If they can’t agree on monitoring standards for air quality, I fear even bigger disagreements between now and Friday’s deadline.

  • Phil Cope

    I work in the City and can see the site taking shape from my office window. It has been great to watch it develop and, as you say, without too much fuss. All especially impressive when you think of the mayhem elsewhere — like in the bank where I work!

  • Bryan Martin

    Doubtless all of the people in Copenhagen feel passionate about the issues, and may have some knowledge and experience to bring to the table. But it is hard not to think the whole NGO sector has grown too big. What do all those people do? And what exactly can they contribute to what is going on? Indeed, what is going on? Hard to work out and surely there is a better way to do business than this

  • Paula Marks

    Maybe we are missing the middle bit because the Games themselves won’t be a success!

  • Mike

    The original budget was £2.4 billion for the whole games. A spend of £7.2 billion just for the construction deserves “hats off”? Are you even serious?

    It’s hard to imagine how the economy has crumbled with you guys at the helm. Well, it’s fine, we’ll pay for the white elephant by printing some more money I guess. Job done.

  • Andrew Williams

    Hats off to the Olympic team. And surely hats off to Boris as well? (Come on admit it, you think Boris has done a pretty good job too!)

    Regarding eye-watering figures – potentially as the price of bank shares increases the Governments emergency investment may become a much less significant loss (as is already happening I believe)…hey, they might even see a profit on their shares in the long run. The problem for the Government is now a BIG cash flow one, but potentially the investment to the banks could be repaid by an increase in the value of the shares – I don’t think the public understand this hypothetical upside. Now none of this means the Government don’t have an enormous cash flow problem and a massive deficit issue, but glimmers of hope…

  • Lawrence

    Once again a statement about “the original budget” and how it is now much higher for London 2012.
    1 When the IOC invites bids, this applied to Rio recently, the bidding cities all have to price their planned construction works as if they were building them immediately. So London’s bid price was set at 2005 prices.
    2 There was no contingency in the original estimates, to cover any new requirements or changes, yet in any building project over 7 years it’s obvious that not everything will be thought about on day 1.
    3 The building works are transforming east London, an area starved of investment for ever, so it’s not £x billion for a few weeks of Games, even if it will be the greatest show on earth, but a long term shot in the arm for a deprived region.
    I agree with the positive way in which Alastair comments on what is a great British story, so stop whining.

  • Mike

    @Lawrence

    2005 prices? I’m not sure that £2.4 billion in 2005 money works out to £9.4 billion in 2012 money (although QE will have inflation through the roof before long so maybe!) and that’s assuming that all the spending takes place in 2012 which of course it doesn’t; they’re doing the work now.

    In any case, the original budget had the cost at £2.4 billion in 2004 money. Assuming 6% inflation each year (because we’re talking construction, not retail we need to plan higher) that gets us to £4 billion in 2012 money. So again, “hats off”, you’ve only overshot budget by £5 billion guys, well done.

    As for your point 2, sure, not everything will be thought about on day 1 but if Government wants to spend £2.4 billion on something, they better have written the budget on some other than the back of a fag packet. The management costs have gone up over 35 times from the original budget. How did they ever expect to do all the management (inc rent, IT, site logistics) on £16 million? I would guess they either didn’t expect to and they expected to up the costs and bill the taxpayer, or simply didn’t manage to include 34 35ths of the money on day one because they hadn’t thought it through. Careless or craven, doesn’t matter which.

    3, how many “depreived regions” could we give a shot in the arm to for £9 billion? More than one I’d wager.

    As you’ve probably guessed, I don’t think it’s a £5 billion overspend, I think it’s a £9.4 billion overspend as the budget could so easily have been £0. Some very expensive spilt milk I suppose. Ho hum.