The government failed to include IT systems for its Olympic Delivery Authority in its costing for the 2012 Olympics – and did not budget for them until 16 months after the games were awarded to London.
The revelation comes in a report from the Commons public accounts committee following the MPs’ inquiry into the preparations for the Olympics, risk assessment and management of the project.
Since London was chosen to stage the games in July 2005, controversy has centred on cost hikes, with a £900m increase on the original £3.3bn cost announced by the then culture secretary, Tessa Jowell, in November 2006.
The report says: “This increase included some £400 million for IT and site mobilisation and the costs of the CLM Consortium, appointed by the Olympic Delivery Authority as its delivery partner to assist in project managing the delivery of the venues and infrastructure.”
IT costs for the ODA - set up to be a single delivery body responsible for establishing the Olympic and Paralympic infrastructure – had not been factored into the original cost estimates for the organisation.
The report notes: “The original budget had used the costs of an urban development corporation as a benchmark for the Olympic Delivery Authority’s running costs, with the result that these costs had been seriously underestimated.”
The MPs warned that overall costs for the Olympics were still not clear. “At the time of our examination, however, 20 months after London was awarded the Games, there was still no final agreed budget in place,” the report says.
A note from the Department for Culture, Media and Sport provided to the committee after MPs probed the extra costs reveals that the total programme delivery budget outlined by Jowell on 21 November 2006 was £570m.
“Of this, the combined staffing, accommodation and IT cost of ODA and delivery partner CLM is £476m,” the note says. The £94m balance covered facilities for up to 9,000 construction workers on the Olympic site.
Neither the DCMS nor the ODA was able say how much of the £476m was expected to be spent on IT. A DCMS spokesperson said: “All these things will be broken down when the official accounts are published.”
Public accounts committee chair Edward Leigh MP said: “At the time of the bid, the department seriously underestimated the costs of the games and was far too optimistic about the extent of private sector funding. The truth is that the government is financially exposed.”
DCMS had “finally announced a budget, totalling some £9bn”, which the National Audit Office would report on, he added.