The government, London mayor Ken Livingstone and David Higgins chief executive of the Olympic Delivery Authority (ODA) are locked in dispute over plans for a contingency fund to cover the costs of delivering the infrastructure for 2012 Olympic Games.
Details of the wrangle emerged this morning as Higgins and Sir Roy McNulty, acting chairman of the ODA, went before the London Assembly at mayor’s Question Time to face questions about progress on the project.
Under questioning, both refused to say how much they were demanding from Treasury to cover building cost.
But Sir Roy admitted the sums involved were “significantly higher” than an original estimate of £2.4bn.
Sir Roy said the figure had been pushed up by additional costs of regeneration, security and possibly VAT.
In response Livingstone said he had been discussing with government and the ODA plans for an extra contingency fund on top of 20% already agreed to cover unforeseen costs.
Livingstone revealed that Treasury was arguing that a fund equal to 60% of the overall budget should be set aside.
He said the proposal was “breathtakingly ridiculous” and would be a “green light” for developers to “screw up” construction of the project.
Livingstone said he would be prepared to accept an additional fund equal to 20%, but revealed that Higgins was calling for a fund of 30%.
“If you start out on this huge infrastructure project and say it might overrun by 60%, everybody bidding for contract knows you have set aside this huge pot of money for when they screw up,” he said. “That sends all the wrong signals.”
Sir Roy also revealed that a financial settlement had not yet been agreed with Jack Lemley, the US engineer who resigned suddenly from the post of ODA chair last month.
“There were issues between Jack, the ODA board and other stakeholders on the project,” he said.
“The mismatch between Jack and our environment here led to serious differences, and it was decided that it was I n everybody’s interest if Jack returned to pursue his business interests in the US.”
References: EGi News 15/11/06
