2012 London Olympic village bail-out

In January the government announced a cash injection of £500m into the 2012 London Olympics project, to replace the funding that had initially been expected from private sector sponsorship, but which quickly dried up in the credit crunch fallout.

Over £360m of this bail-out is needed to continue the construction of the Olympic Village, the accommodation for 17,000 athletes and officials during the Olympic Games, and the location of more than one thousand “affordable homes” after 2012.

There are already calls to scale down the construction plans in the light of the current financial crisis. The Lib Dem Olympic spokesman, Tom Brake, has called the planned media centre (another recipient of government contingency funds) “a huge white elephant” – words once almost synonymous with the Millennium Dome.

Scaling down – or, in PRINCE2 terminology, reducing the scope, of the Olympics project might gall those responsible for designing and promoting the 2012 games, but it may be the most viable route out of an increasingly sticky situation.

Scope, schedule and budget form a triangle familiar to anyone who’s attended a PRINCE2 training course. If the scope increases, then the schedule and the budget also increase. If you want to tighten the schedule than either the scope or the budget has to give.

In this case, the schedule is immovable. The Olympic Games will begin in 2012 whether the Olympic Delivery Authority is ready or not. The budget, on the other hand, is definitely under pressure. Private sector sponsorship is not coming through, and the government is running through its contingency fund with a rapidity that – in the light of the billions recently poured into the financial sector – is frankly frightening. If the scope of the project is not reduced, who knows where the spending will end?

Take a moment, however, to consider where this £500m is going. The construction of thousands of new homes in the Olympic Village may not be quite what we need in the wake of the 2008 property crash, but the jobs that it will provide are precisely what we need when we consider the soaring UK unemployment figures. Up to 30 000 construction workers will be employed at the Olympic Village (and just think how many project managers will be needed to contain them all …). Tax payers may be funding the Olympic Village, but a substantial proportion of those funds are returning to the tax payers in the form of paid employment. Given the slew of jobs cut over recent months, this must certainly be a silver lining in a cloud of ‘huge white elephants’.

Tags: 2012 London Olympics project, contingency fund, Olympic village