The London Mayor, Sadiq Khan is struggling to find an auditing company to take on the independent review of the London Stadium transformation over-spend and spiraling running costs.
He announced his inquiry on 1st November last year but many companies have reportedly ruled themselves out through conflict of interest as they were involved in the former Olympic Stadium project at some point in the last seven years.
The Mayor’s team has approached several independent auditing companies to invite them to bid to carry out an investigation over a £50m over spend, as well as major practical problems with its operation. The companies invited to bid have been asked to demonstrate how they would provide an expert analysis of:
· The history of the London Stadium including all relevant construction, financial and operational arrangements, with a particular focus on the stadium’s conversion into a multi-use arena and the subsequent negotiations and arrangements.
· The key decision points and contractual commitments that were made. That includes the financial and operational projections that informed the investment of public money into transformation works, and who was responsible for them.
· Whether the work leading to the decisions and commitments made was sufficiently robust and subject to appropriate levels of due diligence and negotiation to ensure that value for money was achieved for the taxpayer.
· The stadium’s financial viability in terms of its ongoing and future operating costs, and the income of the current working arrangements.
If they do manage to finally find a company they will also be asked to produce a report for publication that identifies any lessons that can be learnt. Their report will be expected to cover three distinct phases in the history of the London Stadium, which include:
· The Olympic bodies’ original decision making in determining the design and nature of the Stadium built for the Games and what thought was given to how the Stadium would be used post-Games.
· The decision making in the tendering for and delivery of the Stadium transformation in light of the original design and its legacy objectives.
. Decisions relating to the current operational arrangements for the Stadium.
To be honest I am now past caring … when we hit form we fill it and sing loud and proud … the migration of the first season there has been eventful but over time we will all find our own feel for the place … there is no point crying over spilled milk … the owners need our bums on seats and they will keep working to get us there whether it is improvements on or off the pitch …
What was the projected cost of the original plan to transform it into a 25,000 seater athletics stadium & running costs?
The initial estimated cost to turn it into a 25,000 seater athletics stadium was around £40m which quickly rose £160m when football was factored in.
The largest chunk of funding for the transformation comes from a one-off settlement of £148.8m from the exchequer in 2010 of which £40m of it was already factored in the £9.3bn Olympics Budget. On top of that Newham council provided £40m through a loan (in return for a 35% stake), a further £25m came from the government. UK Athletics invested £1m and the London Marathon Charitable Trust provided £3.5m with West Ham chipping in £15m.
The rest of the conversion budget is funded by London Legacy Development Corporation (LLDC). It quickly became clear that the £160m budgeted would not be enough. First, the costs rose to £193.3m as a result of difficulties that the constructor Balfour Beatty experienced reenforcing and building the cantilevered roof. In June last year the price rose to £272m. This was presented as a final budget, although with the caveat that costs could yet rise further.
It is now estimated that the total bill for the conversion will be at least £323m – more than twice the original estimate. Added to the final cost of building the Olympic Stadium (put at £429m by the Olympic Delivery Authority) the final bill for the rebuilt, renamed London Stadium now stands at £752m.
It worth adding originally the Olympic Stadium was priced up at £280m in the London 2012 bid book before the price tag rose to £429m so over spent on these projects is nothing new.
It is hard to understand why the Mayor wants to open this can of worms ? Everyone knows that Seb Coe his cronies and the LLDC are responsible, other than a huge expense, politically any gain would be minimal, he would be better off having his aides read through all the paperwork associated to the deal from inception to delivery and draw up his own conclusions. The lesson learned is never allow politicians and bureaucrats to take charge of building projects, especially when they have an abundance of vanity and a minority of common sense.
Stadium costs usually escalate and contractors famously get the sums wrong.
John Laing Construction built the Welsh rugby stadium for circa £30m which barely covered the cost of the structural steel let alone all their other costs. They went from arguably the UK’s leading contractor to being sold to an Irish subcontractor for £1 shortly afterwards.
The Australian company Multiplex lost £250m on Wembley and then took down Cleveland Steel
In an attempt to mitigate their losses through bashing their supply chain.
Unlike Laing and Multiplex, Balfour Beatty obviously had a very loose contract if the costs at the London Stadium doubled and they managed to recover this uplift.
Either way my guess is that one day a wealthy investor may knock down and start again. In the meantime the Olympic stadium will always be a bit of a compromise as a soccer venue – that said it does grow on you after a while especially with a few better performances on the pitch.
As for enquiries they usually cost £m’s and tell us what we already know – Hillsborough, Bloody Sunday, etc. Not worthpaying the accountants and lawyers.
Khan would be better off sitting down with Sullivan and agreeing a deal whereby Sullivan takes the stadium lock stock and barrel. £25M cash now is surely better than £12M loss every year for the next 98 years? It wouldn’t be popular but neither will publishing the accounts every year that show loss on loss on loss.
That Mietel Tower, the egg whisk thing, every time I’ve seen it it’s lit up in red for match days. I haven’t seen it recently because I come in from the other side but I wish they’d light it up in claret and blue for matches. That wouldn’t be hard given that most landmarks like the wheel and Wembley change colours after each atrocity.
One for your next Brady meeting Sean? Westhamification and all that. That would be a massive item