Researchers at the University of Oxford’s Said Business School say this equates to a 101 per cent overrun compared to the original budget of just £4.2bn in 2005.
But Professor Bent Flyvbjerg and his co-researcher Allison Stewart say that this compares favourably to an average cost overrun of 179 per cent for Olympics held during the last 50 years.
But it is substantially more than the typical cost overrun of 47 per cent for Games held in the last the decade.
“While all major programmes are prone to cost overruns, due largely both to optimism and conscious strategic misrepresentation, overruns of the Games are in a league of their own,” Flyvbjerg said.
The researchers found that a major problem for organisers is that, unlike other major investment programmes, each Olympics is unique to the host city and involves thousands of staff who do not have experience of working on equivalent projects.
Organisers are also prone to purposefully underestimating costs for political reasons, leading the researchers to recommend an approach known as “reference class forecasting” – essentially using the consistent level of past overruns to calculate a more realistic budget for future Olympics.
The report also offers a warning to London 2012 organisers: “Though there is little the London Games can do now to limit the cost overruns, it is important the Committee keep a firm hand on the budget in the remaining weeks leading up to the Games, or the situation could worsen.
“As we learned from Delhi’s Commonwealth Games in 2010 and the Athens Olympics in 2004, in the final stages of preparation the focus can quickly shift from cost control to delivery at any cost, resulting in significant additional overruns.
“Transportation, security, and broadcasting are three areas that could potentially require urgent financial attention if the organisers’ projections are incorrect.”