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VANOC on schedule, on budget

Draws $2 million from contingency fund for venue construction

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By Andrew Mitchell

Venue construction for 2010 remains on schedule and on budget, according to the latest quarterly report issued last week by the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Games (VANOC).

There have been no new increases in the budget since VANOC went to the provincial and federal governments in February of 2006 to ask for an additional $110 million for venue construction, on top of the original budget of $470 million. At the time VANOC said they could not have anticipated the soaring cost of steel and concrete on the global market, or shortage of skilled workers to draw from.

VANOC did withdraw $2.8 million from the $66.8 million contingency fund that was built into the venue construction budget over the last quarter, as a result of shifting some construction related staffing costs from the Games’ operating budget to the venue budget. In the same quarter, ending April 30 they also realized approximately $800,000 in savings for the renovation of the Pacific Coliseum, all of which was put back into the contingency fund.

With many projects nearing completion — all but three venues are expected to be complete by the end of 2007, and the rest by mid-2008 — the contingency fund is still healthy with $53.3 million available.

“This contingency was set up from the beginning, because it was fairly clear to everyone with the market we are working with that it made sense to have a contingency for each project and a central contingency to protect the overall budget,” said VANOC chief financial officer John McLaughlin.

“It’s a competitive marketplace, and a heated market — I doubt any project would be constructed today without a contingency attached to it.”

Since venue construction began VANOC has spent a total of $306 million on construction costs, including $63 million in the third quarter. Exact figures will be confirmed with the release of VANOC’s next audited fiscal report in October.

According to McLaughlin, the operating revenues are in good shape with a surplus cash balance of $84.3 million — including an advance payment from the IOC of $68.4 million, domestic sponsorship revenue of $16.3 million, and other revenues of $3.3 million in the last quarter.

Most of that money is accounted for as the cost of operations is expected to increase over the next few years leading up to the Games. In the last quarter alone VANOC hired 67 new employees, bringing total staff to 375.

However, as costs increase for the organization building toward the Games, revenues should also increase with the addition of new sponsors. In the January to March period VANOC signed new agreements with Weston Bakeries, Nortel, Jet Set Sports, Air Canada, TransCanada, and the Insurance Corporation of British Columbia. VANOC now has 23 signed sponsors.

VANOC also signed a licensing agreement with Moving Products to produce VANOC and Canadian Olympic Committee products, bringing the total number of licensee agreements to 21.

There are still more sponsorship sectors, and according to Chris Brumwell, manager of media relations for VANOC, negotiations are continuing with sponsors in many key areas.

“There are still a lot of sponsorships to be had — in the last quarterly report the number was 23, and there is still a number to go,” he said. “We have already identified a lot of them, and I know our team is working hard, and having meetings with potential sponsors to get them signed on.

“I do know we have exceeded our sponsorship goals since the beginning, and that there is a lot of interest in being involved in these Games.”

According to McLaughlin, the provincial and federal governments have contributed to the funding for the construction budget, while operating costs leading up to and after the Games will be shouldered by IOC contributions, corporate sponsorships, ticket sales, licensing fees, and other sources of revenue. To date they have commitments to cover approximately $1.4 billion of their $1.6 billion projected operating budget.

 

The quarterly report also includes an update on venues.

According to Dan Doyle, head of venue construction, all but three venues are on schedule to open by the end of this year. The last project to get underway was the Hillcrest Nat Bailey Stadium, which will host curling events in 2010. The Richmond Skating Oval and renovation of a practice hockey arena have also experienced delays, but are on track for 2008.

“The time lines we’re working under are very aggressive, which will reduce the risk of an increase to our capital budget and provide our athletes with a window of opportunity to train at and become familiar with venues to have a real home field advantage,” said Doyle. The goal from the start was to give athletes a minimum of two years to train at Olympic venues, and for facility managers to prepare for the Games by hosting test events.

All of the Whistler venues — the Nordic Centre, Sliding Centre, and alpine runs are on track, and will be hosting test events and training this coming winter.

 

Whistler Venues

• The men’s and women’s downhill runs will be completed this summer, along with a training run and expanded snowmaking system. “One challenge we’re having this year is the late season snowpack, which means crews are working on eight different job sites around the mountain,” said Doyle. “We also noticed a nesting robin at one job site, and moved away from that site to another until we can go back in there.”

• Work is underway on all sections of the sliding centre track, and the construction of on-site buildings will take place over the summer. The refrigeration system is also in the process of being installed and will be tested by autumn. “Crews are working on every inch of that track, which is over a kilometre long,” said Doyle.

• The ski jump is being assembled in the Nordic centre, and the tracks for cross-country and biathlon racing are nearly complete. VANOC also got the go-ahead to build an expanded network of trails in the Callaghan to enhance its use as a training facility and legacy for the Nordic community.

Doyle also noted that construction was beginning in earnest for both athletes villages, with the installation of site servicing, roads, and the foundations of the first buildings. The first buildings should be raised at both sites by the end of the year.

According to John Furlong, chief executive officer of VANOC, some other notable milestones will be reached in 2007.

This fall VANOC will announce its official Olympic and Paralympic mascots, said Furlong. Right now the concepts are a closely guarded secret.

By the end of the year Furlong also hopes to announce a ticketing plan for the Games, including ticket prices.

VANOC has also been addressing a controversy that has arisen as a result of plans to spend $44.5 million on raises and bonuses for staff. According to Furlong, the money includes cost-of-living raises for all staff in the neighbourhood of three per cent a year, as well as a bonus plan for staff members who stay until after the Games. By the time the Games take place, VANOC will have a staff of 1,400 employees.

“What has happened with other Games is that staff members leave early because they get offers, or because they know their job expires after the Games and they are looking for more security,” said Furlong. “It’s fairly common to have these plans in place to retain staff. I know the Commonwealth Games had plans in place, that Expo 86 had plans in place. The purpose of that money has been spelled out in that section of the business plan, and only staff that stay until the end will receive bonuses.”