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Beijing Cuts Olympic Costs

Details of Beijing's broad Olympic cost-cutting measures, reported in Business Beijing last month, are now emerging.  Key government and organizing-committee officials have disclosed some of the measures which Beijing will undertake to achieve what Mayor Wang Qishan has called "a frugal Olympics."

While a call to cut costs, reduce complexity and increase safety was made by Mayor Wang in July this year, the overriding emphasis on frugality dates from 2001. In that year, the Beijing Organising Committee for the Games of the XXIX Olympiad (BOCOG) vowed to "carry out the principle of a frugal Olympics, save investment and value economic benefit."

On August 5 this year, construction work on Beijing's iconic National Stadium, or "bird's nest," was summarily suspended, pending cost and design reviews. Details of the precise nature of the cost-cutting measures were delayed due to the Athens 2004 Olympics, which concluded last month. Hundreds of staffers from BOCOG and the Beijing municipal government who traveled to Greece to study the Athens Games have now returned to China, and early details of the cost-cutting measures are emerging.

Five venues cancelled

On September 9, Chai Hua, an official in BOCOG's media department, confirmed that five Olympic venues which were to be newly-built have been cancelled. Chai said that some existing facilities will be upgraded and some temporary structures will be built to accommodate the events. At press time, BOCOG could not provide details on which venues had been scrapped, but a revised Olympic construction plan is expected to be made public following a high-level meeting of the Beijing People's Congress Standing Committee on September 15.

Business Beijing will track these important developments online at www.btmbeijing.com.

National Stadium and Swimming Centre trimmed

Beijing's National Stadium, known as the "bird's nest" due to its complex steel latticework design, has been officially revised, according to the People's Daily.

The re-design, which follows the construction halt of August 5, calls for a reduction of 10,000 tons of steel from the original 65,000 tons, cancellation of the retractable roof, and a reduction of the huge television screens from four to one.

The National Stadium, designed by Swiss architectural firm Herzog and de Meuron, was originally budgeted at 3 billion yuan (US$363 million).  No official announcement of the cost savings achieved by the re-design were available at press time.

Meanwhile, the second of Beijing's iconic Olympic stadia, the National Swimming Centre, or "Water Cube", has had its total area cut by 7,800 cubic metres, achieving a reported saving of 90 million yuan (US$10.9 million).

Completions postponed

In what has been reported by the People's Daily as a "new round of optimizations," completion of Beijing's key Olympic stadia has been postponed by one year, with the new target being 2007, rather than 2006.  The foundation-laying of some of the remaining new stadia have been rescheduled to 2005 from the original construction target of 2004.

This new optimization will reportedly "make full use of new technologies [and] materials to ensure minimum cost with quality maintained," according to the official Party newspaper.

Significant cuts

According to Xinhua, China's official news agency, Beijing's authorities are seeking a "new mode" of operation which will cut up to 6 billion yuan (US$725 million) off the estimated US$3 billion budget for the 18 main Olympic sporting facilities. This early estimated 25 percent cut in the Beijing 2008 construction budget was unable to be confirmed by Business Beijing at press time.

"I can only say that at this time we are planning to save several billion yuan," said Yang Zhaoke, a spokesperson for the Office of the Olympic Economy of the Beijing Municipal Commission for Development and Reform. "Whether we can save four, five or six billion can only come after a general accounting for the departments in charge of the projects."

A senior Chinese economist quoted by Xinhua on September 9 said that "before the latest planned cuts are taken into account, design alterations will result in savings of 3 billion yuan (US$363 million)."

Funding in place

China's Vice Minister of Construction, Huang Wei, said in Beijing on September 8 that Olympic funds are now in place, and that there would be no problems of withholding funds.

Speaking at a press conference hosted by the Information Office of the State Council, Huang said that a raft of measures has been implemented to prevent tardy project payments.

Prior to the latest round of budget optimizations, the total investment in Beijing 2008 was put at US$33.8 billion.