Olympic budgets 'must be more realistic'

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Seven cities vying to stage the 2016 Games will be told they must declare the estimated cost upon completion of the project - and not just forecasts at the time of submitting their bid seven years earlier.

The International Olympic Committee has adopted the "more transparent" bookkeeping rules following recommendations from Games organisers in London and Vancouver, host of the 2010 Winter Olympics whose budget has come under pressure due to rising property values.

When they submit their candidate file next year, the bidding cities will have to estimate costs in local currency and US dollars in 2009 and 2016 prices. The formula adopted to calculate seven years' inflation will be down to each city but will be subject to approval from the IOC finance department.

The changes were explained to bidding cities at an IOC seminar in Lausanne, Switzerland, this week.

London Olympics chiefs were forced last week to admit that the cost of the main stadium had risen to £496 million compared with the "bid book" estimate of £ 280 million, which was submitted during the bid at 2004 prices.

The increase, according to the Olympic Delivery Authority, comprises inflation and VAT which was not originally included. The ODA is expected to confirm later this year that the budget for the aquatics centre, costed at £ 75million, has doubled to £150 million.

Just 18 months after London's win the budget increased from £2.4billion to £9.3billion with additional items including VAT, security, regeneration and contingency of £2.7billion.

Shadow Olympics minister Hugh Robertson welcomed the move. He said: "It already appears that London's first legacy to the Olympic movement has been to force the IOC to take a much more robust approach to budgets."

A spokeswoman for the IOC said: "The changes have come from a recommendation from London and Vancouver when we did a debrief with them. We feel this will reduce the chance of surprises occurring."