A group of eight executives gathered in a large room in the offices of City law firm Freshfields, just off Fleet Street in the heart of London. Across a huge, square table were their opposite numbers — eight representatives from their group’s client.

The team faced not one crisis, but several. They had to cope with a huge labour dispute that had crippled work on their multi-billion-pound project. They had to deal with a health-and-safety emergency. To add to their challenges, they were embroiled in a legal wrangle. Nightmare followed nightmare. Within just a few hours, including a working lunch of sandwiches and coffee, just about every conceivable mishap had to be tackled.

It was, of course, only make-believe — a day of role-playing in which the Olympic Delivery Authority (ODA) tested the mettle of the consortiums vying to take charge of ensuring that the London 2012 Olympics gets off the ground. The eight executives were from one of the consortiums. Their opposite numbers were from the ODA.

The exercise helped to determine which of four short-listed groups would emerge as the authority’s “delivery partner” — the private-sector group that would co-ordinate all aspects of the London 2012 project.

Three months ago, the contract was awarded to CLM, a consortium bringing together America’s CH2M Hill, contractor Laing O’Rourke and construction manager Mace.

The CLM deal is the largest Olympic contract awarded so far. The consortium’s final bill could reach £400m. But it marks only the beginning of what promises to be a bonanza for British companies that win work for the 2012 games. The budget may be mushrooming: it was £2.4 billion when London’s bid was being prepared. Whitehall sources suggest there is £4 billion of contracts up for grabs. Others believe the final bill could top £10 billion.

Taxpayers may not be happy. But potential suppliers are rubbing their hands.

The London Organising Committee (Locog) and the ODA — the two bodies handing out work for the Olympics — will, over the coming six years, find themselves at the centre of one of the biggest contract scrambles in British history. And the event will offer rich pickings for companies big and small.

SEVEN MONTHS AGO, Firmin & Sons, a 329-year-old Birmingham firm whose claims to fame include making the buttons for Horatio Nelson’s uniforms, collapsed into administration under the weight of its pension deficit. Shortly afterwards, Firmin was rescued by Kashket & Partners, which makes the scarlet tunics for the Queen’s household footguards.

And now, Firmin is one of thousands of small enterprises hoping to profit from the 2012 Olympics. It wants to make the 1,000 or so gold, silver and bronze medals that will be awarded at the games.

Tim Newnes, group managing director of Kashket, the owner of Firmin, is desperate to ensure the contract does not go to a foreign company. It is a wish echoed by another Birmingham firm, Fattorini, maker of an eclectic mix of goods ranging from swords to cufflinks and barometers and now also hoping to get the medals contract.

Tom Fattorini, who runs the company with his brothers Greg and Sebastian and cousin Tim, said: “I want the contract to go to a British manufacturer. The medals are the hallmark of the quality of the games and Britain would be a laughing stock if the contract went to another country.”

Other small companies are hoping to enjoy a fillip from the Olympics. Dennis Spurr, 53, who runs the Fantastic Sausage Factory on St Mary Street in Weymouth, with his wife Maria and son Tim, watched his sales soar by a third this summer, after he created five Olympic rings from pork sausages and pinned them to the sign on the front of his shop. He is now planning to create a special sausage for the games, when visitors will pile into the resort to watch Olympic sailing events.

At the other end of the scale, some huge contracts are in the offing. In the new year, the ODA plans to start the procurement process for the construction of the Olympics Aquatics Centre. Within the coming week, London & Continental Railways is expected to pick a development partner to help build the Olympic Village, from a short-list of two — Bouygues in a consortium with Barratt; and a team led by Lend Lease and including East Thames Group and First Base.

Stitching together the land for the 500-acre site has been an olympian task in itself, involving the acquisition of more than 2,000 different plots. The London Development Agency, which has been charged with the job, claims it has secured 93% of the necessary land and that agreements have been struck with 59% of the firms within the Olympic park.

Landowners with holdings around the Olympic site are expected to benefit from soaring values. One property expert said that on average land values had risen from £1.25m an acre to £4m an acre.

Aitch Group is just one of the housebuilders expected to benefit from the Olympic effect. It has started construction on a 22-storey residential tower bordering Stratford High Street, within walking distance of the Olympic site. The building is due to be completed in 2008.

Bellway, the Newcastle-based housebuilder, is close to securing planning permission for 10,500 homes in Barking in a joint venture with English Partnerships, the government regeneration agency. John Watson, chief executive of Bellway, is sceptical the Olympics will boost prices. He argues that a shortage of construction workers may even drive up costs for the scheme. “The idea that Olympics equals benefit is too simplistic,” he said.

Security companies are expected to reap huge sums from the project. Originally, the cost of security was put at about £200m. Now a figure of £660m is being floated, and London mayor Ken Livingstone has suggested the total could even reach £850m. In part, the security budget has been inflated by the London bombings last year — just a day after the announcement in Singapore that Britain had been chosen to host the 2012 event.

Security is already big business. Members of the British Security Industry Association — reckoned to cover 70% of the sector — had turnover of £4.3 billion last year. Almost half of this was accounted for by security guards and security systems.

Alex Carmichael at the association, said: “The Olympics will be huge, and it is going to take more than one company to provide all the requirements.”

Besides security guards, there will be a need for electronic surveillance and for physical protection of the Olympic sites — not just in London, but also at venues around the country. “And remember, it won’t just be for the duration of the games,” said Carmichael. There will have to be security while the facilities are being built and that will have to continue until they are handed over to some other user well after the games have finished.

Carmichael added: “The problem at the moment is that so many figures are being bounced around. But we don’t really yet know what will be required. But it will be a showcase event. An event like this happens only once in a blue moon.”

THE key figure in allocating the Olympics money is Morag Stuart, 31, head of procurement for the ODA. She graduated from Cardiff university with a degree in business administration, then joined British Aerospace — later BAE Systems — and set up a supply chain for howitzers.

She has emphasised that contracts have not already been sewn up. “Let me reassure every business out there that is interested in being part of London 2012 that it is simply not the case that lots of work has been placed, or that they have ‘missed the boat’,” she said.

Broadly speaking, the ODA is in charge of making sure the infrastructure is in place. The London Organising Committee, meanwhile, will be in charge of handing over £2 billion of contracts nearer the time — for catering, medical services, merchandising, marketing, sports equipment, torch relay, temporary seating and facilities, staff uniforms, IT and seating. It estimates it will need to source 299 gold medals, 3,000 table-tennis balls, 11,500 shuttlecocks, 30,000 beds, 75,000 litres of milk and 200,000 chairs.

The ODA and the organising committee have to tread a fine line. On the one hand, they want to highlight the work on offer to businesses. On the other, they have to try to reassure that costs are under control. A report published last week in Building magazine, the trade journal, said sources within CLM were suggesting the total bill could be as high as £12 billion. But David Higgins, chief executive of the ODA, said that figure was “total rubbish”.

Higgins insisted the cost of the project was not spiralling out of control. “There is no such thing as a spiralling rise in the cost of the project,” he said. “Provided we get a realistic budget we are confident we can deliver the Olympics on cost and on time.”

He also insisted there was “no way” that the Olympic procurement team would seek to employ foreign companies just to cut costs. “There will be a significant supply of work both from us and Locog.”

But the cost of staging the event has already become a hugely controversial issue. Neither the Department for Culture Media and Sport, ODA nor Locog are able to give clear-cut answers to questions about the likely final bill. Tessa Jowell, the culture secretary, told a parliamentary select committee last week that the cost of the Olympic park in east London was expected to rise from the £2.4 billion quoted in the original bid to £3.3 billion.

She cited increased security costs and a doubling of steel prices plus inflation in the construction industry. The Construction Products Association has challenged her comments on steel. Michael Ankers, chief executive, said that since the original Olympic bid was submitted, steel prices have actually fallen by about 8%.

And when might British taxpayers learn details of the new, revised budget? Not until next year. And how many believe that will be the end of the story? Very few.

OLYMPICS BUSINESS WINNERS

SEVERAL big companies are likely to benefit from the £4 billion Olympic bonanza. Their contracts will fall roughly into two areas.

SECURITY

Security is a sector in which small, local companies can pick up work by providing guards. But the big contracts, particularly for security hardware at the main Olympic site are likely to go to the industry’s big players. The final security bill for the Olympics is expected to be three to four times the £200m that was originally mooted.

The largest players expected to benefit from Olympic work include: ADT Fire and Security (alarms); Group 4 Securicor (security guarding); Chubb Security Personnel (security guarding); Honeywell (manufacturer of electronic security products); Bewator (access control products); Dedicated Micros/Remguard (CCTV).

CONSTRUCTION

CLM, a consortium comprising Laing O’Rourke, Mace and CH2M Hill International is the Olympic Delivery Authority’s key partner.

A consortium comprising EDAW, Arup and Atkins has been appointed master-planner for the Olympic site.

Sir Robert McAlpine has been appointed to build the Olympic Stadium.

Balfour Beatty, Skanska, Kier and Costain are expected to bid for other Olympic contracts.

Two consortiums — Bouygues, in partnership with Barratt; and a Lend Lease-led team including East Thames Group and First Base — have been short-listed to build the Olympic Village, which will house 17,000 athletes and will later be turned into 4,850 homes. A formal appointment is expected this week.

Westfield, the Australian shopping-centre giant, is building 4m sq ft of shopping and leisure facilities.

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