TOMORROW the London Development Agency is expected to reveal the short list of companies that could manage the mammoth construction project for the Olympics complex in east London.

The £1.7 billion programme of works will, in seven years, turn a derelict area in the Lea Valley, north of Stratford, into an Olympic showpiece that will include a new stadium, a village for athletes and a host of other sporting venues.

The great and good of the international construction, planning and consulting industries have thrown their hats in the ring. Amec, the British construction and services group, is a leading contender for the contract. Mace, Bovis Lend Lease and America’s Bechtel have also put their names forward.

The project-management contract will be worth millions of pounds in fees. Next year it will be passed from the London Development Agency to the new Olympic Delivery Authority, which will be set up by the Olympics legislation that is currently before parliament.

Insiders said the names on the shortlist would give some clue as to how the government viewed the Olympics, and whether its focus was narrowly on the event itself, or on the longer-term prospects it offered for the regeneration of east London and the wider capital.

The tension between the two goals is reflected in the fact that two government departments have been given a role in the project — Tessa Jowell’s Department for Culture, Media and Sport and the Office of the Deputy Prime Minister, run by John Prescott.

“The next few months are going to be critical,” said Mark Bostock, consulting director at Arup, and the co-author of the cost/benefit analysis report that swung the government behind the games three years ago. “The decisions taken now will affect the final shape of the games, and what the real priorities are in their planning and development.”

Bostock has a long-running interest in east London regeneration. He was a leading member of the Arup team that drew up the plans to take the high-speed rail link from the Channel tunnel to central London through Stratford rather than a direct route from the south.

The rail link turned out to be a trump card for the London bid. It was a centrepiece of the games’ transport plans, with an Olympic Javelin service that will take spectators from central London to Stratford in just seven minutes.

The 2002 cost-benefit analysis, details of which have never been made public before, examined a “specimen” Olympics project to be staged in London in 2012. It estimated the total costs at £1.8 billion, including £13m to bid, £779m to stage the event, and just £403m for construction and infrastructure provision.

The study also examined the legacy of previous Olympics, at Atlanta and Sydney. In the latter case, it found that although the games themselves — the cost of the staging and the extensive infrastructure programmes — were heavily in deficit, the associated benefits, in particular in tourism, which brought in an extra £2.5 billion in revenue, put them well into the black. In total, the Sydney games cost £2.2 billion, and generated income to Australia of £ 5.5 billion, the study concluded.

“Sydney generated a benefit-cost ratio of roughly two,” said Bostock. “The challenge for Britain is to move that figure up. I think with London 2012 we should be aiming for a ratio of three, and an even greater number once the wider, less tangible benefits are taken into account.”

If the London games cost £3 billion — now regarded as the most accurate estimate of the eventual cost — that multiple of returns would bring a boost of more than £9 billion to the British economy.

The study also notes in passing that there would have been serious difficulties in maintaining momentum for a London Olympics if the 2012 bid had failed. A delay until 2016 would have resulted in considerable planning blight in east London, with no other suitable site in the capital for staging a games that was readily identifiable.

The authors also warn that for the project to be successful the government needs to create not only a dedicated organising committee and delivery authority, but also an Olympic transport agency and an operational command unit in the Metropolitan Police.

“Without implementation agencies there can be no Olympic Games, and without effective agencies, national and London prestige is at risk,” they said. “If the management of the event falls short of what is expected, the memory will be sour rather than positive.”

The Olympics bill had its second reading in parliament on Tuesday, and will go to a special committee when the house returns after the summer recess. As well as creating the Olympic Delivery Authority — and giving it powers to co-ordinate transport for the games — the bill will introduce the regulations needed to meet the International Olympic Committee’s demands for the staging of the event.

The bill will outlaw ticket touting and restrict unapproved advertising and trading around venues.

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