The British construction industry must "embrace change" in order to meet all targets set for it by the demands of staging the Olympics in London in 2012, according to a leading figure in the industry.

With the building work in the Lower Lea Valley described as the biggest reconstruction project in London since Sir Christopher Wren was tasked with re-building the City after the Great Fire, it is a challenge which many have already doubted whether the construction industry in Britain can handle, not least because of a severe shortage in the workforce in specialist skills such as bricklayers, plumbers and electricians.

"It is one of Britain’s biggest industries, contributing 10 per cent to the UK’s GDP and employing over two million people, but construction lags behind other sectors when it comes to embracing change," Matt Nichols, the business development director at Wolseley UK, warns in this week's edition of Accountancy Age.

"The industry is something of an ‘underachiever’ when it comes to delivering projects on time and within budget," Mr Nichols wrote. "At a time when London is preparing for the 2012 Olympics, the message is clear: a shake-up of the construction industry is long overdue."

The warning for the industry came on the day that the Department of Culture, Media and Sport announced that Jack Lemley would be the £300,000 per year, part-time chairman of the Olympic Delivery Authority, the body charged with overseeing the £2.4 billion construction of the infrastructure for the Games.

Mr Lemley is a 70-year-old American engineer who previously worked as the CEO at TransmancheLink, the company which built and equipped the Channel Tunnel. Most recently, Mr Lemley had been working on an investigation of the shortcomings of the Big Dig, a massive, ten-year project to renew the freeways into Boston. Mr Lemley discovered a $1 billion overspend on that project, but resigned from the job earlier this year when unable to pursue the case as thoroughly as he would have liked.

In London, the DCMS today appointed KPMG as cost consultants for the Olympic Games, while dismissing weekend newspaper reports that the project is already in financial trouble, due to high inflation in the construction sector.

A spokesperson from KPMG said that the firm had been appointed only recently and would not be making any imminent announcements. They added: "To maintain a focus on costs is just good practice."

Mr Nichols' concerns over the construction of the Olympic Park, Village and major venues, such as the 80,000-seater Olympic Stadium, expressed the fears of many. "Hampered by inefficiency and outdated practices, one of the toughest challenges facing the [construction] sector is eliminating project delays and cost overruns," he wrote.

With the Games project likely to boost the UK's economy by at least £2 billion over the next 15 years, and regeneration work valued at £8.3 billion estimated to be available to the construction industry, Olympic gold could take many forms at a successful Games for Britain.

But Mr Nichols believes that competitive tendering will shave margins for contractors so tightly that builders involved in the Olympic project may not make significant profits. He points at the building of Wembley on the other side of north London, and the projected £20 million losses which Australian builders Multiplex already stand to make, after having underbid their rivals for the job in the first place.

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