From the London Observer:

“The cost of staging the London Olympic Games in 2012 is set to double. Senior officials organising the Games say construction costs have been seriously underestimated by Tessa Jowell’s Department of Culture, Media and Sport. A rise in costs could spell financial disaster for Londoners. The Observer has learnt that the government has in recent days appointed consultancy KPMG to begin a reappraisal of its Olympic costs. These have surged because original projections allowed for inflation at 3 per cent, but inflation in the construction sector is now over 7 per cent, as the price of raw materials, particularly oil and steel, has soared.”

Well, there’s a surprise.