Consultant demands extra cash for additional work as government decides whether to bid for 2012 games.
Consultant Arup is in talks with the government over whether it should be paid a fee for research it is to undertake into the cost of staging the 2012 Olympic Games in east London.

Arup completed a 拢200,000 cost-benefit analysis into a bid last year. This concluded that staging the Olympics would cost up to 拢3.6bn, a conclusion that clashed with separate government figures suggested the figure could be 拢5.4bn.

The government has now asked Arup to come up with a figure that both parties can agree on. This is needed for a Cabinet meeting at the end of February, at which a decision on whether to make a bid to stage the Olympics will be taken.

Sources close to Arup said this constituted additional work. One said: "A fee is up for discussion. We're doing some extra work and we're talking to civil servants about that."

The discrepancy between government figures and those of Arup is largely attributable to methodology. Arup's study is based on the 2002 economy, the government's on that of 2012.

Arup estimated that the games would cost 拢3.6bn; the government came up with 拢5.4bn

Arup was forced to defend its estimates to a parliamentary select committee this week. Responding to MP Chris Bryant's accusations that Arup's figures were "fag-packety", project director, Mark Bostock said: "We may have missed some costs, but the principle remains very clear."

Arup recommended that a bid for the 2012 Olympics should be undertaken through a public鈥損rivate partnership. Bostock stressed that without an understanding between the Greater London Authority, the British Olympic Association and the government, any bid would fail.

Labour MPs on the select committee are known to be dubious about the bid because of the embarrassment to the government if London missed out. An announcement would be made in 2005 鈥� the most likely year for a general election.

In a separate deal, the LDA is believed to have paid Arup between 拢20,000 and 拢30,000 for research it has done into what would be entailed by staging the games in east London. Arup is already producing a report for developer Chelsfield, which is undertaking a 68.8 ha redevelopment in Stratford, in east London 鈥� the area earmarked for an Olympic stadium.