18 July 2012

Doing the numbers

The G4S Olympic contract amounted to £284 million, in return for which G4S would provide 10,400 security personnel.  Of this amount, £57 million was in the form of a "management fee".

Presumably therefore £227 million was earmarked for the supply of personnel (incidentally amounting to about £22,000 per employee).

G4S is now aiming at the provision of only 7,000 personnel, a 33% shortfall (although it cannot guarantee even this reduced provision).

Accordingly, and assuming that the contract is on a broadly pro rata basis, G4S remuneration faces a reduction of £75 million (33% of £227 million).  Its management fee of £57 million must also be in doubt, and then it also has to pay for the extra soldiers and police now to be committed to the Games.

It is therefore facing a loss on the contract of well over £100 million.  So why is the company talking of a loss of only £30 million to 50 million?

(Basic figures taken from this article.)

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