Vancouver 2010 Olympic organizers said Friday in their latest quarterly report that operating expenses are climbing as venue-construction costs decline.

The organizing committee, known as VANOC, is also reporting a boost in its cash balance for the three months ending Jan. 31, which rose by more than $16 million from the end of October.

"Financially, we're in a positive position with a cash balance of $56.5 million and a sound contingency on the capital construction side,'' chief financial officer John McLaughlin said in a news release.

"These factors will help us as we meet the inevitable challenges that all organizing committees face in the final two years.''

Most of VANOC's operational spending in the last quarter has been in areas such as sport and technology and were in line with business-plan projections, he said.

"While we're pleased with the progress to date, we also know that many tests lie ahead, as is expected in the normal course of staging the Games,'' added VANOC chief executive officer John Furlong.

VANOC's deferred operating expenses in the second quarter jumped to $43.1 million, compared with $25.7 million for the period ending Oct. 31, when unrealized foreign-exchange gains or loses were removed.

The increase was tied to higher across-the-board spending as VANOC moves from the planning to the operational phase.

Net deferred operating revenues in the last quarter also grew to $43.1 million, well up from $6.7 million in the previous quarter thanks largely to more sponsorship money.

All operating revenues and expenses are deferred prior to Games time in accordance to Canada's generally accepted accounting principles.

VANOC said it has now entered into domestic sponsorship agreements worth about $709 million, more than 90 per cent of its overall target of $760 million.

VANOC's total venue-development expenditures for the quarter were $38.4 million, compared with $63.3 million in the previous quarter and now total $466.3 million.

Its venue development central contingency remains adequate to protect against the remaining $125.5 million in the venue construction budget, the financial report said.

VANOC's workforce continues to increase as it added 87 new people in the second quarter to bring total full-time staff to 590.