Why some Olympic Games have incurred in massive budget overruns?

Eduard -

I'd suggest that these comparisons are between what was originally forecast when high level planning first began and the final bill. As we know, with a large, long duration, complex program like the Olympics, rolling wave planning is required which means things like overall cost are likely to be quite different from the initial ROMs.

We also need to think of changes in material and labor costs over the planning and execution time horizon.

For example, with COVID-19 supply chain issues, costs of most building materials have tripled in the past couple of years...

Kiron

First one has to understand that the initial budget numbers are for a different audience and may not reflect reality. The tax payers would probably not support realistic budgets so there is a significant amount of budget suppression when the games are announced. Every time an Olympic award is announced with attached budget we all know (except apparently the experts that put the budget together) that it's fiction. Budget accuracy is not of initial concern, getting the games is the only consideration.

Then we get into scope management (or lack thereof) due to politics of the day combined with price escalation driven by corporate greed. After that comes the "sunken cost" issue (can't stop now) and finally the appeal to national pride - "forget the cost, get it done".

Hi Kiron,

thanks for your message. Indeed, circa 10 years separate the election day and the actual start of the Games. Several things with an impact on the project financials can happen along the way.

However, I still struggle to understand how the deviation can be so large in some cases. If one breaks down the costing, "x" for a new Olympic stadium, "y" for the Olympic village, "z" for upadting or creating new infrastructures, etc. Quite simple.

Builders placing lower bids to get the job can explain this phenomenon, but with such a long track of Olympic Games throughout modern history, I would imagine that governments of involved countries would be more cautious and reluctant to believe certain inputs.

Dear Eduard,
First, we should not evaluate just a fixed budget. Instead, the range of budget relative to the level of development of engineering and architecture at the moment of estimation. Usually, projects of architecture and engineering experiment many changes during its performance. In the first stage of the project, the design is not well defined, being just a pre-architecture and partial engineering. The architecture of a project can provide broader ranges of estimation driven by the technology, automated infrastructures and finishes.
There are other factors related to inflation and rate exchanges depending on the stable economy of the country.
Also, in some way, an Olympic Games infrastructure project has much political influence because it would identify the strength of the country and its development in terms of engineering and construction companies. Thus, in the beginning, pre-architecture and budget are driven by objectives of country budget and capabilities, but along the project execution, scope modifications in architecture and technology will lead to changes to show majesty and pride.