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The London Olympic Games are going to be the costliest ever according to Oxford University research released yesterday. The study says that the sports extravaganza is going to cost £8.4 billion ($13 billion) in real terms, provided there is no last minute splurge to meet deadlines.
The original bid for London had estimated the cost at £4.2 billion in 2005. So, there is a 101 percent cost over-run, says the study carried out by the BT Centre for major program management at Oxford's Said Business School.
Comparing the costs of 30 Summer and Winter Olympic Games since 1960, the study shows the eventual cost of the Olympic Games is always over budget, by 179% on average. However, the budget overrun of the London Olympics is 'significantly more' than the average budget overruns for Games during the past decade.
Actual costs exceeded budgets by 47% in the past three Games since 2000 according to the research, as compared to an average overrun of 258% before that (1968-2000). This could be because the more recent hosts have provided bid committees with better information and fuller final accounting than in the past.
Lead researcher Professor Bent Flyvbjerg says: 'While all major programs are prone to cost overruns, due largely both to optimism and conscious strategic misrepresentation, overruns of the Games are in a league of their own. When compared with typical overruns on other major programs, such as transport and IT programs, budget overruns for the Olympic Games are extreme, both for their size and frequency.
Costs factored into the calculations included security, transport, technology and ceremonies, and related construction costs for sports venues, athletes' villages, and press and media centers. The researchers conducted an extended search of all publicly available data on the costs for the Games: both the costs incurred by the Organizing Committee for the Olympic Games' and other direct costs incurred by public and private funders.
While London is well prepared, the organizing committee has very little contingency left to spend if there are any issues during the Games, Flyvbjerg said.
"Transportation, security, and broadcasting are three areas that could potentially require urgent financial attention if the organizers' projections are incorrect," he added.
The findings are based on a quantitative analysis of budget data from every summer and winter Olympic Games from 1960 to 2012. In total, the research analyses 30 Games to identify the pattern and trends of cost overruns in the Games over time. All cost data was adjusted for inflation and currency exchange rates.
London Olympics to be costliest ever - The Times of India
The original bid for London had estimated the cost at £4.2 billion in 2005. So, there is a 101 percent cost over-run, says the study carried out by the BT Centre for major program management at Oxford's Said Business School.
Comparing the costs of 30 Summer and Winter Olympic Games since 1960, the study shows the eventual cost of the Olympic Games is always over budget, by 179% on average. However, the budget overrun of the London Olympics is 'significantly more' than the average budget overruns for Games during the past decade.
Actual costs exceeded budgets by 47% in the past three Games since 2000 according to the research, as compared to an average overrun of 258% before that (1968-2000). This could be because the more recent hosts have provided bid committees with better information and fuller final accounting than in the past.
Lead researcher Professor Bent Flyvbjerg says: 'While all major programs are prone to cost overruns, due largely both to optimism and conscious strategic misrepresentation, overruns of the Games are in a league of their own. When compared with typical overruns on other major programs, such as transport and IT programs, budget overruns for the Olympic Games are extreme, both for their size and frequency.
Costs factored into the calculations included security, transport, technology and ceremonies, and related construction costs for sports venues, athletes' villages, and press and media centers. The researchers conducted an extended search of all publicly available data on the costs for the Games: both the costs incurred by the Organizing Committee for the Olympic Games' and other direct costs incurred by public and private funders.
While London is well prepared, the organizing committee has very little contingency left to spend if there are any issues during the Games, Flyvbjerg said.
"Transportation, security, and broadcasting are three areas that could potentially require urgent financial attention if the organizers' projections are incorrect," he added.
The findings are based on a quantitative analysis of budget data from every summer and winter Olympic Games from 1960 to 2012. In total, the research analyses 30 Games to identify the pattern and trends of cost overruns in the Games over time. All cost data was adjusted for inflation and currency exchange rates.
London Olympics to be costliest ever - The Times of India
