Olympic cost overruns plague all host cities: Oxford University study

Coun. Evan Woolley, chair of Calgary's Olympic Games Assessment Committee said a plebiscite no vote would immediately end city's bid

The Vancouver 2010 Olympics had cost overruns of 13 per cent according to a study by professors at the Oxford University Saïd Business School.

Cost overruns aren’t just common with Olympic games – they’re a hard and fast rule according to the authors of an extensive study on the subject.

Dr. Allison Stewart, a former associate fellow at Oxford University’s Saïd Business School, was co-author on two papers that compared the projected and final costs of modern Olympic games – both summer and winter – starting in 1960 and extending to 2016.

The original 2012 paper, and a 2016 update that looked more closely at the London 2012 numbers, both found that on average, Winter Olympics since 1960 have had a cost overrun of 142 per cent.

For some reason the Olympics are a very risky type of project,” she said. “It doesn’t mean it can’t be done well. It means that you have to be very careful and watch everything very closely.”

The study looked at the numbers cited in each city’s bid book, and then compared it to final analysis of costs after the games had been held.

The paper noted that the bid book is a legally binding document with both a budget of projected costs and a guarantee to ensure financing of major capital cost infrastructure.

Calgary’s on track to prepare and submit its bid book by January 11, 2019 if it chooses to go ahead with a bid.

According to Stewart and her co-authors, cities rarely use bid-book numbers when measuring cost overruns at the end of the games.

“New budgets are developed after the bid has been awarded to the city, which are often substantially different to those presented at the bidding stages,” reads the study.

Stewart’s study dug up those bid books and carefully researched the final costs.

Some cities – Vancouver for instance – had smaller cost overruns. In Vancouver’s case, it was 13 per cent. Sochi 2014 by comparison had a 289 per cent cost overrun.

Montreal’s 1976 summer games took the top spot with cost overruns calculated at 720 per cent.

The 2012 paper had a warning to cities and countries thinking about a bid.

“The data thus show that for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky type of mega-project that exists, something that many cities and nations have learned to their peril.”

RESPONSE

Coun. Evan Woolley, who is chair of the city’s 2026 Olympic Games Assessment Committee, said he’s aware of Stewart’s papers, but he notes there are finer points to drill down on.

“On the operating costs of Olympics – there’s rarely overruns,” he said. “We’ve seen overruns happen in places like Sochi where there were very poor project controls, and very poor operating controls on it.”

Operating costs are often calculated separately from infrastructure costs, but Stewart’s papers looked at total costs.

“The Vancouver Olympics did not go over budget, and Calgary (in 1988) made a profit – and those are the two closely associated Olympics in terms of their project management,” said Woolley.

Stewart said Calgary’s plan to reuse many of its venues from 1988 is a great idea, but it won’t mean a free ride for the city either.

“They wouldn’t be the first city to propose that theory and then to find that the challenge is that each sport has specific requirements for what the field needs to look like, how many spectators, etc,” said Stewart.

She pointed to Rio as an example of a city that attempted to reuse venues from the 2007 Pan-American Games, and still experienced a cost overrun of 51 per cent.

Even with the Agenda 2020 plan from the IOC, which now encourages reusing of venues and allows for temporary venues, Stewart cautions that the waters are still untested.

“I’m certainly encouraged by those developments but we haven’t seen the outcome of them yet.”

ENGAGEMENT

Calgary announced Tuesday that it will be rolling out its engagement process to provide Calgarians with information and numbers they will need to make an informed vote in the Nov. 13 plebiscite.

In addition to six open houses and several pop-up engagement sessions, the city is inviting Calgarians to visit calgary.ca/2026Games to educate themselves on benefits, costs and risks of hosting the games.

Woolley said even if Calgarians give the green light in the November plebiscite, there are still potential deal breakers that could cause Calgary to drop out of the race.

“This is really complex project and there are a ton of risks with undertaking a project of this scale and magnitude,” he said.

He said the question he’s asking his team is whether or not the city has the capacity and skills to undertake a project with high risks but also the potential of great benefit.

He also said that a no vote in the plebiscite would immediately end the city’s work on preparing a bid.

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