Oxford researchers have indicated that the London Olympic Games are set to be the most expensive of all time, with the current projected cost standing at £8.4 billion.
The working paper carried out by researchers from Oxford’s Saïd Business School also found that the budget overrun of London 2012, currently predicted to be 101%, is ‘significantly more’ than the average for the past decade.
Although the average overrun for 1968-2000 stood at 258%, the Games in the last 10 years have seen this average reduced to 47%.
When asked why London 2012’s expenditure is greater than other recent Olympics, researcher Allison Stewart expressed uncertainty, telling Cherwell, “With the data we have, we don’t have enough to speculate on why London 2012 is experiencing significantly higher cost overruns than Games of the last decade. By all accounts, London has been very well managed.
“However, they increased their budget to almost the current expected cost only two years after winning the Games, which suggests that the bid budget was simply unrealistic and unachievable.”
Despite this, lead researcher Professor Bent Flyvbjerg stressed that the difficulties in budgeting Olympics were shared by all host nations, commenting, “Unlike other major programmes such as bridges, airports, IT or engineering works, the Games are always a unique undertaking to that city. Of the thousands of people engaged to work on the programme, few of them will ever have been on a Games committee in the past.
“This means that they are highly reliant on the information from the International Olympic Committee (IOC) and the other host cities around the world. Whilst a significant amount of information is transferred, there is inevitably a gap in experience that means that the Games are always starting from scratch in certain areas.”
Researchers are confident, however, that the overrun will not significantly affect the quality of the Games, with Stewart commenting, “By all accounts, the London Games are on schedule, and given the early acknowledgement of the budget overrun, we do not believe that it is likely to affect the execution of the Games.”
She is also confident that the Games will not have a significant long-term impact on the economy, saying, “Fortunately, Britain has a large economy, so is relatively well placed to absorb this overrun. However, it will be important to recoup the planned legacy for the Games, for example in securing a tenant for the Olympic Stadium, to ensure that the costs do not increase through ongoing maintenance fees.”
The research is the first to document, in a consistent fashion, the costs and cost overruns for the Olympic Games from 1960 to 2012. The findings are based on a quantitative analysis of budget data from every summer and winter Olympic Games from 1960 to 2012.
