Olympic budgets – 

“the bigger the headache,  the bigger the pill

Megaprojects and Olympic budgets, have a lot in common: they both come with dubious ethical connotations. Recent sport megaprojects – Sochi, South Africa, and the World Cup stadiums in Brazil, now have been assailed as being politically biased, financially irresponsible, and unethical. Worse, enduring pay-to-play criteria makes competition a sordid, gutter business that is entirely self-interested, and is antithetical to the spirit of the games – that they are equally accessible to all, and that whole communities should not be uprooted to accommodate them.

The Rio Stadium displaced 19,000 living in favelas[i]. People in Sochi and Soweto were also given the bum-rush, so to make way for those mega-parks. For a short term, these are egregious evictions, but barely approach the 250,000 that were displaced by Robert Moses’ notorious New York highway masterplan[ii]: the one with expressway overpasses too low for buses to clear in order to reach the suburbs and beaches. Thankfully, no single official will ever have as much power of governance in infrastructural planning as Moses did.

Ehrenfeucht points out the tendency of megaprojects to be unethical – like those Robert Moses planned and presided over. He suggests we have more checks and balance in the planning process, i.e., more effective enforcement:

Megaprojects offer a wonderful opportunity to study planners’ ethics and what elsewhere I have called the dark side of planning. Our studies show that in many projects planners do not live up to their codes of ethics. Some of the checks and balances we already talked about would help remedy this situation. But there is also the question of professional ethics in relation to our professional organizations, and to what extent these organizations take their codes of ethics seriously by actually enforcing them (Ehrenfeucht, 2004)

Again, why have rules if you don’t plan on enforcing them? Olympic and World Cup megaprojects are political by nature. It has recently been made ‘public’[iii] that the IOC has been conducting business under pay-to-play[iv] guidelines at least since 1991.[v] Olympic mega-parks are generally characterized as being too expensive, overbuilt, and frequently poor candidates for repurposing as a revenue generating asset. Planners don’t seem distracted with details, such as upgrading local infrastructure unless – it is in service to the park. In fact, Olympic parks can create more work in dismantling and cleanup, than they can offset with any operating revenue. They may be upcycled into skateboard parks, or just left to oxidize.

Megaprojects are expected to make sense economically. The overbuilding of football stadiums in Brazil and South Africa was criticized as being wrong-headed, given the >20% poverty rates in those countries. The return of investment for hosting countries is typically a poor one.[vi] Flyvberg (and Stewart) find that Olympic Games appear to be the most cost-volatile of all megaprojects.

All Games have experienced Olympic budgets that were far eclipsed: the 1976 Games the hands-down loser. While it is not unusual for observers to suggest that this is ‘obvious’, it is worth considering this point carefully.

Olympic budgets are  typically established as the maximum – or, alternatively, the expected – value to be spent on a project. However, in the Games Olympic budgets are more like a fictitious minimum that is consistently overspent. Further, even more than in other megaprojects, each budget is established with a legal requirement for the host city and country government to guarantee that they will cover the cost overruns of the Games.

These data suggest that this guarantee is akin to writing a blank cheque for a purchase, with the certainty that the cost will be more than what has been quoted. With an average cost overrun of 179 per cent in real terms, the extent of Olympic budgets overruns in the Games appears to be substantially higher than in other types of megaprojects (Flyvbjerg, 2012)

Although the Sochi Olympic budget had a price tag at one time of $12B,[vii] that sum escalated to a staggering $51B, Russia nonetheless asserts the park will end up some $300M in the black. After the games, part of the venue was repurposed for the Russian Grand Prix. It must be said that the expectation of obtaining an honest accounting of the cost of those – or for that matter – any games, is highly unlikely, given the likelihood of strategic misrepresentation.

Olympic Budgets reward failure

Flyvberg finds that megaprojects are – by their very nature – political and wasteful. He said of the Iraq War megaproject-that-should-not-have-been:

Moreover, as with other megaprojects, there are groups who stand to benefit no matter what the outcome is—those companies, like Halliburton, which have been in a position to secure contracts, and the consultants who helped them prepare the bids. Huge profits are being made and these groups may laugh all the way along their well-trodden path to the bank. Even at this level of mundane detail, the reconstruction of Iraq follows the pattern found in other megaprojects.

Flyvberg is characteristically pessimistic of megaproject ethics, which he believes lacks accountability over long-haul megaprojects, and publicizes spin to obfuscate its ineptitude:

“Strategic misrepresentation” is the Orwellian euphemism planners and planning researchers like to use for deception and lying. This is not cognitive bias; it is calculated. So you also have politicians and planners involved in strategically misrepresenting projects in order to get the go-ahead to build them (Ehrenfeucht, 2004)

Environmental catastrophes – such as the Love Canal[viii], and the recent poisoning and subsequent cover up of Flint, Michigan’s lead-laden drinking water[ix], are two examples of failed strategic misrepresentation. The gross mishandling of the Deepwater Horizon permitting, and subsequent spill response, is typical of response-management ineptitude that is summoned by government officials and their minions. But then these are only some of the worst disasters in the US, and do not address international disasters, though the phenomenon manifests according to the respective governments.

The fast and incessant pace of public and news events going viral in our attention-challenged world has the downside of historical impermanence. Because news travels at such a rapid pace in social media, we process it and forget about it with remarkable expedience: many are more likely to remember who won the baseball World Series in 2012, than the Exxon Valdez[x] spill, and that is how Exxon would prefer it. Many now argue that responses to environmental mega-disasters are contingent on the wealth of affected communities, even conspiracy accusations and cries of environmental racism, as they did post-Katrina.

In the first, it would seem ludicrous to nominate any modern day megaproject as a candidate to excel in the manner of execution, because megaprojects involve so much administration and red-tape, they may lurch forward with what can only be thought of as inexorable sloth: the more information is sought, the more resistance there is to dispensing it; the smaller a problem is the more potential is has to grow; the buck stops nowhere. These are just a few of the counter-intuitive mantras that seem to dog any great enterprise.

What would the ancient Egyptians have thought?

[i] http://www.theguardian.com/world/2013/dec/05/world-cup-favelas-socially-cleansed-olympics

[ii]

[iii] It was originally alleged several years ago. By the time it came to light in the mainstream media, it was more or less common knowledge that a pay to play environment existed.

[iv] http://www.wired.com/2015/05/fifa-scandal-explained/

[v] http://www.justice.gov/opa/pr/nine-fifa-officials-and-five-corporate-executives-indicted-racketeering-conspiracy-and

[vi] Russian President Putin hast stated the games finished in the black

[vii] I might dispute the $12B Wikipedia cites, as Putin would have known the Chinese spent $44B in Beijing, and could not have been that clueless.

[viii] https://en.wikipedia.org/wiki/Love_Canal

[ix] https://www.epa.gov/flint/flint-drinking-water-documents

[x]