Sochi 2014 - a closer look at the Winter Olympics

Sochi 2014 Winter Olympics

Olympics, World Cups, and other large scale projects qualify as mega projects. These projects are huge in scope, have large budgets, and sometimes very complex requirements. They typically impact not only the local community, but have an international reach - as anybody close to a TV or radio over the next couple of days will tell you.

Its that time again - at time of writing this blog, the Sochi Olympics are in full swing. The 22nd Winter Olympics are scheduled to take place from 7 to 23 February 2014, in Sochi, Russia, with some events held in the resort settlement of Krasnaya Polyana.

For the fans, here is a link to their official website.

The Sochi 2014 Winter Olympics has not really been the media darling in the last couple of months. Quite far from it actually. Sochi has recently been in the news for all the wrong reasons - really not what you expect from an Olympic Games.

• Firstly it has been slated and tarred for perceived, and actual legislated discrimination. This topic was the cause of quite a lot of public debate and negative feedback. But this is an article about mega projects, so that part of the discussion will have to wait for another day. 

• Secondly, the press has been abuzz with news that the facilities will not be complete. This picture of surprisingly social toilet facilities went around the world on Twitter. The Olympics are known for breaking down borders (literally) - maybe they intended to create new opportunities for bi-lateral discussion ? 

• Humour aside, in the weeks and days prior to the event, specifically the Western press has been particularly negative about the extent of preparations. They have been grilling Sochi 24/7, as can be seen from the following rather non-flattering selection of articles:
• Sochi's olympic village is half built and full of trash
• Sochi Olympics Off to Rough Start Before They Even Begin
• Some Sochi hotels not ready for Olympics
• 15 signs that Russia is not very ready for the Olympics

Originally 1 more pic included but it turned out to be a fake, so I removed it

• This type of negative commentary is sadly quite normal, as the hosting country and host city or cities are put under a microscope in full public view with a spot light like never before. And, journalists are out in full force to create stories - that's their job. 
• Yes, it does happen that not everything might not be 100% finished. It might even be that due to shortage in resources, the project teams had to prioritize and decided to rather install the curtain rail in a hotel room before installing the man-hole cover on the pavement. I am not saying that that is the way it should be, but give credit where it is due.  
• Even the smallest item gets blown out of perspective and becomes an international media feeding frenzy. Everybody seems to find sadistic joy (schadenfreude) in downplaying the hosts' ability to successfully deliver the event. 

• When comparing against other events, the state of preparedness is not necessarily far off.  
• For the Greece Athens Olympics in 2004,  there was huge public hysteria, wet paint and work done up to the day of the event. About 3 years after being awarded, the IOC had to reprimand Greece for the lack of progress and they had to call in international assistance. To catch up and save money they e.g. abandoned the construction of the roof over the Olympic swimming pool, cancelled landscaping of certain public areas
• Even in Germany, the pinnacle of efficiency, there were challenges during the 2006 World Cup, with the Organizing Committee only getting access to their offices in the main stadium in as little as days or hours before the opening event. 
• South Africa risked a so-called "Plan B" in the event of not being ready for the 2010 FIFA World Cup, but still managed to complete stadium and other preparations months in advance.

So yes, it is possible to run slightly late or re-prioritize certain parts of the infrastructure planning. Normally the event is an enormous success regardless.

The problem is not with either of the above issues, but rather clearly with the following:

• Thirdly, and most importantly - cost. "According to an analysis by Bent Flyvbjerg, chair of major project management at the University of Oxford, and his colleague Allison Stewart, all Olympic games since 1960 have had a cost overrun. On average, they cost nearly three times the initial budget. " - read Akshat Rathi's full article here
• So what happened in Sochi? Well they decided to use a resort town that did not have sufficient or appropriate type of facilities to host the Winter Olympics. Fortunately this is a winter Olympics and not the summer event, so it only has to host about one third of the number of events. This might be where you can expect a saving, right ?
• Surprisingly not so. Despite having to host a smaller number of events, on average, then, each Winter Olympic event will cost +- $520m. Bargain. But wait, there is more .... 
• The Sochi Olympics originally proposed a budget of around $12 billion during the bidding stage. This has since mushroomed to an eye-watering $ 50 billion - making Sochi the most expensive Olympic event ever. MOST EXPENSIVE EVER...

Source: http://qz.com/172180/the-sochi-olympics-are-going-to-cost-more-than-the-last-13-olympics-combined/

• Based on an analysis completed by Dutch media, Sochi is more expensive than all previous Winter Olympics combined 

• No detail breakdown of expenses has been made publicly available to date, and I doubt that it it will. So it is not clear what type of expenses have been included and or excluded from this total cost of $ 50 billion. What is known is that Stochi required quite a bit of work in the line of new venue infrastructure, hotels, and similar to be ready for the various events. 

Graphic courtesy of CNN

• If we were however to have a look at the following infographic (courtesy of National Post), a whole new picture starts emerging:

• The Sochi Games are also home to one of the most expensive road and railroad combos in the word at $ 9 billion ($ 8.7 to be more precise) for about 31 miles to connect the various towns - read the story on The Economist.
• This road / rail project is more expensive than the total cost for preparations for the last Winter Olympics in Vancouver in 2010.
• Times article
• This ABC investigative story paints a sad picture. 
• CNBC believes it is money well spent?
• The Guardian had this to say
• Pres Putin will have his hands full - as the negative press may very well drown out the good news from Sochi

Closing thoughts

As I have said above, some of the bad press is due to journalists doing their jobs perhaps a bit too well. However, the flip side is that most people would be fired for blowing a budget by more than $ 10, or 20, or 30 billion ...

Direct comparison is always difficult. Montreal paid off their Olympic stadium only in 2006, 30 years later. Wonder how long the Russian people will have to pay tax to pay this off? 

I have no doubt that the Sochi Olympics will be a tremendous success and wish them all the luck. For anybody who has ever been involved in something like this, it takes a tremendous lot of planning and intensely hard work to make an event of this size work.  And even more effort to make it a success. I therefore wish to congratulate everybody that put their hearts and souls into planning and operations of the event, as well as those athletes who reached this level where they compete internationally - I take my hat off to you.

But maybe we need to reconsider what the modern Olympics symbolize in terms of human endeavor - after all, the Olympic motto is Citius—Altius—Fortius, which is Latin for "faster, higher, stronger."

It is not supposed to be a competition where construction companies and politicians compete for gold.

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