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Does anyone know why it would cost more than 5 times more than the original budget? And how did they manage to reallocate that much resources? This being the 3

by pestaa 14y ago

Does anyone know why it would cost more than 5 times more than the original budget? And how did they manage to reallocate that much resources? This being the 3rd Olympic event in London, I'm surprised the estimate was that much off.

gaius 14y ago
The first, a combination of incompetence (e.g. forgetting they'd have to pay VAT) and corruption. The latter: by getting into debt, that now necessitates cuts to the very things being celebrated, e.g. the NHS. We spend more on interest on government debt in the UK than we do on defence.
hazov 14y ago
Maybe it has something to do with cost overrun that professor Bent Flyvbjerg researches. Basically he says that budget estimations are prone to a cognitive fallacy by those with planning powers. EDIT: added "estimations"
simonw 14y ago
Last time London hosted the Olympics was post-war 1948, on a budget of less than a million pounds (I'm not sure if that figure is adjusted for modern currency or not, but either way it's not much money) - they didn't even build any new buildings for it.
yummyfajitas 14y ago
Most big projects of this nature come in over budget. The reason is the incentives of the politicians coming up with budget estimates. If they come up with a realistic (high) estimate, the project doesn't get done. That's a political loss - their cronies don't get paid, and they don't get to put their name on a big project. If they come up with an unrealistically low estimate, their cronies get paid and they rarely get voted out of office.
excuse-me 14y ago
It wasn't - the actual construction was under budget. The problem is that "the budget" figures that get quoted are mostly pulled out of the air. When a politician at the bid stage wants to make it sound affordable they use a number that is just the spent cost of running the event. When they want to make it look like there has been a great investment - they use the figure which includes all the new transport links and all the development grants to the region. There are also budget numbers that aren't spent. So the cost went up by a $Bn when the government decided that it had to charge 20% VAT (federal sales tax) on everything - but of course that goes straight back to the government. Then there is the $Bn security costs - but it's not like they weren't going to pay for having an army for that two weeks anyway

by pestaa 14y ago

gaius 14y ago

The first, a combination of incompetence (e.g. forgetting they'd have to pay VAT) and corruption. The latter: by getting into debt, that now necessitates cuts to the very things being celebrated, e.g. the NHS. We spend more on interest on government debt in the UK than we do on defence.

hazov 14y ago

Maybe it has something to do with cost overrun that professor Bent Flyvbjerg researches. Basically he says that budget estimations are prone to a cognitive fallacy by those with planning powers. EDIT: added "estimations"

simonw 14y ago

Last time London hosted the Olympics was post-war 1948, on a budget of less than a million pounds (I'm not sure if that figure is adjusted for modern currency or not, but either way it's not much money) - they didn't even build any new buildings for it.

yummyfajitas 14y ago

Most big projects of this nature come in over budget. The reason is the incentives of the politicians coming up with budget estimates. If they come up with a realistic (high) estimate, the project doesn't get done. That's a political loss - their cronies don't get paid, and they don't get to put their name on a big project. If they come up with an unrealistically low estimate, their cronies get paid and they rarely get voted out of office.

excuse-me 14y ago

It wasn't - the actual construction was under budget. The problem is that "the budget" figures that get quoted are mostly pulled out of the air. When a politician at the bid stage wants to make it sound affordable they use a number that is just the spent cost of running the event. When they want to make it look like there has been a great investment - they use the figure which includes all the new transport links and all the development grants to the region. There are also budget numbers that aren't spent. So the cost went up by a $Bn when the government decided that it had to charge 20% VAT (federal sales tax) on everything - but of course that goes straight back to the government. Then there is the $Bn security costs - but it's not like they weren't going to pay for having an army for that two weeks anyway