Challenges of Olympic Proportions: An Analysis of Project Management

Techniques to Overcome Challenges of Mega Events

Adam Newton

Pennsylvania State University

Table of Contents

1.0 Background 3

2.0 Statement and Evidence of the Problem 4

3.0 Defining the Challenges of the Mega Event 7

3.1 Organizational Requirements 8

3.2 Monument Complex 10

3.3 Urban Renewal 13

3.4 Sustainability 15

3.5 Human Rights 17

4.0 Overcoming Challenges of the Mega Event 19

4.1 Assess 22

4.2 Allocate 25

4.3 Adapt 33

4.4 Aftermath 37

Bibliography 41

2

Background

Global mega events like the FIFA World Cup, the Olympic Games and the

World Expo have grown in popularity, size, scale and cost over the past few

decades thanks to the ever-increasing impact of globalization. These “urban

occasion[s] of multidimensional global significance” (Deng & Poon, 2013, p. 23)

provide countries across the world with opportunities to create a lasting

impression on audiences through the use of massive-scale spectacles that

require years of advanced planning to put necessary infrastructure, logistics and

support teams in place all while meeting stringent requirements for post-event

sustainability. Such planning addresses a combination of factors that lie internal

(e.g., event size, scope, timeline, etc.) and external (e.g., event visibility,

environmental impact, impact on tourism) to the core event itself (Gauthier,

2013).

While there are many large events, whose scale is by no means small,

few reach a magnitude to be considered “mega.” For the purpose of this paper

we will define a mega event based on the following criteria: multi-billion dollar

budgets, more than 5 years of planning, required infrastructure development and

has a multi-national impact (Flyvbjerg, 2014, p. 6). To further constrain this

analysis, we will only focus on the Olympic Games and the FIFA World Cup as

the prominent mega events to be studied as they provide the strongest examples

of the colossal effort and subsequent impact involved in the production of

modern-day global mega events. As Gauthier (2013, p. 60) states, the Olympic

Games “[are] not restricted to the athletic tournament, but also involves cities that

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fiercely compete to host ‘the greatest show on earth.’” For instance, the Olympics

and other mega events are seen as a catalyst for rejuvenating the host city or

country’s infrastructure, building patriotism among citizens and stimulating the

economy to support an influx of tourism, media and sponsorship in years to come

(Gauthier, 2013).

Statement and Evidence of the Problem

Mega events bring about many of the same political, social and economic

issues as mega projects, yet mega events also must deal with the unique

challenge of occurring on a global stage that will magnify failures just as much as

successes (Jennings & Lodge, 2011; Grabher & Theil, 2014). The high

expectations and subsequent risk of large-scale failure inherent to hosting mega

events is especially dangerous for localities with developing economies such as

the BRICS, Argentina and Qatar, all of which increasingly vie for the privilege of

hosting mega events since China secured the Summer Olympics in 2008 (Junior,

2014). It has begun to be argued that the best way to protect such fledgling hosts

from the potential negative side effects of their undertaking is to take a proactive

approach to understanding, identifying and diagnosing in advance the common

mega event challenges rather than waiting to treat the symptoms of failure once

they have already appeared by using traditional project management responses.

Looking at the history of the mega event, enormous (yet avoidable) cost

overruns are the most common failure. For example, initial cost estimates for the

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London Olympics placed the total cost at £1.8, yet the ‘final’ cost totaled £9.3

billion excluding items not considered to be within the official budget. (Jennings &

Lodge, 2011) Similarly, experts estimate that the 2014 Winter Olympics in Sochi,

Russia reached a record $51 billion in expenditures despite the fact that Winter

Olympic Games typically cost far less than their summer counterparts. This

overage is due at least in part to the notably absurd $7.8 billion spent to connect

two competition locations in Russia, which, as a point of reference, is more than

NASA spent to send the Curiosity rover to Mars. In fact, the costs for the road

were so astronomical that the Russian version of Esquire estimated that the

same road “could have been covered in an eight-inch layer of foie gras for the

same price” (Arnold & Foxall, 2014, p. 6).

That said, not all mega events are doomed and some, like the 1984

Olympics, even manage to produce multiple positive outcomes. Hosted in Los

Angeles, history can trace the 1984 Olympic Games with bringing about

significant economic, infrastructural and social revitalization within the city, a feat

that set the bar high for all Olympics that followed. Unfortunately, as Table 1

illustrates, replicating the success seen in 1984 has been next to impossible

thanks to, in part, the increased size, scale and cost of the Games that have

occurred since then (olympic.org).

5

Games Nations Athletes Sports Events1984 140 6797 23 2211988 159 8465 25 2371992 169 9367 28 2571996 197 10,320 26 2712000 199 10,651 28 3002004 201 10,625 28 3012008 205 10,942 28 3022012 204 10,568 26 302

Table 1 (olympic.org)

Initial research suggests that many mega events fail because of a skewed

cost-benefit analyses, a lack of “honest” numbers and a general lack of rigor in

the initial planning stages of mega events, which ultimately lead planning

committees to approve projects that have otherwise clear negative economic,

social and environmental consequences (Jennings & Lodge, 2011). Aspirational

mega event hosts often allow their optimism to override logic and, in the process,

underestimate or even overlook the major risks involved. For example, many

misguided hosts dangerously assume that investing in a mega event will

generate enough income to offset the upfront costs, but history proves otherwise.

Next, hopeful hosts commonly justify the massive and often unrecovered

costs involved in mega events by incorrectly pointing out that the infrastructure

developed for the event will benefit their community for years to come. In reality,

however, most mega event infrastructure is nearly useless following the initial

event due to the rushed, construction that accompanies impossibly short

timelines or the unsustainably high maintenance fees and capacities that are

required to keep the facility in use indefinitely. Finally, many hosts do not see

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legacy as a risk, yet it is easy for the poor reputation that follows a less-than-ideal

event to remain a curse long after the event’s conclusion.

To avoid such judgment errors, it is critical that all potential hosts carefully

evaluate all mega event outcomes—positive and negative; short-term and long-

term—before beginning the bidding process. Upon deciding to move ahead, the

host should take inventory of all of the common challenges that plague mega

events and set actionable measures for minimizing and/or avoiding the

challenges altogether. Based on the limited literature on the topic, such

challenges fall within the following five categories, all of which we will fully

explore:

• Organizational Requirements

• Monument Complexes

• Urban Renewal

• Sustainability

• Human Rights

Defining the Challenges

Often the symptoms of a mega event’s shortcomings are identified as, for

example, grossly over-budget or a negative public image, but to address these

issues we must first understand their causes. After reviewing various outcomes

of past mega events, we suggest that these challenges are, individually or in

combination, root causes of these symptoms. By identifying them, we are able to

understand how they come about and what measures can be taken to avoid

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them and their negative outcomes. We will discuss each in detail, providing

examples of how they have historically occurred, then transition into proposed

recommendations to mitigate or avoid these challenges in the future.

Organizational Requirements

The complex organizational structure and stringent organizational

requirements that accompany most mega events are the first hurdle to identify,

plan for and avoid. A mega event acts as a loosely formed organization that

holds “a compound rather than a mixture of objectives” (Deng & Poon, 2011, p.

28). Each mega event will have a governing body or parent organization that sets

standards for maintaining a cohesive experience from event to event. The parent

organization holds each host to stringent standards that must be met, no matter

how lucrative or exaggerated. The classic example of such a body is the

International Olympic Committee (IOC), which consists of 125 members

representing a spectrum of countries that oversee the Games (Malfas &

Theodoraki, 2004). The IOC sets legal requirements that all hosts must meet

before even submitting a bid, stating that all Olympics bidders “must protect

Olympic word marks, promulgate anti-ambush marketing laws, ensure entrance

to the country for members of the ‘Olympic Family,’ and a governmental

guarantee of any fiscal shortfall” (Deng & Poon, 2013, p. 50, with emphasis

added).

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Moving down the chain of command, regional committees and local

governmental agencies, though disparate, are ultimately charged with

implementing the requirements of the parent organization and making the mega

event come to life in conjunction with the organization’s wishes. As Deng and

Poon (2011, p. 27) write,

“Due to these unconventional complexities, mega events are often

realized through cross-boundary collaboration efforts. They can be jointly

promoted by several government agencies, developed by multiple

business entities and delivered by interdisciplinary consultants from

multiple design and construction practices.”

Because of this complex structure, it is an inevitability that conflicts in

priorities, communication channels and negotiations will take place between the

various parties involved in carrying out a mega event. Cross-organizational

synergy is necessary for producing a successful event, yet the boundaries that

exist between organizations often block information flow and prevent resource

sharing, dooming any hopes of clear and succinct collaboration (Deng & Poon,

2011).

For instance, Brazil enacted a law in 2003 that “effectively prohibited

alcohol sales at stadiums during football matches” (Gauthier, 2013, p. 58), but

then later won a bid to host the 2014 FIFA World Cup. Upon visiting Brazil, the

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Secretary General of FIFA, Jerome Valcke, expressed the organization’s

discontent with the alcohol ban, stating that “alcoholic drinks are part of the FIFA

World Cup, so we’re going to have them” and essentially forcing Brazil to allow

the consumption of alcohol or risk losing the right to host. It is speculated that the

official beer sponsor of the World Cup aided Valcke in winning his battle against

Brazil, as the sponsor had previously paid tens of millions of dollars in securing

exclusive pouring rights at the games (Junior, 2014).

The collaboration of FIFA’s Secretary General with the official beer

sponsor perfectly illustrates a common yet unethical crutch that mega events use

to circumvent the inevitable intra-organizational conflict inherent in mega events:

political alliances. Many mega events, especially mega sporting events,

commonly engage corporate elites and local politicians in profitable partnerships

aimed at furthering the goals of the parent organization. The practices of such

alliances, termed “politics of place,” typically involve campaigns to convince the

government or citizens of the host city to cough up additional tax money for use

in the event, even though it is those same taxpayers that end up footing the bill

when the event does not profit. (Gauthier, 2013).

Monument Complex

In addition to organizational requirements and political nuances, mega

event planning committees often fall victim to what is known as a “monument

complex” or “a desire to leave lasting monuments to their vision, world view and

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time in office” (Jennings, 2013, p. 6). Simply put, monument complexes come

into play when planning committees unnecessarily complicate the tasks at hand

with overly ambitious architecture designs and impractically costly construction

and technology implementations just for the sake of legacy, whether their own or,

more often, that of a key event influencer (e.g., politicians, top businessmen, etc.)

(Jennings & Lodge, 2011).

Planning committees’ inability to appropriately forecast and manage risk

often magnifies the negative impact of monument complexes. For instance,

planning committees suffering from such a complex will shortsightedly

underestimate risk, especially financial, and overestimate benefits to gain

necessary approvals when bidding and planning for a mega event project. Doing

so leads the final cost of the event to far exceed projections while the benefits fall

short, which ironically takes a significant toll on the legacy of the event that that

planning committee worked so hard to produce (Jennings & Lodge, 2011).

History suggests that two of the most recent Olympic Games (London

2012 and Sochi 2014) both fell victim to the monument complex hurdle. It can be

seen as a central issue of the 2012 London Summer Olympics, on the heels of

the notoriously costly Millennium Dome, a project that concerned then Prime

Minister Tony Blair greatly:

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“When the [Olympic] bid was first raised as a possibility, most of the

cabinet were dubious and the Treasury was hostile... after the Dome, we

were all a trifle nervous of anything so immense, costly and liable to turn

out tricky. [Blair] was attracted to the bid because he liked the boldness of

the notion,” persuaded by the cajoling of Culture Secretary Tessa Jowell

who, he recollected, “looked at me reproachfully and said, ‘I really didn’t

think that was your attitude to leadership. I thought you were prepared to

take a risk. And it is a big risk. Of course we may not win but at least we

will have had the courage to try’” (Jennings, 2013, p. 5).

Similarly, Russian President Vladimir Putin made the 2014 Winter

Olympics in Sochi his pet project, so much so that he began holding state

receptions at his summer residence in Sochi while proclaiming his goal of

developing the city into a world-class winter resort (Jennings & Lodge, 2011).

Putin was not alone in his optimism, as many outside observers truly believed the

Games would lay the groundwork for Russia’s reemergence as a great

geopolitical and geo-economic power, as “only first-rate powers are awarded

such prestigious events, goes the reasoning, ergo Russia is a first-rate power”

(Arnold & Foxall, 2014, p. 6).

Unfortunately, Putin and the Games’ organizers let their intentions get the

best of them and, not surprisingly, encouraged huge cost overruns that ultimately

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only served to solidify Russia’s poor reputation on a global stage rather than

remedy it.

Many mega event organizers and planning committees blow their budgets

seeking dramatic impact without realizing that any impact gained will likely be

short-lived at best. A study of the tourism implications of the Olympic Games

found that the Games’ overall effect on tourism was, in fact, negative (Malfas &

Theodoraki, 2004). For example, the study concluded that the 1988 Summer

Olympics in Seoul and the 2004 Summer Olympics in Athens did not have a

long-term, positive impact on local tourism (Malfas & Theodoraki, 2004).

Urban Renewal

No city is completely equipped to deal with the organizational and political

demands and sheer population influx that go along with hosting a mega event,

though some have a much better head start than others. In preparation, many

host cities will be pressured to spend millions or billions on infrastructure in

preparation for the event, with the justification for said spending being that the

project will help with future urban renewal. In advance of hosting the 2014 Winter

Games, Sochi, Russia “did not have a single sports venue… and as a result,

roughly 85 percent of stadia infrastructure for the Games [was] been built from

scratch” (Arnold & Foxall, 2014, p. 7).

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With a mega event comes an influx of tourists, volunteers and media that

need housing, impact city flow and traffic patterns and increase food

consumption and waste disposal. Prior to the arrival of these crowds, the

construction of housing and new roads and the development of public transport

to/from the event venues are required. Most planning committees do not stop

here, however, instead using the event as an excuse to engage in massive

infrastructural development that is not directly related to the event, all under the

guise of improving the physical appearance or functionality of the host city or

region. As one author notes, “[M]ega events [are] one of the main products of

post-modern society and a key means by which cities express their personality,

enhance their status and advertise their position on the global stage” (Malfas &

Theodoraki, 2004, p. 211).

Inflated infrastructure spending haunted the 1976 Summer Olympics in

Montreal, which included the construction of a stadium playfully named the “Big

O” because of its doughnut-shaped roof. Later, once the stadium’s true cost

came to light, citizens branded it with an alternate version of its original name:

the “Big Owe.” Thanks to the stadium and other similar missteps, it took Montreal

three decades to pay off the cost of hosting the Games (Deng, 2012). To add

insult to injury, the planning committee lacked the foresight to make the design of

the “Big O” match its surroundings, which ultimately kept Montreal from being

able to repurpose the stadium as a sports park in an effort to rebrand Montreal as

a sports destination city (Deng, 2012).

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In addition to costs, timeline pressures often lead planning committees to

disregard future use in favor of making sure that all construction projects are

ready on deadline. Furthermore, timelines are often used by politicians and other

power players to create a sense of urgency that they can use to bypass the

standard procedure for urban development application approvals, including

public hearings, environmental surveying, social assessments and the like

(Gauthier, 2013). This need for completion at any cost contributed to the multiple

failures of the 2014 Sochi Winter Olympics, specifically the road development.

Many roads in Sochi, including the aforementioned multibillion-dollar “foie gras

road,” were poorly constructed, riddled with potholes, or simply left unfinished

(Junior, 2014).

All host cities must update infrastructure in some manner, whether on a

large or small scale, to support the temporary increase in population associated

with mega events. Knowing this, planning committees should take great care to

assure each project has a vision and strategy for the short-term as well as the

long-term and not take quick out-of-scope shortcuts in the face of political or

deadline pressures. As seen in the example of the 1984 Los Angeles Olympics,

being wary of scope creep and enhancing existing structures instead of building

new structures from scratch can ensure that events end with a new profit, not

long-term debt in the form of infrastructure.

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Sustainability

Grandiose sustainability plans often go unfulfilled after a mega event,

largely because organizers’ lack of long-term vision leads them to prioritize the

immediate steps needed to make the event happen over figuring out how to have

the greatest possible impact in the long run (Deng & Poon, 2011). In addition,

capacity and building requirements often morph well-intentioned infrastructure

initiatives into behemoth projects that stand little chance of finding a frequent use

after the mega event, resulting in heightened cost overruns (Deng, 2012). For

instance, the average seating capacity of the five Olympic stadiums built since

2000 comes to 89,147, which is vastly greater than the typical demand for

conventional tourist and sports facilities. In fact, crowds that large may not occur

again for decades, if at all, which explains why the Olympic stadiums in Montreal,

Sydney and Athens have been largely underused after the Games (Deng, 2012).

The Vancouver Olympic Village is an ideal example of the challenges

found in the tension between building requirements, costs and overzealous

future-use promises. Organizers originally proposed the Village as a LEED

Platinum-rated, zero-net energy efficient community that would convert raw

sewage to heat the buildings. In addition, the Village was to be a cultural and

residential destination that included sites for urban agriculture among other

amenities. Despite the best of intentions, the Village ultimately failed to succeed

due to projected costs of living higher than those seen in luxurious, high-rise

Manhattan rentals. In the end, when the Games ended and the Village went

16

unoccupied, the city of Vancouver and its taxpayers were left with the $1 billion

bill, making the Village one of the biggest financial losses that the city ever

experienced (McCarthy, 2012).

In addition to future-use options, planning committees should also take

into consideration the impact that the mega event will have on those currently

living on the event site, who could face rapid gentrification and eventually

eviction. The 1996 Atlanta Games are a cautionary tale of such negative social

impacts. In preparation for the Games, the city demolished multiple public

housing projects, which left approximately 15,000 residents homeless. As Malfas

and Theodoraki (2004, p. 213) report, “9500 units of affordable housing were lost

and $350 million in public funds was diverted from low-income housing, social

services and other support services for homeless and poor people to Olympic

preparation during the same period.”

Human Rights

The perceptions and opinions of the general public are one final hurdle of

the mega event to be avoided. In addition to the homelessness that follows

gentrification, the 24-hour news cycle and ever increased interconnectedness of

the world make all aspects of a mega event—whether positive or negative, public

or private—more visible to the general public than ever before. While it is nearly

impossible to not offend or upset anyone at all when working on a massive scale,

angering or alienating a sizeable portion of the population, locally or afar, stands

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to cause significant problems for the climate, attendance and general public

support of the event.

For instance, the 2014 Sochi Winter Olympic Games, among its many

issues, suffered from a public image problem. Typically, governing organizations

like the IOC try to avoid controversial political or social issues, but the timing of

Russian President Putin’s June 2013 signing of a law against “nontraditional

sexual relationships” made avoiding controversy impossible for the upcoming

Winter Games (Arnold & Foxall, 2014, p. 4). Multiple LGBT and human rights

organizations called for a boycott of the Olympics in advance, but boycott did not

occur. As a result, the offended global public took great pride in celebrating

Sochi’s failures, including its failed final ring opening during the opening

ceremonies. All signs suggest that Russia’s discriminatory take on human rights

—and not the performance or scenery of the Games—will ultimately go down in

history as Sochi’s legacy.

Russia is not the lone offender when it comes to human rights issues,

however. Gentrification and resultant displacement similar to that of the 1996

Atlanta Olympic Games has also occurred as part of the 2012 London Summer

Olympics and the recent 2014 World Cup in Rio, Brazil and there are reports that

“a man who was evicted to make way for the 1968 Summer Olympics is set to be

evicted for the 2020 Tokyo Olympics” (Junior, 2014). Still worse, it has been

reported that at least 1,200 migrant workers have died in Qatar in recent years,

18

with the number expecting to reach 4,000 by the 2022 World Cup – though the

Qatar government denies there is any relation between the deaths and stadium

construction (Ingraham, 2015). Additionally, Qatar’s kafala rules for employment

prevent employees from unionizing, forcing the Secretary General of the

Supreme Committee for Qatar 2022 to publicly address labor concerns. As the

Secretary General stated, “We admit that there are labor issues here in the

country, but Qatar is committed for reform. We will require that contractors

impose a clause to ensure that international labor standards are met” (Gauthier,

2013, p. 68).

The above examples expose the humanitarian issues inherent in the

staging of many mega events but do not address another common concern: the

use of public money. Controversy abounds in mega event financing, as seen in

Boston declining to put forth a 2024 Olympic bid, with many taxpayers not

approving of local and state governments’ decisions to allocate funds toward

mega events—funds that could be used for projects for the public good

(Gauthier, 2013).

Overcoming Challenges

As we have discussed thus far, there is a reoccurring instance of mega

event organizers stumbling over challenges by ignoring cautionary tales and

thereby becoming victims to the “pricing forgetfulness” that will ultimately doom

them to suffer the same fate of previous planners (Deng, 2012). In this section,

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we will explore traditional project management practices that focus on mega

projects and adapt those recommendations into the management of mega

events.

For context, mega projects, as defined by Miller and Lessard,

“are high-stakes games characterized by substantial irreversible

commitments, skewed reward structures in case of success, and high

probabilities of failure. Once built, projects have little use beyond the

original intended purpose. Potential returns can be good but they are often

truncated. The journey to the period of revenue generation takes 10 years

on average. Substantial front-end expenditures prior to committing large

capital costs have to be carried. During the ramp-up period, market

estimates are tested and the true worth of the project appears; sponsors

may find that it is much lower than expected. (Miller and Lessard, 2001, p.

437.)”

And further clarified by Flyvbjerg as: “large-scale, complex ventures that

typically cost US$1 billion or more, take many years to develop and build, involve

multiple public and private stakeholders, are transformational, and impact

millions of people (Flyvbjerg, 2014, p.6).”

Within the traditional project management field, cost overruns have been

recorded and an accepted outcome for nearly 70 years. Flyvbjerg presents the

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“Iron Law of Mega projects, suggesting that nine out of ten such projects have

cost over- runs; overruns of up to 50% in real terms are common, over 50% are

not uncommon.” Such examples range from the Suez Canal (1,900% cost

overrun), the Sydney Opera house (1,400% overrun) and Denver International

Airport (200% cost overrun). Though in the past decade, front-end planning has

been touted as the counterapproach to lessen these overruns and align the

project (Flyvbjerg, 2014 p. 9-11). For context, a selection of mega project costs

have been provided in Table 2. With these definitions and historical benchmarks,

we can begin to note correlations between mega projects and mega events (e.g.:

lengthy timeline and large capital costs).

Joint

Strik

e Figh

ter

China H

SR

Intern

ation

al Spa

ce S

tation

Sochi

2014

Lond

on's

Cross R

ail

UK NHS IT

Athen's

Olym

pics

050

100150200250300350400450 400

300

150

51

26 18.3 11.5

Mega Project Costs (billions $)

Table 2 (Flyvbjerg, 2014 p. 9)

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For the purpose of comparison, we will equate the previously presented

challenges to the multi-dimensional risks in mega projects discussed by Miller

and Lessard and adapt from their process to cope with risks for a structure to

avoid or lessen the impact of challenges for this section (Miller and Lessard,

2001, p. 437).

The model put forth is divided into four phases – three occurring before or

during the event and one phase after the event – yet all need to be considered

well in advance of the opening. We will further explore the benefit of front-end

management to support this layout, as it is exceptionally crucial and the point at

which many challenges should be addressed. This method requires a heavy

investment in time and information along with experts and knowledge resources,

but can give the entire event a foundation poised to overcome the anticipated –

and the unavoidable surprises – as the opening day draws near.

Assess

In traditional project management studies, knowledge management has only

recently begun to be standardized and regulated as projects are increasing in

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complexity and size, requiring detailed records of activity. Within the field of

Knowledge Management, there are three distinct characteristics of information:

Explicit: can be collected, classified, described, stored and disseminated

Implicit: experienced based know-how, interpretation residing in the heads

of stakeholders. Requires a process to convert into explicit knowledge and

influenced by how individuals wish to contribute.

Tacit: unique to an individual and situation; intuition based on behaviors

and experiences.

(Adair and Frawley, 2013, p.35)

Even with a push towards standardization, it is suggested that many

workers fall short of fully documenting their knowledge. As one study cites, this is

generally because they do not have the time or resources to comprehensively

document while working on the project (Shokri-Ghasabeh & Chileshe, 2014,

p.127). From this insight it is critical to create an environment early on that is

conducive to knowledge documentation, transfer and implementation (Davenport,

1998, p. 47). And while the direct financial incentives of Knowledge Management

vary from organizations, it’s inarguable that operational improvements and

efficiencies deliver savings in time and resources.

In regards to the Olympics, prior to the 2000 Games in Sydney there were

no standards for collecting or maintaining a central database of information of

“best practices” and strategies used by others (Adair & Frawley, p. 38). Rather

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the opposite was true where countries would consider their knowledge and

experience proprietary and not wish to share with future hosts until the Olympic

Games Knowledge Service was created. Still, as there have only been, to date,

four rotations of Olympic Games since then, this is a fairly young practice.

David Pitchford, executive direction of the Major Projects Authority, a

management partnership with other governmental departments, suggests that

already some hosts are adopting knowledge transfer by implementing over 300

papers, with more supplied by other vendors, into a central knowledge portal –

the Legacy Learning website. To further support the success of the Games as

well as their commitment to sharing knowledge, Pitchford notes “the London

Olympics were a triumph of project management on a grand scale. Maintaining

the Learning Legacy website forms an important part of our plan to apply the

lessons of this success to other major projects (Olympic Knowledge, 2013).”

While London is following their stated procedure, time will tell how

successful this database of knowledge will be for future hosts. And to further

leverage the immense amounts of information, these new hosts should use this

service as a early as possible and adapt the documentation mindset at the onset.

This will first introduce a much smaller team to the concept and as more workers

are added to the planning and management team, it will become a standard

practice within the organization. Next, an informative handoff of information

should be made from one host to another – it should not merely be a download of

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information, but a time to offer best practices and further advice on avoiding

challenges to the next host. Finally, the International Olympic Committee should

consider extending this service to become a Center of Excellence so explicit

knowledge might be stored in databases while explicit and tacit knowledge can

reside with experts in the certain areas – specifically relating to the execution of

the Olympics. Though, as Deng and Poon (2011, p. 29) put it, “Although

recurring failures in mega events can find a plausible excuse in a lack of

experience, the forgetfulness, or more precisely the deliberate ignorance of

previous lessons, is the most detrimental risk of all.”

Allocate

After the assessment of the initial vision and stakeholder expectations,

what could be classified as the most critical phase takes place: allocating

resources. Traditionally this is where both mega projects and mega events begin

to derail as it requires the creation of a plan that is appealing, usually at the cost

of gross underestimation.

Or, as Flyvbjerg outlines: ”showing the project at its best … results in an

inverted Darwinism, i.e., the survival of the unfittest (Flyvbjerg, 2008).” Instead of

the best overall project being selected, the project that looks best on paper is

selected. These are typically those with the greatest cost underestimate and

benefit overestimate, resulting in a major benefit shortfall (Flyvbjerg, 2014).

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The practice of underbidding and overestimating has become so

mainstream that bold claims, such as the one made by Willie Brown regarding

the San Francisco Transbay Terminal construction, reveal the generally

unspoken truth that has plagued mega projects for years:

“News that the Transbay Terminal is something like $300 million over

budget should not come as a shock to anyone. We always knew the initial

estimate was way under the real cost. Just like we never had a real cost

for the [San Francisco] Central Subway or the [San Francisco–Oakland]

Bay Bridge or any other massive construction project. So get off it. In the

world of civic projects, the first budget is really just a down payment. If

people knew the real cost from the start, nothing would ever be approved.

The idea is to get going. Start digging a hole and make it so big, there’s no

alternative to coming up with the money to fill it in.” (Flyvbjerg, 2014).

Similarly, we have seen comparable cost overruns at the most recent

Olympics. The London 2012 Olympics, which were deemed a success, were well

over their original budget estimates (see Table 3) and the Sochi 2014 Olympics

might well forever go down in history as the most expensive – or at least set a

bar no country wishes to surpass.

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London 2012 Olympic Budget Estimates (in millions £)

2002 2003 2004 2007Operations 779 897 1539 n/aInfrastructure and facilities

403 731 2670 4486

Land acquisition 325 425 - -Site Security - - 190 268Total Security 160.2 170 - 600Tax - - - 836Contingency 109 - - 2747Total cost 1800 3140 4209 9325Source Arup Pricewaterhouse

CoopersLondon 2012 Ltd National Audit

Office

Table 3 (Flyvbjerg, 2014 p. 9).

Traditional project management research is conflicted on the best method

to address these cost overruns and under-allocation. We will consider three

different perspectives: The Hiding Hand Principal, Project Pathogens and

Reference Class Forecasting. Each has it’s a role and impact in the traditional

project management sense and we will further explore if one or a combination of

will will prove more beneficial for mega events.

The first notion is Hirschman’s Hiding Hand which suggests that “the only

way in which we can bring our creative resources fully into play is by misjudging

the nature of the tasks, by presenting it to ourselves in a more routine, simple,

undemanding of genuine creativity than it will turn out to be (Hirschman, 1967, p.

13).” This method acknowledges the reality that many projects cannot fathom

their complexity, so it should be embraced upfront by not trying to anticipate each

challenge. Rather, by starting with a problem one thinks they can solve, human

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nature has a propensity to believe they can overcome any obstacles encountered

(Hirschman, 1967, p. 14).

The benefit of this method is its underestimations allows projects that

could be perceived as infeasible and too difficult to begin without being turned

down. Hirschman acknowledges the benefit is especially useful on projects that

lack creativity and innovation, specifically industrial projects, where, for instance,

a factory “look[s] as though they could be picked up and dropped anywhere,”

when in reality the unique challenges for each location are usually not uncovered

until the project beings. This can be contrasted against an agricultural project

where it is expected to vary from location to location-based on known differences

(Hirschman, 1967, p. 16-17).

When we consider mega events like the Olympics, we can take a similar

mindset in acknowledging that many of the same venues (e.g.: swimming pools,

tracks, etc) are needed at each event, though, as suggested, the construction of

these each pose unique challenges per location. For instance, the upcoming

2016 Rio Olympic Games will use Guanabara Bay as the venue for sailing and

windsurfing venue, but, as of this writing, and less than a year before their

opening, the lake still remains heavily polluted and recently tested positive for the

deadly KPC enzyme (Kirkpatrick, 2015). This sort of unanticipated complication

is precisely the hidden complication presented by Hirschman. Rio now has the

opportunity to use their creativity and innovation to address the problem, but if

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they do not meet the deadline they will not only risk the burden of public scrutiny

and disappointment from athletes, but also risk the health and safety of athletes

by allowing them in the water.

Based on Hirschman’s’ recommendations, the Hiding Hand principal is

suited for mega events due to their large industrial needs. But not factored into

this method is a timeline that cannot be moved against a required functionality of

100% -- unlike other infrastructure projects that could be delayed or open in

phases of completion. The implicit deception is useful to the extent of winning a

bid, but the negative ramifications of not being to follow through will be severely

scrutinized by the world, possibly be used as a justification for poor athletic

performance and negatively impact the nation’s Olympic legacy.

Continuing along the notion of hidden problems, Peter Love explores

“project pathogens” that imbed themselves within projects as omission errors,

unnoticed and unseen until an actual problem arises. They are defined as: “slips,

lapses, mistakes, and procedural violations. [Where] active failures are often

difficult to foresee, and therefore, cannot be eliminated by simply reacting to the

event that has occurred.” And often these pathogens enter the system very early

on as seemingly harmless actions, lying dormant until an event spurs it into

fruition (Love, 2009, p. 425).

29

As we look into the points along the project where this occurs, those

interviewed note the upfront design and planning typically experience seemingly

small omissions such as incorrect task sequencing, isolated procedural steps or

a general overload of information where not all details are captured. The authors

attribute these occurrences to process complexity and the pressures

accompanying clients and stakeholders on tight timelines (Love, 2009, p.430)

Project pathogens serve as a cautionary tale for masking problems. While

these errors caused by planning/schedule omission differ from unanticipated or

unacknowledged challenges, the outcomes of heightened expenses and

truncated timelines to address the issues are prevalent. The key distinction

between the two is a pathogen is only seen as a negative while the

underestimation of the Hiding Hand is intended to spur innovation. Regardless,

each carry risks that, if possible, should be avoided by seeking full project

transparency, especially in mega events, so unknowns and mistakes made

upfront do not continue to compound and create a lesser final product.

An alternative method, introduced fairly recently, is Reference Class

Forecasting, deemed by the APA (American Planning Association) as “beneficial

for non-routine projects such as stadiums, museums, exhibit centers, and other

local one-off projects. Planners should never rely solely on civil engineering

technology as a way to generate project forecasts (Flyvbjerg, 2014).” In short,

this method reaches a greater degree of accuracy by benchmarking against

30

actual performance of previous projects where comparable actions are required.

Additionally, the projects need not be of the same type. For instance, when

overhauling city’s public transit system, what could one potentially learn from an

opera house or airport baggage system? Initially all three projects seem vastly

different based on their intended outcomes, but, when viewing the pure statistical

attributes of the project; such as size, throughput or cost overruns, the lessons

can be grouped together to predict the outcome of future projects (Flyvbjerg,

2014).

In general, reference class forecasting for a particular project requires a

curbing of optimistic bias through the following three steps:

(1) Identification of a relevant reference class of past, similar projects. The

class must be broad enough to be statistically meaningful but narrow

enough to be truly comparable with the specific project.

(2) Establishing a probability distribution for the selected reference class. This

requires access to credible, empirical data for a sufficient number of

projects within the reference class to make statistically meaningful

conclusions.

(3) Comparing the specific project with the reference class distribution, in

order to establish the most likely outcome for the specific project.

(Flyvbjerg, 2014)

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Unlike the Hiding Hand method, Reference Class Forecasting is built on

the foundation of forced honesty by using the past to make decisions about the

future. And given the repository of information and knowledge management

techniques that have been implemented, this method has become easier to

implement. Still, it is not without its flaws – one being its strength: honesty. When

looking back at the cost table of the London Olympics (Table 3), the budget

difference is apparent. If future hosts were to use the real final data to make

estimates, would they stand a chance against winning a bid? Especially if

another is using a method such as Hiding Hand, one is going to appear much

more attractive.

The allocation phase of mega events appears to be the critical point of

successful planning. While it’s still possible to have a successful overall event

like the London games, it’s not arguable that they greatly missed the mark based

on their initial forecast. And with the collection of publically available information,

it’s not feasible for to suggest mega events such as the Olympics can be

accomplished disproportionately cheaper. In addition, the Adapt phase, which we

will discuss next, can benefit from the caution of project pathogens. In these

instances, anticipating there are issues under the surface of the project that have

not been identified can help prepare a mindset to respond if issues should arise.

There is also a detriment to the country or nation when they place

deception upon themselves: Greece is a notable example. It is estimated that the

32

“2004 Olympic Games in Athens, for which cost overruns and incurred debt were

so large they negatively affected the credit rating of the whole nation,

substantially weakening the economy in the years before the 2008 international

financial crisis. This resulted in a double dip— and disaster—for Greece, when

other nations had only a single dip (Flyvbjerg, p.16, 2014).”

When deception and faultily planning goes so far as to bankrupt a nation,

we must consider its usefulness and weigh alternate options. By implementing

techniques like Reference Class Forecasting, mega events cannot hide behind

veiled budgets, but rather can be properly planned for – especially for

nations/cities whose finances cannot reach as deep.

Adapt

Inevitably things will go wrong leading up to the opening ceremony, but

many contingencies in planning a mega event are narrowly focused on a series

of “what ifs.” An alternative perspective moves the planning team away from

adaptation strategies to create a mindset of adaptability to react to these

unanticipated occurrences. Williams and Samset present the notion that a mega

project should begin with multiple “concepts” or strategies to solve the problem

presented. By introducing alternatives and not one dominate, predefined solution,

stakeholders can compare the pros and cons of each, possibly creating a hybrid

solution of concepts. One way to accomplish this is through “soft systems

methodology.” By leveraging this methodology, stakeholders, who have personal

33

subjectivity and success criteria, are able to establish understanding and a

unified vision at the start of the project (Williams & Samset, 2010, p.41). And

while this notion serves well in theory, it’s impossible to know all outcomes.

For an alternate perspective, we will leverage the analogy implemented by

Grabher and Thiel that compares a mega event to disaster preparation. To start,

the immovable deadline of an event’s opening is likened to the imminent landfall

of a Category 5 hurricane playing out in front of a large audience where disaster

support teams have a finite window of opportunity to solve for the “event.” In

addition, the shock – or pure spectacle – experienced by the host city/nation has

a ripple effect felt around the globe. Under these conditions, mere adaption to

foreseeable demands leaves everyone susceptible to those unanticipated

occurrences. “Adaptability requires resources and capacities to generate and to

perform alternative options in changing conditions (Grabher and Thiel, 2014, p.

529).”

Their proposed organizational structure is Heterarchy, which was originally

introduced as a way to describe how the brain is not organized as a distinct

hierarchy, but rather organized so it might re-order values and priorities based on

changing circumstances. Recently, in the field of management, it has been

acknowledged as a way to manage power struggles that arise within large

multinational companies that span the globe. This is done by increasing the

34

interdependencies of networks, creating an interconnected workflow and

decentralizing the core responsibilities for change (Grabher and Thiel, 2014).

Through this method, a “redundancy of difference” is created where the

various groups within an organization critique with varying definitions of

performance criteria. From this comes a reduction in tunnel vision that is often a

result of one hierarchical direction, allowing for adaption of new solutions based

on the collective feedback of the whole network (Grabher and Thiel, 2014, p.

531).

To further the usefulness of the heterarchy approach, examining the London

2012 Olympic games shows a direction that was successful in both the execution

of the games as well as the often overlooked aspect: the Olympic Legacy. The

Olympic Delivery Authority (ODA) setup traditional key performance indicators:

Time

Cost

Quality

Healthy and Safety

Sustainability

Equality and Inclusion

Employment and Skills

Legacy

Design and Accessibility

35

And while traditional project management techniques glorify the use of

performance indicators, the twist was contractors were given the power to decide

how to achieve them. Instead of defining how to achieve success, the project

was largely adaptable thanks to its goal ambiguity. For example, “to be the first

major venue built onsite” could be a motivating objective, but those in Health and

Safety and Legacy had an influence on defining success for that building – not

just those focused on the timeline and cost. Another instance of unrealized goal

ambiguity was a strong push from Sustainability to reuse demolition material – an

example that resulted in both time and cost savings. Which would likely be an

idea that would not have been explored under traditional hierarchy systems

(Grabher and Thiel, 2014, p. 534).

Grabher and Thiel further explore “optioneering” – a leitmotif used to examine

alternatives while being prepared to adapt to the openly accepted, yet unknown,

surprises. This becomes a sort of risk management as well because it prepares

for potential challenges, but more importantly, introduces an adaptive mindset for

all involved in the project rather than pointing blame when a singular solution did

not work. This proved especially beneficial when, in the world financial crisis of

2008 struck. For example, using a cable structure for the Velodrome’s roof was

originally dismissed due to its cost, but after further consideration to the rising

cost of the process of steel and concrete construction, the time saved with cable

would reduce the overall cost (Grabher and Thiel, 2014, p. 535).

36

Aftermath

Each mega event leaves behind unique physical, social and economic

legacies. Positive physical changes include not only the buildings used for the

event, but also the improvements made to transportation, telecommunications

and overall public safety. Socially, the event’s legacy encompasses any

workforce or public training and education, the generation of patriotism and pride

and an increase in the general public’s mood and happiness. Finally, economic

benefits, which can have the most lasting positive impact of them all, include an

increase in income generation, manufacturing and consumer demand during the

event (Junior; 2014).

Yet all of these potential positive aspects of an event’s legacy are tainted

when event organizers and planners do not properly address the previously

discussed challenges. Thus far, the challenges we have illustrated serve as

cautionary tales from mega event history—stories that should serve as warning

signs to future mega events.

Much like the implementation of knowledge transfers, the idea of “legacy”

within the Olympics world is new – not set forth until the IOC charter in 2003, with

an official publication not appearing until 2009. Additionally, since each legacy

criteria is unique to the host and their circumstances, there exists no formal

standard for legacy management. Yet, while this is the most abstract of

management needs, it also is the one that will linger on the mind of the world.

37

Thus far we have explored many of the challenges encountered by a

mega event and leveraged project management techniques to address them.

Still, we have not defined what a successful mega event entails – which becomes

the deepest root of much of their success: what criteria should we measure a

mega event against?

First off, let’s look at a traditional project management example to begin

drawing a comparison: The Sydney Opera House.

“Did people really think that the Sydney Opera House would come in on

budget? Or did we all agree to accept the deception and engage in wishful

thinking in order to make something that we really wanted happen? ... [D]o

Australians really regret those dramatic sails in the harbour? Or would

they have regret- ted more the decision [not to build] that would most

reasonably have been based on a fair prediction of costs?” The logic is

seductive, yet precarious. In retrospect, of course Australians do not

regret the Sydney Opera House, given what it has done for Australia

though, at first, the building was not called “dramatic sails in the harbour,”

but “copulating white turtles” and “something that is crawling out of the

ocean with nothing good in mind” designed by an architect with “lousy

taste.” (Flyvbjerg, 2014, p. 13).

38

The real success of a mega event is its legacy – though, as seen by the

Sydney Opera House example, legacy takes on different views over time and

holds different opinions based on the reviewer. Does one view a stadium as an

engineering marvel or a money drain for taxpayers after the event has concluded

as it must be retrofitted for a new use? Legacy also suffers from the reoccurring

problem of promises, which, at the bidding time, were made in good faith, but the

reality of their implementation often becomes near impossible. Compounding

that, anticipating the economic environment that far into the future is equally

problematic.

Reflecting upon all the challenges faced in managing a mega event,

particularly those of the size and scope of the Olympics, one might wonder if all

the final costs are worth the price. From a pure numbers perspective, no, it is not

– but mega events are so much more than quantifiable number. Or, in the words

of Pierre de Coubertin, founder of the IOC: “Holding an Olympic Games means

evoking history.” So while the 1984 Olympics were profitable, it is unlikely that

their success will ever be replicated using their techniques. We cannot use

expenditures to measure success as the true measures of success are not about

making money – it’s about creating a legacy. Regardless, cost will always be a

factor and with the honest and upfront planning discussed in this paper, mega

events won’t necessarily be cheaper, but they are more likely to not overrun their

budget and, in turn, create new metrics for defining a successful mega event.

39

The mega event isn’t new to the world anymore and with the ever-

increasing expectations pre-existing, it’s a daunting task to manage them. This

paper only addresses the high level challenges encountered by hosts and initial

management recommendations, though the list is by no means exhaustive. The

methods discussed of overcoming these challenges will never be exactly the

same given the unique nature of location, climate, governments and other

influences one might not expect. But these practices, which have been tested in

traditional project management environments, will serve as a foundation to

continue the success and efficiency of this ever-growing industry.

40

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