London 2012 Olympic Games

Lessons for MSP Programme Managers

For several years, the 2012 games have been criticised because their costs were constantly rising. Now, a different type of criticism is appearing, saying that some of the promised benefits will be hard to deliver.

This article reviews the London Olympics using the perspective of MSP (Managing Successful Programmes). As a major UK government initiative, this is reasonable - the Olympic Games programme should use MSP, which is the approved UK government Programme Management method

London 2012 Olympic Games - Tranches and Blueprints

If we analyse the 2012 Olympics as an MSP programme, then – here I simplify things – there are two main tranches. Tranche 1 is to prepare the games and run the event; Tranche 2 is to deliver the legacy. In this case, the programme will have two main Blueprints – an Intermediate Blueprint for the summer games in 2012, and a Final Blueprint that specifies the long-term outcome, where the stadium, the aquatic centre, etc. are handed over to the local community.

London 2012 Olympic Games – Initial Business Case

The London bid for the Olympics, as presented in Singapore in 2004, was full of promise. The list of benefits included

• 20,000 local construction jobs
• Boost to Tourism during the Games
• Legacy sporting venues (Stadium, Aquatic centre)
• A boost to Sport in UK
• Rejuvenation of East London
• New transport infrastructure

This gave a positive business case. For £2.3 billion of costs, the benefits would be high. An easy-to-justify Business Case.

London 2012 Olympic Games – Updated Business Case

Now, seven years later, the picture has changed. The preparation for the 2012 London Olympic Games is advancing. The major building works are done, and preparations for the summer games are well advanced.

The costs have risen, and keep rising. Some benefits are fragile or negative.

The cost estimates have grown and grown. The budget has grown from £2.3 billion to £9.3 billion. This cost growth has been widely documented, so I won’t discuss it here. The most recent cost expansion, identified this week, concerns security staff. The original plan (on the Intermediate Blueprint, i.e. for the 2012 Games period) included a major element for event security, with 10,000 security staff. This has been found to be insufficient, and 20,000 security staff will be needed, at considerable additional cost.

London 2012 Olympic Games – A benefits review

The benefits forecast has come under more recent scrutiny. Two major sporting venues will be created for the Games, the Aquatic centre and the Olympic stadium. Both have serious problems with their benefit realisation, but the problems with benefits are wider:

• 20,000 local jobs – The massive building programme created tens of thousands of construction industry jobs. On a recent BBC radio programme “File on Four”, local politicians explained that only a few hundred local residents got jobs. The benefit has not been delivered. In MSP terms, this benefit is badly profiled. A benefit profile must pass the DOAM test (Describable, Observable, Attributable, Measurable). The authorities can track the jobs and the workers, but there is no way to trace whether the workers are local people. Many building workers came from outside London, but now have London addresses while they are working on there. They are not local people, they are temporary residents. So this benefit profile fails the DOAM test – not observable and/or not measurable – and is therefore hard to claim as a benefit for the programme. This benefit should therefore be removed from the Benefit Map and the Business Case.
• Boost to Tourism - Many politicians are still talking of increased tourism due to the Games. This is a just a dream. The politicians need to learn from the past. As a recent article in “The Economist” explains “Since the 1992 Barcelona games, hosts have seen a fall in foreign guests during each Olympics, as well as in the months before and after”. This supposed benefit is therefore actually a dis-benefit, because there will be fewer tourists in 2012 than in a normal year. Indeed some West End theatre owners fear they will have to close their shows next summer due to lack of customers. This dis-benefit makes the already bad programme Business Case even worse.
• Legacy – the Aquatic Centre. The Final Blueprint for the programme specifies that the aquatic centre will be a community leisure pool, with slides and toboggans. Have fun, bring the kids! However the intermediate blueprint for the aquatic centre is not aligned to this need. The aquatic centre has now been built – it’s a large, iconic architectural masterpiece, probably good for the summer Olympics. But it has low roof, which cannot be converted to give room for the future slides and toboggans, which will attract families with kids. Additionally, the large prestigious building will be expensive to run and maintain (perhaps £2m per year). So the benefit delivery from the aquatic centre may be bad, with high costs and low income. The cashable value of the benefit will go down, and the programme Business Case gets worse.
• Legacy – the Stadium. The second legacy venue is the stadium. The initial benefit realisation plan for the Olympics proposed the sale of the stadium, but this has hit major problems. The expected sale to either Tottenham or West Ham football clubs hit legal issues, and the stadium will now be rented, not sold, which directly hits the benefits stream and the programme Business Case. No rental contract has been signed, so a large cash benefit has been replaced by a possible long-term rental income. Worse, the new rental tenant may ask for building work as a condition for rental, which would add to programme costs.
• Regeneration of East London – the Village – The Olympic village will be built for the Games, and then converted into housing, at a cost of £1.1billion. This seems to have been sold to developers for £825million. While some politicians dispute the figures, it seems to that the regeneration (an intangible benefit) must be balanced by a significant cost or dis-benefit (the £275 million loss on the sale of the Village).
• Regeneration of East London – the Media Centre. A huge building has been built for the media, to support 20,000 journalists and TV crews during the games, at a cost of a third of a billion pounds. However, there is no decision, and no clear plan about the legacy use of the Media Centre. The Final Blueprint is unclear, after 7 years!

London 2012 Olympic Games – Not a viable programme?

For any normal Programme, the Business Case is regularly reviewed. A golden rule of MSP is that if the Business Case is bad, the programme should be halted. The Business Case of the 2012 Games looks very bad, with high costs and low benefits. Additionally, the Business Case has been artificially lightened by hiding many costs, such as infrastructure improvements (£6.5 billion) and counterterrorism (£1 billion)

However, this programme is a political programme, with the UK prestige at stake. In reality, the programme will not be halted. This once-justifiable programme seems to have become an expensive folly.

London 2012 Olympic Games – Lessons for MSP Programme Managers

The lesson for Rio 2016 and for future Olympic Games? In the recent BBC radio programme “File on Four”, the final comment from a London politician gives us a key lesson about Stakeholder Engagement – “Make sure that the people who are responsible for your legacy are there at the start; don’t plan an Olympic Games where everybody is in there just for the purposes of delivering an Olympic Games”. A good lesson for Rio and a good lesson for all Programme Managers.

© Copyright Triotime 2011