Why Olympic Budgets Explode

How research found every Olympics since 1960 exceeded its budget, why mega-projects overrun, and the planning fallacy behind it.

Olympic budgets almost always overrun.

The evidence

Researchers Bent Flyvbjerg and colleagues at Oxford found that every Olympics with available data since 1960 ran over budget, with average overruns of over 150 percent in real terms.

Examples

Montreal 1976: huge overruns left debt that took about 30 years to pay off.
Sochi 2014: reportedly cost around 50 billion dollars, the most expensive Winter Olympics.
Tokyo 2020 (held in 2021): costs far exceeded initial estimates.

Why overruns happen

Fixed deadlines: the opening date can’t move, so costs rise to finish on time.
Planning fallacy: optimistic early estimates.
Low-balling bids to win.
Scope creep: adding features.
Security costs.

Who pays

Usually taxpayers of the host city and country, since organisers and the IOC shift risk to hosts through guarantees.

Lesson

Big projects with immovable deadlines and unique designs are especially prone to overruns.

The unmovable date

Months before the opening ceremony, a stadium is behind schedule. Workers are paid overtime and extra contractors hired, sharply raising costs.

Thinking Olympic budgets are usually accurate

Research found all measured Olympics since 1960 overran.

Key takeaways

Every Olympics with data since 1960 ran over budget.
Average overruns exceeded 150 percent in real terms.
Fixed deadlines and optimistic estimates drive overruns.
Host taxpayers usually bear the costs.