Jennings, W (2012) Why costs overrun: Risk, optimism and uncertainty in budgeting for the London 2012 Olympic Games. Construction Management and Economics, 30(6), pp. 455-462. ISSN 1466433X
Abstract
The systematic under-estimation of costs in budgeting for large-scale projects raises the vexing question of why there are such incongruities between the projections made at initial stages and the eventual outturn cost. As a first step to understanding the sources of such budgeting overruns in the context of the Olympics, this research note outlines how the costs of the London 2012 Olympic Games were under-estimated in a series of budget forecasts, identifying sources of error and categorizing these according to the effects on budgeting of: (1) inattention to risk inside government; (2) biases in decision-making in the evaluation and use of information; and (3) uncertainty in project management and administration. These factors are accentuated through the planning and budgeting context, as estimates at different stages of the process serve alternative purposes and entail varying levels of knowledge and scrutiny.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cost overruns; mega-events; olympics; optimism bias; risk |
| Index terms: | London, cost overrun, Olympic Games, budget forecast, decision-making, overrun, project management, estimation, estimate, budgeting, bias, optimism bias |
| Subjects: | financial and cost management, probability and distributions, project management theory and practice, financial management, Geography, project controls, decision analysis, sociology, cognitive psychology |
| Topics: | Business Strategy, Risk Management, Research Practice, Cost Management, Geographical Context, Urban Studies, Time Control, Project Management |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here