February 14, 2006
Cost estimation a difficult endeavour for VANOC
Games guidelines leave no room for inflation
Olympic elation has settled into public trepidation, but an industry expert is counseling moderation.
The Vancouver Olympic Organizing Committee recently announced the new budget for the 2010 Olympic Games would come to $665 million, a 41 per cent increase over previous estimates. The rapidly rising price of construction in British Columbia was named as the main culprit for the swelling budget.
But John Furlong, the head of VANOC, also said the organization has found ways to save $85 million, such as using the new Vancouver Convention Centre – which is currently under construction – as broadcasting headquarters, consolidating ski runs at Whistler, and building the needed speed-skating venue in Richmond instead of at Simon Fraser University as originally planned.
Keith Sashaw, president of the Vancouver Regional Construction Association, said the current controversy surrounding the cost of upcoming Olympic venues for the 2010 Winter Games does not take several important factors into account, including the fact that Olympic rules preclude projecting future costs.
“Olympic rules stated the organizers have to declare in 2002 dollars what they thought the budget for the Games would be. There was no allowance for inflation,” Sashaw said.
He added the Olympic projects being criticized for cost overruns were a vital component in the revitalization of the B.C. economy.
“I credit the Olympics with being the spark that ignited the investment that’s going on right now in B.C.,” Sashaw said.
He also pointed out the adjustments VANOC was going through are no different than the difference between planning an execution on any construction project.
“Whether it’s a large complicated project or renovating your kitchen, there’s always a cost difference between what you planned for and actual costs,” Sashaw said.
Sashaw said the outlook for Olympic work would improve in 2006, since the organizers and builders now have a firmer grip on actual costs.
“The budget announced shows what it will take to get from here until 2010,” he said.
He also said talk of “cost overruns” was somewhat alarmist, as only a couple of projects had even entered the building phase. VANOC would be able to continue with cost cutting throughout the design phase of many different Olympic projects, he said.
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