DNV has led a quality assurance project on the budget estimate and of the concept for arranging Olympic Winter Games in the arctic Norwegian city Tromsø. The report was presented 30 Sept, showing the Olympics would be twice as expensive as estimated by the tentative bidder Tromsø 2018.
Controversy, enthusiasm and emotion always surround bids for hosting Olympic Games.
Big projects like these tend to have expansive budgets and frequent overruns on costs, which is why the government has been keen to get independent quality assurance from trusted parties.
The report established the new baseline for the cost discussions. The sports associations will now discuss their proposal to the government based on these new cost estimates. The government will then decide whether or not Norway will promote Tromsø's candidacy for the Olympic Winter Games in 2018 for the International Olympic Committee (IOC).
Main findings
The most important findings were that the state would need to guarantee for NOK 28.6 billion, covering an unlimited IOC requirement, and that the most likely total cost of hosting the games would be NOK 19.1 billion, after earning. The Tromsø 2018 organisation’s estimates were more modest at half for the state guarantee and NOK 9.5 billion for total cost.
The Norwegian Ministry of Finance has a frame agreement with a consortium of well qualified Norwegian companies to carry out independent quality assurance of public investments of more than NOK 500 million. In addition to DNV, the consortium consists of Advansia and SNF (see box to the left). In this case, DNV led the project.
A concept that plays to DNV’s strengths
"This framework for independent quality assurance of big public projects has been established as best practice in Norway and is spreading to other countries. It is a concept that makes sense for all big investment projects, also outside of the public sector. The concept plays to DNV’s strengths and represents many opportunities for DNV to create value in the decision making processes," says director Aage Enghaug in DNV Industry.
DNV Industry’s Henning Refshauge Vahr has been DNV’s project manager and Vibeke Binz has been responsible for analysis and uncertainty and risk modelling.