Government stuff-up or consultant spin: Who’s responsible for the Games debacle?

Australian and state taxpayers bear these gross miscalculations, but it is Australia’s sovereign reputation that is damaged by the Victorian government’s volte-face on the Commonwealth Games.

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Of course, there are also plenty of examples of major projects in the private sector that blow out over time. Usually, this results in senior management scalps.

And listed companies have to adhere to continuous disclosure regulations, so shareholders receive more timely updates on a potential increase to project costs.

The Commonwealth Games disaster looks like a combination of significant creep in the scope of the project, a Pollyanna approach on the original estimate combined with higher interest rates and some escalation in construction costs.

Commonwealth Games Australia isn’t buying the Victorian government’s explanation, to the extent it has even offered one. CGA’s chief executive Craig Phillips said he would be interested in seeing how the government costed its estimates to host the Games in Melbourne, particularly given the roughly $1.2 billion price tag for the 2018 Gold Coast Games and the $1.8 billion price tag for 2022 Birmingham.

For its part, the Victorian government has batted the ball back to the consultants, who estimated the cost of the project at $2.6 billion – placing big four firm EY as one of those in the frame.

The Victorian Minister for Commonwealth Games Delivery Jacinta Allen said she preferred not to blame the consultants, but noted that there was a yawning chasm between the cost estimates and the “actuals”.

There is certainly a school of thought that consultants tend to give their clients what they want to hear.

Yet another consulting group, PwC LLP, compiled a report for the Commonwealth Games Federation in 2019 around developing a new Games Value Framework that “defines the potential costs and benefits of hosting the Commonwealth Games, articulates how these costs and benefits should be assessed, collates the existing evidence from recent Commonwealth Games and draws out lessons learned and critical success factors.”

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In summary that report states that “hosting the Commonwealth Games offers a unique opportunity to deliver a positive return on public investment and can reposition and transform a host city”.

Clearly Dan Andrews doesn’t share that view. Instead, he contended that the value in spending up to $7 billion on a 12-day sporting event didn’t stack up.

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