Economic evaluation of projects

Politecnico di Milano A.A 2020 | 2021 Architecture and Urban Design Economic evaluation of projects Valentina Ferretti Linda Migliorati Sarper Yalcinsoy

Students | G14 Yanling Zheng Massimiliano Piffer Aida Navidbakhsh Daria Sachek Lina Gao

SOCHI Olympics 2014

2000

Putin visited Sochi for the first time as the President of Russia

2005

the Sochi 2014 Bid Committee was established.

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2001

Renovation and construction of several mountain resorts around Krasnaya Polyana started, financed by well-known businessmen and OAO Gazprom.

Promoting Sochi as a host city of the Olympics was driven by a personal interest of the Russian President in developing this particular region

July 4, 2007.

The city of Sochi was officially awarded the right to host the 2014 Winter Olympic Games

December 27, 2007

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Sochi National Park Unisco sites Caucasus National Reserve

June 8, 2006

Approval of the Government Decree no. 357 ‘‘Federal Special-Purpose Program for Development of Sochi as a Mountain Climate Resort (2006-2014)’’

This decree officially expressed that the government wished to develop Sochi and to prepare the city for the Olympics

Krasnaya Polyana

Mountain cluster

Sochi National Park Unisco sites Sochi

Olympic Railroad Airport G

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Coastal cluster

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Legacy

decree no. 991 has been approved considering the detailed IOC requirements

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Brief history

“Sochi today, the world tomorrow” “Russia, great, new, open!”

Sochi Olympic Games as a means of demonstrating that Russia can be a world leader in such areas as technology, infrastructure, leisure, and quality of life to the rest of the world and to Russian population.

Missing relevant Knowledge

Selective attention Olympic speculation

Narrow framing

Overconfidence bias

Personal ties between contractors and Officials

Legacy failure?

Loss of objectives

Ambiguity Not thinking broadly/ deeply enough about the range of environmental and social aspects

1.

Bidding phase Olympic proposal for Sochi 2014 and its future legacy

When measuring/estimate objectives and overall targets.

The whole venue was charactherized by an overscaled thinking, aming to show the power of a country rather than fitting the solutions in the peculiar small size Sochi’s natural landscape.

The budgets and environmental strategies, aimed to zero-waste and green structures, were deeply overconfident given the fact that would have been completely built from scratch and Russia had no policies and plans on environmental strategies

Many tasks were not implemented or largely exceeded the bidding hypothesis (social and environmental LONG TERM factors mostly) due to narrow framing and overconficence while measuring

2.

Construction phase Building the venue

3.

Post-games phase Legacy applied after the olympic period

Biases map

Cartoon | Overconfidence

According to the research conducted, the Overconfidence bias is the most frequent and relevant one among others, with the most severe consequences to the implementation of the whole project.

55 bn $ carbon neutrality, zero waste, extensive environmental impact assessments 12 bn $

Main evidence of the bias: - ambiguous and ambitious objectives mesuring, including ones not strictly related to the overall goal of hosting the Olympic Games, such as: proclaiming power, showing the modernization of the country, etc.

se eu eR tiv ap Ad

- The choice of location did not correspond to the scale of the project planned by the government > Overscaling the project

> Overudget of the project

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ic om n o Ec

All the stadiums and buildings will be reused by the city

Loss of

En vir on m en t

Over confidence bias

> Overstessing an idea

- the initial budget set by the government for the implementation of the games was greatly exceeded.

“Reducing waste”, Pollution of Natural habitats

Social factors

The overconfidence effect is a well-established bias in which a person’s subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high.

Overconfidence is one example of a miscalibration of subjective probabilities.

Throughout the research literature, overconfidence has been defined in three distinct ways: overestimation of one’s actual performance; overplacement of one’s performance relative to others; overprecision in expressing unwarranted certainty in the accuracy of one’s beliefs

Promoting new jobs opportunities and affordable housing

Jobs drop after the Games and too high apt. prices for locals

Project overscaling with respect to the local usage

State of the art Bidding phase

Bias evidences

$16 billion were sports-related costs. After accounting for inflation, this makes Sochi the second-most expensive Olympics ever in terms of sports-related costs and the most expensive Olympics in terms of cost per event. With a public share of 96.5 percent of funding, the Sochi Games had the highest proportion of public money for any Olympic Games on record. The benefit from this high cost, however, is limited. Extensive construction led to hotel overcapacities, investors defaulted on state-backed loans, and there is no coherent plan for the after use of venues and some of the largest infrastructure projects. As a consequence, the Sochi Olympics will continue to be a burden for the Russian state, with expenses for operation, maintenance, and foregone interest and tax revenue in the order of $1.2 billion per year”

The Olympic Stadium and the Main Olympic Village came in 12 times more expensive than budgeted.

These massive overruns are all the more surprising, considering that the bid book stated that “expenses are forecast on the ‘high side,’ recognizing that expenses for Olympic Winter Games are typically under-estimated at this stage” (Bidding Committee Sochi 2006, 99).” “One justification of this high expenditure for the Olympics in Sochi has been that all facilities needed to be constructed from scratch. This is a highly unusual situation for an Olympic Games, where at least some facilities exist at the time of the bid in most locations, even if they need to be upgraded.”

“The high total costs to the public as such would not be so much of a problem, if they indeed led to revenues that would justify these outlays. But this is hardly realistic. Let us assume that the $51 billion of capital costs would have to be financed by floating Russian Government bonds. At 8.5 percent of current interest rates, just servicing the debt would require a massive $4.4 billion profit per year. Each citizen of Sochi would have to contribute $10,500 per year. Alternatively, Sochi would have to attract 4 million additional tourists per year that each generate $1000 in taxes.

Just servicing the debt would consume much of the annual budget of Krasnodar Province (about $6 billion [181 billion rubles] in 2015). The cost of the Games is thus out of proportion to any potential income – whether as tax revenue or employment – that could be gained from it.”

“Total costs were $55 billion, having increased 4.5 times from $12 billion at the time of the bid. Of this total, about Reference:

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60 Proportion of public funding | % in the overall budget

55 x4 x3 x2 x1

12 Olympics Budget | bn $

Economic

The most prominent of Sochi’s infrastructure works deserves special attention. The combined highway-andhigh-speed-rail project connecting the coast to the mountains was the most expensive part of the Sochi Winter Olympics. At $8.7 billion, and its useful life almost over, the Adler–Krasnaya Polyana high-speed railway might just be the most expensive rail project in history. The 31-mile line connects Adler, a city on the coast of the Black Sea along the border of the breakaway Georgian republic of Abkhazia, with Krasnaya Polyana, a skiresort town in the Caucasus Mountains. Its construction exceeded projected costs by at least 90 percent, according to the Anti-Corruption Foundation, which has compiled a map detailing the excesses of the Sochi Winter Olympics.

Bias evidences

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International consultants put into the bid book what they knew that the IOC would like and buy, and when we got the Games it was all of a sudden like: whoooa, we have to deliver on all that and we had no idea how to do that. (Interview with staff of Sochi OCOG) As part of its bid, Russia told IOC members it would be staging a “zero waste” Games that followed green building standards. This was a huge challenge: organizers had to build infrastructure to host 88 other competing countries, the world’s media and hundreds of thousands of spectators in an underdeveloped region that was home to a UNESCO World Heritage site and a national park. Sochi organizers pushed ahead with their green theme, working with the United Nations Environment Program (UNEP) to review construction progress, issuing interim sustainability reports measuring their environmental impact and devising an environmental strategy that promised to deliver the Games “in harmony with nature.”

The staff in the environment function of the Sochi OCOG, often ecologists, however, had almost no experience with any of the promises made in the bid book. Many of them had a background in environmental conservation and protection and in the interviews they pointed out that programmes to achieve carbon neutrality, zero waste or social equity, or to implement a sustainability management system were novelties in Russia.

Endangered local species and protected plants by means of extensive infrastructure - Number of Resorts, Stadiums and infrastructures - Rail-way+High way Adler-Krasnaya Polyana - Airport

The lack of knowledge and controls led to a “Reducing Olympic footprint and managing waste”

Many sustainable practicies were not implemented due to the fact that they were norvelties in Russia

Zero waste& Carbon neutrality, Habitat preservation

Environment

The sustainability agenda for the Sochi 2014 Games is documented in the bid book with which Sochi applied for hosting the event. As an annex to the host city contract that the IOC signs with every Games host, the bid book contains the legally binding commitments of the Sochi OCOG. As such, it is the main document against which the IOC and other stakeholders measure the success of OCOGs to deliver on their claims. For the sustainability agenda, the bid book committed to an extensive range of activities: a comprehensive sustainability management system inside the OCOG, sustainable procurement of inputs, carbon neutrality, zero waste, extensive environmental impact assessments, multi-stakeholder consultations, environmental outreach and preservation and enhancement of natural habitats and land surfaces, among others (Bidding Committee Sochi, 2006: 71–85). As we will see, much of this had been inspired by the previous Winter Games in Vancouver and brought to Sochi through multiple forms of transportation.

The person to head the environment function had come to the OCOG from the state environmental oversight agency (Rosprirodnadzor) and his first task was to familiarise himself with the bid commitments.

It turned out that most of the commitments in the bid book, in his words, were ‘science fiction’. Just like many other bid books for sports megaevents (Pentifallo and VanWynsberghe, 2012), it had been prepared to a large degree by foreign experts, who had been hired for this job, because of their previous experience with other bids. As one interviewee emphasised:

Bias evidences

Moreover, scoping decisions have happened with little regard to measure appropriate sustainable long-term use, so that much of the infrastructure is Reference:

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oversized. The transport infrastructure – touted as one of the principal legacies of the Games – is a case in point. The new airport will be able to handle 3800 passengers per hour at peak time, which equals a fivefold increase over current capacities, but serves a stagnating number of tourist arrivals.

As the experience of conducting the Games in other countries shows, using the legacy in a positive way is one of the most complex tasks. An important aspect in this is determining how to use the venues in post-Olympics. If done effectively, their use after the Games could serve as a catalyst for the development of Sochi as one of the most important sports centres in Russia.

An analysis showed that those facilities that are currently being constructed are excessive for Sochi in the post-Olympic period, even taking into account the creation of a federal sports training centre.

After the Formula One race which cost the region 10 billion roubles (£99 million), the Olympic park is turning into a ghetto,’ he warned.’ The ice plant near Adler-Arena is not used any longer.’ From time to time newspapers write about the planting of greenery in the park but the truth is that it is dying.’Why am I calling it a ghetto? Just look at all those iron fences.’ Apart from the cost of keeping the ice cold, ‘the state is spending millions of roubles on having an ice hockey-team in the subtropical climate.

As if we didn’t have enough already.’ Fisht Stadium - built at a cost of £525 million has been used twice only, he said, ‘at the opening and closing ceremonies of the Games’.

Olympic village Stadiums Airport&Rail-way

Resort&Hotels

Post-Olympics?

Partial reuse | Annual sport events & holidays

Hardly accessible for daily activities by locals: oversized infrastructure and Hotels/ Resorts overcapacity

Abandonment and lack of mantenance

A continue burden in mantenance

$1.2 billion per year.

Decay

AdaptiveReuse

“The Olympic Games were meant to become a catalyst for Sochi’s development as a winter resort, which, together with its reputation for summer holidays, would turn the area into a year-round destination.”

“Most of the venues in the mountain cluster will be used as training sites for future Olympic athletes (see Table 1), but the future for the six stadiums and the main media center in the coastal cluster is uncertain. The initial, rather vague, plan was to repurpose them for exhibitions and events like conventions, concerts, and shows (Bidding Committee Sochi 2006). In 2011, it became clear that Sochi would not be able to fill so much exhibition and event space, and organizers voiced plans to dismantle the two smallest venues (the small hockey stadium and the curling arena) and ship them to other Russian cities (Jones Lang Lasalle 2014). This, however, would have cost more than the construction of the venues. While touted publically as one of the beacons of a sustainable legacy of the Games, the owners quietly shelved plans to this effect as the Games drew closer (Fedorova 2014). The current after use of the Olympic Park and its venues is piecemeal. The Park sees few tourists because of the absence of attractions and its remoteness relative to the city center and the main beaches.”

“Other after-use plans require significant investments.” ““All of this is going to be used by millions and millions of citizens – even before the Games and many years after”

Bias evidences

If the extent of spending for the Olympics in Sochi cannot be justified via the immediate economic impact, one could still argue that the new roads, railways, hotels, and leisure facilities help to attract more tourists. That is certainly the main line of argument of supporters of the Olympic project (Sochi Legacy Report 2014), who expect an increase in tourist arrivals of about 30 percent. But the preparation for the Sochi mega-event has expanded room capacity by so much that this has led to destructive competition for survival among hotels during much of the year.

Due to the seasonality of demand, most places struggled to reach a 50 percent occupancy rate, even before the expansion of supply through the Olympics (Jones Lang Lasalle 2014).

After the Olympics, despite a 22 percent increase in tourist arrivals in the peak summer season in 2014, the occupancy rate was just about 40 percent, whereas it used to be at 70 percent to 90 percent (Aminov and Kiseleva 2015). During the off-season, occupancy rates are as low as 8 percent, even for the new hotels (Weaver 2014).

The Olympic Village was converted into a holiday complex, but the prices are too high for Russians, while the international buyers are not interested in the location.

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Current Hotel&Resort capacity

Expected HighTurism inflow Hotel and Resort Extra room LowMediumTurism inflow

Turistic stock overcapacity

Social

Many 3, 4 and 5-star hotels were built for the Olympic park and the mountain cluster.

But Russians, who constitute to most of the tourists in Sochi, prefer cheaper solutions, such as two-star hotels or bed and breakfast. Additionally, most of the tourists of the area are based in Sochi Central District, around 30 km far from the Olympic park and village.

Preparations for the Sochi Games created and supported an estimated 690,000 jobs.

However, most of such jobs are temporary (in construction, event management and tourism industries) and therefore they won’t last.

Many of them may crowd out other jobs: of the 48,000 jobs created by the London Olympics in 2012 only around 10 per cent are estimated to have been filled by previously unemployed people.

Bias evidences

Decomposing Olympics

Tackling the main categories of the Olympic games

How much do I know about this phenomenon?

Any counterfactual?

Stretch. [...]

The first approach to debias overconfidence focuses on encouraging people to consider more information and/or “an alternative”.

Expanding the knowledge to make better estimates

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UNPACKING

Consequences Set of problems detected due to overconficence in measuring objectives

1 Environmental proposal 2 Socio-Economic proposal 3 Infrastructure and buildings 4 Legacy

UNPACKING

PERFORMANCE TABLE Filtering the scale of the Olympic objects through the context

Recognizing the multitude of aspects that can influence the decisions.

Researching the aspects in order to further personal knowledge.

Enrich the overall perspective

Reflection& Conclusion

UNPACKING

Context of Sochi

A picture of the condition before the Olympics

1 Environment of the site 2 Socio-Economic aspects 3 Infrastructure

Debias methodology

Fisht Olympic Stadium | Sochi Olympics 2014

Decomposing Olympics

IOC NOC Government

Organizing Comittee

Private Corporations

Pre-Olympic Period

Olympic Period

Post-Olympic Period

Investment

Promotion

Migration

Tourism

Sporting Events

Cultural Events

Tourism

Liquidation

Investments

Reuse

Tourism

Construction of sports facilities

Venue management

Formation of the Olympiclegacy

Construction and reconstruction of infrastructure facilities

Business activity

Decrease in business activity

Managing tourist inflow

Fluctuation of touristuc inflow

Image formation

Strengthening the image

Waste management - Recycling

Implementing the adaptive reuse program

Security

Partially maintaining job opportunities + adding new ones

Formation of room stock Forming job opportunities - Staff Training Information Support Sustainable program guidelines and implementation Forming the concept of the Games Establishing the scale and aims of the project according to the needs of the hosting city Establishing a Post-Olympic program Reference:

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Decomposing Olympics

Environmental proposal of Sochi

Socio-economic proposal of Sochi

How much do we know?

How much do we know?

General Olympic Guidelines

Minimizing and offsetting inescapable negative impacts, as opposed to increasing sustainability per se.

1. Having a positive impact on biodiversity.

2. Having operations that emit no greenhouse gases or other harmful substances.

3. Sourcing all products and services in ways that have no negative environmental or social impacts and applying ethical supply chain policies.

4. Treating all products and materials as valuable resources that can be re-used multiple times.

Zero waste and carbon neutral Olympics.

Sochi Objectives

Usee of environmentally friendly building materials and renewable sources of energy, recycling, reduction of greenhouse gas emissions, as well as sustainable water and energy use.

Heat recovery systems, water reuse systems and rainwater use systems, dual-function heating/ cooling technology, energy-saving lighting.

Sustainable management plan - Olympic Movement and IOC documents - Obligations and regulatory requirements - Parties involved - International standards - Timeline of development before/during and post Games Green buildings - Standards of LEED and BREEAM to accomplish - Efficient use of energy, water and other resources.

- Use of renewable energy, such as solar energy.

- Pollution and waste reduction measures, and the enabling of reuse and recycling.

- Good indoor environmental air quality.

- Use of materials that are nontoxic, ethical and sustainable - Consideration of the environment in design, construction and operation.

- Consideration of the quality of life of occupants in design, construction and operation.

- A design that enables adaptation to a changing environment Zero Waste The conservation of all resources by means of responsible production, consumption, reuse, and recovery of products, packaging, and materials without burning and with no discharges to land, water, or air that threaten the environment or human health.

Carbon neutrality - Balancing carbon dioxide emissions with carbon offsets - Reducing carbon emissions to zero through changing energy sources

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Sochi objectives

Accelerating sustainability policies in the areas of energy efficiency, green building, district energy, urban design and agriculture.

Olympic | Unpacking

General Olympic Guidelines

Olympic | Unpacking Improved living standards for all, better protected and managed ecosystems and a safer, more prosperous future.

Creating a safe and inclusive working environment in which all people can flourish.

Helping to create and support thriving communities wherever you operate.

Cost savings.

Long-term positive change in the socio-economic aspect, effective use of resources potential, new jobs and development of Sochi as a new modern and open russian city.

12 billion dollars for the implementation of the project: operational costs $1.648 billion; capital costs $10,638 billion.

Economy growth Russia’s growth slowed down to only 1.3 % in 2013 Emerging markets typically face higher costs of staging such events Both because of a small existing stock of general and sports infrastructure and because emerging market firms contributing to the preparation of the event may lack the technologies and management expertise available to their counterparts in advanced economies.

Uncertainties into account Due to a critical environment all potential changes have to be accounted as part of the budget.

Job opportunities most of lympic jobs are temporary: in construction, event management and tourism industries.

Stakeholders Including the public as a stakeholder in generating objectives regarding Olympic venue design.

Decomposing Olympics

Infrastructure and buildings proposal of Sochi How much do we know?

Sochi objectives

Creating 2 clusters for hosting the Olympics - Krasnaya Polyana Mountain Cluster and Coastal Cluster.

Most buildings to be constructed from scratch.

Improving the existing city infrastructure.

7. Laura Biathlon & Ski Complex 7500 people

Krasnaya Polyana

Motorway + Railway to Mountain Cluster 48,2 km | 12 Tunnels | 46 Bridges It can handle 20,000 visitors/hour (Resort overall capacity is 30,000 people)

8. Rosa Khutor Extreme Park&Alpine center 10250 people 7

10. Sliding Center Sanki 5000 seats 4 ski resorts

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Adler airport renovation 2,500 passengers / hour, 3800 passengers/hour at peak time > 5 times the old capacity

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Sochi Hotels&Resorts 25,000 new rooms

world’s largest construction site

Sochi Olympic Village 47 Buildings 3000 people

Media Center 8,000 mass media representatives + Hotel | 600 guests

Adler Train station renovation 3000 to 5000 passengers/ hour and up to 20,000 at peak time

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The Black Sea Reference:

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Sochi Medals Plaza 20,000 standing spectators

8 - Alpine Center

Olympic | Unpacking 1. Fisht Olympic Stadium 40,000-seat 1 Stadium 2. Adler Arena Skating Center 8,000-seat 3. Bolshoy Ice Dome 12,000-seat 4. Ice Cube Curling Center 3,000-seat 5. Iceberg Skating Palace 12,000-seat

Sochi Olympic Park 20.5 hectars Water Features Olympic Park | 700.000 gallons of clean water

9. RusSki Gorki Jumping Center 7500 people

6. Shayba Arena 7,000-seat 5 sports arenas

Further implementation:

- More than 367km of roads and bridges.

- More than 200km of railways, with 54 bridges and 22 tunnels.

-967,400 square metres of road surface and pavements.

- 480km of low-pressure gas pipelines.

Two new thermal power plants and one gas power plant with a combined capacity of 1,200MW. - Three new sewage treatment plants.

- 550km of high voltage power lines.

- A new water and wastewater treatment facility processing 255,000 cubic metres of liquid per day.

- A new seaport for passenger liners, ferries and personal boats.

- 60 new educational, cultural and health facilities.

-25,000 additional hotel rooms, with 56 hotels now rated four-star and above.

- A new theme park, Sochi Park, with one of the highest and fastest roller coasters in Russia.

Decomposing Olympics

Legacy proposal of Sochi How much do we know?

Sochi 2014

Olympic | Unpacking To project the momentum beyond Sochi and spread these changes across the whole of Russia.

General Olympic Guidelines

Develop Sochi as the Russian Riviera,Sochi as an international brand by transforming the city into Winter destination.

Modernizing and expanding the city’s tourism infrastructure to establish Sochi as an international tourist destination Align the interests of the city, the region and the nation to create the Federal Target Programme for the Development of Sochi as a Mountain Climate Resort The ownership of several venues would be transferred to the Federal Agency for Physical Training and Sports and the Krasnodar region to facilitate the development of winter sports throughout Russia and Sochi as a sports tourist destination.

Investing in sport Restoring Russia’s status as a leading winter sports nation and providing benefits for athletes at all levels.

Sochi Objectives

System of “green” standards The Sochi Games created a system of “green” standards to be used on large-scale projects in Russia, which has created a model for sustainable construction in the world’s largest country.

Year-round destination Sochi transformed from regional summer resort to year-round destination for skiers, as well as summer sport devotees.

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Planning management -Legacy need to be planned well before the event and plenty time to implement -Careful evaluation of the conditions and capacity in need -Long-term plans for the areas involved in the Games -Consideration of the post-event impact on nearby neighourhoods -reduction, reuse, and recycle processes - Creating a specific budget section dedicated to adaptive reuse purposes - Site-specific adaptive reuse plan - Analyzing the specific needs of the citizens and potential tourists of the hosting city.

- Dedicating a section in the budget to adaptive reuse purposes.

- Including easily disassembled structures for a number of venues which will not be included in the - Post-Olympic use of the area.

- Locating venues in easily accessible areas of the hosting city.

- Accounting for functional flexibility during the design stages.

Stadiums

Ski - Lift

Olympic village

Resort&Hotels

Adler Olympic Park

Krasnaya Polyana

-Event Spaces -Conference Hall -Training center -New Sport cluster

-Training winter center for Russian athletes

New Residential Housing stock for locals

Hotel extra rooms shouldrespond to the expected inflow of turist the whole year-round

a coastal cluster for ice event

a mountain cluster

London 2012 as leading example to tackle Legacy

Decomposing Olympics

Context of Sochi

Natural environment of Sochi region Context | Unpacking Climate & Location

Humid subtropical Climate Average annual temperature: 15 °C Heavy seasonal rains

Located nearby the Black sea and at the foot of the Caucasus, just a few km from major ski resorts.

Parks, Habitat and Unesco World Heritage site

Caucasus National Reserve is a Russian ‘zapovednik’ (strict ecological reserve) covering a heavily mountainous section of the Northwest Caucasus Mountains.

It is the largest and oldest in the territory of specially protected natural area in the Caucasus, having been created in 1924 as the Caucasian Bison Reserve.

In 1979, the site was named a UNESCO Biosphere Reserve.

Warm rainy winters Average daily temperature: 5 °C Flood risks in the coastal cluster

Humid subtropical Climate Warm rainy winters Existing resorts Protected Area in 1999 it was included in a UNESCO World Heritage Site.

As stated by the UNESCO specialists, it is the only large mountain area in Europe that has not experienced significant human impact. Its habitats are exceptionally varied for such a small area, ranging from lowlands to glaciers.

Krasnaya Polyana, the site choosen for the mountain cluster is situated 50 km to the north from the Russian resort of Sochi.

Policies Reference:

Olympic | related information

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Sochi National Park is Russia’s oldest national park, established on May 5, 1983 occuping the Greater Sochi area.

From this territory, the park does not include the areas of settlement, such as the city of Sochi and various urban and rural settlements.

Rich diversity of species The region has one of the highest levels of species endemism and diversity in the world: 23% of vascular species, and 10% of vertebrates as well as high flora biodiversity > Red listed and threatened plants

Not present yet or ambiguous Russiadidn’thavestrongandalready implemented policies regarding environmental sustainability.

Bidding by example ?

The aim was following the structure of the 2010 Vancouver games

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Caucasus National Reserve UNESCO World Heritage Site.

The only large mountain area in Europe that has not experienced significant human impact.

Rich biodiversity and endangered species.

Vancouver 2010 as leading example to tackle sustainability

Context of Sochi

Socio Economic aspects of Sochi region

The inhabitants

Population | 443,562 residents up to 600,000 residents in the urban area.

Medium size city and urban area (Moscow population is 12 million inhabitants)

Economic sectors in Sochi

The city area | 176.77 kmq while the Greater Sochi Area covers over 3,502 kmq.

Average salay | 380 euro Average House rent | 582 euro

Averagely medium-low income population

The economy of Sochi is based on trade, construction, resort and tourism:

One of the most popular tourism centres as well as a prominent financial centre in Russia

Urban Development Masterplan Approval of the Government Decree no. 357 ‘‘Federal SpecialPurpose Program for Development of Sochi as a Mountain Climate Resort (2006-2014)’’ on June 8, 2006 was the next important event in the Olympic history of Sochi.

This decree officially expressed that the government wished to develop Sochi and to prepare the city for the Olympics.

An overall Masterplan for Sochi was already prepared before Olympics

retail trade (59%), construction (15%), resorts and tourism (11%), industry (10.6%), transport (3.5%) and agriculture (0.9%) The average annual occupancy rate of hotels and hotels is at 77%, but varies by season.

Terrorism and Conflicts Reference:

Olympic | related information

Further Development

Context | Unpacking

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Huge stock of Hotels already present

Terrorism The 19 of January, Vilayat Dagestan, an affiliate of insurgent group Ansar al-Sunna, released a video statement in which two Islamist militants announced an intention to carry out jihadi attacks throughout Russia and promised a “present” for Russian President Vladimir Putin at the Olympics

Olympic cluster proximity The Olympics will take place in the immediate vicinity of the troubled North Caucasus republics, and therefore security issues will be particularly significant

The Russian-Georgian War, 2008 was a war between Georgia, Russia and the Russian-backed self-proclaimed republics of South Ossetia and Abkhazia. [note 3] The war took place in August 2008 following a period of worsening relations between Russia and Georgia, both formerly constituent republics of the Soviet Union. The fighting took place in the strategically important Transcaucasia region.

“Georgia question” > Political action The Olympics are not being held in one of the internal regions of Russia, but near a disputed border, which Russia considers to be its border with Abkhazia, which it recognises as an independent state, but which Georgia (and the overwhelming majority of countries in the world) sees as the interstate boundary between the Russian Federation and Georgia.

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Medium size city with medium-low income population based on retail and turism.

Security issues due to recent conflicts

Turistic stock already present.

Development of a regional masterplan since 2006

Context of Sochi

Infrastructures of Sochi region

Air transports

Air traffic Sochi-Adler Airport has both the Domestic Terminal with the capacity of 800 passengers / hour, and the International Terminal with the current capacity of 130 passengers / hour.

Water transports

Boat and ferry Sochi has Sea communication with Crimea, Novorossiysk, Abkhazian Gagra and Georgian Batumi.

There are also marine crossings to Trabzon (Turkey).

The port has two passenger berths that have a total length of 330 m, and can accommodate vessels up to 200 meters with a draft of 8.5 m

Terrestrial transports

Context | Unpacking

Coastline infrastructure Sochi-Adler and the whole region is well connected by local roads and a combination of high-way + Railway running along the sea coast.

Punctual roads are also accessing the Caucasian mountains, connecting the seaside with the National Reserve and its peaks.

Sport

A multi-purpose stadium The Slava Metreveli Central is used mostly for football matches.

The stadium was opened 19 April 1964 football match between Syria and the RSFSR The stadium seats 10,200 people and it went sold out just one time in history.

Olympic | related information Upsizing for Olympic games The Austrian construction company Strabag designed and built the new 60,000 m² airport terminal with a capacity of 1,600 passengers / hour in Sochi.

Fivetimes over current capacity In 2012 it opened the entire new airport complex with the capacity of 2,500 passengers / hour, 3800 passengers/hour at peak time

Krasnaya Polyana

Port Renovation After the reconstruction the port was able to admit simultaneously two cruise of 300 mt ships and a ferry almost all year round.

Presence of a scaled infrastructure for Sochi but underscaled for the Games.

Adler-Krasnaya Polyana - 30’ The project for the transport infrastructure included railways and roads between Adler (a suburb of Sochi) and Krasnaya Polyana (mountain resort), along the Mzymta river

Only 1 multi-purpose stadium is present in Sochi.

And few other sport centres

Mountain cluster

SOCHI

Slava Metreveli central Adler Coastal cluster

Coastline infrastructure Existing high-way + Railway and regional road to Krasnaya Polyana

New Rail+highway New Ski lift

Existing Ski lift

Other few small sport centers are present in the Adler area

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Context of Sochi

Performance Table

Environmental proposal

carbon neutrality, zero waste, extensive environmental impact assessments, environmental outreach and preservation, and enhancement of natural habitats and land surfaces, harmony with nature.

Socio economic proposal

Long-term positive change in the socioeconomic aspect, effective use of resource potential, 12 billion dollars for the implementation of the project: operational costs $1.648 billion; capital costs $10,638 billion.

Creating 2 clusters for hosting the Olympics - Krasnaya Polyana Infrastructure Mountain Cluster and Coastal Cluster. and buildings to be building proposal Most constructed from scratch.

Improving the existing city infrastructure.

Legacy

Re-converting all the arenas and coastal cluster into conference/ event spaces. Re-using the mountain cluster as athletes training camps.

Re-adapt the Olympic village as residential stock.

No specific proposal for the after use

State of the art

O v e r c o n f i d e n c e

Olympic Games Sochi

Bidding proposals

Consequences

• The venues are located next to a UNESCO site.

• Environmental function staff with almost no experience with the bid book promises. No one officially in charge.

• Environmental impact assessments not performed, encironmental documentation not provided.

• Loss of objectives from the Bid Book.

• Hazardous waste dumping practices.

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• $4.249 billion - operational costs (158% increase).

• $50,665 billion- capital costs (376% increase).

• $11.894 billion - sports-related capital costs (no initial budget).

• $38,771 billion - non-sports-related capital costs (no initial budget).

• Total of 347% cost overrun.

• Constant threat of terrorist attacks.

• Turned out to be an elite-led project.

• The most expensive Olympic Games.

• The total cost is around $55 billion (1651 billion rubles).

• Public participation in planning had been low.

• Discouraged Access in the reuse • No return on investments.

• Extra expenses on overscale projects.

• High security cost (with no initial budget).

•

• Enough roads and railways to handle 20,000 visitors/hour.

• Occupancy rates falling by between 35 percent and 40 percent after the Games.

• Increased capacity of the airport by 5 times (while the tourist inflow decreased).

• Increased capacity of the train station to host 20000 people at rush hour.

All buildings were constructed from scratch, a completely new infrastructure.

• 5 arenas, 1 stadium, 4 Ski implants, Media Center, Extra Hotel, Olympic Village, Airport and Train station renovation, Highway+Railway AdlerKrasnaya Polyana, Sochi Olympic Park, city facilities.

• Sewage and power plant renovations.

• The Fisht Stadium has only been used during the Olympic Games and FIFA 2018, and is now being deconstructed.

• The adaptive reuse program was not implemented yet.

• Some of the venues have begun to be used as training facilities for Russian athletes.

Damaging the natural habitat of endangered species • Extensive environmental footprint with some irreversible damage.

• Biodiversity lost in the area.

• Parts of the national park have been completely destroyed.

• Added danger of increased landslides, mudflows and building collapses.

•

The venues are a burden for the Russian state with $1.219 billion maintenance costs per year.

• The government has to invest into adaptation program for some venues and demolish others.

• Most of the venues are abandoned and have come to decay.

• Tourist inflow drop-hotel overcapacities.

Olympic Decomposing

Context of Sochi

Unpacking

Counterfactual

Mitigation

Environment Economy&Social Infrastructures Developments

Carbon neutrality

Balancing (offsetting) or reducing carbon dioxite Conservation of all resources production, consumption, reuse, and recovery of products Precise standards to achieve, materials, green energy Protect and restore habitats and prevent species extinction or reduction in range

Humid subtropical Climate Caucasus National Reserve > UNESCO World Heritage Site.

No “Green” Policies alrady active

1. Examining the experience and knowledge of the environmental staff prior to emplementation.

2. Expanding knowledge on the specific sustainability claims.

1. Avoiding construction next to UNESCO site and National Park.

2. Including more specific strategies (rather than general objectives) necessary for the bid book implementation.

Emerging markets typically face higher costs of staging such events Including the public as a stakeholder in generating objectives regarding Olympic venue design.

Most of the job opportunities are temporary Taking uncertainty into account as part of the budget

Medium size city with medium-low income population based on retail and turism.

Security issues due to recent conflicts

1. Examining the specific social and economic needs prior to project proposal.

2. Including a more specific budget according to each design proposal.

1. Considering the possible high and low extents for each budget claim.

2. Is there something that can influence the initial budget?

3. Including the public as a stakeholder.

Coastal and mountain clusters.

Improving the Infrastructure connections between the and city, the Olympic building proposal village and clusters, by means of a railway and high way

Building a whole venue means also considering facing uncertanties due to the natural context and social aspects In a small scale city large infrastructure projects are rarely used to the fullest extent.

Construction site are usually more land consuming that the actual project

Existing Airport and Tain station.

Coastline infrastructure and local high-way to reach the mountains.

Sport centers with appropriate scale

1. Expanding knowledge on the specific context in which you are building and its needs.

2. What is the current situation in Sochi? Do they really need a project of this scale?

1. Are there buildings, venues or infrastructures that can be used as part of the project rather than constructing them from scratch?

2. Avoid overscaled construction.

Re-converting the two clusters to training and event spaces Olympic village as residential stock.

Site-specific adaptive reuse plan Analyzing the specific needs of the citizens and potential tourists of the hosting city Creating a specific budget section dedicated to adaptive reuse purposes Flexibility and accessibility as key cards during design stages

2006, Masterplan for an overall development of the Sochi region, wheater or not the winning of the announcement

1. Expanding knowledge on specific Post-Olympic use examples. What are the needs of Sochi population and how can they be implemented in the adoptive reuse program?

1. Generating a specific after use plan, rather than assigning a general funcion to all venues.

2. Looking at successful examples.

3. Is social housing more in demand than hotels?

Zero waste

Environmental proposal

Green buildings

Olympic Games Sochi

Preservation of natural habitats

Long-term positive change New jobs Development of Socio economic Sochi as a new modern city. proposal 12 billion $ for the project

Legacy

No specific proposal for the after use

overconfidence

M i t i g a t i o n B i a s

How much do we know about the Olympic games and the Context?

Olympic Context Environmental aspects

SocioEconomic aspects

1. In order to mitigate overconfidence, the research phase of the project has to be carried out with more detail. The research and implementation objectives have to be separated into specific categories: environment, socio-economic, construction, and adaptive reuse. The level of ignorance on each one of the aspects has to be stated explicitly.

2. The time and budget of the project have to be approached with a counterfactual point of view: circumstances that could influence the project to the best or worst extent need to be assumed to have happened.

Expanding Knowledge: Unpacking Constructional aspects

Legacy aspects

Sochi Context

- Examining the experience and knowledge of the staff prior to implementation.

-Evaluating the possible strategies for implementation of your objectives.

-Listing and evaluating the various aspects that can potentially influence the implementation of objectives.

- Examining the specific needs of different stakeholders - not only the spectators and athletes in the Olympics, but the citizens of Sochi.

- Evaluating short and long-term consequences of each objective.

- Correlating the scale of the Olympics to the scale of Sochi.

Incorporating specific strategies for the Post-Olympic use.

Conclusion

Group reflection

What evidence is crucial in supporting our claims? Realizing overconfidence and narrow framing are much more linked than what we have initially considered.

6.

Highlighting Evidence of the Overconfidence Bias

Trying to understand the relationship between overconfidence and narrow framing. Understanding we were focusing on the outcome rather than the potential causes and motivation.

7.

Building our Debiasing Structure

4.

Spotting the Biases Deciding not to take the political aspect into consideration, and realizing later that it actually influenced almost every bit of information available!

How do we tackle just overconfidence?

Realizing each group member understands our methodology in his/her own way.

Taking the personality aspect into consideration for the first time in group discussions.

5.

Research II Sorting the Papers Collected 2.

Initial Discussion of the Aspects to Be Considered

8.

Research III Expanding Our Knowledge

Anchoring Risk!

Trying to establish an appropriate frame for our analysis. What are the things we should and should not consider? What is important to us?

Trying to deepen our understanding of the related aspects identified.

Realizing that the information available is very limited.

3.

Research I Collecting Articles and Structuring Reliable Information

9.

10.

Organizing Data

Filtering

Trying to establish an effective structure for our presentation. Listing and sorting all information regarding overconfidence. Realizing we had been collecting interesting but irrelevant information.

1.

Identifying the Case Study Discussing the first pieces of information found in google overesting our abilities to search for valuable details.

Anchoring Risk!

Realizing we were anchoring on information that was not necessarily related to our topic.

Using a matrix to analyze the information acquired. Establishing a relationship between the context of Sochi in general and of Olympics in Sochi. Going back to evaluating the evidence of the overconfidence bias.

What are the things that can be done to mitigate the bias?

Group Discussion.

11.

Final Conclusion and Suggestions

References | Bias evidences

1

2

3

Azzali Simona, The legacies of Sochi 2014 Winter Olympics: an evaluation of the Adler Olympic Park IOC - Internationa Olympic Commitee FACTSHEET: SOCHI 2014 FACTS & FIGURES 2015 Kharunya Paramaguru, The Not So Sustainable Sochi Winter Olympics, January 30, 2014

References | Extra sitography

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https://time.com/2828/sochi-winter-olympics-environmental-damage 4

Kriston Capps, The Sochi Light Rail Is the Most Epic Failure in Olympic History 18 February 2015

https://www.bloomberg.com/news/articles/2015-02-18/russia-s-olympic-sochi-light-rail-may-diebecause-no-one-will-maintain-it 5

6 7 8

9

10

Martin Müller, Universität Zürich, Switzerland Mobile policies: Why sustainability went wrong in the 2014 Olympics in Sochi Martin Müller, After Sochi 2014: costs and impacts of Russia’s Olympic Games, 2015 Organizing Commitee, Sochi 2014: sustainability report 2009-2010 The Anti-Corruption Foundation Sochi 2014: Encyclopedia of spending - The Cost of Olympics Report OC - Organizing Commitee of Sochi Olympic Games 2014 SUSTAINABILITY REPORT Sochi 2014 - Progress report to the 126th IOC session, February 2014

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16

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References | Debias practice

18

https://www.thesochiproject.org/en/chapters/building-the-winter-capital/ https://www.wikipedia.it/ - Overconfidence bias - Sochi - Venues of the 2014 Winter Olympics and Paralympics - Adler Airport and Railway station - Economy of Sochi - Infrastructure -Sustainability: environment https://www.ebrd.com/news/2014/economic-impact-of-the-2014-sochi-winterolympics.html https://www.olympic.org/documents/games-sochi-2014-winter-olympic-games https://chinadialogue.net/en/cities/8660-sochi-olympics-leave-an-environmentallydamaging-legacy/ https://www.nytimes.com/2014/02/24/sports/olympics/sochi-olympics-constructionweighs-on-citys-future.html#:~:text=Ultimately%2C%20more%20than%20220%20 miles,just%20ran%20out%20of%20gold https://wwf.panda.org/?188262/Preparations-for-Olympic-games-in-Russia-notmeeting-environmental-standards---WWF https://tass.ru/sport/1708995 https://www.thesochiproject.org/en/chapters/building-the-winter-capital/

a

b

Valentina Ferretti, Sule Guney, Gilberto Montibeller, and Detlof von Winterfeldt “Testing best practices to reduce the overconfidence bias in multi-criteria decision analysis”, 2016 J. Scott Armstrong, William B. Denniston Jr., Matt M. Gordon The Use of the Decomposition Principle in Making Judgments, 1975

20

International Olympic Committee, “Olympic Games Framework.” Stillmed.olympic.org

Sources

Thank you!