IRRATIONAL BUDGETING: CONCLUSIONS

Posted by Kathryn Schwartz on January 18, 2014
Economy

CONCLUSIONS

In addition to the increased scope of activities, the other major reason for increased costs/budget estimates was delay at all stages in respect of most activities. These delays, with consequent bunching of activities towards Games time, led to substantial increases in cost.

The unique challenge of managing and monitoring the activities of multiple agencies for delivering the Games project should have been met by entrusting its stewardship to a single point of authority and accountability, with adequate mandate to ensure all deliverables in time, to cost, and to specified quality standards. Further, in view of the Government guarantee for meeting the cost of the Games, it was essential for such stewardship to be fully under Government control. However, this model of management or financial control was not followed for the Games project. Design process

In the absence of a single point of authority and accountability and the lack of a clear governance structure, a multiplicity of co-ordination committees was created. This approach was not methodical, consistent and effective, and also led to complete diffusion of accountability. This was unlike the structure for the Melbourne CWG2006, where the Victorian Government oversaw the planning and delivery of the Games through a specially formed Cabinet Committee. The Minister for Commonwealth Games was specifically empowered and made responsible under the Commonwealth Games Arrangements Act 2001.

The above mentioned inference is based upon the CAG report number 6 (2011-12).

The success and failure of any mega event depends upon the foundation of an effective budgeting and control. The highly conservative and unrealistic size of the budget leads to revisions of estimates at very short intervals, which impacts the delivery of performance and cast shadow on the whole event. The other contributors in such fiascos includes increased costs/estimates due to non accomplishment of assignments/projects at appropriate time, thus results into bunching of activities towards the end and consequential increase in cost.

The absence of a single point of authority and accountability contributes to the piecemeal approach towards cost estimation and budget approvals; and such approaches are required to be curbed ab-inito to preserve the reputation of a country and augmentation in the economy of a host city/country. The comparison of two editions of Commonwealth Games clearly indicates that the Commonwealth Games 2006 Victoria because of its effective budgeting, control and authority with responsibilities has impacted on the economy estimated to result in an increase in Gross State Product and employment. By contrast, the irrational budgeting, control and lack of single authority and responsibilities in the Commonwealth Games 2010 Delhi led to increase the burden on public exchequer more than 15 folds than projected during the bidding for the Games. The precipitous increase was compounded by several instances of lack of financial prudence and propriety across the range of implementing agencies.

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