The Norwegian Parliament produced five budget propositions between 1990 and 1995 for the '94 Winter Olympics in Lillehammer. To obtain five different propositions, the budget was amended on four separate occasions by parliament. The estimated final cost was 379,514 Norwegian kroner over the original budget from 1990 (roughly $50,000 USD). Did any of these budget changes by the Norwegian Parliament predict exceeding the original budget more than other years?
To analyze the relationship between the individual budget changes and the predictability of exceeding the original budget, I created a logistic regression model to compare coefficients between the years to establish relationship strength of the individual budget change to the eventual outcome, overspending. I looked at Lillehammer's budget expenses (obtained in the Lillehammer Olympic Official Report) and selected 20 expenses that were covered in all five parliamentary propositions. The chosen expenses range from sport venues to marketing costs to cultural venues, covering all major aspects of hosting the Winter Olympics. The individual budgetary changes made by parliament serve as the predictor variables. The Norwegian Parliament made changes to the budget in 1991, 1992, 1993 and 1994. For each expense, I designated whether the budget allocation increased or did not increase (either staying the same or decreasing) in that year.
The chart from my model and the results from the regression test are shown below:
[1 = increase; 0 = did not increase]
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| Norwegian Parliament Budgetary Changes |
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| Coefficients from Regression Model According to Year |
The year 1992 had the highest value for a positive coefficient which indicates that increasing an individual expense in that year had the highest probability of going over budget. Conversely, deciding not to increase an individual expense yielded a lower probability. The year 1994 had the lowest coefficient as most expenses were already over budget and attempts to shrink the budget failed to make a difference in the eventual outcome OR projects were already sufficiently under-budget to the point that increasing the allocated funds made no difference in keeping the expenses below the original budget.
These coefficients explain that the budget changes in 1992 (in which 15 out of the 20 selected expenses were increased by the Norwegian Parliament) indicated the highest probability of going over the original budget. The parliamentary decisions in 1992 had strong effects on future parliamentary decisions as opposed to 1991, when the construction process was still fairly new and unfamiliar, thereby making budget changes less predictive of future action. The increased probability of exceeding the budget after 1993 is what prompted parliament to wisely cap the total Olympic budget at 7,374,514 kroner in 1994. Perhaps if Russian officials had done the same, Sochi wouldn't have produced $2.5 billion in estimated national debt...
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| Lillehammer Olympic Budget from Official Report |
