Section II: Case Study II - The Salt Lake Organising Committee: 2002 Olympics Our analysis of the case study had the following objectives: 1.
To focus on the role of the new management in redesigning the organization to ensure successful execution of the 2002 Winter Olympics; 2.
To identify the practices involved in the various stages of the project life cycle; 3.
To discover how testing and validation reduce risk and uncertainty when planning a one-time event such as the Olympics. The bribery scandal and how it underpins the sequence of events The bribery scandal had a huge impact on the planning of the Olympics as the financial viability of the games depended on the involvement of various stakeholders and their reaction to the scandal could define the ultimate success of the event, for example: •
The SLC Olympics were originally budgeted at $ 1.55 billion, as $ 751 million was expected to materialize from sponsorships. At the time, this figure meant that SLOC would sign up sponsors far in excess of what had been done in prior Winter Games. In the wake of the scandal one delicate negotiation with health-care giant Johnson & Johnson was broken off followed by withdrawals from other sponsors. •
After the scandal the federal government, which was meant to provide funds for transportation and security, pulled back; •
The impact of the scandal on the general public should also be taken into consideration, as people would be expected to purchase tickets and turn the Games into a profitable business venture. After the scandal SLOC recognised the need to separate the tainted committee of the past from its future; therefore, Mitt Romney was brought in as CEO and Fraser Bullock as COO. The challenges were correctly identified right from the start of their appointment: $400 million budget deficit, knowledge gap, lack of relevant experience, dysfunctional organisation, staff operating in silos, inexperienced volunteer staff, no operational plan in place. Effective action plans were implemented in order to tackle the above challenges: tiered level of importance expense categorisation was introduced, new revenue generating areas were identified, people with significant international event experience were brought in and meld with those that had no such prior experience, the organisation was flattened to shorten the distance between Romney and Bullock and some key functional areas, staff was empowered by top management to come up with own solutions to challenges, an organisational culture was built up to give all staff the sense of common purpose. Hugely optimistic budget
As a result of the scandal, the budget given to Romney when he joined SLOC reflected millions of revenue dollars unlikely to materialize. Due to the existing challenges, the financial strategy became the core project strategy. The objective of the new financial strategy was to restore confidence by creating a validated budget while keeping the books wide open. The entire system of managing the project is therefore, severely impacted by this strategy. Cash flow rules with support from the bottom
In order to cut unnecessary costs, Bullock categorized all expenses into what he called a “tired level of importance”. The classification took care of a lot of overheads automatically. Bullock also developed further Romney’s idea of identifying new revenue generating areas: sponsors were approached to fill in as many gaps in the budget as possible – for example, SLOC convinced Microsoft to develop and host the website as a sponsor. To secure the necessary cuts, Bullock realized he had to win the trust of Olympic staffers. Bullock made sure the staff knew the ‘lack of choice’ scenario behind the strategy of cost cuts, but more importantly he wanted his staff to feel comfortable with the cost cuts philosophy and incorporate it into their own decision making. He let the functional managers decide on their own lists of priorities when suggesting cost cuts. In this sense, the...
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