Impact/legacy measurement and evaluation in mega events projects with

focus on intangible assets

Mauricio Nunes Rodrigues

Marcos Cavalcanti (COPPE/UFRJ)Ahmed Bounfour (UPSUD)

The 8th International Doctoral Consortium on Intellectual Capital Management27 may 2015

Content

1. Introduction2. Research Question 3. Methodological approach4. Model development5. Model validation study (FIFA 2014 World Cup

Tourism impacts)6. Next steps

1. Why hosting mega event projects?

• Increasing number of stakeholders interested in hosting international mega events, despite criticism regarding:• costly and complex bidding and implementation projects• actual scene of poor performance in terms of public support

and economic / environmental outcomes

• Why these stakeholders place value on hosting such events (e.g. Olympic Games, Sports World Championships, Festivals, Cultural and Political summits)?

1. Potential economic benefits

Directs• Capital flow to host city/country• Infrastructure construction or

upgrade• Lower transportation costs due

improved networks• Increase in tourists spending

Indirects

• Advertising effect of the host city/country as a potential tourist or business destination

• more local business opportunities

• Improved local sense of community and civic pride

• Improved perceived abroad image of the host city/country

• Citizen entertainment and welfare

• Human resources skills development

• Motivation to a more active life(Clark, 2008; Kasimati, 2003; Preuss, 2007; Preuss, 2010; Zimbalist, 2010)

1. Potential downsides / risks

• Don`t be able to deliver all positive impacts (planned or unplanned)

• Socially unjust displacement and re-distributions

• Poor urban land use

• Underused facilities after the event

• High public debts

• Excessive costs

• Athens 2004 more than US$ 10 bi

• Beijing 2008 more than US$ 40 bi

• London 2012 about US$ 15 bi

(Cashman, 2010; Haußermann & Simons, 2000; Flyvbjerg et al. 2003; Zimbalist, 2010)

1. Costs x Investment - Are it worth it?

• Key role on public policies and investment (tourism and business destination attractiveness, business growth, urban regeneration, and infrastructure, image, environmental and local population quality of life improvements)

(Clark, 2008; OECD, 2010; Orueta & Fainstein, 2008; Preuss, 2007; Zimbalist, 2010)

• When hosted well, the mega event project can play a significant role in city/region local development, growth and competitiveness

(OECD, 2010)

• The benefits do not occur by accident or without an effective action

Need strategic vision and a proper impact planning and management

(Clark, 2008; IOC, 2009b; OECD, 2010)

• Impact strategic planning and forecasting traditionally done by a best practice / benchmarking approach with basis on tangible socio-environment-economic indicators

(Preuss, 2007)

• Do not provide relevant information for effective decision-making, neither for the strategic management of the future positive impacts, legacies and benefits

• The value of nations, regions, organizations is directly related to their intangible capitals and depends on systems to visualize, cultivate and capitalize on value-creation interactions

(Edvinsson, 2003; Edvinsson & Bounfour, 2004)

1. Impacts planning and management

2. Research question

How could we measure and evaluate the impacts generated for and by mega event projects, taking into account the intangible assets, with a focus on future

value creation (legacies)?

3. Methodological approach

• Qualitative and strategic design with basis on the intangibles approach

Hypothesis Evidence

1. The mega event project’s decision-makers and managers should base their decisions not only on tangible socio-environment-economic analysis

The traditional approaches to mega projects performance measurement and evaluation are insufficient to support the strategic maximization of the potential benefits (Flyvbjerg et al., 2003)

2. The measurement and evaluation of the intangible aspects can help to improve the significance of the positive impacts expected by some stakeholders

The intangible assets have become strategic factors for value creation, and are considered central factors to economies’ growth and competitiveness (OECD, 2008)

3. It is possible to develop a reliable operational method to measure and evaluate the mega event projects intangible aspects

????

3. Objective

To develop a diagnostic model for measurement and evaluation of the mega event projects impacts and legacies, taking into account the intangible assets

3. Methodological approach

4. Model development

• Focus• to identify the relevant intangible assets, the

interdependencies between then, the success factors generated, and the variables that should be collected

• Strategy = research case study • To guarantee the external validity and follow the strategic

approach • To prevent the lack of a real-life event context and a well

defined objective to the impact analysis• Widely used in organizational and managerial studies when the

investigators are interested in understand complex social phenomena (Kohlbacher, 2006; Yin, 2003)

4. Model development• Case analysis

• Assessment and evaluation of the impacts on the intangible assets and outcomes of the FIFA 2014 World Cup interventions on the Rio de Janeiro city tourism industry

• Mixed approach• Based on the Intangible Capital Rating - CRIE/BNDES

(Deutscher, 2007, 2008 and Cavalcanti, 2007) and the Intellectual Capital Dynamic Value - IC-dVAL (Bounfour, 2000, 2003)

CRIE/BNDES IC-dVAL Identification of the assets which the organizations should have to implement their future vision

Integration of a link between the financial value of assets and the internal performance

4. The MEI2 Model

The operational version of the Mega Event Intangibles Impacts Model (MEI2 Model) consist of:• 5 Dimensions• 15 Assets (resources, competencies and processes)• 42 Indicators

4. The MEI2 Model

5. The MEI2 Model Validation

• Data collection• Interviews with FIFA 2014 World Cup stakeholders directly and

indirectly impacted by the interventions on the Rio de Janeiro city tourism industry

• The sample was divided in two groups

• Focus• Stakeholders perceptions of the performance and impacts of the

interventions on the intangible assets and outcomes listed as main sources of competitive advantage for its strategic objectives

Internal stakeholders External stakeholders

Decision-makers and local project management staff from government bodies

Tourism industry business associations and unions

Other sectors business associations and agencies

Megaproject / event specialists

• Data collection in 3 steps

• Step 1 – Impact analysis

• Step 2 – Foundations of the stakeholders perceptions

• Step 3 – Identification of the ideal competitive positioning

5. The MEI2 Model Validation

5. The MEI2 Model Validation

5. Preliminary results

Degree of importance (the relative value) for each dimension of intangible capital

5. Preliminary results

Performance Ratings of the FIFA 2014 World Cup interventions on the Rio de Janeiro city Tourism industry

5. The MEI2 Model Validation

• Preliminary conclusions• The concentration of importance in human capital by internal

stakeholders (35% of the overall weight) was reflected in the division of financial resources to professional and languages skills training (about 74% of specific budget for tourism intervention)

• The strategic positioning captured by the model in both groups (but more concentrated in internal stakeholders) leads us to infer that the strategic positioning of tourism interventions was more focused on project execution internal questions than to the lasting potential benefits of the project for the tourism

• The Overall performance rating (11,5%) situated in the first improvement quartile indicated a fair overall positive impact of the FIFA 2014 World Cup interventions on the Rio de Janeiro city Tourism industry

• There is a significant different performance perception between the two groups of stakeholders (38,5% - internal X 2,5% - external) derived by a pessimist perspective from the external stakeholders

6. Next steps• Increase the sample

• to expand the field of analysis. E.g., increasing the number of subgroups regarding the external stakeholders (tourism industry, non-tourism industry and megaproject specialists)

• To reduce the risk of the Type I error (false positive) in comparisons between groups

• Collect data about the intervention expenditures for each dimension of intangible capital• to calculate the dynamic value of the Intangible capital

• Define a set of external indexes and socioeconomic indicators• to compare and benchmarking the expected benefits (tourism and

business destination attractiveness, business growth, urban regeneration, and infrastructure, image, environmental and local population quality of life improvements) with our results

Thanks for your attention!

Questions and comments?

Mauricio Rodriguesmauricio@pep.ufrj.br