Expo 86

Adapted from: Ross, Jerry, and Barry M. Staw. 1986. Expo 86: An Escalation Prototype. Administrative Science Quarterly 31 (2):274-297.

Some photographs of the Expo 86 in Vancouver.

Hosting a world exposition in Vancouver, BC was initially suggested by Provincial Premier William Bennett in 1978. The fair, to be held in 1986 would highlight Vancouver's centennial celebration. On June 20, 1979, BC formally filed an application with the International Bureau of Exhibitions (IBE) to be sanctioned to hold the fair, and on Nov 29, 1979, the application was approved in principle. On Feb 12, 1981 a Crown corporation was established by the government of BC to oversee the management of the fair. Over the next five years, they would make the necessary preparation for the exposition, which was to be held in the five-and-a-half month period of May 2 to Oct 13, 1986.

The initial plans called for a very modest expo with a total budget projection of $78 million. On May 20, 1980, the provincial secretary, speaking for Premier Bennett, promised a fair that "can not only be substantive and exciting but would also be good business." In 1980 and in early 1981, a number of analysts and outside consultants prepared reports on critical variable affecting the fair. Of particular importance was the fair's anticipated attendance of 12.5 million, a number calculated in Attendance Analysis and Physical Planning Guidelines for Transpo 86, by Economics Research Associates in July 1981. This figure was based on an assumption of primary, secondary, and tertiary population zones surround the Expo 86 site, coupled with data on attendance at past fairs. The 12.5 million figure was "based on the assumption that local residents will exhibit a very high propensity to attend the event on a repeated basis."

In Feb 1982, the federal government did agree to provide major funding for Expo 86. The figure agreed upon was $160 million, However, $75 million was earmarked for the construction of a federal pavilion, while $60M would be devoted to the construction of an advanced rapid transit system. Thus, only $25M would be available for general fair expenditure. Moreover, the federal government refused both to increase that dollar amount and, more ominously, flatly refused to accept any responsibility for unprojected losses that the fair might incur.

The BC premier decided to continue with plans for the fair: "The bottom line is that Victoria [seat of provincial government] has assumed all the risk in return for the fixed federal contribution" (Vancouver Sun Apr 2, 1982). The premier had again affirmed his decision to host the fair, with responsibility for the outcome now resting with him and his provincial government.

BC has a history of tumultuous labor-management relations and the Bennett Social Credit government was overtly hostile to the union movement. A key conflict centered on whether the Expo site would be a closed one - that is, restricted to only union labor. Clearly, in BC a great deal of union labor would be needed to construct a project of this size. Non-union contractors simply lacked the size and expertise. Most BC unions also have non-affiliation clauses in their contracts that prevent them from being forced to work on sites with non-union labor. This conflict, which had been heating up throughout the late 1983, reached a boiling point in early 1984.

Crisis

On Mar 30, 1984, in a televised address Premier William Bennett threatened to cancel Expo 86. He vowed that unless there was a promise of union peace on the site he would terminate the fair. He appointed Jim Pattison, the fair's chairman, as a special representative to reach agreement with the unions and set a ten-day deadline.

The next two weeks were frantic ones. The Bennett government has tied itself to the Expo not only by clear lines of responsibility but also by being politically vulnerable. "Expo was conceived as a key part of the Social Credit government re-election strategy, which would likely put to test in elections the year after the fair. A successful Expo will held Bennett's Socreds, but a financial flop would turn it into a liability." (Toronto Star, Apr 10, 1984)

There were other problems. Observers noted that tens of millions of dollars had already been invested in Expo. To close down the project at this point would result in all of these funds being lost. Rumors also circulated that the federal government might sue to recover the money it had provided if Bennett chose to pull the plug. Other groups collected petitions with thousands of signatures, demanding the Expo be continued.

On Apr 11, 1984, Jim Pattison recommended that Expos 86 be cancelled. He had been unable to negotiate an agreement with union officials over construction practices on the Expo site. At this time, he estimated that $80M would be the cost of a shutdown. However, he suggested that "we should bite the bullet and get it over with." (Globe and Mail, Apr 12, 1984) Pattison stated that it was better in his estimation, to absorb the $80M write-off than to saddle taxpayers with a potential loss of $950M and face even more embarrassment.

Reaffirming Commitment

On Apr 16, 1984, Premier William Bennett announced he was overruling fair director Jim Pattison's recommendation to cancel the fair. The fair would go on. It was his intention to pass special legislation to ensure "that neither the unions nor anyone else could disrupt the fair." (GAM, Apr 16, 1984)

At this time, Bennett announced that he was unconcerned about skyrocketing cost and deficit estimates for the fair. Any deficits, estimated by some at $140M, twice the 1978 cost estimate, would be made up by increased sales of lottery tickets. "I don't consider that taxation," stated Bennett. In order to produce the relatively low deficit figures discussed, estimates of the fair attendance were boosted to 28 million - roughly equivalent to every man, woman, and child in Canada. No mention was made of how the infrastructure of Vancouver could cope with such an influx.

Without advance warning, Jim Pattison ordered cutbacks in the Expo 86 budget. The aim was to maintain provincial exposure in the billion-dollar event at $806M. This required over $129M in budget cuts. Pattison ordered the cuts after it was discovered that nobody had budgeted $17M for a promised monorail, and dozens of other special-interest events had ballooned out of line.

On Nov 7, 1984, Expo reduced official estimates of attendance to 15 million visits, following Pattison's "sobering" visit to New Orleans. In late December, attendance projections were reduced still further to 13.75 million visits.

Finally, on Jan 23, 1985, Expos released updated budget estimates. Overall, the fair was expected to cost $1.5 billion. The provincial government's share would be $802M, which was expected to produce a deficit of $311M. It was also revealed that Expo had known of this massive deficit for over a year. "It's a Crown Corporation," said finance chairman Brown, "if it runs out of money, who do you think is going to pay for it?" (GAM, Jan 25, 1985)

Analysis

Certainly, one feature that may have contributed to the continuing-Expo decision was information processing errors. The clearest manifestation of this was in the ever-increasing attendance estimates. At the fair's proposal stage, outside analysts suggested 12.5 million visits as an upper limit. This would strain Vancouver's capacity and made generous repeated-attendance assumptions. As the budgetary situation worsened, however, these figures were converted from ceilings or optimistic estimates to worst-case scenarios. Throughout the Expo planning, when warnings of budget overruns were repeatedly provided in staff reports, the signals were virtually always ignored or downplayed. As one staffer noted, "The whole emphasis among the Expo staff was on being positive." And even when the Expo budget ballooned to nearly a billion dollars in 1984, the Premier was still publicly speaking of a break-even project that would attract 20 to 28 million visits, a figure that was technically improbable, given the shortage of hotel rooms, parking, and traffic control."

Premier William Bennett had initially proposed the project, stating at that time "This [Expo] is a total and whole-hearted commitment by your provincial government." (Vancouver Province, Jan 30, 1980) Subsequently, in 1982, with the threat of a lack of federal support, he again took personal responsibility for continuing the project, stating that "it would be easy to forego these projects but I say it is time for government to ignore those who would wring their hands." (Vancouver Sun, Apr 2, 1982) When the fair was again threatened in 1984, with critics, columnists, and the fair director urging cancellation, the Premier personally overruled these suggestions and determined that the fair would be held.

As Expo became a billion-dollar project, the political fate of the Premier and his party became increasingly linked to the fair. Some observers felt that his decision to overrule fair cancellation stemmed at least in part from the fact that politically it was already too late. Because he was so closely linked to the fair, the fallout from the project cancellation would not be settled by the next election. Additionally, public opinion polls suggested that the fair remained politically popular. Despite the eventual financial impact, the short-run political impact of staging the exhibition appeared positive.

Federal funds were provided for the construction of major accompanying projects, and the 1982 reaffirmation of the project raised the profile of the Expo. Subsequent to 1982, major efforts were made to sign up participants for the fair. Dozens of countries were induced into hosting exhibits. A series of relationships also developed with other parties directly associated with the expo - realtors, architects, construction companies, parking garages, and the ever-growing Expo staff itself.

As the fair planning progressed, a secondary set of indirect constituents became involved. These included not only hotel, restaurant, and transportation industries, but also small businesses, photographers, souvenir shops, and the like. In addition, as time passed and the fair's scope and profile increased, a variety of symbolic attachments affecting the average BC citizen became associated with the Expo decision - ranging from BC's reputation as a province that completes its projects, to the very definition of western Canada as on a par with the East and Vancouver as major city, the equal of Toronto or Montreal.


Discussion Questions

  1. How did psychological and social factors led to the decision to persist with the project?
  2. In what ways did the project become embedded in the culture and politics of its stakeholders?
  3. How can we avoid decision escalation errors?