After Euro 2012: what the infrastructure was worth, and what it cost

The tournament ended on 1 July. Ukraine hosted matches in Kyiv, Donetsk, Kharkiv and Lviv, and by the standards that matter to a host — logistics, security, visitor experience — it went considerably better than most external forecasts suggested.

This entry is about what remains, because the sporting event was three weeks and the infrastructure has a design life of thirty years.

The assets worth having

The airports are the clearest gain. Kyiv Boryspil's new terminal, and the rebuilt airports at Lviv, Donetsk and Kharkiv, replaced facilities that were genuinely unfit for purpose. Lviv in particular changes the economics of western Ukraine: an airport capable of handling low-cost carriers puts the city within a two-hour flight of most of Central Europe, which matters for tourism, for the software industry's recruitment and for business travel.

The road corridors — Kyiv to Kharkiv, Kyiv to Lviv, and sections around each host city — are the second durable asset. Ukrainian trunk road quality was among the worst in Europe and remains poor away from these corridors, but freight transit times on the improved sections have fallen materially.

Rail rolling stock was renewed on the main intercity routes with new high-speed sets. The service is genuinely competitive with driving on the Kyiv–Kharkiv and Kyiv–Lviv routes for the first time.

The stadiums are the weakest part of the portfolio, as they are after every tournament. Two of the four have a plausible commercial future; the others will be a maintenance liability on municipal budgets.

The cost comparison

Poland co-hosted the same tournament, built a comparable programme of stadiums, airports and roads, and spent less per unit of delivered capacity. The difference is not construction cost inflation, wage levels or terrain — Polish wages are higher.

The difference is procurement. Most large Ukrainian contracts in this programme were awarded without genuine competition, under emergency provisions justified by the tournament deadline. Where a single bidder faces a deadline-driven client with no alternative, the price is whatever the bidder says it is.

That is the specific, measurable cost of a procurement system that lacks transparency, and it is the strongest available argument for the electronic tendering reform that will be introduced four years from now. Anyone who wants to know what ProZorro is worth should compare these two national programmes.

The lesson about deadlines

There is a genuinely positive finding here that deserves separating from the cost critique. Ukraine demonstrated that it can build large infrastructure to an externally imposed deadline when there is political consensus on the objective and international scrutiny of the outcome.

That combination — hard deadline, external observer, agreed goal — is rare in Ukrainian public administration and it produced results that the normal capital investment process has never produced. It is worth asking what else could be organised that way. Reconstruction of the energy system, motorway completion and border crossing capacity are all candidates.

What businesses should take from it

Two practical points. First, if you are assessing Ukrainian logistics costs, update your assumptions: transit times on the improved corridors and through the rebuilt airports are materially better than the figures in any pre-2010 analysis.

Second, if you are considering bidding for Ukrainian public work, note that the current system rewards relationships over price and that this is about to change. Firms that build compliance and documentation capacity now will be positioned when the tendering rules do.

Related in this archive

• Chernivtsi and the Habsburg west: why the map still shows
• Organised retail: the shift from bazaar to mall, and what it revealed
• From Mendeleev to the first Soviet computer: Kyiv's technical inheritance
• Ukraine Annual Review 2012: stagnation with one door opened

What I noticed leaving the airport that year was less the terminal than the road being finished — and that road is still there. A deadline getting work done is the strongest effect I have seen on my own sites too. Whether the cost was too high can be argued; but without the date most of the work would never have started, and that has to be said as well.