OLYMPICS. As London 2012 winds down, attention turns to Sochi, Russia, host of the 2014 winter Olympics. WSJ's Paul Sonne takes an in-depth look at where Sochi is on building the infrastructure and venues, and talks to the president of the 2014 Sochi Organizing Committee in London about what to expect in two years.

As the London Olympics moved toward their conclusion last week, a pair of Russian helicopters hovered over a mountainside 1,930 miles southeast of the British capital, hoisting heavy metal poles that soon will support new gondolas.

Welcome to Sochi, the Russian resort city on the Black Sea. In just a year and a half, the one-time summer playground for the Soviet elite will host the 2014 Winter Olympics and attempt to show the world that Russia can execute its first major global event since the fall of the U.S.S.R. The stakes—Russia's national pride—are high.

Russian President Vladimir Putin, in a visit to Sochi last year, described the games as a way to mobilize the government and society toward a single, positive national purpose. "Of course there are skeptics," Putin said, signaling his intent to prove them wrong.

"He considers this project his baby," says Dmitry Chernyshenko, chief executive of the Sochi 2014 Organizing Committee. So close is Putin's involvement that shortly after London's opening ceremony, he told a Russian news agency that he's familiar with the preliminary plan for Sochi's opening show and hopes the event will be "no less beautiful."

Still, the challenges for Sochi are many. They include a weakened Russian Olympic team that could embarrass the country at home, and the threat of terrorist attacks that have rocked Russia for over a decade. Then, there are more localized issues, such as whether Sochi will be cold enough for snow, and whether "Europe's largest construction project" will prove unfriendly to the environment.

Chernyshenko said Russia will be ready. "We are on time and on budget," he said.

Sochi's ski facilities are built; most of the venues will be done in the fall; and the stadium will be finished early next year. After that, Sochi will set about hosting 22 international sports events, such as the Grand Prix of Figure Skating, to test the facilities before the games start Feb. 7, 2014.

"We are building everything from scratch," Chernyshenko said. It's like painting on a blank canvas, he said: "You can paint whatever you want and can imagine."

On a recent day, cranes, dump trucks and earth-moving vehicles were busy carrying out Sochi's facelift. Apartments for 2,600 athletes and coaches were in various stages of construction, as workers raced to get roofs on them by winter. Inside the hot and dusty Bolshoi Ice Palace, workmen atop a mechanical arm installed wiring in a scoreboard above the hockey rink.

The mammoth project consists of two main parks: A compact sea-level park, housing the skating venues and a 40,000-seat Olympic stadium; and a sprawling mountain park, which is hosting snowboarding, bobsledding, the luge and skiing on trails as high as 2,050 meters (6,725 feet) above sea level.

The two parks are to be connected by a 30-mile highway, as well as a high-speed train that will run every five minutes and transport more than 86,000 passengers a day. Once they reach the mountain's base via train, passengers will take one of 17 gondolas up to a ski resort and Olympic competition venues.

Sochi is warmer than past Winter Olympic host cities—the seaside park will feature palm and magnolia trees—but organizers dismiss concerns about having enough snow for the games.

To be safe, Russian officials have been packing reserve snow into underground storage facilities for over a year. They expect to have 250,000 cubic meters saved up by the games—an emergency backup supply in case the 430 snow machines that are being installed don't suffice.

"For the competition, anyway, the snow is always artificial," Chernyshenko said. The snow machines Sochi installed operate in 50 degrees fahrenheit or below.

"Mr. Putin told me Sochi has the best snow in the world, and I have no reason not to believe him," former Olympic ski champion Jean-Claude Killy, chair of the International Olympic Committee coordination commission for the Sochi games, told reporters last year.

All told, the budget for the Sochi games is massive, some $18 billion. That includes $2 billion for the organizing committee; $8 billion for constructing the venues; and another $7.2 billion for the rail and highway project, which is being paid for by state-owned Russian Railways. Then there are additional government infrastructure projects.

Much of the money comes from a group of corporate sponsors and investors that includes state-owned lender OAO Sberbank, state-owned oil giant OAO Rosneft and oligarch Vladimir Potanin's holding company Interros. Chernyshenko said the organizing committee will make a profit.

But the $7.2 billion cost estimate for the rail and highway project, in particular, has raised eyebrows. Russian Esquire quipped that for the price, the road's 30 miles could be paved 1.1 centimeters deep in beluga caviar.

"It's a huge, complex engineering project," said Anastasia Chernova, a spokeswoman for the Sochi Department of Railway Construction. She said the project covers 18 miles of tunnels and 24 miles of bridges through the mountains, as well as provisions to restore the environment, such as reforestation.

Officials involved in Olympic preparations insist costs are closely monitored. Last week, Russia's Interior Ministry brought charges against two private subcontractors building the Olympic Stadium and bobsled track, accusing them of trying to swindle more than $250 million in state funds by falsifying expense accounts and overstating construction cost estimates.

More likely to rile the Russian public than corruption would be a poor performance by the country's Olympic team in Sochi. "The biggest failure would be our team losing at the Winter Olympic Games," Deputy Prime Minister Dmitry Kozak said in an appearance in London during this summer's games.

Russia performed disastrously in Vancouver, taking 11th place in gold medals and 6th place overall. The result led to the resignation of the Olympic committee chief and stirred the Russian public into an uproar. In London, Russia finished a respectable third overall, but its fourth place in the gold medal standings – behind the U.S., China and Britain – was its lowest in a Summer Olympics since the breakup of the U.S.S.R.

Alexander Zhukov, Russia's Olympic Committee president, said the Russian team will perform better in Sochi than it did in Vancouver. "We are preparing better," Zhukov said. For instance, Russian athletes now have Winter Olympic practice facilities that they didn't have before, he noted.

Apart from improving the national team, security is perhaps the most serious test. The Black Sea city, population 343,000, is a few hundred miles from Chechnya, Kabardino-Balkaria and North Ossetia, republics in southern Russia's Caucasus region that have faced violence for years. Russia and Georgia went to war four years ago over South Ossetia—a territory claimed by Georgia but run by Russian-backed separatists—about 200 miles southeast of Sochi.

In May, Russian authorities said they foiled a terrorist attack on Sochi after seizing weapons and ammunition in Abkhazia, another disputed region a few miles from the costal Olympic Park.

"You have to understand that Sochi is not the Caucasus," Chernyshenko said. He says Russian security forces are planning to reinforce natural protections provided by the mountains and sea: "Russian authorities are doing their utmost to provide the safest games ever."

Unlike London, which outsourced some security functions to private contractors, Russian police are handling the arrangements for Sochi, Chernyshenko said.

At the city's seaside Olympic Park last Thursday, though, security wasn't so tight. Inside the 632-acre construction zone, an oval-shaped area guarded by a single police checkpoint, a pair of scavengers in an old white Lada sedan had slipped in on a back road and were loading a small trailer with scrap metal to drive out and sell.

Corrections & Amplifications
Russian organizers are spending some $18 billion to prepare Sochi for the 2014 Winter Olympics. In an earlier version of this article, a Web summary incorrectly attributed this spending to the Putin government.

By PAUL SONNE and RICHARD BOUDREAUX
The Wall Street Journal
August 13, 2012, 3:02 p.m. ET

A version of this article appeared August 13, 2012, on page B9 in the U.S. edition of The Wall Street Journal, with the headline: Russia Readies For Sochi 2014— The Putin Games.