The troubled Diana, Princess of Wales Memorial Fountain has been described as a "muddy bog" and "open drain" by MPs.
The fountain opened in July 2004
The Hyde Park monument, which was plagued by problems like blockages and slippery stones that led to visitors injuring themselves, re-opened in May.
Officials from the Department for Culture, Media and Sport and the Royal Parks were grilled at a Public Accounts Committee (Pac) hearing on Wednesday.
The fountain, which opened in July 2004, had cost £5.2m, it was revealed.
MPs were told the project went over budget by £2.2m and most of the overspend was on improvements made after teething problems that forced the fountain to shut three times.
Labour MP Sadiq Khan said the monument was a "fiasco" and criticised officials for failing to realise how many people would be interested in the site, given that Diana's death was such a "big deal".
"I find it implausible that nobody said ... lots of people want to go to the memorial," he said.
Department for Culture Media and Sport permanent secretary Dame Sue Street said she regretted that visitor numbers to the monument had been underestimated.
"Coach loads of children arriving in their swimming trunks had not been envisaged," she added.
She also told the hearing that initial projections for the running costs - now set at £250,000 a year - did not take into account that stewards would be needed to staff the site.
The fountain has been plagued with problems since plans to build it were announced in September 1999.
Originally due to open in the summer of 2003 - six years after Diana's death - it was delayed because it proved hard to find agreement on what it should look like.
When US artist Kathryn Gustafson's 80m by 50m oval stone ring finally opened, it shut again within days because leaves blocked the drains, causing it to flood.
It closed for a month three weeks later and new safety rules were imposed when three visitors slipped and hurt themselves while paddling.