Who the heck budgeted this thing? If I gave an estimate of three bucks and it turned out to be five, no sweat. But if one was looking to spend 3 billion and it turned out to be $5 billion??? That's some serious scratch!
first quote made up from thin air
second quote you go to the contractors with finished plans and numbers and they calculate how much work it will take and give you a realistic number
first quote was in a recession. i bet the price of materials is higher now than a few years ago as well.
Dangerous thinking, my friend. Having a lot of cash doesn't mean you are allowed to squander it all away. This is exactly a reason why I, as an investor, don't like corporations keeping too much cash on hand. They will fall into the mindset of "we have too much, this amounts to nothing". They will build corporate jets, pay for expensive retreats, or overpay on acquisitions (think Microsoft). I prefer that company keeps a good amount of cash, say $50B, for capital projects, R&D and acquisitions, and distribute the rest to investors. With their cash hoard near $150B now, you've gotta admit it's more than they need to run their operations.
So you actually prefer, as an investor, that they use their money to pay you money. OKAAAAY.
As an investor, I prefer they use their money to buy you out so I don't have to read that crap again.
How can anyone accurately price a building like this? Yea it will be round with custom curved glass panels and the entire 30 acre roof will be solar panels. Plus all the custom and cutting-edge stuff we don't even know about and it will take 5 years to complete. The original quantity surveyor probably screwed up the original estimate or didn't have enough information to price it properly.
Serious question. Such quotes for multi-year projects are not made in nominal (i.e., price inflation-included) dollars!?
It can be, but typically is not.
In most cases, the contractor either absorbs any inflation or locks in the price of key raw materials as soon as they get the contract. Only rarely would someone building something like this agree to an inflation adjustment for the capital cost.
How can anyone accurately price a building like this? Yea it will be round with custom curved glass panels and the entire 30 acre roof will be solar panels. Plus all the custom and cutting-edge stuff we don't even know about and it will take 5 years to complete. The original quantity surveyor probably screwed up the original estimate or didn't have enough information to price it properly.
If the contractor is competent to build it, they should be able to price it.
There are, however, many unknowns. For example, someone pointed out above that if Apple changed the plans, that would greatly increase the price. Or maybe Apple relied on a 'budgetary' price for their estimates and the actual firm prices are coming in higher (which is not at all unusual, although a 67% increase is).
AI reported that each tree would cost $60K to relocate.
I call BS on that estimate unless they're bringing them from, say, Armenia. We had a 25' tall, 8" trunk diameter maple tree planted in our front yard for a total of under $900.
I call BS on that estimate unless they're bringing them from, say, Armenia. We had a 25' tall, 8" trunk diameter maple tree planted in our front yard for a total of under $900.
Even in Business Class it wouldn't cost that much from Armenia. For $60,000 I'd expect them to come from some magical land called Apricotia
Who the heck budgeted this thing? If I gave an estimate of three bucks and it turned out to be five, no sweat. But if one was looking to spend 3 billion and it turned out to be $5 billion??? That's some serious scratch!
They probably ran into difficulties installing the warp engines.
How can anyone accurately price a building like this? Yea it will be round with custom curved glass panels and the entire 30 acre roof will be solar panels. Plus all the custom and cutting-edge stuff we don't even know about and it will take 5 years to complete. The original quantity surveyor probably screwed up the original estimate or didn't have enough information to price it properly.
Not to mention once they put the contracts out to bid the price got inflated, just because it is Apple. Those contractors will earn their money though complying with the obsessive attention to detail required by Apple.
Uh, anyone that has been involved in any ambitious building project knows that this is par for the course- The initial estimate is almost ALWAYS way, way off.
Also, investor relations nightmare? I thought investors were running around shrieking with concern about how much money Apple has in the bank, shouldn't they be satisfied that some of it is being used? Apple can do whatever the **** it wants with it, and I can't think of a better use $5B for a new HQ that is going to serve them for the next few decades. Their hoard is approaching $150B, this is nothing but a drop in the bucket considering the real, significant benefits. Instagram was acquired for $1B. Motorola, $8B. Skype, $12B. A state of the art HQ for the most successful company on the planet is worth every penny.
If the contractor is competent to build it, they should be able to price it.
There are, however, many unknowns. For example, someone pointed out above that if Apple changed the plans, that would greatly increase the price. Or maybe Apple relied on a 'budgetary' price for their estimates and the actual firm prices are coming in higher (which is not at all unusual, although a 67% increase is).
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
Not to mention once they put the contracts out to bid the price got inflated, just because it is Apple. Those contractors will earn their money though complying with the obsessive attention to detail required by Apple.
I'm an electrical engineer and I see this all the time. For a multi-year project, the contractor is expected to absorb this risk in his original price. It can sometimes benefit them or hamper them, that's the risk they take. You are also absolutely right about getting their money via changes from Apple. Once the contractor has the job, any changes Apple makes will double the price (at a minimum) since it's not competitive pricing anymore. If Apple was smart, they wouldn't rush this project and would have made sure the plans and details work for them to avoid any changes during construction. If they didn't do that, the contractors will be rubbing their hands together with a big grin on their face. Also Apple needs to watch out for backroom deals from the designers and manufacturers/contractors. Some guys single source a product and receive massive kickbacks from the manufacturer. On a project this large, I'm sure it will be riddled with deals like this.
Quote:
Originally Posted by hmm
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
I doubt contractors have even priced this yet. Usually they would bring a quantity surveyor consulting firm to come up with an original estimate. This is done again just before the tender drawings and documents go to the contractors for pricing to make sure the budget is still on track. Obviously with that kind of a jump, the original estimate was not even close or the design changed.
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
What did they do... add a second donut?!
Shit, man, they haven't started building it yet and the price has supposedly gone up dramatically. Most likely by the time they are done it will be $ 7 billion +.
If I was on the board and this report was true I'd be very very concerned.
I doubt contractors have even priced this yet. Usually they would bring a quantity surveyor consulting firm to come up with an original estimate. This is done again just before the tender drawings and documents go to the contractors for pricing to make sure the budget is still on track. Obviously with that kind of a jump, the original estimate was not even close or the design changed.
This happens quite often when the second estimate is calculated.
In government projects I've always called the first estimate the Politician's Budget. The second estimate is a mix of the Politician's Budget and the real estimate. The third and final actual end cost just follows along the line that it is easier to ask for forgiveness than it is to ask for permission.
Comments
Quote:
Originally Posted by Rot'nApple
Who the heck budgeted this thing? If I gave an estimate of three bucks and it turned out to be five, no sweat. But if one was looking to spend 3 billion and it turned out to be $5 billion??? That's some serious scratch!
first quote made up from thin air
second quote you go to the contractors with finished plans and numbers and they calculate how much work it will take and give you a realistic number
first quote was in a recession. i bet the price of materials is higher now than a few years ago as well.
Quote:
Originally Posted by zoffdino
Dangerous thinking, my friend. Having a lot of cash doesn't mean you are allowed to squander it all away. This is exactly a reason why I, as an investor, don't like corporations keeping too much cash on hand. They will fall into the mindset of "we have too much, this amounts to nothing". They will build corporate jets, pay for expensive retreats, or overpay on acquisitions (think Microsoft). I prefer that company keeps a good amount of cash, say $50B, for capital projects, R&D and acquisitions, and distribute the rest to investors. With their cash hoard near $150B now, you've gotta admit it's more than they need to run their operations.
So you actually prefer, as an investor, that they use their money to pay you money. OKAAAAY.
As an investor, I prefer they use their money to buy you out so I don't have to read that crap again.
Quote:
Originally Posted by al_bundy
second quote you go to the contractors with finished plans and numbers and they calculate how much work it will take and give you a realistic number
first quote was in a recession. i bet the price of materials is higher now than a few years ago as well.
Serious question. Such quotes for multi-year projects are not made in nominal (i.e., price inflation-included) dollars!?
How can anyone accurately price a building like this? Yea it will be round with custom curved glass panels and the entire 30 acre roof will be solar panels. Plus all the custom and cutting-edge stuff we don't even know about and it will take 5 years to complete. The original quantity surveyor probably screwed up the original estimate or didn't have enough information to price it properly.
It can be, but typically is not.
In most cases, the contractor either absorbs any inflation or locks in the price of key raw materials as soon as they get the contract. Only rarely would someone building something like this agree to an inflation adjustment for the capital cost.
If the contractor is competent to build it, they should be able to price it.
There are, however, many unknowns. For example, someone pointed out above that if Apple changed the plans, that would greatly increase the price. Or maybe Apple relied on a 'budgetary' price for their estimates and the actual firm prices are coming in higher (which is not at all unusual, although a 67% increase is).
Quote:
Originally Posted by zoffdino
AI reported that each tree would cost $60K to relocate.
I call BS on that estimate unless they're bringing them from, say, Armenia. We had a 25' tall, 8" trunk diameter maple tree planted in our front yard for a total of under $900.
Even in Business Class it wouldn't cost that much from Armenia. For $60,000 I'd expect them to come from some magical land called Apricotia
Analysts predict Apple to release less expensive plastic iCampus iSpaceShip.
Asian rumor sites are showing what may be fake photos of iCampus cases, for Apple fans who want to cover up the cheap plastic look:
Supply chain analyst, Sukkma Balhs, thinks Apple will release a new iCampus Mini, but it won't be retina quality, at least in the first release.
Quote:
Originally Posted by Rot'nApple
Who the heck budgeted this thing? If I gave an estimate of three bucks and it turned out to be five, no sweat. But if one was looking to spend 3 billion and it turned out to be $5 billion??? That's some serious scratch!
They probably ran into difficulties installing the warp engines.
... and down goes AAPL on this 'news' ...
Quote:
Originally Posted by GadgetCanada
How can anyone accurately price a building like this? Yea it will be round with custom curved glass panels and the entire 30 acre roof will be solar panels. Plus all the custom and cutting-edge stuff we don't even know about and it will take 5 years to complete. The original quantity surveyor probably screwed up the original estimate or didn't have enough information to price it properly.
Not to mention once they put the contracts out to bid the price got inflated, just because it is Apple. Those contractors will earn their money though complying with the obsessive attention to detail required by Apple.
Spaceship 2 will come out in 2017, will be 20% lighter, 14.7% smaller, come in white or black, and still cost the same.
Also, investor relations nightmare? I thought investors were running around shrieking with concern about how much money Apple has in the bank, shouldn't they be satisfied that some of it is being used? Apple can do whatever the **** it wants with it, and I can't think of a better use $5B for a new HQ that is going to serve them for the next few decades. Their hoard is approaching $150B, this is nothing but a drop in the bucket considering the real, significant benefits. Instagram was acquired for $1B. Motorola, $8B. Skype, $12B. A state of the art HQ for the most successful company on the planet is worth every penny.
Quote:
Originally Posted by jragosta
If the contractor is competent to build it, they should be able to price it.
There are, however, many unknowns. For example, someone pointed out above that if Apple changed the plans, that would greatly increase the price. Or maybe Apple relied on a 'budgetary' price for their estimates and the actual firm prices are coming in higher (which is not at all unusual, although a 67% increase is).
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
Quote:
Originally Posted by mstone
Not to mention once they put the contracts out to bid the price got inflated, just because it is Apple. Those contractors will earn their money though complying with the obsessive attention to detail required by Apple.
I'm an electrical engineer and I see this all the time. For a multi-year project, the contractor is expected to absorb this risk in his original price. It can sometimes benefit them or hamper them, that's the risk they take. You are also absolutely right about getting their money via changes from Apple. Once the contractor has the job, any changes Apple makes will double the price (at a minimum) since it's not competitive pricing anymore. If Apple was smart, they wouldn't rush this project and would have made sure the plans and details work for them to avoid any changes during construction. If they didn't do that, the contractors will be rubbing their hands together with a big grin on their face. Also Apple needs to watch out for backroom deals from the designers and manufacturers/contractors. Some guys single source a product and receive massive kickbacks from the manufacturer. On a project this large, I'm sure it will be riddled with deals like this.
Quote:
Originally Posted by hmm
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
I doubt contractors have even priced this yet. Usually they would bring a quantity surveyor consulting firm to come up with an original estimate. This is done again just before the tender drawings and documents go to the contractors for pricing to make sure the budget is still on track. Obviously with that kind of a jump, the original estimate was not even close or the design changed.
Quote:
Originally Posted by hmm
I suspect we'll see a followup article later that details this. Isn't it possible that the plans changed somewhere in there prompting the updated figure?
What did they do... add a second donut?!
Shit, man, they haven't started building it yet and the price has supposedly gone up dramatically. Most likely by the time they are done it will be $ 7 billion +.
If I was on the board and this report was true I'd be very very concerned.
Quote:
Originally Posted by GadgetCanada
I doubt contractors have even priced this yet. Usually they would bring a quantity surveyor consulting firm to come up with an original estimate. This is done again just before the tender drawings and documents go to the contractors for pricing to make sure the budget is still on track. Obviously with that kind of a jump, the original estimate was not even close or the design changed.
This happens quite often when the second estimate is calculated.
In government projects I've always called the first estimate the Politician's Budget. The second estimate is a mix of the Politician's Budget and the real estimate. The third and final actual end cost just follows along the line that it is easier to ask for forgiveness than it is to ask for permission.
Quote:
Originally Posted by island hermit
Quote:
Originally Posted by SolipsismX
I can certainly help with that. I coincidently started today an apricot tree relocation service. Only $180,000 per tree.
Just to remind you... this is not a military contract.
Sure it is. Thermonuclear is IN in Cupertino /s