Apple brutally fires people who are incompetent - particularly those who have responsibility - like Vice Presidents at Apple. They have no excuse not to get their job done.
Obviously Skanska and DPR were incompetent. Delays and a $2 BILLION cost overrun are inexcusable.
Getting it done is a bottom-line, while the cost overrun has to be seen in the light of how much Apple changed the design goals along the way (if they did and I do recall the number of people occupying the structure close to doubled) and that is rather common in construction projects that span years: always "just one more small change"... and they can add up to huge extra costs.
Money for Apple probably means less than getting the thing DONE. And even with penalties sometimes people just can't finish.
I would also presume getting it right, in the way Steve/Sir Jony want it, is also more important than money or delays (unless excessive). So if changes were proposed that strayed away from the original vision, I could see that being a problem.
Well, well, well. I recall that a number of people poured scorn when I suggested a few months ago (in relation to story on how the new Apple campus was coming along) that 2015/16 seemed way too optimistic.
What did I base it on? Just casual empirical observation: in the US, we seem to be utterly incapable of building anything big or ambitious within budget and on time. Doesn't matter if it's Apple or the US government. It is a lost art.
Two billion over "estimates" is flat-out contractor ineptness. We read about stuff like that all the time - especially with the San Francisco Bay Bridge.
I deal with construction contractors all the time and it just irks me to kingdom-come when they low-ball an estimate in order to get the business. I'm not saying that Skanska and DPR did that, but to go from a $3 billion "estimate" and then have it balloon to 60% over that means to me they flat-out lied about their ability to do the job. Would it be too much of a stretch to guess that they low-balled it because they figured a deep-pocket company like Apple would pay the increase like chump-change? Why do contractors always low-ball projects like these? Are they learning to be this stupid or was it an acquired trait?
There's one contractor I worked with on a major remodel project (entire house remodel) and when I asked him for an estimate, he gave me an estimate that even I knew was way too low for the work needed. I literally yelled at him for trying to pull such a stunt. Because this contractor actually does (did) good work, I made him a deal... I told him that I would pay him double his "estimate" - which was still below competing bids - but I will not go a penny above that. Doing everything that was discussed, and with no construction surprises, the costs began to reach the final estimate. He asked for more money, I flat-out refused. Reminding him that I payed him double his estimate, I told him he's going to have to absorb the costs, and learn a lesson about how to properly bid for a project.
Why can't contractors make proper bids, and if anything.. do the work below the estimate? That would be great for once.
True, but if there is a fine structure in place it would be unusual to get rid of them. Ride it out and rake in the cash for their mistakes.
Generally speaking, once you hit a certain point it isn't worth it anymore. A project like that is going to have a 3-5% profit margin for the GC; it can be erased rather quickly with liquidated damages or withheld payments.
To be honest switching contractor between Core and Shell and Tenant Improvement phases is generally not a big deal. For fast-track projects they are likely negotiated separately as refinement of the TI package does not happen until well after breaking ground. It is likely going to have a big hit on DPR, as I imagine Skanska was the dominant player on the core and shell work.
I wouldn't see this as a "world is ending" event... just that the very aggressive schedule has now been rationalized to the real world. Not sure if the dockworker's work slowdown would have played a role in the delays...
what on earth? architects are architects, thats their job, not construction. can you provide some facts that back up your claim that the architect they hired is responsible for the construction problems? or that apple is "throwing a tantrum"? no, i dont think so. looks to me youre just another guy jumping to conclusions.
There are two distinguished Chicago architects who became notorious for revolutionary design philosophies that couldn't hold water. Literally. The roofs and windows had chronic leaks due to the architects' designs. The initials of these geniuses are FLW and HJ. Fixing the problems was near impossible without great costs or significantly changing the original design concept. Then there's the John Hancock Tower in Boston, where windows failed and crashed to the street and where finally all them had to be redesigned and replaced, for a time earning the structure the nickname of "The World's Tallest Plywood Building." Yes, architects are often responsible for construction problems. Whether or not that's the situation with the new Apple campus. in general more architects need to walk the walk instead of just talking the talk.
Apple initially planned to complete the campus in 2015, and now says it will begin occupation in late 2016.
Horse-shit. I have never read ANYWHERE that this was supposed to be complete 2015. It has always been 2016. But hey, anything to push a narrative. Also, a project of this insane magnitude is expected to have SOME kind of delays. There are thousands of factors and not everything can be set in stone from the beginning. And if it costs more than initially expected, so what? Apple can afford it. A couple billion is like 2 weeks' profit. Not that outrageous for an investment in their future HQ.
Apple strikes me as a pretty bad customer, hard to deal with, demanding, and unremitting, with massive punitive costs for any problems, not matter who is at fault. No matter what the industry, I think I'd be hesitant to enter into a deal with them, and I'd certainly push back heavily on any terms they tried to impose, even if it cost my company the deal.
As a consumer, my opinion of Apple is very different, but Apple seem to have little spirit of partnership, or tolerance of the usual rigours of business with their suppliers.
Steve Jobs said 2015 for a moving-in date (18:00):
[VIDEO]
In 2011, he said they wanted to break ground in 2012 and move in 2015. It's not Apple's operation though, when do builders ever complete things on schedule, especially something of this scale?
"Since 2011, the budget for Apple’s Campus 2 has ballooned from less than $3 billion to nearly $5 billion, according to five people close to the project who were not authorized to speak on the record."
You could get the totals based on the contract amounts and one of the sources linked in the article had emails from the contractor. Apple is a public company so they can't keep costs secret. They need the building so there's not much they can do about it. Their only other option was to leave Cupertino.
They shouldn't have given the work to SKANKA. They have too many projects already for their size (and capability). Compared to other European (read British) contractors, they are relatively small and inexperience.
Apple strikes me as a pretty bad customer, hard to deal with, demanding, and unremitting, with massive punitive costs for any problems, not matter who is at fault. No matter what the industry, I think I'd be hesitant to enter into a deal with them, and I'd certainly push back heavily on any terms they tried to impose, even if it cost my company the deal.
As a consumer, my opinion of Apple is very different, but Apple seem to have little spirit of partnership, or tolerance of the usual rigours of business with their suppliers.
Don't like the terms? Don't sign the deal.
I'm sure if your contractor is building your house and says it'll cost twice as much and take twice as long you'll just go along with it.
Steve Jobs said 2015 for a moving-in date (18:00):
In 2011, he said they wanted to break ground in 2012 and move in 2015. It's not Apple's operation though, when do builders ever complete things on schedule, especially something of this scale?
"Since 2011, the budget for Apple’s Campus 2 has ballooned from less than $3 billion to nearly $5 billion, according to five people close to the project who were not authorized to speak on the record."
You could get the totals based on the contract amounts and one of the sources linked in the article had emails from the contractor. Apple is a public company so they can't keep costs secret. They need the building so there's not much they can do about it. Their only other option was to leave Cupertino.
Ok, but then the story should say they didn't break ground until 2014, so the two year shift in completion date is all or mostly not related to current construction delays or problems, but whatever reasons they waited to start (design changes, permits, demolition, goodness knows what else).
And the cost changes may have to do with the enormous change in scope as noted later in that same article you linked to, from housing 6,000 people to 12-13,000 personnel. From a per-person basis, that almost sounds like the 2.5 to 5 bn difference!
Two BILLION OVER budget? Two thousand million? That can't be right!? How much was the project supposed to cost at the point the plans were finalised? Surely it should be 2 million.
Are you kidding me? You can't build a McDonalds in the US for $2 million. Two million for Apple is pocket change not worth a meeting with a contractor on a project this size.
No, I think your point was Apple's a horrible partner/customer and you shouldn't do business with them. All I'm saying is once you sign the deal you have no reason to complain. Just deliver what you promised.
Not surprised! Gettin contracts on deliberately low ballin figures and after some time asking for much more money on the basis of all sorts of excuses is Skanskas business model. We recognise them all too well here in Sweden but for one difference: here paxpayers are always coerced to pony up! Go Apple, show them how it should be played!
Comments
Surprised they don't have a fine structure built in for every days delay.
Money for Apple probably means less than getting the thing DONE. And even with penalties sometimes people just can't finish.
Apple brutally fires people who are incompetent - particularly those who have responsibility - like Vice Presidents at Apple. They have no excuse not to get their job done.
Obviously Skanska and DPR were incompetent. Delays and a $2 BILLION cost overrun are inexcusable.
Getting it done is a bottom-line, while the cost overrun has to be seen in the light of how much Apple changed the design goals along the way (if they did and I do recall the number of people occupying the structure close to doubled) and that is rather common in construction projects that span years: always "just one more small change"... and they can add up to huge extra costs.
Money for Apple probably means less than getting the thing DONE. And even with penalties sometimes people just can't finish.
I would also presume getting it right, in the way Steve/Sir Jony want it, is also more important than money or delays (unless excessive). So if changes were proposed that strayed away from the original vision, I could see that being a problem.
Well, well, well. I recall that a number of people poured scorn when I suggested a few months ago (in relation to story on how the new Apple campus was coming along) that 2015/16 seemed way too optimistic.
What did I base it on? Just casual empirical observation: in the US, we seem to be utterly incapable of building anything big or ambitious within budget and on time. Doesn't matter if it's Apple or the US government. It is a lost art.
Two billion over "estimates" is flat-out contractor ineptness. We read about stuff like that all the time - especially with the San Francisco Bay Bridge.
I deal with construction contractors all the time and it just irks me to kingdom-come when they low-ball an estimate in order to get the business. I'm not saying that Skanska and DPR did that, but to go from a $3 billion "estimate" and then have it balloon to 60% over that means to me they flat-out lied about their ability to do the job. Would it be too much of a stretch to guess that they low-balled it because they figured a deep-pocket company like Apple would pay the increase like chump-change? Why do contractors always low-ball projects like these? Are they learning to be this stupid or was it an acquired trait?
There's one contractor I worked with on a major remodel project (entire house remodel) and when I asked him for an estimate, he gave me an estimate that even I knew was way too low for the work needed. I literally yelled at him for trying to pull such a stunt. Because this contractor actually does (did) good work, I made him a deal... I told him that I would pay him double his "estimate" - which was still below competing bids - but I will not go a penny above that. Doing everything that was discussed, and with no construction surprises, the costs began to reach the final estimate. He asked for more money, I flat-out refused. Reminding him that I payed him double his estimate, I told him he's going to have to absorb the costs, and learn a lesson about how to properly bid for a project.
Why can't contractors make proper bids, and if anything.. do the work below the estimate? That would be great for once.
Generally speaking, once you hit a certain point it isn't worth it anymore. A project like that is going to have a 3-5% profit margin for the GC; it can be erased rather quickly with liquidated damages or withheld payments.
To be honest switching contractor between Core and Shell and Tenant Improvement phases is generally not a big deal. For fast-track projects they are likely negotiated separately as refinement of the TI package does not happen until well after breaking ground. It is likely going to have a big hit on DPR, as I imagine Skanska was the dominant player on the core and shell work.
I wouldn't see this as a "world is ending" event... just that the very aggressive schedule has now been rationalized to the real world. Not sure if the dockworker's work slowdown would have played a role in the delays...
I don't recall 2015 as a move in target, and AFAIK no one knows except Apple how much, if any, the are over cost. Where does a $2bn number come from?
I was thinking the same thing. This story has been overly dramatized with false information.
what on earth? architects are architects, thats their job, not construction. can you provide some facts that back up your claim that the architect they hired is responsible for the construction problems? or that apple is "throwing a tantrum"? no, i dont think so. looks to me youre just another guy jumping to conclusions.
There are two distinguished Chicago architects who became notorious for revolutionary design philosophies that couldn't hold water. Literally. The roofs and windows had chronic leaks due to the architects' designs. The initials of these geniuses are FLW and HJ. Fixing the problems was near impossible without great costs or significantly changing the original design concept. Then there's the John Hancock Tower in Boston, where windows failed and crashed to the street and where finally all them had to be redesigned and replaced, for a time earning the structure the nickname of "The World's Tallest Plywood Building." Yes, architects are often responsible for construction problems. Whether or not that's the situation with the new Apple campus. in general more architects need to walk the walk instead of just talking the talk.
Horse-shit. I have never read ANYWHERE that this was supposed to be complete 2015. It has always been 2016. But hey, anything to push a narrative. Also, a project of this insane magnitude is expected to have SOME kind of delays. There are thousands of factors and not everything can be set in stone from the beginning. And if it costs more than initially expected, so what? Apple can afford it. A couple billion is like 2 weeks' profit. Not that outrageous for an investment in their future HQ.
Apple strikes me as a pretty bad customer, hard to deal with, demanding, and unremitting, with massive punitive costs for any problems, not matter who is at fault. No matter what the industry, I think I'd be hesitant to enter into a deal with them, and I'd certainly push back heavily on any terms they tried to impose, even if it cost my company the deal.
As a consumer, my opinion of Apple is very different, but Apple seem to have little spirit of partnership, or tolerance of the usual rigours of business with their suppliers.
Steve Jobs said 2015 for a moving-in date (18:00):
[VIDEO]
In 2011, he said they wanted to break ground in 2012 and move in 2015. It's not Apple's operation though, when do builders ever complete things on schedule, especially something of this scale?
That was reported a while ago:
http://www.bloomberg.com/bw/articles/2013-04-04/apples-campus-2-shapes-up-as-an-investor-relations-nightmare
"Since 2011, the budget for Apple’s Campus 2 has ballooned from less than $3 billion to nearly $5 billion, according to five people close to the project who were not authorized to speak on the record."
You could get the totals based on the contract amounts and one of the sources linked in the article had emails from the contractor. Apple is a public company so they can't keep costs secret. They need the building so there's not much they can do about it. Their only other option was to leave Cupertino.
Don't like the terms? Don't sign the deal.
I'm sure if your contractor is building your house and says it'll cost twice as much and take twice as long you'll just go along with it.
Steve Jobs said 2015 for a moving-in date (18:00):
In 2011, he said they wanted to break ground in 2012 and move in 2015. It's not Apple's operation though, when do builders ever complete things on schedule, especially something of this scale?
That was reported a while ago:
http://www.bloomberg.com/bw/articles/2013-04-04/apples-campus-2-shapes-up-as-an-investor-relations-nightmare
"Since 2011, the budget for Apple’s Campus 2 has ballooned from less than $3 billion to nearly $5 billion, according to five people close to the project who were not authorized to speak on the record."
You could get the totals based on the contract amounts and one of the sources linked in the article had emails from the contractor. Apple is a public company so they can't keep costs secret. They need the building so there's not much they can do about it. Their only other option was to leave Cupertino.
Ok, but then the story should say they didn't break ground until 2014, so the two year shift in completion date is all or mostly not related to current construction delays or problems, but whatever reasons they waited to start (design changes, permits, demolition, goodness knows what else).
And the cost changes may have to do with the enormous change in scope as noted later in that same article you linked to, from housing 6,000 people to 12-13,000 personnel. From a per-person basis, that almost sounds like the 2.5 to 5 bn difference!
Don't like the terms? Don't sign the deal.
Congratulations, that was my point.
Are you kidding me? You can't build a McDonalds in the US for $2 million. Two million for Apple is pocket change not worth a meeting with a contractor on a project this size.
No, I think your point was Apple's a horrible partner/customer and you shouldn't do business with them. All I'm saying is once you sign the deal you have no reason to complain. Just deliver what you promised.