Apple fires Campus 2 contractors as 'spaceship' faces delays, spiraling costs
Apple has reportedly severed its relationship with general contractors Skanska and DPR -- the two firms responsible for overseeing construction of its new "spaceship" headquarters -- with near-immediate effect, a rare mid-stream shakeup that follows a string of delays and increasing costs.
Skanska and DPR, who won the bid in a joint venture, "will transition completely off the project in the next several weeks," according to an internal email seen by the Silicon Valley Business Journal. The companies were "unable to come to an agreement during negotiations for the revised scope of work," Skanska USA chief Richard Cavallaro wrote.
Word that Skanska and DPR were in trouble first surfaced last week, when a trade magazine reported that Skanska was set to depart after completing the core and shell of the main building, a setback that would cost the Swedish company some $800 million in lost revenue.
While it's not uncommon to replace contractors between building phases --?Apple retained Rudolph & Sletten for the interior build-out, rather than Skanska --?switching in mid-stream is nearly unheard of for projects the size of Campus 2. The change hints that there may be deeper problems with the operation that is already more than a year behind and $2 billion over budget.
Some have suggested that the timeline may have slipped even further, moving into 2017. Apple initially planned to complete the campus in 2015, and now says it will begin occupation in late 2016.
The Journal believes that oversight of Campus 2 will fall to Atlanta-based Holder Construction, which built Apple's North Carolina datacenter. Holder is already involved in the Cupertino project, handling mechanical, electrical and plumbing systems.
Skanska and DPR, who won the bid in a joint venture, "will transition completely off the project in the next several weeks," according to an internal email seen by the Silicon Valley Business Journal. The companies were "unable to come to an agreement during negotiations for the revised scope of work," Skanska USA chief Richard Cavallaro wrote.
Word that Skanska and DPR were in trouble first surfaced last week, when a trade magazine reported that Skanska was set to depart after completing the core and shell of the main building, a setback that would cost the Swedish company some $800 million in lost revenue.
While it's not uncommon to replace contractors between building phases --?Apple retained Rudolph & Sletten for the interior build-out, rather than Skanska --?switching in mid-stream is nearly unheard of for projects the size of Campus 2. The change hints that there may be deeper problems with the operation that is already more than a year behind and $2 billion over budget.
Some have suggested that the timeline may have slipped even further, moving into 2017. Apple initially planned to complete the campus in 2015, and now says it will begin occupation in late 2016.
The Journal believes that oversight of Campus 2 will fall to Atlanta-based Holder Construction, which built Apple's North Carolina datacenter. Holder is already involved in the Cupertino project, handling mechanical, electrical and plumbing systems.
Comments
Surprised they don't have a fine structure built in for every days delay.
We don't know, likely they do.
We don't know, likely they do.
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.
Better cash-out all your Apple stocks, they are clearly doomed.
First solar panels on fire, then chlorine gas, now this. Another sign of Tim Cook's failure to manage his supply chain. Steve Jobs would never approve of this lavish construction project, despite the fact that it was his idea. /s
Obviously Skanska and DPR were incompetent. Delays and a $2 BILLION cost overrun are inexcusable.
That's pretty bad publicity for Skanska. The disagreement must have been massive in order for them to pull out. I'd think they'd rather accept a small loss than take the publicity hit, so they must have been looking at a pretty big loss if they remained involved.
When the employees arrive at their new Swedish work stations, they'll have to assemble the chairs and desks themselves anyways.
You joke, but this actually happened to me. "Welcome to your renovated office. See that pile of Ikea boxes in the middle of the room? Claim your stuff and build it." They even made a video of it.
Hardly. They can advertise that they were fired by none other than Apple. Sure, if you read fine print it mentions budget and schedule overruns, but hey...its construction. Do you want a half-finished building now or a finished one later for more money than we agreed to up front?
It is not unusually for projects like this to have changes along the away and before the change goes into affect the contractor submits their new costs quotes for the change. Depending on the change the cost can go up or down. However, many time contractors will low ball bid projects like this and make their profits on the change requests. They will hit you with high costs to make a change since you are less likely to dump them mid stream and will just pay. This is why you usually see large cost over running on public projects as well. Most is due to the fact our public offical poorly scope the project or requirements and contractors know this and hope public officals got it wrong and they can charge them for it.
I been involved in a couple of capital improvement projects, and I found it interesting when contractors would come in and tell you they could not do something and they had to change how it was design and how much more it was going to cost. Sometime they are valid and other times you have to challenge them on their assumption about the change. They will tell you the change will make things better in reality they are no better than the original solutoin it just means they get to charge you for the change.
It sounds like this got really bad with the Apple project and good for apple to tell the contractor to back their bags and trailer and get the hell out. This will send a clear message to the new contractor they can not play that game.
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.
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.
Consider a tiny old house in the area costs a cool million, and they're building a state-of-the-art ginormous space ship office, designed by the best in the world. It's probably more than 2 million bucks for a few feet of those glass walls.