Apple's Spaceship Headquarters Having Budget Overruns
April 4, 2013 1:23 PM
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It went from less than $3 billion in 2011 to nearly $5 billion now
Former Apple CEO Steve Jobs wanted Apple's
huge, second campus
to be built by 2015, but issues with going way over budget has tacked on an extra year to the completion date.
Back in June 2011, Jobs presented plans for Apple's new corporate building before the Cupertino City Council. It looked like a spaceship, and was capable of holding 12,000 employees.
The plans consisted of a 2.8 million square foot campus with 176 acres of trees (adding 6,000 trees total). There were curved exterior walls and 40-foot panes of concave glass from the floor to the ceiling.
At that time, the budget was a little under $3 billion. Jobs wanted to break ground in 2012 and have
the Apple spaceship
complete by 2015.
However, the budget has since grown to nearly $5 billion today, and the company doesn't plan to start building until June. The project likely won't be complete until 2016.
What's causing the delay? Apple is taking a little extra time to cut down that giant budget, which has ballooned since initial plans went through.
Apple is currently working with architect Foster + Partners to chop about $1 billion from the budget before going any further. Apple had hired Norman Foster’s firm back in 2010 when plans were just begining. Apple's general contractor is a joint venture of DPR Construction (Redwood City, California) and Skanska USA Building (New York).
But the company still needs to work out agreements with several other subcontractors in order to begin. Contractors will be submitting bids by May of this year.
Despite having $137 billion in the bank, Apple is likely looking to cut the budget a bit because its shares have fallen 38 percent since its high of $700 per share in September 2012. Also, competitors like Samsung are making a huge splash in the mobile market with high-tech smartphones and tablets that rival the iPhone/iPad in price, design and functionality.
Investors aren't too happy with the $5 billion budget, either.
“This is rubbing salt in the wound, to spend at a level that most anyone would say is extravagant, at a time when they’re being so stingy on dividends," said Keith Goddard, the chief executive of Tulsa-based Capital Advisors, which owns 30,537 shares of Apple. "This headquarters would perpetuate the negative story.”
Samsung recently announced that it plans to top Apple's spaceship headquarters by building
a $300 million green campus
, which will be placed in San Jose, California. It will feature a 1.1 million square foot campus with sports courts, cafes and gardens. Even the design is interesting, with
alternating layers of larger and smaller floors to give a ridged appearance to the building.
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Apple will be around for a long time
4/5/2013 8:12:54 AM
Even if apple sells everything, laid off everyone and just collect interest off its cash then it will still make billions a year. Xbox was one of my most bullyish marketshare grabbing method by pushing cash losing over 1 billion a year. Apple can bully its way into any market just using its interest and still be in the black forever.
I don't get it. As a project or program manager, you have the option to crash certain parts of the project to get it finished in time. Of course that cost money. But if you are going to crash, then you might as well crash as early in the project as possible so you can be sure you finish in time. Then you don't have to tell your boss/client that you spent the money and you're late.
Being late and overbudget is exactly the reasons project managers gets fired for.
RE: Apple will be around for a long time
4/6/2013 2:45:10 AM
The thing about managing big project is you almost always go over budget. There are so many hidden costs that it's almost inevitable, unless you are most seasoned or you care so much of other people's money that you penny pinch.
The trouble is, that never happens because if you've spent "X" amount already, why not a little more? .. the cycle continues ...
Once you are in that rabit hole, you can't "cut" loose. Now, you are really gonna be fired. Spending absurd amount of money for doing nothing ....
See the problem?
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