Apple Inc. (AAPL) Dismisses ‘Spaceship’ Contractors Due to Delays and Spiraling Costs

Apple Cupertino headquarters

Apple Inc. (NASDAQ:AAPL) will no longer be retaining the services of two of the main contractors involved in the construction of its new “Spaceship” campus. As per the Silicon Valley Business Journal, DPR Construction Inc., and Skanska USA the firms that bagged the contract to build the new Apple campus will be exiting the team. The cause is attributed to rising costs and a string of delays.

In an internal email that was leaked, Skanska USA head, Richard Cavallaro, stated that Apple and the construction firm failed to arrive at an agreement during negotiations for the revised scope of the project. He added that the team would exit fully from the project in the coming weeks. Apple was not specifically mentioned in the email as the agreement is confidential but has been named in Cupertino permit records.

It is not known who will be roped in for the construction project once Skanska leaves it. According to anonymous industry sources, Holder Construction, an Atlanta-based company would be overseeing the project from now on. Holder Construction has previously been associated with Apple having built the tech company’s North Carolina data center. It is already responsible for the plumbing, mechanical and electrical systems of the “Spaceship” project.

Apple has retained Rudolph & Sletten for constructing the interiors. Irrespective of which organization comes in now, Apple’s ambitious campus is looking at an additional expensive delay.

The departure is estimated to cost Skanska around $800 million in lost revenue. While some projects have replaced contractors in the middle of building phases doing so midstream is highly unusual for projects of the scale of Campus 2.

The development raises the possibility of deeper issues with the project already over a year behind schedule and a massive $2 billion over budget.

Apple’s initial target was to have the campus in place by 2015. However, the company has revised the occupation to late 2016 now with some sources estimating that the project will be completed only by 2017. Once completed, Apple Campus 2 will be a 2,800,000 square feet headquarters that can accommodate around 12,000 of its employees.

Sources: digitaltrends, appleinsider