Amazon’s HQ2: The multi-billion dollar project

This past year Jeff Bezos and the Amazon team announced one of, if not, the biggest expansion projects of this generation. Amazon HQ2 will be Amazon’s second headquarters with an expected investment of over $5 Billion dollars in construction (yes you read that correctly) and could include as many as 50,000 high-paying jobs. In addition to its direct hiring, construction and ongoing operations of HQ2 are expected to also generate tens of thousands of additional jobs in the encompassing community. Taking on such an enormous endeavor that will affect millions of people and generate tens of billions of dollars is no easy task. Project managers have to be on top of their game if they want to successfully build and operate this new base.

Amazon is still in the early Planning stage of this project, currently narrowing down their search for the best potential location. The first proposal for the core requirements needed for the possible area was revealed in September of 2017. (If you would like to read the actual requirements and submission request you can find it here —> https://www.documentcloud.org/documents/4112684-Amazon-Requirements.html) They have yet to set a timeline for construction, seeing as they are waiting to select the final location, but they have confirmed the construction model. The initial build out is rumored to begin in 2019 and take place in three phases. $300-600 million will be spent during Phase 1 on 500,000 to 1 million square feet of offices and by Phase 3 it will be 2-3 million square feet. Phase 4 and beyond are stated to “grow organically” with the full build-out exceeding 8 million square feet.

238 proposals were submitted for HQ2 and on January 18 this list was narrowed down to a mere 20 finalist for the bidding process (shoutout to one of my neighboring cities Raleigh, NC for making the list). Candidates spared no expense when it came to their promotional campaigns for the the future headquarters. Tucson, Arizona sent a 21-foot cactus to Amazon, Georgia voted to de-annex a section of land, and Birmingham, Alabama set up several giant Amazon boxes and dash buttons around public areas, all in an attempt to promote their city’s bid. Although these wacky stunts have caught executive’s attention, the company stands firm in taking a data-driven approach to site selection.

After Bezos chooses the permanent site, management will work to finalize start and finish times which will be done by analyzing historical information and making informed estimates. They will then be able to create network diagrams for costs and activity length. Finding the best angle of approach and being able to stay on track throughout the project is crucial for Amazon. Any wasted time or setbacks on tasks in HQ2’s Critical Path could lead to a full project delay, costing huge amounts money and consuming valuable time. To avoid these mistakes Amazon will need to monitor the risks involved and plan for any additional resources that may be needed in case anything does go wrong.

That leaves me to ask these final questions. What do you guys believe will be the most difficult or time consuming aspect of HQ2’s project and which phase should they increase efforts in for the most successful outcome? Can you identify any risks that are already prevalent?

 

Additional Info:

https://www.forbes.com/sites/keithflamer/2017/09/08/amazon-continues-world-domination-announces-future-plans-for-second-5-billion-headquarters/#384742a354c1

https://www.amazon.com/gp/browse.html/?node=17044620011

*If you want some humor* –https://youtu.be/Xop8ug07KS8

11 thoughts on “Amazon’s HQ2: The multi-billion dollar project

  • February 7, 2018 at 9:55 am
    Permalink

    I definitely agree with your points. This project for Amazon is a massive one and will in fact be one of the biggest expansion projects of this generation. Because Amazon is still looking for the ideal location for the project, one can argue that the project has not completed the defining stage just yet. The company still needs to decide what resources they will utilize, and in this case it is the location of the site. The defining stage to me is incomplete until the define where the project will occur. But, in regards to moving this project along the company has gone ahead and started the planning phase. It is much better use of their time to start planning for the project instead of waiting around to determine the location first. I was interested in learning more about the candidates for this project, as one of the hardest decisions Amazon will have to face early in this project is location. Choosing the ideal location for this headquarters can make or break a project. The company needs to choose a city that will fit the head quarter’s needs and will allow this new project to be the most successful. In the NY Times article I provided, it breaks down every finalist and what each city has to offer. Amazon’s new project has brought enthusiasm to this bidding process that is “normally reserved for the Olympics”!

    https://www.nytimes.com/2018/01/18/technology/cities-amazon-headquarters.html

  • February 7, 2018 at 1:57 pm
    Permalink

    I agree with most of the points made here by Isabella. The location choice made by Amazon will have a drastic impact on whatever city it chooses. Billions of dollars of current revenue, from the construction of the headquarters, along with future revenue inflows to the city, from the spending by the employees and taxes, can drastically change the trajectory of a city’s economy. As far as this project goes for Amazon, it may be one of the biggest projects a company has ever undergone. The main steps of a project are: Defining, Organizing, Planning, Monitoring and Controlling Projects. At this point, Amazon seems to be in the very early stages, they have not fully defined their project, or at least revealed this information to the public. They have discussed the scope and the resources but have not definitively stated the time frame or their desires. In the video embedded in this post, it states that Amazon’s top considerations for where they locate will be: an urban location, good transport links, a university for recruitment, but it is interesting to see how much they are swayed by each cities proposals that they are making for Amazon. In this link:
    https://www.cnet.com/news/heres-what-the-20-finalist-cities-offered-amazon-for-hq2/
    it states all of the offerings each city has made to Amazon. Some of the most interesting ones are: Atlanta has offered $1 billion in incentives, Boston offered a “Amazon task force” to represent Amazons interest in Boston government, Newark offered $7 Billion in tax cuts, etc. I am curious to watch this project develop and will keep an eye out for whether Amazon chooses a city that has made a large “promise”.

  • February 7, 2018 at 2:40 pm
    Permalink

    The location decision for HQ2 will have the greatest effect on both Amazon and the city where the headquarters will be located. Amazon currently has over 40 buildings that are included within their headquarters in Seattle, but adding a second location has many implications beyond Amazon and the location of HQ2. The location search itself is a great example of Amazon’s deliberate business strategies and management of processes. By announcing that they would be building a new headquarters, Amazon created a very competitive environment amongst cities. The cities advertised to their citizens the benefits that Amazon would bring to their community, $5 billion in investment and over 50,000 high paying jobs. The positivity that surround this project have given Amazon an even better brand image and publicity. To answer your question involving prevalent risks to this project, I believe the largest risk at this time is the location choice. Some cities do not have the necessary infrastructure or capacity for expansion in order to handle a giant like Amazon. If the added stress became too much for the selected city, it is possible that the success of the project could be hindered severely. This is why the management of the selection process is so important for Amazon. Nonetheless, it will be very interesting to follow Amazon’s selection process and see the effects on the new city.

  • February 7, 2018 at 8:54 pm
    Permalink

    I think the biggest obstacle for Amazon is the unpredictability of how the future will go for them. This is a huge and expensive project for Amazon to take on, and right now it makes since for them to do it since they have been so successful and are growing so quickly. But there have been other successful companies in the past who wanted to expand to more than one headquarters, but then had to pull out late in the process because their success levels and profits dropped unexpectedly. Examples of this are found in this article (https://www.wired.com/story/does-amazon-really-need-a-dollar5-billion-second-hq-maybe/) about Cisco and Intel. Both companies got through the planning stages of the process and were into the building stages. While their headquarters were being built, they realized the project was taking too long and costing too much money. The article suggests some ways a similar problem could happen to Amazon. It mentions that Amazon rarely makes a profit, so a change in the economy could slow Amazon’s growth and halt the new headquarters’ process.
    My guess is that this article might have a point, but this is probably something that the project managers at Amazon have thought about and know how to handle. Also, since Amazon hasn’t even picked its location yet, they still have the opportunity to make sure the location will work for many different future scenarios, and that they will be able to build the new headquarters in a reasonable budget. Also, I agree with Izzie that the project length is critical because since Amazon has been very successful recently, I think it makes sense to capitalize on that success while they still have the public’s interest.

  • February 7, 2018 at 11:57 pm
    Permalink

    You bring up some great points Isabella. I hope Amazon is ready for the massive feat it is about to undertake. Nonetheless, I find it reassuring that Amazon is taking its time finding the ideal location and finalizing the construction model. As you mentioned, this will require many different project managers. I think a major issue that may hinder the proposed timeline for completion will be communication. Think about how much we sometimes struggle working in a group of 5 for a class project? Now imagine having to work on a project with a thousand other people. Communication will be key to the success of HQ2. Each project manager must be able to organize and plan for their own segment of the program while working continuously besides other segments of the project. Additionally, managers sometimes overestimate their ability to complete a job on time or stay within the budget. Therefore, it will take several professional risk estimates and statistical analysis to generate an accurate time frame for HQ2. Another risk that these bidding cities and Amazon need to consider is the effect, other than the increase in jobs, that building such a popular attraction will have on the people. Seattle has the 9th worst traffic in the nation, and this is due partly to Amazon’s current headquarters. According to the Business Insider article, INRIX estimates that the city loses $5 billion a year because of traffic. The new jobs will only intensify the current traffic problems in the bidding cities such as Miami, LA, Dallas, NYC, Atlanta, and Chicago, cities that are already known for their congested roads. This is just another aspect that Amazon must consider. They may also need to invest time and money into the infrastructure around the new headquarters so that the operation runs smoothly, and is as successful as the projections expect it to be.

    Article mentioned- http://www.businessinsider.com/amazon-hq2-traffic-like-seattle-2018-2

  • February 8, 2018 at 12:16 am
    Permalink

    Amazon’s new headquarters project is a serious undertaking that will significantly impact the company’s future success. Accordingly, Amazon has been taking ample time to ensure they choose the right location and apply the correct amount of resources. Once the project begins however, I think their plans will be accurately planned out so that development of the new headquarters will be feasible and fluidly executed. Therefore, I believe the most difficult aspect of this second headquarters project is the current stage of studying and examining locations for their spot and also then allocating resources to begin the building of the infrastructure and establishment of the management.

  • February 8, 2018 at 12:56 am
    Permalink

    Although AmazonHQ2 is still in the beginning phases of its project, it has drawn so much attention from cities all around the country. The city I would like to pay particular attention to is Newark, NJ. Growing up only about 5 minutes from Newark, New Jersey, I have seen the city continue to grow in front of me. Senator Cory Booker, who was once the mayor of Newark and whom I had the chance to meet on the streets of Newark, says that Newark was once one of “America’s premium cities” for years. Newark has been through some damage and the damage has left its mark, but as I grow older I am starting to see Newark transform into a city of new businesses and more employment opportunities. With Rutgers-Newark in the heart of the city, Newark truly has great potential. Although I would love to see how this could help grow Newark economically, especially since nearly a third of its population live underneath the poverty line. The HQ2 would not only impact Newark, but also my town and numerous towns nearby, I must admit that I hope neither NYC, nor Newark, nor Philadelphia nearby do win the bid. The rise in employment is impressive, but along with this comes the rush of people eager for jobs moving into these areas. Overpopulation is already a problem in Newark, and it is encroaching on the nearby towns. Gentrification can become a bigger strain to an existing problem. Additionally, high traffic areas are another concern they would have to consider. In-depth research and planning by the 60 -member formal committee would have to be completed before beginning this project. Regardless, I would be interested to see how far Newark, NJ makes it into the bid.

    Articles Used:
    https://www.forbes.com/sites/samanthasharf/2018/01/28/amazon-hq2-everything-you-need-to-know-about-the-20-finalists/#22bb109c3f4d
    http://s.nj.com/A6rkHbd

  • February 8, 2018 at 1:03 am
    Permalink

    Among Amazon’s considerations are proximity to a big airport, commuting time and quality of life. The prize, Amazon says, is up to 50,000 full-time jobs and $5 billion in investment over nearly 20 years. In order to win the Amazon headquarters prize, cities all over the United States are planning massive highway construction projects to accommodate extra traffic flow generated by Amazon. This project will be co-opted with whichever city Amazon chooses. I agree with Brianna that communication between Amazon and the destination city will be crucial to the overall success of the project. Amazon has already mentioned that it is targeting a city with workforce talent (potentially a prestigious technical university) as well as enough affordable housing in order to attract the young talent. This is another project that cities will embark on to attract Amazon. Coordinating the construction for the many projects of a monumental move such as Amazon’s second headquarters is a complex challenge. https://www.wsj.com/articles/to-woo-amazon-cities-tackle-everything-from-traffic-to-housing-1516185001

  • February 8, 2018 at 7:00 am
    Permalink

    Isabella, Amazon’s pursuit of a second headquarter location is a great example of a firm or organization trying to manage a project. In recent business new, this topic has been extremely prevalent. It has not only been a topic of interest, because it is such a big investment on Amazon’s part; it has grabbed the attention of the nation, because of HQ2’s potential to benefit the economy of an entire city.

    Here is a list of the two hundred plus cities that had the potential to be the new home for Amazon’s HQ2 (https://qz.com/1119945/a-nearly-complete-list-of-the-238-places-that-bid-for-amazons-next-headquarters/). Our own city of Richmond made the list! If we (“Great Richmond”) were able to win the bid for HQ2, I believe that it would significantly change the city. First, there would be a massive construction process to say the least. Based on the size of the projected facility, I have to imagine that this would be an annoying and bothersome process for citizens of Richmond. However, when the project were to be completed, the city would reap the benefits. About 50,000 high paying jobs would enter the Richmond economy! Also, Amazon has the potential and is predicted to grow significantly in the future; this could potentially mean even more jobs and more growth for the city of Richmond. That being said, Richmond did not make the cut for the list of twenty (https://www.nbcnews.com/business/business-news/amazon-picks-20-finalists-hq2-second-headquarters-location-n838726). Whichever city is lucky enough to win the bid for HQ2 should be extremely excited and ready for economic growth.

    In my opinion, Amazon’s current phase of choosing a location will be the the most time consuming and important aspect of the major project. It will be very difficult for Jeff Bezos and his management team to single out one city that will be better than the rest. In order to make the right decision on such a critical topic, Amazon’s management team must do extensive research and analysis of each potential location. They will need to figure out which community is best for their second headquarter; which city will yield the best logistics?

    I believe a risk that Amazon might have is selecting a city that lacks the proper space and infrastructure needed to support this giant project.

  • February 8, 2018 at 8:24 am
    Permalink

    Amazon is currently attempting to crash costs of their critical time via this location search. The hype surrounding the new HQ2 is simply to pit states and cities against each other in order for one to provide an extremely generous tax break for Amazon to construct their new center of operations to prospective city. This is hugely beneficial for Amazon, as they could stand to profit immensely from large tax incentives that will allow them to grow and develop past their competition. This can provide massive incentives to locate in one area over others. This tax reduction typically also cancels out much of the benefits associated with allowing major corporations into the cities, and there is no real major evidence to suggest that these large corporate headquarters provide massive benefit to these communities, especially when coupled with such large tax incentives.
    Amazon is smart to force competition between their potential sites, and are capitalizing upon lawmakers and city governors need to display to potential voters that they are trying to improve their economies. This will help crash costs more than any specific and detailed planning will, especially on a project on such a wide a scale as this. The tax savings alone could run into the multi-millions and save Amazon huge amounts of capital, especially on a potential five billion dollar project, and at their host cities expense.

  • February 8, 2018 at 8:26 am
    Permalink

    Welcome to what should be one of the largest Gantt charts in all of history. Bezos might make it simple on the consumer to digest with four different phases, but within those four phases involves a complex critical path, filled with hundreds of thousands of tasks that will get the project done (hopefully) on schedule. A lot of tasks could be time consuming – the overall architecture planning, acquiring the labor to complete the project, dealing with suppliers for raw materials, and so forth. Each task relies on many stakeholders that could possibly delay the project.

    One of the tasks I find most consuming within the supply chain process, for Amazon’s new building, would have to be the construction tasks themselves. Some argue they still need to define their resources and the city, and that should take the most time. But since Amazon must have a dedicated labor force, able to see Bezos’ vision for a great headquarters, as well as good relationships with suppliers, and assure quality, I really think this is the phase that could go the most off the critical path. So much could go wrong during the construction process that delays, to me, just sound inevitable – which is entirely normal.

    Within the managing projects process, I’m arguing that monitoring these tasks could be the most important. Not only do Amazon operations managers have to create the highest quality building every for Bezos and the gang, but they also must do it at an extremely large scale with decent efficiency. If they cannot monitor the project well, expect huge delays. Tough, but exciting days lie ahead for Amazon operations managers.

Comments are closed.

css.php