Sprint's Massive Economies of Scale:
10 Percent-Plus Savings on $700 Million Kansas City HQ
The virtues of virtuality vs. the clout of knowledge worker concentration: That's one of the ongoing real estate dialogues in today's era of the plugged-in workplace, one in which employees could conceivably work anywhere, anytime, anyplace.
Sprint (www.sprint.com), however, is one company that's gone for knowledge worker concentration in a big, big way. And that strategy is reaping huge real estate savings at Sprint's US$700 million world headquarters, a 22-building, 14,500-employee corporate campus that's now under construction in Overland Park, Kan., in the Kansas City metro.
Sprint's savings secret isn't something you had to be Einstein to dream up. You may well be treated like Einstein, though, once multimillion-dollar benefits like these begin to accrue to the bottom line.
The magic of Sprint's HQ strategy lies in the sheer scale through which it's being implemented. These are Cecil B. DeMille-scale economies of scale, achieved through an inordinately expansive buy-in-bulk real estate scheme
Central to that scheme is Sprint's campus facility design: The campus will consist of 18 new, identically designed low-rise buildings on the 240-acre (96-ha.) site. (Four service facilities and eight parking garages are also being built at the new headquarters complex.) With those identical designs, Sprint gained the kind of purchasing leverage that's normally reserved for the Donald Trumps of the real estate world.
So much so, in fact, that Sprint Vice President of Real Estate Faye Manker says that the company is buying its building materials at a savings of more than 10 percent - hardly chump change when you're talking about a $700 million project.
In addition, all the equipment for the campus is being purchased ahead of scheduled delivery times and in one single package -- including everything from elevators, AC units, chillers, electrical gear, temperature controls, cooling towers and plumbing fixtures to bricks, doors, light fixtures and fire alarms. Those all-in-one equipment purchases are then assigned to the appropriate contractors and architects.
Sprint's efficient, all-at-once modus operandi also eliminates the pricey materials storage costs that are usually part and parcel of such a large project. In like fashion, Sprint avoids the cost exposure of stored materials inevitably deteriorating over time.
And the savings don't end there for the 2.4 million-sq.-ft. (216,000 sq. m.) campus that's scheduled to come on line in full force in 2002.
The identical facility designs within Sprint's headquarters armada will, for example, considerably cut the costs for maintenance and care.
All of the office buildings are utilizing a concrete structure with stone-and-brick facades. Similarly, all of the 11 parking structures on the campus will be made from pre-cast concrete. And the finished campus will include an on-site concrete hatch plant that will be capable of quickly supplying many of the materials needed for repairs and maintenance.
Sprint's smart purchasing strategy even extends to the 6,000 trees that will be planted on the new campus. They're being grown on farms located close to the construction site, and all should be ready for planting at the same time.
Those 6,000 trees - plus natural prairie grasses, native Kansas flowers, 40,000 flowering bulbs, four fountains, two waterfalls, two lakes and an eight-acre (3.2-ha.) wetlands area -- will be part of the 60 percent of the Sprint headquarters site that will be devoted to green space.
"From the very beginning, we knew one of the ways the new Sprint headquarters could better blend with its surroundings was through the effective use of green space," Manker says.
Sprint's new world headquarters will also add dramatic real savings and operational synergies.
Company officials say the new campus complex will save the firm $40 million when compared with the costs of leasing over a 30-year span the 60-plus Kansas City area office locations that Sprint was occupying.
In addition, the new headquarters, says Manker, will enhance productivity across all business units by facilitating more frequent face-to-face interactions, less travel time, and greater synergy among the departments currently spread throughout the Kansas City metro.
"We wanted to construct an office environment that would foster teamwork and encourage interaction and cooperation at every level," Manker says.
Cognizant of human capital's mission-critical nature, the Sprint complex is also rich in amenities, including, for example, a fitness center, dry cleaner, dining facilities, airport shuttle service and ATM service. In addition, the Sprint "Town Center," an outdoor retail/dining hub and courtyard, will include a convenience store, dining areas and coffee shops. Also on the premises will be a 3,000-seat amphitheater, a 350-seat auditorium, a reception courtyard, a glass-enclosed "winter garden" and a reception area that can seat 600.
"Customer service is Sprint's top priority," says Manker. "To that end, we need the best infrastructure to attract great employees, so the new facilities are an investment in our business."
"Sprint is creating a work environment that is user-friendly and meets employees' daily needs," Manker adds. "We have designed a community within a campus to provide a balanced lifestyle for our current employees, and we are confident that the new Sprint world headquarters will attract highly qualified future employees from across the United States."
Technology will also make visitors feel more like members of that community. In particular, technology will assist campus visitors in what would otherwise be a foreboding navigational challenge. Instead of a gate or guard station, visitors will use a kiosk with a touch-screen detailing the directions to the closest parking garage and the building in which they can find the person they're visiting. The campus will also include "courtesy booths" for visitors who need additional assistance.
Sprint didn't arrive at its headquarters design by happy accident, company officials explain.
In fact, Sprint began its new corporate headquarters project only after researching the campus architecture of some of the biggest names in corporate America, including Ameritech, EDS, Compaq, Microsoft, Monsanto, Sears and Sun Microsystems.
The gradual transition of the more than 14,500 employees to the Sprint corporate campus began July 19 and will continue through 2002, company officials say.
Thus far, construction is running on budget and on schedule at the new headquarters, which was formally dedicated on Oct. 1, 1999. Construction is under way on more than one-third of the 22 buildings in the complex.
A substantial slice of contemporary conventional wisdom notwithstanding, smaller isn't always beautiful.
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