Why does it take so long to complete a Disney project

[Master Yoda]

The swamps that were Walt Disney World began to be cleared and drained in 1967, and Magic Kingdom opened four years later in 1971. This included the utilidoors under Magic Kingdom, the lakes and canals around Magic Kingdom, the monorail, miles of roads, acres of parking lots, the Contemporary, the Polynesian, Fort Wilderness, and two golf courses. Disneyland took about a year to build. Epcot took about 3 years to build. None of this was off the shelf, and the accountants were not fiscal-yearing the deadline of the projects. Accountants kept the books, they didn't hold the books ransom for tax purposes.

The timelines for new Disney projects are insane. To build Magic Kingdom now would probably take a decade given whatever slothful business practices are in place. Where's the urgency? Where's the military whip-cracker who knows how to get things done? Truly, the bureaucrats have conquered, and the bogging down with meetings and other painstaking deliberatia have poisoned a once fast-moving and responsive organization.

There in lies the difference between building on a loan and building with cash. It is really no more complicated than that.

 

[MisterPenguin]

Some data points...

Darker blue are estimated dates.

While it certainly seems that Ratatouille is being slow-built, at the same time, the new resort towers are going up lickety-split.

 

[Phonedave]

Once again, this is considered a capital investment, not an expense. When the actually account for the expense is over many years. Some real time expenses may be done during some specific quarter or fiscal period, but, it never counts as an expense other then depreciation deductions on taxes. Over 20 or more years. They can't even take advantage of that until it is open and generating income. It is a simplistic excuse, but, not a valid one. They have other reasons and it may be timing or even something as simple as staffing a particular attraction to stay within theme. It's not at all like paying Salaries or buying office supplies. Almost all expense in a construction project, is just a transfer from cash to a capital asset. Interest on that project may be counted as an expense if it is done with borrowed money, but, just the interest. The actual physical asset will increase the Net Worth, but, have nothing to do with expense until depreciation kicks in.

As you said... timing is probably the biggest, most valid reason if they are dragging their feet, but, it really cannot be called dragging when the timing is planned.

Not sure how DIsney does their accounting (there are a number of different accepted methods) but with my project I have to watch AFUDC - Allowence for Funds Used During Constuction.

AFUDC is an accounting practice whereby the costs of debt and equity funds used to finance plant construction are credited on the statement of income and charged to construction in progress on the balance sheet. The capitalization period for AFUDC shall begin when two conditions are present: (1) capital expenditures for the project have been incurred; and (2) activities that are necessary to get the construction project ready for its intended use are in progress. AFUDC capitalization shall continue as long as these two conditions are present.

No AFUDC should be accrued during periods of interrupted construction unless the company can justify the interruption as being reasonable under the circumstances.

It is basically a capililization of the cost of capital that is tied up in a project before the project realizes an ROI.

If I take $1M and use it to build a project that takes a year to complete before I can in service it, that $1M is tied up and not earning anything for a year. There is a cost of tying up that $1M, at the least I could have put it in a low risk investment. So using AFUDC you can capitilize that cost of committing the capilal, but only of you dont delay construction unnecessarly.

Engineering - welcome to the world of budgets.

 

[Ralphlaw]

Let us also not forget that the Ratatouille ride already exists--In Paris. Disney is not reinventing the wheel, yet it still takes 3 years to build the thing? No, it won't be exactly the same, but it will certainly be very similar and not a grand departure from trails that were blazed four years ago.

I doubt that anyone could make a convincing argument that Disney is still a quick-moving company that can make decisions and move a project to completion with decent speed. On the contrary: They've become very slow. I understand the accounting issues, but such concerns certainly existed back in the building days of Disneyland and Magic Kingdom. Accounting is nice, but right now Disney is sitting on under-utilized real estate, under-utilized IPs, and pent up demand. As long as the new attractions remain unbuilt, they are losing money that they could be making.

If I had enough pent up demand that I could hire a new employee and immediately make money from that employee, I wouldn't delay hiring that employee simply because I didn't feel like ponying up for a desk and computer. Profit follows investment and action. For some reason, delaying the opening of Rat for 1,000 days somehow makes sense to the current Disney corporation. It doesn't to me.

 

[KBLovedDisney]

Forgive me if this has been talked about before, but I have a question in regards to Florida vs other state construction pay. Where I live, I have been told that the workers are payed via hourly for a construction project. However, in Florida, they are payed based solely on the project. Thus the construction work never gets completed.

I was only told this and I have no idea if it is true or not. Can anyone confirm or correct me on this? I am genuinely curious.

 

[Master Yoda]

Forgive me if this has been talked about before, but I have a question in regards to Florida vs other state construction pay. Where I live, I have been told that the workers are payed via hourly for a construction project. However, in Florida, they are payed based solely on the project. Thus the construction work never gets completed.

I was only told this and I have no idea if it is true or not. Can anyone confirm or correct me on this? I am genuinely curious.

It depends on the contract.

In most cases the contractor will typically agree on a price for the project that he is to be paid. Any increase to this price will generally need to be approved.

The other common format is often called labor and materials, where the contractor essentially gives them a bill at the end.

The actual people doing the work are paid hourly. Florida has some pretty strict laws about salaried employees that are pretty hard to get around. At most a super might be salaried, but everyone under them is paid hourly.

 

[lazyboy97o]

Forgive me if this has been talked about before, but I have a question in regards to Florida vs other state construction pay. Where I live, I have been told that the workers are payed via hourly for a construction project. However, in Florida, they are payed based solely on the project. Thus the construction work never gets completed.

I was only told this and I have no idea if it is true or not. Can anyone confirm or correct me on this? I am genuinely curious.

As @Master Yoda said, it depends on the Owner-Contractor agreement. For larger projects it is not unusual for Disney to use a Cost Plus Fee (labor and materials) contract, knowing that the work is without a solid precedent and that there will be changes along the way.

 

[Master Yoda]

As @Master Yoda said, it depends on the Owner-Contractor agreement. For larger projects it is not unusual for Disney to use a Cost Plus Fee (labor and materials) contract, knowing that the work is without a solid precedent and that there will be changes along the way.

This^^^

Where I usually see labor and materials or a cost plus are on things like remodels where there are so many unknowns or projects where the architect and/or engineer have gone bat crap crazy and designed something in a way where there is no good way to accurately estimate the cost to build.

 

[lazyboy97o]

This^^^

Where I usually see labor and materials or a cost plus are on things like remodels where there are so many unknowns or projects where the architect and/or engineer have gone bat crap crazy and designed something in a way where there is no good way to accurately estimate the cost to build.

In the case of Disney you get the two-fer where the owner is the bat crap crazy designer.

I’m not sure how you would better structure it, but that Walt Disney Imagineering is lead designer and owner/owner’s rep is probably something that really does co tribute to high costs. Walt Disney Imagineering is limited by what they ask for and manage. There isn’t a separate owner who holds the possibility of more work who is going to at least hesitate to approve a wheelbarrow full of change orders.

 

[Goofyernmost]

Contracts are usually contracts. They include wages, materials, etc. Without legal action they are binding. If, however, Disney or any other customer makes on the go changes, Change orders come into it and those additional costs are mutually agreed upon before anything gets changed. I can't see any business feeling that they will save anything by not having an upfront cost of labor. That is one of the biggest costs that exist in any project.

Adjustable yes, by mutual agreement, but, not just a here's your bill. When contracts are bid it is usually up to the contractor to calculate the costs for them to do that particular job (basic). With Change orders that can alter day to day. The customer usually sets a date of completion, not counting possible natural disasters. Change orders can alter all costs and all times, but, many business will institute a fine for running over the completion time not altered by uncontrollable circumstances.

 

[Jedi Stitch]

The general contractor goes cost plus 2%. The owner goes here is my schedule, bonus for early completion, fees for late. The sub goes here is my bid for the work. Then the lead honcho goes let make a change, then the sub-contractor goes Change Order $$$$. The general get the CO to amend the schedule and value so the general can still get cost +2%, and with the amended schedule still on time or better for bonus.

 

[Goofyernmost]

The swamps that were Walt Disney World began to be cleared and drained in 1967, and Magic Kingdom opened four years later in 1971. This included the utilidoors under Magic Kingdom, the lakes and canals around Magic Kingdom, the monorail, miles of roads, acres of parking lots, the Contemporary, the Polynesian, Fort Wilderness, and two golf courses. Disneyland took about a year to build. Epcot took about 3 years to build. None of this was off the shelf, and the accountants were not fiscal-yearing the deadline of the projects. Accountants kept the books, they didn't hold the books ransom for tax purposes.

The timelines for new Disney projects are insane. To build Magic Kingdom now would probably take a decade given whatever slothful business practices are in place. Where's the urgency? Where's the military whip-cracker who knows how to get things done? Truly, the bureaucrats have conquered, and the bogging down with meetings and other painstaking deliberatia have poisoned a once fast-moving and responsive organization.

Now you guys are just inventing reasons. Let's look at the Epcot scenario. An entire park was being built simultaneously and it took three years. That means that it still took 3 years to build each attraction much like it does now. No accountant holds a project captive over taxes as it does not benefit Disney to not have it up and running and starting the depreciation process and creating income. The only way it really affects taxation is to have it done. Epcot might have even been slower then necessary because financially Disney Co. was not rolling in money at the time. Not to mention that almost nothing was open and running when it opened in October 1982. So it took way longer then 3 years to get the complete package. I know, I know... the next statement will be "well, it only took a year to build Disneyland". Very true, but, look at what was there and you will see a very distinct lack of the high tech demand that is there today. It doesn't take long to build a trail to run a stage coach on or a river to float a boat. And then read up on how many things broke down almost instantly when the park opened. A park that wasn't ready to open, but, stuck to a predetermined opening day.

My next question would have to be. Why is construction time such a negative point with fans. Yes, I know you all want new things, but, almost none of you have a clue on how anything is built other then maybe your stick built homes. Nothing with the complexity and detail of a theme park attraction.

I will agree that management by committee is useless, however, our day and age requires it to keep individuals from being thrown under the bus. Placing blame has taken many people out of the picture. Something that a committee would shelter. Not necessarily a good thing, but, a part of corporate life. Couple that with 57 bosses all making changes after the fact, and you have longer construction times then we would like to see. However, there is a better then even chance that you really like the end result that came for some of those delays.

 

[KBLovedDisney]

Does Disney have their own construction company, or do they hire a well-known third party?

 

[lazyboy97o]

Contracts are usually contracts. They include wages, materials, etc. Without legal action they are binding. If, however, Disney or any other customer makes on the go changes, Change orders come into it and those additional costs are mutually agreed upon before anything gets changed. I can't see any business feeling that they will save anything by not having an upfront cost of labor. That is one of the biggest costs that exist in any project.

Adjustable yes, by mutual agreement, but, not just a here's your bill. When contracts are bid it is usually up to the contractor to calculate the costs for them to do that particular job (basic). With Change orders that can alter day to day. The customer usually sets a date of completion, not counting possible natural disasters. Change orders can alter all costs and all times, but, many business will institute a fine for running over the completion time not altered by uncontrollable circumstances.

Cost Plus Fee is a thing and there is usually no bidding involved in fast-track and integrated project delivery (IPD).

Does Disney have their own construction company, or do they hire a well-known third party?

It depends on the work. Disney owns Lake Buena Vista Construction Company. They tend to work on smaller projects while larger projects use outside contractors like PCL. If you read the permits they should name the contractor. Disney also contracts out architecture and engineering services.

 

[Master Yoda]

Does Disney have their own construction company, or do they hire a well-known third party?

Both, except the third party is not always a company of note. I have even done work for Disney and I work for a rather small company.

 

[StarWarsGirl]

I used to be one of those people who did not understand why it took Disney so long to roll out a project.

Now I work for a project management department in IT in a company smaller than Disney.

I get it now.

There are probably a bunch of checkpoints that a project has to go through, especially a large project. Disney has such attention to detail that they have to make sure every single one is accounted for. That takes time even just in scheduling to sit down with the right people.

There are also probably certain times when you can "go live" with a project. End of a quarter...lousy time to try to go live. You don't want too many going live at the same time because of resource constraints. In projects like these across multiple departments, you have to have coordination. There's definitely IT work done on new rides and attractions; they have to coordinate.

When you're rolling out a project to consumers, you want to make sure you can deliver on time. Remember how we all reacted when Rivers of Light was delayed? Or Seven Dwarfs? Yeah, Disney doesn't want that. They would rather give us a timeline that's far out and have us be pleasantly surprised than have delays in a go live.

Not to mention that the bigger the company, the more challenging the project management, and Disney is huge.

The model may not be perfect and it may take time, but it helps ensure quality and ensures that the project doesn't fail.

 

[Master Yoda]

Contracts are usually contracts. They include wages, materials, etc. Without legal action they are binding. If, however, Disney or any other customer makes on the go changes, Change orders come into it and those additional costs are mutually agreed upon before anything gets changed. I can't see any business feeling that they will save anything by not having an upfront cost of labor. That is one of the biggest costs that exist in any project.

Adjustable yes, by mutual agreement, but, not just a here's your bill. When contracts are bid it is usually up to the contractor to calculate the costs for them to do that particular job (basic). With Change orders that can alter day to day. The customer usually sets a date of completion, not counting possible natural disasters. Change orders can alter all costs and all times, but, many business will institute a fine for running over the completion time not altered by uncontrollable circumstances.

I was over simplifying.

 

[Phonedave]

Let us also not forget that the Ratatouille ride already exists--In Paris. Disney is not reinventing the wheel, yet it still takes 3 years to build the thing? No, it won't be exactly the same, but it will certainly be very similar and not a grand departure from trails that were blazed four years ago.

I doubt that anyone could make a convincing argument that Disney is still a quick-moving company that can make decisions and move a project to completion with decent speed. On the contrary: They've become very slow. I understand the accounting issues, but such concerns certainly existed back in the building days of Disneyland and Magic Kingdom. Accounting is nice, but right now Disney is sitting on under-utilized real estate, under-utilized IPs, and pent up demand. As long as the new attractions remain unbuilt, they are losing money that they could be making.

If I had enough pent up demand that I could hire a new employee and immediately make money from that employee, I wouldn't delay hiring that employee simply because I didn't feel like ponying up for a desk and computer. Profit follows investment and action. For some reason, delaying the opening of Rat for 1,000 days somehow makes sense to the current Disney corporation. It doesn't to me.

Remember, we have to look at DISNEY not WDW. I have projects that were projected to be profitiable. I wrote business cases for them, however those business cases ended up below the line. That's crazy you say, if you have a project that is going to make money, then you do it. Why would those cases not be funded (or funded below what I asked)

Ah, but here is the thing. Capital is a limited resource. There is not an unlimited pot of money that DIsney has to spend (and you do not want to borrow too much, even if your projected ROI is higher than the cost of borrowing, the street does not like to see too high of a debt ratio.) So what happens is, you have a project that is going to cost $1B that will take 3 years and will then generate a projected 10% ROI. However, some other person has a project that is going to cost $1B and take 2 years and generate an 11% ROI. There are only so many $1B pots of money to give out. Your poject gets put on hold, not because it is not desireable, but because an other project is MORE desireable.

-dave

 

[ford91exploder]

Remember, we have to look at DISNEY not WDW. I have projects that were projected to be profitiable. I wrote business cases for them, however those business cases ended up below the line. That's crazy you say, if you have a project that is going to make money, then you do it. Why would those cases not be funded (or funded below what I asked)

Ah, but here is the thing. Capital is a limited resource. There is not an unlimited pot of money that DIsney has to spend (and you do not want to borrow too much, even if your projected ROI is higher than the cost of borrowing, the street does not like to see too high of a debt ratio.) So what happens is, you have a project that is going to cost $1B that will take 3 years and will then generate a projected 10% ROI. However, some other person has a project that is going to cost $1B and take 2 years and generate an 11% ROI. There are only so many $1B pots of money to give out. Your poject gets put on hold, not because it is not desireable, but because an other project is MORE desireable.

-dave

This ignores the key issue here, Disney does not manage the BUSINESS, They manage the STOCK PRICE, Repurchasing a huge volume of shares does more for the stock price than investing in plant and equipment.

 

[Ralphlaw]

Now you guys are just inventing reasons. Let's look at the Epcot scenario. An entire park was being built simultaneously and it took three years. That means that it still took 3 years to build each attraction much like it does now. No accountant holds a project captive over taxes as it does not benefit Disney to not have it up and running and starting the depreciation process and creating income. The only way it really affects taxation is to have it done. Epcot might have even been slower then necessary because financially Disney Co. was not rolling in money at the time. Not to mention that almost nothing was open and running when it opened in October 1982. So it took way longer then 3 years to get the complete package. I know, I know... the next statement will be "well, it only took a year to build Disneyland". Very true, but, look at what was there and you will see a very distinct lack of the high tech demand that is there today. It doesn't take long to build a trail to run a stage coach on or a river to float a boat. And then read up on how many things broke down almost instantly when the park opened. A park that wasn't ready to open, but, stuck to a predetermined opening day.

My next question would have to be. Why is construction time such a negative point with fans. Yes, I know you all want new things, but, almost none of you have a clue on how anything is built other then maybe your stick built homes. Nothing with the complexity and detail of a theme park attraction.

I will agree that management by committee is useless, however, our day and age requires it to keep individuals from being thrown under the bus. Placing blame has taken many people out of the picture. Something that a committee would shelter. Not necessarily a good thing, but, a part of corporate life. Couple that with 57 bosses all making changes after the fact, and you have longer construction times then we would like to see. However, there is a better then even chance that you really like the end result that came for some of those delays.

I used to be one of those people who did not understand why it took Disney so long to roll out a project.

Now I work for a project management department in IT in a company smaller than Disney.

I get it now.

There are probably a bunch of checkpoints that a project has to go through, especially a large project. Disney has such attention to detail that they have to make sure every single one is accounted for. That takes time even just in scheduling to sit down with the right people.

There are also probably certain times when you can "go live" with a project. End of a quarter...lousy time to try to go live. You don't want too many going live at the same time because of resource constraints. In projects like these across multiple departments, you have to have coordination. There's definitely IT work done on new rides and attractions; they have to coordinate.

When you're rolling out a project to consumers, you want to make sure you can deliver on time. Remember how we all reacted when Rivers of Light was delayed? Or Seven Dwarfs? Yeah, Disney doesn't want that. They would rather give us a timeline that's far out and have us be pleasantly surprised than have delays in a go live.

Not to mention that the bigger the company, the more challenging the project management, and Disney is huge.

The model may not be perfect and it may take time, but it helps ensure quality and ensures that the project doesn't fail.

So what I'm hearing is that indeed the bureaucracy has taken over. I understand that layers have built up, and I even sympathize to an extent. Yet Disney used to be known as a responsive company that reacted quickly to market demand, and wasn't bogged down in bureaucracy. If, for example, Disney could somehow get paid $1 billion for putting up a beautiful and working Ratatouille ride by October 13, 2018, could they do it? For that much money, I assume Iger would appoint a Rat Czar to make sure the $1 billion prize would be awarded to them. But if that were possible, then why can't they do it now?

Or is it not possible? Business books from "In Search of Excellence" through the seven steps have warned organizations that layers of bureaucracy can kill them. Once a business gets bogged down with committees, sign-offs, etc . . . that organization becomes stale, stagnant and ineffective. Rat is just one example, but the greater screaming monument is the fact that the Yeti in Expedition Everest has been in disco mode for nearly a decade. Excuses abound for not fixing it, but I have heard absolutely nothing as to why a better band aid than a $20 disco light was not installed these last 9 years. Shameful. Fine, the yeti is broken, but let's actually use a touch of imagination and ingenuity to put something better than a furry John Travolta in its place until we can actually get it fully fixed. Apparently no one had the ideas, authority or foresight to achieve that better band aid.

Of course, Disney has also allowed the limp Tomorrowland Transit Authority narration to continue for years as well even though there is not a single sane person in the world who believes the current version is better than the narration it replaced. Plus, it would be very easy and inexpensive to bring back the old narration. No one has the authority or foresight to fix it.

All of these are sad indications that Disney has become so huge and red taped that the once great ideas become watered down and stale before they ever make it to the public. In my experience, committees deflate truly great and imaginative ideas, and that unfortunately is what we are getting with all the rehashes, refits, and IPing of the parks. Where are the great ideas? I fear they are not coming from Disney right now. I hope I'm wrong, but I will have to consult with the Board, swing it past 5 committees, get 27 sign-offs, amortize it though the next fiscal year, and complete a few studies before I could tell you for sure.