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How to Lower Office Construction Costs

April 25, 2019 01:26 AM

Generally speaking the office buildout process includes a few steps; first the client must retain a broker to secure a space (buy or lease), then during lease negotiations an architect or designer will help the broker with a test fit to make sure the space is generally adequate for the clients intended use. Then either the landlord or Client (depending on lease negotiations) will retain an architect/designer that will work with the client to create construction documents that will ultimately be given to the contractor to build the space. It is common for this entire process to take between 4-6 months sometimes longer or shorter dependent on other factors such as space availability, jurisdiction permits and complexity of the construction.

Know your budget. Throughout this new office process there are many opportunities to negotiate fees, but what provides the best value? Should you try to negotiate with everyone? The answer here is that knowing your budget will save you more money and time then trying to negotiate or value engineer, which is the process of removing or substituting parts of your project for lower quality.

If you have a prepared budget this information will do the negotiations for you. It is in the best interest of good designers, those that awarded with the industry, to build great spaces. It is in the interest of the contractor to keep good relationships with the architect and designers. Knowing the budget is going to push the architect and designer to build the best space they can for the given restraints.

It is also important to disclose this to the broker as they are empowered to negotiate buildout costs on the client’s behalf. Rather than negotiate fees you will generally save more money and time by retaining highly qualified people for each of these roles (broker, architect/designer, and general contractor). Interview and talk with each of these people.

People

Choose the right team. When interviewing companies make sure you are talking to the people that will be working on your project. It’s nice to meet owners or business development specialists, but the people you really need to talk with are the ones that will be doing the work on the client’s project. Base your decision on the specific individuals that will be working on your project. Make sure the people, individual professionals are qualified. These professionals bring years of expertise, local industry connections and specific skills needed to bring your project to a successful completion.

Having these recognized professionals on your team is more important than negotiating a few dollars on fees. The difference between a qualified architect/designer and a junior professional can easily save you 20%. For example a qualified designer will attend progress construction meetings with the client. The qualified designer will walk the space with onsite personnel as the project is being constructed to solve issues before they present problems or delays. On average each unforeseen construction delay, situations that could not be anticipated before construction begins, cost the client an additional 7% of the total construction cost. On a $500,000 buildout that’s a $35,000 savings by choosing the right team for your project.

Time

Create a timeline. What are the factors driving this project? If the client is in a current lease that needs ends in June make sure you are starting the process with plenty of time. This timeline should not be about construction details it should be your organizational requirements. An easy way to get started with this is by writing down your desired move-in date and working backwards.

The client should create this timeline early and internally. Talk with the stakeholders in the company and figure out everything that will be affected by the move. Have each stakeholder in the company create a list of what they are responsible for and put that together. A good collaborative tool for putting this together is SmartSheet. By doing this exercise many of the common pitfalls companies endure will become evident and avoided. For example, if the client is a medical facility the nursing director is going to have responsibilities that are different then the finance team and internists. It may turnout that the client will need access to part of the space for storage prior to a certificate of occupancy being issued. Or when the client share’s this timeline with the broker it may be discovered that instead of three (3) months to locate and negotiate a lease there is only one (1) month.

Summary

There are many factors that can affect a new office build-out, but a Client only needs to concerned on People, Budget and Time to be successful.

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