Office Refurbishment Costs
A well-planned and executed office refurbishment can deliver an excellent ROI for your business. It can improve the wellbeing, collaboration, and productivity of your staff. However, the return cannot come without the investment in the first place, which in many cases is a big expense. In addition to the high upfront cost, refurbishments can be complex projects, with a number of ways you can incur hidden costs.
Every week, we speak to companies about their upcoming office refurbishments, and hidden costs are one of their top concerns. Hidden costs are one of the most common reasons office refurbishments end in failure. If you run out of budget, you may have to reduce the specification of your project before you finish, or cut funding from other areas. Even if you secure extra funding from your management team, this can be frustrating.
Given all the negative effects hidden costs can have on your office refurbishment, it’s important that you are aware of them before you begin your project. You can then create a plan to avoid them, and manage your project carefully to ensure they don’t become an issue. In this article, we’ll explain 6 of the most common hidden costs associated with office refurbishment, and how you can minimise their impact on your project.
One hidden cost that almost every company underestimates is the amount of time required to plan for and deliver your office refurbishment. While this doesn’t appear on any invoice, the amount of time your team will spend planning for and managing your project will need to be considered. At Zentura we advise our clients to allow 5-10 hours per week for a 5,000 sq/ft project. For larger projects over 10,000 sq/ft, you will need to allow at least 15 hours per week. For particularly busy phases such as pre-start and delivery, this may double.
You can reduce the amount of time you and your team need to spend on your office fit out by appointing a design and build partner that you fully trust. You are looking for a company that understands your vision and project objectives and is committed to your success as much as theirs. They will take a lot less time to manage, as you won't need to monitor them closely.
Variations are the single biggest reason for office refurbishment cost overruns. These occur when clients want to add or adapt something after the contract is signed. Your design & build partner will usually be happy to issue a variation to the contract at a cost. This is normally due to the client having omitted something from the original scope or wanting the specification of finishes to be improved.
Variations have occurred in almost all of the thousands of projects we have worked on. Office refurbishments are complex projects. It is almost certain you will have forgotten something or will want to upgrade something during the project. To prevent this from being a hidden cost, we recommend allowing a contingency of 5-10% of your project value. This will enable you to make changes as needed without going over budget. To reduce the number of changes needed, carefully review your quote and design package to make sure it includes everything from your brief.
Withheld costs are one of the most damaging hidden costs in office refurbishment. They often occur in competitive design and build projects, and are a serious issue in tender projects. If there is severe cost pressure, companies will reduce their profit margin to win the project. Once the project is won, they will then attempt to improve their profitability by charging for extras.
To avoid cost overruns on your office fit out project, we recommend you work on a fixed-cost contract with your contractor. Your contractor shouldn’t be able to introduce extra costs for items already included in their quote. You should also cross-reference the design package, and make sure everything is included in your quote. Your contract also needs to include references to the design package to make sure it is part of the contract.
Remedial works are, by definition, impossible to plan for. They involve fixing issues with your existing building or fit out that are discovered during the project. Common examples include leaking roofs or faulty electrics. As they can’t be detected before the works begin, they are very difficult to budget for, but they can have a big impact on your project. This is especially true for older buildings or buildings that have not been well-maintained.
To minimise the risk of remedial works costs, we recommend you have a building surveyor carry out an inspection of your office annually. This will uncover any serious issues with your building, and prevent them from being discovered during the project. You should also always allow a project contingency of 5-10%, to cover for eventualities such as this.
Quality of workmanship is difficult to quantity, but it will have a huge impact on the success of your project, as well as the upfront and hidden costs of your project. In a highly competitive pitch-to-win scenario, some companies may use cheaper subcontractors who have lower labour costs. This may be a false economy if your office refurbishment requires a lot of rework or churn in a few months’ time.
The quality of workmanship on of the most difficult areas to assess when comparing design & build quotes. However, there are several things you can do to ensure poor workmanship doesn’t derail your project. The first is to ensure your design & build company uses qualified subcontractors and staff. You can also ask your design & build company for references, and speak directly to their previous clients about their quality of workmanship.
The most overlooked hidden cost of office fit out is aftercare. While office fit out companies will provide support during the project, many disappear as soon as the project is finished. There are two key parts to aftercare. The first is resolving minor issues that arise in your office as a result of your project, such as a faulty chair or TV screen. The other part is churn works – small adjustments that need to be made to your workspace as your company evolves and grows over time.
To minimise the impact of poor aftercare on your office fit out, you need to assess potential design & build partners based not only on what they say, but what aftercare provisions are in the contract. References from previous clients can also be very helpful to understand how their aftercare package works in practise, and how good their churn works service is. It may be worth paying a higher price to ensure your office fit out company provides a good aftercare package.
How to Choose The Best Office Refurbishment Company
Awareness of the top 6 hidden office refurbishment costs is crucial to making your project a success. Now you know what they are and how to manage them, you can plan your project carefully to avoid or minimise their impact. You can also keep track of these risks during your project, to make sure they don’t become a major problem. Choosing the best office refurbishment contractor for your project is also crucial.
To learn more about how avoiding hidden costs, read our article How to keep your office fit out on budget. It details the 5 essential steps you need to take to avoid cost overruns, and how you can apply them to your own office fit out or refurbishment project. Want to learn more about what your office refurbishment is likely to cost? Read our office refurbishment costs 2023 article. There, we’ll talk you through some indicative costs, as well as the different types of office refurbishment, and what can drive the cost up or down.