Around seventy per cent of small businesses have not correctly planned or budgeted for the fit-out of their commercial office space, potentially putting their business in jeopardy.
Fit-outs often cost more and take far longer than people expect, with tenants signing leases and then facing the prospect of either being unable to use the space or working in a construction site.
There are numerous reasons why companies decide to fit-out a new or existing office space, their old space may not be big enough to facilitate growth, or they may have a lease expiring and decide that an office move is the best option. As companies begin to look at new spaces and to set budgets for rent and associated move costs, it is important to consider the office fit-out costs and to get accurate estimates from fit-out contractors.
If you’re interested in refurbishing your office space with the aid of a fit-out contractor, you should know that an office fit-out is an investment and every investment involves costs and expenses! Aside from the fees on materials and furniture, you’ll have to pore over labour costs, permits, licenses, and even the losses you might have if the business is stopped during the fit-out execution.
Dedicate time for planning and budgeting to avoid bill shocks, overspending, and even unwanted debts. It will give you fair control of the process, making the fit-out productive and stress-free, just like how you wanted it to be. Below are some helpful points you can use:
Making Structural Changes
- Will the changes to your office be cosmetic – painting, carpet, lighting?
- Demolishing or moving walls?
- Exposed ceilings?
Structural changes to your fit-out will increase the costs of your fit-out as opposed to cosmetic changes to your space, due to work being greater in complexity.
If you are taking over a new space that has elements of an existing fit-out (E.g. Existing workstations), this will be more cost-effective to move into space as it is. However, businesses often overlook the longer-term cost of changing the way they work to suit the previous tenant’s fit-out. It may suit your budget when you are moving, but it’s very important to analyse the damage it may cause to the fabric and makeup of your teams. If taking over an existing fit-out, it is good to take the time to consider your workspace and how it aligns with the way your teamwork. What can departmental adjacencies be made to streamline your work and make the work environment more productive?
What Is Your Project Timeline?
The timeline to complete the works will determine the cost of your final budget. The shorter the timeline, the more weekend and out of hours work that will need to be carried out to ensure you move into your new space on time, resulting in increased costs.
Structural works mentioned above will also require building permits, so it is necessary to allow extra time for these to be applied for and approved of.
Landlords and building managers also stipulate that some works be completed outside business hours to eliminate disruption for other tenants. (E.g. Noisy works)
How Much Office Space Do You Need?
It is important to provide employees with an environment that will support their work needs and create a workspace with the right mix of spaces, balancing communal workspaces that correspond to the type of work tasks they perform.
Determining how much space your company needs should involve more than just how many employees you are currently accommodating. Your new workplace today must support its future hires and staff growth into the future.
The square meter of your tenancy has a lot to do with the final cost of your fit-out—but so too does the nature of your business. So before you go getting caught up in the grand pursuit of your new office space—or even before you start making plans to refurbish your current office—it would be prudent to assess the future of your business. It’s about having an honest conversation with yourself early on. It’s about addressing the potential challenges, and being able to counteract those inevitable costs with a well-constructed plan.
Some spatial considerations for the future might include:
- The potential growth of the business
- Plans to scale down
- Preferred work settings
- Merging with other businesses
- Coworking/subletting opportunities
- Company values
- Technological requirements
- The nature of your current and future employees
As a general rule-of-thumb, an open plan is an inexpensive way to open up the potential of your business, and flexible partitions can be used to create privacy. Nonetheless, cordoning off various departments with a private office structure can sometimes be more appropriate in terms of productivity. It’s important to consider all of the costs, from not just one angle, but all.
Identify the Type of Fit-Out Right Away
First, you need to gather the key people in your office and start determining the ideal fit-out for your office space. You can go for cosmetics only or the renovation of surfaces or outward edifices. This usually involves:
- Repainting of walls
- Installing new floorings
- Refurbishing of materials used in workstations
- No drastic structural modifications
You can also opt for the contractor to do basic structures like rooms, ceilings, and toilets but they’ll leave the space considerably empty for the company to fill in with their own choices of furniture and other equipment.
Since fit-out is very broad and can be customised based on personal preferences, you and your contractor can also agree on doing a turnkey project wherein everything will be achieved in the fit-out – from the alteration of structures to the supplementation of furniture. Rest assured that there will be an appropriate fit-out system available for your office space!
Consider the Amount of Time to Spend
Once you’ve settled on the fit-out for your area, you need to estimate how long the fit-out will take. This is the first element to deliberate on to come up with the estimated total of expenses needed.
Estimate the duration based on the kind of fit-out solution you need, then evaluate if the company can afford spending on the operation hours based on the rate charges of the fit-out contractor you hired. Remember that a longer time period means bigger costs.
You can work with the office fit-out contractor of your choice regarding the duration of the construction. Usually, fit-out contractors in the Philippines provide evaluation services. They’ll inspect the space and discuss your visions about the office. During this process, you can talk about your proposed timeframe and the fit-out contractor will collaborate with you to land on a final fitting scheme.
Estimating the duration for the fit-out is practical because you can avoid the risks of overspending – a deadline gives you a goal to achieve and regulations to adhere.
Measure the Size of the Space
The size of your property will affect your budget. Larger spaces, especially with lots of divisions, cost more than smaller ones and work areas with an open floor plan.
In addition, the cost will increase if you choose expensive but high-quality materials because their supply for installation doubles. In this case, you can choose only a particular space that will undergo a fit-out solution. You can also choose a smaller space if you’re relocating. Nevertheless, remember that these solutions can be risky! The moment your business blows up, your office space will be insufficient. This is why budgeting and planning with precision are truly essential.
Have a Clear Vision of the Design
Having a well-established concept of the design you’re targeting will help tremendously on budgeting, and by that, we mean having a tangible visualisation of the fit-out project. This doesn’t necessarily mean hiring a fit-out contractor right away. You can do basic scribbles or ask for the assistance of a designer for a more professional blueprint.
When you see the designs visually, you’ll be able to weigh in what matters most or not. Then you can now work with a fit-out contractor who’ll use their experience and skills to elevate your plans once you both agreed on a final design.
Browse the Contracts Properly
To preserve the budget you set, ensure that you’re getting the right deal from your fit-out contractor, including the following:
- Labour costs
- Other minor fees
- Assurance that the contractor’s fit-out services will be completed successfully on time
Try to extract hidden charges as much as you can. You don’t want them to show up late in the process. Carefully peruse the documents you sign. You should also make sure that taxes are in place and those responsible for possible accountabilities are on the check.
Resume the Business
Fit-outs can either make a business continue its operations under certain conditions or stop temporarily to make way for the tasks. Evaluate your type of fit-out. Will the construction hinder work greatly? Will important services like the internet or air conditioning be down?
If working during fit-out creation is manageable, it’s best to resume the business; but if it will hinder work, it’s better to halt the operations. As a major downside, you might lose business during the working days, but after the fit-out, there’s definitely a chance to recuperate the losses. If you really need to keep the business running, you can rent out a provisionary space adequate for the workforce.
Office Refurbishment & Fit-Out Costs
This is a question that we are asked frequently — how much does an office fit-out cost? There is no simple one-size-fits-all answer. However, we can provide pricing guides and cost indications for some of the variables that are encountered in a commercial fit-out project.
Like anything involved in business solutions achieved through building improvements, a fit-out project is primarily determined by what you would like to achieve for your business. To assist you in your decisions, we can provide the typical costs involved in the four main areas of a commercial office fit-out or refurbishment project.
Basic Refurbishment Design Costs:
Typically for a basic commercial refurbishment, there is no alteration to the specified systems of the building. This means that the need to obtain a building consent is unlikely. However, there are occasions when a landlord may require a building consent exemption, and that typically costs around $500 in council fees.
In addition to the cost of the consent exemption, a fire engineers report must be factored into your budget, a fee that typically ranges from $1800 – $2500. Further, the cost for the ventilation report can vary from $700 – $3000 depending on the scale and scope of the refurbishment.
Additional design time will be required to compile the consent documentation, and this typically costs $2000 – $3000. This particular design time is over and above the concept designs and construction drawings that are detailed below.
Almost all office refurbishments will require some level of planning and design. These may include selections of interior finishes and design schemes, colour coordination, construction drawings, and detailed plans. As a standard rule of thumb, a basic office refurbishment would require a floor plan, finish plan, electrical and data plan, elevations, and construction details. This results in a design cost for an average office of 400m2 that would range from $4,000 – $7,000, depending on the complexity of the individual project.
Major Refurbishment or New Fit-Out Project Design Costs:
A new building consent will be required for the following circumstances:
- A more complex refurbishment.
- A more extensive project that contains proposals to change, alter or modify specified systems such as new or modified fire protection, ventilation, sanitary works, or structural changes.
Below are the indicative design costs associated with a new or major refurbishment project:
- Architectural and interior design $80/m2
- Ceiling design and engineering $13/m2
- Ventilation design & engineering $6/m2
- Fire design & engineering $12/m2
- Furniture layout design $4/m2
- Council consent fees $18/m2
In this section, we will look at the typical building costs for a refurbishment or fit-out project. As with the design component, any indicative costs listed in this section are to be regarded as a rough guide, and they exclude GST, project management fees, preliminary expenses, and general costs.
In a typical refurbishment, the general scope allows for new or altered partition walls, generally with floor-to-ceiling glazing. Further, the refurbishment typically includes upgrades to electrical and data systems and a repaint of the internal walls. This results in an average office interior cost of around $140-$240/m2.
Additional Costs to Update or Modify the Following:
- Lay new carpet tiles $80/m2
- Install new suspended grid ceiling $65/m2
- Update lighting $50/m2
- Fire protection upgrade $80/m2
- Ventilation modification and upgrades $50/m2
- Furniture supply & installation $140/m2
Project Management & Preliminary & General:
Several items are frequently included under the title P & G or contractors’ margin. However, to simplify things, we have bundled those items together as one item in this guide.
Project management costs are the main contractor’s fee for managing the project. These costs include the coordination of the sub-contractors. Further, the project manager is responsible for maintaining health and safety and ensuring quality, project budget, and timeline.
P & G or Preliminary and General are costs such as waste bins, temporary power supplies, cleaning of buildings, temporary hoarding, protection of fencing, access, or any other project-related expenses that are not directly related to anyone trade in particular. The main contractor usually allows for these costs to save each trade from the need to charge individually for their own items.
As a rule of thumb, the P & G project management cost for a simple refurbishment project is between $15-$20 /m2.
Office fit-out Contractors will generally provide estimated costs per Sq. Ft, so it is crucial that you know the dimensions and size of your new space, while the per Sq. Ft cost will depend on a number of factors, including:
- The state of the mechanical and electrical (M&E) systems are servicing the space, i.e. heating, ventilation, power supply etc. If the M&E is old or not in working order, it can be a costly exercise to install new systems, so it worth appraising the M&E of any shortlisted space
- Does space have a raised floor? This can impact costs as a raised floor allows for optimum power supply and distribution management, allowing all cabling to remain hidden underneath. Not having a raised floor can mean that fit-out costs can increase as more innovative solutions are required, or a raised floor needs to be installed
- How old is the building and/or it a listed building? There can tend to be complications with older buildings as normal wear, and tear can take its toll, while if space is within a listed building, there can be an increased level of paperwork required before any fit-out can begin which can impact costs
- Ultimately, office fit-out costs are heavily influenced by the specification required by the company moving into the new space, whether they desire high spec finishes, fixtures and furniture
After listing down the factors above, you and your team should make a rundown to arrive at the budget beneficial to the company and the office fit-out that you all desire. Budgeting for a fit-out might cause a headache, but focused planning and evaluation will pave for a successful fit-out project!