How to Stay Within Your Tenant Improvement Budget

How to Stay Within Your Tenant Improvement Budget

When performing a build-out of new office space, there is often a starting budget. Many times, as upgrades and enhancements are discussed or offered, temptation wins and the budget flies out the proverbial window. Suddenly you find yourself with a much higher budget than you originally intended when signed the deal with landlord. Here are some timely tips to help you stay within your tenant improvement budget as you establish and manager your project.

Establish Your Budget

Establish your budget from the beginning with the designer or contractor. While your landlord is likely providing a set amount for your build-out, you will want to establish how much you can spend on upgrades and enhancements you need before the project begins. This will serve as the basis for your project’s budget. Keep in mind, your move into the new space will cost more than the build-out construction. You will need to consider design fees and project management fees, as well as, moving costs, new furnishings, telecommunications, IT, and any other specialty items your space requires. With your budget established, your space designer can then best achieve your desired space within your budget.

Monitor Your Budget Consistently Through the Project

Even though you established your budget at the beginning, contingencies can happen, and changes may be needed. It is true for any real estate project, so you need to monitor the progress and your budget by following your pricing parameters and insuring they are respected. If items are continually coming in at prices higher than original estimates, consider less expensive alternative to achieve the same level of aesthetics and function.

Control Design Input

Often companies seek employee input in planning their new offices. This approach makes employees feel valued and included, but it can add to the bottom line if not managed. Your employees may see this opportunity as a way to gain access to top of the line everything, with little consideration of your budget. You also risk the backlash should you include some employees’ suggestions and not others in the final design. The best way to allow employees to engage in the process is limit their input to specific items and options. You can narrow also narrow down selections to your top choices, within budget of course, and allow employees to vote on their favorite. In this way, you allow employee input, but not so much that it takes you over-budget or causes an internal squabble.

Analyze Costs in Technical Areas

There will be areas in your build-out project where you must rely on experts to recommend exactly what you need. Areas like IT, labs, etc. require expert assistance but you must analyze cost and ensure that all expenses are justified. One way to accomplish the task is to have your expert advisor develop a cost comparison of what you presently have and the one upgrades being proposed so you can easily determine if the costs are warranted and will enhance your services.

A Few Final Words of Advice

Your build-out is a big project, one with lots of variables. It includes design costs, materials costs, plus all the costs of moving to your new location. Every aspect must be planned for if you are to stay within your tenant improvement budget and achieve your goals. At Perillo Construction, our goal is to work alongside both tenant and landlord to accomplish your goals with the highest quality materials and workmanship, while staying with in your budget and completing your project on time.