Office Fit Out Costs
If you’re planning an office fit out, one of your first steps will be to research what your project will cost. You may even have asked a design & build company to provide an initial quote. At this stage, you’re probably thinking, why does office fit out cost so much?
You’re not alone. Many companies we speak to are surprised at how much their project will cost. They struggle to see how their project could possibly cost so much. The fact is, there is a lot more that goes into an office design & build project than meets the eye.
In this article. we'll explain why office fit out is so expensive. First, we'll explain the key cost drivers of design & build, and how they contribute to the overall cost. Then, we'll go through 7 actionable ways to reduce fit out costs, and how to apply them to your project. By the end, of the article, you'll understand why fit out is so expensive, and how you can value-engineer your own office fit out.
Office Fit Out Cost Drivers
Raw Materials
Office fit outs require a lot of raw materials, most of which are not visible in the final product. As well as the visible elements such as signage and furniture, there are a lot of other parts, such as sub-flooring and insulation. Typically, about 40% of your project costs will go toward materials.
Many of these raw materials are construction staples, such as wood and steel. Over the last three years, raw material costs have risen 15-20% per year on average, while steel has more than trebled. As a result, construction costs have increased in recent years.
Labour
The intensive labour required to produce raw materials also contributes to high overall project costs. Many base materials require a lot of intensisive production. Labour costs also have a direct impact on your project. A 15,000 sq/ft office fit out would take 12-15 weeks. That adds up to 12,000 or more man-hours on site!
Many elements of office fit out are either dangerous or technical. Both these situations need extensive qualification and training by specialised workers, which further increases costs. Overall, labour costs will contribute 30-40% of your overall project costs, and are a big part of what makes office fit out so expensive.
Hidden Utilities
The mechanical & electrical systems are some of the most important (and expensive) elements of an office fit out. These systems include Air Conditioning (HVAC), Power & Data, Lighting, and sprinklers. Because these systems are almost invisible, many people underestimate their importance to keeping your office running, and the amount of work that goes into installing and maintaining them.
They are complex systems that require expensive components and skilled maintenance. Typically, utilities will comprise around a third of your overall office fit out costs, including materials and labour.
Custom Designs
No two offices, buildings, or briefs are the same. As a result, each project is completely bespoke, both in terms of design and build. A lot of work is required in understanding your company's needs, and how your office can help your business forward. The design is then created around your brief and brand, rather than a one-size-fits-none approach. The delivery is also completely bespoke. Each project requires a lot of planning and preparation.
Energy Costs
Another factor causing office fit out cost increases is rising energy costs. As a result of the extensive processing that raw materials require, office fit out prices are vulnerable to increases in energy costs. Energy prices in the UK have increased by up to 400% in the last 12 months. This has caused overall project costs to rise by 2-4. Raw materials also require a lot of energy for transportation and installation. This further increases overall project costs.
How to Reduce Your Office Fit Out Costs
Office fit outs may often be expensive, but that doesn’t mean you are powerless to reduce the costs. With careful planning and good management, there are several steps you can take to keep the cost of your office fit out down.
However, it’s also important that you minimise the impact of these cost reductions on the quality of the finished project. Here, we’ll explain several steps you can take to reduce the cost of your project with minimal impact on the end result.
Project Management
Effective project management is essential to making your project a success. As we’ve already explained, office fit outs can be very uncertain and complex. This means a skilled and experienced project manager is necessary to minimise the impact of disruptions.
While it will be cheaper initially to appoint specialist contractors, the increased outlay of working with a design and build firm will almost always prove to be a good investment. With their contacts, expertise, and experience, they will be able to save you cost as well as time, ensuring your project is delivered on time, on brief, and on budget.
Minimise Build Out
Reducing the amount of partitioning in your office design will create a big reduction in your office fit out costs. Building partitioning is labour and material-intensive, so it's very costly. The amount of supporting work required further increases partitioning costs. Often, services such as lighting, fire detection and floorboxes have to be reconfigured to suit the new layout.
You can reduce the amount of partitioning needed in your office by using zoning furniture. This creates separation between different areas without the cost and hassle of service adaptions. It also makes your space more open and welcoming. The use of pods for focussed spaces and small meeting areas can also reduce the need for partitioning.
Maximise Tax Relief
Tax relief can save you up to 25% of your office fit out costs. However, few companies fully understand how to maximise the available tax relief schemes. The first thing to establish is what works are classed as repairs and what works are classed as improvements. All repair works can be classed as an expense, making them automatically tax deductible.
The Annual Investment Allowance (AIA) is a form of tax relief designated for the purchase of business equipment. You can deduct the full value of an item that qualifies for AIA from your profits before tax. To learn more about maximising tax relief on your office fit out, read this article.
Prioritise Requirements
You can save significant sums on your office refurbishment by identifying the nice-to-haves and then respecifying them. You could even eliminate them altogether, depending on how much you need to cut costs.
It is essential to have a well-defined project brief right at the start. If you need to reduce the cost of your office refurbishment, it's important you don’t eliminate essential parts of your office. Doing this could decrease the performance of your people. When you need to value engineer, you can compare your design with what you need the project to achieve.
Despecify Finishes
The next place to look for cost reductions is reducing the specification of the finishes. Some things like furniture or lighting should not be respecified. This is because cheaper options can reduce staff productivity and even cause health issues.
However, there are some ways to create cost savings that have little impact on the performance of your people. Examples include furniture upholstery, flooring, and design features. You will likely be able to find a similar product at a lower price, with little impact on the end result. This is especially important for large-quantity items such as flooring.
Fixed-Cost Contract
While it may not save initial costs, a fixed-cost contract is essential to reduce the overall cost of your project. The last thing you need is to be hit with a long series of mid-project price increases. Without a fixed cost contract, you are liable for raw material price increases, so a commitment to deliver the project for a fixed cost is essential.
Your fixed-cost contract should also be tied to the design as well as the quote. By ensuring that the entire design is included in the quote and that the contract is tied to both the quote and the design, you can keep your office fit out on budget.
Managing Your Office Fit Out Costs
An office fit out is a big project. It requires a lot of work, and that comes at a large cost. However, it's important to consider your fit out as an investment, not an expense. Real estate and staffing costs are two of the biggest outlays of every company. By maximising the performance of both, an office fit out can have a transformative impact on your company.
Just because your initial costs may have come in higher than you wanted, you're not powerless. By carefully planning, prioritising, and value engineering, you can reduce the cost of your office fit out with minimal impact on the end result. https://www.zenturaworkspace.co.uk/post/reduce-tax-office-fit-outTo learn more about value engineering your project, read this article.
To learn everything you need to know about office fit out costs, download Your 2024 Office Fit Out Cost Guide. In there, you'll learn about what affects fit out costs, why some companies are more expensive than others, how to choose your specification, and much more. Download Your Cost Guide Here.
To learn more about the potential return on investment of your office fit out and how to maximise that return, read What is the ROI of Office Fit Out.
