Office Construction and Build-Out Cost: How to Plan and Budget

How much does an office build-out really cost? Trying to estimate a budget for your office buildout can be frustrating. It is difficult to impossible for individuals to get quotes from major construction companies, and you may not know exactly which line items should be included in your cost estimates.

AQUILA’s project managers have put together budgets and bids for hundreds of tenant improvement projects and office build-outs, and want to help you understand the process and what you can expect to budget.

In this article, we will help you understand:

The major categories of expenses that make up a construction budget
Which line items to account for in each of these categories
How much of your budget to anticipate spending on these categories

Office Build-Out Cost Categories

Many of the build-out costs will be project-specific, so it is best to consult with a project manager to get the best estimate possible. As a general overview, however, the most common expenses will fall into the categories:

Hard Costs
Soft Costs
Vendor Costs
Contingencies
Project Management Fees

Below we will examine what is included in each of these categories and what you can expect to budget for each one.

Hard Costs

Hard costs typically include the physical renovations to the space, such as building walls and upgrading the air-conditioning. Hard costs will likely make up the majority of your project costs – about 75% to 85%. These are also the most difficult to estimate without looking at the specific details of a project.

Below is a list of common hard costs our project managers generally see in Austin:

Paint and Carpet
Electrical
Plumbing
Walls and Framing
Doors and Windows

Hard costs can vary a lot, depending on the quality of the finishes you choose and how many renovations you plan to make to the space.

Soft Costs

Unlike hard costs, soft costs do not include any physical changes to the space. Instead, these costs include the expenses and services necessary to complete the project itself. These generally account for 8 to 12% of the total project cost.

Some expenses that fall under this category include:

Architectural designs
Permitting
Legal fees

Soft costs can sometimes vary depending on the type of project and its complexity but, in general, these costs will be easier to estimate than hard costs.

Not sure what the differences between hard costs and soft costs are? Quick Answer: Hard Costs vs Soft Costs for Office Build-Out Budgets

Vendor Costs

Vendor costs make up a variety of miscellaneous expenses that you might find yourself needing to pay for during your project. These can range from 5% to 10% of your overall budget.

These costs can include:

Cabling
Security
Moving
Signage

Like hard costs, these costs are also very dependent on the specific project. They mostly depend on the space being renovated, the tenant’s needs, and the terms of the tenant’s lease.

Contingency Allowance

To finish the budget, an experienced project manager will include a contingency allowance for unexpected expenses. Even if you choose to not use a project manager, it is still advisable to include a contingency allowance in your own budget.

For projects in “shell” condition, this allowance usually falls between 5% to 10% of the overall project cost, while remodels usually have contingency allowances of 10% or more since you are more likely to encounter unexpected issues in second-generation spaces.

Project Management Fee

The last component of your budget is the project manager’s fee, should you choose to use a project manager for your buildout. This is generally 3% to 5% of your overall cost, but can vary depending on the project size.

Though this might look like an additional expense, a good project manager will typically save you money on your overall project cost, and help you avoid making costly mistakes.

Read Now: Cost to Hire a Project Manager for an Office Build-Out or Renovation (Prices/Rates)

Build-Out Cost Bottom Line

The chart below outlines what a typical office build-out cost budget looks like. Our experienced project managers have found that this breakdown remains true regardless of the project size.

Typical Budget Breakdown
Category	Percentage of Total Breakdown
Hard Costs	75 – 85%
Soft Costs	8 – 12%
Vendor Costs	5 – 10%
Project Manager Fee	3 – 5%
Contingency	5 – 10%

To start budgeting for your office build-out, download our handy, interactive Office Build-Out Budget Template.

Still Need Assistance Estimating Your Build-Out Cost?

If you are still confused as to what goes into an office buildout project’s budget or having trouble gathering the necessary estimates, don’t feel that you must go through this process alone. Our project management team would love to meet with you and assist with constructing an accurate estimate of what your project will cost.

If you would like assistance with your office buildout budget, set up a consultation with our project management team today.

Or if you’d like to learn more about building out your office space read our Ultimate Guide to Building Out Office Space.