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
Construction Budget Categories
In the case of an office build-out, many of the 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 in the categories of:
- Hard Costs
- Soft Costs
- Vendor Costs
- Project Management Fees
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
- 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.
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
- 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 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:
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.
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.
The chart below outlines what a typical office build-out 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?
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.
- What is a Tenant Improvement Allowance and What Does it Cover?
- Cost to Hire a Project Manager for an Office Build-Out or Renovation
- What is an Amortized Tenant Improvement Allowance & How Can It Help Pay for My Office Build-Out?