Geoff Andrew is Managing Director at office interior, fit out, project management and furniture specialist, Oktra
Financing a fit-out, reducing costs
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24 June 2014
The legal sector has always set the bar high in terms of beautifully designed offices, not just to attract and retain the best talent but also to give customers a high quality experience from the moment they arrive. With first impressions so important, the design and fit-out of law offices are business critical.
We’ve been designing and delivering legal premises for decades and are well versed in how to mitigate the risks, control budgets, finance works and capitalise on cost savings along the way. Here, we impart our knowledge in the hope that it helps you on your next project.
The first, most critical stage is establishing the brief and sufficient time should be devoted to its development, either in-house or with support. It’s where you set out your company’s requirements for relocation or refurbishment in full and ask yourself exactly what you hope to achieve from the project. Being methodical and specific will help ensure you get exactly what you want from the transition.
Evaluate whether you need to opt for refurbishment or relocation. Future plans for expansion and how your premises help facilitate growth will feed into this debate as will avoiding excess space that isn’t used effectively.
Technology will also play a part – how are you using it, how does it enable your business to thrive and is there potential to benefit from latest advances or new ways of working, such as task-based working or hot desking?
Office layout – open plan versus cellular, break out spaces versus quiet rooms, health centres, restaurants, food halls and leisure facilities – also needs to be fully discussed, ideally in conjunction with your property, HR and IT teams.
Overall, timescales and costs will most likely be the key driving forces of the project and will therefore impact on your choice of procurement. If you opt for a traditional build, which you may remember from my last blog is where you hire and project manage all the different team members yourself, you’ll need to allow extra time for the process. Design and build (D&B), widely recognised as the most cost-effective and time-efficient way to undertake projects under 100,000 square feet, will be far easier to coordinate because it offers a turnkey solution with design, specification, consultancy, project management and construction services all under one roof. It is also based on a fixed price and projects usually complete on time and to a consistently high standard.
How high you set your budget depends on what you can realistically afford. Is there any room for negotiation on the lease terms, are there any financing options you could benefit from such as loans, leasing or hire purchase. What about tax breaks from the Inland Revenue? Capital allowances do exist and, with the right advice from a tax expert, up to 70% of the relocation/refurbishment could be eligible for some form of tax relief.
And how much should a fit-out cost? Office fit-outs vary, which makes it difficult to give a simple answer. You may require purely cosmetic work which covers a broad spectrum in itself or a detailed analysis of workspace utilisation and the development of strategy for the future. If you need structural changes, you need additional skills such as a surveyor and structural engineer, which need to be brought in if you opt for the traditional route, but will be included in the price with D&B.
That said, based on our extensive experience working on legal sector projects for the likes of Kennedys, SeyFarth Shaw, Edwards Wildman and Waltons and Morse, we advise clients to set aside a similar amount to one year’s rent (i.e £55 psft or £75 psft with a lower limit of circa £35 psft due to the cellular nature of construction.
Most important is that your fit-out budget is comprehensive and incorporates at least the following: fit-out/refurbishment costs; IT infrastructure as well as hardware, software, support; relocation to a new telephone system, installation and training; and furniture.
Relocating and refurbishing represent a major investment for your business so, to make sure you don’t get caught out by hidden or unforeseen costs, we also recommend a contingency budget of between 5% and 10% of the project total, just in case.
If you follow these steps, you’ll be well on your way to a comprehensive brief, timetable and realistic budget for your whole project. You will also, importantly, have managed risk throughout the process and reduced your costs wherever possible.
We wish you all the best with your next project. If we can be of any help, you can find us and our Essential Office Refurbishment Handbook at www.oktra.co.uk.