What Will My Office Cost?

We all want to know “what’s it going to cost?” You may have built an office before, or you know of others who have. Are your experience and/or the experience of others really a good barometer of what this project is going to cost? Well, yes and no.

“Yes,” in the sense that it can give you a good rule of thumb. But the answer is “No” if you don’t fully explore all of the variables that are going to make up the total cost. Let’s consider an example:

Say you want to build a log cabin in the mountains. On one hand you might want a real show place, or, on the other hand, you might just want a simple place to escape - just the basics.

In the show place, you’re going to want nothing but the best: ceramic tile, high-end carpet, granite countertops, a real stone fireplace, top-of-the-line kitchen appliances, crown molding throughout, and high-end paint finishes. Lots of high-end materials and money is not an issue.

In the just-the-basics place, you just want a fireplace and running water because it’s just going to be a place to escape and you want to make sure you can cook, sleep and go to the bathroom. There is nothing but the basics and everything has to fit into a tight budget.

Two wildly different costs - and yet the same place: a cabin in the mountains. So, what’s it going to cost? Here’s the answer. There are three variables in the scope of your project and of the three, you get to decide on two of them. Your Design/Build Team gets to decide on the third. The three variables are

• Materials
• Size
• Investment

To explain: If you want a 5,000 square-foot office and have $400,000 to spend, your Design/Build Team will tell you what materials can be used. If you want the finest materials and have $400,000 to spend, your Design/Build Team will tell you how large your office will be. If you want the finest materials and still need the 5,000 sq. ft., then your Design/Build Team will tell you how much your investment will be.

So now when your associates tell you their office cost $400,000 (or even worse, they say it cost them “x”dollars per square foot), you can now ask them some things that might help you determine what to expect yours to cost. The bottom line here is that you shouldn’t get caught up in the hearsay and hype. Your Design/Build Team can help you determine your budget so you’ll have a reasonable figure to plan on and take to your bank.

The DSKW Team

Employing a Design-Build Team to Build Your New Office

Traditionally, armed with a preliminary equipment plan, a small business professional will approach several general contractors for a fee and schedule proposal. The contractor applies his past experiences to the drawings to flesh out the actual scope of work from which to develop an estimate.

The professional and the general contractor are already at a disadvantage. The preliminary equipment layout or technical drawings that the professional is working from are, at best, a general guide to lay out walls and cabinets so the equipment ordered will fit. These drawings will not get a permit for your tradesmen, nor will they ensure that all of the trades are coordinated properly so the equipment will be easy to hook up once installed. For that, you, the professional, are relying on the general contractor’s ability to coordinate (wing it) in the field. Unfortunately, field coordination usually leads to confusion and confusion always leads to delays and cost overruns.

With a design-build team, however, confidence that your project is in the hands of professionals begins at the first stage. Design-build firms are construction management specialists and an integral part of the design team.  That means construction time and expense implications are assessed and addressed early in the process. The design-build team works together to decide the most cost-effective materials and methods of delivery before the design is finalized. This enables the team to provide accurate scheduling and costs. And, because the same group is responsible for drawings and functional performance (construction), the possibility of expensive surprises in the construction phase are virtually eliminated.

New office construction is one of the greatest areas of expense for most businesses; so it’s imperative to reduce the margin for error in this process. The greatest advantage of the design-build team approach is the potential for reducing this risk in your new office development. Single-source responsibility for quality, cost and schedule adherence clearly makes this the superior delivery mechanism for your new office. Because the design build team is accountable for design, construction and installation, you can enjoy the certainty of a well-executed plan from your committed design build team.

The integrated nature of the design-build team approach also eliminates project delay due to miscommunication between the parties on project in the areas of scope and responsibility. Bidding periods and redesign time are eliminated. Materials and equipment procurement and construction work can begin earlier (in some cases, before the construction documents are fully completed). Since total design construction time is reduced, you enjoy less stress and are in your new office doing business sooner.

The design-build team approach ensures high quality in your finished office because the team is contractually responsible to you from design through complete build-out and into operation. All too often, the professional plays the middleman distributing the work of design, construction and installation to various parties and becoming experienced on the fly. This is not necessary. Just as expanding your business to add a complete range of services allows you to create coordinated services with your clients , a design-build team does the same for you by coordinating office design, construction management and equipment installation to move you into your office faster and create a quicker revenue flow.

The Sykes Team

Expectations Between Architect and Client

Anytime something new and exciting is undertaken - and your office design is just that to a designer or architect- some stress is involved. Unfortunately, stress generally flows to the team member who knows the least about the process. That’s why patients are stressed when sitting in an operating chair, and the dentist isn't. For the same reasons, this is why most clients will feel stress while an architect designs their space and the architect doesn't feel the same stress.

A successful office design requires that the client and the architect bring the following character traits to the process:

• Sense of humor
• Good self-image
• Patience
• Clear communication from the very beginning
• Planning
• Superior awareness
• Flexibility
• Good listening skills
• Positive attitude
• Personal integrity
• Strong desire to reach goals
• Authority and promptness in decision-making
• Attendance at all important meetings

 With these join expectations in place, let's look at what the client needs to bring to the process:

• Sufficient and prompt funding for quality job
• Space and access to it
• Responsibility for your own actions that affect the job

And by the same token, a good design group will bring to the table:

• Site verification visit and provide written report of findings
• Office layout
• Complete architecture and engineering design and construction documents
• Submit construction documents to governing jurisdiction(s) for plan review
• Forward construction documents to you for distribution to general contractors for final construction budget proposals

A common mistake is assuming your unique office design or remodel can be purchased “off the shelf.” The earlier you fully engage with your architect and dedicate the mental, emotional, and financial resources necessary to complete the project design, the more satisfied and, yes, even enjoyable, the total design and construction process will become.

The Sykes Team

Time + Scope + Budget: The Architect's Balancing Act

We all know time is money.  When it comes to the world of design/build, the relationship is all that more apparent.

An architect sells his time and expertise. As such, his fees will vary based on three elements:

• The time allowed by the client’s deadlines to complete the design and drawings;
• The scope of included services and design requirements requested by the client;
• The overall construction budget established by the client. 

Each of these three elements - time, scope and budget - affect how the architect approaches the project and the time, resources, and expertise he will need to apply to the project in order to keep the three elements in balance.

For example, a client engages an architect and his engineers to design and provide drawings for the client’s project. The project is a 2,500 square foot dental office. The dentist doesn’t want anything fancy: just a “starter” offi ce with a few special finishes concentrated in the reception/waiting area and the operatories functional and pleasant. Ordinarily, a project of this size takes six weeks for the architect to adequately design and coordinate the engineering with the appropriate level of quality control prior to submission for permit. Let’s say the fee for this project is $15,000.

Time
Circumstances beyond everyone’s control have compressed the deadline. Every possible day must be saved in the schedule. The dentist absolutely has to have the design completed and the drawings submitted for permit in four weeks instead of six. The number of hours needed to complete the project doesn’t change, just the deadline. The only way to complete the project by the new deadline is to make up that two weeks of schedule with overtime hours. The fee must go up.

Scope
In the above example the client has engaged the architect to provide a “base” level of service: space planning, engineering, and construction documents. Let’s say in addition to the base level the dentist wants interior decorating, furniture selections, and closer monitoring of the general contractor. All of these additional services increase the scope of work and the time needed by the architect to adequately provide the services requested by the client. The fee must go up.

Budget
Typically the budget set by the dentist for the overall project covers two significant expenditures: the cost of general construction and the purchase of the equipment. The architecture and engineering fees are influenced by this third element - the budget - in this way. The amount of money you set to construct your office dictates the level of detail and finish material you can expect to find in your design. The higher the level of detail (curved furr-downs, special trim and mouldings, varied ceiling heights and lighting levels), the greater the amount of time the designer must dedicate to the drawings to ensure the design is coordinated with all of the disciplines and that the drawings are complete enough to instruct the contractor how to install the increased level of finish details. The fee must go up.

This balancing act is not possible without a lot of cooperation and understanding between the parties involved. If any of these three elements changes, the fee goes up.

The Sykes Team

The Five Steps: Grand Opening

The day has finally arrived: all of the previous steps are complete and the store is ready to open for business.  It is time to count down to opening the doors for those first sales.

Before the doors swing open, we need to do the following for our owner/tenant:

• Provide a facility management handbook which includes:
• Warranties
• Operating manuals
• Service contact information
• Conduct a satisfaction survey with the owner about how the process (the previous steps) went for them.
• Hand over the keys to the owner.
• Install fixtures and stock merchandise--and ready the staff for the opening.

Now the owner is ready to do business.

For more information on the Five-Step Total Construction Solution, please visit http://www.sykesconstruction.com/images/sykes-5step-brochure.pdf

The Sykes Team

The Five Steps: General Construction

We're getting closer to the grand opening.  This step is where things get active from a "we can see things happening" standpoint.

General construction consists of:

• Managing the construction of the project.
• Responding to city inspectors.
• Responding to landlord and owner questions.
• Addressing change order requests.
• Scheduling the site walkthrough with the owner.
• Reviewing facility mechanical operating instructions with the owner.
• Satisfying all items on the "punch list".

Managing the construction of the project is the biggest bite of this step.  Within this componenet, there are a number of "to do" items, including:

• Acquiring building permits.
• Monitoring the construction schedule.
• Ordering and scheduling furniture, fixtures and equipment.
• Monitoring the actual construction.
• Installing furniture, fixtures and equipment.
• Visiting the building site.

With your preliminary work (steps 1, 2 and 3) done and done accurately, this step moves smoothly toward the grand opening.

The Sykes Team

The Five Steps: City Planning and Building Code Review

It is the third of the five steps on the way to a grand opening.  This step really needs your attention.

City planning and code review are critical. You can't proceed between steps without proper permitting.

The steps you need to take to ensure compliance during this phase include:

• Submission of drawings and documentation to the city (or municipality) for review and comment.
• Finalization of the construction schedule.
• Addressing city review comments.
• Receipt of notice of construction permit approval.
• Assurance of building and systems code compliance.
• Finalization of construction budget.
• Approval and sign off of final construction contract with owner.

Once this sequence of events has taken place, you can move on to the next step: general construction.

The Sykes Team

A Real World Postmortem: Northern Tool & Equipment

Recently Sykes completed a build-out of the newest Northern Tool and Equipment store in North Texas, their Plano location.  We used our 5-Step Process throughout the project and it culminated in a project-completing postmortem analysis of the store.

The team (pictured on the left) featured project management and executives from both of our companies.  As a natural part of this process, we took these steps:

• Reviewed the build-out process
• Discussed what worked and what didn't
• Applied the "lessons learned" to the next project
• Discussed next steps (in terms of this project and future projects)

This meeting had extra benefits, too:

• Nothing replaces face-to-face contact. Since Northern Tool is a Minnesota-based company and Sykes is located in North Texas, meeting face-to-face made communication easier and more clear.
• Recommendations and referrals were more natural for both sides.

We highly recommend the postmortem meeting as a way to cement the bond between contractor/designer and customer/end user.

The Sykes Team

The Postmortem: The Last Step in the Buildout Process

It is as an important element of a project as any part of the implementation.

The postmortem.

At the end of any project, the team needs to talk about the course the project took. Recently, Sykes completed a project for Northern Tool and Equipment, a Minnesota-based retailer.

The attached pictures are of the attendees at the first Northern Tool and Equipment project postmortem meeting conducted by one of their suppliers. The project was their new store in Plano. This was a first because previously few of Northern Tool’s contractors conducted a meeting of this nature.

The meeting agenda covered:

• Business processes
• Lines of communication
• Coordination with multiple work responsible parties.

The good news is that conducting meetings like this results in an open dialogue. For example, our conversations in this environment resulted in the opportunity to bid on two new projects in Oklahoma.

The Sykes Team

Construction Trends Analysis

On a regular basis, we comment on and analyze the data from Reed Construction Data. Here is our take on the August Construction Materials price trends from Reed.

In the June report it was projected that the annual rate of increase would be 8%. This latest report reflects a rate of 6%. We noticed the large jumps in steel (4.1%) and copper (9.5%) as well as the increasingly important effect that the “weaker dollar” is going to have on imported items. As we remember from economics class, the weaker dollar makes our exported products less expensive resulting in (hopefully) a healthier export market; but, at the same time makes our purchases (imports) from other countries more expensive. This is not a comment on the overall or longer-term impact of the relative health of our economy caused by a weaker dollar. This is mentioned just to point out that the weaker dollar by definition causes our cost of imported goods to go up and most of us are most immediately affected by what it costs us to buy something.

Something else that is not reflected in this report is this issue of inventories. As we have seen recently, inventories are getting low – near a bottom. A couple of quick, practical examples: RTU’s and other HVAC equipment is no longer “off the shelf”. It’s now taking 3-6 weeks longer to get RTU’s that previously took a phone call. Also, electrical switch gear is beginning to be a longer-lead item. Panels and switch gear that was a 1-2 week delivery is now taking twice that. What does that mean? That means those manufacturers are going to have to start producing again – and instead of these items being shipped quickly out of inventory, they are now going to have to be manufactured – thus causing longer lead times and most likely higher prices.

Thanks for reading.

The Sykes Team

The Five Steps: Architecture & Engineering Documents

The next step in the five-step total construction solution process is a key one to the completion of the project: engineering documentation.

In this step you get through these steps so that the project has shape and direction. First you complete the architectural, engineering and construction documents related to:

• Space planning 
• Interior design and decorative finishes
• Plumbing design
• HVAC design
• Lighting design

After the documentation is complete, the following steps take place:

• Review of drawings and documents with the owner
• Identification of site-specific construction requirements
• Solicitation and selection of subcontractor bids

Once this documentation step is complete we can move on to the municipal reviews.

Dave and Kevin

The 5 Steps: Site Analysis

The first of the five steps, site analysis really has to be done before anything else.

Site analysis has to do with understanding the space by doing a site survey and beginning to do the store design.  Budgeting also starts here.

The landlord is contacted to get the basic information on the property lease.  This helps in the budget process and helps determine the extent to which work can be done.

A preliminary construction agreement is drafted and delivered to the owner.  The owner reviews it and signs off.

A site survey is conducted and the details are transcribed for later consumption in the process. A preliminary store layout is put together and the layout is submitted to the landlord for approval.

A preliminary budget is created.

You can't really start without this information and these steps.

Dave

The Five-Step Total Construction Solution

There are five basic steps to take between undeveloped land and an open store.  We've come up with these five steps:

1. Site analysis and design
2. Architecture and engineering documents
3. City plan and building code review
4. General construction
5. Grand opening

We'll briefly talk about each step here.  In later posts we'll go into detail on each step.

Site analysis has to do with understanding the space by doing a site survey and beginning to do the store design.  Budgeting also starts here.

Documentation of all of the major elements (space planning, HVAC, plumbing) is next.  Subcontractors are also identified.

City planning and code review are critical.  You can't proceed between steps without proper permitting.

The grand opening is the culmination of it all. Let the sales begin!

We'll discuss each of these steps in detail in subsequent posts.

Dave

Construction Terminology, Part II

A few more acronyms to whet your appetite.  At the recent NextGen meeting, these came up in conversation and discussion:

• ADA.  American's with Disabilities Act.  This is the legislation that defines how we design and construct to allow equal access to all.  Sets things such as, for example, ramp slope and surface type, counter heights, door widths.
• TDLR. Texas Department of Licensing.  This is the agency that sets our regulatory guidelines for construction and permitting.
• RAS.  A Registered Accessibility Specialist; usually connected to a design firm or architect.
• CD. Construction Document.
• PSF. Price per square foot.
• FDC. Fire Department connection.
• CMU. Concrete masonry unit.
• M-E-P. Short for mechanical-electrical-plumbing.
• CDS.  Cold dark shell. As defined in a earlier post, the very basic shell in a retail setting, waiting for finish out.

More later.

Dave

Defining Retail Spaces: The Boxes

Retail lease spaces come in several "flavors".  In this and subsequent posts we will define the two major types of space as defined by our industry and known as:

• Vanilla boxes
• Cold dark shells

There are other names.  For example, the vanilla box is also known as:

• Vanilla shell
• White box
• Warm shell
• Landlord work

These names describe the condition of the floors, walls and plumbing and other details that have been included or not in a space.

Cold dark shells are also known as:

• Dark box
• Grey shell
• Base shell 
• Cold shell

These spaces are first-generation space and are more basic than the vanilla box.

More details on each in subsequent posts.

Dave

"It Depends"

At a recent meeting of the ICSC Next Gen group here in Dallas, our colleague, Don Epperson, and I talked about a number of things related to costs and trends in our industry.  In this, our first in a series reporting from that event, we talk about our old friend of a phrase "It Depends".

This phrase comes about because while we can have rules of thumb on cost, every situation has its variables and specific criteria to the situation.  However, you only get to ask so many "It Depends" questions before the client or prospect or tenant tunes you out.

So, consider these types of variables:

• A restaurant of the same square footage as a soft goods retailer has many more requirements of equipment and code, thereby driving costs.
• A multi-level building, because of its structural differences, has different demands.
• Even demolition varies due to age of the building, what has to be removed and how it has to be removed.

You really have to consider each case.  But by asking a few critical questions (try and keep it to three), you can quickly surmise the situation and give your audience the guidelines they are looking for for budgeting purposes.

Consider these rules of thumb, given some perimeters and basic assumptions:

• A water line averages $18 a lineal foot to install
• Storefronts and facades on buildings run $300 to $1,000 per lineal foot
• To provide adequate HVAC coverage plan on 1 ton of air per 300 square feet in a 12- to 15-foot tall space
• Concrete costs an average of $70 cubic yard

But it all depends......

Dave

Construction Terminology, Part I

There are so many terms and jargon surrounding retail design and construction; we thought it a good idea to prepare a primer or list for reference. Here are a few terms defined in a simple list:

• Cold dark shell. The raw space ready for interior wall panels and other details. Precedes vanilla shell.
• Anchor. The largest store in a retail development. Examples: Macy’s, Bloomingdales.
• Big Box. A standalone retail store. Examples: Home Depot, Walmart.
• Strip center. An unenclosed retail space with drive-up parking.
• Tilt-up panels. Concrete wall panels, cast on the ground and lifted into place when cured and dry.
• HVAC. Heating, ventilation, air conditioning.
• QSR. Quick-service restaurant.
• Vanilla Shell. The basic walls of a commercial space, ready for HVAC, electrical and fixturing.

More definitions in future entries.

Dave