How to save on tenant improvement build outs
Posted by Andrew Thomas on
How to save on tenant improvement projects?
Happy tenants mean a thriving building, and tenant improvement (TI) projects can make a big difference for getting or keeping tenants at your building.
On the flip side, the costs for tenant improvements can grow quickly. As with any construction or remodel project, lead times, cost increases, and logistics can all impact bottom line. If you’re working on TI projects and you’d like to run smoother, more cost-effective projects, we have a few insights and tips to make your life easier.
Why lighting can cause budget issues on tenant improvement projects
Lighting tends to be one of the more difficult trades in construction and remodel projects. Part of this is because there are so many technologies and options — which also translates to very different price ranges. On top of this, local code is requiring stringent efficiency standards and new controls requirements.
In the end, lighting is necessary, but it adds significant complexity and highly variable costs.
It’s not uncommon for a construction project manager — new construction or remodel — to get into a situation where product leads times will jeopardize the schedule or bids for product are significantly off budget.
The primary reasons this happens are:
- Lighting was specified without keeping costs or lead times in mind. This is common in the industry depending on who specified the lighting for a TI project.
- Lighting was over-specified, meaning a higher-grade fixture was selected where a standard commercial-grade fixture would be sufficient.
- Lighting was specified from a narrow list of manufacturers because the specifier was most familiar with the brands, but not because they were the best solutions for the space.
Sounds like a real mess, right? Here are two approaches to addressing these challenges and getting easier and more cost-effective TI projects.
How to deal with an over-budget tenant improvement project
We often get brought into a TI project when lighting package pricing seems out-of-hand. At this point, the best solution is to value engineer the specification, but value engineering can also introduce new problems and should be done by a true partner in the project.
Value engineering the right way
The best kind of value engineering factors in the cost constraints on a project with the design intent and long-term lighting needs. The last thing a property manager needs is low-quality lighting that causes maintenance headaches and tenant complaints.
When our team approaches value engineering, we bring our decades of lighting expertise to the project and will evaluate true equal alternate products based on the need of the space. Some of the factors include:
- Color temperature and quality
- Product lifespan and warranty
- Local code and requirements
- Controls compatibility, if applicable
- Specific stock levels and lead times
Value engineering issues to avoid
We’ve also seen and heard of countless projects where value engineering introduced new issues for the customer. Here are two red flags to look out for:
- Too many differences in product specs can result in poor quality lighting that doesn’t meet the needs of the space. In this case, the product might have been considered “close enough” for the purpose of saving money but cuts corners that cause maintenance headaches and complaints down the road.
- Light levels are important, and some value engineering can reduce light output for the sake of savings. This can cause frustrations for a tenant if they don’t have adequate light in their space.
If you’re running an over-budget TI project and you need help reducing lighting costs, our team is here to help balance the budget with the needs of the space. We also have this deep dive on our value engineering process if you’d like to learn more about how to avoid issues.
Getting ahead of tenant improvement project cost overruns
Value engineering, when done right, can be a life saver in a TI project, but what if you could avoid the headaches and delays from the start? Here are key tips for avoiding lighting budget and lead time issues:
- Negotiate pricing from day one. When you’re planning your TI build out, make sure that you have a distributor engaged early who can define lead times and product costs while the plans are being developed.
- Consolidate manufacturer specs when possible. If your lighting plans allow, consolidating to fewer manufacturers can help you leverage greater cost savings. The one key question here is to make sure that the manufacturer’s product in any given application still meets the specific needs for the space.
- Treat high-impact areas differently. If you have key areas in the TI, this is the right place to consider higher-end lighting. This could mean higher quality lighting or decorative fixtures.
For three ways to save on new construction lighting without value engineering, check out this article.
High-end TI work needs a special touch, and our RL Studio team knows how to complete the job so it's both aesthetically beautiful and delivered on time. Check out our design team's portfolio, then schedule a consultation with our lighting experts to get your next TI project started.