5 Hidden Impacts of Having the Wrong Office Fit-Out Budget Approved by Your Board

If you’re reading this, there’s a good chance you’ve got a project on the horizon. (Hopefully at least 18+ months away!) Maybe it’s a new office, an additional floor or simply a much-needed upgrade. Like every Head of FM, Workplace, or Real Estate leader I’ve worked with, the burden of preparing and getting budget approval from the board falls squarely on your shoulders.

The issue is that approved budgets are frequently incorrect, potentially causing significant hidden impacts on your project down the line.

In this short article I am going to walk you through some of these hidden impacts and share some useful tips and exercises to ensure your next budget is robust and aligned with your project objectives.

Five hidden impacts of having the wrong budget

1. Board loses confidence in the financial reporting of the budget

Boards don’t like surprises. Once a budget is signed off, it becomes the financial narrative of the project. If you have to go back later asking for more money, (even if for legitimate reasons) it feels like a failure. You’ll face awkward questions: Why didn’t we know this earlier? Has something gone wrong? Are we managing this properly?

The result? You spend more time defending your project than delivering it.

And worse still, you risk losing the board’s confidence very early on in the project journey. This typically happens as soon as you appoint your project cost consultant, and they prepare an initial cost model which predicts a cost far higher than what you have in your approved budget.

2. You box yourself into the wrong spec, wrong team or the wrong space

If you have ‘under’ budgeted, the project team will be forced to make compromises before the design and procurement stages have even begun. It might preclude you from certain signature architects, forms of procurement and limit your contractor selection.

3. You burn time, credibility, and opportunity

In construction, time costs money. But in early-stage planning, money costs time. If your budget is unrealistic, the project stalls while you go back through design changes, VE exercises, or board-level reapprovals.

This delay has real consequences:

• Demoralise the project design team

• Additional design fees (& time) for value engineering redesigns.

• Your internal teams (IT, HR, operations) are disappointed as you dilute vision

4. You end up spending more, not less

Ironically, a low-ball budget rarely saves money. In fact, it often leads to higher overall costs. Here’s why:

• Design teams burn hours redesigning to fit an unrealistic budget.(i.e. VE)

• Programme extensions drive up professional fees.

• You may still end up back at the board only this time with a much bigger ask, under more pressure, and with less goodwill.

If you’d just prepared a robust budget from the outset, you’d have more options, more negotiating power, and more trust in the room.

5. You absorb all the risk quietly

Boards often assume that once the budget’s signed off, risk is managed. But if the budget was based on generic benchmarks or overly optimistic assumptions, it’s you and your project team who absorb the volatility and take on the burden of that risk. Which is why a robust assumptions and exclusions is critical when preparing your budget.

That includes:

• Scope creep

• Procurement changes (i.e having to go 2-stage due to market factors)

• Market movement

• Compliance changes or base build complications.

• Landlord delays or leasehold limitations that push costs up.

What you can do differently

This isn’t about asking for more money. It’s about presenting the right number and the right thinking at the right time. Here’s what I advise every Head of FM, Workplace, or Real Estate to do in the early stages:

1. Stress test your budget before it hits the boardroom.

Use a dynamic project budget cost model that enables you to break down the overall project costs into different elements. It will enable you to finesse individual line items. Perhaps consider creating a ‘low to high’ range.

2. Get key stakeholder engagement in your budget before its submitted

Work closely with IT, HR, ESG, and procurement to understand their real requirements. Get your internal IT/AV department to prepar their own budget and assumptions for the project and incorporate that into your master budget. Ensure each line item in your budget as a key stakeholder responsible for the number.

3. Include clear summary of your basis, assumptions and exclusions

Your board needs to what the total number is, what it covers, and what it doesn’t. Transparency here builds confidence and avoids blame later. This also allows you to legitimately request additional budget if the project parameters “evolve” from budget approval to commencement which can often be several months or years. (This is a very common cause of ‘overspending’ on projects.)

4. Factor in realistic design and construction contingencies and defend it.

You’ll never regret having contingency. You’ll only regret not having enough of it. A well-argued case for contingency can be the difference between control and crisis later down the line. Start high, I would suggest 10% of gross project value. (You can always reduce the allowances as the project scope becomes clearer down the line).

5. Consider getting a third-party expert pre-budget review.

Sometimes, you need an external voice to validate what you’re putting forward or highlight the blind spots you’ve missed. This does not have to be me, utilise your existing network, if you have a relationship with another cost consultant, use it. I have no doubt they will happily spare an hour to help you refine your budget and ensure it’s where it needs to be. Trust me, you will be so happy you didn’t skip this step.

Final thoughts

The best-run fit-out projects don’t start with perfect spaces, or even perfect teams. They start with a robust project budget. Spend the time early, and perhaps a small of money for some expert advice to ensure your project is setup correctly. If I said you can spend £10,000 today to build a robust budget that ensures the successful delivery of your £20million office relocation, it’s a no-brainer, right?

As a cost consultant, my role isn’t just to prepare budgets or manage costs. It’s to give you a narrative that holds up under pressure. A budget that has the trust in the boardroom and protects you when the real project begins.

If you’ve got a project in planning, now is the time to get this right. Because once that number goes to the board, it’s not just a budget. It’s your reputation.

Have a project on the horizon?

Check out my free resources to help you prepare a robust budget for board approval. (Including a free excel budget template and check list).