How Do You Budget for an Office Fitout? A CFO’s Guide to Hidden Costs and Contingency

Budgeting for an office fitout starts with understanding that the number on the construction contract is rarely the number that matters. The true cost of a fitout encompasses the base build works, furniture and technology, professional fees, statutory approvals, make-good obligations on your existing tenancy, relocation costs, and a contingency that reflects the actual complexity of the project, not the most optimistic read of it.

For a CFO approaching a fitout for the first time, or reassessing one that has already begun, the discipline is the same as any capital investment: interrogate the assumptions, understand what is included and what isn’t, and make sure the risk is priced before it becomes a variation. A well-structured fitout budget is not a single number. It is a framework, and the quality of that framework determines whether your organisation stays in control of its investment or spends the back half of the project managing surprises.

When a fitout is presented to a CFO or finance committee for approval, the headline figure is typically a construction cost, a rate per square metre multiplied by the net lettable area, often benchmarked against an industry average. It is a useful starting point. It is not a budget.

The gap between a construction rate and a total project cost is where most fitout budgets run into trouble. Not because the construction estimate is wrong, but because it is only one component of a cost base that includes many others and those others are frequently underestimated, poorly sequenced in the approval process, or left out entirely until they can no longer be ignored.

Understanding the full composition of a fitout budget is not a matter of financial conservatism. It is a matter of accuracy. And accuracy, at the approval stage, is what allows an organisation to make a genuinely informed decision about whether and how to proceed.

What a complete fitout budget actually contains

A robust fitout budget is structured across several distinct cost categories. Each carries its own risk profile and its own common pitfalls.

Base construction works.

This is the core fitout scope, partitioning, ceilings, flooring, joinery, services, and finishes. It is typically the largest single line item and the one most scrutinised at approval. Construction rates in the Australian commercial market vary significantly by city, building grade, specification level, and programme, so benchmarking requires care. A rate that is reasonable for a mid-spec fitout in a B-grade building may be materially insufficient for a high-specification fitout in a premium tower, and vice versa.

Furniture, fixtures, and equipment.

FF&E is consistently underestimated in early-stage budgets, often because it is treated as a separate procurement exercise to be resolved later. In practice, furniture represents a significant proportion of total project cost commonly between 15 and 25 per cent of the construction budget for a well-specified commercial office and lead times for quality product can be considerable. Treating FF&E as an afterthought creates both budget and programme risk.

Technology and audiovisual.

The cost of workplace technology, audiovisual systems, end-of-trip connectivity, integrated booking platforms, and network infrastructure, has grown substantially as workplace expectations have shifted. These costs are frequently excluded from early estimates and introduced into the budget late, at a point where the programme offers little flexibility to value-engineer or re-scope without impact.

Professional fees.

Interior design, project management, and specialist consultants, acoustic, mechanical, hydraulic, electrical represent a meaningful cost that should be included in the budget from the outset. A reasonable allowance for professional fees across a full-service delivery model is typically in the range of 10 to 15 per cent of the construction cost, though this varies with project complexity and the scope of services engaged.

Make good obligations.

If your organisation is vacating an existing tenancy, the lease almost certainly includes a make-good clause requiring the space to be returned in a defined condition. The cost of make-good is often overlooked in fitout budgets because it relates to a lease being exited rather than a space being built but it is a real cost, frequently material, and sometimes negotiable with the outgoing landlord if addressed early enough. Understanding the make-good obligation before it falls due is a basic piece of financial hygiene that saves organisations significant money.

Relocation and transition costs.

The physical cost of moving removalists, IT decommissioning and recommissioning, staff communications, and the productivity drag of a transition period rarely appears in a fitout budget and almost always appears in the final cost. These costs are manageable when planned for; they are disruptive when they arrive unannounced.

Contingency: what it is, and what it isn’t

Contingency is the most misunderstood line item in a fitout budget. It is not a pool of money set aside to fund scope additions after approval. It is a financial buffer calibrated to the genuine uncertainty that exists in any construction project, uncertainty about site conditions, programme risk, documentation completeness, and the cost of decisions that have not yet been made.

The appropriate level of contingency depends on where the project is in its lifecycle. At concept stage, when little is fixed and much is assumed, a contingency of 15 to 20 per cent of construction cost is appropriate. As documentation matures and the contractor is engaged, that figure should reduce, to 10 per cent at tender and 5 per cent during construction, for a well-documented, well-managed project.

Contingency is not a pool of money for scope additions. It is a

buffer calibrated to the genuine uncertainty in your project.

A contingency that is too low is not a sign of a well-controlled budget. It is a sign of a budget that has not honestly priced the risk it carries. The result is a project that requires additional approval mid-stream, at the worst possible time, when leverage is low and options are limited.

A contingency that is never drawn down is not waste. It is evidence that the project was well managed, and the risks were well understood. Finance leaders who treat an unspent contingency as an overestimate are creating the conditions for the next project to be underfunded from the start.

The questions a CFO should be asking

A fitout budget presented for approval should be able to withstand a set of specific, direct questions. If it cannot, the budget is not ready, and approving it is accepting a risk that hasn’t been priced.

What is included in the construction rate, and what is excluded?

Base build items, HVAC, base electrical, fire services, may be landlord-funded or tenant-funded depending on the lease. Clarity on this point alone can materially change the construction budget.

Has the make-good obligation been quantified?

If not, it should be, before any approval is sought. The range of outcomes is too wide to leave unaddressed.

When was the contractor engaged, and on what basis?

A budget developed with Early Contractor Involvement, where the contractor has reviewed and priced the documentation, carries significantly less pricing risk than one developed from a design that has not yet been to market. The basis of the estimate tells you how much confidence to place in it.

What assumptions drive the contingency?

Contingency should not be a round number applied to the total. It should be a considered assessment of specific risks. If the team cannot explain what the contingency is covering, it has not been properly constructed.

Why the budget conversation is a delivery conversation

The quality of a fitout budget is ultimately a function of the quality of information behind it. Early engagement between designers, project managers, and contractors before the budget is presented for approval, not after produces a cost plan that reflects what the project will cost, not what it is hoped to cost.

This is not a subtle distinction. It is the difference between a budget that holds and one that requires revision at the worst possible moment. For a CFO, the value of rigorous pre-approval work is not just financial. It is reputational, the ability to present a project to the board or the executive team with confidence that the number is real, the risk is understood, and the delivery is in capable hands.

At Graham Nicholas, cost transparency is built into the delivery model from day one. A fully transparent tender means the client can see exactly what is included, what is excluded, and what assumptions underpin the price. There are no surprises in the final account because there are no hidden assumptions in the first one. That is what thirty years of project delivery looks like when it is done with discipline. And it is the standard every fitout budget should be held to.

Planning a fitout and want to understand the full cost picture before you commit?

We work with finance leaders and property teams to build budgets that hold from first estimate through to final account. Our national project experience means live market rates and real current costs, giving you certainty at every stage.

Get in touch with the Graham Nicholas team to start the conversation.

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