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This article is part of the school of coworking course through Archie. Make sure to check out the other articles to learn more about how to start a coworking space business.
Building a coworking space from the ground up can be finicky, lengthy, and overall exhausting. You will likely be faced with multiple delays, budget adjustments, and other unexpected crises during the buildout process.
Despite your best efforts to plan ahead and define the scopes of your project, there is a lot that can go wrong during this time.
Still, there’s no need to panic, we’ve got your back! We’ve created this 5-step guide on how to build your coworking space to help you get through this process with maximum success and minimal setbacks.
Step 1: Planning
As it is for any project, the first step of your coworking space buildout will be planning.
Thankfully, the majority of the necessary planning was done during the design stage of your coworking space journey and you only have a few more tasks to go through before the construction can begin.
You will want to hire a General Contractor (GC) for your coworking space buildout.
Depending on where you are located this could be optional or mandatory. Your local construction association’s website should provide you with the legal requirements of commercial construction projects.
With your GC you will go over the timeline and costs summary you created during the design stage in order to establish what type of contract you will sign.
1.1 General contractor agreement
At this point, you should have settled on a contractor you would like to go with for your buildout. Now, the two of you will have to consider what type of contract you will enter for the duration of the project.
There are several types of agreements available but for the purpose of this article, we will focus on the two you are most likely to use: lump sum and time & materials (T&M) contracts.
Option 1: Lump sum contracts
A lump-sum contract is perhaps the most basic type of construction contract.
Sometimes referred to as “fixed price”, this common agreement stipulates one fixed price for the realization of the entire project as opposed to receiving individual invoices for each required material.
In a lump sum contract, the contractor is responsible for completing the buildout within the price cap set forth in the agreement, meaning that any additional costs would be absorbed by him as long as they are within the scope you provided him with. To avoid this, contractors will boost the total price of the project to include a buffer for covering unexpected expenses. In the instance where the project came under budget, the GC would also keep the difference.
There is also a risk that your contractor will cut corners if the budget has ran out but an unexpected cost arises.
Lump sum contracts pros:
- simplified bidding: consolidate all bids under one total price vs. submitting individual bids
- small projects
- projects with predictable scopes
Lump sum contracts cons:
- The construction plan must be extremely detailed
- Inflated total price to include GC’s additional cost buffer
- Rigid project scopes
Option 2: Time and materials contracts
In this type of contract, the operator will pay the general contractor one consolidated invoice of three separate fees including (1) an hourly or monthly superintendent fee, (2) a GC fee ranging from 8 to 15% of the total project cost, and (3) the price of the labour & material that he paid out of pocket.
With these contracts, there is a risk that the contractor will take more time to complete the project since there is a financial incentive to do so on his side. To avoid this, include a timeframe cap on the project when signing the agreement which stipulates that after X number of months past the end date the operator will no longer be responsible for the superintendent fees.
T&M contracts pros:
- large projects
- projects with variable scopes or scopes susceptible to change
- might save cost on buildout if it is cheaper than planned
T&M contract cons:
- an incentive for the GC to have a slow progression on the project to increase his profit
- added costs must be absorbed by the operator unless GC is at fault.
- tracking every invoice to ensure costs are accurate and you are not overpaying
The selected contract type should then be signed by both parties and will legally bind both sides to uphold their end of the deal until after the completion of the project.
It can take more than a year for a buildout to be fully realized and trust us, the last thing you want is to be tied up in a contract that is draining your funds and sinking your dreams.
This is why it is absolutely critical that you be 100% aware of what you are committing to – pay attention to the fine prints and look for hidden costs.
1.2. Construction document
The construction document will be one of your key tools for the duration of the buildout.
It should include a newly revised timeline and summary of the costs for the project, and a section for inputting quotes and tracking expenses.
This last section will become your master tool throughout the buildout, you and your contractor will use the document to track new quotes, new unaccounted expenses, paid and unpaid invoices, and so forth.
A timeline is an important tool. It will help you visualize the tasks at hand, the duration of each segment and should help eliminate unnecessary delays.
This is an overview of the scopes of the project by groups and should be used to guide you and your project team. Your contractor should normally provide you with a more accurate and adjusted timeline, but there are numerous online tools available if you wish to create the timeline yourself.
Below is an example of a construction timeline generated through a free online software. (Table view and Gantt chart view)
Breakdown and tracking
It is crucial that you keep track of the many different expenses throughout this process. In addition to the cost summary, your construction document should include a separate detailed breakdown of those costs.
This document can be drafted by either you or your contractor but will be used by both sides throughout the project. Before construction starts, only the quotes you previously obtained during the design process will be added to the document. As construction advances, there will be more and more information to keep track of so you want to make sure that your document makes sense and is easy to read and manage.
Below is an example of what this section should look like:
Once the above is completed you can begin the pre-construction phase of your buildout.
Step 2: Pre-Construction
At this stage, you will need to apply for construction permits and start procuring the necessary materials.
Construction permits are mandatory papers issued by your municipality granting you, the operator, the right to renovate or build a space.
You or your contractor will need to apply for one (or more) permits for your plans to be approved. Your application should include your construction surveying document, your detailed floor plan, and all additional document mentioned above.
Permits are not issued overnight. The waiting period depends in large on your plans, it can take anywhere from two weeks to several months for the city to give your project the green light.
In addition to this, you will need to dish out some money to acquire the necessary permits. These fees, typically ranging from $500 to $2000, do not represent a significant portion of your overall budget but making mistakes in your permit application could end up costing you more in time and dollars so be diligent with this.
Tip: For a rough estimate of the permit cost use the following formula → cost of the work ÷ 1,000 x $9.80
With your permits in hand, you’ve got the green light to start building.
Consequently, you will need to procure all the necessary materials for your buildout. This can be done through the help of your contractor or by yourself.
Tip: If you recall from the design section of this course, your contractor is more likely to get deals and reduced prices on materials so we recommend you utilize this instead of doing the procurement yourself.
Step 3: Construction
The demolition stage is dependent on the type of your buildout.
For a shell condition buildout, the demolition has already been done so you will skip ahead to the construction phase.
Similarly, if your space is a 2nd generation buildout and you’re happy with the layout, chances are you will also skip the greater portion of this step.
Alternatively, if your space requires demolition, you will need a demolition plan which will provide an overview of the process and the attached risks.
Demolition can take anywhere between 3 to 7 days but naturally this estimate is an approximate number. Demolition can take less or more time depending on a multitude of factors, size being one of them.
Below is an example of a demolition plan:
Finally! You are at the building stage of your coworking space buildout journey. Your space is now a blank canvas and it’s time to bring your design to life.
This phase is sure to take as long as any before it is fully realized so, once again, be ready for delays, expect unexpected costs and keep track of every cost and every task.
Here’s a breakdown of the building process:
- Rough framing. Think of this as the skeleton of your space, at this stage, floor systems are down, wall framing is completed and windows are put in.
- MEP installation. MEP stands for mechanical HVAC, electrical, and plumbing systems and relates to everything that is kept hidden behind walls or floors. Any modification or replacement of these systems will take place during this phase and will have to pass an inspection for safety measures.
- Insulation and drywall. Once the MEP is up to code and has passed all required inspections you will put in insulation before putting up the drywall throughout. The first coat of paint will then be applied to all interior walls, a process known as priming the walls.
- Finishes. During this finishing phase, you will install trims, cabinets, interior doors and general hardware such as outlet covers and light switches, as well as put down your flooring and give the walls their final coat of paint.
Tip: Mistakes are common on construction sites and it is not uncommon for contractors to have to partially or fully take down drywall to fix those mistakes. Because of this, you will want to wait until later to give the walls their final coat of paint.
Now your space is move-in ready!
Step 4: Finalizing your buildout
4.1 Furniture, fixtures, and equipment (FF&E)
During the design process, you created one or more mood boards for your space which gave you a broad view of what your space requires and what you wish it to look like.
Now, it’s time to get out there and purchase it all. Depending on the size of your space this might be a big undertaking.
Because some time has passed since your initial research, expect that some items might no longer be available and that you may need extra time to find alternatives. Plan accordingly in your timeline and allow for enough time to find replacements as well as take shipping time into account.
A final inspection, otherwise known as a punch list, is the concluding step for your buildout to be fully completed.
With your project team, you will conduct a final walkthrough of the space and markdown anything that isn’t in conformity with the original plans.
Each item on the list must be fixed by the person responsible for it before a certificate of occupancy (also referred to as a certificate of substantial completion) can be issued and your space can open.
Step 5: Getting your Space Ready for Opening
The buildout is now complete but you still need to finalize a few more things before you can officially open your doors to the public.
5.1 Clean up
The construction process might be over but it surely won’t look like it unless you give your space a good, deep cleaning. If your budget allows for it, you might want to consider hiring a team of professionals to help you get rid of all the sawdust and debris left behind.
5.2 Moving in
Your brand new coworking space is now ready to receive all the FF&E you previously purchased.
Be prepared to get your hands dirty one more time as you will likely be putting furniture together for the next few days.
This is truly your final step before the grand opening. It’s been a lengthy and difficult journey and surely you are getting rather exhausted but we urge you not to rush through this step all the same.
Instead, have fun with the process and take your time figuring out if everything is in the best emplacement possible. This is your last chance to make sure everything is in order to wow anyone who walks through the doors.
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