When preparing a construction or renovation budget, clients should see every cost considered. The budget should include costs like site work, permitting, millwork, furniture, graphics, technology, professional fees, and contingency. In my experience, when those costs sit outside the number, the institution is approving only part of the project.
The Element Group looks at the early project budget as the foundation. It establishes the approved project budget and the number the design and construction team has to work within.
The following 10 steps reflect how we approach budgeting at The Element Group for new construction and renovations and how we keep checking it as the project becomes more defined.
1. Define the business objective before defining the project
Before we discuss square footage, construction costs, or the operating model, we start by understanding what the institution is trying to accomplish. A branch intended to enter a new market creates different requirements than one designed to improve operational efficiency or change how customers and members use the space.
Once the objective is clear, we can determine whether the right response is a ground-up branch, an in-store location, an open renovation, a relocation, or another format. Each option can carry unique costs; for example, an open renovation may require premium construction hours so the branch can serve customers the next morning, while a new build may include utility connection fees and site work.
2. Bring the right departments into the process early
The right group will vary by institution, but it may include the project sponsor and team members from retail operations, marketing, IT, finance, facilities, and branch leadership. Each department sees a different part of the project.
In our experience, early participation creates buy-in, but it also improves the budget. When operational needs surface after the floor plan is developed, the institution may be paying to redesign work it has already approved.
3. Choose a partner with current cost data
If you haven’t built or renovated a branch in a couple of years, your last project will be a poor budgeting benchmark. At Element, we track what it takes to design and build branches across the country. We use that database for budget estimates, and then bring in local contractors’ knowledge to finalize a number.
The value of our data goes beyond a cost per square foot. It helps the team understand regional differences and the cost of the specific experience the institution wants to create.
4. Build the budget around the operating model
Once the business objective is clear, we translate it into an operating model. We look at the services offered, expected staffing, transaction activity, drive-up needs, technology, and back-of-house space. Those requirements should determine the footprint, rather than starting with a square-footage target and trying to make the operating model fit.
In my experience, a well planned 2,000 square foot branch can cost less and work better than a poorly planned 3,000 square foot branch.
5. Put the full project on paper
General construction is one part of the number. A complete branch project budget should also account for:
- Site work
- Millwork
- Furniture
- Graphics
- Exterior signage
- Digital technology
- Signature elements
- Professional fees
- Staff training
These budget decisions are all connected. If any of these costs sit outside the initial project budget, decision makers see an incomplete number at approval time.
6. Complete due diligence before design gets too far
Hidden costs usually have a source. In an existing building, the team needs to review available drawings, survey the space, and study the mechanical and electrical systems. In a ground-up project, the team needs to understand the site, setbacks, utilities, planning requirements, and zoning process.
Our construction PMs will contact building, planning, and zoning departments during early planning. Even the meeting calendar can affect a project. If a planning board doesn’t meet during part of the summer, missing one agenda may delay the project by a month. Delays like this belong in the budget conversation, because time carries a cost.
The next three steps are central to how we manage risk at Element. We connect contingency to due diligence, map the institution’s approval process and municipal approvals into the project schedule, and test the budget at every design phase. Together, those controls help the project keep moving without losing sight of the original concept budget.
7. Build contingency from due diligence
There will always be conditions the team can’t see before construction. The answer isn’t to ignore them or rely on one standard percentage. Due diligence should reduce the unknowns first. The remaining uncertainty informs the contingency.
We’ve seen institutions carry 5, 10, or even 20 percent depending on the project and the level of risk. The appropriate number may be different for a new build than for an occupied renovation. We’d rather help clients explain a thoughtful contingency during the initial approval process rather than see the project return for additional funding after construction starts.
8. Map the approval process and decision dates
Every project needs budget authorization, but the approval path varies by institution. It may rely on delegated authority, executive or committee review, or board approval when required. The schedule also depends on permits, planning meetings, design decisions, bidding, and long-lead materials. Those internal and external dates need to be visible from the beginning.
An institution can lose a month waiting for the next internal approval meeting or municipal planning session. It can also lose time when furniture, graphics, or construction decisions reach the appropriate decision-makers without enough information or notice. A realistic timeline should show external approvals, internal decisions, responsible decision-makers, and due dates.
9. Test the budget at every design phase
An initial budget is a starting point, not a number to file away. We stress test our budget at each phase of the project: concepting, schematic design, design development, and construction documentation. Each phase adds data as the floor plan becomes clearer, materials are selected, and requirements are defined.
Testing the budget at these points gives the teams time to make needed adjustments, without extensive delays.
10. Establish project ownership and decision responsibilities
Broad input belongs at the beginning, see Step 2. Once the project is underway, the institution needs a project lead who can coordinate the participating departments and route decisions to the right people. Coordinating the project is different from having authority to make every decision.
Before the project starts, we have clients define which decisions the project lead can make, which require cross-functional review, and which must follow the established approval process. We build those decision points into the project schedule and raise them weeks in advance. The client shouldn’t hear on Tuesday that a furniture package must be approved on Wednesday. Clear responsibilities and a visible approval schedule protect both the budget and the timeline.
Use the budget throughout the project
An early budget should remain active after approval. It gives the institution a working number, identifies where uncertainty remains, and establishes when costs and decisions need to be reviewed. As the design develops, the team should be able to explain what changed, why it changed, and how the project will stay aligned with the approved investment.
At Element, we begin that work with a Design Critique. We bring the business objective, concept, floor plan, initial visual direction, budget, and schedule into one review. This lets the right decision-makers see the full project and address risk before changes become expensive.
If your institution is planning a new branch, renovation, or expansion, start the conversation while the budget can still shape the project. Schedule an Element Design Critique.