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The fitting out of a tenancy within a commercial building occupied by a number of different tenants has the potential for pitfalls not found in more typical projects that involve, unoccupied premises, single clients and neighbours on separate titles.
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While the design and construction of tenancy fit-out work involves risks that are common to most construction projects, there are some particular challenges. Where these are recognised and dealt with, the tenant and the consultant team can reduce the risks that accompany them and minimise, if not eliminate, potential cost and time overruns on the project. More importantly for the architect, the potential for dispute with the contractor, building owner and neighbouring tenants can be minimised. A dispute will invariably involve the architects additional time on the project, often without reimbursement.
Building age
In the last two decades of the 20th century, there was a major shift in the design of tenancy fit-out away from an aggregation of individual partitioned spaces mixed with common open-plan areas, to full system furniture layouts, involving large areas of open planning, hot desks and only a small number of more private and partitioned spaces. This has increased the efficiency of floor planning and occupation densities, while still complying with the requirements of the National Construction Code (NCC). The fit-out of buildings more than 20 years old thus requires particular attention to structure and services issues in the building itself.
Consultant input
Many commercial buildings struggle to provide structural and service infrastructure with the capacity to meet the higher occupation levels and additional service requirements of the modern office. Architects now need to involve consultants at an earlier stage to ensure that their client's particular requirements for structural loading and servicing are identified prior to commencing the search for space. An architect, facility planner or interior designer needs to be involved in the preparation of a brief for the space, looking at all the above issues, together with future requirements and the tenant's budget.
Services loads
Accommodating more people within the available space increases the heat load and the demand on the available air-conditioning and electrical-services systems of the building.
Since 1990, there has been a dramatic increase in the use of electronic equipment in offices with most personnel supplied with at least one personal computer and, often several screens, printers and other computer peripherals. A significant increase in the demand on existing installed services has been exacerbated by a significant increase in the use and capacity of:
- modems for data transfer within the office and to the outside
- photocopiers, scanners and other electronic equipment
- lighting
- vending machines and catering facilities.
The advice of mechanical and electrical services consultants is essential in determining the impact of these additional loads and ensure service sizes are correct for occupancy.
Structural loads
If the building requires significant physical file storage or loads it is recommended that a structural engineer be engaged to confirm the adequacy of the existing structure. The concentrated storage of paper documents can be a significant structural loading, which requires analysis of the building's structure to ensure that it is not overloaded.
Private and flexible break out spaces
Most commercial leases contain a clause relating to acoustic requirements on the space. If tenancy fit-out work is taking place within a building already occupied by other tenants, there may be significant restrictions placed upon both the design and the construction activity. Any disruption to existing tenants by construction activity or by the new tenant's operations could result in action being taken against the building owner by the existing tenants or their employees. Even without particular acoustic restrictions clauses in lease agreements, there are common law rights that tenants can exercise if the work within neighbouring tenancies and common areas causes them hardship.
Contract and construction issues
The architect should consider the following matters that may affect existing tenants' rights, in the preparation of the documentation and contracts for a fit-out project:
Contractor's site facilities and amenities
The location of and access to the contractor's site facilities need to be considered in preparing the tender documents to ensure that they do not adversely affect the rights of other tenants, site security or communication with the construction team. Care also needs to be taken that the contractor can still accommodate requirements for worker amenity and safety in such locations.
Contracting
If the building in which the tenancy is to be constructed is still under construction, the head contract agreement may not allow for separate contractors to undertake tenancy work, prior to practical completion. If this is the case, the tenant generally has two alternatives with regard to its fit-out work:
- Contract the work to the head contractor constructing the building. In this instance, the contractor will also subcontract the services trades to the same companies that are supplying and installing the main building services. The absence of competitive tendering could increase costs but may reduce construction time. These additional costs may, however, be offset by savings achieved through incorporating changes to the main building documents for structure, layout and services to accommodate fit-out plans before construction or installation, rather than altering the main building documents later.
- Delay fit-out works until after practical completion of the main building. In this instance, the tenant is then free to contract with whoever it wishes to construct the fit-out works with the proviso that warranties and defects liability arrangements under the head contract are not voided.
A thorough dilapidation inspection of the site of the fit-out, as well as access routes, will need to be completed prior to work commencing in the tenancy to ensure that pre-existing damage to the base building materials, finishes and services are identified and distinguished from those that might be caused by the fit-out contractor and its subcontractor.
If the head contract is silent regarding fit-out work, then the tenant is free to contract with whoever it wishes to construct the fit-out works. Again, the services installation or modification will need to be undertaken by the same companies that are supplying and installing the main building services, and the contractor must agree to cooperate with and take direction regarding access to the tenancy from the head contractor.
Lease conditions
Even if the main building is not under construction or still within the defects liability period, there may be lease conditions or pre-existing warranties and service agreements that require the tenant to engage the companies that originally constructed or are maintaining some of the services to the building to ensure that warranties and service agreements are maintained.
The onus is on the building owner to notify the tenant of any restrictions on the method of contracting for the fit-out work. The prudent architect will ensure that this issue is confirmed at an early stage.
Where a fit-out manual is provided by the building owner, it needs careful study at an early stage to establish where the terms and conditions nominated in the document subject the tenant to additional risk during construction and even later during its period of occupation. Examples of compliance with such manuals include updating of services operating manuals and as-installed drawings.
In addition, a checklist should be prepared of all legislation that may have an impact upon the fit-out, including occupational-health-and-safety legislation, the Disability Discrimination Act and maintenance of essential services.
It should be remembered that, as well as a contractual obligation to the client, the architect has a duty of care to the building owner, the client and the public.
Open and clear communication is key to the success of an office fit-out project. Refer Acumen note Agreements for office and retail tenancy work.
Access and loading
The contractor and subcontractors will need access to the building. This has the potential to disrupt access for staff and visitors of neighbouring tenancies. If the work is being undertaken in a multistorey building, the contractor will also need control of at least one lift suitable for lifting construction material. Some of that access may be outside the normal trading or business hours of the neighbouring tenants.
Taking a lift out of service for the purposes of transporting construction workers and materials for a tenancy fit-out can significantly alter the waiting time for the lifts remaining in service and this can be a source of irritation for existing occupants.
Access to the building before 8am and after 6pm has implications for the security of the existing tenant's premises as they may be unoccupied. In some cases, security personnel may be required. If abnormal working hours exist and care needs to be taken to ensure these working hours are known and tenderers advised accordingly.
Limitations on access should be made clear prior to the calling of tenders, to prevent the contractor claiming a variation to the contract, having previously assumed access was available at most times. Limitations on access may also affect the program for the works.
Access should be managed to ensure that building security is not compromised and that escape routes for the other tenants are not affected during construction. If necessary, the contractor may also be required to employ security personnel at additional cost during early morning and late afternoon/evening.
Noise
Documents should stipulate that noisy operations are to be restricted and, where excessive noise and vibration are likely to be generated (such as structure-borne noise and vibration) that those operations should be conducted out of hours or at weekends, when the building may be unoccupied.
If the tenant is intending to undertake work processes within its tenancy that might involve excessive noise or vibration, the design of the fit-out work must include isolation provisions that reduce the possibility of adversely affecting the neighbouring tenants.
Services
Tenancy fit-out work may involve the need to distribute services such as sewer drainage through spaces outside the tenancy boundary or within the space occupied by other tenants. The designers must take into account the rights of neighbouring tenants and, wherever possible, distribute services within the tenancy boundaries. Where that is not possible, the neighbouring tenants, as well as the building owner, will need to be consulted during tender documentation to reach agreement on:
- the nature of the services to be installed
- the path through the neighbouring tenancy or common area
- the protection of that tenancy from any potential problems (avoiding leaks etc)
- the hours during which the work can be performed
- who bears the cost of services upgrades or fixes in other tenancies.
During a fit-out, there may need to be an interruption of services to neighbouring tenancies to permit connection or upgrading of the services. This will require discussion and agreement with the building owner and the existing tenants prior to completing documentation and may involve the provision of temporary services.
This is particularly important where neighbouring tenants have a need for uninterrupted service supply to some parts of their operations or where security systems or fire protection are impacted upon.
If critical services are interrupted, the times during which the building is left unprotected should be minimised and agreed between the building owner and the contractor before work commences. For example, it should be mandatory that all fire services are recharged, even those within the tenancy fit-out site, at the end of each working day, so that no area is left without protection while unoccupied. Alternatively generators or redirected power sources may be required to maintain power. This needs to be covered by the tender documents, so that tenderers can properly allow for any resulting cost implications.
Fail-safe procedures need to be implemented to ensure that where draining down of fire systems within buildings is necessary, they are reconnected and recharged at the end of each day. (On one occasion, it was more than two years after the completion of the fit-out works, before it was discovered that the sprinkler system had not been recharged during the initial works.)
Care also needs to be taken that fire authorities are advised when systems are temporarily turned off while alteration work is undertaken to avoid costly charges for false alarms.
Waste
Building fit-out operations create considerable waste. This waste needs to be removed regularly and should not be allowed to accumulate either within the site of the tenancy works or outside the site. The tender documents should cover the issue of waste storage on site and:
- its containment within a clearly defined area
- the method and times of transfer from the site
- the control of dust and noise while it is being transferred
- the times and frequency of removal.
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.