How to make the right commercial decision when refurbishing an existing workplace
There are good reasons why reuse should be considered before replacement on any refurbishment or fit-out project.
Keeping existing materials and building components can reduce embodied carbon, avoid unnecessary waste, shorten procurement periods and, in the right circumstances, significantly reduce capital expenditure. It can also help organisations meet wider sustainability objectives without compromising the quality of the finished workplace.
However, there is an assumption I occasionally hear during early design discussions that concerns me:
“We’ll reuse it, so it will be cheaper.”
Sometimes it will be. Sometimes it won’t.
The commercial question isn’t simply whether something can be retained. It is whether retaining it represents better overall value than replacing it.
That requires considerably more investigation than comparing the purchase price of something new against the apparent cost of keeping what is already there.
Start by Understanding What You’ve Actually Got
The first challenge with any reuse strategy is information.
Before deciding that an existing element can be retained, the project team needs to understand its condition, remaining life, performance and suitability for the proposed use.
This is particularly important when dealing with existing MEP installations. Retaining fan coil units, lighting, controls or electrical infrastructure may initially appear attractive, but the commercial case changes if those systems require extensive modification, testing or repair to meet the requirements of the new workplace.
The same principle applies to architectural elements. Existing ceilings, raised floors, doors, partitions, joinery and furniture may all have reuse potential, but condition surveys need to establish what can genuinely be retained.
This is where early surveys become important. Without sufficient information, the cost plan risks assuming a saving that may not actually exist.
The Cost of Reuse Is More Than the Cost of the Existing Item
When comparing reuse with replacement, I think the cost analysis needs to go considerably further than the headline material cost.
Take an existing ceiling as a simple example. Keeping it avoids buying a new ceiling, but that doesn’t necessarily mean the saving equals the cost of supplying and installing a replacement.
Sections may need to be carefully dismantled to accommodate new services. Tiles could require cleaning or replacement. The grid may need alterations. Existing lighting may need repositioning, and additional labour could be required to work around the retained installation.
The correct comparison is therefore between the total cost of retaining and adapting the existing asset and the total cost of removing and replacing it.
That distinction becomes particularly important where reuse creates additional interfaces between old and new work.
MEP Is Often Where the Biggest Questions Sit
For office refurbishment projects, building services can represent one of the largest areas of both potential saving and commercial risk.
Retaining existing services can avoid substantial capital expenditure, but only where the existing installation has sufficient capacity, remaining service life and compatibility with the proposed design.
A meaningful assessment should consider condition, age, maintenance history, energy performance, controls compatibility, occupational density and the implications of any proposed changes to the layout.
There is also a programme consideration. If extensive intrusive surveys, testing and modifications are required to make an existing system suitable, the apparent saving can start to reduce.
More importantly, the client needs to understand the whole-life consequence. Saving capital today by retaining plant approaching the end of its useful life may simply move expenditure into the operational budget several years later.
That may still be the right decision, particularly where the lease term is relatively short, but it should be an informed one.
Reuse Can Introduce Risk
New products generally arrive with clearly defined specifications, warranties and expected performance.
Existing assets carry more uncertainty.
The project team therefore needs to understand what happens if retained elements subsequently prove unsuitable. If existing fan coil units fail during commissioning, who carries the cost? If reused furniture requires more refurbishment than anticipated, where does that allowance sit? If existing finishes are damaged during construction, is replacement included within the contractor’s price? If something fails during the defects period, who is providing the warranty?
These issues should be identified within the project risk register, which would normally be owned and managed by the Project Manager. The Quantity Surveyor can then provide commercial input to help quantify those risks and ensure the cost plan contains an appropriate allowance.
That is much more robust than assuming reuse represents a saving and adding a generic contingency percentage elsewhere in the budget.
Compare Options on a Like-for-Like Basis
This is where option appraisal becomes particularly useful.
For significant elements, I would generally want to understand at least three things: the capital cost, the programme implications and the whole-life impact of each option.
For example, an assessment might compare retaining and repairing an existing installation, partially replacing it, or replacing it completely.
The cheapest capital option isn’t necessarily the best value.
A more expensive solution may offer lower maintenance costs, improved energy performance, a longer service life or greater flexibility. Equally, an existing asset with plenty of remaining life may offer very little additional benefit from replacement.
Putting those options alongside each other allows the client to make the decision based on value rather than assumption.
Carbon Needs to Be Part of the Decision
Cost is only one side of the equation.
One of the strongest arguments for reuse is the potential reduction in embodied carbon associated with manufacturing, transporting and installing new materials.
That means there will be circumstances where reuse is commercially neutral, or potentially even slightly more expensive, but still represents the better overall outcome because it materially reduces the project’s environmental impact.
The important point is to make that trade-off visible.
If the project has clearly defined sustainability objectives, those objectives should form part of the option appraisal alongside cost, programme, performance and risk.
Otherwise there is a danger that value engineering later in the project simply selects whichever option produces the lowest immediate capital cost.
Don’t Forget Programme
Reuse can shorten programmes where it removes demolition, procurement and installation activities.
It can also do the opposite.
Careful dismantling takes time. Surveys and testing need to be completed. Existing elements may need to be stored, catalogued, refurbished and reinstalled. Design teams may need to work around dimensions and constraints that wouldn’t exist with a new installation.
There can also be procurement implications. Contractors need to understand exactly what they are expected to retain and the condition in which it needs to be handed back.
These requirements need to be properly documented at tender stage. Otherwise contractors will price different interpretations of the reuse strategy, making meaningful tender comparison difficult.
Set the Strategy Early
The greatest opportunity for reuse usually exists before the design becomes fixed.
If reuse is introduced late as a cost-saving exercise, the project team is trying to adapt an already-developed design around existing components.
If it is established as a project objective from the outset, surveys, test fits and design decisions can be structured around what is already available.
That is a very different approach.
The design team can establish what should be retained, what should be adapted and what genuinely needs replacing. The QS can then test those decisions commercially as the design develops rather than trying to find savings after the budget has already been exceeded.
This is where I think value management is a better description than value engineering. The objective isn’t simply to make the project cheaper. It is to achieve the required function and performance using the most appropriate combination of existing and new assets.
What Should Clients Be Asking?
If reuse forms part of your project strategy, there are several questions I would want answered before relying on the anticipated saving:
- What condition is the existing asset in, and how has that been verified?
- What remaining service life does it have?
- What does it cost to adapt, test, repair and reinstall rather than simply retain?
- Are there additional design or construction interfaces created by reuse?
- What warranties or performance guarantees will apply?
- What is the whole-life cost compared with replacement?
- What is the embodied-carbon benefit?
- Does reuse help or hinder the programme?
- What happens if the retained element subsequently proves unsuitable?
- Has that risk been quantified within the project budget?
None of these questions is intended to discourage reuse. They are there to make sure the business case for reuse is genuine.
Final Thoughts
I’m a strong supporter of reuse where it makes sense.
We’ve seen projects where challenging the requirement for new and looking properly at what the client actually needed has generated substantial reductions in capital expenditure while also reducing waste and embodied carbon.
However, “reuse first” and “reuse at any cost” are not the same thing.
Good project decisions require the team to understand the condition of the existing asset, the cost of adaptation, programme implications, performance requirements, whole-life cost, carbon impact and the risks associated with retaining it.
Sometimes that analysis will demonstrate that reuse is clearly the right answer. On other occasions, replacement will provide better long-term value.
The important thing is that the decision is made using evidence rather than assumption.
How EthosEQ Can Help
At EthosEQ, we help clients test reuse strategies commercially during the early stages of fit-out and refurbishment projects. Working alongside the design and technical teams, we can compare the capital and whole-life cost implications of retaining, adapting or replacing significant elements and reflect the associated commercial risks within the cost plan.
The objective is straightforward: to help clients understand where reuse genuinely creates value and make informed investment decisions before the design becomes fixed.
Links
How To Manage Risk Before It Becomes Change – EthosEQ
4 steps to a sustainable office refurbishment – with real examples
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Disclaimer This article is provided for general information only and does not constitute cost, contractual, legal, sustainability or investment advice. The suitability and commercial value of reusing existing building elements will depend on project-specific factors including condition, remaining service life, technical performance, programme, procurement strategy, market conditions, whole-life cost and risk. Appropriate surveys and professional advice should be obtained before making project or investment decisions.
