Any company that fails to budget for commercial capital improvements often ends up paying much higher costs due to lack of preparation. Capital improvements are necessary for enduring brick-and-mortar businesses. The following can help investment owners better understand the importance of budgeting for commercial capital improvements and begin setting funds aside for such projects.

What Qualifies as a Capital Improvement?

Capital improvements to commercial property improve the value or extend the life of the property and boost the condition of the asset beyond its current or original state. Many capital expenditures are mistaken to be under the heading of maintenance. The difference is that maintenance is an expense while capital expenditures improve the market value of the asset and provide benefits to the community. Any major value-adding improvement is a capital expenditure. Examples follow:

  • Roof replacement
  • Installing hardscapes such as pergolas, retaining walls, and decks
  • Replacing flooring
  • Modernizing elevator cabs
  • Installing variable frequency drives on cooling tower motors
  • Accessibility improvements for the disabled or handicapped
  • Installing new HVAC systems

Tips to Budget for Capital Improvement Projects

Establish a Plan

Examine your building and property inside and out, looking for anything that will probably need to be upgraded, renovated, or replaced in the next few years. Check the age of major structures and systems, such as plumbing, parking areas, HVAC systems, and information technology (IT). Create an outline listing the assets soon to need improvements and estimated timelines in which capital funds will likely be required.

Make Cost Estimates

Get approximations of the cost for each capital cost expenditure so that you can arrive at an amount likely needed for annual capital improvements. This can be accomplished through research of similar projects or products in your area together with demands that may be created by current trends in your industry.

Make Plans for Savings

Large expenses are often difficult to handle without borrowing, but it is an advantage to reduce the amount borrowed. Devise strategies for funding your capital improvement projects. If you have a down payment ready to contribute to the cost of a capital expenditure, you will be a more desirable borrower.

Fund Projects with the Unexpected in Mind

It’s a mistake to think that a smaller budget is the best approach to a capital expenditure plan in order to get needed funding more easily. Instead, consider worst case scenarios so that you have a contingency plan in place. For example, if the cost of a new roof is projected to be $50,000, budget for $55,000. This way, you are prepared for the unexpected.

Consider Hiring an Experienced Project Management Company

Depending on the size and scope of your commercial capital improvement or renovation project, it may be best to hire a project management company. Benefits of a project manager include:

  • You can remain focused on your business goals,
  • There is greater assurance that your project will be completed on budget and in a timely manner, and
  • Any complications that may arise will be handled by experienced experts.

Contact Weaver Realty Group

Weaver Realty Group is a local company offering comprehensive project management services for commercial capital improvements. Our experienced team has the capability of planning, coordinating, budgeting, and supervising commercial capital expenditures, including renovations, from planning to completion. Our goal is customer satisfaction, and an added benefit we offer is that we are a Florida Licensed General Contractor and LEED Accredited Professional. Contact Weaver Realty Group today at (904) 733-0039.