By KeyCrew Media
Business owners planning commercial build-outs consistently arrive with cost expectations that bear little resemblance to what their projects will actually require. According to Mike Marden, a registered architect and licensed general contractor at WDS Architecture in Phoenix, the gap sets up a predictable chain of delays and budget overruns that the industry has largely normalized. Projects tend to take roughly three times longer than clients expect and cost approximately twice what they initially estimated, based on patterns Marden has observed across the types of projects his firm handles.
The Invisible Line Items
Marden says the most common misconception he encounters is that commercial construction costs roughly what clients imagine based on residential experience or conversations with friends who’ve done similar work. Commercial code requirements alone add a layer of expense that most first-time commercial clients never anticipate.
“They’re thinking, I’m just building three rooms,” Marden says. “They don’t realize commercial code is much different than residential.”
A client planning a basic tenant improvement- walls, doors, carpet- may not be accounting for egress lighting fixtures, exit signs on battery backups, fire extinguisher certification, fire riser inspections, electrical infrastructure upgrades, or HVAC modifications. These are code-mandated requirements that apply regardless of how simple the project appears on the surface. By the time all of those line items are visible, the project looks nothing like the number the client had in mind.
Beyond materials and labor, clients also overlook what Marden describes as the contractor’s operational costs, running the job site, personnel, safety, environmental, temporary facilities and cleanup. Those components exist on every commercial project and are absent from the informal estimates clients assemble on their own.
Why Clients Avoid the Budget Conversation
The cost gap would be manageable if clients were willing to discuss their financial parameters early. Marden says most aren’t. Some clients fear that naming a number will result in a more expensive project, while others thinking their number is high will have a contractor automatically charge that number. They stay vague and hope the project lands where they want it to.
This vagueness creates a design process that operates without guardrails. Architects, absent any budget context, design toward the best possible outcome. Contractors, when they eventually see the drawings, price what’s on the page. The client, seeing the bids for the first time, experiences the collision between their internal number and external reality as a shock rather than a predictable outcome of the process.
Marden is direct about what happens when clients refuse to engage on cost. “There are times we’ve continued and we should not have,” he says. “Most of the time we’re not going to take the journey together.”
What matters to Marden is not the size of the number but whether the client is willing to be transparent. “Them telling us the number means they’re willing to be real with us,” he says. He works with clients across a wide range of project scales; what signals a viable working relationship is the willingness to discuss cost openly from the start.
The Redesign Trap
When the budget conversation is deferred until bids arrive, consequences extend well beyond initial sticker shock. Clients who discover their project costs twice what they expected face a choice between accepting the number, reducing scope, or redesigning. All three options carry costs that weren’t in the original plan.
Redesign means additional architect time, revised drawings, and a new round of bidding, all of which extend the timeline. Extended timelines mean the client’s lease clock keeps running, which may mean paying rent on a space they can’t yet occupy. The original budget problem generates a timeline problem, which generates additional cost, which may require further scope reductions, which may require another round of design changes.
Marden describes this cycle as predictable and avoidable. The fix is to treat cost as a design parameter from day one, revisit it at every stage of development, and make the invisible line items visible before the client has committed to a direction.
“Each meeting, we’re pricing this thing,” Marden says. “Let’s do a little sketch, it’s about this much money. Let’s develop a little further. Okay, where are we at with price?”
How WDS Integrates Pricing Into Design
The firm addresses this problem by integrating participation and pricing by WDS Commercial into the design process rather than treating it as a separate phase. Because WDS operates as both architect and general contractor, Marden says cost conversations happen in real time as design decisions are made, not after drawings are completed and sent out for bid.
The firm uses an intake process that asks prospective clients directly what they think the project will cost. When the number is unrealistic, Marden works through comparable projects and line-item breakdowns to help clients build a more grounded estimate before design begins.
“Let’s build that budget together,” Marden says. “Or if they give me a number, it’s like, well, how did you get the number? Can we take a look at your list of line items and see what’s missing?”
When clients provide a number that exceeds what their project requires, the firm can scale scope accordingly. When the number falls short, Marden says the conversation shifts to phasing, completing part of the project now and deferring the rest, or adjusting scope to fit reality. Either way, the client makes that decision before drawings are finalized, not after bids come back high.
For business owners entering their first commercial build-out, the most consequential decision may not be which contractor to hire or which materials to specify. It may be whether to answer the cost question honestly on day one, before the design process builds momentum in a direction their finances cannot support.
Mike Marden is the founder of WDS Architecture and WDS Commercial, a Phoenix-based integrated design-build firm serving commercial and tenant-improvement clients across the Valley. Learn more at wds.build.
