Сonstruction market stakeholders opinion about the architecture and construction inspection reform: survey results

12-06-2020

In May 2020, the Construction Sector team of BRDO conducted a survey on the reform of the state architecture and construction inspection among construction market stakeholders, such as international, national, and regional construction companies, contractors for design, expertise, and technical supervision works (services), developers and other companies. 

BRDO experts planned to assess the impact of resolutions No.218 and No.219 of 13/03/2020 on liquidation of the State Architectural and Construction Inspection (DABI) and creation of three new bodies adopted by the Cabinet of Ministers of Ukraine, analyze the views of market stakeholders on electronic services in construction, professional certification of contractors, market surveillance, as well as pre-trial appeals of action (inaction) of administrative service providers in construction and their responsibility through questionnaires.

We received 84 fully completed questionnaires, and another 193 respondents answered certain questions selectively. In total, the stakeholder survey covered respondents from 13 Ukrainian regions and the city of Kyiv.

Almost 84% of respondents addressed architecture and construction control authorities during the last year. More than 38% of them visited DABI departments in person, almost 28% – used CNAP (administrative service centers) services, slightly more than 13% of respondents sent regular letters, 9% – e-mails or forms through the website, and about 8% used e-cabinets for developers.

More than 51% of respondents believe that providers of construction permits should not check the documents submitted for violations of urban planning terms and restrictions and non-compliance with construction rules and standards. According to the respondents, these aspects should be checked during the examination of expert documentation.

36.3% believe that providers of construction permits should make a check.

Respondents mainly support the distribution of powers to provide administrative services (issuance of permits, certificates, etc.) and supervision/control functions in construction between different authorities. More than 63.3% support such a reform. Almost 37% do not support this idea.

More than 68% of respondents do not support the suspension of architectural and construction control measures at construction sites until the State Inspection of Urban Planning begins to exercise its powers and functions.

Only 21.5% of respondents believe that the suspension of architectural and construction control measures will not affect the market. The vast majority of respondents believe that the suspension will lead to negative consequences.

70% believe that this will lead to an increase in violations of the urban planning legislation during pre-construction and construction works.

Almost 60% predict an increase in the number of unauthorized constructions.

33% of respondents believe that the suspension of architectural and construction control will lead to 1) an increase in the number of citizens affected by construction scams, and 2) an increase in the number of unfair competition cases.

Only 41% of respondents support the transfer of architectural and construction control powers to private inspectors who obtained professional qualification. Almost 59% of respondents are opposed to this idea.

68% of respondents believe that the licensing of economic activities for the construction of CC2/CC3 facilities is justified. 32% are against such licensing.

The majority of respondents (almost 58%) believe that the cancellation of licensing of economic activities for the construction of facilities will reduce the quality of construction.

42% believe that the cancellation of licensing will not affect the quality of construction.

69% of respondents support the decentralization in terms of construction permits and building commissioning. Almost 31% of respondents have the opposite view.

Almost 47% of respondents say that they had problems with their economic activity due to non-compliance of some provisions of resolutions No.218 and No.219 (on the liquidation and optimization of DABI) with legal acts with the highest legal force since the adoption of above resolutions by the Cabinet of Ministers of Ukraine.

53% of respondents say that they had no problems.

The vast majority of respondents (75.3%) say they expect problems with their economic activity in case of failure to bring the adopted CMU resolutions No.218 and No.219 (on the liquidation and optimization of DABI) in line with legal acts with the highest legal force (laws).

Regarding advantages of the format of the architectural and construction control reform proposed by resolutions No.218 and No.219 (on the liquidation and optimization of DABI):

• Almost 24% of respondents’ answers contain information about the lack of positive innovations in the reform model proposed by resolutions No.218 and No.219.
• 12% say that the separation of control and licensing functions is the main advantage of the reform initiated by resolutions No.218 and No.219. 9.5% of answers contain hopes of reducing corruption and increasing the transparency of activities of new architectural and construction control authorities.

The following advantages were also mentioned:

• introduction of electronic cabinets;
• updating the technical regulation system;
• liquidation of the DABI as a body;
• potential simplification of procedures;
• the need to prove the fact of violation in court and the possibility of appeal to the Ministry of Regional Development.

The respondents expressed some hopes for the launch of effective market control and surveillance. The temporary suspension of inspections, elimination of conflicts of interest within the DABI, simplification of the control procedure, introduction of checklists, and a risk-oriented approach in the field of architectural and construction control are among the positive aspects mentioned.

Additionally, there is a proposal to transfer architectural and construction control functions to the MIA (Ministry of Internal Affairs) departments. One respondent has the impression that the developers have initiated the reform to reduce control over the construction process.

Regarding the shortcomings of the format of the architectural and construction control reform proposed by CMU resolutions No.218 and No.219 (on the liquidation and optimization of DABI):

More than 17% of the answers contain information on the duplication of functions and unclear powers of new authorities.

11.5% of respondents say that the creation of 3 agencies instead of one is the main shortcoming of the reform, which, in their opinion, will only lead to an increase in corruption.

The following shortcomings were also mentioned:

• complications in the work of market participants due to an unclear/incomplete list of documents and a lack of operating algorithms;
• unresolved issues of distribution of functions and powers between central bodies of architectural and construction control and local or local self-government authorities;
• a lack of efforts to involve insurance agencies in the reform.

These options have more than 8.5% of answers each.

According to the results of responses, the options regarding the generally negative attitude to the reform and the non-compliance of adopted resolutions of the Cabinet of Ministers with the current legislation have 5.7% each.

Respondents made some comments on the personnel problem (lack of (professionals) certified specialists who should perform control functions), lack of adequate transition period, lack of regulation of the liability of officials for dishonest actions. Market participants also expressed concerns about the temporary suspension of works and the transfer of powers related to the construction of CC2/CC3 facilities to certified private inspectors.

The vast majority of respondents (94%) support the introduction of the Unified State Electronic System in construction.

The survey respondents mention the following main priority services that market participants expect to be implemented electronically in the e-cabinet:

• assigning the real estate unit address (88.3% of respondents);
• obtaining urban planning conditions and restrictions (85.7%);
• obtaining the right to perform pre-construction and construction works (84.4%);
• obtaining specifications (83.1%);
• obtaining a construction certificate (80.5%).

The respondents mention the following main services that market participants additionally offer to be introduced electronically in the e-cabinet:

• automatic generation of urban planning conditions and restrictions using the electronic urban planning cadastre;
• approval of construction of facilities under the law “On Protection of Cultural Heritage”;
• obtaining a construction permit;
• changing the land plot usage;
• independent expert assessment (by independent accredited legal entities) of compliance of completed facilities with the agreed project and the facilities for ensuring and implementing fire and technology-related standards and rules for further assessments of compulsory insurance risks;
• state registration of real estate;
• receiving land plot data (coordinates) by certified architects after entering designing goals in the e-cabinet.

Also, survey participants propose to expand a list of information services that may be available in the system through:

• the register of construction certificates;
• the information map of construction facilities;
• information on the setting out of construction facilities (with clear coordinates) through the cadastre;
• open dynamic statistics of price indices for construction services by region;
• detailed statistics of violations and accidents on construction sites by region;
• online inspections of construction sites;
• information services for ordinary citizens (potential investors).

The following suggestions and comments on the establishment of processes in the sector were made:

1. Possibility of acceptance of completed construction facilities by an independent party (3rd party (independent inspection body) having the appropriate accreditation.
2. Improvement of inefficient existing state registers and services and their integration with others.
3. Design documentation, expertise, specifications, and other documents should be signed by the relevant persons with e-signature in the developer’s e-cabinet.
4. Maximum openness of market processes and decisions regarding certain facilities/entities.
5. Manual reviews by inspectors when submitting documents in electronic form.
6. Licenses for legal organizations are issued only by the state.
7. Licensed organizations should provide compulsory insurance for the works they perform.
8. Certification is provided only by trade unions and organizations (civil engineers, the union of architects, there should be many such organizations).
9. The state should keep a register of certified specialists receiving a notification from those who issued the certificate.
10. The activity of specialists who have received certificates should be insured by trade unions or organizations that have issued the certificate. Monopoly will be eliminated, and there will be competition and responsibility.
11. Professional certification of chief state inspectors, chief construction supervision inspectors, and other officials performing functions of state architectural and construction control will not improve the quality of administrative services but will lead to corruption because certificates are issued by organizations and such specialists will lobby certain interests.

The vast majority of respondents (almost 65%) support the expansion of the list of contractors performing construction works subject to professional certification. 35.4% of respondents are opposed to this option.

More than 60.5% of respondents believe that expanding the list of persons subject to professional certification will improve the quality of construction. Almost 40% do not support this opinion.

More than 83% of respondents support the reasonability of professional certification of construction supervision inspectors and other officials who perform functions of state architectural and construction control.

74.4% of respondents believe that the professional certification of the state construction supervision inspectors and other officials who perform functions of state architectural and construction control will improve the quality of administrative services in construction and strengthen the architectural and construction control. Almost 26% do not feel confident about such prospects.

78.5% of respondents support the opinion that the commissioning of completed facilities should be performed by a commission.

Almost 80% of respondents fully support the need for market surveillance of construction products. 19% believe that market surveillance is not needed.

It is also suggested that market surveillance is required for state-funded construction.

50% of respondents believe that the State Service on Food Safety and Consumers Protection should perform market surveillance of construction products. 25% propose to keep state architectural and construction control authorities responsible for this function. There is also an opinion that both authorities should perform the functions of market surveillance of construction products.

The survey participants also offer their options regarding a market surveillance authority, namely:

• a designated body as a result of conformity assessment and competence confirmation;
• certification bodies and accredited laboratories;
• an independent third party (inspection body) having the appropriate accreditation;
• insurance companies;
• a local government authority;
• a new body created as part of the TC 305 (technical standardization committee) and the SE “NDIBMV” (Ukrainian Research and Design-and-Engineering Institute of Building Materials and Products);
• SROs (self-regulatory organizations);
• producers of construction materials.

The respondents believe that the commission for the commissioning of completed facilities should include the following main persons:

• a construction project owner (94.6% of respondents);
• general design engineer (91.9%);
• general contractor (91.9%);
• chief architect and/or project engineer (85.1%);
• engineer-supervisor (82.4%);
• inspector of the architectural and construction control body (71.6%).

Less than 50% of respondents support the inclusion of other persons from the proposed list in the commission.

Additionally, survey participants propose to expand the list of persons and consider the possibility to include the following person in the commission:

• an expert who generated an expert report (instead of a DABI expert);
• a representative of the state service, which is responsible for the monitoring of compliance with sanitary standards;
• a representative of the State Emergency Service;
• representatives of engineering networks according to specifications;
• persons who carry out architectural supervision by area (structures, networks, etc.);
• representatives of scientific and technical supervision, if any;
• representatives of an independent inspection body;
• independent accredited law firms, which have the right to certify the compliance and operability of all life support systems and life safety systems;
• representatives of public self-organization bodies as a representative body created by residents who live in the village, township, city or parts thereof legally to address certain issues of local importance;
• a representative of a financial institution or a co-owner organization head.

Some respondents also comment on the fact that representatives of government agencies should not be involved in the work of the commission responsible for the commissioning of completed facilities and contractors should not be involved to evaluate the results of their work.

Almost 84% of respondents fully support the introduction of a mechanism for pre-trial appeals of action or inaction of providers of administrative services and supervisory/control authorities in construction.

40% of respondents believe that the State Regulatory Service as a body implementing state policy on supervision (control), licensing and approval system in the field of economic activity should consider (out-of-court) complaints about action or inaction of administrative service providers and supervisory/control authorities in construction.

34% of respondents support granting such a right to the Ministry of Communities and Territories Development.

14% believe that this function should be performed by the Ministry of Digital Transformation of Ukraine, as a body implementing state policy in the field of administrative services.

The survey participants also offer their options regarding a body for out-of-court examination, namely:

• local government body;
• NGOs;

It was also proposed to introduce personal liability of administrative service providers and supervisory/control authorities in construction and provide the bodies that authorized these entities to carry out the relevant activities with out-of-court examination functions.

Almost 60% of respondents believe that the body that reviews complaints about action or inaction of administrative service providers and supervisory/control authorities in construction should be authorized to eliminate violations. 30.2% believe that such powers should not be given to such a body.

The survey participants also suggest the following:

• Decisions of the body should be binding on providers of administrative services;
• Authorities should have the right to stop faulty constructions;
• Only through an option to force the body that did not issue a permit with appropriate sanctions;
• The State Regulatory Service should maintain a list of licensed and certified specialists;
• With the possibility for such entities to appeal the decision of this body in court.

62% of respondents believe that administrative liability for illegal refusals to issue/register permits should be introduced. 35.5% believe that such actions should be criminalized.

53% of respondents believe that criminal liability should be introduced for officials for the issuance/registration of documents on the commissioning of improperly built facilities. 38% believe that administrative liability should be introduced for such actions. Almost 9% of respondents see no reason to introduce such a liability.

Note: The survey describes general trends, tendencies, and attitudes of market participants regarding the subject being analyzed. According to experts, this research can be used to form recommendations only in combination with other data on the research subject (statistical and analytical reports, analysis of best practices, expert opinions, etc.).

 

---

This material is prepared by the Better Regulation Delivery Office (BRDO), an independent expert and analytical center funded by the European Union under the FORBIZ project and within the framework of EU4Business Initiative.