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BRDO: Regulation of the architecture and building design market provokes numerous corruption abuses and requires urgent changes

The architecture and building design market is the basis of the construction industry with a volume of more than 1 billion UAH per year and high added value. This sector requires highly skilled specialists along with the introduction of modern technologies. However, outdated systems of training, certification of specialists and technical regulation hinder the development of the market in Ukraine.

The state, business, and public representatives tried to find the ways of resolving the market problems at the Roundtable “Competitive Architectural and Building Construction Industry in Ukraine – Integration with European Standards” on February 15. The event was organized by the Better Regulation Delivery Office and the Union of Architects of Ukraine with the support of EU4Business/FORBIZ as part of the #PRODialogue Public Dialogue.

22 Ukrainian universities train specialists in architecture and urban planning, and 42 universities – project engineers. At the same time, no specialists are trained and certified in many demanded areas, in particular, in design and engineering of utility systems and engineering according to Eurocodes.

Unregulated competencies of self-regulatory organizations, to which functions of preparing specialists for professional certification were delegated, provoke the appearing of additional requirements, which are not stipulated by law. For example, only members of relevant self-regulatory organizations can obtain their professional qualification, and this creates a barrier for equal access to administrative services and increases business costs.

“The architectural sector requires significant investments and modern approaches. Today, the design engineers and architects in Ukraine are very poorly paid, and the level of their wages is the lowest in Europe. It is necessary to work on ensuring that promising Ukrainian specialists are in great demand and have fair wages in Ukraine, so they won’t go abroad to work,” Lev Partskhaladze, the Deputy Minister of Regional Development, Construction, and Housing of Ukraine, said when opening the event.

According to the BRDO’s analytical research, 8 of 36 regulatory acts in the architecture and building design market are illegal and 18 of them should be revised. “The current regulation provokes corruption abuses by regulators, creates barriers for market participants, unreasonably complicates the procedure of finalization and approval of design documents and does not ensure copyrights protection. Since 2009, the number of enterprises in the Ukrainian architecture and building design market has decreased threefold, and now there are about 2,060 enterprises,” said Olena Shuliak, the Head of Construction Sector of BRDO.

Another problem is the unregulated procedure of approval of design documents for construction projects with the involvement of budget funds, funds of state, and municipal enterprises. The cost of such projects should be approved by executive authorities according to outdated standards that leads to the artificial non-market reduction in the tender value of such works and poor quality of finished construction projects.

In general, the market is characterized by low prices for design and engineering works. For example, in Ukraine, the share of design and engineering works in the total cost of construction is on average 1.5-2%. In comparison, in France, it is 8-13%, and in the UK, it amounts to 10-17%. “Today our market is characterized by technological backwardness. Architects are poorly paid and, accordingly, this affects the quality of their work. We have virtually no system of state orders for design and engineering,” emphasized Volodymyr Husakov, the President of the National Union of Architects of Ukraine.      

Maksim Nefyodov, the First Deputy Minister of Economic Development and Trade of Ukraine, paid attention to creating the competitive environment in the market. “It is obvious that high quality architecture is more expensive than the poor quality one. In Ukraine, the demand for high-quality design and engineering services is in prospect. So, it is very important to create the competitive environment that will boost the development of the market,” he said.

In addition, the regulatory environment is burdened by numerous obsolete and unfinalized rules. For example, the Law of Ukraine “On Regulation of Urban Development” stipulates that design documents for construction projects, which are developed according to urban planning conditions and land development restrictions, do not require any approval of government and local authorities. However, provisions of a number of other legislative acts require the finalization of construction projects prior to their approval.

Oleksiy Kudriavtsev, the Head of the State Architectural and Construction Inspection of Ukraine, said that there would be qualitative changes in approaches to state control after the reform of permitting procedures in construction. “The strategy of reforming the system of state supervision (control) was approved by the Government. In this context, we are working on the possibility to revise inspection functions of state architectural and construction agencies and introduce phased review of construction works. As the Strategy states, the basic idea is to focus not on identification of violations, but on their prevention. That is, moving from a punishment vector to maximum business advisory support,” he said.

According to the BRDO, the sustainable development of the architecture and building design market requires taking the following steps:

  • introducing modern methodologies in the system of education and professional certification of specialists;
  • eliminating gaps in the regulation of the procedure of the design documentation approval;
  • promoting the competitive environment in the market to improve the quality of provided works and removing the grounds for tender abuses;
  • providing a mechanism for copyright protection;
  • updating the system of technical regulation and facilitating the introduction of modern technologies in the market.

The event was also attended Viktor Shyryiaiev, Chief Architect of the MISKTZYVILPROEKT LLC, Oleksandr Chyzhevskyi, Director of the UKRNDPITSYVILBUD SE, and representatives of business and expert community and the public.