Taming the dragon

03.08.2016

VCIOM and E&Y appraised the reforms in construction industry of Moscow.

Two studies on lowering administrative barriers in the field of urban planning of the Russian capital were presented at the Moscow Urban Forum 2016. They were conducted by VCIOM and Ernst&Young on request of the Moscow Urban Forum.

In the years 2015-2016 the Moscow government has taken a number of measures aimed at reducing administrative barriers in urban planning. The key measures include the development of the plan to abolish 40 redundant or duplicative procedures, transfer of all town-planning documentation in electronic format, creation of the Consolidated Plan of underground utilities and structures of Moscow and introduction of additional data on the technical specifications in GPZU (development plan of a land plot).

[citata id=1387]Although the survey participants have noted positive results of the industry, there is still much to be done. “Administrative barriers are like a dragon: when one head is off, the other three emerge. We still have enough of them, and we will continue the work on lowering them,” said the Head of Moscow Construction complex Marat Khusnullin.

Currently most of the services related to preparation of construction documentation is available in electronic format (12 procedures), including the conclusion of Mosgosstroynadzor (Moscow State Construction Supervision Committee) of conformity of a constructed object with the technical regulations, the preparation of architectural and urban planning decision (ARG), opening and  closure of orders for excavation, preparation of GPZU, technical conditions of Mosvodokanal for connection to  water supply and sewage and “The developers’ personal account”. Also developers can now submit three types of applications in electronic format (applications for a new project, applications for connection to power supply networks and networks of water supply and sewage, statement of state registration of titles).

According to the Moscow government, since January 2017 the minimum time required for urban planning procedures will amount to 99 days for low-risk projects and 240 days – for all other types of projects.

Not the main obstacle to business

[citata id=762]The aim of the VCIOM study was to evaluate the awareness of representatives of construction sector are familiar of the measures undertaken by the Government of Moscow to reduce administrative barriers, to estimate their real impact on Moscow’s construction industry and to find out what other factors have a negative impact on the construction activities in the capital.

The respondents of the study were top managers of construction, real estate development and consulting companies, economists, urbanists, representatives of industry associations and officials. The study has showed a fairly high level of awareness on the reforms in construction industry of Moscow – 56 % of respondents said they were aware of the work being done to lower administrative burden on construction companies.

In particular, 20 % of respondents are aware of cancellation of redundant procedures; 22.6 % are aware of the approval of the new procedure of registration of orders; more than a third of experts – 36.5 % – had heard about the transfer of core state services in construction in electronic format; the majority of respondents – 39 % – are aware of launching a process of transfer of grid companies services to electronic format.

[citata id=1241]Participants in the study appreciated the measures on lowering administrative barriers: 80.5 % of respondents approve the transfer of the key state services related to construction in electronic format; more than 77 % of respondents have a positive attitude to the transfer of grid companies’ services to online format; 76.3 % of the study participants approve revocation of redundant procedures.

More than half of the respondents (almost 60 %) believe that lowering administrative barriers will reduce construction costs by reducing downtime periods; 62.2 % expect to reduce the terms of implementation construction projects.

The main source of problems related to administrative barriers is considered to be grid companies. The special challenge for developers is to deal with multiple grid companies – every company is working according to its own standards, so it leads to extension of project terms.

At the same time, the research has shown that today administrative barriers are not perceived as the main obstacle to business – they reside only on 13th place and did not even come in the top ten of major problems of the industry. According to the survey participants the main issue of today is the uncertain economic environment.

Сhanging for the better

The aim of the Ernst & Young study “Moscow Construction Sector Regulation Survey” was to analyze the effectiveness of reforms in the field of administrative barriers and to collect expert recommendations for optimization of the regulation of construction industry.

[citata id=813]The E&Y experts described the situation with regulation of construction industry in Moscow as a difficult one, but changing for the better. Respondents noted that the regulation of urban planning activities in the Russian capital is more complicated than in some cities of the CIS (Tbilisi, Minsk) and in Turkey. However, regardless of the number and difficulty of the existing procedures, respondents noted improvements in the regulation of construction industry.  In particular, they point out increased transparency, revocation of redundant procedures and predictability of their terms, quality service performed by expert organizations and access to information on obtaining a construction permit.

In the E&Y study, the situation in construction industry of Moscow was compared with the capitals of a number of western countries – Berlin, Toronto, Prague and Helsinki. Respondents admitted that the regulatory process is complicated in many countries, and the terms of procedures in a number of cities (such as Prague and Berlin) are higher than in Moscow. It was noted that the peculiarities of the Russian capital should be taken into account – it has a large area, number and density of population as compared to other cities involved in the study, these issues have a certain influence on the regulation of construction industry.

[citata id=1139]The E&Y survey of revealed that 50 % of respondents are aware of the reforms, 42 % partially familiar with them, and 8% do not know about them. At the same time 62 % of respondents are pleased with the experience of interaction with regulatory authorities in Moscow, 25 % are satisfied with them.

The respondents noted an increase in the speed of processing applications and provision information upon request, as well as a friendlier attitude on the part of officials. At the same time, respondents expressed complaints about instances of incorrect processing of data, which leads to time losses. They also aired discontent about discordance in documentation, untimely notification of problems occurred and the facts of failures in disputable situations.

In the course of the study, respondents submitted their proposals for regulation of construction industry. They can be divided into four categories: regulation of urban planning documentation, reducing the terms for consideration of documents, increasing the transparency of procedures and measures for the development of personnel.

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