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Cancellation of licensing of construction activities. What are we losing?

The licensing of construction activities has been recently cancelled, leading to mixed consequences and effects on the economy. This has resulted in an inevitable decline in revenue, some environmental issues, and revoking of consumer protection. Nevertheless, this decision has brought the emergence of light industries and labour markets, leading to job creation and cost declines for construction businesses. It has also simplified the process of entering this market, created more affordable housing, and intensified competition in the industry. Therefore, cancelling the licensing of construction activities can be a double-edged sword, as it provided with both benefits and losses.

From January 1, 2009, the granting of licenses for the design of buildings and structures, the construction of buildings and structures is terminated,
engineering surveys for the construction of buildings and structures, all with the exception of structures for seasonal or auxiliary purposes. The validity period of previously issued licenses for construction activities is extended until January 1, 2010. That is, during the year builders will coexist in two ways: with and without licenses..

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A little from the history of the issue. The state decided that a lot is included in its immediate responsibilities and decided to give part of its concerns to the people. This is how the licensing of the activities of arbitration managers and appraisers was canceled. Passed quietly and imperceptibly. The next step is to cancel the licensing of auditing and construction activities. And if everything is calm about auditors, without outbursts of emotions at the state level – there are not so many auditors, and about their services, God forbid, about five percent of our population know, then the situation with licensing of construction activities is completely different. Spears have been breaking here for more than one year with the involvement of the general public, legislators and sovereign people, and the terms of this very cancellation are being postponed all the time! Indeed, the question is very difficult, or rather, very responsible. Let people not know what a license is, but absolutely everyone is familiar with construction or its fruits. The public is especially concerned about the safety of the constructed facilities. Everyone thinks that the crumbling buildings were built by unlicensed construction organizations, to put it simply – hack. But control over construction organizations only by the licensing authority is not exhausted, in addition to licensing in the current legislation there are seven (!!!) types of control over this activity! So the child is not left unattended!

Strictly speaking, licensing itself is not dated by Tsar Pea, the law on licensing was adopted not so long ago – in 2001 and according to
the head of the Federal Licensing Center has not yet developed its resource.
Remember the years in which licensing began, the devastation that inherited from the transition period from socialism to capitalism! Construction
the industry barely woke up from the most severe crisis, enterprises one after another for a penny went under the hammer with all their belongings. New
enterprises on the wreckage of building trusts had everything: personnel (albeit battered by perestroika), equipment, technology. And the licensing requirements imposed on them by the Gosstroy were quite feasible.

And what is happening now in the licensing of enterprises to carry out construction activities? Let’s start by getting a license.
Any company planning to engage in construction must obtain a license for this type of activity. Obtaining a license for any type of construction activity, and there are about 150 types of them, involves:
– availability of competent specialists who are able to manage the process and know construction technologies;
– availability of qualified workers of those specialties for which a license is requested;
– material base with the necessary equipment and tools.

This is so, briefly and not a complete list, only the main points. In fact, think about where the new enterprise has all of the above conditions: base, specialists, and workers? Fulfillment of all points for a newly organized enterprise is a bluff! At best, there will be a group of enthusiasts of several people, and some equipment. This is clear to everyone, including the licensing authority. But they boldly give licenses, and then just as boldly take them away – this is called licensing control for compliance with licensing requirements. A few numbers: in 2005-2006, about 100 thousand organizations of the construction complex were inspected and 499 licenses were canceled in court.

But more and more new enterprises receive construction licenses. In this field, there is a huge number of intermediary firms offering their services to accelerate the licensing process. They offer everything you need: skilled workers, competent civil engineers with advanced training courses, technicians with all kinds of admissions – don’t think that these firms operate as recruiting agencies, they only provide documents. Yes, only the documents of all these specialists. The so-called “dead souls”, only in a different form: there are people and are alive, they work for themselves, each at his own enterprise and often do not even know that they are constantly being recruited into different construction organizations, then fired…

Each intermediary firm has a set of documents that they rotate for more than one year, for “dead souls” they even do refresher courses, if only the documents meet the requirements of Rosstroy!
As for the material base: here, too, firms providing licensing services have their own documents for equipment, buildings and structures. For the entire material base, you just need to write a lease agreement with the owner – licensing requirements allow you to do this.
And everything would be understandable if only Moscow knew everything – where can she keep track of all of Russia – no, every region has its own licensing center, a federal branch in charge of obtaining licenses. And they know nothing about qualified specialists and existing construction bases in their region!

For the most impatient license seekers, who, even with a liberal attitude towards them in the regional branch, cannot obtain a license, there is an offer from Moscow firms, they can help solve an unsolvable issue in the region. Price decides everything.

Now imagine: a licensed enterprise that has no specialists, no workers, no construction base, no equipment! What will they customize? They can only be trusted to sweep the streets.
And how you can relate to the inviting advertising: “For those of you who cannot waste time on obtaining licenses, we can offer to purchase a ready-made company with a license” – the height of cynicism! You do not need to have anything to carry out construction activities, have only money to buy an enterprise.
The process of obtaining licenses is clear, but where will the happy owner of one go if he has no stake or yard? And he will calmly hand over his license in a kind of lease to those enterprises that have whom and what to build, but do not have a license. All this is absolutely technically solved with one stroke of the pen..

Hot days are coming to construction licensing firms! Everywhere it is advertised that if a company manages to obtain a license before January 1, 2009, then it will be carefree to exist with it until January 1, 2010, or even longer. And for this “longer” there are reasons, since our right hand always does not know what the left is doing. In confirmation of this – the words of the Deputy Head of the Department of Regional Urban Development of the Ministry of Regional Development of the Russian Federation Lyubov Tikhovodova, who said that during 2009-2010 the licenses, which expire, will be reissued and extended. Such a “wonderful” decision has matured in the Ministry of Regional Development. The ministry believes that if a company cannot navigate in the new conditions, then it should be given a chance and additional time to solve the problem and the opportunity to work. So, representatives of the construction business have a chance to renew the license not until the beginning, but until the end of 2010. Well, there may still be something that will change…

This is such a vicious circle in licensing! I do not want to indiscriminately talk about all construction organizations, but for the most part, all enterprises follow
this vicious circle, giving away huge amounts of money to firms and officials. So is it all worth saving? Do I have to cling to it?

What is offered instead of licensing? Gosstroy of Russia is trying to implement everywhere a quality system based on state standards GOST R ISO 9000 in construction and installation organizations of the Russian Federation. But the dispute is not about certification. Today it can be obtained faster and cheaper than a fading license. All the fuss is about creating self-regulatory organizations.

According to Law No. 148-FZ of July 22, 2008 “On Amendments to the Urban Planning Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” from January 1, 2009, only members of self-regulatory organizations (SROs) will be allowed to construct major facilities. This SRO transfers the functions of admittance to work affecting the safety of capital construction facilities, as well as the organization of control. It is assumed that self-regulation can improve the state of affairs in the construction sector and increase the quality and safety of construction sites.

The above law assumes that these very SROs will be of several types: for conducting surveys, design work and directly carrying out construction activities. However, today’s practice shows that many construction companies are engaged in all types of these works. The law does not give an answer to the question of how these organizations should be, disband and join different SROs?

The second controversial point for making the transition to an SRO is membership itself, which entails a substantial entry fee and subsequent
monthly deductions. It is this point that opponents of the abolition of licensing make one of the main ones, motivating them that small and medium-sized businesses will be pushed aside from construction activities by the construction elite. In this regard, everything will depend on the list of works that will be attributed to the exclusive competence of the SRO. It is clear that painting work will not be classified as admission, but small and medium-sized businesses that cannot bear the burden of maintaining an SRO will not survive for them.!

The third controversial point is how to ensure the notorious increase in SRO responsibility for the result of its activities. There are two proposals: by creating a compensation fund or by insurance of construction projects. Although, in essence, the compensation fund and call to have value as an insurance one. But here we are talking about the arrival of large insurance companies on the construction market and, as a result, this arrival will raise the cost of construction itself. All taken together: entrance fees and insurance will lead to higher construction costs and will fall on the shoulders of the consumer.

And one more very important point: the existing legislation is far from ideal and needs to be improved. Opponents of the abolition of licensing scare the Constitutional Court that the adopted law does not comply with the norms of the Russian Constitution. But this is all doable, you just need time and common sense!

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Comments: 1
  1. Carter Campbell

    The cancellation of licensing for construction activities raises concerns about the potential consequences. As readers, we should question what exactly we are losing with this decision. How will it affect the quality of construction projects, safety standards, and overall accountability? Furthermore, what impact will it have on employment opportunities and the economy? Is there an alternative plan in place to ensure these aspects are properly regulated? These questions are crucial to understanding the potential implications and ensuring a well-informed decision.

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