3.3 billion EUR and 65000 workplaces lost in construction in three years
Business Support Network conducted an analysis of the damage caused to the construction companies and construction materials producers in Serbia due to postponement of creation of new Law on Construction and Planning.
Data for the analysis were gathered from Statistical Office of the Republic of Serbia, Business Register Agency, Real Estate Cadastre of the Republic of Serbia and through survey conducted among 726 managers of construction firms operating in Serbia. In the field research multiple public oppinion survey agencies were involved, as well as expert consultants, construction engeneers in private construction companies, etc.
Unrealized or partially realized business deals – a product of bad regulation
Research was focused on how complicated and slow procedures prevent realization of business deals in construction industry. Company managers were asked to give their estimate of how many deals were left unrealized or partially realized from 2012 onwards due to bureaucracy.
Table 1. Number of unrealized or partially realized business deals and their value
| Total number of surveyed construction companies | 726 | 100% | Notes |
| Construction companies suffering losses due to unrealized or partially realized business deals | 684 | 94.2% | – Unrealized deals are those deals that were completely blocked due to construction permits not issued and other barriers.
– Partially realized deals are those that were planned by the company and were started, but whose deadlines were missed and were significantly slowed down due to bureaucracy |
| Construction companies suffering no losses | 42 | 5.8% | |
| Number of unrealized deals 2012-2014
(company average) |
9 | ||
| Losses due to unrealized deals
(company average) |
176,248 EUR | ||
| Number of partially realized deals 2012-2014
(company average) |
21 | ||
| Losses due to unrealized deals
(company average) |
291,314 EUR |
Considering that 726 surveyed companies represents 10.09% of the whole construction industry in the country, the total losses of the construction and construction materials industry in the 2012-2014 period is estimated at 3.365 billion EUR.
Bad regulations „costed us” 65,000 workplaces in three years
Keeping in mind the share the surveyed companies represent in the complete industry, realization of the blocked business deals would mean the openining of 21,500 new workplaces in this sector every year. Postponement of the adoption of new Law on Construction and Planning and simplification of the procedures thus prevented opening of 65,000 new workplace in the last three years.
Problematic procedures in construction
Managers of 726 companies evaluated which procedures posed the main barriers for realization of business deals in the 2012-2014 period.
Table 2. Which procedures prevented or blocked realization of business deals for construstion companies
| Procedures | Percentage of companies that had issues |
| Granting of construction permit | 54,7 |
| Obtaining documentation for the construction permit | 45,8 |
| Obtaining documents from the Real Estate Cadastre | 51,9 |
| Granting of location permit | 27,8 |
| Granting of usage permit | 26,3 |
| Receiving of certificate of conformity for products (materials) in construction | 19,8 |
| Granting of permit for construction expansion | 21,7 |
| Procedures related to reconstruction, adaptation and modernisation of construction | 11,6 |
| Procedures related to urbanistic and regulation plans of local self-governments | 7,9 |
| Procedures related to change of purpose of objects | 16,8 |
| Other | 15,5 |
Construction permits and obtaining the required documentation are at the top of the list, but one in four companies has issues with obtaining location and usage permit, and there are also significant issues with obtaining permits for expansion of existing buildings.
Producers and importers of construction materials have problems with obtaining the certificate of conformity for their products (materials), and hundreds of construction sites in the country are blocked, waiting for the approval of certificates for materials to be used during the construction. On the other hand, exporters of construction material pay twice for certification of conformity, once in Serbia, and the second time for the EU market, since Serbia hasn’t harmonized its standards with the EU. These double expenses for certification are reflected in the final price of product, heavily effecting their competitiveness.
It is necessary that, after almost 3 years of announcements, Ministry in charge of construction finally urgently draft and adopt the new Law on Construction and Planning and finally fully harmonize Serbian standards of quality for construction materials and equipment with the standards in the EU. Otherwise, the next year will also be lost for the construction sector.