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On November 8th Ukrainian Real Estate Club held a business lunch on «Basic problems of relations between the participants of the construction process». The main topics of discussion were the reasons of controversial issues between the investor and the client on the one hand and the general contractor and general designer on the other, the reason of the budget deficit, reducing the quality of real estate projects, as well as how to deal with the risks and changes in the projects. The moderator of the event was President of the URE Club Sergey Gaydaychuk.
At the beginning of the discussion the development director of Octava Capital Aleksei Shlimovich said: «An open dialogue between members of the construction process should be carried out continuously, because it can be used to define the rules of interaction, lower material and time costs and improve the quality of work. Without discussion of actual issues that arise among participants in this market, between clients and investors, and general contractors and general designers, will still be the same problems».
On the issue of rescheduling and intervention of developer in the project realization, president of ITT Group Oksana Markarova suggested that changes in the project have been made frequently in the past, when construction has progressed rapidly, and companies rush to begin construction of facilities, preferring to complete the design during construction process. Now on the market there will be no such a practice, investors are aware of their responsibilities, and construction begins only after the approval of technical documentation and general design. The exception may be only for small objects. President of the company Prisma Development Igor Zabulonskiy added that developers are often at a strict time frame set by the investors, and approval of all documents takes too much time. For this reason, the work must begin with the lack of project documentation.
In discussion the changes of the project budget the participants proposed the idea of concluding with a general contractor an «open contract» in which the final cost of the project may change (for example, managed to avoid certain risks, reduce the cost of materials, etc.). In response to this suggestion, Igor Zabulonskiy said: «At the initial stage of the project investor is more interested in a fixed amount put into the project, so even controlled the "free" price is unacceptable». Also, the panellists agreed that if the project cost will vary, it is likely to be changed only in the direction of increasing the amount and almost never - downward.
Among discussed issues was the involvement of subcontractors in the implementation of projects, and sharing, therefore, the risks between the two sides of the construction process. Concerns of the general contractors entail the imposition of developers the subcontracting companies and arrangements of their responsibility for the quality and terms of completion by third parties. In turn, client explain the attraction of additional specialists by their high level of professionalism in certain areas (IT, communications, ventilation, etc.), which cannot be achieved by a general company. «With many subcontractors we work for a long time and we know who does the job well, so we recommend a general contractor these companies and there are minimum risks here», - stated Oksana Markarova.
The discussion arise a problem of the level of competence of general contracting company. To date, there are two models of the general contractor work. The general contractor - «the operator of resources» when a general contractor carry operating functions and control function, involving for the implementation of the project sub-contractors, and also companies - general contractors, that self-performing most of the project, involving subcontractors only for specialized works. Level of competence of both models of companies in the prevailing majority is low. According to developers, the number of general contractors that make an exception to this rule is insignificant for the Ukrainian market.
In addition to the issues raised, there are plenty of problems between the two sides of the construction process. They are related to design work, supply and cost of materials and many others. As it became clear from discussions that took place during a business lunch, a dialogue between market participants need to be continued and expanded.
«The position of two sides is very important, general contractors want to understand approach to business of developers and investors, and vice versa, and for that we need such meetings to be held regularly, perhaps in an expanded format, search and find an optimal, efficient model of interaction between all participants in the construction process», - summed up the meeting Aleksei Shlimovich.
The event was attended by members and guests of URE Club. Business Lunch was supported by Incom and SOLID Group.
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Inkom - the largest national IT company, system integrator, a recognized leader in the Ukrainian market, able to offer the widest range of solutions and services in the concept of building the information architecture of business.
www.incom.ua
SOLID Group specializes in the implementation of modern intelligent decisions in the design, construction and property management. The composition of SOLID Group includes companies SOLID Construction Company and SOLID Property Management.
www.solid-group.com.ua
Octava Capital manages the assets of companies within the Group of Companies Octava, including stocks and corporate rights. The group's companies are represented in such industries as information technology, telecommunications, distribution, real estate and construction. The largest companies in the group: Incom Datagroup, Megatrade, SOLID Group.
www.octava.ua
