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The Warsaw Voice » Real Estate » February 4, 2010
12 th Investors' Obstacle Course Conference
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What Hinders Construction Projects?
February 4, 2010 By A.R.    
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Life is not easy for investors carrying out construction projects in Poland. Successive governments have not yet delivered on promises to simplify and shorten the process of planning and carrying out construction projects. According to experts, the continued absence of investor-friendly regulations makes many construction projects an ordeal.

For 12 years now, investors-including builders, developers, energy companies, telecommunications operators and power suppliers-have pinpointed a series of legal and administrative barriers to construction projects at the Investors' Obstacle Course conference, which is held by The Warsaw Voice.

This year's Investors' Obstacle Course conference was held at the Marriott Hotel in Warsaw Jan. 13-14 and focused on the latest proposals for changes to laws concerning the construction process. Other topics included building supervision and risks related to construction projects. All those involved in construction projects, from investors to central and local government officials and members of trade organizations, were among conference participants.

During a discussion on the role of construction supervision, participants debated the extent to which the state should be involved in the construction process and they also discussed the desired model of construction supervision in Poland. The discussion began with a statement by Anna Macińska, director of the law and organization department of the GUNB General Construction Supervision Authority. Using selected EU member states as examples, Macińska analyzed individual procedures in the construction process. "European countries do not have a single model for the work of building supervision inspectors or common rules for the supervision of construction projects," Macińska said. "There are different definitions of the rights and obligations of construction market players, different ways of protecting third parties and the public interest in the construction process, and different approaches to unauthorized construction projects."

According to Prof. Michał Kulesza from the University of Warsaw, building supervision authorities are no longer a "partner" for public administration in the construction process, but are increasingly seen as an "operator" and "inspector" responsible for making sure that market players respect legal regulations. Kulesza said that it is realistic to expect that private businesses will provide building supervision services to local government in the near future.

One of the biggest problems plaguing construction sector investors in Poland for years is that laws regulating construction projects are out of touch with the economic reality, conference participants said. According to Jacek Miller, managing partner at Miller i Partnerzy law firm, construction projects are hindered by incoherent regulations and inconsistent, arbitrary interpretation of legal procedures.

Andrzej Rejner, a director at Vattenfall Distribution Poland SA company, said that, while some legal regulations have changed in the past several years, these changes have brought little improvement to the way in which construction projects are carried out.

According to Robert Dziwiński, chief building supervision inspector, the latest amendments to the construction law are crucial to meaningful change on the construction market. Passed by parliament last year, the amendments have been hailed as a big step toward making it easier for investors to carry out projects in the construction sector. However, it is unclear when the new law will come into force because President Lech Kaczyński, after a request from the ombudsman, has asked the Constitutional Court to examine the amendments.

The amendments are supposed to considerably shorten the time needed to plan projects. This is expected to boost the economy and make it more competitive. If the new regulations come into force, the construction process will change considerably, experts say.

According to Waldemar Koszałkowski, chief advisor on electromagnetic compatibility for the Polska Telefonia Cyfrowa Sp. z o.o. company, another problem is a business-unfriendly law on zoning and spatial planning and related procedures.

Long-winded location procedures give investors the biggest headache and are a major obstacle to construction projects, Koszałkowski said.

Marek Poddany, vice-president of the PZFD Polish Association of Developers, said that, due to red tape, some construction projects these days take twice as long as just a few years ago.

Barriers to construction processes are particularly burdensome in projects involving infrastructure. Such projects are vital for uninterrupted deliveries of electricity and natural gas, experts say. According to Stefania Kasprzyk, CEO of PSE Operator, the power engineering sector is working on the edge of risk in electricity transmission. No new high-voltage transmission lines have been built over the past 15 years and the situation may deteriorate further when new power units-currently being planned and built at power plants-are launched, Kasprzyk said. "The main problem is lingering procedures for building even the shortest section of a power line," Kasprzyk said. "Today it takes five years on average to obtain all the permits and approvals, while the construction process itself takes no more than two years in the case of a 100-kilometer stretch. As a result, it is quite likely that some of the planned power grid projects will not be completed by the time the new power units are launched."

According to Jan Anysz, chairman of the ProLinea Association for Infrastructure Development, current legal regulations cause delays in construction projects leading to a situation in which infrastructure-related projects cannot be completed on time. "What makes infrastructure-related projects particularly difficult to carry out are claims made by owners of properties through which power lines, oil and gas pipelines and other such facilities will have to pass," Anysz said.

Marek Rewoliński, an expert with the Polish Association for the Transmission and Distribution of Electrical Power, said that in practice most these claims are unfounded and the amounts the landowners demand inflated. "Courts approve no more than 1.5 to 7 percent of the compensation property owners demand," Rewoliński said.
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