Dealing with construction permits.[FIGURE 3.1 OMITTED]
In 2007 the municipality of Niamey, Niger, issued only 300 building permits. But you wouldn't know it by looking around the city, where buildings are sprouting; fast. "Building permit? Who needs that? Just hire a contractor, tell him what you want, and out of the ground it comes," says a local developer.
This approach to building has resulted in a city at odds with the original zoning plans: water pipes zigzag in every direction, and houses extend beyond their assigned land parcels. The reason: obtaining all building-related approvals and connecting to utilities can take entrepreneurs almost 9 months, at a cost of 2,694% of income per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. .
The situation may soon change. Niger adopted a new building law in March 2008, following the collapse of 2 buildings in the center of Niamey.
In Almaty, Kazakhstan, builders suffer the burden of overregulation. Undertaking the construction of a simple warehouse requires navigating a labyrith of 38 procedures and 18 agencies--and spending 231 days in the process.
Striking the right balance is a challenge when it comes to construction regulations. Good regulations ensure the safety standards Safety standards are standards designed to ensure the safety of products, activities or processes, etc. They may be advisory or compulsory and are normally laid down by an advisory or regulatory body that may be either voluntary or statutory. that protect the public while making the permitting process efficient, transparent and affordable for both building authorities and the private professionals who use it. If procedures are overly complicated or costly, builders build without a permit.
In an effort to achieve this balance between safety and cost, Bavaria introduced a differentiated permitting approach in 1994. Low-risk projects require that the designing architects show proof of their qualifications and assume liability for the construction. Medium-risk ones require that an independent certified See certification. appraiser A person selected or appointed by a competent authority or an interested party to evaluate the financial worth of property.
Appraisers are frequently appointed in probate and condemnation proceedings and are also used by banks and real estate concerns to determine the market approve the plans. Only high-risk, complex projects are fully reviewed by building authorities. (1) By 2002 builders had saved an estimated 154 million [euro] in building permit fees, and building authorities had 270 fewer employees on their payroll. The approach has spread to the rest of Germany.
Economies that score well on the ease of dealing with construction permits tend to have rigorous yet expeditious ex·pe·di·tious
Acting or done with speed and efficiency. See Synonyms at fast1.
ex and transparent permitting processes (table 3.1). Speed matters. A recent study in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. shows that accelerating permit approvals by 3 months in a 22-month project cycle could increase property tax revenue by 16.15% and construction spending Construction Spending
An economic indicator that measures the amount of spending towards new construction. Released monthly by the U.S. Department of Commerce's Census Bureau, it looks at residential and non-residential construction in the private sector, and state and federal at for local governments by 5.7%. (2) Yet in 80 of the 181 economies studied in Doing Business, compliance with construction formalities for·mal·i·ty
n. pl. for·mal·i·ties
1. The quality or condition of being formal.
2. Rigorous or ceremonious adherence to established forms, rules, or customs.
3. takes longer than the standardized 30-week construction project itself.
Singapore's Building and Construction Authority provides easy access to the information needed for obtaining a construction permit. Its website lists all the forms that must be filled out, provides downloadable copies and enables users to submit all paperwork electronically. Developers in Austria, Denmark, Iceland, Malaysia and the United States also complete their applications online.
Twenty-seven economies, including France and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. (China), ensure timely approvals for building permits through silence-is-consent rules, with time limits ranging from 2 to 4 weeks.
Finland and Singapore--both among the 10 fastest in dealing with construction permits--hold the architect or another qualified professional accountable for supervising the construction and ensuring its quality.
WHO REFORMED IN 2007/08?
Eighteen economies made it easier for businesses to comply with construction related formalities in 2007/08 (table 3.2). Africa had the most reforms, with 6 economies--Angola, Burkina Faso Burkina Faso (burkē`nə fä`sō), republic (2005 est. pop. 13,925,000), 105,869 sq mi (274,200 sq km), W Africa. It borders on Mali in the west and north, on Niger in the northeast, on Benin in the southeast, and on Togo, Ghana, and , Liberia, Mauritania, Rwanda and Sierra Leone--making it easier to deal with construction permits. Eastern Europe Eastern Europe
The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. and Central Asia followed, with reforms in Armenia, Belarus, Bosnia and Herzegovina Bosnia and Herzegovina (bŏz`nēə, hĕrtsəgōvē`nə), Serbo-Croatian Bosna i Hercegovina, country (2005 est. pop. 4,025,000), 19,741 sq mi (51,129 sq km), on the Balkan peninsula, S Europe. , Croatia and the Kyrgyz Republic.
In East Asia East Asia
A region of Asia coextensive with the Far East.
East Asian adj. & n. and Pacific, Hong Kong (China), Singapore and Tonga streamlined procedures. In Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and the Caribbean, Colombia and Jamaica reduced the time to process building permit applications. Among OECD OECD: see Organization for Economic Cooperation and Development. high-income economies, Portugal was the only reformer. In the Middle East and North Africa, Egypt was the only one. South Asia This article is about the geopolitical region in Asia. For geophysical treatments, see Indian subcontinent.
South Asia, also known as Southern Asia recorded no major reforms.
The Kyrgyz Republic was the top reformer in dealing with construction permits in 2007/08. A new one-stop shop was launched for issuing architectural planning terms and construction permits. Regulations left over from Soviet times had required builders to obtain separate preapprovals from each utility authority. Now all approvals are handled in the one-stop shop.
Kyrgyz reformers didn't stop there. A presidential decree eliminated the location permit, which had required the signature of Bishkek's mayor and took 60 days to obtain. "It used to be a nightmare. You never knew what additional papers would be required," says Bekbolot, owner of a medium-size construction company. The mayor's office no longer handles occupancy permits either. "It took me 6 months before the reforms, and I still could not obtain the mayor's signature. After the reforms, it took me just over a week to get my occupancy permit signed and sealed."
After cutting 9 procedures and 173 days, the government is now focusing on reducing the cost--still high at more than 405% of income per capita.
Burkina Faso, once among the bottom 10 on the ease of dealing with construction permits, was the second fastest reformer. A multifaceted reform program cut 12 days and reduced the cost by 25%. To start, a government decree limited the number of on-site inspections by the National Laboratory for Buildings and Public Works public works
Construction projects, such as highways or dams, financed by public funds and constructed by a government for the benefit or use of the general public.
Noun 1. . That eliminated the biweekly bi·week·ly
1. Happening every two weeks.
2. Happening twice a week; semiweekly.
n. pl. bi·week·lies
A publication issued every two weeks.
1. Every two weeks. random inspections that used to plague plague, any contagious, malignant, epidemic disease, in particular the bubonic plague and the black plague (or Black Death), both forms of the same infection. builders in Ouagadougou. "We can still expect inspections at certain critical stages, but this is a far cry from the up to 15 or so we could receive before," says one architect. In May 2008 the government launched a one-stop shop. This has already shown results. It cut fees for soil exams in half and reduced those for municipal approvals and fire safety studies. And it allows applicants for building permits to make all payments at a single place.
Reformers were active in Africa. In Liberia the Ministry of Public Works committed to delivering building permits in just 30 days, down from 90. The ministry advertised the 30-day statutory time limit and designed a user-friendly checklist of all the documents required.
It also eliminated the need for the minister's signature on building permits for simpler projects by delegating approval to mid-level staff.
Liberia's deputy minister of public works cut building permit fees in half, from $1,400 to $700, to encourage more legal building in Monrovia. "I thought people were going underground because costs were too high, so I decided to cut fees." In a country where obtaining a building permit used to cost 10 times income per capita and other costs of construction permitting remain high, this makes sense (table 3.3).
Sierra Leone Sierra Leone (sēĕr`ə lēō`nē, lēōn`; sēr`ə lēōn), officially Republic of Sierra Leone, republic (2005 est. pop. 6,018,000), 27,699 sq mi (71,740 sq km), W Africa. revamped its inspection regime. Existing regulations provided for inspections after each stage of construction. But inspectors would come at random once or even twice a week. Starting in 2007, the Ministry of Lands, Housing, Country Planning and Environment recruited a new cadre (company) CADRE - The US software engineering vendor which merged with Bachman Information Systems to form Cayenne Software in July 1996. of professional inspectors and began enforcing the regulations.
Rwanda streamlined project clearances for the second year in a row by combining the applications for a location clearance and building permit in a single form. And businesses now need to submit only one application form for water, sewerage sewerage, system for the removal and disposal of chiefly liquid wastes and of rainwater, which are collectively called sewage. The average person in the industrialized world produces between 60 and 140 gallons of sewage per day. and electricity connections. Angola incorporated the applications for electricity and water connections into the building permit process, cutting procedures from 14 to 12.
Mauritania introduced its first building code. This simplifies the requirements for small construction projects and lays the groundwork for a one-stop shop for building permits.
In Zimbabwe and Benin, obtaining building permits became more difficult. In Zimbabwe's capital, Harare, employees have been leaving the construction administration. With fewer trained professionals to review applications, getting a building plan approved by the city council can now take a year.
In Cotonou, Benin, it now takes about 180 days to obtain a building permit--3 months longer than it used to--because of administrative backlogs. A new regulation released in June 2007 sets statutory time limits of 120 days for building permits. But these time limits have yet to be enforced.
Eastern Europe and Central Asia saw many reforms, though only half of them easing the regulatory burden. In Croatia a new building code eliminated the need for a building permit for smaller projects and eased the requirements for larger ones. Now midsize commercial construction projects no longer need clearances from the fire department, water and sewerage authorities, telephone company, labor inspectorate and sanitary sanitary /san·i·tary/ (san´i-tar?e) promoting or pertaining to health.
1. Of or relating to health.
2. authority--cutting 5 procedures.
In Bosnia and Herzegovina administrative improvements made it easier to obtain cadastre CADASTRE. A term derived from the French, which has been adopted in Louisiana, and which signifies the official statement of the quantity and value of real property in any district, made for the purpose of justly apportioning the taxes payable on such property. 3 Am. St. Pap. 679; 12 Pet. 428, n. excerpts, required for building permits, and to register new buildings in the cadastre and land book registry. That cut the time from 467 days to 296. In Belarus new statutory time limits for pre-permitting procedures and building permits reduced the time by 140 days. In Armenia companies no longer have to pay "charitable contribution charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. " fees to obtain the designing right. That cut the cost by 383.3% of income per capita.
Several economies went the other way. In Serbia the wait for building permits increased by an average 75 days. In Ukraine a regulation introduced in 2007 requires businesses to pay a "contribution" to infrastructure development that amounts to 15% of construction costs. Now builders in Kiev can expect to pay 1,902% of income per capita to deal with construction-related formalities.
In East Asia, Hong Kong (China) pursued a broad program that eliminated 8 procedures and cut the time for construction permits by more than 5 weeks, ranking it among the top reformers globally. In 2006 the government, working with the private sector, created a cross-sector consultation team to identify ways to improve permitting procedures. Working groups started with agencies and companies operating in the construction sector found redundant procedures, improved communication and coordination schemes and identified regulatory "easy fixes" that could improve efficiency. "This is a very clever and pragmatic approach--something very much in touch with our culture," comments the owner of a local construction company.
Singapore reduced the time for dealing with construction permits by two-thirds in 2007/08--more than any other economy in the world. The agencies responsible for approvals cut their internal time limits by half. To save more time, the Building and Construction Authority's new data management system makes processing smarter and more user friendly. Today builders regularly receive updates on the status of their permit applications by e-mail and text messaging Sending short messages to a smartphone, pager, PDA or other handheld device. Text messaging implies sending short messages generally no more than a couple of hundred characters in length. .
Latin America and the Caribbean also saw important reforms. In Colombia the magistrates responsible for issuing building permits started using a single form. Builders no longer need to obtain the names and contact information of all neighbors before submitting a permit application. A decree implementing a decade-old silence-is-consent rule kicked in, reducing the time to obtain a building permit from 3 months to 2. In Jamaica the government began implementing a 90-day statutory time limit. That cut the time to obtain a building permit from 210 days to 130--much better, though still short of the target.
Elsewhere, economies continued to revamp re·vamp
tr.v. re·vamped, re·vamp·ing, re·vamps
1. To patch up or restore; renovate.
2. To revise or reconstruct (a manuscript, for example).
3. To vamp (a shoe) anew.
n. their building codes. Tonga implemented its 2005 building code in late 2007. The new code incorporates zoning and health and fire safety approvals into the building permit process, cutting 3 procedures and reducing the time by f2 days. Portugal's new building regulations introduced electronic processing of documents. Egypt's new building code aims to reduce the time to obtain a building permit by establishing a single window and enforcing a 30-day statutory time limit. The new code also introduces a single certificate for obtaining all utility connections. Before, each utility connection required 3 separate letters from the municipality.
WHAT ARE THE REFORM TRENDS?
In the past 4 years, with 20 reforms, Eastern Europe and Central Asia has had this most reforms making it easier to deal with construction permits (figure e.3). Africa follows, with 13. OECD high-income economies have had 9, East Asia and Pacific 8, Latin America and the Caribbean 6, the Middle East and North Africa 4 and South Asia 0.
Of the 60 reforms easing construction permitting, 35 have been legal and 25 administrative. Legal reforms deal with new building codes, regulations and bylaws The rules and regulations enacted by an association or a corporation to provide a framework for its operation and management.
Bylaws may specify the qualifications, rights, and liabilities of membership, and the powers, duties, and grounds for the dissolution of an that change the standards and organization of construction permitting. Administrative reforms include streamlining project clearances and introducing time limits and online processes. Reforming building codes can be a long, complex exercise, requiring input from many stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. . A new building code enacted in 2007 in the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. was 18 years in the making.
[FIGURE 3.3 OMITTED]
The focus in Eastern Europe and Central Asia, while initially on legal reforms, is fitting to administrative changes. Georgia is a good example. After 3 years of reform it claimed a place in the top 10 on the ease of dealing with construction permits. But long delays remain in the rest of the region--where the process takes 260 days on average, over 100 days more than the average of 154 in OECD high-income economies.
Reformers in Africa started with administrative reforms. They began in earnest in 2006, cutting 4 procedures and reducing delays by 15 days on average. Meanwhile, delays in the rest of the region increased by 26 days. In Nigeria administrative reforms have cut superfluous su·per·flu·ous
Being beyond what is required or sufficient.
[Middle English, from Old French superflueux, from Latin superfluus, from superfluere, to overflow : procedures and inspections. But builders in Africa still face outdated out·dat·ed
old-fashioned or obsolete
Adj. 1. construction codes or new ones not yet fully implemented. Kenya overhauled all its building regulations. Today it is the only African economy to rank among the top 10 on the ease of dealing with construction permits.
STREAMLINING PROJECT CLEARANCES
The most popular reform feature globally has been to streamline project clearances (figure 3.4). Because building approvals require the technical oversight of multiple agencies, an obvious choice has been to set up a one-stop shop. But this is no easy fix. One-stop shops are designed to integrate services through a single point of contact between building authorities and entrepreneurs. Their success depends on coordination between these authorities and on sound overarching o·ver·arch·ing
1. Forming an arch overhead or above: overarching branches.
2. Extending over or throughout: "I am not sure whether the missing ingredient . . . legislation.
Take the experience of Bangladesh. In August 2007 Dhaka's municipal building authority introduced a one-stop shop for building permits. Almost a year later builders still had to visit each agency responsible for approvals, mainly because of inconsistent fire safety regulations. By law, only buildings with more than 10 floors should require fire safety clearance. The fire department insists that the cutoff should be 6 floors, as in the old regulations. Builders can spend 6 months shuttling between agencies, trying to make sense of the inconsistent rules.
SETTING TIME LIMITS
The second most popular reform feature has been to introduce statutory time limits or silence-is-consent rules. Many economies write time limits into the law in the hope of ending administrative delays. Algeria put a 2-month time limit on issuing building permits in 2006. But obtaining a building permit still takes an average 150 days because of lack of administrative resources. Builders wait, out of fear that their buildings will be demolished de·mol·ish
tr.v. de·mol·ished, de·mol·ish·ing, de·mol·ish·es
1. To tear down completely; raze.
2. To do away with completely; put an end to.
3. if they proceed without a permit.
In Colombia a law introduced a silence-is-consent rule in 1997. Ten years later an implementing regulation and a far-reaching public awareness campaign finally made it possible for builders to take control of the process. "Now we can begin construction after 45 working days without any fear. As long as every requirement is complied with, we know the law protects us," says one Colombian architect.
The third most popular reform feature has been to shift from random inspections toward a more risk-based approach, with inspections only at critical stages of construction. Building authorities have traditionally relied on random inspections to ensure compliance. Today only 41 economies--most in Africa, Latin America and the Caribbean and the Middle East and North Africa--still use them. Building authorities have learned that random inspections strain their limited resources and are an inefficient way to ensure building safety (figure 3.5).
Eleven of the top 15 economies on the ease of dealing with construction permits have gone beyond risk-based inspections. Instead, they allow certified professionals or independent agencies to perform inspections during construction. Building authorities usually inspect buildings only after they are complete. Singapore, one of the top performers, delegates control and supervision of the entire construction process to licensed engineers and architects. In Japan more flexible licensing regulations for private inspection companies have increased their numbers and made contracting with them faster and cheaper for builders.
Most EU economies have shifted at least part of inspections to the private domain. Their experience shows that private inspections work best when supported by strong professional associations with well-regulated accreditation mechanisms. A mature insurance industry also helps. In 2007 the Czech Republic introduced a new profession of authorized inspectors. Two professional chambers of architects and engineers and technicians provide a strong base. (3)
(1.) Bayerisches Staatsministerium des Innern (2002).
(2.) PricewaterhouseCoopers (2005).
(3.) Geginat and Malinska (2008).
TABLE 3.1 Where is dealing with construction permits easy--and where not? Easiest RANK Most difficult RANK St. Vincent and 1 Tanzania 172 the Grenadines Singapore 2 Burundi 173 New Zealand 3 Zimbabwe 174 Belize 4 Kazakhstan 175 Marshall Islands 5 China 176 St. Kitts and Nevis 6 Liberia 177 Denmark 7 Tajikistan 178 Maldives 8 Ukraine 179 Kenya 9 Russian Federation 180 Georgia 10 Eritrea 181 Note: Rankings are the average of the economy rankings on the procedures, time and cost to comply with formalities to build a warehouse. See Data notes for details. Source: Doing Business database. TABLE 3.2 Streamlining permitting procedures--a popular reform feature in 2007/08 Streamlined construction Angola, Colombia, Croatia, Hong Kong permit procedures (China), Jamaica, Kyrgyz Republic, Rwanda, Tonga Reduced permit Belarus, Bosnia and Herzegovina, processing times Colombia, Jamaica, Liberia, Singapore Adopted new building Croatia, Egypt, Mauritania, regulations Portugal, Tonga Reduced fees Armenia, Bosnia and Herzegovina, Burkina Faso, Hong Kong (China), Liberia Improved inspection regime Burkina Faso, Hong Kong (China), for construction projects Sierra Leone Source: Doing Business database. TABLE 3.3 Who regulates construction permits the least-and who the most? Procedures (number) Fewest Most Denmark 6 Azerbaijan 31 New Zealand 7 Hungary 31 Vanuatu 7 Brunei 32 Sweden 8 Guinea 32 Chad 9 Tajikistan 32 Maldives 9 El Salvador 34 St. Lucia 9 Czech Republic 36 Grenada 10 China 37 Jamaica 10 Kazakhstan 38 Kenya 10 Russian Federation 54 Time (days) Fastest Slowest Korea 34 Cameroon 426 Finland 38 Suriname 431 Singapore 38 Ukraine 471 United States 40 Lesotho 601 Vanuatu 51 Cote d'lvoire 628 Marshall Islands 55 Iran 670 Bahrain 56 Russian Federation 704 Solomon Islands 62 Cambodia 709 New Zealand 65 Haiti 1,179 Belize 66 Zimbabwe 1,426 Cost (% of income per capita) Least Most Qatar 0.8 Ukraine 1,902 United Arab Emirates 1.5 Tanzania 2,087 St. Kitts and Nevis 5.1 Serbia 2,178 Brunei 5.3 Russian Federation 2,613 Trinidad and Tobago 5.5 Guinea-Bissau 2,629 Palau 5.9 Niger 2,694 Malaysia 7.9 Burundi 8,516 St. Vincent and the Grenadines 8.4 Afghanistan 14,919 Thailand 9.4 Zimbabwe 16,369 Hungary 10.3 Liberia 60,989 Source: Doing Business database. FIGURE 3.2 Rankings on dealing with construction permits are based on 3 Vindicators As % of income per capita, 33.3% Cost no brides included Procedure is completed whet 33.3 Procedures final document is received; construction permits, inspections and utility connections included Days to build a warehouse in main 33.3 Time city Note: See Data notes for details. Note: Table made from pie chart. FIGURE 3.4 Top 5 reform features in dealing with construction permits Reforms including feature since DB2006 (%) Streamlined project clearances 33% Introduced statutory time limits 28% Changed inspection regime 13% Introduced new building code 13% Computerized permitting process 8% Note: A reform may include several reform features. Source: Doing Business database. Note: Table made from bar graph. FIGURE 3.5 Private and risk-based inspections--greater efficiency Average delay for inspections (days) Private inspections 214 Rish-based inspections 218 by building authorities Random inspections 254 by building authorities Source: Doing Business database. Note: Table made from bar graph.