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Fundamental problems of the construction sector of Kazakhstan and their modern solutions

Fundamental problems of the construction sector of Kazakhstan and their modern solutions
There are a lot of problems in the strategic industry of the country, namely in construction. But, let's talk about three main problems from the point of view of the builders themselves.
The first problem is the failure of deadlines. 80% of construction organizations are ready to undertake a project with deadlines set for customers, just to get an order. For the first six months, everyone is satisfied and happy, there are no conflicts (or almost none). Going out for six months, it is easy to predict that the project goes beyond the planned schedule. Often, builders have "their own real schedule" , according to which it is precisely possible to build, and the customer reports according to the "customer's schedule", this is the same schedule set by the customer. But the schedules for the work of state construction projects are often greatly shortened and do not take into account the complexity of communication among contractors, the time of approval, and possible changes in project – this is due to the timing of the development of budget funds.
But construction companies, realizing the unreality of schedules, accept it, they simply have no choice. To win the project, they have to lie and make deliberately false promises.
The disruption of work deadlines may be due to errors and poor-quality work of the construction organizations themselves. For example, there was a case when the EPC contractor did not take into account the renewal of the engineering networks of the existing part of the factory for reconstruction, which was supposed to connect to the new part of the factory. As a result, the project was extended for another 10 months and the cost was increased by 40%.

The second problem is the eternal confrontation between builders and designers. Imagine a group of people walking across the sea in a boat with a fragile glass bottom, passing a heavy brick to each other from time to time. This brick can fall and break the bottom, drowning everyone due to the fact that one did not take good care to put the object in the hands of another. So, here everything is also banal. At the beginning of construction, the designer does not always provide the contractor with all the necessary information. Builders cannot fully analyze the project, they do not have time to study it, hoping that even if problems arise and additional costs are required, it will be possible, so to speak, "to sort it out along the way." As a result, the project often changes a lot, some work has to be replaced by others, and even the budget can go down the drain.
Here a conflict of interests is inevitable: take, for example, incorrectly exposed walls: some dimensions are indicated in the project, and in fact – others. The most interesting thing begins in the proceedings: the designer blames the builders for an obvious mistake, the builders blame the designer for the poor quality of the drawings. And everyone is right in their own way. And then who is to blame? Therefore, apparently the customer, because he chose contractors. In any case, in most cases you have to pay the customer for all the errors in the project.
Another interesting point. Kazakhstan's specifics suggest that it is necessary to coordinate the project, pass state/non-state expertise at any cost. First of all, this applies, again, to state projects with budget financing. It often happens like this: the project is being prepared specifically for approval, some additions, replacement of work occur later, the main thing becomes the preservation of the project price. And the builder again finds himself in an almost hopeless situation.

The third problem is incorrect estimates. The builder, when he accepted an unrealistic schedule from the customer, he had already incorrectly made his estimate calculation. If we take into account that many construction organizations do not know how to correctly assess their risks and challenge their rights during the negotiation of contracts, then it is likely that the builder will take the volume deliberately without profit, and sometimes at a loss. But according to the legislation of the Republic of Kazakhstan, there are a number of advantages for construction contractors, for example, that they can request an increase in the cost of the project if the cost of goods and materials has increased by at least 10%. But here is an important point, not one organization will not work at a loss, it will ultimately still be the Customer's expenses. From practice: there was a similar case when the contract protected the customer more, and also the construction contractor has a lot of fines for non-fulfillment of obligations, the estimate of the builder is weak and he barely reaches the break-even point. The customer, threatening with fines, forced the builder to finish off the project, but the quality was unacceptable, to put it mildly. As a result, the Customer still paid for all these works / alterations, but already during operation.

Therefore, if you are a Customer, do not think that it is possible to force builders to work if they do not receive the planned profit, even if you have a strong contract. No one has canceled bankruptcy, if you drive the builders completely into a corner, they may well simply be insolvent and declare themselves bankrupt. But we will analyze this in the next article. In the meantime, we offer you to look at the real solutions to the three problems that you have read about.

Our solutions as construction project managers.
Solution #1: Transparent schedule
1.1 First, we analyze the planned scope of work in the project documentation and contract agreements.
1.2 Based on the analysis data, we say whether these deadlines are acceptable or they need to be adjusted. If there is a correction, then what kind of correction should be carried out.
1.3 We propose to include in the contract not only a condition according to the schedule of work, but also a real mechanism for its control and monitoring. So that in the future it would be possible to measure and compare the plan-fact of the execution of the schedule, and give the opportunity to leverage the situation.

Solution #2: Project approach
2.1. First of all, a mechanism for transmitting project documentation and a communication matrix are being developed, which will be part of the Project Management Plan.
2.2. We carry out full input control of project documentation for compliance with the norms of the RK and the requirements of the Customer.
2.3. After the transaction of the project documentation, we sit down at a common table with all interested parties (designer, builder, customer, etc.), start a discussion, find pitfalls, understand what changes will be required already at the initial stage.
2.4. We make changes, if necessary, according to the Procedure for Changing the Project.

Solution #3: Preliminary price list
1.1. Our company is a representative of the Globecost calculator, and we can easily calculate the preliminary cost of the project. This is a tool for estimating the cost of construction for various categories of real estate, which contains sets of calculation models for objects with typical parameters, including comprehensive information on all construction costs for 25 items, including: direct costs, indirect costs, design, project management, risks, inflation. Based on commercial pricing and estimates calculated by the resource method.
1.2. We will analyze the estimate in the ABC 4 program. Let's compare it with the project, and show where you can save money, where you can increase the cost. From practice: saving project funds after the analysis of the PSD from $ 100,000 to $ 20,000,000.
All these ways of solving the main problems have been developed by the company over the years of successful work in the construction market.
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