How to prepare for better times? Simplify legislative processes

Has the years-long decline in Czech construction come to a halt? Has the economic crisis ended for starving builders, and can they once again optimistically hope for better times to come? These and other questions were raised at the 11th Annual Forum of Czech Construction at the Clarion Hotel in Prague, which attracted 300 experts from all segments of the construction market: not only large construction and contracting firms but also investors, designers, and developers. This year, the organizers of the Forum, the Union of Entrepreneurs in Construction of the Czech Republic and Blue Events, focused primarily on exchanging experiences through panel discussions.

The first well-attended panel Builders and the State, which focused on legislation regarding construction preparation and especially infrastructure building, actively included gentlemen such as: Bohuslav Sobotka, Prime Minister of the Czech Republic, Dan Ťok, Minister of Transport, Václav Matyáš, President of SPS ČR, Michal Štefl, Vice President of the Czech Chamber of Commerce for Transport, Construction, and the Environment, Jiří Koliba, Deputy Minister of Industry and Trade of the Czech Republic, and Jan Kroupa, General Director of the Road and Motorway Directorate.

Prime Minister Sobotka presented specific steps that the government has taken and plans for the near future. He began his speech with the words: “We must work for optimism”, and introduced the actions that the government is preparing in the near future. The new coalition agreement offers a new direction for economic policy, with priorities including not only budget deficit control but also employment. Therefore, there are more funds in the State Transport Infrastructure Fund, and public contracts are increasing. In the coming years, new investment incentives will be introduced, and changes to the public procurement law are being worked on to expedite approval processes and construction preparations, along with strong support for the preparation of a single permitting process (JPŘ) for constructions. Our ability to draw European funds is improving: primarily because the government managed to adopt laws which the European Commission conditioned for unblocking the funds. Additional operational programs will be approved by mid this year, and calls for proposals will be announced. A government priority is also to speed up the preparation of transport constructions: high-speed railways, completion of highway connections with neighboring countries, and an increase in the budget for investments in the maintenance of 2nd and 3rd class roads. For better communication, the Government Council for Construction was established to improve cooperation among ministries. “The government is convinced that it will restore the capacity for sensible public investments,” the Prime Minister concluded his introductory speech.

The main topic of the morning discussion was the problems limiting the development of construction. Michal Štefl sees obstacles primarily in the “swings of historical clocks”, meaning the constant change of ministers, especially the actions of some of them. Minister Bárta halted the preparation of all constructions a few years ago, and this has its consequences to this day. Properties are not being purchased, officials at all levels suffer from constant shifts in legislation from one extreme to another and are demotivated, resulting in very slow progress in preparatory work. Another obstacle is the pressure from environmental activists, especially in the preparation of transport infrastructure.

Václav Matyáš, on behalf of SPS, appreciated that the new government has already taken many steps in the right direction during its year in office to restart construction development. This year is expected to bring significant changes in construction legislation that could help stimulate the market. However, it is extremely important that ministries do not leave these preparatory works solely at the reference level but discuss the necessary measures at the level of direct communication among ministers. He praised the current government for its willingness to change things and for improved communication among ministers and at the tripartite level. However, most unions are dissatisfied with the work of the Office for the Protection of Competition (ÚHOS). The biggest barriers, according to the SPS president, stem from the fact that “we have a distorted competitive environment, and a negative role is also played by the personnel emptiness, both among construction workers and among the technical supervision of the investor.”

Dan Ťok stated that the Ministry of Transport and the Road and Motorway Directorate plan to shorten the time for investor preparations. A possible model could be Germany, where the average time from the start to completion of construction is 6 years; here, it is 12 years. However, one cannot simply sit and wait for changes in laws. Those that we accept now will be applicable at the earliest in two years. Even under the current legal conditions, we can start projects sufficiently quickly by providing quality project documentation in advance and reducing delays in their transfer from one office to another: “We must work to ensure that the staff ensures things on time within the laws we have.”

Jan Kroupa mentioned the changing personnel situation at the Road and Motorway Directorate, where fortunately capable middle management directors who know their work well and have been promoted have been retained. Jiří Koliba sees great hope in the established Council of the Government for Construction, which the Prime Minister convened just last Thursday. Thanks to the participation of all competent ministers and their deputies, the Council reached a quick agreement on an amendment to the construction law and plans to discuss the law on linear constructions. If this collaboration continues to function in this way, there would be no need to fight for a new competence law concerning construction.

Bohuslav Sobotka confirmed that, in his opinion, there is no point in fighting for a change in the competence law and placing construction under a single ministry, as it could result in wasting an entire four-year term over this dispute without any constructions being prepared. He also commented on a question about the growing destructive influence of environmental activists: “We live in a free society and must reckon with the right of citizens to express themselves.” The government’s ambition is not to impose citizens' rights but to rationalize the process and to decide on their remarks in real-time. Dan Ťok believes that environmentalists should not be demonized. It is necessary to engage with the public in advance; a forceful solution at the last minute does not help anything.

Panelists further discussed the pitfalls of the public procurement law and the competition based solely on the lowest price. They agreed that contracting authorities should focus not on the need for the lowest price, but primarily on efficiency, transparency, and the final quality of contracts. In conclusion, everyone offered their views on what positive changes can be expected in the construction industry. A large portion of them sees hope in the preparations for the single permitting process - integrated approval of documentation for zoning decisions, building permits, and EIA, although it is clear that complete integration will only be possible for simpler constructions. Václav Matyáš concluded: “A certain sober optimism is allowed not only by the results of the ministry in the past year but above all by better communication and improved perception of construction issues by the government.”

The second half of the morning program – the discussion Builders, Developers, and Investors was attended by: Vladimír Dvořák, Executive Director of YIT; Martin Půta, Governor of the Liberec Region; Matěj Stropnický, Deputy Mayor for Urban Development and the Urban Plan of Prague; Ondřej Votruba, Deputy Minister for Public Investments, MMR ČR; Jan Charvát, Media Coordinator of Chance for Buildings, and Petra Mašínová, CEO of NEWTON Media.

The discussion began with a video montage of an interview with the Mayor of Prague Adriana Krnáčová. She sees the transformations of the lower part of Wenceslas Square into a real boulevard for pedestrians, the brownfields of Bubenské and Žižkov railway stations, and the development of a comprehensive strategic and metropolitan plan as crucial for Prague. Her priorities also include equitable treatment of developers, city districts, and citizens, including clear rules for their participation. At the end of the interview, she mentioned her dream: “The city should work more with international architectural firms so that real architectural gems are created that would attract tourists to Prague.”

Matěj Stropnický admitted that he would like to introduce certain long-term political visions into the metropolitan plan. Among his personal visions is limiting the north-south boulevard so that it does not run through the center of Prague as a high-capacity type highway. He also emphasized that he would ensure the completion of the revision of Prague's building regulations as soon as possible, ending the current dire situation: “Through close cooperation with the MMR - the team also includes the head of the building code department and the head for urban development - we want to avoid the problem that their comments would not be adequately incorporated into the regulations.”

Vladimír Dvořák believes that: “The regulations should be purely a technical matter, not a political one. The only politics that should be involved is to ensure that the city as a whole prospers.” The most important condition is balance between the interests of citizens, the city and its parts, and investors.
During the discussion about public involvement in decision-making regarding the urban plan, Roman Koucký, Director of the Planning Section at the Institute of Planning and Development of Prague, pointed out how citizens can be involved in the decision-making process. The Czech construction law is very specific in stating that no proposal can be publicly disclosed before it is officially discussed. “So the demand for public discussion of plans is justified but currently unrealistic,” emphasized Koucký.

Matěj Stropnický believes that there are other options for public involvement and information, for example, extracting information from zoning analytical materials. The City Hall is currently creating a participation manual to set how the public can engage in discussions in accordance with the law.

Martin Půta admits that attracting people to decision-making is generally a good idea, but from his experiences in Liberec, he knows that this method usually does not create positive visions but rather negates construction intentions. Matěj Stropnický emphasizes: “For public involvement to be effective, it must be provided with an appropriate timeframe for its engagement. The participation manual should define the moments when the public can enter the discussion so that it makes sense.”

Panel participants also addressed the planned single permitting process (JPŘ): Ondřej Votruba hopes that this will generally accelerate the processes. For special constructions, permits will only be issued by a special building authority, not additionally by the local authority. This will be a loss of powers for the MMR, but for the sake of a good cause. Only if the investor wishes, they will have the option of having separate building and zoning processes. The upcoming law on procurement processes will prohibit competing on price as the only selection criterion for projects with a significant share of creative and intellectual activity. Martin Půta commented that the situation in public procurement has generally improved in recent years, in the sense that many have learned that awarding the cheapest contractor without guarantees of quality and reliability can ultimately prove very costly.

Matěj Stropnický addressed developers with a call to not want to use land to the last inch and to architects to not design to the maximum of what is possible and not go beyond what the developer requests.

At the end of this discussion, there was also a question about what good news the panelists can share with the participants. Martin Půta is clear: “We must take care of good news ourselves.” This year is exceptional in that regions can access substantial funds, both from the State Transport Infrastructure Fund and from the Regional Operational Program. However, they are facing a counterproblem – they have the money, but are unable to spend it as they are not sufficiently project-ready.

Petra Mašínová presented positive messages that could benefit builders. Between 2012 and 2014, 30,000 contributions about construction were published. Positive growth and optimism have not yet manifested much in the reports. However, she presented monitoring of planned constructions from Newton Media as a new useful source of business opportunities. Jan Charvát spoke about the chances for buildings and the impulses that energy-efficient construction brings.
Matěj Stropnický believes that in the future, investors will engage with the public about their intentions more proactively, considering what the construction will bring to its surroundings and what imprint it will leave. He would like to see fewer projects in the style of: “buy, build, sell, and go away… and the construction then acts in the area like a meteorite.”

Ondřej Votruba, on behalf of the MMR, concluded by promising that in preparing laws, they will strive to “not go from one extreme to another,” and that amendments to the laws will genuinely succeed in shortening the lengthy procedural processes, which according to Czech Invest's research, is considered the second biggest barrier to foreign investments in the Czech Republic.

Facts about the Forum of Czech Construction 2015:
- The 11th edition took place on March 10, 2015, at the Clarion Congress Hotel Prague with 300 participants from among builders, developers, investors, and significant representatives of public administration.
- Organizers: Blue Events and the Union of Entrepreneurs in Construction of the Czech Republic.
- The main partner was Deloitte, and the forum was also supported by several prominent companies.