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DOI: https://doi.org/10.34069/AI/2022.54.06.19
How to Cite:
Nepomnyashchyy, O., Marusheva, O., Prav, Y., Shandryk, V., & Zhebelev, I. (2022). Conceptual approaches to state regulation of
the construction industry: the experience of Ukraine and EU states. Amazonia Investiga, 11(54), 199-207.
https://doi.org/10.34069/AI/2022.54.06.19
Conceptual approaches to state regulation of the construction
industry: the experience of Ukraine and EU states
КОНЦЕПТУАЛЬНІ ПІДХОДИ ДО ДЕРЖАВНОГО РЕГУЛЮВАННЯ БУДІВЕЛЬНОЇ ГАЛУЗІ:
ДОСВІД УКРАЇНИ ТА ДЕРЖАВ ЄС
Received: July 10, 2022 Accepted: August 10, 2022
Written by:
Oleksandr Nepomnyashchyy76
https://orcid.org/0000-0002-5766-3150
Oleksandra Marusheva77
https://orcid.org/0000-0001-9126-4674
Yurii Prav78
https://orcid.org/0000-0003-0701-9479
Viacheslav Shandryk79
https://orcid.org/0000-0002-9188-8396
Igor Zhebelev80
https://orcid.org/0000-0002-5467-1163
Abstract
Ensuring sustainable development of the
construction industry is one of the priorities of
state policy, and in conditions of socio-economic
and socio-political instability the relevance of
this issue is particularly exacerbated. The
purpose of the study is to substantiate the main
conceptual approaches to the state regulation of
the construction industry in Ukraine and the
European Union. The study uses such methods of
economic analysis as analysis, synthesis,
abstraction, comparison, analogy, observation,
monitoring, systematization, generalization,
graphic and tabular analysis. As a result of the
study it was established found that the state
regulation of the construction industry consists of
a complex of legislative and regulatory acts,
through which the state has a regulatory
influence and determines the main strategic
priorities of the construction industry. Among
the main problems of state regulation of the
building branch weakness of institutional and
legal provision, discrepancy of normative-legal
and legislative acts to the norms of international
76
D.Sc. in Public Administration, Professor, Professor of the Department of Computer Technologies and Reconstruction of Airports
and Highways, National Aviation University, Kyiv, Ukraine.
77
D.Sc. in Public Administration, Associate Professor, Professor of the Public Management and Administration Department, National
Aviation University, Kyiv, Ukraine.
78
D.Sc. in Public Administration, Associate Professor, Professor of the Department of Information Security, Faculty of Cybersecurity,
Computer and Software Engineering, National Aviation University, Kyiv, Ukraine.
79
PhD in Public Administration, Director “VS Project” LLC, Ukraine.
80
Post-graduate student of the Public Management and Administration Department, National Aviation University, Kyiv, Ukraine.
200
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and European law in the building sphere,
imperfection of technical regulation of town-
planning activity, process of licensing and
technical supervision, and also insurance of
building activity has been determined. It has been
cleared out, that in European Union countries the
state regulation of the building branch is more
perfect and effective than in Ukraine.
Keywords: Construction, state regulation of
construction, urban planning, construction
industry, construction regulations.
Introduction
One of the strategically important areas of the
European economy is construction, since
construction creates new jobs and is considered
to be a tool for employment growth and reduction
of unemployment. In addition, it stimulates
social production and contributes to the increase
of the quality of life of the population. The
emergence of new challenges leads to an
intensification of transformational changes that
lead to crisis situations and require the search for
effective tools to counteract destabilising
phenomena. The study of the world experience
demonstrates the ability of the construction
industry to perform the functions of such a tool
and ensure the achievement of the multiplier
effect of sustainable development of the
country’s economy. It is yet clear that the
European vector of development requires the
creation of appropriate mechanisms for the
development of territorial communities on the
basis of modernization, which should meet
international standards, requiring an effective
system of state regulation of the construction
industry. These trends actualize the problem of
finding innovative conceptual approaches to the
state regulation of the construction industry,
taking into account the transformational
restructuring of the system and structure of
public administration. The purpose of the study
is to substantiate the main conceptual approaches
to the state regulation of the construction industry
in Ukraine and the European Union. Significant
developments in this direction have already been
carried out by leading scientists, who have
detailed conceptual approaches to state
regulation of the construction industry and
formed relevant recommendatory conclusions
for its improvement.
Literature Review
The process of formation and development of the
construction industry is influenced by
destabilising factors and innovations and requires
an effective management mechanism. In today’s
environment, state regulation of the construction
industry takes place through a set of instruments
through which the state regulates the list of
requirements for the subjects of the industry.
Among the most common of these, Marusheva
et al. (2019) highlight:
1) laws;
2) formal and informal regulations;
3) supporting rules.
At the same time, scholars identify the positive
aspects of state regulation of the construction
industry and argue that it allows to combine the
interests of the public and individuals in such a
way that a more competitive environment and a
balance of savings and investment activities are
possible. At the same time, scholars note that
state regulation of the construction industry is of
particular importance in developing countries,
where it is used to ensure a systematic approach
to spatial planning, urban zoning, design and
construction work. The problem of increasing the
efficiency of state regulation of the construction
industry has not yet been solved and Marusheva
et al. (2019) consider conceptual approaches in
terms of:
1) deregulation of business activities in the
construction sector;
2) decentralisation of management activities in
this area;
3) promotion of regional and local community
development;
4) transition from functional to project-based
management;
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5) application of risk management principles in
the implementation of construction project
management.
The importance of using risk management in
public regulation of the construction industry is
also highlighted by Anslow & Dickinson (2015),
who investigated changes in the functioning of
the construction industry and their causes.
The US and Botswana Construction Industry
Report 2021. (Cision, 2021; Research and
Markets, 2021) highlighted the main
performance trends and influencing factors for
the construction industry and established that the
state regulation is based on the active
participation of government structures, and
among the main destabilizing factors were
identified pandemic COVID-19, changes in the
economic environment, rising costs of
consumables, shortages, delays in the
implementation of innovative construction
technologies, lack of state incentives, lack of
incentives for the construction industry. that in
Ukraine there are additional factors that
destabilize the situation in the construction
industry and need increased state intervention in
the regulation of its activities. These factors are
interpreted by Bigagli et al. (2020) as the main
trends determining the development vectors of
the construction industry at the international
level.
In this context, Dmytrenko (2018), who
emphasizes the need to restructure the domestic
construction industry and reorient it towards the
norms and standards of the European Union, is
valid. This will improve the competitiveness of
enterprises and ensure compliance with the
principles of sustainable economic development
and successful integration into the global space.
Opasiuk (2020) has investigated that in most
transition countries, including Ukraine, there is
still a dual regulatory system in the construction
sector: outdated Soviet norms and new national
standards and state construction norms, partially
implemented in accordance with European
standards. State construction norms are divided
into organisational and methodological norms,
estimation norms and rules, urban planning
normative documents, recommended normative
documents and technical normative documents
and production technology. At the same time,
there are state standards, construction norms and
rules, departmental norms of technological
design, departmental construction norms and
combined norms of technological and
construction design.
The legal and regulatory framework for public
administration in the construction industry,
which must be effective and perfect and also
capable of providing the right conditions for
construction companies to enter global markets,
is of great importance. The scholar is convinced
that in the current environment there is an
unresolved problem of reducing obstacles for
small enterprises to enter international markets,
which is particularly acute at the level of the
European Union and requires due attention to
create a fund of insurance guarantees,
harmonisation of liability and insurance systems,
consideration of the possibility of developing a
single standard construction contract and benefits
and preferences for the use of innovative
technologies. In this context, the research of
Chesterman (2020), who argues for liability
insurance in the construction industry and
increased consumer protection, which increases
the confidence of customers, investors and
financial institutions in the industry, is relevant.
From this perspective, the scholar proposes to
strengthen state regulation of liability insurance
processes and to form an appropriate
organisational and legal mechanism for such
regulation.
Marusheva (2020), Marusheva (2019) proposes a
solution to the problem by improving the
regulatory mechanism for relations in the
construction sector. She argues that
implementation needs a system of public
electronic records of information and the creation
of special registers of information services in the
construction sector. Certainly, one cannot but
agree with the scientist’s opinion, because
creation of a single transparent and accessible
information environment will simplify the
processes and the mechanism of public
administration in the construction industry.
Moreover, Seleznyova (2017) argues that state
regulation of the construction industry should
include the main aspects of such regulation of
economic entities operating in construction.
These aspects have a major impact on economic
complexes, both nationally and internationally.
At the same time, the problem of investment in
the construction industry is exacerbated, which,
according to Kozina & Frolina (2018), requires
state intervention by regulating its sustainable
investment and innovation development both in
the short term and in the strategic perspective.
Equally important is the issue of ensuring
environmental principles in construction, which
Macaulay (2020) investigated using the UK as an
example. He found that the environmental factor
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is one of the important factors in construction
investment decisions at European Union level.
Edmondson & Earnest (2021) highlight the
importance of the impact of digitalisation on
public management of the construction industry.
They argue that innovative technology,
automation and robotics in the construction
industry increase its competitiveness and
enhance the safety of construction work.
Of course, the conceptual approaches to state
regulation of the construction industry in the
modern world are characterised by diversity and
peculiarities depending on the territorial location
and level of development of the country. In the
European Union countries there is a higher level
of standardisation of norms and regulations of
state regulation of the construction sector,
whereas in the transition countries there are cases
of Soviet standards and a dual system of
construction regulation that requires
harmonisation with international norms.
The aim of the study is to substantiate the major
conceptual approaches to state regulation of the
construction industry in Ukraine and the
European Union.
Materials and Methods
The study uses such methods of economic
analysis as analysis and synthesis, which are used
to determine the essence of state regulation of the
construction sphere. Abstraction, comparison
and analogy, which have been used to identify
the main conceptual approaches to state
regulation of the construction industry in the
European Union and in Ukraine, are also used in
the research. Observation and monitoring have
been used to clarify the peculiarities of state
regulation of the construction sector in the
European Union countries and compare with the
trends observed in Ukraine. Systematization and
generalization were used to formulate hypotheses
and based on the obtained results to draw
conclusions. Method of retrospective analysis,
based on which the experience of the European
Union states in providing state regulation of the
construction sector was examined, graphical and
tabular methods, allowed the results of the study
to be visualised.
Countries of the European Union and Ukraine
were selected for the research.
In the course of the research the following
methods of economic analysis have been used,
namely: the analysis and synthesis, with the help
of which the essence of state regulation of the
construction sphere was determined; methods of
abstraction, comparison and analogy have been
used to identify the main conceptual approaches
to state regulation of the construction industry in
the countries of the European Union and in
Ukraine; the method of observation and
monitoring has been used to find out the features
of the state regulation of the construction
industry in the countries of the European Union
and compare them with the tendencies observed
in Ukraine; formulation of hypotheses and
formation of conclusions has been carried out
using the method of systematization and
generalization; the study of the experience of the
European Union states regarding ensuring state
regulation of the construction sector has been
conducted on the basis of the method of
retrospective analysis; visual display of research
results has been carried out using graphic and
tabular methods.
The information base for the study consists of the
scientific works of domestic and foreign scholars
and reporting data from international
organisations.
Results
Problems of state regulation of the construction
industry are in each of the European Union
countries and are particularly acute in Ukraine,
which seeks to integrate into the European space
and is at war. The analysis of modern conceptual
approaches to state regulation of the construction
industry in Ukraine and the European Union
allows to identify the main trends and to form
strategic directions of such regulation. Of
primary importance, in this context, is the need
to provide the population with housing, because
the full-scale invasion of Ukraine by Russia has
created a number of problems for all countries of
the group in question. The construction industry
in Ukraine has been the most affected, with a
significant part of its housing infrastructure
having been fully destroyed and some having
been severely damaged, forcing 13.7 million
people (World Migration Report 2020 (2021)) to
relocate to safer areas of the country. As a
consequence, the problem of housing has arisen
in all countries and is being addressed through a
variety of options ranging from the settlement of
temporarily vacant premises to the construction
of modular settlements and new housing
complexes.
While the countries of the European Union are
able to solve the problems of the construction
sector more efficiently and promptly, Ukraine is
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unable to do so quickly. There are a number of
factors that emerged in the pre-war period that
hindered the efficient development of the
construction sector, creating significant
imbalances in the structure of state regulation of
the sector, the main ones of which are
systematised in Figure 1.
Figure 1. Main problems of state regulation of the construction industry.
Formed by the data of: Author’s work.
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The results of the analysis allow to distinguish a
too low level of legal and regulatory regulation
of the construction sector. As a consequence,
there is a need to develop and approve a Town
Planning Code. It would systematise the main
regulations in this area and the principles of anti-
corruption policy in the construction sector. In
addition, its approval would help eliminate
inaccuracies and inconsistencies with respect to
the powers of state administration bodies.
Moreover, the Urban Development Code would
regulate the organisational and legal mechanisms
for state and public control of activities in the
construction sector.
In addition, the problem of approximation of the
domestic system of technical regulation of urban
planning activity to the model of the European
Union countries remains unresolved. This also
requires adaptation of national legislation to
European standards, for which it is necessary to:
1) implement EU Regulation No. 305/2011 of
the European Parliament and Council;
2) make a transition to the parametric method of
standardizing building standards;
3) to harmonize EN and IOS standards in the
construction industry.
It should be noted that the countries of the
European Union use a comprehensive approach
to state regulation of the construction industry,
taking into account the basics and principles of
state programming. In particular, the mechanism
of state regulation of the construction sector of
such countries as Sweden and Austria can be
called the most optimal. The experience of state
regulation of the construction sector in France is
built in the government management of the
development of the construction sector. In
Finland, state regulation of the construction
sector is carried out at the highest level by issuing
state orders and coordinating the activities of
construction organisations.
The problem of construction insurance remains
equally important for both Ukraine and EU
countries and requires the definition of types of
insurance and the creation of conditions for the
introduction of an insurer’s representative in
construction. Certain countries have already had
some success in this direction, mostly countries
with a high level of development. At the same
time, the introduction of building information
modelling will reinforce the innovative
component of state regulation of the construction
industry and increase its efficiency.
The experience of state regulation of the
construction sector in countries close in
development and geopolitical movement to
Ukraine, in particular Poland, the Czech
Republic and Hungary, is described as positive.
It is considered appropriate to systematise the
comparative characteristics of state regulation of
the construction sector in individual EU
countries in Figure 2.
It should be noted that in European Union
countries such as Spain, Italy, Germany and
France, the main institutions regulating the
construction industry are non-governmental
bodies and professional associations of builders.
A special feature of state regulation of the
construction industry in Portugal is the
mandatory qualification (accreditation) of
construction companies and builders.
Increased attention needs to be given to the
problem of investigating a parametric approach
to the development of the technical aspects of
state regulation of the construction industry. The
reason for this is that the European Union
countries are fully responsible for the
implementation of public safety, energy
efficiency and health and safety requirements in
construction work, which is not the case in transit
countries, in particular in Ukraine. Moreover,
there is often a situation where the engineering
community is not prepared to apply the
parametric approach in standardisation due to a
lack of experience in its implementation.
Separately, the ambiguity of government policy
on the regulation of the construction sector
should be noted, which affects the consistency of
planning activities and leads to a chaotic
prioritisation of activities.
From the said it can be claimed that state
regulation of the construction sector in the
European Union differs from that in Ukraine.
First of all, this is due to the differences in
legislative provision.
Discussion
Based on the results of the study of basic
conceptual approaches to state regulation of the
construction industry in Ukraine and the
European Union it can be stated that the positive
experience of such regulation is based on the
need to choose the European vector of
development and strengthening of institutional
and legislative changes of state regulation of the
construction industry.
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Identification of the major aspects of concern of
state regulation of the construction sector in the
European Union countries and Ukraine allowed
to systematise the main drawbacks, most of
which are associated with the imperfection of the
regulatory and legislative support and lack of
harmonisation with the norms of European law.
The European Union countries have provided a
higher level of standardisation of regulations and
norms of state regulation of the construction
sector, and Ukraine is at the stage of
transformational restructuring and has partially
implemented the European legislation.
Figure 2. Comparative characteristics of state regulation of the construction industry in selected European
Union countries.
Author’s work
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The parametric approach to technical regulation
of the construction sector and the establishment
of norms and regulations that will comply with
European Union standards requires increased
attention, which requires improvements in
government policy in this area.
Equally important is the need to intensify the
innovative development of the construction
industry, which will create additional conditions
for construction organisations to enter
international markets, improve the skills of
specialists and enhance the investment
attractiveness of the industry.
These trends allow to formulate the major
strategic guidelines for improving state
regulation of the construction industry, namely:
1) intensifying the establishment of self-
regulatory organisations as part of the
implementation of the state’s deregulation
policy for the construction industry;
2) improvement of existing legislation to
ensure the modernisation of the urban
planning system;
3) bringing the system of technical regulations
in line with EU standards, with a focus on
strengthening energy conservation and
energy efficiency in the sector;
4) the establishment of dedicated innovation
centres to coordinate activities for the
creation of new technology methodologies
and the organisation of construction
activities;
5) increased accountability for violations of
oversight and control requirements;
6) creating new training methodologies for the
construction industry to take into account
current challenges and trends in the global
economy.
The methods, mentioned above, aimed at
improving the state regulation of the construction
industry will improve the development indicators
of the construction industry, its competitiveness
and investment attractiveness.
Conclusions
Thus, the results of the research justification
basic conceptual approaches to the state
regulation of the construction industry in Ukraine
and the European Union give reason to assert that
the existing practice of state regulation of the
construction industry in the European Union is
more effective than in Ukraine. It has been
established that out-of-date norms and standards
of building are still used in Ukraine, and the
conformity of the current legislation with the
norms of the European Law is low. It has been
established that a steady development of the
construction branch leads to growth of economic
indicators of development of the country and is
able to provide growth of employment and
quality of life of the population. It is offered to
give more attention to the problem of insurance
of building activity and estimation of
possibilities of an exit of the domestic building
organizations to the international market, and
also strengthening of digitization of the
construction area that will allow to strengthen
country’s positions in the international rating of
the states’ competitiveness.
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