12.04.07

The canceling of licensing requirements and the institution of self-regulation is one of the hottest issues in the Russian construction industry. However, how this "innovation" will be implemented remains unclear to most.

Amendments to the town planning code of the Russian Federation require the creation of Self Regulatory Organizations (СRО) which will supervise its own members and accept responsibility for members that break the rules set by the organization.

The term Self Regulatory Organizations gained usage in Russia after the adoption of the "Law on Technical Regulation." However, a law on SRO's themselves has not yet been passed. A statement issued by the Presidential Council on Realizing High-Priority National Projects makes reference to a parliamentary hearing on a statutory provision for regulation of the construction industry. The Chairman of the State Duma Property Committee declared that the system currently in place is unable enforce punishments of construction companies that violate laws in that sphere.

The construction market is controlled by 15 various departments and 13 monitoring agencies, but bureaucrats issuing licenses bear no responsibility for the quality of the work done by the construction company, and construction companies aren’t liable for the results of their work. SROs were presented as an alternative and are supported by the Ministry of Economic Development and Trade of the RF. Proponents are confident that SRO’s would be more effective from the point of view of controlling the market. Italy, where an SRO system was introduced for the elevator industry, was cited as a model. There, the number of breakdowns was cut in half, and the number of fines imposed doubled. The ministry anticipates similar changes for the construction market in Russia within 2-3 years after the introduction of the SRO system.

However, introducing a construction SRO without a law in place to formalize the organization type looks very strange to say the least.

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