The experts of the Atameken NCE RK discussed the issues of pricing in the construction sector, with the participation of business representatives and the authorized body.

Opening the meeting, the Chairman of the Committee of the Presidium of the Atameken NCE RK Alexander Belovich informed the participants of the meeting about the signing by the Prime Minister of the Republic of Kazakhstan of the Protocol on problematic issues in the construction sphere, following the results of a large meeting with the participation of business at the end of November last year. He said that at the said meeting, business voiced to the Government all the problems of the construction industry, which today prevent it from working.

As a result of the meeting, all relevant ministries have been instructed to work with the business on the problems voiced, and develop ways to solve them. To start the given work it has been decided with the discussion of the most important question for all builders - pricing.

"Today, without exception, all subjects of the construction market, involved in public procurement and procurement of the quasi-governmental sector, note the discrepancy between the estimated prices for construction materials and wages to the prices that currently exist in the market. You all know that the prices of materials, machines, and mechanisms are constantly changing. We need to understand how we can solve this problem and what measures to take so that our labor, which we invest in the construction of a particular object, is paid for by market indicators," Alexander Belovich pointed out the problem.

In continuation of the topic, Deputy Chairman of the Board of the Atameken NCE RK Yuliya Yakupbaeva told about the causes of providing unfair prices by the state.

"Firstly, today price collections are formed in manual mode, based on the collection of price lists of suppliers. Secondly, there is a fragmentation of databases, which contain different directories and have different approaches to data formation. These registers are formed in a closed mode, business is detached from this process and has no opportunity to influence it. We can't figure out the pricing. Besides, the coefficients to increase the estimated prices do not take into account devaluation and inflation, seasonal price rise, and other factors," Yuliya Yakupbaeva said.

The meeting participants confirmed the relevance of the voiced problems and actively participated in their discussion.

For example, according to the Vice President for Economic Affairs of the Basis Holding Nataliya Skorikova, the estimated prices do not correspond to market prices for all construction projects.

"According to construction materials, the difference always ranges from 10 to 20%, while in the Turkestan region it is more than 20-30%. In addition, the compendia lists have outdated machines and mechanisms, formwork designs are completely different from those currently used by construction companies," Nataliya Skorikova said. 

As a result of hot discussions between the participants of the meeting, the Deputy Chairman of the Committee on Construction and Housing and Communal Services of the MIID RK Almaz Yydyrysov expressed his position.

He proposed to create a Working Group, including representatives of business to develop specific mechanisms for pricing and called on the meeting participants to submit specific proposals to change the current methodology.

In addition, he informed about recent changes in the methodology for determining estimated prices.

"Last year we switched to agency statistics. Within two years, we plan to transfer all construction materials to the agency statistics. Today, this is only 20%. We plan to complete this work by the end of 2023. All prices will be formed on the basis of statistical data," Almaz Ydrysov said.

The participants of the meeting did not support the initiative of the state body to introduce monitoring of current prices based on statistical data, because the business has many questions concerning their reliability.

"We should not transfer problems in statistics to directories of estimated prices. It is unreasonable," Alexander Belovich said.

"Forcing contractors to submit statistical reports is an additional burden on business. After all, we are talking about a few thousand items that will require filling out statistical forms. And if large companies can afford to maintain a separate staff for such reports, small and medium businesses do not have such opportunities," Kairat Maukebayev, CEO of NurSADI LLP, said.

As a solution, the Atameken NCE RK proposed to digitize the whole process of pricing, with the creation of a Unified Register of suppliers of construction materials and services.

According to Yuliya Yakupbaeva, the creation of the Register will ensure transparency and reliability of the formation of the estimated prices based on a single directory of all construction materials, manufacturers and suppliers, to monitor the share of local content in materials and equipment and solve other problems of the industry.

"It is necessary to have the uniform Register which would be formed on a digital principle. It should have the uniform comprehensible directories, comprehensible analytics, market place to conclude transactions, a system of aggregation, accumulation for its subsequent conducting without superfluous expenditures of labour, and the most important thing that the interface and market place should be convenient to participants of the sector," Yuliya Yakupbaeva said.

Along with prices for construction materials, the experts discussed problems with the level of estimated wages.

Today the workers' salary is calculated from the average salary, which is absolutely incorrect according to the business opinion, as the earned salary in the construction market depends on the specific specialty.

For example, two different experts receive 500,000 and 100,000 tenge accordingly, and the operating technique establishes an average salary at a rate of 300,000 tenge that does not correspond to market rates. According to the representatives of the authorized body, the other mechanism on the definition of cost of a salary is not developed, and the problem decision will be reached after the full transition in 2023 to the application of the data of departmental statistics.

"Business cannot come to the employees and say that 2023 will come and then it will be time for fair wages. We are sitting with you now, and they are working on the construction site. They have a salary of $200-300 and we can't pay more, because you have such rates in your directories," Alexander Belovich said.

In addition, according to representatives of the authorized body, the discrepancy between the level of estimated wages and the market is affected by the lack of technology cards for certain types of work, the development of which is currently underfunded. At the same time, the authorized body urged business representatives to take part in the development of such maps at their own expense.

Deputy Chairman of BI Group Talgat Kozhakhmetov shared his experience in this area.

"Our company has developed about 40 technological maps. But I would like to note that they do not show the market value of works, but only help us to properly conduct the work, observe the technology of production. The cost of works dictates the market, and we must come from the market," Talgat Kozhakhmetov said.

As a result of the discussion, representatives of the authorized body assured the participants of the meeting that they are ready to solve all the issues within the Working Group.

Concluding the meeting, Yuliya Yakupbaeva outlined further steps to promote the initiative to create a Unified Register and urged business representatives to take an active part in the work of the Working Group.