special project
Unfinished Russia
Why do cars in the country stall and stop?
socially significant construction projects
In 2023, nearly 7 public construction projects in Russia were listed as suspended or mothballed. These included hospitals, schools, kindergartens, community centers, sports and fitness centers, roads, parks, and others.
In these objects, According to Almost 197 billion rubles have been invested in monitoring unfinished construction projects (UNC), but they are not serving their intended purpose; on the contrary, they continue to drain budget funds for conservation, security, inspection, and updating design and estimate documentation.
The figure seems significant. Unless you know that in 2000, there were over 88 properties with this status in the country. Judging by numbers According to Rosstat, the situation with socially significant undeveloped buildings in the country has objectively improved over the past couple of decades and continues to improve. However, there are some nuances.
NeMoscow examined the issue using statistical reports, media publications, and scientific articles.
"NeMoskva" research is a search for the typical and the anomalous in Russia's regions. A group of journalists examines how processes unfold, phenomena exist, and problems are resolved or not resolved differently in different parts of the country. From disparate elements, we assemble a coherent picture and try to understand what it tells us about the country and its people.
Also read our other studies:
The situation is improving
Authors Articles "Problems of unfinished construction and ways to reduce it," Candidate of Economic Sciences Oleg Pankratov and Doctor of Economics, Professor, Honored Builder of Russia Evgeny Pankratov Three periods are distinguished in the modern history of Russia in relation to the “unfinished business”:
1991 - 2000 years
The number of unplanned projects was high, while the number of mothballed or suspended projects tripled compared to the same period in the previous year, while new projects decreased sixfold. This is explained by the decline in "investment opportunities" of enterprises and the country, as well as the fact that companies formed from privatized state-owned enterprises lacked the funds or the will to complete the projects they had begun.
2000 - 2010 years
The situation has improved significantly. The number of projects under construction has been cut almost in half. The number of suspended or mothballed projects has decreased by 3,5 times, amounting to 24% of the total number of unfinished projects.
2010 - 2019 years
The share of suspended and mothballed projects in the total number of construction projects continued to decline—the number of such projects decreased by 2,6 times.
Researchers conclude that the problem of publicly funded, socially significant, and infrastructural construction projects has become much less acute in Russia over the past three decades. According to Rosstat figures, it continues to improve: In 2019, there were suspended and mothballed facilities 9416, in 2020 - 8441, in 2021 - 8818, in 2022 - 7008, in 2023 - 6912.
Reducing the volume of problematic unfinished can be seen in all federal districts since 2000.
But there are nuances
Firstly, the reduction in the number of stopped construction projects occurs against the backdrop of a reduction in the number of emergency situations
Website for monitoring unfinished construction projects determines All projects under construction in the country are considered to be on-site facilities. These include abandoned projects (construction suspended or mothballed), long-term construction projects (construction ongoing for more than five years), and construction projects that are being carried out and financed according to plan. The first two types are considered problematic.
That is: during a construction boom, when a large number of different construction projects are being carried out simultaneously, there will, in principle, be many public safety facilities.
The reduction in the number of ONS as such cannot be considered an unambiguously negative trend; such a conclusion requires a more detailed study of the context. And yet, it allows us to look at the trend of declining problematic properties differently. After all, it turns out that this decline was due simply to a reduction in construction.
Secondly, not everyone is seeing positive changes. The Caucasus is in the worst situation.
Since 2000, the number of suspended and mothballed projects has decreased in all but two regions. The share of such construction projects relative to the total number of unscheduled projects has decreased in all but four regions. Over the past decade (2013-(2023) the number of suspended and mothballed projects decreased in most regions—in 67 out of 83. The share of such construction projects in relation to the total number of ONS decreased in 58 out of 83 regions.
An anomaly against this background appears to be North-Caucasian Federal District. Firstly, it has the lowest number of actual unscheduled construction projects. Secondly, in five of the district's seven regions, the number of problematic construction projects has increased over the past decade. Thirdly, according to Rosstat data, it is the only district where the share of mothballed and suspended projects in the total number of unscheduled construction projects has not decreased since 2000, but has even increased slightly.
The key role in these indicators belongs to Dagestan (+313 suspended and mothballed facilities compared to 2013) and Ingushetia (in 2023, only 50 suspended and mothballed facilities were registered in the Republic, 50 of which were also classified as problematic).
Thirdly, the war is likely having a negative impact on the situation. Since its inception, the number of regions with a growing volume of problematic unfinished construction projects has increased.
Data from different sources differ due to different approaches to calculation. However, both Rosstat figures and the figures from the ONS monitoring show that before the war, there were fewer regions where the share of problematic facilities in the total number of ONS increased rather than decreased. To put it simply, the dynamics after the start of the war are worse than before.
We color-coded all regions on the map based on the severity of the problem. A number of parameters were used to determine the severity.
For information on dynamics in all regions, see here
Why are construction projects being halted and delayed?
Averages matter to decision makers, but not to residents of specific locations. Does it really matter, for example, what the national average salary is if yours is below average?
"Among the public health facilities funded by budgets at various levels are many schools, university campuses, clinics, hospitals, and other social facilities, as well as roads, heating mains, and public utility infrastructure, sports complexes, stadiums, and so on. Because these public health facilities are not completed on time, children in some regions of the country are forced to use special transportation to get to school, and in some places, this makes it impossible to receive timely medical care," recognize on the ONS monitoring website.
NeMoskva examined four dozen high-profile stories about long-term and failed infrastructure projects to understand the reasons why they arise in the first place.
You can also read about these objects - click on the cards to learn more about each one.
In all the stories, four groups of reasons can be identified for why construction projects are delayed and stopped (one case may have several such reasons).
😔 Miscalculated - 17 times
Construction began, but it turned out that more money was needed than planned. Or the design and estimate documentation didn't match the actual volumes. Or it turned out that some technical solution was flawed and needed to be redone, which meant finding additional resources again.
😱 Chosen the wrong one - 14 times
In these cases, the contractor is bankrupt or dishonest, failing to fulfill obligations, constructing poorly, or missing deadlines. In some cases, embezzlement or "futile" spending has been proven in court.
🤔 While we were dragging our feet, everything changed – 14 times
This group of reasons is considered secondary. When construction is initially delayed for another reason, then construction materials become more expensive, requirements and regulations change, and individual structural elements become unusable, leading to a subsequent shortage of funds.
😡 No agreement – 5 times
The client and contractor sign the contract, but details that the parties disagree with come to light, and the contract is terminated. Or the client and contractor hurl mutual accusations at each other, making it difficult to determine who is right and who is wrong.
This list of reasons is not exhaustive; it is based on a study of only 40 cases. Experts say the problem of major unfinished construction is too complex to derive a universal list of factors. Each case is unique and requires individual analysis.
В report Federation Council of July 2023, mentioned article Pankratovs and article 2015 years Nikishins, female researchers from the Irkutsk region, There are various lists of reasons, we have summarized them into one:
- No money. The project is not financially secure, there is a lack of money, especially in connection with "weak justification for funding sources".
- Overestimation of forces. Mismatch between the scope of work and the contractor’s capabilities, inefficient use of available resources (in one of the articles this is called "constant imbalance")
- Problems with the project. Specifically, with regard to design and survey work and design and estimate documentation: the work is carried out with poor quality, the design and estimate documentation is provided late, is of poor quality, and may be completely absent, and investors violate the requirements for the design and estimate documentation.
- Disadvantages in the system of relationships between the parties (general contractor, subcontractors, suppliers, supply and transport organizations), lack of coordination of all participants and responsibility of the parties for the timely commissioning of the facility.
- Problems with power. Administrative obstacles (too long and complicated permits and approvals), excessively strict control by government agencies.
- Object obsolescence and the impossibility of its rapid adaptation to changing conditions.
- Simply poor quality of work. This concerns both the low level of work organization and the inadequate quality of the final result.
Add high here loan rates и various difficult to predict factors - the contractor may go bankrupt, materials and equipment can be supplied delayed, the authorities may decide that the object has become "inappropriate", and it may also suddenly turn out that not properly designed property rights. All these points are also mentioned among others. The Pankratov researchers conclude their list with the point "unforeseen risks and much more".
At least one more reason deserves special mention as a hypothesis. In bоMost of the objects studied by NeMoskva were federal funds are involvedAttracting federal funding for a project in the spirit of "let's get involved first, and then we'll figure it out" (that is, without understanding whether regional funds will suffice for completion) is one of the likely causes of unfinished business.
"A significant portion of the unfinished construction project is made up of projects financed by the federal budget. These are primarily large projects, which were unaffordable for the Republic of Dagestan's budget at the time construction began. Due to the completion of federal program activities, including early completion, these projects are left without funding sources. Completing these projects independently is extremely difficult for the republic due to their resource-intensive nature." - confirms the hypothesis publication In the Dagestani newspaper Derbend, Dagestan, as mentioned above, is one of the most problematic regions in terms of unfinished construction. Problems have been accumulating here for decades, and the list of unfinished projects includes projects begun as early as the 80s.
The Nikishin researchers are also, in fact, pay attention on the role of federal money in the problem: "legal and economic relations between the federal center and the regions are insufficiently regulated," "the basic rights and obligations of participants in the process, their responsibilities, forms and methods of ensuring measures for the maintenance of facilities, their completion, conservation or liquidation are not clearly defined."
What do they do with it?
The topic of unfinished construction was discussed at a roundtable in the Federation Council in the spring of 2023. In summary are listed problems, and most of the list is taken up by organizational and bureaucratic issues.
Thus, not all regions have yet begun maintaining their own registers of publicly traded assets (legal acts requiring the maintenance of such registers have been adopted in 36 regions); in some regions, the executive body responsible for registering assets has not been determined; in others, the "issue of uniform application of digitalization methods" has not been resolved; in a number of cases, there is a risk of "duplicate" registration of an asset, when it appears simultaneously in both the federal and regional registers.
Only sixth point seven is the problem with money: "...there are no regional budget funds to cover the financial support for completing the construction of problematic projects (including the need for a significant amount of funds for technical inspections and engineering surveys necessary to determine the technical condition of the project; the cost of the project to complete construction is increasing due to rising prices for construction resources, as well as due to changes in regulatory requirements for unfinished projects)."
At the same time, the first deputy chairman of the Federation Council Committee, Vladimir Gorodetsky, who chaired the round table, said, that the lack of funds in regional budgets for completing the construction of problematic facilities was stated all regions.
Completion of construction is being carried out within the framework of the Federal Targeted Investment Program (FTIP). Its geographical priorities The infographic below shows how high the investment in occupied Crimea is and how Moscow-centricity remains strong.
The minutes of the roundtable discussion on the problematic "unfinished business" conclude with a list of recommendations. Translated from bureaucratic jargon to layman's terms, they can be reformulated as follows:
- Form the federal register of public authorities more quickly.
- So, for those who haven't done so yet, regional registries should be formed.
- Help regions create regional registries.
- Include the year construction began in reports. This will improve the quality of assessments of problematic unfinished projects.
- Develop criteria for determining the level of readiness of a facility included in the registry. Decide who will determine this level.
- To study the issue of using the Electronic Budget system for maintaining registers.
- Ensure annual inventory of public safety facilities.
- Take into account the costs of preparing technical documentation, surveying and securing the facility, and maintaining the construction site when forming the estimated cost.
- Eliminate interruptions in funding for the work.
- Strengthen control over the “established construction procedure”.
Seven of the ten recommendations relate to maintaining a register of public health facilities. This is an important task—all the researchers we mention in the project have emphasized the need for such a register. But let's return to the list of reasons for the emergence of problematic facilities that we provided above.
How many of them were offered a solution?
|
Problem |
Is a solution to the problem suggested in the recommendations? |
|
Lack of funding |
❌ |
|
Overestimation of the contractor's capabilities |
❌ |
|
Design problems (poor quality of design documentation, etc.) |
❌ |
|
Shortcomings in the system of relationships between different parties |
❌ |
|
Administrative obstacles and excessively strict controls |
❌ |
|
Obsolescence of the object and the impossibility of its rapid adaptation |
❌ |
|
Poor quality of work at the site |
✅ (partly) |
|
High interest rates on loans |
❌ |
|
Unregulated relations between the federal center and the regions |
❌ |
Let's add to this another detail noted by the Pankratovs: while in Soviet times, individual research teams and laboratories were specifically engaged in problematic "unfinished projects," over the past two or three decades, not a single scientific unit has remained in the country that would offer solutions.
«“The problem, in scientific and practical terms, was practically left to its own devices,” Scientists state. They conclude that currently, decisions can only come from government agencies, customers, or investors.
The special project was prepared by the NeMoskva research team with the participation of the media initiative Fourth Sector.
Illustrations were generated by the DALL-E neural network.
The dataset used in the study can be скачать здесь.