Alexander Kalashnikov
Construction for dummies in Russia: save money and mind
Foreword
Greetings English-speaking readers! This book is mainly about how things are in the construction industry in Russia. It contains our specific Russian features in the legislation and in the current situation in the economy. This book has become a comprehensive expression of the experience that I personally, or my colleagues, had to face in practical activities in construction. I got into construction quite by accident, I have no construction education, so I immediately had to figure out all issues on my own and look for ways to solve certain problems, without having any theoretical ideas.
Nevertheless, for 10 years in construction, I managed to be a foreman, designer, lawyer, economist and PTO engineer, supplier, project manager, certification specialist, commercial and executive director, customer and contractor, and I have seen enough of it all from the inside.
Moreover, I saw those aspects of construction and those nuances that not a word will be said in a construction university, both pluses and minuses, as well as the most common problems.
This book will not teach you how to build, assemble structures, pour concrete or lay bricks, but will give you a more advanced understanding of building and doing business in this area, i.e. about matters no less important than the direct construction process.
All in all, this book should be interesting.
People who want to be builders;
Students and graduates of construction universities;
Ordinary people or specialists of organizations who want or are forced to be customers of construction work in order to build or repair something;
People who want to manage construction organizations and earn money from this activity;
Designers and VET workers (in terms of parsing constant errors in estimates and projects).
1. Problems of the construction industry with staffing. Causes, consequences, ways out.
In construction, there are two constant problems with personnel:
maintaining the optimal number of staff;
management of the composition and qualifications of employees.
Causes
1. Low predictability of work volumes
Much more factors affect the receipt of volumes of construction work than in other industries. For example, there is an Olympics or a World Cup – there is a construction site, no – accordingly, there is nothing to talk about. Only developers of residential complexes or districts have it easier in this sense, because they can plan the work as a whole and for 3 and 5 years ahead – but this is not more than 1% of the number of all organizations.
2. Taxation, and primarily VAT and a high percentage of deductions from wages
Most construction projects fall under the need to work on the general taxation system. Contractors on the simplified tax system do not fit into the system because their customers need input VAT, and because the maintenance of large facilities means an annual revenue of 200 million rubles, i.e. the impossibility of applying the USN.
Example. You received 100 rubles for the work performed. with VAT, while you need to officially pay a salary of 70 rubles to workers. What is left after paying taxes?
Answer: Shortage of 20.1 rubles. either wages or taxes.
3. Seasonality
Seasonality is determined not only by climatic conditions. It also depends on the budget. Basically, objects are put into operation in the spring and must be delivered by December, i.e. by the end of the financial year, respectively, from January to April-May, there may be no work at all, and from May there is a terrible shortage of people, when both factors add up.
4. Competition
For comparison, in the USSR there were around 10-15 thousand construction organizations, and a few years ago in Russia there were more than 100 thousand of them. Yes, not as powerful as the DCS and SMU used to be, provided with equipment, people, etc … And so , sometimes firms that have only one seal from their fixed assets. But 100 thousand ! It's an Achievement!
But how much higher the competition, and how much lower the level of training of specialists, because it holds back the profits received by the “builders”, and they are accordingly forced to save on everything and make do with less qualified personnel.
5. Self-regulation in construction
The principles of self-regulation, which apparently came from Masonic organizations on the principle of “pay a fee and if you come out with a face, we will accept you,” and the current state policy in this matter only leads to the degradation of all participants. SRO checks – fiction, paid fees – sleep, i.e. work calmly. At the same time, only the funds themselves are clearly in the black – in fact, parasites. At least contributions to SROs could be directed to training and education!
6. Low quality of management of the national economy in general and the construction industry in particular
It must be admitted that our condition directly depends on how we are managed.
7. Population depopulation
Including in view of the above reasons – minus about a million people a year.
Consequences
1. Lack of permanent employees in the staff of the organization and social guarantees for workers
The number of AUP and ITR in organizations in general can consist of only one or two people when they solve the whole range of issues, and the main working staff are people who are recruited only at specific facilities.
There are more pants in large organizations, or in specialized installations of engineering networks, structures, etc., and then a couple of people of especially valuable employees can form the basis, and the rest will be involved in work only periodically.
2. Lack of opportunity / desire to improve qualifications
90% of the workers are people in free flight, who themselves have somehow learned something somewhere, wander from one construction site to another and who are not particularly forced by anyone to improve their skills and engage in at least self-education, to know SNiPs and GOSTs. In fact, no more than 10% of people are engaged in this, and the rest, if it is an emergency, watch videos on YouTube , at best, and not always what is supposed to be.
And when to study, if you need to earn …
3. Skill level
The average qualification does not always reach even the level of self-taught artisans.
4. Work culture – and quality of work
The nomadic lifestyle of workers in the industry, with an abundance of “so-so employers” who do not always meet their payment obligations in full or on time, the general level of education of workers leads us to a disregard for the results of our own labor.
In general, it would not be bad to conduct an objective sociological study on the topic of the attitude of the population to their work – it will be tough.
5. Labor cost
Real professionals literally have to be persuaded to go to work, despite the fact that the cost of their services can be two or even three average wages for the same job, because there are really few of them, and their workload with current work can be two Three months ahead, or even more.
At the same time, just good performers receive the usual average salary, nothing higher than people with a complete lack of qualifications. No one wants and agrees to receive “little”, or rather, in accordance with their qualifications, and they keep the average price level, because there is already a huge shortage of people in the industry during the season. Only at the same time, hacks are often kicked out of the objects, but they manage to earn some of the money and further push prices up.
The increased degree of demanded payment by employees is influenced by a lack of confidence in employers in general. Therefore, people include risks in the price: they didn’t get it there, they didn’t get it, but they bounced back elsewhere.
Construction organizations today are in extremely difficult conditions, when professionals are extremely expensive, and non-professionals are simply expensive, despite the fact that involving them in work has the risk of poor-quality work, violation of deadlines, destruction of building materials, etc. – in short, to losses, the fault of which is all of the above.
Ways out of the situation
I think I managed to show the deepest systemic crisis and imbalance in the industry. We do not have enough managers to sort it all out. People who are strictly forbidden to be trusted are allowed to manage the national economy. It is impossible to improve the situation without changing the socio-economic model, the right, including the electoral one.
We urgently need:
New training programs for managers from among specialists from various industries – "management" has not justified itself;
New mechanisms for the selection and involvement in the state apparatus and the legislative branch of people who started their careers from the very bottom and have reached a certain level of professionalism, understanding all the specifics of their industry;
Work on the education of citizens through the formation of a normal cultural environment, in which managers are also formed, and the adjustment of value orientations from personal benefit to personal contribution;
The system of evaluation criteria and the procedure for the examination of state management decisions for their compliance with the long-term interests of citizens, with the introduction of criminal liability for their violation.
2. Construction and democracy are incompatible
Normal statement, right?
And the point is this. At the heart of democracy is the election of officials of various levels.
Often officials are representatives of any parties. In general, democracy creates a situation in which various people and entire parties are fighting for votes, for ratings and for winning elections.
construction projects of various purposes, especially kindergartens, schools, stadiums, hospitals, houses for migrants, etc. , created “with their participation,” and often even in spite of such participation. become a sort of fat plus in the eyes of voters. Therefore, by the agreed date, or rather by the beginning of the elections, the objects must be handed over at all costs – this is the task facing those who are currently in power.
There is another side of the coin. For example, the president approves some target program, allocates funds for its implementation, and sets specific deadlines. This applies to all the Olympics, International Economic Forums, and the elimination of the consequences of emergencies. The allocated funds are under special control, to break the deadlines is fraught with deprivation of access to the feeder and loss of position. But there are elective positions everywhere, it’s not easy to get this …
So, democracy drives officials into a rigid framework in terms of monitoring the timing of the construction of facilities: on the one hand, voters and elections, on the other, higher-level officials who have exactly the same responsibility to society and a more significant level of tasks to achieve which they will not stand on ceremony with "local officials" for a long time.
All this leads to tight deadlines for design and construction work, for the selection of contractors for their implementation. In general, an emergency. Is it necessary to explain that in such situations an unimaginable number of mistakes are made, threatening, among other things, the durability and safety of buildings. There are many examples of such errors and miscalculations.
But deadlines are deadlines. Therefore, many violations remain uncorrected, or are corrected retroactively, after the ribbon is cut – anything can happen. And all these situations are excellent grounds for forced official forgery, when many, out of fear of losing their jobs, take work at their own peril and risk. Therefore, from the point of view of the safety of construction projects, democracy and elections are a clear hindrance.
3. About some errors in construction documentation leading to losses
I was approached by people from educational organizations, Internet portals that train workers or improve their qualifications, so that I would prepare for them some useful, scientifically oriented, “interesting for their audience” publications … And I told them that it makes no sense to teach their professionals to something like that, or retrain if they make thousands of the dumbest mistakes every day, the same ones over and over again, from which customers and contractors then have serious headaches, up to lawsuits and losses amounting to tens of millions within the framework of just one object…
I insisted and insist on the fact that it is these very elementary examples that designers and estimators need to wash their heads on a daily basis. Personally, about 20% of my work at the construction site was involved in eliminating the consequences of all this – this must be stopped.
You may also encounter them, so do not be too lazy to go through this material – it can help you more than once, at least by paying attention to it.
3.1. Errors in the estimate documentation and their consequences – losses
1. Errors in units or decimal places
Not a very common mistake, but sometimes people make mistakes in the number of decimal places or units of measure. For example, meters – meters, are confused with tens or hundreds of meters – 10 meters, 100 meters, forgetting to divide or multiply the value by 10 or 100, respectively, less often – by 1000.
On one of the objects worth about 700 million rubles. due to such errors, the total estimate turned out to be 90 million rubles. more than it should have been. That is, in fact, the estimates included hundreds or thousands of times more work or materials than can be applied in principle at this facility.
For example, instead of the actual 26 square meters of plaster, the volume was indicated as 2,600 square meters, and instead of the actual 350 kilograms of reinforcement, 350 tons. The case is outstanding, but absolutely real.
Thus, the total cost of these errors amounted to about 15% of the total cost estimate. All these works could not be performed, although they were in the estimate, so we had to bring the estimate in line and terminate the contract for the amount of erroneously overestimated volumes. All this certainly affected the profitability and the level of profitability of the object (the ratio of profit to the cost of work as a percentage).
As a rule, those who use ready-made estimate documentation in their work notice such things, but those who draw it up do not notice. It is very bad when such moments are clarified already in the process of execution of the contract, when it remains only to state the fact of budget cuts.
It is quite easy to detect errors in estimates if they are small – on 3-5 sheets, and it is almost impossible to immediately notice them if the estimate exceeds 50, 100 or 500 pages.
However, there are benefits to be gained from this situation as well. Since funds have already been allocated for construction work, especially if the object is budgetary, the Customer can go to a meeting and spend the saved funds on other work that is necessary or on the purchase of any equipment with its installation, within the freed amount of within the framework of the contract already concluded with you, if it does not contain any prohibitions on this. As a rule, the amount of changes under government contracts cannot exceed 10% of the estimated cost.
2. Errors in the types of work
The second group of mistakes is when they forget to accidentally add some types of work to the estimate. Sometimes such errors violate the technological sequence of work as a whole, which can also lead to losses.
Examples:
We had a facility where work was to be done to strengthen the wall by installing buttresses. Their technological sequence was as follows: earthworks (clearing the work site from the ground, digging pits with an excavator and manually to a depth of 2.5 m), laying footings, installing metal frames and formwork, pouring them with concrete, backfilling pits, compacting soil. So, in the estimate, the very initial earthworks in the amount of approximately 300 cubic meters were completely absent .
You must mount any equipment in the building. But the dimensions of this equipment exceed any maximum openings in the walls; accordingly, it may be physically impossible to bring this equipment inside without temporarily dismantling sections of the walls to increase the openings in them. Not every designer or estimator can foresee such things. Therefore, inspect the place of work before performing work or concluding a contract.
The worst thing is when you have already appointed people, hired equipment and started work, and only then found out everything, because the customer, especially if it is a state customer, may simply not have extra money that he can allocate to complete the data works and all attempts to humanly resolve this issue may lead nowhere . Sue him or incur losses, but do the work, or terminate the contract – this decision is up to you.
In any case, remember that all hidden work must be recorded in acts, and if you completed work today that was not included in the estimate, just so as not to stop all construction or some part of it, then the absence of acts of hidden work, protocols for considering these commission issues, etc. will complicate your situation if you decide to prove your case in court or in any other way to resolve this issue.
There are also other situations. I was once asked to mount a turnkey door. I mounted and forgot about this business until the customer called me and asked “Where are the slopes?”. In his opinion, slopes were included in the concept of “turnkey”, but in my opinion , if they were not mentioned in principle, they were not in the “turnkey”, but there was only a door, its delivery and installation. Speak every little thing, and better reflect in the contracts.
3. Errors in materials taken into account or not taken into account by the estimate
In order to avoid misunderstandings, so that both the contractor and the customer clearly understand what is included in the cost of work and what is not – i.e. whether materials are included in the cost of work, when drawing up an estimate, it is necessary to accurately describe the materials used and their quantity. If you received an estimate for consideration, deal with this issue paramountly.
So, there are two types of estimated or contractual prices:
1. Prices without the cost of materials;
2. Prices including the cost of materials.
Most often, prices that include the cost of materials are used in state estimates, these are the so-called FER (federal) or TER (territorial) unit prices. They facilitate the accounting of expenses of budgetary organizations, budget planning, and are also adjusted for inflation, etc.
Let's compare two types of rates:
Prices without the cost of materials:
FER15-01-090-03 (approved by the Order of the Ministry of Construction of Russia dated December 30, 2016 No. 1039 / pr ) – “Arrangement of ventilated facades with porcelain tile cladding: with a heat-insulating layer”.
FER11-01-027-02 – “Installation of cement mortar coatings from ceramic tiles for multi-color floors”.
Prices including the cost of materials:
FER15-04-012-02 – "Painting of facades from scaffolding with surface preparation: organosilicon".
FER12-01-010-01 – “Installation of small coverings (firewalls, parapets, overhangs, etc.) from galvanized sheet steel (adjoining the profiled sheet to the wall)”.
As you can see, it is impossible to determine visually only by the name of the price what exactly it may include: only work or work and materials. Therefore, if materials are not indicated in the estimate, contact the estimator for help so that he “unfolds” the price and shows what exactly it includes – there is such a technical possibility in the “Grand Estimate”, etc. programs, or look for their decoding on the Internet or in specialized directories.