How to enhance the credibility of construction cost estimates?

How to enhance the credibility of construction cost estimates?
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Today, the industry has faced the necessity to shift toward a new model for evaluating construction cost estimates. The implementation date has been determined — October 1, 2018. This innovation has become the subject of intense discussion by all market actors.

We have had a discussion recently here at the Lipetsk Pipe Company “Svobodny Sokol”, which was attended by 40 representatives of regional enterprises, led by the First Vice Governor of the Lipetsk region, Yuri Nikolayevich Bozhko, Director at the Urban Development and Architecture Department of the Ministry of Construction, Housing and Utilities, Olga Alexandrovna Dashkova, and First Deputy Head of FAU Glavgosexpertiza of Russia, Irina Nikolaevna Lishenko. The issue of transition to a new resource model is a sensitive one for many enterprises. Why?

Let me explain from my own experience. We are an import-substituting enterprise, moreover, we export our products to Great Britain, Germany, Italy, Spain, Iraq, Portugal, Poland, Slovenia, as well as to the CIS countries: Belarus, Kazakhstan, Moldova, etc. Ductile iron pipes by Svobodny Sokol are certified by the German Water and Gas Supply Association DVGW, and by WRAS — Water Regulation Advisory Scheme — in the UK. Our products have all the required certificates for application both in Russia and Europe.

Ductile iron is now the world’s No. 1 technology for water supply systems. Ductile Iron pipes are absolutely safe, failure-proof; they show resistance to earthquakes and are applied in highway construction, as well as under the conditions of the Far North, they don’t require a special “cushion”. Ductile iron pipes can be covered with earth and are quickly mounted. But more importantly, drinking water comes through these pipes to people without any impurities or secondary pollution. Let’s agree, a pure drinking water in the tap — isn’t it the most crucial issue of public safety? But!

Any clandestine pipe manufacturer, which is by definition not burdened with the problem of checks for compliance with standards, is in an advantageous position because it can set dumping prices without prejudice to its work. In the field of the fight against counterfeit products, declared by the country’s government, it is necessary to eliminate all possible loopholes for the promotion of low-quality products, which will be cheap at the point of entry but then will turn into the budget’s black hole due to the need to indefinitely repair and remodel the building or engineering network.

However, in a situation where a decision is made only on the basis of the lowest price, I suppose, a green light is given for counterfeiting. After all, the new resource model takes into account only the price, not the quality of products, their durability, prices for installation, ownership, operation. ‘How all this can be assessed?’, you may ask. For this purpose, a building’s “life cycle” parameter should be introduced. But for now, this definition is not enshrined in the legislation, while anything that is not determined by the law does not exist, as Ms. Dashkova has rightly noted.

In the case of ductile iron pipes produced by LTK Svobodny Sokol, the buyer’s saving is composed of indirect factors: the fact that no electricity costs for welding are incurred since the pipe installation does not require this; there is no need in bringing sand and making a “cushion” —  a ductile iron pipe can be covered with earth, etc. These costs are quite tangible and they should be taken into account in the new decision-making system.

Compulsory certification according to the No. 44 Federal Law needs to be introduced not just for products but for manufacturing as well. The bill, which introduces a “building’s life cycle” parameter, has passed the first reading in the State Duma (the Russian Parliament - editor’s note). It is my hope that this will fundamentally improve the situation with counterfeit in the construction industry, where there is a lot of it.

Igor Viktorovich Efremov, Director General at LTK Svobodny Sokol