Datarun, a company specializing in data analysis, has published a report stating that the Czech Republic is losing significant financial resources due to slow digitalization. Specifically, the report focuses on the construction management sector, estimating annual losses of seven billion Czech korunas.
“Until construction management becomes fast and efficient with the help of digitalization, the Czech Republic will lose at least seven billion korunas every year. These are conservative estimates based on an evaluation report prepared as a basis for the new construction law,” says the Datarun report.
According to the analysts, government officials and the Ministry for Regional Development (MMR) are merely creating extensive PR and marketing campaigns around construction management. They promise easier acquisition of construction permits for builders, but nothing is happening.
The ongoing project for the digitalization of construction management is currently unsatisfactory. The MMR canceled public tenders that were under preparation for a long time. Subsequently, the Office for the Protection of Economic Competition (ÚOHS) repealed the cancellation due to MMR’s incorrect procedure, bringing these public tenders into play. A new tender, “Digitalization of Construction Management” (DSŘ), was issued, but it already had errors in the tender documentation, which ÚOHS subsequently canceled.
Datarun warns that the country is at risk of losing European funds dedicated to digitalization, amounting to millions of korunas. “The latest developments indicate that the MMR has already stopped counting on the millions from the Integrated Operational Program, which was supposed to secure funding for digitalization and had been boasted about for years,” states Datarun.
The report also highlights that responsibility for digitalization projects has been assumed by Petr Fiala (ODS) and Minister Ivan Bartoš (Pirates). This year, a significant breakthrough in the digitalization of construction management was expected, with systems intended to benefit both builders and the state. However, no development or programming has even started yet.
If successful, the digitalization of construction management could shorten the process by two years.
The Datarun report also reminds us that construction management in the Czech Republic is excessively time-consuming, ranking the country near the bottom among surveyed states. According to the Doing Business report by the World Bank, the Czech Republic ranked 157th out of 190 countries in 2020. The permitting process for residential and infrastructure projects can stretch up to 10 years.
“The building authority should assess a builder’s request without unnecessary delays within 60 days of initiating the process. In complex situations, a decision can be made within 90 days. However, deadlines are commonly extended due to waiting for binding opinions from relevant bodies, which are not counted within the set timeframes. On average, a builder faces over twenty tasks that must be completed, and they must obtain statements from the respective bodies themselves. For example, if a small company wants to expand its operations and build a production hall, it must obtain statements from up to thirty-two different authorities and institutions, which will be submitted to the building authority,” describe the analysts regarding the functioning of construction in the Czech Republic. In the best-case scenario, the approval process for building a family house takes 6-9 months.
Waiting for a construction permit increases costs, and applicants incur significant expenses for related tasks. Since digitalization in this area is still not functioning, individuals should expect to handle everything in person.
“When investors and developers consider where to invest in Central Europe, for example, in Germany or Poland, they can plan their investments much better and adhere to schedules. In our case, obtaining a construction permit can take years, which increases costs and leaves them uncertain about their investment,” adds Petr Bartoň, Chief Analyst at Datarun.