Construction and Related Engineering Services

CONSTRUCTION AND RELATED ENGINEERING SERVICES

Karsten Steinfatt

Organization of American States

Trade Unit

First revision

December 4, 2001

The construction process involves a myriad of services activities that can be grouped into two broad categories. The first category is commonly known as engineering design services. It encompasses both architectural and engineering inputs, including project feasibility studies, conceptual design, cost estimations, site planning, structural analysis, and preparation of detailed drawings and specifications. The second category is composed of those services that make physical construction possible, including activities relating to procurement of supplies, mobilization of labor and equipment, and management of projects. Even though construction firms often provide both types of service categories, this template focuses almost exclusively on the second category (construction services), leaving the treatment of architectural and engineering services to the template on professional services. It should be recognized, however, that the supply of construction-related engineering services involves services provided by professional engineers, and that there is considerable overlap between the two categories of services. For this reason, a complete picture of policy and performance in construction and related engineering services can only be obtained through a careful assessment of the data resulting from both this template and the template on professional services.

Note: Unless otherwise specified, please give information for the latest year available and indicate which year. Sections D, H, I, and J ask for time series data for the period 1990-2000. If time series data are not available, please collect indicators for the years 1990, 1995, and 2000.

If insufficient space is provided, please attach additional information on separate sheets. Please report all monetary values in their reported currencies.

A. Market Access

Commercial presence

1. Are there policy restrictions on new entry of construction firms?
Entry by any firm / If yes, total number of firms allowed / Entry by foreign firms / If yes, total number of foreign firms allowed
 No  Yes /  No  Yes
2. If entry is restricted, what are the reasons provided by the government?
 To give incumbent firms time to prepare for competition
 To increase government revenue from privatization or license fees
 Strategic activity reserved to the state
 Inadequate regulatory and supervisory capacity
 No perceived economic need for new construction firms
 Other: ______
3. Which of the following services are locally established foreign construction firms permitted to provide?
 General construction work for buildings
 General construction work for civil engineering
 Installation and assembly work
 Building completion and finishing work
 Pre-erection work at construction sites and other work
4. Are foreign construction companies required to establish locally through a particular legal form of establishment (i.e. subsidiary, branch, representative office)?
 No  Yes
If yes, please specify the legal form of establishment that is required:
 Subsidiaries  Branches  Representative Office
If no, which of the following legal forms of establishment are allowed for foreign construction firms?
 Subsidiaries  Branches  Representative Office  All
5. Are foreign construction companies required to form one or more joint venture(s) with domestic companies in order to provide services to the domestic market?
 No  Yes
6. Are there restrictions as regards the joint venture(s)/partnership(s)/association(s) that locally-established foreign construction firms can form with domestic firms?
 No  Yes
7. Does the state hold exclusive rights in the construction of:
Highways
Bridges
Airports
Ports
Power plants
Water and sewage systems
Other: ______/  No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
If yes, are there mechanisms (e.g. concessions) that allow for participation by:
Domestically-owned private companies /  No  Yes
If yes, please specify the type of mechanism that exists:______
Foreign (locally established) companies /  No  Yes
If yes, please specify the type of mechanism that exists:______
Foreign (non locally established) companies /  No  Yes
If yes, please specify the type of mechanism that exists:______
8. Are there limitations on the contract amount accessible to locally established foreign firms?
 No  Yes
If yes, please specify what the maximum contract amount is: ______
9. Are there restrictions on the use of the international/foreign name of a firm?
 No  Yes
10. Are there restrictions on the temporary intra-firm transfer of:
 Construction machinery
 Technical and training manuals
 Engineering software and design tools
 Other: ______

Movement of natural persons

11. Are there residency or nationality requirements for any of the following categories of personnel employed by locally established foreign construction companies?
Minimum number/percentage of nationals/residents (please specify)
Members of the board of directors
Executives
Managers
Unskilled workers
Other staff (specify):
12. Identify the categories of intra-corporate transferees whose entry and stay is subject to labor market tests
 Members of the board of directors
 Executives
 Managers
 Unskilled workers
 Other staff (specify):

B. Ownership

13. Is private ownership in the provision of construction services allowed?
Existing firms / Maximum private equity permitted (%) /
New firms / Maximum private equity permitted (%)
 No  Yes /  No  Yes
14. Is foreign ownership in the provision of construction services allowed?
Existing firms / Maximum foreign equity permitted (%) /
New firms / Maximum foreign equity permitted (%)
 No  Yes /  No  Yes

C. Government Procurement[1]

15. In-House Construction
Does the government have an in-house construction department?
 No  Yes
If yes, under what circumstances is the procuring entity required to resort to the in-house procurement department?
 Value of services to be procured is low (please specify: ______)
 In-house construction department is lowest cost supplier
 Strategic projects (please specify:______)
 Procurement is confidential or sensitive (please specify: ______)
 Urgency (please specify: ______)
 Other: ______
16. Foreign Participation in the Procurement Process
Can foreign companies participate in the procurement of construction services by:
Locally established foreign companies / Foreign companies with no commercial presence
Central entities /  No  Yes /  No  Yes
Sub-central entities /  No  Yes /  No  Yes
Local entities /  No  Yes /  No  Yes
State-owned enterprises /  No  Yes /  No  Yes
If yes, specify the thresholds, if any, that apply for:

Locally established foreign companies

/

Foreign companies with no commercial presence

Central entities
Sub-central entities
Local entities
State-owned enterprises
In those cases where foreign companies are allowed to participate in the procurement process, does the law restrict their role to acting as sub-contractors (as opposed to prime contractors)?
 No  Yes
17. How are invitations or solicitations to bid for a construction project made public?
 Published in an official gazette
 Published in a newspaper/magazine/journal
 Published in an official website
 Other: ______
17a. Are there requirements to make the invitation or solicitation to bid available in more than one language?
 No  Yes
If yes, please specify in which language(s): ______
18. Which of the following non-price criteria must procuring entities take into account during the suppliers’ evaluation processes?
Attribute / Taken into account during evaluation process?
Use of local materials /  No  Yes
Licensing of technology to local firms /  No  Yes
Investment in home country /  No  Yes
Employment in home country /  No  Yes
Other (please specify):
19. In evaluating procurement contracts, do procuring entities at the central, sub-central or local levels grant price advantages to:
Domestically owned companies / Locally established foreign companies
Central entities /  No  Yes
If yes, specify the amount of the price advantage: ______/  No  Yes
If yes, specify the amount of the price advantage: ______
Sub-central entities /  No  Yes
If yes, specify the amount of the price advantage: ______/  No  Yes
If yes, specify the amount of the price advantage: ______
Local entities /  No  Yes
If yes, specify the amount of the price advantage: ______/  No  Yes
If yes, specify the amount of the price advantage: ______
State-owned enterprises /  No  Yes
If yes, specify the amount of the price advantage: ______/  No  Yes
If yes, specify the amount of the price advantage: ______
20. Are entities required to publish, or provide to unsuccessful bidders, pertinent reasons for the rejection of their bids?
 No  Yes
21. Does the procurement law provide for a system of review of bidder complaints?
 No  Yes

D. Market Structure

22. Share of construction in total GDP (1990-2000): ______

23. Total number of construction firms in the market: ______

24. Please list the characteristics of the 10 largest construction firms in terms of revenue (most recent year available):

Name of firm / Year of establish-ment / Domestically owned equity (%) / Foreign equity (%) / Domestic market share / Ratio of foreign contracts to total contracts / Three principal foreign markets (if applicable)
25. Please provide the following information:
Number of fully state-owned construction firms: _____
Number of fully domestically owned[2] private construction firms: _____
Number of foreign minority-owned[3] construction firms: _____
Number of foreign majority-owned[4] construction firms: _____

E. Regulation

26. Characteristics of regulator
Name of regulator:
Year of establishment:
% of Regulator’s finances from:
License and other fees: _____
Budgetary allocation: _____
Other (specify): _____
Is the regulator independent of the relevant Ministry(ies)?
 No  Yes
Number of professional staff employed by Regulator: ______
27. Licensing
a)If the number of providers is not restricted by policy, specify the types of licenses that providers must obtain in order to operate in the domestic market; the body(ies) responsible for issuing the licenses; whether the license is required by domestic or foreign companies (or both); whether foreign construction companies are subject to different or additional licensing conditions from domestic companies; and whether the validity of the license is restricted temporally or geographically. Use the list below to fill in the column on “main conditions.”

1. Payment of license fee (indicate amount)
2. Minimum capital (indicate amount)
3. Tax declaration
4. Bank references
5. Deposit of a cash bond (indicate amount)
6. Experience in the field of construction (specify)
7. Information on projects performed during the past x years (specify)
8. Certificates assessing conformity with quality assurance systems
9. Enrolment in a professional or trade register
10. Proof of the professional qualifications of the staff member(s) primarily responsible for providing the services
11. Other (specify)

Type of license / Issuing body / Required by? / Main conditions / Specify any additional conditions for foreign suppliers / Validity restricted temporally? / Validity restricted geo-graphically
 Domestic
 Foreign /  No Yes /  No Yes
 Domestic
 Foreign /  No Yes /  No Yes
 Domestic
 Foreign /  No Yes /  No Yes
b)If the number of providers is limited by policy, through what mechanism are licenses
allocated?
 First come, first served basis
 Competitive bidding
 Discretionary decision by the issuing body
 Other:______
28. Prior to and during the performance of a construction contract, construction companies must fulfill certain regulatory requirements specific to that particular contract. The table below lists 3 common categories of regulations faced by construction companies. For each one of them, specify the level (central, sub-central, local) at which they are administered, and indicate whether foreign construction companies are subject to different requirements from domestic companies. For those regulations that are administered and applied at the sub-central or local levels, answer the questions by referring to a state/province/municipality of your choice. Please note that this question focuses on regulations that must be fulfilled in the context of a particular construction project, not regulations that apply horizontally to all construction service providers.
Type of regulation / Level of government (check as many as apply) / Different requirements for domestic and foreign companies? (If yes, please specify);
Building regulations and technical requirements /  Central
 Sub-central
 Local /  No  Yes
Building permits and inspection /  Central
 Sub-central
 Local /  No  Yes
Registration of proprietors, contractors and professionals /  Central
 Sub-central
 Local /  No  Yes
29. Are there restrictions on the purchase of land by nationals and/or foreigners?
 No  Yes
If yes, provide a brief description of the restrictions currently in place, the reasons provided by the government, and explain whether the restriction applies to foreigners only?
Brief description of the restriction / Reason provided by government / Applies to foreigners only?
 No  Yes
 No  Yes
 No  Yes
30. Are fees and remunerations resulting from the provision of services in one of the following areas currently regulated?
 General construction work for buildings
 General construction work for civil engineering
 Installation and assembly work
 Building completion and finishing work
 Pre-erection work at construction sites and other work
31. Are professional bodies or industry associations involved in specifying prices or establishing pricing guidelines?
 No  Yes
32. Are foreign construction companies required to train local staff?
 No  Yes
33. Which of the following government programs are available to construction companies?
Program / Available to foreign construction companies established locally?
 Direct payments
 Tax breaks
 Preferential access to credit
 Below-market interest rates
 Export financing
 Government-provided risk insurance (including inflation protection programs)
 Underwriting of feasibility studies
 Reimbursement of bid preparation costs
 Other: ______/  No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes
34. Public consultation and transparency
a)Which of the following are consulted in advance of regulatory decisions?
 Service providers
 Consumer groups
 User industries
 Other: ______
b)How are laws and regulatory decisions made public?
 Published on the regulator’s website
 Published in an official gazette
 Other: ______

F. Regional Integration Agreements in Construction Services

35. Please indicate if there are any preferential arrangements affecting construction services, and list the preferential measures.[5] Note that agreements affecting government procurement of construction services should be listed under section C. above.

Name of agreement / Partner country(ies) in agreement / Date of entry into force / Preferential measures

G. Past and Future Changes in Policy

36. Please indicate major changes in market access policies, ownership rules, and regulation since 1985 (e.g., liberalization of the foreign investment regime, introduction of regulatory reform and administrative simplification programs, reforms of procurement laws and regulations, etc.). If possible, attach copies of laws and regulations.

Area of policy change (market access, ownership or regulation) / Year of change / Brief description

37. Please indicate announced or anticipated changes in the same areas.

Area of policy change (market access, ownership, government procurement, or regulation) / Anticipated date / Description of change

H. Employment

38. Main indicators (for the years 1990-2000).
How many people are employed in the construction sector? ______
What share of the total labor force is directly employed in this sector? ______
What share of workers is employed by foreign-owned operators providing construction services? ______
What share of the construction labor force is employed directly by the government (including state-owned construction firms)? ______
What is the annual average wage in this sector?______
If available, please attach time series data on these employment indicators separately. If time series data from 1990 to 2000 are not available, please collect indicators for the years 1990, 1995 and 2000.

H. Trade and Investment

39. Investment indicators (for the years 1990-2000)
What is the total value of the foreign contracts awarded to locally established firms? ______
What is the total value of domestic contracts awarded to foreign firms? ______
What is the total amount of investment in construction services? ______
What is the total amount of foreign direct investment in this sector? ______
What is the total stock of foreign direct investment in this sector? ______
If time series data from 1990 to 2000 are not available, please collect indicators for the years 1990, 1995 and 2000.

I. Prices and Access to Construction Services

40. Please provide information on the value per square meter of new buildings completed[6] for the latest year available. For a comprehensive assessment of construction sector performance, it would be extremely useful to have historical data on this indicator. If time series data are available, please attach them separately for the period 1990-2000 (preferably electronically).
All buildings
Value[7] per square meter

Residential buildings[8]

Value per square meter
Industrial buildings[9]
Value per square meter

Commercial buildings[10]

Value per square meter

Educational buildings[11]

Value per square meter

Health buildings[12]

Value per square meter
Other buildings[13]
Value per square meter
41. Please list all major civil engineering projects (roads, bridges, airports, power plants) in excess of USD 7 million completed in your country during the past five years.
Brief description of the project / Value / Date of completion / Principal contractor / Is the contractor a foreign majority owned firm?
 No  Yes
 No  Yes
 No  Yes
 No  Yes
 No  Yes

Please, provide the name and contact information of the respondent of this questionnaire, or of a specialist from whom we can obtain clarifications if necessary.

Name______

Telephone______

Fax______

E-mail address:______

Annex

Additional Questions on Government Procurement

Procurement Process

A1. Are there requirements for publication of annual notices of planned procurement?
 No  Yes
If yes, specify how these notices are made public.
 Published in an official gazette
 Published in a newspaper/magazine/journal
 Published in an official website
 Other: ______
A2. Are the criteria for award of contracts made available in advance to potential suppliers?
 No  Yes
A3. Are there any charges for obtaining the full set of tender documents?
 No  Yes
If yes, specify how these charges are set:
A4. Do national procurement laws and regulations establish a minimum time frame for the preparation and submission of bids?
 No  Yes
If yes, please specify what the minimum time frame is: ______
A5. In cases where procuring entities maintain permanent lists of qualified suppliers, are these entities required by law to publicize the existence of such lists?
 No  Yes
A6. Are permanent lists of qualified suppliers open for participation by:
Domestic companies / Foreign (locally established) companies / Foreign (non locally established) companies
 No  Yes /  No  Yes /  No  Yes
A7. Are potential suppliers required to obtain any of the licenses specified under question 27 in order to participate in the procurement process?
 No  Yes
If yes, specify which licenses:
A8. Do national procurement laws and regulations express preference for performance characteristics and international standards in defining how procuring agencies must draft procurement requirements or technical specifications?
 No  Yes
A9. Are there legal requirements for successful foreign bidders to sub-contract certain elements of a construction project to domestic companies?
 No  Yes
A10. As a rule, is the successful bidder required to make a deposit or guarantee prior to commencing the construction work?
 No  Yes
If yes, specify the amount of the deposit or guarantee:
A11.Do procurement laws and regulations identify open tendering (as opposed to sole-source procurement or restricted tendering) as the “normal” or “preferred” procurement method?
 No  Yes
If yes, which factors warrant the use of sole-source or restricted tendering?
 No satisfactory offers have been obtained in the open or selective procedure
 Tenders submitted have been collusive
 Service is available only from one source or from a limited number of bidders
 Procuring entity is unable to provide complete technical specifications
 Value of services to be procured is low
 Unforeseen circumstances making additional construction services necessary which cannot be separated from the initial order
 Urgency
 Procurement is confidential or sensitive (please specify: ______)
 Open tendering is not in the public interest (please specify: ______)
 Other: ______
A12. Are there requirements to maintain minutes or a record of the procurement proceedings?
 No  Yes
If yes, are these records available for consultation by unsuccessful bidders?
 No  Yes
A13. Is a monitoring and oversight body of government procurement currently in place?
 No  Yes
If yes, specify the following:
Name of body:
Year of establishment:
Is the body itself involved in procurement decision-making (e.g. by conducting procurement proceedings or by having ex officio seats on the tender committees of individual ministries or other procuring entities)? /  No  Yes
Number of professional staff:

1