SELF-REGULATION IN CONSTRUCTION SEKTOR FIRST RESULTS NEAR PERSPECTIVES

SELF-REGULATION IN CONSTRUCTION SEKTOR FIRST RESULTS NEAR PERSPECTIVES Moscow, October 2009.

CHANGES IN THE SYSTEM OF ACCESS TO CONSTRUCTION MARKET ________________________ Licenses were issued by public institutions , such as Federal Agency of Construction and housing and communal services (Gosstroy, Rosstroy) – Ministry of regional development LICENSING q. Engineering research q. Projecting q. Construction e nc Si SELF-REGULATION 1 n. Ja 09 20 Certificates of access are issued by nonstate self-regulatory organizations q. Engineering research q. Projecting q. Construction Moscow, October 2009

SELF-REGULATION IN THE SECTOR OF CONSTRUCTION, PROJECTING, ENGINEERING RESEARCH _______________________ Organisations unite to form a noncommercial partnership Apply for registration as a selfregulatory organisation Issue the access certificates (instead of a license) Work out the regulations and standards, obligatory for their members Found the compensation fund Obtain the status of self-regulatory organisation Work out the regulations and standards, obligatory for their members Moscow, October 2009 Control the activity of their members (instead of a licensing control)

CHANGES IN THE REGULATION OF MARKET Since 1 January 2009 ________________________ Gosstroy Rosstroy Minregion üNormative regulation üLicensing control Ministry of regional development Normative regulation Self-Regulatory Organization (SRO) ØIssue of access certificates ØControl of the members of SRO ØStandards and regulations of SRO Federal service of ecological, technological and atomic supervision (ROSTECHNADZOR) ØRegistration of SRO ØSupervision of SRO Moscow, October 2009

SCHEME OF ORGANISATION OF SELF-REGULATION IN THE CONSTRUCTION SECTOR ___________________________ REGIONAL SRO §Access to market and control of members activity §Forming of a system of liability for breakage §Training and certification of personnel NATIONAL ASSOCIATION OF SRO §Creation of unified standards, requirements and regulations §Protection of rights and interests of regional construction SRO §Presentation of interests of construction community at legislature and executive authority of Russian Federation § Obligatory membership for regional SRO Moscow, October 2009 REGULATORY AUTHORITY §Conduct of united SRO register §Approval of united standards, requirements and regulations §Control of SRO activity

REGIONAL SRO IN CONSTRUCTION IN A FORM OF NON-COMMERCIAL PARTNERSHIP ____________________________________________ AUTHORITY: issue of acces certificates to works, which affect the safety of objects of capital construction 1. 2. 3. 4. 5. 6. 7. REQUIREMENTS: Unites more than 100 members Compensation fund is no lees than 1000000 r. per member or 300000 if SRO has the regulations of liability insurance Presence of accepted documents: - requirements of issue of access certificates - regulations of control in self-regulation - document with a system of responsibility arrangements, including the types of punishment Have the right to set up: -self-regulation standards -self-regulations Presence of completed compensation fund Presence of internet web-site Presence of member register Moscow, October 2009

INFORMATION CONCERNING THE TRANSITION TO SELFREGULATION ________________________ On 21 October 2009 The following SRO of 83 subjects of Russian Federation have registered in Rostechnadzor: 49 – in construction field 33 – in the field of projection 4 – in the field of engineering research Regional coverage - 69 subjects of Russian Federation (including branch offices and representative offices of SRO) Moscow, October 2009

KEY SUCCESS FACTORS FOR SRO ________________________ № KEY SUCCESS FACTOR STRATEGY Key index of carrying out 1 Conservation and maintenance Statement of clear and understandable of SRO reputation for members of SRO mission of organization, compliance with its goals and objectives Positive response among media, business community and consumers 2 Sufficient financing Receiving of grants, participation Increase of financial funds in international sponsoring receiving programs 3 Collective brand recognition Increase of costs for advertising campaigns and PR, informational and educational campaigns 4 Leadership qualities of SRO top Getting the competent -management involved in the work 5 Amount of SRO members Increase of significance and recognition of collective brand Active lobbying of interests of business community and SRO members Decrease of membership fee and Quantative increase of amount increase of value, offered by SRO of SRO members to its members

Non-commercial partnership “Self-regulatory organization “INTERREGIONAL UNION OF BUILDERS” (NP “SRO “IUB”) ________________________ NP “SRO “IUB” is included in state register of self-regulatory organizations by decision of Rostechnadzor on 18 March 2009. Interregional Union of Builders is the first-rate self-regulatory organisation of constructors in Russia. Aggregate income of IUB members exceeds 500 milliard r. Aggregate personnel quantity exceeds 150 000 persons. At 21 October 2009 IUB has 284 members – construction companies from Russia, Europe, CIS, and 134 candidate companies. Compensatory fund of IUB exceeds 85 million r. Moscow, October 2009

Head management of NP “Self-regulatory organization “Interregional Union of Builders” ________________________ President of IUB Efim Basin , Chairman of the Committee of Russian Chamber of Commerce and Industry for construction, housing and communal services. Councilor for housing construction under the Chairman of Council of the Federation, member of Ministry of Regional development board, chief director of LLC “Corporation Engtransstroy”. On 16 July 2009 was elected as a Chairman of organizing committee of preparation for all-Russian congress of construction SRO. The Congress will take place on 10 November 2009. Moscow, October 2009

Structure of membership base of NP SRO "IUB" 39% Small-scale enterprises Medium-sized enterprises Large-scale enterprises Largest-scale enterprises 44% 5% 12% Construction turnover less than 100 million r. – small-scale enterprises 100 million r. – 1 milliard r. – medium-sized enterprises 1 milliard r. – 5 milliard r. – large-scale enterprises Over 5 milliard r. – largest-scale enterprises. Moscow, October 2009

Principle of specialization of contract construction organization as provided by NP SRO “IUB” statistics ________________________ Average amount of construction access per 1 organization – 9 types of works and 117 types of production and service 11% 17% 24% Moscow, October 2009 less than 5 types of works 48% 6 -10 types of works 11 -20 types of works over 20 types of works

United database of members of self-regulatory organizations in construction field WWW. SRO-S. RU

Self-regulatory organizations register ________________________

MOS. SRO-S. RU Official web-site NP “SRO “IUB”

NP “SELF-REGULATORY ORGANISATION “INTERREGIONAL UNION OF BUILDERS” ________________________ Materials provided by NP “SRO “IUB” 8 bld. 1, B. Sadovaya str. , Moscow, 123001 MOS. SRO-S. RU www. sro-s. ru mos@sro-s. ru Phone/Fax: (495) 650 -17 -18 (495) 650 -17 -19 Moscow, October 2009