Construction process in Armenia today: Part 1 – where are we now

In this topic I would like to discuss current situation in industry of construction in Armenia: I am going to mention problems which construction companies meet during their working process.

 

        Construction is one of the main parts of economy of Republic of Armenia. Effectiveness of the construction process promotes the development of national industry as well as has a strong impact on society. For example reconstruction of main roads helped increasing the speed and effectiveness of the transportation of commodity by car trucks. Another example is construction of gas pipeline from Iran which decreased energetic dependence of Armenia from Russia. Beside that construction process creates additional long term jobs.

All the facts mentioned above of course are very positive but unfortunately parallel to positive there are a lot of negative processes in construction sphere.

The construction sphere in Armenia today is a multitude of small companies who have to follow unwritten rules of the corrupted system. The example of that is process of getting construction orders. Although according to Armenian law construction orders have to be get via tender process, in most of the cases this process are overcoming. So if contractor want to get an order he doesn’t have to compete for that but have to use money or connections. So corruption and profitable connections made much more effect than fair competition. As a result construction market doesn’t develop in good direction.

In my opinion the problem exists since soviet time. Traditionally in soviet time in order to get something person had to knock the doors of the “big” chiefs, gave bribes or something like that. The same thing was also in construction sphere: for getting orders persons had to have “good friends” in municipality as 95% of construction orders came from government.

Although nowadays the role of government in modern construction system of Armenia is not high and remains stable 7% for last 5 years the local officials still have a power in giving lands for new buildings so still the “soviet” system of bribes exists and prevents development of fair competition. 

 to be continued…..