This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information

Good Practices

Setting rules and ensuring that they are clear and coherent
Improving transparency and facilitating access to regulations
Ensuring that building quality control and safety mechanisms are in place
Differentiating projects by risk
Using one-stop shops to improve coordination and increase efficiency

SETTING RULES AND ENSURING THAT THEY ARE CLEAR AND COHERENT

Efficient building regulation starts with establishing a coherent body of rules that defines what is required from builders. Today, more than 120 economies around the world have a comprehensive set of building rules in the form of building codes and laws that regulate all aspects of the construction process. But simply providing rules is not enough as unclear regulations may not only cause confusion on how to proceed but also increase opportunities for corruption, disputes and unnecessary delays. Laying out a clear list of documents and preapprovals required before applying for a building permit and providing applicants with the required fees and how they are calculated are first steps towards achieving clarity, consistency and transparency.

Economies must also ensure that, when rules are adopted, they are enforced in practice. In Nepal for instance, a national building code was adopted in 1994 but never implemented nor abided by in practice. As a result, buildings were being erected without much concern for safety, in a country with a history of high magnitude earthquakes. Two decades later, Nepal has implemented a system that automatically checks for compliance with the National Building Code. Implementation must also be uniform throughout the country as local authorities may interpret the rules differently. In the Philippines, a national building code exists since 1977 but rules vary substantially among cities. For example, according to a 2011 subnational Doing Business report, it takes 25 procedures and 85 days for an entrepreneur in Taguig to complete all construction permitting formalities but 36 procedures and 148 days for one in Pasig (1).

But simply making building regulations available is not enough if the requirements for obtaining a building permit are not clearly laid out in the regulations (or on a website or in a pamphlet). Applicants need to have a list of the documents and preapprovals required before applying, so as to avoid situations where the permit-issuing authority can arbitrarily impose additional requirements. And applicants need to be aware of the required fees and how they are calculated. 
Beyond good regulations, an effective inspection system is also critical in protecting public safety. Without an inspection system in place, there is no mechanism to ensure that buildings comply with proper safety standards, increasing the chances of structural defects. And as a first step, having technical experts review the proposed plans before construction even begins can reduce the risk of structural failures later on.

Besides being clear and fully enforced, building rules also need to be adaptable to keep up with economic and technological change—particularly in the light of growing environmental concerns. Indeed, overly precise provisions make it challenging to keep regulations up to date. For example, some building codes specify which materials can be used in construction projects but, although this ensures building safety, it would only be efficient if codes are regularly updated to include new innovations in the materials field. This is not the case in the transition economies of Eastern Europe and Central Asia, where such rules are most common. On the other hand, New Zealand chose an effective approach: performance oriented building codes set technical standards and targets but do not regulate how to achieve them, allowing for innovation and flexibility in building techniques.

The professionals who conduct inspections ensure safety standards for buildings, so it is important that they be certified and have the necessary technical qualifications. Similarly, the individuals who review and approve building plans need to have a technical background in architecture or engineering to understand whether the plans conform to the necessary safety standards.

IMPROVING TRANSPARENCY AND FACILITATING ACCESS TO REGULATIONS

Ensuring access to applicable regulations is a powerful tool to strengthen accountability in both the private and public sectors while reducing opportunities for corruption and abusive practices that prevail in opaque business environments. Moreover, according to a case-study published in the Doing Business 2013 report, economies with a greater access to regulatory information tend to have more efficient regulatory processes and lower regulatory compliance costs (2). In today’s digital age, it is even more important and also much easier to disseminate information quickly and on a wide scale.

To measure the transparency of building regulations, Doing Business looks at whether the regulations are available online, or at the relevant permit-issuing agency free of charge or are distributed through an official gazette or must be purchased. Today, 179 economies have made all or parts of their building regulations available to the public through various channels, and 164 have published them online, making it increasingly easier to understand the different requirements of the construction permitting process and to comply with the applicable regulations.

How easy it is to access regulations varies from one economy to another. For example, the documents made available can range from copies of building laws to simplified checklists of documents and approvals to be obtained before applying for a building permit. Some economies also centralize all the documents relevant for construction permits in a single website, making targeted and comprehensive information available to users. For example, the United Kingdom provides an online portal where all legislation as well as good practices can be easily accessed, in addition to guidelines on how to get approval for a building project. It is also important that the published documents be updated on a systematic and timely fashion to reflect changes in regulations and inform professionals of new standards and laws.

ENSURING THAT BUILDING QUALITY CONTROL AND SAFETY MECHANISMS ARE IN PLACE

Quality is a crucial component of the construction permitting system. The building quality control index assesses both quality control and safety mechanisms by evaluating quality control before, during and after construction, liability and insurance regimes as well as professional certifications. Indeed, beyond a sound regulatory framework, an effective inspection and supervision system is also critical in protecting public safety. Without an inspection system in place, there is no mechanism to ensure that buildings comply with proper safety standards, thereby increasing the chances of structural defects.

As a first step, having technical experts review the proposed plans before construction can reduce the risk of structural failures later. This is strengthened by regular inspections during construction to unveil defects that can be remedied easily at that stage. However, some defects are only discovered long after the building has been occupied. Remedying defects at that stage can be both costly and time-consuming. Therefore, it is important that the responsible party be held liable not only by contract but also by law for an adequate time period. Moreover, the parties involved in the building design, supervision and construction should be required to obtain an insurance to cover the costs of any latent defects. To date, more than 121 countries have introduced provisions to protect building owners against latent defects but only 45 of them mandate the parties involved in the building construction to obtain an insurance to cover such costs.

Furthermore, to avoid any delayed discovery of structural defects and ensure compliance with applicable regulations, the individuals who review and approve building plans need to have a technical background in architecture or engineering to verify whether the plans conform to the necessary safety standards and other prescribed regulations. Similarly, professionals who conduct inspections during construction and at the completion of the building must be certified by competent authorities and have the necessary technical qualifications to supervise construction works.

DIFFERENTIATING PROJECTS BY RISK

Not all building projects are associated with the same social, cultural, economic or environmental risks. The construction of a hospital or skyscraper cannot be compared with the construction of a 2-story commercial warehouse. Therefore, it is important to implement rigorous yet differentiated construction permitting processes to treat buildings according to their risk level and location. Worldwide, the main criteria used to classify a construction project by its potential risk are based on the building’s use, location and size. Today, several economies measured by Doing Business have a risk-differentiated approach and 15 have implemented risk-based inspections.

Simple or low-risk buildings require less documentation than more complex structures and can be approved faster. This saves time for both entrepreneurs and authorities and allows them to channel their efforts and resources more efficiently. Ukraine provides a good example. In mid-2012, the government adopted a risk-based approval system, classifying construction projects into 5 categories based on their complexity, with categories 1–3 being simpler buildings. This has simplified the process and streamlined the procedures needed to obtain construction permits for less complex buildings.

Inspections are another area where risk differentiation should be applied, with more involvement of the private sector. For example, in the United Kingdom, the Department for Communities and Local Government partnered with the private sector to develop a risk assessment tool for building inspectors. High-risk projects such as hotels and movie theaters would have at least as many inspections as low-risk projects at key stages of construction—and, in most cases, would require additional inspections to comply with safety regulations. The use of risk assessment has improved the inspection system, eliminating 8 procedures and 49 days from the construction permitting process since 2008, as measured by Doing Business (3).

USING ONE-STOP SHOPS TO IMPROVE COORDINATION AND INCREASE EFFICIENCY

Building approvals tend to require technical oversight by multiple agencies, and one way to simplify this process is by establishing one-stop shops. Today, around 24 economies around the world have a one-stop shop for construction permitting. However, the success of one-stop shops hinges upon efficient coordination among all agencies involved and often requires overarching legislation that ensures information sharing and establishes oversight mechanisms. In Tanzania for example, better coordination among all agencies has increased the efficiency of its one-stop shop, thus decreasing the time to complete construction permits’ procedures by 52 days.

One-stop shops also allow for more efficient processes and rapid execution, enabling agencies to process greater volumes of permit applications and increase client satisfaction. In 2006, Burkina Faso was among the 10 economies with the most complex construction requirements in the world. Not surprisingly, a survey that year found that more than 23% of local companies identified licenses and permits generally as a major constraint to doing business in the economy (4). To help address this concern, Burkina Faso opened a one-stop shop for construction permits, the “Centre de Facilitation des Actes de Construire”, in May 2008. A new regulation merged 32 procedures into 15, reduced the time required from 226 days to 122 and cut the cost by 40%.

More recently, some economies introduced one-stop shops online, allowing for an even faster, simpler and more convenient service for permit applicants. For instance, Singapore introduced CORENET (Construction and Real Estate Network) e-Submission System in 2013 , which has streamlined the process for building professionals to request and obtain several approvals from different authorities. Services such as obtaining building and fire safety plans approval, as well as commencement permits, environmental and parking clearances and workplace safety and health notifications can all be done through CORENET.

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1.World Bank 2010. Doing Business in the Philippines 2011. Washington, DC: World Bank Group 2010. 
2. World Bank 2012. How transparent is business regulation around the world? http://www.doingbusiness.org/en/reports/thematic-reports/how-transparent-is-business-regulation-around-the-world..
3. Under the Doing Business methodology, if a private inspection firm is hired, only 1 procedure is recorded for the firm. Subsequent inspections are not recorded. Private inspection firms tend to operate more efficiently than government agencies that conduct inspections because government agencies usually conduct other tasks as well. Furthermore, there is generally less opportunity for rent seeking with private firms.
4. World Bank Enterprise Surveys (http://www.enterprisesurveys.org/).