This topic tracks the procedures, time and cost to build a warehouseincluding 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 indicators measure 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 May 2018. 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

Economies have implemented several good practices in dealing with construction-related permits over the years. Some of the most commonly observed examples include setting clear and coherent rules and improving transparency and accessibility of such rules and regulations. Many economies also tend to ensure that building quality control and safety mechanisms are in place, differentiating construction projects by risk and category. Another common good practice is the use of one-stop shops to improve coordination and increase the efficiency of obtaining permits related to construction.

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 159 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 merely providing rules is not enough. 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 a building permit application can be submitted and providing applicants with information on the required fees and how they are calculated are the first steps toward achieving clarity, consistency and transparency.

Economies must also ensure that, when rules are adopted, they are enforced in practice. In Nepal, for example, a national building code was ratified in 1994 but never implemented or abided by in practice. As a result, construction proceeded with little concern for safety in a country vulnerable to 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 Colombia, a national law was enacted in 2016 which introduced stricter construction standards and established measures to increase oversight of building safety and quality. Implementation rules, however, vary substantially among cities. For example, according to the 2017 subnational Doing Business study on Colombia, it takes 13 procedures and 132 days on average for an entrepreneur in Bogotá to complete all construction permitting formalities but 18 procedures and 315 days on average for an entrepreneur in Cali (1).

Making building regulations available is not enough if the requirements for obtaining a building permit are not clearly laid out in regulation (or on a website or in a pamphlet). Applicants need to have a list of the documents and preapprovals required before applying for a permit 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 regulation, an effective inspection system is also critical in protecting public safety. Without one, there is no mechanism to ensure that buildings comply with proper safety standards, increasing the chances of structural defects. Indeed, 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 changeparticularly in 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 effective 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 are 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 open access to relevant regulations can act as a powerful tool to strengthen accountability in both the private and public sectors while the corruption and abusive practices prevalent in opaque business environments. According to a case-study published in Doing Business 2013, 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 much easier, to disseminate information quickly and on a wide scale.

To measure transparency, Doing Business looks at whether building regulations are available online or from the relevant permit-issuing agency free of charge and whether they are distributed through an official gazette or must be purchased. Today, 185 economies have made all or parts of their building regulations available to the public through various channels172 have published them onlinemaking it easier to understand the different requirements of the construction permitting process and to comply with applicable regulations.

How easy it is to access regulations varies from one economy to another. 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 centralize all the documents relevant for construction permits in a single website, making targeted and comprehensive information available to users. The United Kingdom, for example, 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. To convey changes in regulation and inform professionals of new standards and laws, it is also important that published documents be updated in a systematic and timely fashion.

ENSURING THAT BUILDING QUALITY CONTROL AND SAFETY MECHANISMS ARE IN PLACE

Quality control is a crucial component of the construction permitting system. The building quality control index measures both quality control and safety mechanisms by evaluating quality control before, during and after construction. It also assesses liability and insurance regimes and 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.

Having technical experts review the proposed plans before construction begins can reduce the risk of structural failures later. Regular inspections during construction to uncover potential defectswhich can be remedied easily at an early stagefurther mitigate this risk. 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 period. Moreover, the parties involved in the building design, supervision and construction should be required to obtain insurance to cover the costs of any latent defects. To date, more than 131 economies have introduced provisions to protect building owners against latent defects, but only 29 of them mandate that the parties involved in the building construction obtain insurance to cover such costs.

Furthermore, to avoid the delayed discovery of structural defects and ensure compliance with applicable building 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 subject to the same social, cultural, economic or environmental risks. The construction of a hospital or skyscraper is not comparable to that of a two-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 the building’s use, location and size. Today, several economies measured by Doing Business have a risk-differentiated approach and 18 have implemented risk-based inspections.

Simple, low-risk buildings require less documentation than more complex structures and can be approved faster, saving time for both entrepreneurs and authorities by allowing them to channel their efforts and resources more efficiently. Rwanda adopted a risk-based inspections system in May 2017 that provides specific guidance on inspections by building type in relation to anticipated risks and the complexity of the construction. This system 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, and greater involvement of the private sector should be encouraged. 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 constructionand, in most cases, would require additional inspections to comply with safety regulations. The use of risk assessment has improved the inspection system, eliminating eight procedures and 49 days from the construction permitting process as measured by Doing Business since 2008 (3).

USING ONE-STOP SHOPS TO IMPROVE COORDINATION AND INCREASE EFFICIENCY

Building approvals tend to require technical oversight by multiple agencies. An effective way of simplifying this process is by establishing one-stop shops. Today 26 economies around the world have a one-stop shop for construction permits. 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, improved intra-agency coordination has increased the efficiency of its one-stop shop, reducing the time to complete construction permitting procedures by 52 days.

One-stop shops improve processing times and efficiency, allowing agencies to process higher numbers of permit applications and increase client satisfaction. In 2006, Côte d’Ivoire was among the 10 economies with the most complex construction requirements in the world. At that time, regulations required 24 separate procedures and 623 days on average to complete the construction permitting process. In 2017, Côte d’Ivoire overhauled its construction permitting system by establishing a one-stop shop for building permits, simplifying procedures and reducing compliance costs for firms. As a result, the number of required procedures in Côte d’Ivoire was reduced by four and the time to process applications was cut to 162 days.

More recently, some economies have introduced web-based one-stop shops, allowing for an even faster, simpler and more convenient service for permit applicants. Singapore, for example, introduced the CORENET (Construction and Real Estate Network) e-Submission System in 2013. The system has streamlined the process of requesting various approvals from different authorities. Obtaining approvals for building and fire safety plans, 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. 2016. Doing Business in Colombia 2017. Washington, DC: World Bank Group.
2. World Bank 2012. How transparent is business regulation around the world?
3. . Under the Doing Business methodology, if a private inspection firm is hired, only one 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.