On October 23, the Institute for Economic Research and Policy Consulting (IER) presented the results of its study “Reconstruction at Risk: Do We Need Changes in Construction Policy?”
The event was held with the support of Transparency International Ukraine and brought together representatives of the government, parliament, business, and civil society organizations.
IER’s leading expert Oleksandra Betliy presented analytical findings on the readiness of Ukraine’s construction sector for large-scale post-war reconstruction and the reforms needed to increase its transparency and efficiency.
“Reconstruction is not only about physical construction – it’s about development,” said Oleksandra Betliy.
According to her, Ukraine needs around $500 billion for reconstruction, but the key question lies not only in financing, but in the sector’s ability to effectively implement these projects. The construction sector is a complex ecosystem where any change affects the interests of dozens of players. In 2024, 239,000 people were officially employed in the industry, almost half of whom were skilled workers.
“To rebuild, we need a sufficiently skilled workforce. And this is closely connected with education – we need to develop training programs for veterans,” said Betliy. “The professions of architect and engineer are undervalued, while their salaries do not correspond to the enormous administrative and criminal responsibility they bear. Moreover, professional liability insurance in this field remains underdeveloped.”
The analysis of legislation and market research revealed key sectoral problems:
- Shortage of skilled workers as the biggest market challenge.
- Numerous stakeholders with conflicting interests.
- Abolishing construction licensing increased uncertainty.
- Issues with certification of architects and engineers.
- Urban planning permits are often perceived as a “corruption barrier,” though they are critical for developers.
- Weaknesses in expert evaluation: private expertise organizations sometimes perform reviews formally, ignoring major project errors.
- Low competition and high risks in public procurement: constant pressure and inspections by law enforcement and regulatory bodies, delayed payments, lack of advance funding, and issues with acceptance of completed works.
- The current state cost estimation methodology, especially in terms of labor costs, does not reflect market realities, creating room for abuse.
- Companies usually work under fixed-price contracts, preventing flexibility in response to price increases for materials and services.
- Technical supervision is sometimes merely formal.
- Complicated commissioning of completed facilities due to bureaucracy and the “human factor.”
Participation in public procurement can bring construction companies some advantages—such as “critical infrastructure” status and the ability to reserve employees—but the disadvantages outweigh them.
“The problem for the state is that very few construction companies want to participate in public procurement. That’s a huge issue,” Betliy explained. “Builders say: ‘For every public tender, there’s a criminal case,’ or ‘We haven’t even started construction, but the authorities are already demanding documents we haven’t received from the local administration.’ As a result, those working with the private sector don’t want to deal with public tenders. Without reform of law enforcement agencies, we will have neither construction nor a healthy investment climate.”
Can foreign companies enter such a market?
It’s relatively easy to set up a company, but different work standards create challenges. Excessive bureaucracy, complicated permitting procedures, and pressure from regulators are obstacles shared by both Ukrainian and foreign businesses.
“Our companies fear that foreign businesses will come to absorb large funding flows—having better access to them than we do. They’ll hire our workers, while our firms won’t be able to pay comparable wages. They’ll use the same equipment available on the market, increasing competition that our firms won’t withstand. Moreover, access to financing is more expensive for Ukrainian companies than for foreign ones,” Betliy added.
The following areas for change were proposed:
- Pricing
- Digitalization
- Public procurement
- Professional workforce
- European integration
- Accountability and transparency
- Local government capacity
Natalia Kozlovska, Deputy Minister for Communities and Territories Development, confirmed that the government is aware of most of these issues and is preparing a new construction pricing system.
“We’ve reached a compromise with trade unions and employers and increased the base wage for first-grade workers to over 20,000 UAH. In the new system, this amount will become the minimum mandatory standard,” Kozlovska explained.
Among other planned innovations are the creation of a unified classifier of construction materials and a price database synchronized with tax, customs, and statistical systems. Kozlovska also announced the development of a digital licensing system for construction companies to minimize corruption risks and called on international partners to support financing for electronic services in the construction sector.
Olena Shuliak, Head of the Parliamentary Committee on State Power, Local Self-Government, Regional Development, and Urban Planning, emphasized that effective reconstruction is impossible without modern spatial planning.
“Urban planning conditions and restrictions are the most corruption-prone document preventing systematic international developers from entering Ukraine and hindering domestic business operations,” said Shuliak.
She noted that Kyiv still operates under its 1997 master plan, which leads to chaotic construction and imbalance between housing and infrastructure. According to her, it is crucial to update Comprehensive Spatial Development Plans (CSDPs) for communities, since without them, all permits are issued manually.
“The Parliament had to pass a law postponing the mandatory preparation of spatial plans until January 1, 2028. I fear that by then, communities will again say: ‘We have no money, no time, wartime challenges.’ Therefore, we propose incentives for communities that develop CSDPs — including budget financing and support from international institutions,” she said.
Maksym Ivashchenko, Head of Construction Management at CDM Engineering Ukraine, stressed that Ukraine’s recovery requires not only money but new standards.
“All procedures and regulations used by technical supervision engineers should be consolidated in a single manual – a guide for clients, contractors, designers, and above all, technical supervisors,” Ivashchenko noted.
Oleksandr Chervak, Director General of the Confederation of Builders of Ukraine, confirmed the seriousness of the staffing issue.
“One of the biggest problems for business is the labor shortage. Unfortunately, the construction market has a shadow component, largely due to mobilization challenges and the complexity of reserving employees. Workers are not always ready to register officially because if they’re not reserved, they risk being drafted,” he said.
Ivan Lakhtionov, Deputy Executive Director of Transparency International Ukraine, emphasized that construction has become the leader in public procurement volume this year, whereas last year it was only in the top three.
“In 2025 alone, construction accounts for over 300 billion UAH in public procurement. Each participant has their own motivation: some want to deliver quality projects, some aim to build cheaply, some just want to make money, and some are looking to initiate criminal cases. There are even rumors of kickbacks reaching 30–45%. These problems must be addressed,” the expert said.
The participants agreed that Ukraine’s reconstruction must become a driver for modernizing construction policy. This requires updating pricing regulations, introducing digital tools in permitting procedures, reforming certification and training systems, and ensuring transparency and integrity in public procurement.
The discussion in English can be viewed below.
https://www.youtube.com/watch?v=U2JzbgluoJg
