Dealing with construction permits: Private sector participation in construction

Author: Doing Business
Publication: Doing Business 2018

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The world has witnessed an unparalleled expansion of cities in recent decades. The urban population of developing countries is projected to double by 2030, while the area covered by cities could triple.In tandem with this trend, the construction industry is forecast to grow by more than 70%, reaching $15 trillion by 2025. With the population of cities rising around the world, municipal authorities are struggling to keep up with increased demand for their services. In developing economies, in particular, building departments operating under tight budgets and resource constraints are finding it increasingly difficult to enforce building codes, ensure that quality standards are met and adhere to efficient service delivery processing times.

Main Findings

  • Involving private sector engineers or firms in construction regulation is a trend that has been gaining traction in economies around the world.
  • Some form of private sector participation in construction regulation is employed in 93 of the 190 economies covered by Doing Business.
  • Private sector participation in building regulatory processes has shown positive results in achieving regulatory goals. However, the delegation of authority from the public to the private sector has generated significant challenges.
  • Economies that employ some form of private sector involvement in construction regulation tend to have more efficient processes and better quality controls. Yet, they also exhibit higher costs and a propensity for conflicts of interest.
  • The policy choice to integrate private sector entities in construction regulation should be accompanied by appropriate safeguards that favor the public interest over private profits.