White Paper on the Results of Conference CONSTRUCTION AND INFRASTRUCTURE: KEY SECTORS FOR ECONOMIC GROWTH

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The We Build Ukraine think tank develops systemic solutions for the accelerated recovery of key sectors of Ukraine's economy. These sectors include construction and infrastructure, which are crucial for the sustainable development of the state, attracting investment, and creating a new quality of life and business environment.

This white paper is based on the results of the sectoral conference “Construction and Infrastructure: Key Sectors for Economic Growth,” which was held in Kyiv on April 24, 2025, by the We Build Ukraine think tank with the participation of a wide range of businesses, Ukrainian parliamentarians, representatives of Ukraine's donors and partners, and international financial institutions. This white paper contains general analytical conclusions on the transformation of these sectors in the context of post-war reconstruction. The paper aims to formulate a common vision, reform priorities, and practical mechanisms for interaction between the state, business, and international partners.

INTRODUCTION

The construction sector in Ukraine is entering a phase of strategic importance, both in terms of expected investment volumes and its impact on the country's economic model. The focus is not only on eliminating the consequences of destruction, but also on building systemic capacity to implement long-term, complex, and large-scale infrastructure projects in conditions of war and recovery.

According to analytical estimates, construction has the potential to grow from 3–4% to over 10% of GDP and become one of the main sources of multiplier effect: development of materials production, formation of new clusters, stimulation of employment and localization. At the same time, the sector needs a restart — both in terms of investment confidence and the efficiency of procedures, the capacity and readiness of personnel, the existence of clear and understandable rules for business and transparent government planning.

During the conference, speakers and participants confirmed that a window of opportunity is open for Ukraine: international partners are demonstrating their readiness to invest, production capacities have been partially preserved, and a vision has been formulated. At the same time, without a decisive change in institutional approaches and a transition to a unified strategy for action, this chance may be lost.

This document is based on a strategic study by the Boston Consulting Group, which was developed in close cooperation with the We Build Ukraine think tank and identifies construction as one of the key sectors for GDP growth in the post-war period. In addition, the paper summarizes the results of the conference “Construction and Infrastructure: Key Sectors for Economic Growth.” A survey of participants was conducted during the event on key points of corruption pressure and systemic barriers in the field of urban development. The data obtained confirm the business demand for deregulation, transparency in the issuance of permits through digital tools, and the updating of market surveillance tools.

The white paper formulates a consolidated vision for the sector's development and practical recommendations for the government, investors, and businesses, with a focus on reform, building trust, and creating domestic production and logistics capacities as a basis for extensive capital raising.

Thus, it is not just a matter of rebuilding what has been destroyed — the goal must be to develop a modern construction industry that meets EU requirements: sustainable, transparent, technically advanced, and open to competition. This requires alignment with European standards in planning, licensing, materials, and approaches to project management. At the same time, it is necessary to update the regulatory framework, simplify licensing procedures, harmonize market conditions for national and international players, and introduce predictable mechanisms for partnership between business and the state.

RECOVERY.

PARTNERSHIP FOR DEVELOPMENT

Institutional Weakness — a Key Barrier to Large-Scale Reconstruction

Despite the political will to implement infrastructure projects, the sector remains fragmented at both the national and local levels. State institutions are losing their ability to make quick and considered decisions due to frequent staff changes, weak interagency coordination, and a low level of institutional memory. In most cases, local communities do not have up-to-date spatial plans, which makes it impossible to develop transparent investment proposals.

This situation is complicated by the fact that key stakeholders in the process — businesses and international donors and partners — don't have enough confidence in the predictability of the regulatory environment. Their interaction with government institutions often breaks down into isolated initiatives instead of working within a consistent policy framework.

A survey conducted among conference participants confirmed systemic barriers: almost 50% of respondents consider the lack of clear permits and procedures to be the main problem, and over 20% consider the instability of the rules of the game to be the main problem.

Business and international partners constantly emphasize that without clear conditions and institutional stability, it is impossible to launch large-scale recovery programs.

Business is Ready to Invest — But Demands Predictability

The private sector experience presented at the conference demonstrates the readiness of businesses to invest in construction, logistics, local production of materials, and housing. At the same time, the lack of tools for interaction with the state was highlighted: the absence of standard contracts, the complexity of obtaining permits, and the lack of transparent state investment packages.

Some companies are already implementing projects or preparing to do so (particularly in the areas of wind energy, bioethanol, and logistics hubs), but all emphasize the importance of institutional support—predictable regulatory decisions, access to up-to-date planning, and simplified approval procedures. Analytical findings show that without an active role for the state as a catalyst — in the form of stable regulation, clear conditions, and practical mechanisms for promotion and interaction — investors will not be able to scale up projects to industrial level.

The Service State as a Condition for Scaling Up. Coordination and Accountability

The construction industry will not be able to realize its potential without changing the philosophy of public administration — from manual administration to a service model of interaction with customers, investors, and communities. This requires the introduction of digital spatial planning registers, transparent project evaluation and selection procedures, and the prioritization of investments based on unified criteria.

During the discussions, the need to create a single point of entry to ensure strategic planning, coordination of decisions, and effective allocation of resources in the field of reconstruction was repeatedly emphasized. Such a tool should not only work with central authorities but also provide practical support to communities, including documentation templates, model projects, methodological materials, and technical support at all stages of project implementation.

The successful implementation of large-scale reconstruction programs requires not only managerial discipline, but also the formation of a sustainable coordination mechanism between all levels of government, business, and international partners. This refers to a permanent platform that will allow for the coordination of priorities, the consolidation of resources, and the assignment of responsibility for results. Providing communities with access to planning tools, model solutions, and technical support is critical to ensuring that reconstruction is not concentrated in large cities but becomes a comprehensive process across the country.

SUMMARY

Large-scale recovery in Ukraine is impossible without a reboot of approaches to institutional interaction. National and local levels of public administration need a change in philosophy — from fragmented and reactive to service-oriented and coordinated. Businesses and international partners are ready to invest in the construction industry, but they

expect transparent procedures, stable rules, and clear formats for cooperation. Communities, meanwhile, are left without the tools to transform plans into projects, and without this, national ambitions cannot be realized. Central to this process is the formation of a platform where the state not only regulates but also acts as a provider of strategic decisions, a coordinator, and a partner.

BARRIERS AND SYSTEMIC OBSTACLES

TO THE IMPLEMENTATION

OF INFRASTRUCTURE PROJECTS

Large-scale infrastructure recovery is impossible without the actual launch of projects on the ground — from technical and economic feasibility studies to the signing of contracts, completion of construction, and commissioning. However, the project cycle in Ukraine is currently burdened by a significant number of barriers, which relate not only to complex procedures but also to structural mistrust between participants. The licensing system, contract management, planning, accountability, and control all function not as a single system but as fragmented and often contradictory mechanisms.

Conference participants and analytical documents unanimously point to deep gaps between investor expectations and actual market conditions. The situation is complicated by a lack of transparent technical standards, overlapping authorities, unpredictable regulatory decisions, and a lack of support for customers and contractors at all levels. This section describes the most critical issues holding back the implementation of infrastructure projects and outlines the changes needed to overcome them.

The Gap Between Investor Expectations and National Procedures

There is a persistent gap between the expectations of the private sector, both national and international, and the actual practices of project implementation in Ukraine. Conference participants repeatedly pointed to the complexity and non-transparency of licensing procedures, the lack of standardized contract forms, and significant fluctuations in approaches to project planning. In many cases, companies are forced to adapt technical documentation on their own, adjusting to an uncompetitive and archaic regulatory framework. The lack of a unified list of source data for spatial planning creates additional uncertainty and opens the door to abuse during the approval process. In particular, the not-so-clear process for approving deviations from building codes often becomes a place for informal pressure or corruption.

These barriers significantly slow down the preparation of investment projects and create risks for international partners. In particular, there is a mismatch between the approaches commonly used in the EU (e.g., contracts based on FIDIC, NEC, or EPC formats) and Ukrainian requirements, which often come down to unpredictable demands from regulators.

It should be emphasized that a large number of market participants note the critical situation with the issue of “Soviet” methods of cost estimation, which is common for both the construction industry as a whole and public procurement: the difference between the resource-element method of pricing in construction in Ukraine, which is based on normative and estimated indicators and normative prices for labor and material and technical resources (rather than actual market prices), and European and international methods of estimating costs using aggregate prices per unit of measurement at all stages of an infrastructure project. The market notes that this practice creates opportunities for corruption in Ukraine, as market changes are not taken into account and the cost of individual works is deliberately underestimated or overestimated.

This gap is widened by the lack of publicly available tools and templates: even large companies note that they are forced to negotiate with each authority separately, without being able to rely on transparent logic or an open regulatory framework. As a result, investors postpone or scale back projects, and in some cases withdraw altogether.

Conflict of Powers and Responsibilities: Fragmentation Instead of Governance

One of the key systemic problems that was the subject of particular attention at the conference is the conflict of responsibility between different institutions involved in the implementation of infrastructure projects. Different levels of government — from central ministries to local administrations and self-government bodies — often have unclear or overlapping powers, leading to decision-making paralysis. Coordination processes take weeks or months, and legal responsibility is often not linked to actual control over the process.

Participants in the discussion noted that even when there is political will to implement a project, interagency barriers block progress in practice. Formal powers are not backed up by real resources or instruments of influence. As a result, instead of a vertical implementation structure, a horizontal conflict zone emerges, where each body makes decisions within its own narrow comfort zone, regardless of the common goal.

This fragmentation of management directly affects project timelines, costs, and the efficiency of resource use. As a result, investors and donors face not only corruption risks, but also operational risks: adoption of changes to the feasibility study/design documentation, replacement of technical solutions, revision of the order of implementation, or refusal to accept certain works due to formal restrictions on the powers of a particular authority or contractor.

Transparency Without Trust: How Permits and Controls Block Projects

Despite the availability of electronic tools and declared openness, the system of permits and supervision in the construction sector remains non-transparent, overregulated, and vulnerable to abuse. This not only creates risks of corruption but also breeds persistent mistrust between the state and business. Even formally transparent procedures are often accompanied by informal restrictions, significant human influence in the issuance of permits, double interpretation of requirements, or unexpected blockages at the final stages of approval.

The conference repeatedly raised the issue that transparency does not guarantee predictability: market participants cannot calculate the duration of procedures, and regulators retain the ability to halt the process without clear grounds. Some speakers directly pointed to situations where licensing authorities do not formally refuse but delay approval or return documents for formal reasons.

The existence of an electronic system does not eliminate the human factor if there are no standard templates for decisions, deadlines, and accountability mechanisms. Entrepreneurs and investors are often forced to bend the rules, negotiate through other channels, or lose opportunities due to delays in decision-making. In the long run, this blocks the entry of new players, especially international ones.

Failure After Signing the Contract:

Lack of Support and Implementation Capacity

Even successful completion of the selection procedures and signing of the contract does not guarantee that the infrastructure project will be implemented on time, in full, and in line with expectations. During implementation, it often turns out that institutional support is limited or non-existent. The structures that should accompany implementation either do not function properly or do not have sufficient powers to manage the process effectively after the contract is signed.

This creates a systemic gap between planning and implementation: customers and contractors face inconsistencies, delays in decision-making, changes in input data, and the absence of a responsible entity capable of ensuring the integrity of implementation. Decisions are often made anew, and technical or organizational issues trigger a chain reaction of repeated approvals. This loss of management continuity leads to delays, revisions of work volumes and, in some cases, conflicts and disputes.

This is most noticeable at the local customer level. Communities don't have access to standard control formats, methodological support, or professional guidance. Problems are particularly critical at the final stage: non-transparent registration of readiness for operation, unjustified delays or disregard for commissioning, and the absence of a single supervisory body to verify the facility's compliance with the approved project documentation. In some cases, commissioning takes place in violation of the rules, and refusal may be based on a subjective interpretation of the requirements.

A Life Cycle Without Logic:

Project as a Sum of Fragments

Most of the barriers hindering the implementation of infrastructure projects are not just procedural — they are rooted in the lack of a single logic for managing the entire life cycle. In Ukraine, projects are often not viewed as a holistic process: planning, permitting, financing, implementation, monitoring, and completion all exist as separate segments operating in different legal and institutional spheres.

This fragmentation creates chaos in which it is impossible to ensure either rhythmic execution or control over changes. Each stage has its own stakeholders, its own procedures, and is practically unrelated to the previous one. As a result, responsibility for the outcome is lost, and the effectiveness of the system depends not on rules but on the personal efforts of individual performers. This approach is critically inconsistent with the scale and complexity of the tasks facing the reconstruction of Ukraine.

SUMMARY

The key conclusion is that barriers to project implementation are systemic in nature. They arise not only from individual regulatory flaws but also from fragmented powers, a lack of managerial continuity, and the absence of a service-oriented approach at all stages. Mistrust between participants, a lack of standard solutions, and uncertainty after contract signing reduce the effectiveness of even well-prepared and structured projects.

CHALLENGES OF THE WAR

AND POST-WAR PERIOD

Reconstruction in Wartime:

Instability, Risks and Distorted Priorities

Infrastructure restoration in conditions of full-scale war has a fundamentally different dynamic than in peacetime. Wartime logic influences all stages, from planning to implementation. Needs are shaped by the pressure of an emergency situation, and decisions are often made without full justification and with a short-term perspective. Conference participants repeatedly noted that in such conditions it is difficult to ensure the sustainability of projects, planning that considers future needs, or coordination between sectors.

Instead of systemic priorities, decisions are made based on the immediate availability of resources or political considerations. This distorts the logic of strategic planning: projects are built according to administrative orders, without considering spatial plans or effectiveness assessments. At the same time, contractors are forced to work without guarantees of safety, insurance, or compensation, which significantly increases the cost of work and reduces investor interest.

The lack of specialized risk assessment mechanisms for projects in potentially dangerous areas (in particular, those close to the front line or critical infrastructure) makes it impossible to form portfolios suitable for financing. This limits the range of participants, makes it impossible to attract credit funds, and encourages “point solutions” that are poorly integrated into the long-term reconstruction model.

One of the critical challenges that distinguishes the post-war period is the lack of an effective mechanism for insuring infrastructure projects in risk areas. Business remains virtually the only party responsible for the physical safety of facilities, completion deadlines, and financial losses in the event of repeated destruction. While government agencies operate with concepts of force majeure, private contractors have no access to any protection instruments that would reduce implementation risks.

This situation leads to selectivity in participation: companies prefer projects in relatively safe regions or demand higher safety coefficients, which affects budgets, competition, and deadlines. For many foreign companies, the lack of insurance mechanisms or state guarantees is the main factor deterring them from entering the Ukrainian market. The absence of precedents, compensation cases, or a clear role for the state in risk distribution creates an atmosphere of high uncertainty.

Conference participants repeatedly emphasized that without a systematic insurance mechanism for projects in the potential disaster zone, reconstruction will remain sporadic, focusing on “low-risk” projects, and will not be able to cover the entire territory of the country in a comprehensive manner.

International Trust Under Pressure:

the Need for a New Model of Interaction

After three years of full-scale war, international partners expect not only new projects, but also a change in the model of interaction. Funding is no longer provided automatically — donors are increasingly demanding clear reporting, transparency of procedures, and real accountability for results. Representatives of business and foreign agencies have repeatedly emphasized that further support for reconstruction is only possible if trust is demonstrated through actions, not declarations.

At the same time, the international community's fatigue is manifested in reduced flexibility — more and more funding programs require standard competitive selection, linkage to specific indicators, or proven impact. In such conditions, Ukraine's main asset is its ability to create conditions for transparent competition, minimize corruption risks, and increase the predictability of decisions at all stages of the project cycle.

It is no longer a question of adapting to an emergency, but of transitioning to a stable governance regime capable of ensuring a new level of trust. Otherwise, the risk of losing investment support will increase even in the most critical sectors.

High Corruption Risks at Every Stage

of a Construction Project Implementation

Outdated Urban Planning Documentation

Any construction project implemented within the community must comply with the requirements set out in urban planning documentation (spatial development plans).

Much of the existing urban planning documentation is outdated and needs to be updated, amended, or completely revised and redeveloped. At the local level, it is usually limited to areas within settlements and does not include areas outside their boundaries. Outdated urban planning documentation results in numerous obstacles for economic operators who intend to build legally.

Market participants draw attention to the fact that previously adopted decisions in the field of spatial planning are being revoked after investors have already invested funds in the implementation of relevant projects. Given the lack of compensation as a result of such decisions, this situation has an extremely negative impact on the willingness of potential investors to invest in the development of the relevant territories.

Obtaining Initial Data: Urban Planning

Conditions and Restrictions

According to market participants, one of the most vulnerable procedures to abuse in the construction sector remains the issuance of urban planning conditions and restrictions. A document that should be issued automatically as an extract from urban planning documentation has become a tool for local officials to extort bribes. Typical practices include delays in consideration, demands for documents not required by current legislation, and unfounded and arbitrary refusals to issue urban planning conditions and restrictions. This leads to the formation of an informal market for intermediary services, without which the implementation of most construction projects is virtually impossible

There is no extrajudicial procedure for appealing urban planning conditions and restrictions, and the judicial procedure is very time-consuming. An analysis of court practice shows that there are numerous cases where courts have ordered urban planning authorities to issue urban planning conditions and restrictions, which indicates that this is a systemic problem.

Permit to Start Construction Work

The procedure for obtaining construction permits in Ukraine remains complex and vulnerable to abuse. The lack of an automated decision-making system — with verification of submitted information through state registers — leads to the preservation of the “human factor,” which is often used to create obstacles.

Typical problems include deliberate delays, unreasonable demands, and refusal to issue permits without clear grounds. At the same time, there are currently no effective mechanisms for holding officials accountable for violations of the procedure for providing administrative services.

The State Architecture and Urban Planning Inspectorate of Ukraine (DIAM), which was established in December 2020 and has established itself as a service body free of corruption, issues permits only for high-impact facilities, which account for no more than 20% of all permits. As a result, some construction clients are forced to inflate the impact class of a facility in order to avoid interaction with local licensing authorities and fall under the jurisdiction of the DIAM.

Commissioning of an Object

During the process of commissioning completed construction projects, corrupt practices have developed involving officials creating artificial obstacles for the customer in order to obtain bribes for issuing certificates confirming the commissioning of the completed projects. Most abuses occur at the stage of on-site inspection of the facility, when its compliance with the submitted documents, approved project documentation, and construction standards is assessed. At the same time, according to market participants, similar abuses are not observed in cases where commissioning is carried out directly by DIAM.

Architectural and Construction Control and Supervision

The procedures for implementing state architectural and construction control and supervision measures contain a significant number of discretionary powers for architectural and construction control and supervision bodies. This includes, in particular, the possibility to selectively conduct or not conduct inspections, make decisions to suspend work or avoid responding, and issue unfounded orders to suspend preparatory or construction work. This situation creates a breeding ground for administrative pressure and corruption.

Market participants draw particular attention to the problem of monopolization of the market for accreditation of consulting engineers authorized to perform technical supervision. The limited number of accredited specialists and the lack of transparent rules for market entry distort competition and may affect the impartiality of control.

In addition, imperfect regulation of author and technical supervision procedures opens up opportunities for informal influence on the results of inspections. Market participants point to cases of obtaining undue benefits for providing so-called “positive” conclusions of author and/or technical supervision.

Technical Regulation Defects

Current legislation requires compliance with building regulations, including during major repairs and reconstruction, which in practice is not always technically possible, because the building was constructed according to other (previous) building regulations. This prompts construction customers to obtain an additional administrative service — approval of justified deviations from building regulations.

At the same time, the imperfections of the current approach to pricing in construction lead to the development of poor-quality cost estimates in project documentation, particularly in terms of overestimating construction costs.

SUMMARY

Recovery in wartime and transition to post-war development require qualitatively new approaches to risk management, institutional accountability, and models of interaction with partners. Today, infrastructure decisions are often made in emergency mode, without strategic justification, leading to inefficient use of resources, loss of trust, and inability to scale up. At the same time, businesses and international donors do not have sufficient guarantees regarding investment protection, procedural transparency, and the state's implementation capacity. Rethinking the insurance system, the role of the state as a guarantor of stability, and creating new formats of trust are key to recovery that will be systemic rather than piecemeal.

FURTHER STEPS TO STRENGTHEN THE STRATEGIC FRAMEWORK FOR RECONSTRUCTION

Despite the systemic challenges and priorities outlined above, further policy development in the construction and infrastructure sector requires a deeper analysis of a number of issues highlighted in the BCG strategic study and during professional discussions at the conference.

CONCLUSIONS

The restoration of Ukraine is not just a technical reconstruction process, but an opportunity for a profound transformation of the entire system of governance, the investment environment, and the interaction between the state, business, and international partners. The construction industry and related infrastructure have the potential to become drivers of long-term economic growth. However, this potential will not be realized without removing key systemic barriers: fragmented responsibility, non-transparent procedures, lack of institutional capacity, inconsistent priorities, and lack of risk sharing.

Conference participants clearly outlined the demand — for stability, predictability, practical support, and a new model of public administration. This applies to the central level as well as to communities, businesses, the expert community, and donors. Without a change in approach — from manual reactions to systematic coordination — even the best-prepared, structured, and funded programs will remain isolated.

Recovery must move from crisis response mode — where decisions are made urgently, without long-term logic — to stable, managed development policies. Only through common rules of the game, the distribution of responsibilities, and the strengthening of trust can reconstruction become large-scale modernization, rather than a collection of isolated decisions.