Mixing business with humanitarian aid Engineers vital to Ukraine’s reconstruction

Over the last two and a half years, EFCA has been constantly involved in actions and initiatives aimed at supporting the sector in Ukraine. These include a dedicated internal Ukraine Support Group established in 2023 to help the Ukrainian engineering sector; collaboration with other stakeholders from the sector (e.g. FIEC and FIDIC) on different Ukraine-related initiatives; and continuous dialogue with the European Commission (EC), most particularly the unit working on support and reconstruction initiatives for the war-torn country.

Mihai Barcanescu, Policy Manager, EFCA, (pictured) explains the scale of Ukraine’s reconstruction challenge and how consulting engineers can support and contribute to this effort.

It is encouraging to see that all the efforts from both public and private authorities are starting to pay off regarding the support for Ukraine’s reconstruction, especially with the EC’s adoption of the Ukraine Facility and its investment arm, the Ukraine Reconstruction Framework.

While a lot of information about this €50 billion dedicated support mechanism is already public, we would like to highlight several key aspects for the consulting engineering sector. The actual funding and tenders will be done either by the Ukrainian authorities or by the EIB, EBRD and the national development banks (e.g. AFD, KfW) and Export Credit Agencies (ECAs). A first call was made on 25 September for the sum of €2.75 billion, open for 12 months, for public investments (sovereign and sub-sovereign entities); for direct private investments; and private intermediated financing (equity and quasi-equity for private projects).

However, the good news from Brussels and the other EU capitals needs to be matched by a positive situation on the ground. Any analysis of the actual situation in Ukraine must begin with the main challenges that all companies need to face up to when working there – personnel problems due to the displacement of people within the country or outside of it; drafting into the army; funding-related challenges, as most of the money goes to the war effort or needs to be prioritised for specific projects (e.g. health facilities); infrastructure problems (damage or destroyed roads, bridges, etc); and problems with the energy system due to the constant attacks on it.

However, the discussions EFCA has had with the EU representatives and the stakeholders from Brussels and other parts of Europe have shown that there are encouraging developments in the country.

First, the Ukrainian legislation has been steadily improving, with recent changes including those related to determining the cost of various works, such as for the road sector. Moreover, a new Urban Construction Code will soon be adopted. These changes seek not only to align the country’s legislation with the EU’s, but also to improve the engineers’ work.

The Ukrainian legislation also offers several opportunities for foreign engineering companies to enter the national market, either as a registered representative office of a foreign company, a Ukrainian company with 100% foreign investment, or by establishing a consortium with a Ukrainian company and having it registered as a legal entity. In addition, all engineers working in Ukraine must be certified by the authorities, with the certification procedure requiring some specific courses followed by a state (public) examination.

A significant change is the increasing use of the ProZorro electronic public procurement system. This is an online system for state and municipal entities to publish tenders for the purchase of goods, works and services, which is based on the EBRD model. Most tenders benefitting from either EU or other international financing organisations’ (IFI) funding are done via ProZorro. There are various advantages to this system as compared to the old one, as identified by EFCA colleagues from B-Act company working in Ukraine. These include reducing the cost of administering the bidding process; acceleration and simplification of the procurement process; the possibility of procurement monitoring; better prospects for SMEs; and increased openness and clarity of the bidding process.

As with any such systems, ProZorro also has its drawbacks, though some aspects have more to do with the incorrect information provided by the tenderer than with the tool itself. Perhaps the most important disadvantage identified with the whole tendering process is the small weight of the non-price criteria for evaluating bidders (maximum 15-20%), depending on each case. EFCA members’ opinions are that this could be realistically increased to as much as 50%, especially for the engineering criteria.

Further good news is that with the pledged funding, construction tenders are announced throughout Ukraine. Many concern the restoration of damaged facilities and are mainly focused on the regions of large cities and the border areas. Projects to be implemented from this year onwards concern social infrastructure such as hospitals, educational institutions, social housing, water supply and sewage systems.

This combination of improving legislation, increasing funding and financing opportunities and available tenders, is attracting an increasing number of engineering companies in the country, despite the ongoing problems. Turkish, Austrian, French, Polish and Korean companies actively compete with each other and with Ukrainian companies, mostly on the tenders published on ProZorro. US companies are also present on the market, often eyeing the bigger tenders that are generally funded by USAID, the World Bank, EIB and EBRD. Some Norwegian, Swedish, Finnish and Japanese companies are also active. EFCA colleagues are not aware of any Chinese engineering company present so far in Ukraine, but there have already been some Chinese contractors.

Foreign engineering companies are sought after by both public and private entities because of the amount of work available in this period, as well as for their skills and experience. Among the latter, the highest-prized are experience in working in many national settings, the knowledge of European and global (best) practices, as well as the use and knowledge of the latest technologies in construction (e.g. BIM).

It must be noted that the technical and staff challenges faced by the engineering companies working in Ukraine have led them to use novel technologies and practices. Surprisingly or not, AI-based solutions are already used, including for tasks related to design and planning systems, and in particular to analyse large amounts of data on previous projects from which recommendations can then be made for optimisation.

Even more widespread is the use of robots and drones by engineering companies (and others) for tasks such as demining or examining buildings and other structures, especially in cases where specialists cannot go there directly and/or safely. Cybersecurity is also important, including in staffrelated checks, to avoid cyber-attacks and data leaks.

Finally, there is also a clear message from the Ukrainian companies in the sector, whether engineers, contractors or other professionals. At the current pace of reconstruction in the country, it is estimated that it could take approximately 200 years to rebuild it. But Ukrainians want to rebuild their country sooner and are counting on EU help and expertise to do so. The context, therefore, offers a mix of promising business opportunities and contributing to European and humanistic principles.

EFCA will continue to support the efforts of its members and other industry stakeholders, and in particular its members in the Interstate Consultant Engineers Guild (ICEG), on these related topics. It will do so directly and by way of discussions and actions with the EU institutions, along with other relevant European public and private stakeholders, until all the major reconstruction projects have been completed.

On this occasion we would like to thank our member-company B-ACT, and in particular Mr Yuriy Sereda, Director of the Representative Office of B-Act SA in Ukraine, for his time and the rich information he has provided.

B-Act SA is a Polish engineering and consulting firm with over 30 years of experience in project management, consultancy and supervision in the construction sector. Established in 1994, the firm has successfully completed numerous commercial, residential, railway and infrastructure projects, including road construction and water management, in Poland, Ukraine, Romania, the Baltic States, Brazil, Germany and the Middle East. B-Act has been active in the Ukrainian construction market since 2017. In 2019, B-Act established a permanent representative office in Ukraine, participating in key and prestigious construction projects.

Alongside its main office in Kyiv, B-Act operates regional offices in Vinnytsia, Poltava and Kharkiv. In September 2024, B-Act’s Representative Office was recognised as critical to the economy’s functioning and to ensuring essential living conditions during wartime. Despite the full-scale invasion, it has remained dedicated to providing services, reaffirming its commitment to supporting Ukraine’s reconstruction amid challenging market conditions.