Organizational and economic approaches and methods of development of the construction industry in a climate of sanctions pressure

Abstract

Introduction. In the current climate, a central focus in supporting the development of Russia’s construction industry is on what measures are included in the government’s crisis package. In the first quarter of 2022, it included 17 measures directly and 40 measures indirectly impacting the nation’s construction and housing-and-utilities sectors. The prompt passage of such measures, which are to be implemented based on relevant resolutions, enactments, and laws, is aimed at creating a barrier-less environment with a focus on accelerating construction, keeping down building materials prices, and adjusting the prices of existing contracts for supply of building materials in a timely manner. The ever-mounting sanctions pressure is only raising the bar on objectives to be achieved in the area of residential construction, infrastructural transformations, and improvements in construction process innovation, including the implementation of digitalization and use of platform-based solutions to communications issues. Given the scale of the work that lies ahead, there is a need to search for new forms of managing the sector, with a focus on experimental testing of potential methods for resolving the issues in the construction sector that have exacerbated in the conditions of external sanctions pressure. Materials and methods. The authors’ view of transformations in Russia’s construction sector is focused on the following: 1) the need to restructure the nation’s construction authorities and establish three separate ministries — one for construction, one for municipal services, and one for utility infrastructure; 2) the need to employ alternative models for tackling the housing problem and the need to experimentally test the savings-and-loan and rent models; 3) the need for sound import substitution measures and price-setting procedures; 4) the need to create a comfortable business environment with relevant out-of-court settlement mechanisms in place; 5) the need to establish new requirements for applied research. The last item is of particular significance, for any support and development measures need to be scientifically substantiated through the utilization of a variety of problem solving methods and experimental testing and scaling up of newly developed mechanisms and methods. Results. Best practices related to seeking effective solutions indicate that in a mobilization economy testing a particular organizational, investment, or digitalization model in real time will help to not only obtain an objective picture of its effectiveness but also identify the bottlenecks to its application in practice. Moreover, the authors’ analysis suggests that, if the nation’s expertise centers are to resolve most of the development objectives for the construction sector in the current climate of external sanctions pressure, they must not overlook the benefits of creating ecosystems and employing platform-based solutions. Conclusions. Given regional best practices in residential construction, the use of long established EU requirements for price-setting in construction, the inevitable shift to Building Information Modeling, and the current level of applied research in Russia, it appears to be worth focusing on maximizing the industry’s research potential. The shortest route is by way of concerted efforts in the development, experimental testing, and implementation of new models for the development of the construction, municipal services, and utility infrastructure sectors.