(AG Real estate)

Serbia is gaining in importance on the investment map of southeast Europe. When I say Serbia, I mainly mean its capital city of Belgrade. Overwhelming majority of investments are focused exactly on Belgrade and much smaller part goes to other parts of Serbia. This situation will probably soon change when the contracts on concessions for construction of the main roads through Serbia are signed.

Although Belgrade was declared the city of future of southeast Europe last year, foreign investments in Belgrade and Serbia form only 20% of current investments. The largest and the strongest investment companies have not yet started to invest in Belgrade and Serbia, although they show certain interest. According to their very strict criteria for realization of investments, Serbia is not yet politically and economically ready enough, in order for them to justify their investments. Only one of the reasons that dissuade them from the direct investing in projects in Serbia is the shortage of professional international companies that deal with project management and control.

Only few international companies that deal with project management and control currently exist in Serbia. For the sake of comparison, there are over 20 such companies in Hungary. There are several reasons that conditions the arrival of international companies for project management and control. Like it mentioned above, most of investments in Serbia are financed by local investors. So far, local investors have rarely been expressing interest in hiring specialized companies to manage and control their projects. Local investors mainly rely on smaller teams, consisting of the people from the company, and they carry out the entire procedure from the procurement of location to the obtaining of building permit. Control of project and construction are not covered enough. That is especially noticeable on the larger projects, which leads to building of facilities without completely finished projects and additional unexpected expenses and delays.

Current situation

In the past few years, the largest local investors were forced to change their strategy for management of big projects, because certain conditions were imposed by the banks that emerged as financiers or credit donors. All international banks that currently operate in Serbia demand from investors to hire an independent company acceptable to the bank to manage and control projects. Engagement of a renowned international company for management and control of projects gives certain security to the bank that the project will be finished in the agreed period and for the budget approved by the bank.

As far as foreign investors are concerned, they don’t even start any investments if the advisors who would check the profitability of the investment and possibility of its realization were not hired earlier. Already in the phase of preliminary project they hire a company for project management and control that controls making of project documentation and acquiring of all required permits and licenses from the very beginning. As it is well known to all experienced managers, preparation is the most important part of every project and it is there where it is possible for the investor to make largest savings and to come to the best solutions for the project in question.

In that part of the project management and control one can se the greatest difference between the renowned international companies that provide these services and small teams that are sometimes hired directly by the investor. Services of companies that manage and control projects are included already in the initial budget of the foreign investors, and that percentage ranges around 3% of total investment. Experiences and analyses in the world showed that the engagement of professional companies for project management and control results in average saving of 10 to 20% of the budget of the whole investment in the final account. It is not worthwhile for the investor to hire people from the company for management and control of each new project, because every project is specific both in size and in complexity. By hiring an independent company for project management and control, investor meets several legal and bank’s conditions. These companies also provide professional liability insurance to the investor, which gives an additional guarantee that the project management and control will be carried out extremely conscientiously. Another advantage offered by such companies to the investor is their connection with the largest architectural bureaus and specialized consulting companies, which enables quicker elaboration of preliminary projects and, later, the entire project documentation. Also, these companies have experience of work with the largest international building companies that would rather participate in the tender professionally done by such companies. International building companies are willing to sign only those contracts that are internationally acknowledged (FIDIC) with only those investors the professional companies for project management and control and banks find acceptable. What is very important to the foreign investments in Serbia is the fact that international companies for project management and control have regular clients among the leading European and world investors who come to the new markets on the recommendation of such companies. International companies that are present and work in Serbia for some time are able to provide some additional services to the potential investors in form of discovery of suitable locations, check of legal-ownership relations for these locations, as well as market analysis by European standards.

Expectations and Perspectives

Judging by the experience of several international companies that deal with project management and control in Serbia, it is necessary that their teams be made of certain number of experienced foreign engineers and experts and majority of local engineers and experts who know the local market, institutions, local laws and regulations very well, as well as local rules of conduct and mentality, in order to be able to carry out their role successfully. That is also an opportunity for large number of domestic engineers and experts to gain international experience while working with the foreign members of their team. That is especially important because, due to isolation of Serbia in the previous period, small number of young engineers and experts had the opportunity to exchange experience with foreign colleagues and to take part in the construction and realization of largest and more complex projects.

Branislav Simović, graduate civil engineer

Manager of Mace Ltd. Belgrade

bsimovic@mace.co.yu

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