Long-term construction or prison? How can a developer reduce the risks of signing acts of completion

The signing of certificates of completion at various stages of construction is always associated with certain risks for the businesses of the contractor and the customer. Especially in those cases when it comes to public money.

Thus, long-term approval and delays at the junction of reporting periods threaten with the loss of unused funds or an extension of the deadline for delivery and a forced increase in total costs. On the other hand, errors in acts or the signing of documents in advance entail criminal liability.

The paradoxes of drawing up reporting documentation in the context of “custody” by law enforcement agencies were studied by the lawyer of Skliarenko, Sydorenko and Partners Timur Mikhailov in an article for the CENSOR.NET portal “The Impact of Criminal Risks on Management Decisions on the Example of Construction”.

The lawyer drew attention to the strange activity of the Ministry of Internal Affairs and the Security Service of Ukraine at the beginning of each calendar year, when, due to the seasonal nature of the construction business, business activity and production volumes are falling.

Thus, according to the official data of the Office of the Prosecutor General, in the first four months of the year, there are significantly more criminal cases in the construction sector than in the remaining months. This can be seen most clearly under Article 191 (embezzlement) of the Criminal Code.

The author of the article explains this by the fact that at the end of December each year (when it is necessary to master budget financing), courageous leaders who want to build something, repair something for their organization or community, sign acts of completed work in advance. Therefore, at the beginning of January every year, police officers and employees of the Security Service of Ukraine go on a "pilgrim's journey" to all construction projects, record their progress, seize documents to check their compliance with the facts. This naturally creates grounds for extortion of undue benefit.

If the customer is reinsured and does not sign the act of completion (so that the Security Service of Ukraine, together with the State Financial Inspection, would not accuse him of embezzlement due to possible inaccuracies and errors), in this case, his technical supervision repeatedly checks the acts of completion, forces the contractor to redo them, change the coefficients , volumes, rates, eliminate slips.

However, such a delay creates a "cumulative effect": a contractor cannot buy construction materials without money, removes workers from the facility and transfers them to another. After payment, the contractor redefines all processes. A delay in payment of one month leads to a delay in construction work for at least two months, during which the contractor continues to bear all fixed costs - office, salary, etc.

For possible solutions to the problem, see the full version of the article on the CENSOR.NET website.