Risk Assessment in Construction Pricing

GENERAL BACKGROUND

Supporting anti-corruption efforts in Ukraine is a high political priority for the European Union and Denmark. By combating corruption, the EU contributes to the consolidation of democracy and economic growth of Ukraine, as well as the successful approximation of Ukraine with the EU.

Transparency, integrity and accountability of Ukraine’s recovery is one of the key topics of the EUACI. The Government of Ukraine, the Ministry for Development of Communities and Territories of Ukraine (the Ministry) and the State Agency for Restoration and Infrastructure Development of Ukraine (the Agency) are the key counterparts of the EUACI in this area.

As the recovery process involves massive national and international resources, it is key to have a coordinated policy framework to ensure that these funds are managed responsibly and support Ukraine’s long-term commitment to good governance and sustainable development. Post-war reconstruction of Ukraine is a critically important task that not only restores damaged infrastructure but also lays the foundation for sustainable economic growth and social development. This process requires a comprehensive approach, which includes project management at all stages of reconstruction, as well as overcoming numerous challenges.

In the context of ongoing infrastructure development, there is a critical need for transparent, consistent, and risk-informed approaches to pricing in construction.

One of the key problems in construction pricing in Ukraine stems from significant legal gaps and inconsistencies in regulatory frameworks. The existing legislation does not always provide clear, unified standards for calculating project costs, which leads to widespread discrepancies between estimated and actual prices. Different institutions may interpret the same rules differently. This creates uncertainty for developers and contractors, as they must navigate a complex and sometimes contradictory legal environment.

Another challenge lies in the outdated and fragmented nature of the regulatory base used for cost estimation. Many pricing norms still rely on Soviet-era methodologies or old state standards, which do not reflect modern construction technologies, market conditions, or international best practices. As a result, public procurement projects can be mispriced, leading to budget inefficiencies, project delays, or legal disputes. Moreover, the absence of a consistent, modernized cost estimation system undermines investor confidence and complicates the involvement of foreign stakeholders.

Furthermore, enforcement mechanisms are often weak or inconsistent. Even when legal violations in pricing are identified, the penalties may be minimal or not enforced at all. This encourages a culture of informal practices and discourages compliance with established rules. To address these problems, Ukraine needs comprehensive reform in construction pricing legislation—focused on harmonization, transparency, and alignment with international standards—to create a more predictable and fair business environment in the sector.

In this context, the EUACI is seeking a Service Provider (Consultant, Consulting Firm, or NGO) to collaborate closely with the Agency for Restoration in conducting risk assessment of the sphere of pricing in construction with a focus on transparency and anti-corruption.

These Terms of Reference (ToR) provide more details about the assignment.

OBJECTIVE:

The primary objective of this assignment is to conduct a comprehensive risk analysis of pricing regulations and practices in the construction sphere and provide actionable recommendations for improvement and for minimization of corruption risks. The assignment should have a particular focus on transparency issues, accountability and anti-corruption.

SCOPE OF WORK:

The Consultant will identify key risks and gaps in construction pricing and propose mitigation specific propositions. This includes but is not limited to the following tasks:

1. Analyze the Ukrainian legal framework and practices to identify key major risks related to pricing in construction. This focused legal review will prioritize high-impact documents and sources, including the following:
2. Laws, subordinate regulations governing pricing in construction sphere
3. Recommendations, guidelines, including:
   • Guidelines for determining the cost of construction for civil engineering
   • Methodology for determining the cost of road works and services to determine the cost of new construction, reconstruction, repair and maintenance of public roads
   • Regulatory and legal support for determining the cost of wages
   • Procedure for applying cost estimates and pricing standards in determining the cost of design, research and development, survey works and examination of construction project documentation
4. Price analysis (monitoring) policiesof not less than three different public construction customers (e.g. Regional Office of the Agency, city administration, SoEs)
5. Judicial practice
6. Practice of the Antimonopoly Committee
7. Practice of the State Audit Service of Ukraine
8. Analyze construction contracts to identify how pricing regulations are applied and to evaluate specific risks. Focus on the following types of construction customers (not less than 3 contracts per each construction customer):
9. Two Regional Offices of the Agency for Reconstruction
10. Two municipalities / municipally-owned enterprise
11. Two state-owned enterprises
12. The consultant is obliged to conduct not less than 25 interviews with customers, policy makers and construction companies and provide a list of the persons interviewed.
13. Provide specific actionable recommendations on how to mitigate the identified risks.

The particular focus should be paid to the following topics:

●      Dual pricing approaches for “civil” vs. “road” construction for the same Customer (Regional Offices for Restoration)^[1]

●      Absence of a uniform approach to price monitoring and market analysis

●      Legal and practical problems with “average price” concept

●      Problematic categories of costs in construction, including reasonable level of salary, hidden costs (salaries, amortization etc.), equipment prices

●      Specifics of determining construction costs across project lifecycle (investment planning, procurement, contracting, and execution), including ways to ensure fair market-based pricing and avoid unjustified price discrepancies

●      Dynamic vs fixed pricing models: challenges and benefits

●      Main weaknesses and strengths of determining the cost of materials and works using aggregate indicators (“generalized indicators”)

●      Pricing approaches and risks in ‘Design-Build’ contracts, the lack of a base of analogues

●      Lack of uniform price database for benchmarking in construction

●      Standardization of measurements in vertical and road construction

• Main risks of pricing in public procurement, including dumping
• Problems of using specialized pricing computer programs

The results of the analysis shall be presented in a report. The report should cover all the areas mentioned in the Scope of Work, in particular identified risks and recommendations on how to mitigate them

The findings and recommendation should be presented to the key stakeholders, including the Agency for Reconstruction, the Ministry for Regional Development and the EUACI.

DELIVERABLES:

The Deliverables are presented below in Table 1 with a tentative schedule.

Deliverables are to be provided in Ukrainian language. Electronic copies shall be sent by email to the particular EUACI contact person.

Table 1: Summary of deliverables/outputs and the tentative timeline for delivery.

The timelines indicated in the table above are indicative. The Consultant may reflect on and update the timelines for different activities after agreement with the EUACI.

The Consultant will work under the supervision of the EUACI responsible person. 

TIMELINE

The intended commencement date is the date of signature of the contract with the Consultant and the period of implementation of the contract will be 3 months.

PAYMENT

Payment will be made in a maximum of two installments.

The first installment, representing a maximum of 30% of the total contract value, will be made after receipt of the Consultant’s updated work plan, Deliverable 1, to be agreed with the EUACI and invoice.

The second and final payment will be made upon receipt and approval of the Reports and all other supporting documents, including a Final Invoice.

CONSULTANT REQUIREMENTS

The assignment described above is expected to be carried out by a Ukrainian legal entity, including NGO, or a private entrepreneur.

The Consultant’s core team shall include the following key experts:

Cost Estimate Engineer:

1. Master’s degree or equivalent that demonstrates the ability to perform the duties and responsibilities as described;
2. Valid certificate of cost estimate engineer;
3. Work experience ((not less than 5 years) in the field of estimates and financial calculations in the field of construction for public construction customers over past 7 years;
4. Knowledge and experience in public procurements and good governance;
5. Fluency in Ukrainian is required;
6. Ability to speak and write in the English language would be an asset;

Legal Expert:

1. Master’s degree in law, international law, or similar field;
2. Proven track record (not less than 5 years) of analysis of Ukrainian legislation, conducting corruption and/or managerial risks assessments, providing recommendations for legislative changes, promoting good governance;
3. Legal experience in construction, architecture, engineering or another related field for the public and private sectors will be an asset;
4. Excellent written and oral communication skills;
5. Fluency in Ukrainian is required.

Reporting and management

Definition of indicators

The performance of the contractor will be judged upon reaching the purpose of this contract as well as obtaining its results, as indicated in the sections “Objective” and “Expected Deliverables” herein respectively.

Special requirements

By signing the contract, the contractor (and its representatives) agree to hold in trust and confidence any information or documents (“confidential information”), disclosed to the contractor or discovered by the contractor or prepared by the contractor in the course of or as a result of the implementation of the contract and agrees that it shall be used only for the purposes of the contract implementation and shall not be disclosed to any third party without EUACI authorization.

The contractor reports to the EUACI. The contractor shall de-brief the EUACI prior to finalizing the assignment.

The developed deliverables can be checked (as a quality assurance) and payments will be provided by the quality assurance results.

Bidding Details

The bidder must submit the following information to be considered:

1. The CV (no more than three pages long) of each key expert that should include a description of the previous relevant assignments, and key duties on this assignment. (Annex 1)
2. A budget for the services in EUR, inclusive of all taxes or other such charges with a calculation of 45 working days, and information about the level of daily fees of the assigned experts.

If these documents are not submitted in line with the request above, the bid will not be considered.

Please be aware that the EUACI will publish the name of the winner of this tender.

The contract budget cannot exceed 20,000 EUR.

How to apply

The deadline for submitting the proposals is 19 June 2025, 18:00 Kyiv time.

The proposals shall be submitted within the above deadline to [email protected]  with copy to [email protected], indicating the subject line “Consultant for Risk Assessment”.

Bidding language: English

Any clarification questions for the bid request should be addressed to [email protected], no later than 16 June 2025, 18:00 Kyiv time.

To ensure your documents were successfully received, please check that you receive an auto-reply from our system. If your application is properly received, you will receive an auto-reply from the EUACI mailbox. If you don’t receive an auto-reply, your application was not received, please try again or contact.

Evaluation criteria

Bids will be evaluated under the criteria provided below:

^[1] Guidelines for determining the cost of construction for civil engineering / Methodology for determining the cost of road works and services for determining the cost of new construction, reconstruction, repair and maintenance of public roads