Estonia Report Infra

HARMONIZED MARKET ESTONIA KUNO MÄNNIK DIRECTOR OF TARTU ROAD OFFICE

KOIT TSEFELS DEPUTY DIRECTOR OF ESTONIAN ROAD ADMINISTRATION

Allocations From The Road Budget Bridge reconstruction and repairs 2%

Ordinary maintenance 25% Design 3% Other costs 11%

Construction and reconstruction 8% Rehabiltation and repairs 51%

Competitive Bidding And Own Forces Bidding 6,2

15,0

100,0

85,0

T

al ot

gn i s De ad o R

co

93,8

n io t c ru t ns

g id r B

e

7,8

92,2

Own forces

15,3

84,7

32,9

67,1

irs rs ce a i n a p a p re re en d t n ad an ai o n M R tio c t ru s n co

Domestic Value Treshholds For Public Procurement: (net of value added tax)

Purchasing of goods or contracting for services ~ 20 000 EUR or more Contracting for construction works ~125 000 EUR or more

Register Of Public Procurements In the form of computer database and published on the web site of register: http://register.rha.gov.ee/ Only in Estonian!

International Value Tresholds For Public Procurement (in case of state authorithy)

Purchasing of goods or contracting for services 130 000 SDR Contracting for construction works 5 000 000 SDR

Contractors On The Estonian Road Market Examples Via Baltica: Rehabilitation of Ikla-Tallinn-Narva Road I Total 120,6 km Contractor/ Consultant and contract price Works

Estonian companies

Supervision

Finnroad OY (Finland) Technical Center of Estonian Roads Ltd (Estonia) 800 000 €

Contractors On The Estonian Road Market Examples

E 20 Tallinn-Narva Road, Reconstruction of Maardu-Valgejõe Total 62,7 km Contractor/ Consultant and contract price Works Skanska Tekra OY (Finland) 21 400 000 €

Supervision Nicholas O’Dwyer&Company Ltd (Ireland) iproplan Planungsgesellschaft mbH (Germany) AS Telora-E (Estonia) AS Taalri Varahaldus (Estonia) 640 000 €

Contractors On The Estonian Road Market Examples Via Baltica: Väo-Maardu design No. 1 Consultant and contract price COWI A/S (Denmark) EA Reng AS (Estonia) 500 000 €

Technical Assistance for Reconstruction of Tallinn Ringroad and Tallinn-Paldiski Road Consultant and contract price WSP International AB (Sweden) WSP Sverige AB (Sweden) K-Projekt AS (Estonia) 1 800 000 €

Features Of The Estonian Road Work Market • rather small, but offering attractive works with financing from EU • opened • regulated with necessary legal acts, but needs improvements • reliable banking and financing • in works financed from the Eurpopean funds- speaking the English language is compulsory • in minor works understanding the Estonian language recommendable • in big construction work Estonian contractors perform as a concern of 3-4 companies to compete with competitors • bigger Estonian road construction companies have daugtherfirms splitted territorially and dealing mainly with maintenance. Depending on the location of road construction site their recourses (experienced labour, machienery, gravel-pits) can be used in the form of subcontract.

Annual Volum e of Road Works in Tartu Regional Road Office 8,3 MEUR In-House Maintenance and Gravel Repairs 2,05

Mitigation of Traffic "Black Spots" 0,46

New Pavement on Gravel Roads 1,53

Facilities Repairs 0,15

Bridge Repairs 0,37

Ordinary Maintenance 1,60

Gravel Road Repairs 0,22

Rehabilitation of Paved Roads 1,92

Road Works on the Market Tendered by Tartu Regional Road Office in 2005 Ordinary Maintenance Rehabilitation of Paved Roads Gravel Road Repairs Bridge Repairs Facilities Repairs New Pavem ent on Gravel Roads Mitigation of Traffic "Black Spots" 0

0,5

1

1,5

2

2,5

3

MEUR On the Market

In-House

3,5

4

OBSTACLES ON THE ROAD WORK MARKET 1. Public Procurement Act needs renewals. Problems: • Low price prevails too much, quality criteria not considered sufficiently • Time-consuming settlement of protests by arbitration • Urgent seasonal road works should be procured faster

2.Big road works financed from European Cohesion Fund and European Regional Development Fund mostly engage the capacity of domestic contractors and often minor works cannot be accomplished on time

3.Shortage of road designers 4.Wages in Estonia are still much lower than in developed countries and therefore foreign contractors with there own labour have difficulties in competition for cheaper bidding

Developments On The Market • Draft of the renewed Act for the Public Procurement is ready • New competitors from small- size firms (designers, consultants, technical supervisors) are coming • Regular annual increase of wages 5-10% in Estonia decreases the advantages of domestic contractors in comparison with foreigners • Preparation of big road and bridge works (Tallinn ring road, Tartu ring road Saaremaa fixed link) possibly attract a foreign contactor more than earlier.

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