In order to create an integrated system for high volume public construction investments, the Hungarian Government has adopted a new legislation. From January 2019, high volume public construction investments reaching the estimated value of HUF 700 million must be executed by a state-owned company, i.e. the Investment Agency.
The new system for the implementation of high volume public construction projects was developed by a two-level regulation: i.e. an act on the realisation of high volume public construction investments determines the principles and framework of the new system, while a government decree contains the detailed rules.
A high volume public construction investment is any investment that aims the creation, expansion or modification of buildings with one or more building levels. There is a difference between governmental and municipal high volume public construction investments. A governmental high volume construction investment means a construction project on a state-owned real estate that is financed from budgetary resources, while a municipal high volume construction investment means a construction project implemented by the municipality on its own property, using budgetary resources.
According to the new legislation, the Investment Agency (i.e. BMSK Zrt. - Beruházási, Műszaki Fejlesztési, Sportüzemeltetési és Közbeszerzési Zártkörűen Működő Részvénytársaság) must execute those high volume public construction investments whose estimated value reaches HUF 700 million. The implementation of such investments is divided into two procedures. During the preparation of the high volume investment (that consists of among others the preparation of studies, expert opinions, plans, documentation required for the construction works etc.), the Investment Agency is cooperating with other competent authorities and bodies. In the course of realising the investment, the Investment Agency is acting as the client and ensures the fulfilment of the tasks of a technical supervisor.
The main goal of the Government with the new system is to promote that major public investments are completed in due time, within the budget and in a quality appropriate to its function.
By Gabriella Galik, Partner, KCG Partners Law Firm
