,SANITIZED)THE ORGANIZATION OF THE CONSTRUCTION INDUSTRY(SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00246A007600470002-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 16
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2009
• Sequence Number: 2
• Publication Date: September 22, 1959
• Content Type: REPORT

Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
Next 1 Page(s) In Document Denied
Iq
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
Date: 14 September 1959
Subject: The Organization of the Construction Industry
The Allocation of CoY;truction Work and Projects to
Individual Ministriess
Table of Contents
I l..) General
Page
2. Balance Sheet of Tasks and Productive Capacity 2
The Integrated Coefficients
3. Classification of Constructi.oii Work and
Ministries Responsible for the Implementation of
Investment Projects
4. The Advantages and Faults of the Classification
system 8
5. Balancing of Deficits in Productive Capacity 11
6. The Obligatory Control Coefficients
(Wskazniki Dyrektywne)
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
DEN
AL
The Allocation of Construction Work and Projects to Individual
Ministries Supervising the Construction Industry
General
The construction enterprises are regarded as the third
alternate factor in the realization of investments. The first
factor -- the investor was described in the of this
series of reports, the second the designing and consulting
bureaus will be described later. This part describes the
allocation of construction tasks -- investments and capital
repairs to the individual ministries which supervise the
construction-assembly enterprises. It is a complicated problem
since several thousand investment projects* have to be
distributed every year, some 650 state construction-assembly
enterprises, and also because the system does not permit the
investor to select the contractors because they are centrally
assigned by the State Economic Planning Commission (PKPG).
The allocation of construction works and projects is
based on the investment plan and Capital Repairs Plan which
must be prepared by PKPG on the basis of the investment and
capital repairs plans submitted by individual ministries.
This must be done in a short time, in practice during November
and December of every year, in order to give every construction
enterprise the plan of its construction work for the next year
from 1st January.
A total of about 10,000 investment projects, about 3000 of them
are centrally controlled by PKPG and they, use about 80% of the
total investment outlays. The remaining 7000 are allocated to
individual ministries with necessary funds in bulk.)
00rEjTL
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
A. Balance Sheet of Tasks and Productive Capacity
The productive capacity of the construction industry is
strictly controlled by the state as are other economic means
and stocks, i.e., the government allocates the construction-
assembly enterprise like other components such as money, foreign
currency for import, materials, machinery, building lots and
grounds.
The allocation of contractors is conducted according to the
Construction Plan (Plan Budownictwa) derived from the Investment
Plan. The Construction Plan pertains only to a part of the
Investment Plan which is called Construction-Assembly Projects
of the Investment Plan (Roboty Budowlano-Montazowe Planu Inwest-
ycyjnego),and embraces new construction and capital repairs.
The planning of the construction industry production is
conducted by a balance sheet method, i.e., on the basis of the
initial estimates of the planned investments for the given year,
the needed construction work is expressed in zlotys (the number
of workers needed multiplied by their yearly output) and in addition,
in physical units, i.e., rooms, cubature, kilometers for roads, etc.)
and compared with the existing productive capacity of all con-
struction-assembly establishments. The productive capacity embraces
organization, technical personnel, workers, machinery, equipment,
depots and facilities including investments for the construction
industry itself.
FlETI,
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
DENT
The preparation of the balance sheets is facilitated by the
methods of integrated coefficients (wskazniki scalone) and
classification of construction work.
The integrated coefficients (wskazniki scalone) define:
the quantity of man-hours and quantity of the more important
materials needed for one million zlotys of any type of invest-
ment, e.g., it is known from experience and calculation how
much bricks, cement, lime, cables, pipes and other materials
are necessary for the construction of an electric power plant
for one million zloty-i? It is also known how Etteh manhours of
construction workers, mechanics and assembly workers are needed
for one million zloty of the constructed power plant. The same
is true for chemical plants, steelworks, machine industry,
textile industry, agricultural food stuff industry, cement
industry, factories, etc.
The integrated coefficients for one million zlotys of housing
construction for the construction of schools, hospitals, highways,
railways, high tension transmission lines, gas, water installa-
tions and all other various works are known also exactly.
On the other hand the yearly output of one worker in the
basic production e.g., in industrial construction 83,000 zlotys,
in housing construction 75,000, in industrial assembly work 95,000/
in drainage and agricultural soil improvement work 48,000 zlotys,
are also known. In this way it is possible very quickly to
CUNT 1E TIA L
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246A007600470002-5
prepare a statement of the investment needs on the basis of the
comprehensive coefficients and to compare them with the productive
capacity of the existing construction-assembly enterprises. This
method of coefficients was developed in Polish construction
industry planning during the last few years to a high level, and
the preparation of balance sheets statements of the investment i
tasks and productive capacity is done quickly and with sufficient
accuracy.
B. Classification of Construction Works and Ministries Responsi-
ble for the Implementation of Investment Projects
In the official statistics, the construction-assembly enter-
prises are divided. as follows(See Polish Statistical Yearbook
1957page 199):
Socialized construction-assembly enterprises in 1956
644
Among them: General Construction Enterprises 391
From them housing construction enterprises 265
Special construction Enterprises 183
from them: industrial construction enterprises 78
engineering
57
33
Assembly establishments
The above division of the construction-assembly enterprises
and establishments however is sufficient for the allocation
of construction works, and for this reason much more detailed
and specific classification are used in planning.
COONDENTIAL
Approved For Release 2009/07/14: CIA-RDP80T00246A007600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
The construction-assembly works are divided from the point
of view of allocation of individual works and investment projects
into eight groups:
I. General construction works
II. Industrial construction
III. Engineering construction
N. Communication; long distance supply nets
V. Land improvement for agriculture
VI. Construction of mines and shafts
VII. Geological and geodetic work
VIII. Capital Repairs
The following remarks should be made concerning this
division:
.a/ Groups I to VI are divided according to the technical
characteristic of the constructed project;
b/ Group VII is included in the construction plan for some
unknown reason, anyway only surveys of grounds necessary
for the constructions are taken iconsideration;
c/ Group VIII capital repairs are included in one comprehensive
group in order to simplify the planning and they are not
divided between the above listed six categories of construction
investment. These eight groups are further divided into 27
categories of separate projects and: construction works, and Q ne
of the ministries or central governmental offices is assigned
as responsible for each of them as follows:
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
CONFII E TIIJ
Breakdown of Classification of Construction-Assembly Projects and
Responsibility
Ministry responsible
Category of Projects and Works for the implementation
I. GENERAL CONSTRUCTION WORKS
1. Housing construction
Ministry of Construction and
Building Materials Industry
2. General construction
(schools, hospitals,
.offices, shops, etc.)
3. Rural homestead construction
II. INDUSTRIAL CONSTRUCTION
4. Factories, plants
III. ENGINEERING CONSTRUCTION
A net of local enterprises
subordinated administratively
to local peoples councils and
for technical supervision to
the Ministry of Construction
Ministry of Construction
CIVIL ENGINEERING
5.
Roads and Bridges
Ministry of Transportation
6.
Railroads including
electrification
7.
Airfields, civil and
Ministry of Construction
military
8.
Strengthening of sea-
shores and port facilities
Ministry of Construction
9.
Dredging and construction
at sea
Ministry of Shipping and Water
Economy
10.
Regulation of rivers
11.
Dams, canals, and water
reservoirs
Ministry of Construction
Approved For Release 2009/07/14: CIA-RDP80T00246A007600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
CONNORTIA
Category of Projects and Works Ministry Responsible for Implementation
COMMUNAL
12. Long distance water supply lines Ministry of Construction
13. Urban water and sewer systems,
streets, equipment of streets,
streetcars Ministry of Communal Economy
14+. High tension electric lines
Long distance gas and crude
oil pipelines
15. Low tension electric lines for
light including electrification
of rural areas
Ministry of Mining and Electric Power
16. Communication lines, telegraph,
telephone, telecommunication Ministry of Communication
Buildings, stations for radio and
television, and masts
V. LAND IMPROVEMENT FOR AGRICULTURE
17. Drainage, irrigation Ministry of Agriculture
VI. CONSTRUCTION OF MINES AND SHAFTS
18. Coal mines
19. Metal ores mines
20. Sulphur, salt mines, apatite
and other chemical minerals
21. Open pit mines for construction
materials
22. Test and exploitation drillings
for oil
jqpr
UTIAL
7
Ministry of Mining
Ministry of Heavy Industry
Ministry of Chemical Industry
Ministry of Construction
Central Petroleum Office
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
1OEM
Category of Projects and Works Ministry Responsible for Implementation
VII. GEOLOGICAL AND GEODETIC WORKS
23. Geological drillings Each ministry through its own
geological service under technical
supervision:of the Central Administration
of Geology
24+. Surveys of construction Each ministry through its own survey
grounds and measurements service under technical supervision by
during the construction the Central Administration of Geodesy
(the plan does not include and Cartography and establishments
geodetic surveys of the subordinated to it.
country, agricultural
surveys and military
maps)
VIII. CAPITAL REPAIRS
25. Capital,repairs of housing Ministry of Communal Economy
26. Repairs in the state
agricultural farms Ministry of Agriculture
27. Other repairs Ministry-:which controls and
exploits through its own
construction-assembly enterprises
or by the self-management economic
system.
The construction plan does not embrace the constructions carried
out by the Ministry of National Defence on its own. This will be
discussed in a later report.
C. The Advantages and Fault: of the Classification System
The breakdown of the entire construction industry into these
categories is so detailed that every investment project can be properly
classified and thus it is automatically known which ministry is
responsible for its implementation. Incases when an investment could
be classified into one of two categories, e.g., a housing settlement
(responsible Ministry, Construction), has to be built with a new street,
CONFIN.T
W.d
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
0WHE 1
streetcar line and sewer system (responsible Ministry, Communal
Economy) then the State Economic Planning Commission makes an
arbitrary decision. In general, the main type of construction
is decisive for assignment of the general contractor.
One of the advantages of this system is that the contractor
generally knows what kind of construction works awaits him in
the next year. The investor knows also who will be his partner-
contractor and he can, during the planning. stage, coordinate on
various problems which may have an influence on construction
methods. Therefore only in rare instances is some enterprise
surprised by an investment project unknown t4ore often it happens
that an investment project is left out of the construction plan
because of shortage of state credits or the necessity to reduce
the national investment plan ordered by the government, etc.
The second advantage of the classification is the simplicity
and clarity. As a matter of fact all this allocation of investment
construction tasks among the ministries is done by three or four
officials of the Construction Department of the State Economic
Planning Commission. Sometimes dubious problems arise, e.g., an
investment project is small and the construction enterprise does
not like to accept the order, in such cases PKPG makes the
decision in agreement with both ministries involved (the investing
and constructing ministry) e.g., by transferring the project to
the self-management economic system which means t1at the investor
must build the project himself.
'ON EI' TIA I.
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
~DNIUWENVAI
The third advantage is that the allocation of a state con-
tractor means also the automatic allocation of building materials,
because the contracting ministries receive at the same time the
entire poo1of materials necessary for their yearly plans. The
fact of accepting an order from the investor means that the
constructing enterprise will supply the necessary building
materials and is responsible for the implementation of the
project, the labor, and equipment.
The main fault is that the investor cannot select the
contractor. For example, if a factory is built in Zielona Gora,
it is almost certain that this project will be allocated to a
construction enterprise in Zielona Gora although it is well
known that this particular enterprise does not have qualified
engineers, that it will be not able to build it in the required
time, etc. The investor can only complain and intervene with
the Ministry of Construction and Building Materials Industry
that necessary engineers and equipment be assigned to the
construction enterprise.
While the allocation of construction task itself is
simplified by the classification system, enormous work remains
to be done in the preparation of balance sheet of materials
(Department of Construction Planning Commission coordinates
with the Materials Accounting Department),, the preparation of
the balance sheet of labor and bargaining for suitable obligatory
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
DENY
N. F
control coefficients (master standards)(wskazniki dyrektywne)
which are included into the yearly national economic plan.
D. Balancing of deficits in the productive capacity
The balance sheet of the national investment tasks and
productive capacity of the construction industry is not closed
at once. There is usually a shortage of productive capacity;
even if the shortage on the national level is small, e.g., about
8%, it may reach 20% and more in individual voivodship6as
happened in 1957.and in 1958 in the city of Lodz (city of
Lodz is an independent administration equal to a voivodship).
Besides that there can be a shortage in some branch of the
construction industry, e.g., shortage of installation productive
capacity greater than that for the entire construction
industry.
The balancing-of the production capacity with the
tasks is conducted in the following way:
The State Economic Planning Commission as a rule increases
the obligatory control coefficients. A control coefficient is
nothing else than a required (and ordered to be implemented)
master standard of productivity, use of material per unit or
production costs, for the given year. It is well known on the
basis of experience, statistical data, calculations and com-
parison with foreign countries, for example, that the yearly
output of one worker in housing construction amounts, according
the the PolW Statistical Yearbook 1957, page 200, to:
CONFIDENTIAL
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
The value of basic construction-assembly production for one
worker in 1956, in 1956 prices:
in housing construction 75,086 zloty
in industrial construction 85,051 "
in engineering construction 77,767
in agricultural land improvement 48,635
# because cost of
in assembly work 95,669 " materials and machines
is included.
average in the entire construction 75,920 it
These are the output of workers employed in the basic
production, excluding nonproducing workers, assigned to
auxiliary services, etc. For that reason the average output
of one worker is much lower, about 15 to 200.
The State Economic Planning Commission by arbitrarily
increasing the required output for the next year, e.g., by
3.5%, is able to balance larger investments without increasing
the labor force.
In the same way, PKPG increases the tasks of saving building
materials for a production unit each year; in other words it
tightens the norms of use of materials. For example, it
that the use of auxiliary timber (used for scaffolding and other
purposes on the building site) for 100 cubic meters of housing
construction must be cut down from 0.06 cubic meters to 0.05
cubic meters and in this way balances the shortage of materials
on paper. The reason for suchcut is that it (sA known that a
CUFID'TI
QGnees
es
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
lot of timber is wasted on the building sites, and that it is
certain that this amount of timber can be saved.
Independently the PKPG provides for a part of the difference
by increasing the wages fund and funds for recruitment, thus
allowing an increase in the number of workers. It also increases
the allocation of materials, if the increase of building materials
production planned for the next year permits it to do so.
The ministries fight against the increase of the obligatory
control coefficients and higher master standards. They indicate
that the mutual relation of the various types of construction work
(basic construction, installation and assembly) does not change,
that they have a larger percentage of earthwork which reduces the
output for one worker, or that they have to organize a great number
of new construction projects which consumes time and reduces
productivity, that the experienced bricklayers leave the construction
enterprises and start private work and for that reason the con-
struction enterprises must spend more money for training new
workers whose output will(anyway ower etc. At the end of these
long bargainings, the final construction plan emerges containing
the list of allocated construction projects and works (portfolio
of works) and obligatory master standards.
A lot of energy is used for quarrels and disputes about master
standards, but these negotiations have no influence on the date of
the start of individual projects, because this is beyond discussion,
or o4-the allocation of the contractor because the investor has
no say in this respect.
/J
CORM JTI
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
 Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5
ON
MR
Another fault of this system is that all these discussions
are about integrated coefficients and standards for the entire
country, for the entire construction industry, or ministry, or
central administration, but not for individual construction pro-
ject, or individual concrete estimates. For that reason these
coefficients are more or less correct on a large scale of the
country, ministry or a branch of construction industry, but
are not always pertinent to an individual construction project
during the next year. The employees of the construction industry
used to say that these coefficients are as true for the entire
ministry as the official statistics which indicate that every
fifth man in the world is a Chinese.
On the other hand, the Construction Department of PKPG fights
with other PKPG departments for an increase of its labor force,
for credits for its own investments, for allocation of housing,
trucks and automobiles, and, with Ministry of Finance, for an
increase of working capital and longer periods for accounting
of working credits, for increase of stocks of building materials,
and soon. All these conferences continue for a long time and
the final national Construction Plan is usually not approved
until February or March of the current production year. During
the first quarter of a.current year the construction enterprises
work on the basis of temporary standards. In 1958 a so called con-
struction year (rok budowlany) was introduced beginning 1 April,
which differs from the budget year. This change is also convenient
for the industry -fr climatic-seasonal reasons.
CO F E TR
Approved For Release 2009/07/14: CIA-RDP80T00246AO07600470002-5