Beside the big demand for the properties on Montenegrin market, very often comes up a problem in the processes of construction of the properties, advertising and selling. The most frequent problems are connected to:

Huge concentration of investors on Montenegrin property market

Certain objects don’t have all the permits/are not built in accordance with the law

Barely knowing the law of Montenegro which determinate the models of investing in the property

Barely knowing the circumstances on the property market in Montenegro

The language barrier

Let us lead you through Development process in Montenegro! 

Development process in Montenegro 

1. Development site

2. Making the Detailed Design Project

3. Getting the Building License

4. Tender Process and Preconstruction

5. Construction Process 

6. Construction Diary, Construction Book and Book of Inspections

7. Importancy of manpower

1. Development site

First step is to find the development site. It is very hard or foreign Developer to identify potential development site in Montenegro. Developer must have knowledge of the target area and Municipality development plans.

It is also of vital importance that Developer knows the timetable of every review and draft publication of the development plans.

Developer must establish and maintain a good relationship with local agents, but he should also employ “land buyer”. Best way in finding development site in Montenegro is that “land buyer” just investigate the sites and villages on the cost, and make reports with included: ownership papers, site plan, location plan, planning details, and asking price and terms

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2. Making the Detailed Design Project

Technical documentation needed for the construction of buildings and family houses consists of:

1. Urban and Technical conditions

2. Decision of Location

3. Ideal Project

4. Detailed Design Project

5. Realization Project

6. Performance Project 

Ideal Project includes micro location of the project, preliminary design project, ideal project of the infrastructure, analyze of the construction solutions.

 Detailed Design Project includes:

- Architecture project

- Project of the construction and static

- Power installation project

- Water supply installation project

- Project of the machine installations

- Protection of the environment protection

- Other necessary projects and studies

Realization Project includes all details for the construction work on the site.

Performance Project includes all changes that are made during the construction. In the case that there were not any changes in the project, Investor and Construction Company make note that Performance Project is identical like the Main Project (Detailed Design Project). Detailed Design Project is checked by the Technical Reviser, which could be commission, company or officially allowed person. Investor pays technical revision of the project.

The Detailed Design Project must be checked by Municipality Construction Department, it is called Technical Control of the Project. 

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3. Getting the Building License

Obtaining the Building License in Montenegro is relatively slow process, it could last several months. In Montenegro there are two types of planning documents:

        1.The state planning documents

2.The local planning documents

The state planning documents are

1.  Territory plan of the republic

2. Territory plan of the areas with special purposes

3.  Detailed territory plan

4.   Study about location

        The local planning documents are:

        1.   Municipality territory plan

2.   General Urban Plan (GUP)

3.   Detailed Urban Plan (DUP)

4.   Urban Project

5.   Location study

The most important documents for house builders are local planning documents.

All planning documents are synchronized. Especially GUP and DUP. In GUP there are details related to the State planning documents, borders and areas of the separate territories, purpose of that areas with drowning. All this is presented in charts with precise linings.

DUP includes drowning of the real situation on the ground, the purpose of the separate areas, conditions for the construction or reconstruction, the sizes of the foundation of the objects, number of floors. It consists also of the construction and regulation lines, the size of the urban plot, infrastructure connection points. Construction line divides the areas where construction is allowed or not allowed. Regulation line is on the border of the public purpose areas. First step is to obtain the Decision of Location. To obtain this decision owner of the plot must apply with:

  - Title of deed, verified on the court

  - Survey report

  - Cadastre report

  - Ideal project 

Decision if the location consists of Urban and Technical conditions:

  - Survey-cadastre report

  - Purpose of the Object

  - Number of the floors

  - The borders of the urban area

  - Construction and regulation line

  - Horizontal and vertical dimensions of the Object

  - Type of the materials for the façade

  - Type of the roof

  - Orientation of the Object

  - Meteorology report

  - Quality of the ground report and underground water report

  - Infrastructure report

  - Communal connections points

\After getting the Decision of location, to obtain Building Permit, Investor need:

1.  Decision of location with urban and technical conditions

2.  Main design with the planning approval

3.  Evidence of the right of property or other right on the building site

4.  Evidence of the settlement of obligations concerning costs of building site landscaping

5.  Power utility approval

6.  Approval of the Public Utility Company Water and Sewage

7.  Water Management Approval

8.  Fire Protection Approval

9.  Hygiene/Sanitary Approval

10. Traffic Approval

11.  Post and Telecommunications Approval

12.  Ecological Approval

13.  Evidence of settled duties concerning the fee for the construction of the regional water supply system Public Utility Company Montenegrin Coast

14. Certificate of the Federal Ministry of Defence in the Republic of Montenegro as evidence that the obligatory contributions for the construction and maintenance of public shelters have been settled.

15.  Agreement on Disposal of Waste Material, Scrap and Large/Bulky Waste signed with the Public Solid Waste Utility

16. Payment of administrative fee to the account of the Municipality authorities

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4.Tender Process and Preconstruction

                     - There are four main phases in Tender process:

                     -  Preparing tender documentation

                     -  Decision about the type of tender

                     -  Making the list of tenderness

                     -  Evaluation of the tenders

Preparing of the tender documentation includes writing the letter of invitation, preparing of the copied Detailed Design Project, making the example of the future agreement between Investor and Construction Company.

• Letter of invitation consists of brief explanation about project, a list of enclosures, the name of the contact for queries, how and when the result will be presented.
• Detailed Design Project must be copied, prepared without Architect’s bill of quantities.
• There are different types of the contract, according to: subject of the contract and agreed price.

- Lump Sum Contract: Unique price, payments according to the Dynamic plan

- Unit Prices Contract: at the start of the construction payments are the same like in the contract. Later Supervisor measures the amount of the materials, if there is difference from the contract. If there is great difference in the amount of the materials, prices of the materials could be changed.

-Sealing Price Contract: The price is fixed. If there is some extra work, Construction Company’s obligation will be to cover that extra work and materials.

-Fixed Price Contract: The price is agreed between Investor and Contractor, but it is changeable, 10 % the most. The price is not changeable if the construction is late compared to the Dynamic Plan.

All construction contracts in Montenegro are based on the FIDIC standard. FIDIC standard is based on the British Common Law.

Two types of tenders are usual in Montenegro:

      - Open tendering where any construction company may join the tender.

      - Selective tendering where companies are invited from the pre-selected list.

List of contractors must be prepared by PM. He has to have knowledge of the building services; he must be shore that companies from the pre-selected list can handle the complexity of the particular project. For the pilot project, smaller project, list of the contractors can be based on the reputation, recommendation, previous experience. Short list of the contractors is based on the following details:

       - Name of the Company

       - Name of the director

       - Financials status

       - Manpower

       - Management structure

       - Insurers and liability cover

       - Experience in the similar projects 

The same details above together with the offer are enough to estimate the tender process, is it successful or not, and to appoint the Company. Investor should consider all risks of the contract, nature of the construction program; the proposed project budget is realistic. 

After appointing the Construction Company, Investor has obligation to prepare plot for the construction. His obligation is to enable the water connection and power connection, to remove possible obstacles from the plot and to inform officially Municipality about the start of the construction. There is option, which is becoming standard in Montenegro, that Investor is insuring the Project during the construction process. Project Manager organizes these actions. 

 5.  Construction Process 

Construction starts after necessary preconstruction activities.

Preconstruction activities include enabling construction connection points for electricity and water, cleaning of the plot, and making temporary cabinets for tools. Municipality Power department, the same procedure is for water-meter, must check power cabinet.

Construction work should not proceed until the construction company prepared construction strategy and realization plans and Dynamic plan. Those plans are depending on the size and type of the project, shape of the plot, type of the ground, and type and size of the access road to the site.

Before start of the construction, Contractor should make organization plan of the workers, how many workers he need in each phase of construction, mechanization organization, organization of the supplying with materials, possible engaging of the sub-contractors. Contractor must appoint manager of the construction site and manager of the workers.

Investor should appoint his management team; he should hire good and experienced civil engineer with official Approval of the Chamber of Engineers of Montenegro for right to supervise the construction project. Depending of the project Supervision team includes Architect, Mechanical engineer, Quantity engineer etc.

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6. Construction Diary, Construction Book and Book of Inspections

From the official start of the construction there are three official books in the site office: Construction Diary, Construction Book and Book of Inspections. Construction Diary is lead by the Manager of the site; it includes descriptions of the materials, amounts of materials, number of workers, type of the work, weather conditions. Supervisor verifies construction Diary. Construction book includes all finished construction work with the bill of the quantities from the contract. After checking and verifying by Supervisor, Investor has obligation to make the payment. Book of the Inspections is opening after first official visit of the Municipality Inspections. It consists of the inspection’s reports, it is verified by representative of the Investor and Inspector.

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7. Importancy of manpower

Manpower is most important and vital part of every construction project. Workers must be qualified, registered in Company, must have solid equipment and they must be insured. Estimation of needed number of the workers is based on the standards proposed by the Chamber of Engineers.

Contractor’s most responsible person on the site is Manager of the site. He must be experienced and qualified to manage the construction, he is responsible for all orders of needed materials, he must cooperate with Supervisor and PM and he is controlling the sub-contractors. The manager of the workers makes daily reports to the Manager of the site, also the Manager of the site reports to the Director of the company. Manager of the site should have good relations with PM, he should inform PM about all actions and plans on the site.

Sub-contractors are hired when Contractor doesn’t have enough capacity and experience to do some types of construction wok. Because of the high price of engaging the sub-contractor, Contractor always monitors their performance.

Quality of the construction work and materials must be double checked by Contractor and Investor’s supervision team. There are different types of concrete, giter blocks, reinforcement, with similar look and declarations, but with different quality.

The prices of the materials included in the shell works are similar, but there is great difference in the prices of the materials included in the finish work, depending of the producers and suppliers.

Construction should follow Dynamic Plan, which is agreed between Investor and Contractor. PM should daily monitor the construction process, organize progress meetings, and control the initial budget. His targets are quality, cost and time. He must follow the hierarchy, if he thinks there are some mistakes or problems, he should make action to the Supervisor, or if it is bigger problem or delay, he should inform Investor, and make action after Investor’s decision. He should organize his management team in that way that everyone does his part of the job professionally and in time. He is representative of the Investor, but he must be independent in making some decisions.