Infrastructure Policy Review of Ukraine

3. Improving the core functions of infrastructure governance

Abstract

Improving the core functions of infrastructure governance is vital to ensuring that infrastructure projects are effectively managed from planning through to decommissioning. This includes both the technical elements specific to infrastructure lifecycles, as well as cross-cutting governance issues that must be addressed for successful delivery. The key distinction in this section is that all tasks relate directly to infrastructure and fall under the responsibility of the relevant line ministries and implementing organisations under them – such as those for transport or energy. These tasks involve sector-specific functions, from needs assessment to asset management, while also handling overarching governance issues like institutional capacity, risk management, and stakeholder engagement.

3.1. Needs assessment and strategic planning

3.1.1. Overview

Ukraine has moved from a permissive project-accumulation model towards a more rules-based approach to strategic planning and public investment selection. In the current framework, planning and preparation of public investment projects are anchored in the Budget Code, notably Article 33‑1 for the state level and Article 75‑2 for regional and local levels, and are operationalised through Cabinet of Ministers Resolution No. 527 of 28 February 2025 (Cabinet of Ministers of Ukraine, 2025[1]). These changes matter because they shift the logic of project entry from open-ended proposal generation towards fiscal filtering, readiness testing and portfolio management (Cabinet of Ministers of Ukraine (CMU), 2024[2]).

While the current practice is still transitional, from a regulatory perspective prioritisation is no longer meant to depend on ad hoc project promotion alone. It is increasingly shaped by a combination of strategic alignment, implementation readiness, affordability within medium-term ceilings, likely funding source, and the sequencing of ongoing versus new projects, and, where relevant, recovery, security and EU-alignment considerations. The Budget Code now requires that at least 70% of the planned public investment envelope be directed to continuing or completing ongoing projects, which is a direct attempt to reduce stop-go investment and the politically driven proliferation of new starts.

The Single Project Pipeline (SPP) should therefore be understood as an evolving portfolio-management instrument rather than as a simple registry. According to the Ministry of Economy, the SPP is the common pipeline for public investment projects and programmes; according to RDNA5, it supplied the majority of the 2026 priority public investment needs. That is progress, but not yet proof of full comparability across sponsors and sectors. The key analytical issue is whether the projects entering the system are sufficiently defined, costed and owned to justify scarce funding commitments (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]).

Box ‎3.1. New procedures for the Single Project Pipeline in Ukraine

Ukraine’s 2025 public investment reforms have introduced a more explicit mechanism for fiscal gatekeeping and portfolio triage. Resolution No. 232 established a new procedure for the distribution of public investments and created an inter-agency commission chaired by the Minister of Finance to decide how budget funding should be allocated across new and ongoing public investment projects and programmes over a three‑year horizon, replacing the earlier framework under Resolution No. 571 of 2015 (Cabinet of Ministers of Ukraine (CMU), 2025[4]). Resolution No. 294, adopted the same day, established the procedure for developing and monitoring the medium-term plan of priority public investments, linking portfolio decisions more directly to the budget calendar and medium-term fiscal planning (Cabinet of Ministers of Ukraine, 2025[5]).

The importance of this reform lies less in its procedural detail than in the discipline it is intended to impose. Ministries are required to submit lists of projects together with information on priority score, readiness, timing, cost and financing sources. These lists are then reviewed by the Ministry of Finance against fiscal constraints and budget rules before the inter-agency commission makes a final decision on which projects should proceed. The framework also creates an explicit bias towards continuity: at least 70% of available resources are to be directed to ongoing projects, limiting the tendency to launch new initiatives at the expense of completing existing ones (Cabinet of Ministers of Ukraine (CMU), 2025[4]).

The new procedure also allows periodic portfolio correction. The list of projects is reviewed twice a year, and projects that materially exceed costs, fall behind schedule or deviate from their intended purpose may be reconsidered, with funding potentially reallocated to projects that are implementation-ready and progressing on time (Cabinet of Ministers of Ukraine (CMU), 2025[4]). This marks a significant departure from a more permissive pipeline model in which projects could remain in the system with limited fiscal challenge or consequence.

From a strategic-planning perspective, the key point is that Ukraine now has a more formal mechanism for translating strategic priorities into a fiscally bounded portfolio. However, the effectiveness of that mechanism will depend on the quality of upstream needs assessment, project concepts and readiness information. A stronger selection process can improve discipline, but it cannot compensate for weak evidence at entry.

Source: Cabinet of Ministers of Ukraine (CMU) (2025[4]), CMU Resolution No. 232 (28 Feb 2025), Some issues of public investment distribution, https://ealegislation.com/document.fwx?rgn=165440; Cabinet of Ministers of Ukraine (2025[5]), Resolution No. 294 of 28 February 2025 on the approval of the procedure for developing and monitoring the medium-term plan of priority public investments of the state., https://zakon.rada.gov.ua/go/294-2025-%D0%BF.

As part of implementing Ukraine’s PIM Roadmap, the government is currently developing a comprehensive PIM Procedure to streamline public capital expenditure. This initiative aims to ensure alignment of public investments with national priorities, enhance efficiency, and build trust with international partners. The methodology proposed under this system encompasses six key stages: Objective Setting, Identification & Development, Screening, Appraisal, Prioritisation & Selection, and Final Implementation Decision. Each stage ensures projects align with national objectives, meet feasibility standards, and undergo systematic evaluation for strategic impact and efficiency. The methodology follows an integrated approach, guiding project selection through alignment with national objectives as a first “test”. Thus, projects must contribute to achieving the government’s strategic goals.

The methodological architecture of the reform is now more advanced than the practice observed across many project sponsors. The July 2025 PIM guide shared by the government with the communities and other budget users referenced in the user-provided materials sets out a structured sequencing requiring a strategic justification, a clear statement of the problem or need, analysis of current service provision and demand, identification of constraints and risks, consideration of sustainability and inclusiveness, assessment of alternatives, market and procurement analysis, and financial justification. The central issue is therefore no longer the absence of a framework or developing methodological guidance to accompany it, but uneven capacity to apply it consistently and proportionately and the need for additional capacity building to ensure the absorption of the reform on the ground (by project initiators).

The emerging model is conceptually aligned with OECD guidance on infrastructure governance and public investment. OECD work stresses that sound infrastructure planning requires a rigorous assessment of current and future needs, explicit links to budget allocations and financing sources, clear co‑ordination across levels of government, and evidence‑based project selection and prioritisation rather than ad hoc project accumulation (OECD, 2020[6]). Box ‎3.2Box ‎3.2 provides additional details on the meaning of needs assessment in infrastructure that is aligned with international good practices.

DREAM is becoming the operational digital backbone of this new planning model (DREAM, 2026[7]). The legal status of the system was strengthened in January 2025, when the government confirmed that the unified state portfolio of public investment projects would be formed using the unified information system based on DREAM, and government reporting and user-provided draft materials indicate that the system is now being used for medium-term investment plans, project and programme preparation, evaluation, portfolio formation and monitoring (Cabinet of Ministers of Ukraine (CMU), 2024[2]).

That said, needs assessment is shifting from narrative to evidence, but practice is uneven. Sector documents identify service gaps and long-term objectives, and regional instruments collect bottom-up priorities from communities. Quantification is improving but inconsistent: baselines and demand models are not systematically embedded, and scenario analysis is rare. Where indicators exist, they often specify “increasing/decreasing trends” rather than quantified outcomes tied to costs and milestones. This weakens the strategic case at the project entry stage and blunts trade‑offs when ceilings bite.

Box ‎3.2. The role of needs assessment in strategic planning

Needs assessment is not a preliminary narrative exercise. It is the analytical process through which governments determine what service problem exists, where it exists, who is affected, how large the gap is, what options could address it, and whether a capital project is justified at all. OECD work treats this as a core condition of sound infrastructure governance because weak needs assessment distorts the entire investment cycle: it weakens prioritisation, encourages project accumulation, and makes later appraisal, procurement and delivery less reliable. Sound strategic planning should therefore align infrastructure proposals with development objectives, assess current and future demand, link priorities to budget allocations and sources of funding, and provide a basis for evidence‑based project selection and prioritisation.

A robust needs assessment should contain at least five elements. First, it should define the service gap in operational terms, such as insufficient capacity, poor reliability, lack of access, safety failure or climate vulnerability. Second, it should be based on evidence about current and future demand, including past usage trends, demographic and economic projections, and, where relevant, territorial or network diagnostics. Third, it should be place‑specific, since infrastructure needs differ across territories and sectors. Fourth, it should test alternatives, including rehabilitation, better use of existing assets, demand-management measures and phased responses, rather than assume that a new capital project is the only solution. Fifth, it should be tied to fiscal realism and prioritisation, so that strategic planning does not become an inventory of desirable but unaffordable projects.

In Ukraine, strategies usually contain the description of the main problems that a strategy plans to address, and the goals that it plans to achieve. However, needs assessment remains uneven and is often weaker than the description of sector conditions, reform ambitions and external alignment objectives. Some data is used to describe the state of the art in a certain sector rather than identify the bottlenecks. At the same time, Ukraine has a number of external benchmarks / goals that it has to achieve within the EU integration process. Thus, the strategic documents necessarily adhere to the EU-Ukraine reports suggestions, Ukraine Facility plan, and in terms of monetary and fiscal policy, with the IMF program. For example, Transport Strategy foresees development of trans-European transport corridors and introducing EU regulation of natural monopolies in the transport sphere. Besides, all the strategies address the issues of inclusivity and climate change (energy efficiency). Thus, on the one hand little space “for manoeuvre”, and on the other hand limited capacity to collect and process necessary data do not allow the Ukrainian Government to perform proper needs assessment. Some feedback is collected during public discussion of strategy drafts: NGOs from a relevant sector usually can specify which problems are more important than others.

Source: OECD (2020[6]), Recommendation of the Council on the Governance of Infrastructure, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0460;OECD Mission to Ukraine, July 2025.

3.1.2. Challenges

This section identifies four main challenges: overlap between planning instruments, weak translation of strategy into investable projects, uneven project-preparation capacity, and incomplete transparency around prioritisation and pipeline discipline. A first challenge is that strategic and recovery planning instruments remain numerous and partly overlapping, particularly across national, regional and local levels. The result is that the route from needs identification to pipeline entry is still more crowded and less clearly delineated than the reform model implies.

Weak translation of strategic intent into quantified service gaps, credible project concepts and implementable portfolios represents one of the core issues that Ukraine is facing in this area. Strategic planning should identify infrastructure needs, link them to budget allocations and sources of funding, and support evidence‑based project selection. By contrast, many Ukrainian strategic documents still describe broad sector conditions, reform commitments and desired directions of travel more readily than they define bottlenecks, quantify service deficits, compare options under fiscal constraint, or specify the sequence of interventions needed to close the gap.

This affects sectoral and municipal practices of needs assessment and planning, not only in abstract institutional design. The sectoral programmes and projects’ audits often find strategic documents with weak specification of delivery activities, the absence of accompanying plans, and limited use of sectoral modelling and integrated planning documents where relevant. This suggests that planning remains too detached from investable project logic and spatially coherent prioritisation.

The bottleneck has therefore shifted from pipeline creation to pipeline credibility. DREAM and the SPP have improved visibility and common intake, but RDNA5 itself notes that local and regional projects were reflected in the 2026 priorities through national programmes because of differences in portfolio readiness, inconsistent criteria and fragmented information; that is a clear sign that transparency has advanced faster than comparability and that the system still struggles to convert a high volume of concepts into a genuinely decision-ready pipeline (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]).

A further challenge concerns supply-side project-preparation capacity. Smaller communities and weaker sponsors often face high costs and limited access to the technical expertise needed to enter the pipeline on equal terms. Even where formal access to DREAM exists, credible pipeline entry still depends on whether economists, engineers, environmental specialists, design offices and project-preparation support can be mobilised at sufficient scale and quality.

Strategic planning thus remains insufficiently connected to project preparation capacity, which biases access to the pipeline. RDNA5 is explicit that large‑scale recovery depends on ready-to‑implement projects and on the use of project preparation facilities, yet the broader reform narrative shows that many communities still face high costs for project-cost documentation, feasibility material and supporting studies. This means that entry into the pipeline can reflect administrative and financial preparedness as much as objective infrastructure need (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]).

This constraint persists despite expanded training and outreach under the reform. RDNA5 notes that local and regional projects are still being assessed and integrated into sectoral and national programmes, and that the final number of eligible projects and financing needs will continue to evolve (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]). Ministry for Development reporting indicates that seven regional events reached more than 3 500 participants, and more than 470 representatives were trained in the Five Case Model methodology. Project preparation should therefore be treated as part of the strategic-planning challenge rather than as a downstream technical matter. If project entry depends on costly and technically demanding documentation, the pipeline will continue to favour administrative preparedness over objective need.

Project preparation should therefore be treated as part of the strategic planning challenge, not as a downstream technical matter. Credibility of the pipeline depends on whether sponsors can finance and procure the preparatory work needed to convert a stated need into a technically and fiscally testable concept. For larger or more complex infrastructure proposals, this means access to properly scoped feasibility work, early engineering input, site investigations where relevant, and realistic preliminary costings rather than bare project proposal notes. Ukraine’s emerging project-preparation arrangements under the PPP Agency are a useful starting point, but the wider reconstruction context suggests a need for broader preparation support that can also serve donor-financed and subnational pipelines. Without this, DREAM may improve visibility of needs faster than the state improves the quality and comparability of the projects entering the system.

Capacity asymmetries across levels of government continue to distort strategic representation in the pipeline. Investment quality depends heavily on co‑ordination and capability across levels of government, and the Ukrainian reform materials point to staffing issues, turnover, proliferating templates and strengthened formal requirements that are significantly harder for smaller local governments to meet (Ministry for Development of Communities and Territories of Ukraine, 2025[8]). That skews the pipeline towards jurisdictions that already have stronger documentation capacity or donor access, rather than necessarily towards those with the sharpest infrastructure deficits (OECD, 2025[9]).

The planning system is not yet fully integrated across portfolio channels, identifiers and downstream controls. RDNA5 distinguishes between SPP projects and programmes and a separate set of non-SPP initiatives, while official reform communications show that the state is still in the process of building the digital and procedural spine linking planning, budgeting and implementation (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]). The result is that Ukraine currently has greater transparency about what is in the system than analytical control over how strategy, portfolio status, budget decisions and delivery performance fit together (Cabinet of Ministers of Ukraine, 2025[10]).

Moreover, the reform is beginning to reach communities, but subnational capability remains uneven. RDNA5 reports that, by early 2026, all 24 regions and more than 895 hromadas had approved medium-term investment plans and SPPs. Parallel reporting by the Ministry for Development of Communities and Territories states that seven regional events reached more than 3 500 participants and that more than 470 representatives were trained in the Five Case Model methodology (Ministry for Development of Communities and Territories of Ukraine, 2025[11]), which is a serious mobilisation effort but not yet a substitute for durable planning capability across all territories. Subnational experience shows that the bottleneck is not only digital access to the pipeline, but the cost and complexity of producing admissible project documentation. This capacity challenge is already visible in feedback from hromadas on how the new system operates in practice. Box ‎3.3 illustrates how documentation burdens and preparation costs can distort pipeline entry at subnational level.

Box ‎3.3. Subnational feedback on pipeline entry and project-preparation capacity

Ukraine’s PIM reform is being rolled out through regular engagement between the Ministry for Development of Communities and Territories and hromadas, including outreach and capacity-building on the practical implications of the new system. Feedback from these discussions suggests that, at subnational level, the main difficulty is not only understanding prioritisation rules, but meeting the documentation requirements needed to enter and progress through the pipeline. Some hromadas have questioned why their projects receive low priority, while central authorities have emphasised that prioritisation criteria are already defined in the legislation and that projects are reviewed by regional administrations and other bodies before reaching the Strategic Investment Council.

The more structural issue concerns project-preparation capacity. Hromadas report that the preparation of project cost documentation and related technical materials is often too expensive and technically demanding, especially for smaller projects or grant applications. Since these documents are required under the construction and urban-planning framework, weaker local governments may struggle to bring forward projects even where needs are acute (Verkhovna Rada of Ukraine, 2009[12]; 2011[13])This creates a practical bias in favour of jurisdictions that already have donor support, stronger internal capacity or access to specialised project bureaux.

This feedback illustrates a broader point about the new planning system. Formal transparency of criteria is necessary, but it is not sufficient. If project entry depends on costly and technically demanding documentation, the pipeline may still favour administrative preparedness over objective need. In that sense, subnational feedback reinforces the case for stronger project-preparation support, proportional documentation requirements and a more differentiated subnational support model.

Source: Information provided by the OECD Kyiv Office.

3.1.3. Recommendations

Ukraine now needs to move from pipeline visibility to pipeline credibility. That requires treating needs assessment as a practical filtering discipline rather than as a descriptive preface to project generation, which in turn means requiring a minimum evidence base for entry into the public investment project pipeline: quantified baselines, demand or usage forecasts where relevant, territorial or network diagnostics, a clear definition of the bottleneck to be addressed, the main alternatives considered, and at least an indicative statement of recurrent-cost and implementation implications. The recent collaboration between the Government of Ukraine and the International Transport Model (ITF) allow to build a basis on how transport modelling can help advance on this recommendation.

Box ‎3.4. The role of transport modelling in appraisal and option testing

Transport modelling is a critical component for appraising reconstruction options in the high-uncertainty context of post-war Ukraine. It can generate estimates of future transport demand and system performance under alternative infrastructure and policy scenarios. However, given the scale of demographic displacement and uncertainty around economic recovery, traditional modelling approaches based on fixed baseline assumptions are unlikely to produce robust results. Instead, Ukraine would benefit from a strategic, scenario-based approach that explores a range of plausible futures and supports the identification of “no-regret” investments that perform well across multiple recovery pathways.

Despite its importance, the application of transport modelling in Ukraine remains limited to urban and project-level models. Microsimulation models have been developed in major cities such as Kyiv and Lviv to support local decision making, while project-specific models, often produced by academic institutions or consultants, have been used to assess alternative infrastructure designs.

Between 2018 and 2024, the European Union supported the development of a National Transport Model to inform large‑scale investment planning and the preparation of a national transport master plan. However, limited technical capacity, fragmented data systems, and the absence of institutionalised modelling requirements within government have constrained its systematic adoption. As a result, transport modelling is not yet consistently integrated into appraisal processes, weakening the evidence base for investment prioritisation.

Recent initiatives are beginning to address these gaps. In 2025, the International Transport Forum, through the Common Interest Group for Transport in Ukraine (CIG4U), launched a capacity-building programme to strengthen expertise in transport modelling within municipal and national administrations. This includes technical workshops, dissemination of international best practices, and case studies led by Ukrainian practitioners. In parallel, efforts are underway to establish a Ukrainian Association of Transport Modellers and Planners to promote professional standards and support the development of the discipline.

A structured framework to support scenario-based appraisal

To operationalise a more strategic, scenario-based approach to appraisal, Ukraine would benefit from adopting a coherent modelling framework. The ITF Policy Ambitions and Sustainable Transport Assessment (PASTA) framework provides one such approach.

PASTA consists of a suite of integrated simulation models covering urban and non-urban passenger and freight activity, alongside modules for vehicle fleet evolution. It enables the assessment of infrastructure and policy interventions, such as rehabilitating key rail corridors or introducing carbon pricing, on core performance indicators including CO₂ emissions, travel times and network connectivity. Importantly, the framework is designed to explore alternative future scenarios, making it well suited to high-uncertainty environments.

The framework has been applied in a range of country contexts to support evidence‑based policymaking:

• India and Argentina: The PASTA framework was used to assess the impact of exogenous factors, such as trade regionalisation and teleworking, on long-term transport infrastructure requirements.

• Philippines: The freight component of PASTA helped to identify bottlenecks in intermodal connectivity and evaluate the decarbonisation potential of various freight policies, providing a path to reducing emissions.

• Uzbekistan: In Tashkent, scenario analysis compared baseline trends with “Climate Ambition” pathways, quantifying potential reductions in air pollutants (NOx, PM2.5) and CO2 emissions.

Source: CTS (2024[14]); ITF (2023[15]; 2023[16]; 2023[17]; 2022[18]; 2021[19]; ITF, 2020[20]); Stashkiv et al. (2023[21]); Lviv City Council (2019[22]).

Ukraine could harden the project entry stage and use DREAM as a strategic-planning instrument rather than merely a registry. The legal framework already supports medium-term planning and portfolio formation, so the next step is operational: project proposal entry should require a mandatory minimum dataset on policy objective, service gap, location, expected scale, readiness, likely implementation route, environmental and social flags, and indicative recurrent-cost implications, with differentiated editing rights and basic validation rules so that weak entries are filtered or corrected before they influence prioritisation.

Ukraine could make strategic planning more explicitly fiscally bounded at the point where plans and project proposals are formed, not only at the budget stage. Resolution No. 294 already links the medium-term plan of priority public investments to the Budget Declaration and indicative aggregate ceilings, which is institutionally sound (Cabinet of Ministers of Ukraine, 2025[5]). The unresolved task is to ensure that sector strategies and project proposals present prioritised and cost-aware options within those limits instead of simply accumulating eligible ambitions for later pruning.

Ukraine could connect planning much more deliberately to project preparation support. The Project Preparation Unit, PREPARE Ukraine and the wider preparation framework should operate as part of the planning system through a common intake logic, shared maturity tiers and standard terms of reference, so that preparation support is allocated not only to already visible priority projects but also to strategically important proposals that are currently too weakly developed to compete on their own.

Ukraine could adopt a differentiated subnational support model instead of imposing one demanding planning template on territories with sharply different capabilities. A concise subnational PIM manual, minimum documentation thresholds by project size and readiness, repeatable templates, and access to regional or sectoral centres of expertise would be more consistent with OECD principles on multi-level public investment than a formally uniform but practically uneven system; support should be targeted using observable signals from DREAM and sectoral review processes rather than distributed only through generic training or first-come access.

The data spine of the reform should become a strategic-planning tool rather than as an ancillary digital upgrade. A persistent project identifier should attach to each public investment project proposal from entry stage and follow it through portfolio decisions, budgeting, procurement, contract execution and performance monitoring, because without that the state will struggle to learn systematically from project proposal’s quality, preparation time, procurement outcomes and delivery performance across sectors and territories.

The practical objective is not a tidier pipeline but a more credible one. If needs assessment becomes more evidence‑based, more spatially and fiscally grounded, and more closely linked to preparation capacity, Ukraine will be better placed to ensure that projects entering the SPP are not only strategically aligned but also sufficiently developed, comparable across sponsors and realistically capable of progressing through appraisal, procurement and delivery. To this end, Ukraine could complement procedural reform with targeted capacity-building measures focussed on the practical bottlenecks that weaken project entry. This should include: a structured training offer on needs assessment, option development, preliminary costing and project scoping for line ministries, hromadas and sector agencies; accredited pools of external experts or framework contracts for early engineering, environmental, economic and procurement input; regional or sectoral helpdesks able to review weak project proposals before formal submission; model terms of reference for feasibility, prefeasibility and design-support assignments; and a light-touch peer review or mentoring mechanism for subnational sponsors preparing more complex projects. Over time, Ukraine could also link this to a professionalisation agenda, including certification pathways for PIM and project-preparation functions, and stronger partnerships with universities and technical institutes to expand the supply of relevant skills.

3.2. Project appraisal and selection

3.2.1. Overview

Project appraisal and selection now operate through a more formalised pre‑investment chain. Under the current framework, project preparation forms part of the pre‑investment stage and covers pre‑investment studies, project assessment, inclusion in sectoral portfolios, portfolio decisions by the Strategic Investment Council or local investment councils, and confirmation of implementation readiness. The 2026 priorities comprise 195 projects and programmes from the Single Project Pipeline, and the total number of public investment projects and programmes declined by 44% compared with 2025, suggesting a move away from dispersed project accumulation towards a smaller and more selective portfolio. RDNA5 indicates that this tighter architecture is already narrowing the pipeline, but it also shows that the portfolio remains in transition and that local and regional projects are still being assessed and integrated (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]). The central governance issue is therefore no longer whether Ukraine has an appraisal framework, but whether projects are sufficiently prepared, tested and comparable before they reach selection.

In this context, the relevant governance issue is broader than project appraisal in the narrow sense. The Ukrainian reform package now extends well beyond a simple choice among competing proposals. It includes methodological work on project preparation, screening, prioritisation, appraisal, selection, implementation, monitoring and evaluation; capacity-building for reliable capital and current cost estimation; and the development of more consistent appraisal guidance with EU-oriented methods. In practice, this means that the quality of portfolio decisions depends not only on whether projects are appraised, but also on whether they are sufficiently prepared, technically developed, costed and tested before they reach the point of selection.

Within the current Ukrainian framework, project preparation and option development correspond primarily to the preliminary investment feasibility study, which is mandatory for all projects and is required to cover strategic, economic, commercial, financial and managerial justification. Its content includes analysis of the project’s alignment with strategic documents, the problem to be solved, possible technical solutions, preliminary economic comparison of options, initial supplier and contractor market assessment, indicative procurement options, and early implementation planning. For projects above UAH 50 million that require state or local budget financing for preparation of the full investment feasibility study, the preliminary study also functions as the basis for sectoral evaluation and inclusion in the sectoral portfolio before further preparation support is unlocked. Resolution No. 1049 defines project preparation as the pre‑investment stage of the project lifecycle, covering pre‑investment studies, project assessment, inclusion in the relevant sectoral portfolio, decision by the Strategic Investment Council or local investment council on inclusion in the unified portfolio, and confirmation of readiness for implementation (Cabinet of Ministers of Ukraine, 2025[23]). Resolution No. 1049 also defines an investment feasibility study as a further stage whose content depends on projected cost. In addition, it defines a “large-scale project” as one with an indicative value above UAH 400 million.

For analytical purposes, this section therefore treats project preparation, appraisal and selection as a connected pre‑investment chain rather than as a single administrative checkpoint. The sequence used here is not a verbatim restatement of Ukrainian statutory terminology. It is an analytical ordering intended to clarify the points at which project quality is formed, tested and filtered before entry into the portfolio. This clarification matters because the current reform framework is ambitious and cross-cutting, while implementation responsibility is distributed across central ministries, line agencies, regional authorities and local self-government bodies. A clearer articulation of the sequence would help operationalise the reforms and make expectations more intelligible for budget users at different levels of government.

The first component is project preparation and option development. This concerns whether an identified need is translated into a credible project proposal, whether alternative solutions are considered, and whether early preparation is adequately resourced. The second is technical design, engineering standards and implementation readiness. This concerns whether the preferred option has reached sufficient design maturity, whether technical standards and material specifications are fit for purpose, and whether key site and utility information is available before procurement. The third is cost estimation, pricing and materials benchmarking. This concerns whether the financial envelope rests on realistic quantities, up-to-date pricing evidence and a sufficiently robust benchmarking base across sectors. The fourth is appraisal methods and independent quality assurance. This concerns whether projects are subject to proportionate economic, financial, fiscal, environmental and risk analysis, and whether those analyses are challenged before decisions are taken. The fifth is prioritisation, selection and portfolio entry. This concerns whether projects that have passed the earlier tests are compared consistently and admitted into the portfolio on the basis of strategic fit, affordability, readiness and implementation prospects.

This sequencing matters because Ukraine’s weaknesses are distributed across the pre‑investment chain rather than concentrated at a single point. Audit and policy evidence points to thin feasibility preparation, limited use of integrated planning and modelling tools, uneven technical readiness before tendering, weak benchmarking beyond roads, variable estimate realism, and insufficiently structured independent challenge. These are not isolated technical defects. They affect the quality of appraisal, the credibility of selection and, downstream, the incidence of variation orders, cost escalation and contract instability. Strengthening the quality of pre‑investment analysis and preparation would therefore serve two purposes at once: it would improve analytical clarity and reliability in project preparations, and it would help public authorities distinguish more clearly between projects that are strategically desirable, projects that are analytically justified, and projects that are sufficiently prepared to enter procurement and implementation.

To unpack this in a digestible format, the section is therefore organised as a single lifecycle chain with five analytically distinct but interdependent stages. Stage 1: project preparation and option development concerns whether the problem is translated into a credible set of intervention options and whether early preparation is properly resourced. Stage 2: technical design, engineering standards and implementation readiness concerns whether the preferred option has reached sufficient design maturity and whether specifications, site data and standards are robust enough for later procurement and construction. Stage 3: cost estimation, pricing and materials benchmarking concerns whether the financial envelope is based on credible quantities, price data and market evidence rather than formal compliance or ad hoc quote gathering. Stage 4: appraisal methods and independent quality assurance concerns whether the project is tested through proportionate economic, financial, fiscal, environmental and risk analysis, and whether this analysis is subject to challenge before it informs decisions. Stage 5: prioritisation, selection and portfolio entry concerns whether the projects that survive the earlier gates are compared consistently and admitted into the portfolio on the basis of strategic fit, affordability, readiness and implementation prospects. A related institutional development is the emergence of more structured guidance on appraisal methods. Box ‎3.5 shows why this is relevant for Ukraine’s wider PIM reform.

Box ‎3.5. Emerging appraisal guidance for Ukraine: Why the new methodology matters

Under its expanded mandate for Ukraine, EIB Advisory/JASPERS is supporting the government’s PIM reform, including work on the methodology for appraisal of public sector capital expenditure proposals and support to the Ministries of Economy, Finance and Development (EIB Advisory/JASPERS, 2024; EIB, 2024; EIB, 2025). A public presentation prepared by JASPERS in December 2024 confirms that draft guidelines on the appraisal, management and evaluation of public sector capital expenditure proposals had been discussed with the Ukrainian authorities and were intended to support implementation of the PIM Roadmap, including actions on socio‑economic, financial, environmental and risk analysis and the independent appraisal of large‑scale projects.

The importance of this work lies less in the individual techniques than in the move towards a proportionate appraisal framework. The draft guidance does not assume that all projects should be assessed in the same way. Instead, it differentiates between cost-benefit analysis (CBA), cost-effectiveness analysis (CEA), least-cost analysis (LCA) and multi-criteria analysis (MCA), and links their use to the type and scale of investment. In the transport sector, for example, general transport projects are expected to rely primarily on CBA, while compliance‑driven infrastructure and some technology-heavy projects may require CEA or MCA. In sectors such as sustainable urban development, the guidance points towards MCA at programme level combined with more detailed CBA or CEA for large constituent projects. This is analytically important because it moves Ukraine away from a binary choice between full CBA and no meaningful appraisal at all.

The guidance is also significant because it aligns Ukrainian appraisal practice more closely with established EU principles. The JASPERS presentation states that the draft methodology draws on the main EU project-appraisal texts and treats CBA as the preferred method where impacts can be monetised, while accepting other tools where impacts are harder to value in monetary terms. It also sets out core CBA principles, including comparison of “with project” and “without project” scenarios, use of a long-term perspective, application of a social discount rate, incorporation of residual value, conversion from market to economic prices where relevant, and monetisation of non-market effects and externalities. In institutional terms, this matters because it gives Ukraine a more coherent language for testing value for money, comparing projects and aligning domestic appraisal practice with EU-oriented investment governance.

At the same time, methodological improvement should not be mistaken for implementation capacity. A stronger menu of appraisal techniques is useful only if project sponsors can generate credible inputs and if the state can challenge them. The value of the new guidance therefore lies in providing a more disciplined analytical framework; its effectiveness will still depend on whether Ukraine develops the data, sector expertise, cost information and independent quality-assurance functions needed to apply it consistently in practice. That is why appraisal reform should be seen as part of a wider shift towards more evidence‑based project preparation and portfolio discipline, rather than as a stand-alone technical exercise.

Source: EIB Advisory / JASPERS (2024[24]), Ukraine: Economic Appraisal and Public Investment Management, https://jaspers.eib.org/files/activities/2024/5-ukraine-economic-appraisal-and-public-investment-management-martin-pospisil.pdf

3.2.2. Challenges

This section identifies five main challenges. These are: uneven project maturity at the point of appraisal; weak substantive preparation and technical readiness; underdeveloped cost-estimation and benchmarking infrastructure; insufficient independent challenge; and limited visibility of deprioritisation and project exit mechanisms. Together, these weaknesses reduce the comparability of projects entering selection and increase downstream risks in procurement and delivery.

Ukraine has created stronger formal pathways for project preparation, including a Project Preparation Unit intended to co‑ordinate support from various project preparation facilities. But the evidence suggests that practical preparation remains uneven. Feasibility studies are often underfunded, multidisciplinary scoping is weak, early market engagement is sporadic, and there is still no consistently applied independent challenge function before budget decisions are made. In practice, this means that projects may reach appraisal with incomplete baseline evidence, underdeveloped technical options, weak demand analysis, unresolved land, utility or site constraints, and cost estimates that have not been robustly stress-tested. That is not a marginal defect but a systemic public sector capacity issue and it can distort later appraisal, selection, procurement and contract performance.

Project preparation and option development have a number of weaknesses. The first weakness is the limited depth and uneven quality of early preparation. Resolution No. 1049 makes the preliminary investment feasibility study mandatory for all projects and defines it as the stage for strategic, economic, commercial, financial and managerial justification. That is a major improvement in legal architecture. The operational weakness lies elsewhere: feasibility work remains underfunded, multidisciplinary scoping is often thin, option development is not consistently robust, and the capacity to prepare serious pre‑investment documentation remains highly uneven across sponsors. Feasibility studies are often under-resourced, early market consultation is sporadic, and there is no formal independent peer review before budget approval. This means that projects can satisfy minimum formal requirements while still being conceptually weak and insufficiently prepared for later appraisal (Government of Ukraine, the World Bank Group, the European Commission, and the United Nations, 2025[25]).

Technical design maturity and implementation readiness remain a major control weakness. There is an insufficient use of integrated planning tools, limited access to modelling and technical evidence, weak or delayed design checkpoints, and inadequate provision of geotechnical, geological, geodetic and utility information before tendering. The infrastructure projects and programmes’ audits point to a wider standards problem: technical specifications and material standards do not always reflect EU-oriented EN and ISO expectations, which matters for interoperability, safety, market confidence and accession alignment. In practice, this means that projects can be strategically justified yet still be underdesigned, poorly specified or insufficiently de‑risked for procurement. A project may be “selected” in administrative terms without being truly ready for market.

Cost estimation and pricing remain among the most exposed points in the whole system. Ukraine has made progress in formalising construction pricing rules, but it still lacks a mature, trusted, cross-sector benchmarking infrastructure for materials and works. Benchmarking remains fragmented, estimate review appears too formalistic, and public bodies often lack the in-house engineering, quantity-surveying and commercial capability needed to interrogate project documentation properly. The existing unit price database is limited and not systematically maintained beyond roads. The practical consequence is serious: weak investor estimates contaminate expected values in procurement and later feed variation orders, claims, indexation disputes and renegotiation pressure during implementation.

Institutional architecture and public sector capacity to accurately and reliably estimate costs remain weak. Resolution No. 1049 requires fuller financial justification and differentiates treatment by project value, including additional analytical demands for larger projects. But the surrounding institutional infrastructure for cost realism remains weak. The policy material points to a road-focussed and incompletely maintained price database, limited benchmarking outside roads, and insufficient client-side capacity to challenge quantities, assumptions, materials choices and rates. This matters because unreliable estimates do not remain confined to the appraisal stage. They distort expected values in procurement, weaken budget credibility, and later surface as claims, cost escalation, design correction and renegotiation pressure. Weak alignment between official price systems and actual delivery conditions can degrade transparency, bidding quality and later contract stability, as well as limit competition of contracts (OECD, forthcoming[26]). This is exactly why pricing cannot be treated as a minor annex to appraisal. It is a core governance function. Box ‎3.6 illustrates this point in more detail.

Box ‎3.6. Why weak price systems generate downstream risk: Lessons from Brazil’s road concessions

OECD work on Brazil’s road concessions illustrates why pricing systems should not be treated as neutral administrative tools. The review found that reference‑price systems originally designed for budget control and contract administration were being used in contexts with very different risk structures, including concessions and more complex contractual models. When reference prices are applied without adjustment to those different environments, they can distort incentives, weaken the transparency and effectiveness of competition, and create problems for later contract monitoring. The report therefore argues that the purpose of reference pricing should be reconsidered: rather than acting only as a control instrument, it should help administrations understand cost behaviour under different contractual and delivery conditions.

Weak pricing architecture is directly linked to downstream disputes. To fix this, there is a need for stronger feedback loops from post-contract data, clearer differentiation between contractual environments, and better identification of cost drivers such as traffic management, terrain, weather, logistics and labour-market conditions. Moreover, where input-price volatility is not handled well, bidders respond by loading contingencies, participation is deterred and rebalancing disputes increase.

While the contractual setting in Brazil differs from Ukraine’s public works environment, but the underlying lesson transfers: weak benchmarking and unrealistic pricing assumptions do not stay confined to the estimate. They reappear later as inflated contingencies, variation pressure, renegotiation and weakened confidence in the procurement process.

Source: OECD (forthcoming[26]), Addressing Bottlenecks in Brazil’s Road Concessions: Managing Risk to Contain Costs and Assessing Social Finance.

The appraisal framework is improving but remains heterogeneous and incompletely embedded. The emergence of EU-aligned guidance through EIB Advisory/JASPERS, with proportional use of CBA, CEA, LCA and MCA and an intention to strengthen line‑ministry capacity (see Box ‎3.3.) But the same material also indicates that methods remain inconsistent across institutions, that whole‑life costing and risk analysis are unevenly applied, and that binding independent quality assurance at defined gates is still weak. That is a structural problem because appraisal is not merely a calculation exercise. It is the point at which optimistic assumptions should be challenged, option choice should be tested, and poor-quality preparation should be stopped from entering the portfolio. Without credible QA, sophisticated appraisal tools risk becoming decorative rather than decisive.

Prioritisation and selection are becoming more disciplined, but the system still carries transitional features that limit confidence in outcomes. RDNA5 shows a clearer review process by the key PIM ministries and confirms that only initiatives with a defined financing need, adequate implementation readiness and consistency with strategic priorities were selected for the 2026 priorities. That is a material improvement. But the same evidence also shows that much of the subnational pipeline is still being worked through, that project and programme numbers remain subject to revision, and that financing coverage is highly uneven across sectors. The system is therefore moving in the right direction, but portfolio credibility still depends heavily on the quality of the upstream gates. If early preparation, design and pricing remain weak, prioritisation becomes a choice among incompletely prepared options rather than a robust allocation exercise.

While the PIM reforms and the introduction of the DREAM portal improved project prioritisation, selection, and appraisal, the system still operates on projects of uneven maturity. Resolution No. 1049 already creates differentiated paths depending on whether the project exceeds UAH 50 million, whether public financing is required for preparing the full investment feasibility study, and whether the project is large‑scale, defined as above UAH 400 million. RDNA5 confirms that projects were filtered for strategic alignment, economic and financial justification, and implementation readiness, and that those lacking realistic financing prospects were excluded. That is the correct direction of reforms but the remaining weakness is that the system still lacks a sufficiently clear and commonly understood maturity logic around these thresholds. Building institutional capacity and technical capacity more specifically requires gradual improvements. Having policy-level consensus about this, as well as appropriate institutional design, staffing and professional training to involve engineers and technical experts in project prioritisation, selection and appraisal in a meaningful way is key to improving PIM. As long as preparation, design readiness, costing and quality assurance remain uneven, prioritisation is partly a comparison between projects at different stages of substantive maturity.

Development of public investment management methodologies is advancing faster than the quality-assurance regime needed to make it credible. Ukraine is moving towards more structured appraisal methods, including cost-benefit, cost-effectiveness, least-cost and multi-criteria approaches, supported in part by EIB Advisory/JASPERS. The challenge is that appraisal still depends on variable upstream inputs and a weak challenge function. Resolution No. 1049 already differentiates sectoral and expert assessment and requires separation of preparation and evaluation functions to reduce conflicts of interest (Cabinet of Ministers of Ukraine, 2025[23]). Plus, expert appraisal is not concentrated in a single ministry: under the current framework, assessment responsibilities are distributed across three ministries, which matters for both co‑ordination and consistency of challenge. That is a sound design principle, but the independent technical peer review of feasibility work is still not formally embedded, even though this is precisely the point where assumptions that went into the project design should be examined and projects based on less adequate assumptions should be stopped from progressing. Without stronger quality assurance, appraisal risks becoming a more sophisticated form of documentary justification rather than a robust filter.

A further challenge is that portfolio exit remains less visible than portfolio entry. The current section explains how projects are prepared, assessed and selected, but it is still not sufficiently clear on how projects that lose readiness, fail to resolve preparation weaknesses, materially diverge from scope or cost assumptions, or no longer fit fiscal space are corrected, postponed or removed. Without a clearer maturity and exit logic, prioritisation risks becoming a comparison among incompletely prepared options rather than a disciplined portfolio-management process.

A more credible challenge function requires greater specificity about the minimum technical content of feasibility work. For major infrastructure projects, feasibility studies should not be treated as short economic justifications appended to a preferred option. They should include, on a proportionate basis, sufficiently developed engineering assumptions, option comparison, preliminary design parameters, risk analysis, environmental and social constraints, implementation planning, and an explicit costing methodology. For projects with significant technical complexity or uncertain site conditions, independent technical peer review before budget approval would provide a basic assurance that quantities, assumptions and delivery logic are robust enough to support appraisal. Without such checks, the system risks appraising projects whose apparent strategic and economic merits rest on under-specified technical inputs.

The same problem applies to the pricing infrastructure that supports early estimates. Ukraine has made progress in formalising construction pricing rules, but the benchmarking base remains narrow and unevenly maintained, with stronger reference material in roads than in many other infrastructure sectors. As a result, appraisal-stage estimates may still rely on weak or fragmented unit-price evidence, limited completed-project cost data, and insufficient client-side capacity to challenge quantities, assumptions, materials choices and rates. In practical terms, the pre‑investment chain should include staged technical reviews at the points where design maturity, costs and funding assumptions materially change, so that revisions are reconciled before tendering rather than after procurement documents have already been prepared. Ukraine already has sector-specific pricing norms and road-cost methodologies, but the wider objective should be to make preliminary and full feasibility work more transparent about what has and has not yet been verified, and to stop poorly evidenced estimates from flowing unchallenged into portfolio and budget decisions.

The systemic consequence of the issues discussed is delayed tendering, revised estimates, variation orders, scope corrections and contract instability. OECD work on procurement strategy is relevant precisely because it shows that procurement failures are often embedded upstream, before bidder selection even begins (OECD, 2021[27]). The Support Tool for Effective Procurement Strategies (STEPS) assessments in Norway and Germany both stress the importance of reducing pre‑contract uncertainty, understanding market structure, and aligning contract design with the actual characteristics of the project and the delivery market (OECD, 2021[27]; 2025[28]). Ukraine’s current bottleneck is broader than procurement strategy alone, but the underlying logic is the same: immature projects create avoidable downstream risk.

3.2.3. Recommendations

The recommendations focus on five core priorities. Those are: (1) making the pre‑investment chain more operational; (2) strengthening substantive project preparation; (3) improving cost-estimation and benchmarking infrastructure; (4) reinforcing independent challenge; and (5) making project maturity, deprioritisation and portfolio exit more explicit. The purpose is to make the current reform architecture easier to apply consistently across ministries, agencies, regional administrations and municipalities.

The first priority is to make the pre‑investment chain more explicit and more operational building on the sequencing introduced in the current legislation. In practical terms, Ukraine should treat project preparation, technical readiness, cost estimation, appraisal and portfolio entry as distinct control points within one connected process. The purpose is not to add conceptual complexity. It is to make the reform architecture easier to implement across ministries, agencies, regional administrations and municipalities. The current legal framework already contains differentiated gates through Resolution No. 1049 and the wider PIM package. What is still needed is clearer operational sequencing and more consistent understanding of what each gate is intended to prove before the project moves forward.

Second, Ukraine should strengthen substantive project preparation rather than merely require more documentation. The preliminary investment feasibility study should function as a real option-development and project-definition stage. That requires more systematic scoping of alternatives, better early commercial analysis, stronger linkage to strategic documents and more realistic assessment of whether the project is sufficiently developed to justify further preparation funding. The policy note is right to emphasise expansion of project preparation support and stronger feasibility quality as a system priority. Without that, the state risks using scarce preparation resources on projects that are politically visible but conceptually weak, while failing to mature those that are strategically stronger but technically less advanced.

Third, there is a need is to introduce a clearer technical-readiness discipline before projects move towards procurement. Technical design, engineering standards and implementation readiness should be treated as governance issues, not left to emerge informally from engineering practice. The evidence points to a need for firmer checkpoints on design maturity, availability of site data, adequacy of surveys, standards compliance, specification quality and early market testing. In practical terms, this would reduce the number of projects that are appraised and selected on the basis of strategic desirability but remain underdeveloped in engineering terms. It would also reduce the tendency to transfer unresolved risk into the procurement phase.

Then, the government can consider moving from dispersed price analysis towards a more credible benchmarking architecture. Ukraine’s current reforms on construction pricing are useful, but the analytical material indicates that they remain closer to structured quote collection than to mature national evidence base for cost realism. The state therefore needs a stronger public benchmarking infrastructure with unified coding of work items and materials, auditable data sources, systematic updating, integration of historical contract-price information and more substantive scrutiny of estimate realism. This is also the point at which international good practice can contribute. ICMS is relevant because it offers a common framework for classifying, recording and comparing life‑cycle costs across projects and sectors, including for feasibility studies, development appraisals, tender analysis and investment decision making. It is not a replacement for Ukrainian estimating rules. It is, however, a useful reference for improving comparability, whole‑life reporting and benchmarking discipline.

There can also be additional consideration given to appraisal methods depending on the size and scope of projects. Ukraine does not need one rigid method for all projects regardless of their size. It does need a clearer national logic specifying which techniques are appropriate for which project types, what minimum evidence is required at each point, how risk and whole‑life costs should be treated, and when independent review becomes mandatory. The absence of formal peer review processes is an important gap for major projects. Independent technical and economic review is especially important where project documentation, price evidence or delivery assumptions remain weak. Without that challenge function, better appraisal guidance will improve form faster than substance.

Additionally, there is scope to tighten the link between portfolio entry, maturity and financing realism. RDNA5 shows that Ukraine is already excluding projects without realistic financing prospects and using implementation readiness as a criterion for inclusion in the 2026 priorities (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]). That logic should be reinforced. Prioritisation should operate not simply as a ranking exercise among strategically relevant ideas, but as a disciplined portfolio decision among projects that have cleared earlier maturity tests. This would help prevent the pipeline from being used as a holding area for projects that are desirable in principle but insufficiently prepared in practice. In a resource‑constrained recovery context, that discipline is essential for preserving both budget credibility and donor confidence.

Finally, Ukraine should make project maturity and portfolio exit more explicit within the public investment framework. Projects that do not reach the required readiness level, fail to resolve critical preparation weaknesses, or materially diverge from approved scope, cost or financing assumptions should be subject to a traceable process of correction, postponement or removal. This would make prioritisation more credible and reduce the carry-over of weak projects into later budget and procurement decisions.

Ukraine should treat appraisal capability as an investment need in its own right. This requires not only training for current officials, but a wider effort to strengthen the supply of relevant professions through universities, professional bodies and specialised public training providers, including engineers, economists, quantity surveyors, environmental specialists and project-preparation practitioners. Standardised digital tools and AI-enabled support may help sponsors structure documentation, identify omissions and improve comparability, but they should support rather than replace technical judgement and independent challenge.

More generally, the logic of the proposed solutions is to strengthen client-side capability. The underlying challenge in much of the material is not only weak rules, but uneven capacity to use the rules well. Better preparation, better design review, better costing and better appraisal all depend on stronger engineering, commercial, economic and project-management capability within project owners and contracting authorities, particularly at subnational level. Where that capability is absent, the system will continue to rely too heavily on external consultants, formal compliance and late correction, leading to project delays and cost overruns.

3.3. Infrastructure permitting

3.3.1. Overview

Infrastructure permitting in Ukraine should be treated as a governance function that connects planning, environmental compliance, land and urban-development controls, and implementation readiness. For infrastructure, permitting is not merely a downstream administrative formality. In practice, it sits at the interface between earlier project-development work and the transition to procurement and construction.

In Ukraine, the legal base is dispersed across urban-planning, environmental and sectoral legislation rather than concentrated in a single infrastructure‑permitting code. The core framework includes the Law on Regulation of City Planning Activity, the Law on Environmental Impact Assessment, the Law on Strategic Environmental Assessment, and a growing set of digital instruments intended to make permitting and planning data more interoperable (Verkhovna Rada of Ukraine, 2017[29]; 2018[30]; 2011[13]). The permitting process is governed by a combination of national regulations and sector-specific guidelines.

Recent reforms aim to streamline the process by introducing digital tools and improving interoperability across systems. DREAM should not be described as the main operational system for managing permitting workflows. Its role is better understood as a project-information and traceability layer that can connect planning, project preparation and monitoring with permitting-related systems, while the main operational permitting functions sit in e‑construction, eDozvil and related registries.

Ukraine has already built some of the core digital infrastructure for this. The Unified State Electronic System in the Construction Sector is a one‑stop digital channel for many construction-related administrative services. The government also launched the eDozvil pilot in July 2024 to digitise licensing and permitting procedures through a risk-based model in which lower-risk cases may be processed automatically while higher-risk cases are escalated for official review. In parallel, the state‑level Urban Development Cadastre Geoportal has been launched to consolidate urban-planning information nationally, with the government presenting it as a foundational layer for other systems, including DREAM and the register of damaged property (Cabinet of Ministers of Ukraine, 2024[31]; 2025[32]; Verkhovna Rada of Ukraine, 2019[33]). Digitalisation as an important reform vector, but digital tools should be understood as enablers, not as a substitute for simplification of the underlying rules.

EU accession pressures make the permitting agenda more demanding. Environmental permitting is becoming more complex as Ukraine aligns with the EU regulations. The Law on Integrated Prevention and Control of Industrial Pollution was adopted in July 2024 and created the legal basis for integrated environmental permits for specified industrial activities, alongside requirements related to best available techniques (Verkhovna Rada of Ukraine, 2024[34]). At the same time, strategic documents remain subject to Strategic Environmental Assessment, while project-level Environmental Impact Assessment continues to apply to listed activities and requires public participation (Verkhovna Rada of Ukraine, 2018[30]; Verkhovna Rada of Ukraine, 2017[29]). The challenge Ukraine is currently facing in this context is whether Ukraine can move towards a more integrated, risk-based and digitally supported permitting model without weakening environmental safeguards or creating further fragmentation between legal regimes.

This also sharpens a wider governance issue. Ukraine is currently operating with recovery-specific planning instruments alongside the standing planning and permitting framework, but the long-term direction cannot be a permanent dual-track regime. The practical question is how to use temporary recovery instruments without creating durable fragmentation between the wartime recovery architecture and the post-war planning and permitting system.

From an infrastructure governance perspective, this section examines permitting as a co‑ordination problem across four linked domains. From an infrastructure‑governance perspective, the issue is not whether Ukraine has several distinct permitting regimes, but whether those regimes operate as a coherent and predictable sequence. This section therefore examines permitting as a co‑ordination problem across five linked domains:

1. spatial and urban-planning consistency

2. land designation and land-rights assembly

3. environmental assessment and environmental permitting

4. construction and technical approvals

5. administrative process design including digital workflow and transparency.

3.3.2. Challenges

This section identifies four main challenges. These are: structural fragmentation across permitting regimes; weak synchronisation between recovery instruments and the standing planning framework; uneven transparency and predictability for project sponsors and affected stakeholders; and limited administrative capacity and process ownership under wartime conditions.

Ukraine’s permitting system remains structurally fragmented. The permitting regimes are governed by different laws, institutions and information systems, while project sponsors often have to navigate their interaction without a sufficiently coherent operating logic. This is especially visible at the interface between spatial planning, construction permitting, environmental assessment and sector-specific requirements. As in most advanced economies, these controls are governed through separate legal regimes rather than through a single infrastructure‑permitting code. That institutional differentiation is normal and broadly consistent with international practice. The more relevant issue is whether the interaction between those regimes is sufficiently clear, sequenced and interoperable to support predictable project development. The law on city-planning activity establishes the urban-development framework and integrates the electronic construction system into that broader architecture (Verkhovna Rada of Ukraine, 2011[13]). Environmental assessment legislation imposes separate procedures with public participation and, where relevant, transboundary consultation. The consequence is that where sequencing is unclear or data are not interoperable, delay and uncertainty arise not because each individual control is unjustified, but because the system as a whole is poorly co‑ordinated. The reform direction is therefore towards greater integration and transparency.

The more specific weakness is that the interfaces between these regimes remain insufficiently harmonised in the recovery context. The central challenge is not that Ukraine has separate planning, environmental and construction approval regimes. That degree of differentiation is common internationally and is consistent with good practice where different legal controls address different types of risk. In Ukraine, the recovery planning instruments are not fully synchronised with the established system of strategic, spatial and budget planning: the Plan for Recovery and Development is treated as part of the state regional policy planning system and has a defined implementation horizon to 2027, whereas the Programme of Comprehensive Recovery is presented as sitting outside the formal planning-document system, lacking a clear implementation period, lacking a national-level counterpart, and lacking a clear vertical link between oblast and community documents (CSI, 2023[35]). This points to a more precise governance problem: overlap, uncertain hierarchy, inconsistent timing and weak alignment between recovery instruments and the wider planning framework, which in turn complicates permitting, project preparation and funding decisions (Podorozhnyi, 2023[36]).

Permitting systems have uneven transparency and predictability for project sponsors and affected stakeholders. The electronic systems improve visibility in some parts of the process, especially in construction-related services. But the wider permitting chain is still difficult to understand as one connected process. OECD guidance on permitting emphasises clear information, user-centred design, one‑stop access and proactive disclosure of process requirements and decisions, particularly where environmental sensitivity is high (OECD, 2025[37]). Ukraine’s reforms are consistent with that direction, but the country still lacks a fully integrated, end-to‑end permitting journey that allows a sponsor, reviewer or citizen to see what permissions are required, in what order, on what timetable, and with what public-participation obligations. That is a serious weakness in a reconstruction environment where the volume of projects is high and administrative capacity is stretched. In that sense, the reform challenge is not merely one of “streamlining” permits. It is one of structured bargaining across legitimate controls: how to see constraints earlier, co‑ordinate interdependent decisions, and make trade‑offs more predictable before projects reach procurement and construction.

Administrative capacity and process ownership are a distinct challenge in the wartime context. Integrated permitting, statutory timelines and clearer process maps are only credible where permitting authorities have enough specialist staff, stable operating capacity and a clear lead institution for co‑ordinating complex cases. In Ukraine, these constraints are sharpened by wartime turnover, stretched administrative resources and the high volume of reconstruction-related projects. The 2026 OECD report on accelerating infrastructure permitting stresses that integrated permitting and statutory time limits are only credible where there is adequate co‑ordination capacity, stable funding and specialist capability within permitting authorities (OECD, forthcoming[38]). Lead authorities or case managers for complex projects are key for co‑ordinating permitting-related work. This is directly relevant to Ukraine because where the legal framework and digital tools improve, complex infrastructure projects will continue to face delays if no institution is clearly responsible for co‑ordinating inter-agency review, resolving sequencing issues early and maintaining a single authoritative process timetable.

A related constraint concerns land-rights clarification and land assembly, which interact directly with spatial planning and infrastructure permitting. Where cadastral information is incomplete, spatial plans outdated or land ownership fragmented, project sponsors face uncertainty in defining project footprints and securing the land rights required for environmental review, construction permitting and financing. These issues therefore sit at the interface between infrastructure governance and the enabling conditions for private investment and are discussed further in Section 4.2.2 on land acquisition.

3.3.3. Recommendations

The recommendations focus on four priorities. Those are: (1) clarifying the relationship between recovery-specific instruments and the standing planning framework; (2) improving co‑ordination across existing permitting regimes; (3) using digital tools to support end-to‑end process logic rather than isolated transactions; and (4) integrating environmental and spatial constraints earlier in project development. The objective is to make the existing system more coherent, predictable and easier to navigate for project sponsors, authorities and affected stakeholders.

For Ukraine, this means clarifying the hierarchy, timing and interdependence of recovery planning documents and ensuring that they connect more consistently with spatial planning, environmental procedures and budget processes. In practical terms, the government should reduce overlap between recovery-specific instruments and standing planning documents, define more clearly which document performs which function, and ensure that their implementation horizons and financing logic are aligned. That would address the Ukraine‑specific source of avoidable delay more directly than generic calls for “streamlining permitting”. Over time, the aim should be convergence rather than permanent duality: temporary recovery-specific instruments may remain necessary, but they should not harden into a parallel long-term planning and permitting framework.

A second recommendation is to use digital tools to support sequenced, end-to‑end process logic, rather than simply to digitise individual steps. OECD guidance is explicit that licensing and permitting reforms work best when simplification precedes or accompanies digitalisation, when risk treatment is harmonised, and when users can see the full regulatory journey rather than isolated administrative transactions (OECD, 2025[37]). Applied to Ukraine, this means linking e‑construction, eDozvil, environmental registries, the Urban Development Cadastre and DREAM through clearer interoperability, shared identifiers and more transparent process maps. The objective should be to make it easier for project sponsors, regulators and the public to understand what approvals are required, in what order, and on what basis, while preserving substantive review where risks are material.

Thirdly, Ukraine can consider integrating environmental and spatial requirements earlier in project development. Since the separate environmental impact assessment (EIA) and strategic environmental assessment (SEA) and construction-related controls are normal, the practical task is to ensure that they are anticipated early enough to shape project location, land footprint, design and implementation planning. The different infrastructure permits should be anticipated during preparation and technical development so that key constraints, consultation requirements and mitigation obligations are understood before the project reaches procurement. This does not mean compressing environmental procedures. It means reducing the common pattern in which environmental considerations are either delayed or handled in parallel without sufficient technical preparation. In practical terms, Ukraine would benefit from clearer guidance on (1) when SEA, EIA and integrated permitting are triggered, (2) how their outputs should inform project design and site selection, and (3) how related information should be visible through digital platforms and registries. In practical terms, this would improve not only permitting quality but also appraisal credibility, procurement readiness and the realism of project timelines.

The fourth recommendation is to develop one‑stop and risk-based permitting arrangements in a more targeted way. Ukraine is already experimenting with this through the Unified State Electronic System of Permit Documents eDozvil (ePermit). That is sensible, but it should be developed carefully. OECD work is clear that one‑stop shops are useful when they centralise access, guidance and data flow, but they do not justify weakening substantive review for higher-risk activities. The right model is therefore differentiated: automate and simplify genuinely low-risk permissions; preserve full review for higher-risk cases; and make the criteria for escalation transparent. For infrastructure projects, this matters because parts of the process may be suitable for standardisation or automation, while others, particularly environmentally sensitive or technically complex cases, are not. The value of digital permitting lies in reducing avoidable administrative friction, not in pretending that all approvals are routine.

The fifth recommendation is to strengthen capacity and institutional ownership. OECD evidence shows that time limits and integrated models are ineffective without sufficiently resourced authorities, specialist expertise and active co‑ordination. Ukraine should consider dedicated permitting co‑ordination capacity for major infrastructure projects, especially where multiple agencies and legally distinct permit streams are involved. The international examples in the OECD report suggest that case managers, dedicated project teams and stable funding for review bodies are practical complements to legal reform, not optional extras (OECD, forthcoming[38]). Box ‎3.7 provides a more in-depth look into good practices identified in the recent OECD work.

Box ‎3.7. From streamlining to integrated case management: lessons from OECD work on accelerating infrastructure permitting

Good practice in infrastructure permitting does not consist in a single reform. It combines procedural streamlining, institutional co‑ordination, digital case management, adequate administrative capacity, and, where justified, accelerated regimes for nationally significant projects. These measures improve predictability and transparency, but they do not remove the need for environmental safeguards, consultation rights, and legal scrutiny.

Integrated permitting and one‑stop-shop models. Fragmented and sequential approvals are a major source of delay. More effective systems use a lead authority or case manager, a single application pathway, a co‑ordinated timetable, and parallel processing of environmental, land-use and sectoral approvals. Examples include Denmark’s co‑ordinated model for large energy projects, France’s autorisation environnementale unique, and the Netherlands’ integrated framework under the Omgevingswet. These arrangements work only where mandates are clear and co‑ordination is properly resourced.

Digital case management and transparency. Digitalisation is most useful when it supports an integrated workflow rather than merely storing documents. Good practice includes central portals for submission, automated completeness checks, real-time status tracking, shared case records, public dashboards, and common data standards across authorities. Denmark’s Byg & Miljø and the Netherlands’ Omgevingsloket illustrate how digital systems can reduce “stop-the-clock” interruptions and enable parallel review.

Capacity, deadlines and process discipline. Statutory time limits can improve predictability, accountability and early co‑ordination, but they are not credible where permitting authorities lack staff, expertise or stable funding. Effective systems therefore pair deadlines with dedicated project teams, funded case‑management capacity, and cost-recovery arrangements that allow resources to scale with workload and project complexity. Without this, deadlines risk producing superficial assessment or defensive refusals rather than faster decisions.

Priority regimes for nationally significant infrastructure. The strongest acceleration tools usually apply only to designated priority projects. Once recognised as nationally significant, projects may benefit from expedited procedures, co‑ordinated review, binding timetables, additional administrative resources, and, in some jurisdictions, shorter litigation pathways. Examples include the United Kingdom’s NSIP regime, the United States’ FAST‑41 framework, and New Zealand’s fast-track consenting model. These regimes are best understood as an upper tier of the permitting system rather than a substitute for broader reform.

Data systems and benchmarking. Permitting reform is weak where governments do not measure how the system performs. Good practice is to map the full permitting workflow, including pre‑application, consultation, appeals and litigation, and to collect comparable data on duration, resource intensity, mitigation spending and redesign frequency. This creates the evidence base needed to identify bottlenecks, benchmark performance, and assess whether reforms are improving delivery in practice.

Source: OECD (forthcoming[38]), Accelerating Infrastructure Permitting: From Streamlining to Structured Bargaining.

The sixth suggestion is to improve transparency for both project sponsors and the public. This requires more than publishing final decisions. Good practice is to publish process maps, guidance, standard timelines, required datasets, consultation obligations, and key permit decisions in searchable form. In environmentally sensitive areas, OECD guidance also points to the value of proactive disclosure of environmental assessment processes and licences (OECD, forthcoming[38]). Ukraine’s move towards integrated digital systems creates an opportunity here. If e‑construction, the Urban Development Cadastre, environmental registries and DREAM are linked through common identifiers and visible process logic, permitting could become materially more predictable without becoming less rigorous.

A final, longer-term solution is to improve evidence and benchmarking. Most countries lack systematic data on permitting duration, resource intensity, redesign and litigation. That observation is likely to apply even more strongly in Ukraine’s current reconstruction setting. A more structured permitting-performance dataset would help distinguish between delays caused by legitimate environmental or social safeguards and delays caused by avoidable duplication, weak co‑ordination or poor project readiness.

3.4. Procurement strategy

3.4.1. Overview

In OECD terminology, procurement strategy is not the tender procedure itself – it is the pre‑tender decision on how the project should be delivered and contracted. The OECD’s Support Tool for Effective Procurement Strategies (STEPS) defines this as a structured, evidence‑based process for bespoke outputs such as infrastructure, applied after project appraisal but before procurement activities, including market engagement (OECD, 2021[27]). At that stage, the key questions include whether the buyer has the capabilities required for the project, whether the project should be bought through one or several contracts, and what form of contractual relationship is appropriate given uncertainty, market structure and project objectives (OECD, 2025[28]).

Procurement strategy is also an upstream integrity control. Decisions on contract packaging, qualification requirements, technical specifications, standards, delivery model, risk allocation and price‑adjustment mechanisms can shape the competitive field before a tender is launched. If these choices are weakly documented or tailored to specific suppliers, later transparency in Prozorro may reveal the procedure but will not necessarily correct the underlying distortion.

Procurement strategy should not be framed as a binary choice between public procurement and PPP. It concerns the broader front-end decision on how a project should be delivered, including contract packaging, sequencing, interface design, market engagement, risk allocation and, where relevant, whether private participation should be screened as a realistic route. Even within wholly public delivery, authorities still need to decide how to decompose the project into work packages, how far to bundle those packages into larger contracts, which interfaces to retain, how to protect competition, and where direct SME participation is preferable to subcontracting through a tier-one contractor. These choices should be informed by project objectives, buyer capability, market structure, uncertainty and the conditions under which private finance could improve value for money (VfM).

VfM is one input into this judgement, not the mechanism through which all packaging and delivery choices are made. Box ‎3.8 explains why value for money (VfM) is one input into procurement strategy for PPPs, not a stand-alone justification for private participation. A procurement strategy has to be developed for a specific project taking account of:

• the nature of the project

• the capabilities of the delivery entity

• the structure of the market

• whether and under which conditions can private finance involvement improve the overall value for money (VfM) proposition.

That distinction matters for Ukraine because the current framework appears stronger on procurement execution than on procurement strategy formation. The Law on Public Procurement is the core procedural framework for tendering, while Prozorro is the electronic platform through which procurement is published and conducted (Verkhovna Rada of Ukraine, 2015[39]). The wider PIM reform also envisages integration between DREAM, budget systems, Prozorro and the Treasury to enable end-to‑end control (Cabinet of Ministers of Ukraine (CMU), 2024[2]). However, the reviewed legal and institutional material does not appear to establish a clearly mandated, stand-alone infrastructure‑procurement-strategy gate comparable to STEPS. In practice, the strategic choices about packaging, delivery model, risk allocation, private‑finance suitability and interface management therefore risk being made implicitly, late, or inconsistently across project sponsors.

International practice suggests that this is not typically the responsibility of an e‑procurement platform or procurement regulator acting alone. In the German STEPS application, the procurement strategy was developed during project preparation and responsibilities were split across the user, the formal owner/operator, the technical supervision authority and the implementing authority. In Norway, Nye Veier undertook the relevant market analysis and pre‑contract de‑risking as the public project company. In other words, procurement strategy typically sits with the project owner/client side, supported by technical, commercial and procurement expertise, rather than with the procurement platform itself (OECD, 2021[27]; 2025[28]).

Box ‎3.8. Value for money assessment as part of procurement strategy for PPPs

Value for money (VfM) assessment is not a stand-alone justification for using PPPs. It is one element of procurement strategy used to determine whether private participation is likely to deliver better outcomes than the best feasible public-sector alternative. Under the OECD Recommendation on Principles for Public Governance of Public-Private Partnerships, PPP decisions should be co‑ordinated with the budget process, transparently reflected in fiscal accounts, and pursued only where they are expected to deliver value for money over the project lifecycle rather than merely shift expenditures off the public balance sheet (OECD, 2012[40]).

A credible VfM assessment is therefore dynamic and comparative. It should assess the expected price‑quality relationship of private participation against the relevant public delivery option, test whether risk allocation is realistic, and distinguish genuine efficiency gains from one‑off tender effects. In that sense, VfM informs procurement strategy; it does not substitute for broader decisions on delivery model, institutional capability and long-term contract management.

Source: OECD (forthcoming[41]), Making Private Investments in Infrastructure Work: Rethinking Value for Money in Project Delivery.

Ukraine has PPP guidance and project-development materials, but PPP should not be treated as the organising concept of procurement strategy. The yes/no decision on whether private participation is plausible should be screened upstream, on the basis of sector economics, user-payment prospects, fiscal implications, market interest and public capability. Procurement strategy then optimises the chosen route rather than deciding from scratch whether private participation is desirable in principle. In Ukraine, public procurement remains the default in most sectors, and the new Law on Public-Private Partnership adopted in 2025 was an important legal development (Verkhovna Rada of Ukraine, 2025[42]) but it does not automatically translate into PPPs already being a mature operating model across the infrastructure pipeline.

In Ukraine, procurement strategy decisions are influenced by the size, complexity, and nature of infrastructure projects. While public procurement dominates in most infrastructure sectors, there is growing interest in leveraging private investment to address funding gaps and improve efficiency The government worked on early integration of the SOURCE platform for PPPs and concessions, and newer project-preparation arrangements under the PPP Agency are intended to support the wider PIM system, with an explicit longer-term possibility of preparing projects under PPP modalities when macroeconomic conditions and market appetite permit. DREAM is envisaged as the disclosure and workflow environment for projects prepared through that facility. The direction of reforms is therefore towards bringing PPP development into the same project-preparation and pipeline logic as public investment, rather than handling it as an isolated niche process. While this logic is positive for making timely and informed choices on procurement strategy, this work should not be seen as a substitute for selecting a project delivery mode.

3.4.2. Challenges

This section identifies five main challenges. These are: (1) the absence of a consistently explicit pre‑tender strategy stage; (2) weak client-side ownership of commercial choices; (3) underdeveloped market and package analysis; (4) risk allocation that remains too generic and too late; and (5) undisciplined integration of PPP screening into front-end project strategy.

The first challenge is that procurement strategy is not yet sufficiently explicit as a separate front-end governance function. For major infrastructure, these choices should be made after appraisal and before procurement, with enough information available to support serious analysis. In Ukraine, by contrast, the reviewed framework points to strong attention to project preparation, appraisal and e‑procurement, but not to a distinct and consistently assigned stage at which the delivery model, packaging strategy, market approach, interface structure, payment mechanism and PPP option are assessed together. That gap matters because these choices materially affect bidder interest, risk pricing, contract manageability and whole‑life value for money (OECD, 2015[43]; 2012[40]).

The second challenge is institutional ambiguity. The public procurement framework and Prozorro are not designed to act as project-specific procurement-strategy owners. Yet the project owner, beneficiary ministry, implementing agency and contracting authority do not appear to have a consistently defined obligation to produce a formal procurement strategy before tendering. This creates a practical vacuum. Where no actor is clearly accountable for the strategy, key decisions are liable to be taken piecemeal in tender documentation rather than through structured front-end analysis. International STEPS cases suggest the opposite approach: procurement strategy is owned on the client side during project preparation, with technical and commercial analysis feeding into a formal decision before launch (Verkhovna Rada of Ukraine, 2015[39]).

The third challenge is that market analysis and packaging logic remain underdeveloped. STEPS is useful precisely because it forces the buyer to move beyond generic discussion of “public versus private” and instead break the project into work packages, assess supplier-market conditions, test make‑or-buy choices, and decide which activities should be bundled or separated. The Norway case shows this clearly: Nye Veier analysed the contractor market to determine the maximum contract size that would not undermine competition and then designed the procurement around that evidence (OECD, 2021[27]). The German case likewise used work-package analysis and market scanning to identify bottlenecks, tolerable contract size and the appropriate balance between interface reduction and SME access (OECD, 2025[28]). In Ukraine, there is currently no specific guidance on disaggregating large projects into manageable packages and limited capacity to evaluate delivery choices systematically.

The fourth challenge is that risk allocation is likely to be decided too late and too generically. OECD STEPS work is explicit that delivery-model choice should follow analysis of uncertainty, supplier switching costs, rarity of capability and other economic attributes at the work-package level. It also shows that certain packages should not be pushed into rigid lump-sum or price‑based models where uncertainty remains high. In Norway, the OECD concluded that targeted de‑risking before tender was close to best practice, including a fully costed reference design and compensation packages were identified as unsuitable for lump-sum treatment (OECD, 2021[27]). Ukraine’s general challenge, by contrast, is that projects often reach procurement with unresolved design and cost uncertainty. If procurement strategy is not formalised earlier, those unresolved risks are likely either to be priced inefficiently or to return later as claims and renegotiation pressure.

The fifth challenge is that PPP is not yet integrated into procurement strategy in a disciplined way. Ukraine has policy interest in PPPs, a specialised PPP Agency, SOURCE‑related work, and project-preparation arrangements that anticipate later PPP modalities. It also now has a new Law on Public-Private Partnership adopted in 2025 (Verkhovna Rada of Ukraine, 2025[42]). But that does not mean PPP is yet functioning as a mature procurement-strategy option across the infrastructure pipeline. While some PPP-related experience and PPP capability exist, the conditions for broad deployment remain narrow and project-specific. Without a stronger procurement-strategy gate, PPP risks being treated either as a funding aspiration or as a legal speciality, rather than as one possible delivery modality.

3.4.3. Recommendations

The first recommendation is to make procurement strategy an explicit pre‑tender stage in Ukraine’s infrastructure lifecycle. It should sit after project appraisal and before market engagement and tender launch, consistent with the OECD STEPS logic. The purpose is not to create a new bureaucratic layer. It is to ensure that key delivery choices are made deliberately, on evidence, and early enough to shape design completion, market sounding and tender documentation. Procurement strategy should become a standard part of project preparation for complex and higher-value infrastructure projects, rather than being left implicit within procurement documentation.

Secondly, the most workable model could be for the project owner or beneficiary to lead preparation of the strategy and so that this responsibility is assigned more clearly. International practice suggests that procurement strategy should be owned by the project sponsor/public client, supported by the implementing authority and the relevant technical, commercial, procurement and financial specialists. It should not be assigned to Prozorro, whose function is digital tender execution, nor treated as a purely central-regulatory task for the Ministry of Economy. In Ukraine, the most workable model would be for the project owner or beneficiary to lead preparation of the strategy, with mandatory input from the contracting authority where different, and specialist advisory input from the Ministry of Finance, Ministry of Economy or PPP Agency where the strategy involves fiscal support, non-standard delivery models or PPP screening. That would also fit the broader PIM principle that project-level decisions should remain with the sponsor side, while central bodies provide rules, challenge and assurance.

The third recommendation is to specify the minimum content of a procurement strategy using a simplified STEPS logic. At a minimum, the strategy should state: the project objectives that matter for delivery choice; the client’s own capability and what must be bought externally; the work-package breakdown; a basic market analysis of supplier depth and likely bottlenecks; the preferred contract packaging; the proposed delivery model and payment mechanism for each package or bundle; the intended approach to risk allocation; the implications for competition and SME access; and whether private finance or PPP should be taken forward for fuller testing. This is stronger than a generic narrative about “choosing procurement” because it forces structured trade‑offs. The German and Norwegian STEPS cases show that such analysis can materially improve decisions on contract size, SME involvement, interface management and suitability of collaborative versus price‑based delivery models (OECD, 2021[27]; 2025[28]). Box ‎3.9 shows that procurement strategy matters even where the project is wholly publicly financed and there is no immediate PPP decision. The German case shows that these decisions can be approached systematically, using project objectives, market limits and work-package characteristics rather than institutional habit or default tender models. For large Ukrainian infrastructure projects, especially where supplier markets are thin or technical uncertainty remains high, this type of structured work-package and bundling analysis would materially strengthen procurement strategy before tender launch.

Box ‎3.9. Work-package analysis and contract bundling: Lessons from Germany

The OECD’s application of the STEPS methodology to the new campus of the German Federal Criminal Police Office (BKA) illustrates why procurement strategy should not be reduced to a binary choice between “traditional procurement” and PPP. The project was publicly financed, yet it still required a structured front-end decision on how to package works, allocate interfaces, preserve competition, and secure operational performance over time. Using STEPS, the project was broken down into 143 work packages across design, construction, maintenance and operations. These packages were then analysed for their economic characteristics, including uncertainty, rarity of supplier capability and the risk of procurement failure if they were bundled or priced inappropriately. A parallel market analysis was undertaken to test both individual bottlenecks and the overall contract size that the market could credibly absorb.

The analysis showed that contract bundling had to be constrained by market reality. The OECD concluded that the largest contract size should remain below EUR 500 million, with EUR 300‑400 million the preferable range, because larger packages would reduce bidder turnout and undermine competition. It also identified package‑specific constraints. Specialised planning in heating, ventilation and media systems needed monitoring as a potential bottleneck, while laboratory planning involved such high uncertainty that it should not be placed under a lump-sum payment mechanism. Security requirements created an additional cost and risk driver, but the analysis suggested that this challenge should be addressed through more careful scoping of security zones and appropriate contractual treatment, rather than through a wholesale change in delivery model.

On that basis, the German authorities did not compare only one “traditional” option with one “integrated” option. They developed five alternative procurement strategies, ranging from a design-bid-build model with one contract per object, to several larger bundled contracts, to a near-maximal interface‑reduction approach based on one large DBOM arrangement. These options were then assessed against the project’s consolidated objectives. The extreme options were rejected: the most disaggregated strategy created too many interfaces, while the most aggregated strategy risked a competition failure because a project of over EUR 1 billion was unlikely to attract more than one credible bidder. The preferred solution was an intermediate strategy combining several large DBOM contracts with a greater role for SMEs through smaller packages. In effect, bundling was used selectively to reduce interfaces and support service quality, while some less complex objects were reserved for more direct SME participation.

Source: OECD (2025[28]), The Procurement Strategy for the German Federal Criminal Police Campus, https://doi.org/10.1787/cd9b9a4e-en.

The fourth suggestion is to build procurement strategy around targeted de‑risking before tender, not merely around procedure selection. The Norway case is especially relevant for Ukraine because it demonstrates practical measures to reduce pre‑contract uncertainty: market analysis, transparent pre‑selection criteria, a fully costed reference design, bidder compensation for compliant losing bids, and sufficient tender time. Ukraine does not need to replicate that model mechanically. But the underlying lesson is directly transferable where uncertainty remains high, procurement strategy should first ask how much risk can be removed, clarified or retained intelligently before asking which tender procedure to run. That is likely to be more valuable than further procedural tinkering alone.

For infrastructure projects, de‑risking before tender should include more than market analysis and contract design. It should also require a disciplined approach to the technical information released to the market. Where site conditions, buried utilities, geotechnical constraints or interface risks are material to price and buildability, contracting authorities should aim to disclose the underlying surveys, baseline data, design assumptions and cost-build-up logic in a usable form before bidding begins. Incomplete technical disclosure does not merely inconvenience bidders; it widens the scope for inflated risk premia, strategic underpricing followed by claims, and large post-award variations. A procurement strategy for reconstruction should therefore ask, before launch, which uncertainties can be measured, standardised or disclosed early enough to make competition more credible.

The fifth priority is to integrate PPP screening and preparation into the same front-end logic. PPP should be treated as one of the delivery options where they can bring most value. In practical terms, this means that for projects where private delivery, operation or finance may be relevant, the procurement strategy should include an early screening of PPP suitability, followed where warranted by fuller value‑for-money, affordability, fiscal-risk and market-interest analysis. Ukraine already has institutional pieces that could support this: the PPP Agency, earlier SOURCE integration work for PPPs and concessions, and the new project-preparation facility structure under the PPP Agency that is designed to connect with the wider PIM system and may later prepare projects under PPP modalities. The right recommendation is therefore not to build a separate PPP pipeline outside PIM and DREAM, but to make PPP a disciplined branch of the same project-development and procurement-strategy process.

3.5. Procurement

3.5.1. Overview

Public procurement is the stage at which infrastructure projects are converted from approved project proposals and designs into binding works, goods and services contracts. It is therefore the point at which many earlier weaknesses in project preparation become financially and operationally consequential. For infrastructure projects, procurement outcomes depend not only on the legal framework for tendering, but also on whether the project reaches the market with a sufficiently mature scope, reliable cost estimates, coherent packaging, and an allocation of risks that bidders can price credibly. Where those conditions are absent, procurement tends to produce thin competition, strategic underbidding, inflated risk premia, or early contract disputes rather than genuine value for money.

Ukraine has a comparatively strong formal procurement framework, but some infrastructure‑specific procurement risks remain. The Law of Ukraine “On Public Procurement” establishes an EU-oriented framework built around transparency, competition and electronic procurement, and it already contains tools relevant to infrastructure purchasing, including preliminary market consultations, life‑cycle costing, automatic risk indicators, and competitive dialogue (Verkhovna Rada of Ukraine, 2015[39]). For infrastructure works, procurement quality also depends on whether the contracting authority is acting on the basis of documentation and commercial judgements prepared by the entity that actually owns delivery risk. Where the technical owner, formal beneficiary and contracting authority are misaligned, procurement weaknesses often emerge before the tender even reaches the market. However, the same law also constrains the practical weight of non-price criteria by requiring the share of the price or life‑cycle cost criterion to be at least 70% in most procedures, which materially shapes evaluation practice for complex works contracts (Verkhovna Rada of Ukraine, 2015, Art. 29).

The wartime procurement regime has altered the operating context of infrastructure procurement in ways that are understandable but governance‑sensitive. Resolution No. 1 178 introduced special procurement arrangements under martial law (Cabinet of Ministers of Ukraine, 2022[44]), and the 2025 European Commission report notes that wartime decrees have expanded exceptions from ordinary procurement legislation (European Commission, 2025[45]). In parallel, the OECD’s fifth round follow-up report records that direct contracts represented 45% of total procurement by value in 2024, a level it treats as concerning even in wartime conditions because it weakens competitive pressure and heightens integrity risks in high-value sectors (OECD, 2025[46]).

Ukraine’s reform agenda already recognises that reconstruction procurement requires more than routine tendering rules. The Public Procurement Reform Strategy for 2024-2026 links procurement reform explicitly to reconstruction, provides for integration between the procurement system and DREAM, calls for donor-compatible procurement tools, and envisages model forms for contracts for works and works-related services based on international practice. The PIM Action Plan complements this by providing for e‑contracting and automatic transmission of contracts to Treasury bodies, which is directly relevant for traceability in infrastructure procurement (Cabinet of Ministers, 2024[47]). This direction was reinforced by Ministry of Economy Order No. 26 335 of 22 November 2024 approving methodological recommendations on the procurement of construction works during martial law and for 90 days thereafter. That is a useful operational step, but it does not by itself resolve the deeper problems of weak competition, documentation quality and pre‑award control (Ministry of Economy of Ukraine, 2024[48]).

3.5.2. Challenges

This section identifies seven main challenges. These are: overuse of wartime exceptions; weak competition even in formally competitive procedures; excessive reliance on price; incomplete documentation and disclosure; weak pre‑award integrity controls; oversight that remains more corrective than preventative; and fragmented traceability for donor- and IFI-financed procurement.

The first procurement-stage challenge is that wartime flexibility has widened the use of non-competitive routes at precisely the point where infrastructure projects are most exposed to pricing, collusion and favouritism risks. In ordinary circumstances, procurement is expected to test the market and reveal price and capability through competition. When a substantial share of contracts bypass that process, the state loses one of its main governance instruments for verifying whether technical specifications, quantities and prices are reasonable, and this is particularly problematic in works-heavy sectors where contract values are large and cost inflation can be hidden inside scope complexity.

The second challenge is that competition in Ukrainian procurement is weak even where competitive procedures are formally used, and this weakness is especially damaging for infrastructure works. The European Commission reports that 68% of procurement spending was contracted through competitive procedures, yet the average number of bidders was only 1.55, indicating that formal competition often does not translate into meaningful contestability; for infrastructure contracts, such thin bidder turnout reduces price pressure, weakens incentives for quality improvement, and increases vulnerability to repeated local-market concentration or tacit market sharing (European Commission, 2025, p. 65[45]).

The third challenge is that infrastructure procurement remains too price‑driven relative to the quality, durability and maintainability concerns that should matter in works contracting. The Commission explicitly identifies an overreliance on price as the sole award criterion, while the procurement law, although it allows life‑cycle costing and other criteria, still requires price or life‑cycle cost to account for at least 70% of the total score in most cases; in practice, this creates a structural bias towards lowest-price selection in settings where implementation methodology, programme realism, warranty commitments, energy performance and long-term maintenance implications should often matter more than they currently do (European Commission, 2025[45]) (Verkhovna Rada of Ukraine, 2015[39]).

The fourth challenge is that tender documentation for infrastructure works is often not sufficiently complete, standardised or analysable for bidders to price risks properly. The NACP-linked corruption-risk analysis on civilian infrastructure reconstruction finds that the absence of legal requirements to publish a comprehensive set of documents needed to assess construction processes and estimated costs, including in machine‑readable format, creates a non-transparent basis for selecting the winner (National Agency on Corruption Prevention (NACP), 2025[49]). This is a procurement-stage problem, and incomplete or poor-quality disclosure directly distorts bidder behaviour, comparison of offers and the credibility of tender results. The Ministry of Economy’s 2024 methodological recommendations on construction procurement are a useful response to this problem, but the need for such guidance itself underlines that documentation weakness remains systemic rather than incidental.

The fifth challenge is that pre‑award integrity controls remain weaker than the risk profile of reconstruction procurement requires. This narrower procurement judgement should be distinguished from broader anti-corruption implementation progress. Anti-corruption work is ongoing. For instance, according to the NACP, 743 measures under the State Anti-Corruption Programme for 2023-2025 were fully or partially implemented by the end of Q4 2025 (National Agency on Corruption Prevention, 2026[50]). That broader progress is real, but as far as procurement is concerned it does not remove the specific pre‑award vulnerabilities that matter most for infrastructure. The European Commission states that risk assessments, conflict-of-interest prevention and internal and external controls are still weak, particularly in the pre‑award phase (European Commission, 2025[45]). This matters disproportionately for infrastructure because biased technical specifications, restrictive qualification criteria, weak scrutiny of bills of quantities and conflicts involving designers, evaluators or supervisors can shape the entire outcome before any contract is signed. These risks are not fully addressed by publishing tender information alone. Transparency improves visibility, but it does not by itself detect bid rigging, co‑ordinated bidding through related companies, beneficial ownership conflicts, tailored specifications or weak supervision arrangements. Infrastructure procurement therefore requires a control ecosystem that combines disclosure with risk analytics, internal review, competition enforcement, audit follow-up and sanctions.

The sixth challenge is that oversight remains more corrective than preventative, which is too late for many infrastructure procurement failures. The procurement law defines monitoring as a tool to assess compliance during the procurement procedure and contract validity, and the electronic system makes monitoring requests and opinions public. Yet the only a minority of monitoring actions are triggered by automatic risk indicators and that follow-through in court remains limited, which reduces deterrence in a sector where many harmful decisions are effectively locked in once award has taken place. This does not mean that the State Audit Service of Ukraine or other control bodies lack a formal mandate or do not manage this work well. The problem is timing, targeting and infrastructure specificity: many of the most damaging procurement decisions are effectively locked in before the oversight bodies do compliance monitoring can alter the outcome.

The final challenge is that procurement for donor- and IFI-financed infrastructure can become operationally fragmented if interoperability is not fully institutionalised. Ukrainian law allows procurement to follow treaty-based or IFI rules where these apply, and the reform strategy rightly recognises the need for a procurement-system module for international financing and for interoperability with DREAM. However, unless contract data, tender stages and project identifiers remain visible across these channels, contracting authorities face duplicated processes and external stakeholders lose a clear line of sight from project approval to tender, contract and payment.

3.5.3. Recommendations

The recommendations focus on seven key priorities. Those are: restoring competition as the default; improving bidder conditions before tender; reducing excessive reliance on price; treating documentation quality as a control issue; shifting integrity controls upstream; making oversight more preventative and infrastructure‑specific; and completing the digital traceability chain from pipeline to payment.

The first priority is to restore competition as the default operating logic for infrastructure procurement, while keeping narrowly framed wartime exceptions where they are objectively necessary. That requires much tighter justification for using non-competitive or simplified routes under Resolution No. 1 178, together with minimum disclosure obligations for the project scope, quantities, technical surveys and cost assumptions wherever security conditions permit; the point is not to remove flexibility altogether, but to make exceptional routes reviewable, evidence‑based and less vulnerable to routine use for convenience.

The second priority is to strengthen bidder participation in works procurement by reducing avoidable uncertainty before tender launch. Ukraine already has a lawful instrument for this in preliminary market consultations under Article 4 of the procurement law, and OECD STEPS work shows why it matters: better scoping, clearer packaging, more mature reference design and fuller information reduce the tendency of bidders either to stay away or to price uncertainty defensively. Infrastructure procurement would benefit from routine market-sounding for large works, standardised tender packs, clearer interface definitions between lots, and longer preparation windows where projects are technically complex (OECD, 2021[27]).

The third priority is to make evaluation methods more compatible with infrastructure value rather than short-term price minimisation. This does not necessarily require immediate legislative overhaul, although the 70% price floor is a real constraint. Even within the current framework, Ukraine could develop sector-specific evaluation templates for roads, bridges, water systems and public buildings that use verifiable non-price factors, clearer life‑cycle cost methodologies and, where justified, competitive dialogue for complex projects, thereby shifting practice towards more credible whole‑life value assessment without sacrificing transparency.

A related issue is the composition of the evaluation function itself. For major or technically complex infrastructure tenders, the credibility of non-price assessment depends on evaluators having access to genuine engineering and delivery expertise rather than only legal or procedural competence. This does not necessarily require creating wholly separate bodies, but it does require that contracting authorities can draw on independent technical input when assessing methodology, design responsiveness, programme realism, maintainability and the adequacy of proposed materials or equipment. Without that capacity, the formal availability of life‑cycle cost or quality criteria will have limited practical effect.

The fourth priority is to treat documentation quality as a core procurement-control issue rather than an administrative detail. For infrastructure tenders, complete and usable disclosure should include the relevant design basis, bills of quantities, surveys, cost estimates, interface assumptions and evaluation methodology, and these should be published in machine‑readable form to the greatest extent possible; this follows directly from the NACP risk analysis and is one of the clearest actionable measures for reducing both corruption opportunities and purely technical bid distortions (National Agency on Corruption Prevention (NACP), 2025[49]). For works contracts, this should normally include the applicable design standards, the basis for materials specifications, geotechnical and utility information where relevant, and a sufficiently clear explanation of which risks remain with the employer and which are being transferred to bidders. In sectors moving towards EU alignment, tender documents should also avoid locking procurement into outdated national norms where equivalent EN or ISO-based solutions are required for interoperability, safety or donor compatibility. The practical test is whether a technically competent bidder can reconstruct the employer’s assumptions well enough to price the work without relying on speculation about hidden conditions or undocumented design choices.

The fifth priority is to shift integrity controls upstream into the pre‑award and tendering phases. In practice, this can mean mandatory conflict-of-interest declarations for procurement teams and advisers on high-value works, automated checks against ownership and exclusion-related registers through procurement workflows, and standardised drafting controls that reduce the scope for tailored specifications or arbitrary qualification requirements. That focus is in line with the Commission’s diagnosis of weak pre‑award controls indicating that many procurement risks arise before monitoring bodies are realistically able to intervene (European Commission, 2025[45]). For major or high-risk infrastructure contracts, procurement strategy should also include proportionate integrity and competition-risk checks on tender design, bidder requirements, contract modifications and acceptance of works, supported by traceability through DREAM and Prozorro.

The sixth priority is to make oversight more preventative and more infrastructure specific. Ukraine already has a legal basis for monitoring and automatic risk indicators, but these tools should be sharpened for works procurement by focussing on a narrower set of high-risk signals such as single bidding, repeated winners in concentrated markets, abnormal low bids, high-risk amendments and inconsistencies between tendered and estimated prices. This would align better with the Commission’s recommendation to strengthen preventive, risk-based audits and would improve the deterrent effect of control bodies at the stage where procurement decisions are still reversible (European Commission, 2025[45]).

For infrastructure markets, this narrower set of high-risk signals should also include repeated concentration patterns across works categories or regions, because weak competition can be structural rather than project specific. The practical objective is to target audit and monitoring attention on the tenders where restricted participation, abnormal pricing, repeated winners, or high amendment rates suggest that value‑for-money and market contestability are deteriorating. This would make external assurance more relevant to infrastructure delivery risks rather than leaving it concentrated on formal compliance checks after the critical decisions have already been taken. One practical way to make this more operational is to stop rebuilding market intelligence from scratch for each tender and instead adopt a category-management approach for recurrent reconstruction packages, as illustrated in Box ‎3.10.

Box ‎3.10. Category management for recurrent reconstruction procurement packages

Category management is a structured approach to recurrent procurement in which the buyer develops and periodically updates shared intelligence on supplier markets, typical package sizes, recurrent risk points, concentration patterns and documentation standards. Its value in infrastructure is that it reduces the need for each contracting authority to rediscover the same market structure, bottlenecks and packaging problems tender by tender.

For Ukraine, this logic is particularly relevant in roads, public buildings, water and sanitation, and selected energy-related works where many projects involve similar work packages and supplier bases. A category-management approach would not replace project-specific judgement, but it would make procurement more repeatable and less dependent on fragmented local experience. It would also support more targeted risk indicators, better market-sounding and stronger benchmarking of documentation and contract performance.

This more data-driven approach should extend to technical standards and cost benchmarks. In sectors with recurrent project types, Ukraine would benefit from progressively expanding benchmark cost databases and reference assumptions beyond roads to other major infrastructure classes, so that sponsors and reviewers are not estimating each project in isolation. The purpose is to provide a transparent reference point against which quantities, rates and deviations can be examined. The same applies to technical standards: where projects are intended to integrate with EU networks or financing frameworks, procurement strategy should anticipate the use of contemporary EN and ISO-based material and engineering standards, including clear “or equivalent” treatment where national and European standards coexist during transition.

Source: OECD (2021[27]), Procurement strategy in major infrastructure projects: Piloting a new approach in Norway, https://www.oecd.org/en/publications/procurement-strategy-in-major-infrastructure-projects_38996343-en.html; OECD (2025[28]), The Procurement Strategy for the German Federal Criminal Police Campus, https://www.oecd.org/en/publications/the-procurement-strategy-for-the-german-federal-criminal-police-campus_cd9b9a4e-en.html.

The seventh priority is to complete the digital traceability chain from project pipeline to tender, contract, registration and payment. The reform strategy’s integration of the procurement system with DREAM and its donor-procurement module, combined with the PIM Action Plan’s provision for e‑contracting and automatic transmission to Treasury bodies, is a step in the right direction. For infrastructure governance, the practical objective should be a single traceable record linking project entry, procurement route, bidding, award, contract, amendments and payment, because that is the minimum digital architecture needed for reconstruction procurement to be both investable and auditable (Cabinet of Ministers, 2024[47]). Importantly, digital traceability chain should not be treated as a substitute for control: linking DREAM, Prozorro, contract records, payment data and implementation monitoring through persistent identifiers should be combined with ensuring that anomalies trigger institutional review, audit follow-up or enforcement action where warranted.

That same traceability logic should extend to the structure of contract disbursements. In infrastructure works, weak linkage between payment and verified technical progress creates obvious risks: front-loaded cash flow, poor leverage over performance, and difficulty distinguishing legitimate change from weak execution. As e‑contracting develops, the stronger approach would be to align advance payments and interim disbursements with clearly defined contractual milestones, technical certification and variation controls, so that the payment trail reflects actual delivery progress rather than only financial authorisation. This would also improve the usefulness of audit and monitoring data by linking payment events to measurable implementation events.

3.6. Asset management

3.6.1. Overview

Asset management is the point at which infrastructure governance stops being about approving projects and starts being about sustaining performance. Asset management is a systematic management of infrastructure over its full lifecycle through condition assessment, maintenance planning, renewal programming and lifecycle costing. In mature systems, asset management links technical data on asset condition and performance to budget decisions, so that maintenance, rehabilitation and replacement are prioritised before failures become more costly. This is particularly important in infrastructure sectors, where deferred maintenance and weak condition data can quickly erode service quality and raise future capital costs (World Bank, 2018[51]; World Bank, 2019[52]). In practical terms, the question is whether public authorities and operators know what assets they own, what condition those assets are in, what level of service they deliver, what maintenance they need and when renewal becomes more efficient than patching. In mature systems, this evidence feeds directly into budget decisions, so that maintenance, rehabilitation and replacement are prioritised before failures become more costly.

Ukraine’s current framework is stronger on ownership, accounting and project selection than on cross-sector asset management. The Law on the Management of State‑Owned Property establishes the institutional arrangements for managing state property and provides for a Unified Register of Objects that Are in State Ownership, but this is principally a legal and ownership register rather than a full infrastructure asset-management system based on condition, risk and service performance (Verkhovna Rada of Ukraine, 2006). The current PIM reform, as set out in the Roadmap for Reforming Public Investment Management for 2024-2028 and its Action Plan, is focussed on strategic planning, project pipelines, appraisal, selection and monitoring. It does not yet establish a practical, cross-government regime for managing infrastructure assets once they enter operation (Cabinet of Ministers of Ukraine (CMU), 2024[2]).

Sector evidence suggests that Ukraine still needs the basic technical building blocks of modern asset management. In the road sector, the World Bank has called for systematic collection of traffic and road-condition data and the implementation of a GIS-based Road Asset Management System, including at oblast level after decentralisation (World Bank, 2018[51]). In the rail sector, World Bank analysis for Ukrzaliznytsia identified the need for an asset-management system capable of estimating maintenance and renewal budgets, measuring backlogs and applying lifecycle costing to investment (World Bank, 2019[52]). Recent recovery analysis reaches a similar conclusion from a different angle: RDNA5 highlights losses associated with deferred maintenance and stresses that reconstruction planning must be aligned with realistic long-term operation and maintenance capacity (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]).

Ukraine’s legal framework recognises life‑cycle cost as a procurement criterion, but this is not equivalent to systematic whole‑life costing in infrastructure management. The Law on Public Procurement (adopted in 2015, current edition effective from 31 October 2025) allows life‑cycle cost evaluation to include operating, maintenance, collection and disposal costs, as well as certain environmental externalities, but the same law materially limits the practical weight of non-price criteria in ordinary evaluation practice (Verkhovna Rada of Ukraine, 2015[39]). Without condition data, maintenance evidence and sector-level renewal planning, lifecycle‑cost provisions remain narrower than a full asset-management regime. Its practical effect is constrained in most procedures by the requirement that the weight of the price criterion must not be lower than 70%, except in competitive dialogue. This does not prevent quality-oriented procurement, but it does limit the room for non-price criteria in complex works contracts where delivery methodology, durability, maintainability and risk treatment are often central to value for money. All in all, although lifecycle cost is recognised in law, the procurement framework does not by itself generate a practical asset-management system.

3.6.2. Challenges

This section identifies three main challenges: weak asset visibility, insufficient linkage between maintenance evidence and budgeting, and uneven operational capability across sectors, SOEs, utilities and hromadas. Together, these gaps make it difficult to move from reactive repair to planned renewal.

The main difficulty is the absence of a coherent, cross-sector asset-management framework that converts infrastructure stocks into comparable, decision-ready information. Ukraine has legal rules on state property management and public-sector accounting, and some sectors have more developed maintenance routines than others. However, the reviewed materials do not indicate a common requirement for infrastructure owners to maintain standardised asset inventories, collect comparable condition data, estimate maintenance backlogs, apply lifecycle costing, or use risk-based renewal plans across central and subnational government. In practice, this means that infrastructure can remain visible on a balance sheet without being managed as a long-lived service asset with predictable future liabilities (Verkhovna Rada of Ukraine, 2006[53]).

Local-level reforms are increasing the planning and information demands on municipalities, but this does not yet amount to a mature asset-management regime. U-LEAD’s work on public investment management in municipalities shows that recent Budget Code changes require communities to prepare medium-term plans for priority public investments, build a unified local investment portfolio and work through the DREAM ecosystem as part of the new approval and reporting logic (U-LEAD with Europe, 2025[54]). At the same time, U-LEAD’s support programmes on municipal property management, internal control and monitoring suggest that many municipalities are still building the underlying administrative capabilities needed to manage assets consistently, including document packages, internal procedures, monitoring arrangements and co‑ordination across departments. Ukraine’s challenge is therefore not only regulatory design at the centre‑of-government, but also the limited operational capacity of hromadas to translate new investment and monitoring requirements into systematic management of infrastructure stocks.

This gap has become more consequential under wartime damage, fiscal constraint and decentralised service delivery. Where asset condition is poorly measured and maintenance needs are weakly prioritised, scarce reconstruction funding can be diverted towards repeated emergency repair rather than value‑preserving maintenance, while local governments and utilities may inherit growing liabilities without a clear picture of future renewal costs. The evidence from roads, rail and municipal infrastructure suggests that this is a practical delivery risk: without reliable condition data, asset-management tools and realistic operation and maintenance planning, Ukraine will struggle to protect existing infrastructure value while also rebuilding damaged assets.

3.6.3. Recommendations

The recommendations focus on three priorities: establishing a phased minimum asset-management framework, translating that framework into sectoral and entity-level plans, and connecting asset evidence more directly to budgeting and digital implementation.

Ukraine should establish a phased minimum asset-management framework that complements the PIM reform rather than treating asset management as a separate technical niche. At a minimum, such a framework should define common requirements for asset inventories, asset classification, condition-assessment methods, minimum data fields, maintenance backlog estimation, risk-based maintenance planning and lifecycle costing for major infrastructure classes. The framework should also distinguish clearly between accounting registers, project-monitoring systems and operational asset-management systems, so that the state can move from recording what it owns to understanding what condition it is in, what service it provides and what it will cost to sustain. This should also be accompanied by procurement guidance for major infrastructure works so that lifecycle information is generated in forms that can actually be used in tender design and evaluation, bearing in mind that the current weighting rules still favour price in most procedures.

At implementation level, this should translate into sectoral and entity-level Asset Management Plans (AMPs) for the main infrastructure classes. These plans should not be treated as descriptive inventories. They should set out asset condition baselines, service‑level expectations, maintenance and renewal cycles, backlog estimates, lifecycle‑cost assumptions, and triggers for rehabilitation or replacement. The practical benefit is to move decision making away from reactive repair and towards predictable maintenance and renewal programming, which is particularly important under reconstruction pressures and tight fiscal space.

Ukraine should use current digital and reconstruction reforms as the entry point for phased implementation. In practice, this means linking the emerging PIM and DREAM architecture to sector asset registers and maintenance datasets, beginning with sectors where the service risks and capital intensity are highest, such as roads, rail, water and municipal networks. Sector agencies and local authorities should be required to introduce regular condition surveys, medium-term maintenance and renewal plans, and budget submissions that distinguish routine maintenance, major rehabilitation and full replacement. For local governments, this also implies simple, repeatable minimum requirements rather than complex stand-alone systems that smaller hromadas cannot maintain. Over time, these systems should support more credible renewal forecasting and help ensure that reconstruction decisions are consistent with future operation and maintenance capacity.

This also requires clearer treatment of operation and maintenance (O&M) in the budget process. Medium-term plans and annual submissions should distinguish more explicitly between routine maintenance, major rehabilitation and replacement, and should link these envelopes to asset-management evidence rather than treating maintenance as a residual category. Where recurrent spending is not tied to credible maintenance and renewal plans, the state risks rebuilding assets whose future upkeep is structurally underfunded, thereby importing deferred liabilities into the next investment cycle.

3.7. Decommissioning

3.7.1. Overview

Decommissioning is the planned management of infrastructure at the end of its useful life, including technical closure, removal or dismantling, environmental remediation, reuse or repurposing of assets and materials, and the management of residual fiscal and safety risks. In well-developed systems, decommissioning is considered early in the lifecycle so that sponsors understand future closure costs, environmental obligations and salvage or reuse opportunities before committing to build or rehabilitate long-lived assets. This is especially relevant in sectors with significant environmental footprints, complex land-use implications or valuable recoverable materials (Government of Ukraine, World Bank, European Union, United Nations, 2026[3]).

In practical terms, early consideration means that major projects should identify, in proportion to their risk profile, the likely end-of-life obligations before construction decisions are locked in. This includes potential dismantling or closure costs, waste and hazardous-material handling requirements, residual land-restoration obligations, and the scope for reuse, recycling or repurposing of materials and components. Without this forward view, infrastructure can appear affordable at entry while generating poorly understood environmental and fiscal liabilities later in the lifecycle.

Ukraine does have rules on write‑off, disposal and waste management, but these do not amount to a general infrastructure decommissioning framework. For state‑owned property, the Cabinet of Ministers’ Procedure for the Write‑off of State Property establishes a formal mechanism for writing off unfinished construction, completed assets and other state property (Cabinet of Ministers of Ukraine, 2007[55]). More broadly, the Law on Waste Management provides the overarching legal basis for waste regulation (Verkhovna Rada of Ukraine, 2022[56]), while decommissioning in the nuclear field is governed through specific legislation on radioactive waste and the special legal regime applicable to Chornobyl-related facilities (Verkhovna Rada of Ukraine, 1991[57]). These rules are important, but they are fragmented and directed at specific administrative or sectoral issues rather than at lifecycle planning for infrastructure end-of-life.

Recent reforms have started to address construction and demolition waste recovery, but the policy focus remains narrower than decommissioning in the full infrastructure sense. The 2025 EU enlargement report noted that Ukraine still needs to ensure proper management of construction and demolition waste, mining waste and hazardous waste as part of alignment with the EU acquis (European Commission, 2025[45]). In February 2026, the government approved a procedure for meeting targets on the reuse and recycling of construction and demolition waste (Cabinet of Ministers of Ukraine, 2026[58]). This is a useful step, but it addresses material recovery and waste management more directly than project-level decommissioning planning, fiscal provisioning, site restoration and asset repurposing.

Some local support is emerging around downstream waste and demolition management, but it remains narrower than full decommissioning policy. For example, U-LEAD supported 16 municipalities in Sumy oblast to prepare local waste‑management plans, conduct strategic environmental assessment and co‑ordinate those plans with the regional framework, explicitly linking these efforts to better waste‑management investment planning (U-LEAD with Europe, 2024[59]). Such initiatives are useful, but they address local waste systems more directly than the broader fiscal, technical and environmental planning required for infrastructure decommissioning.

3.7.2. Challenges

This section identifies three main challenges: decommissioning is still treated too late in the lifecycle, the governing rules remain fragmented across disposal, waste and sector-specific regimes, and project documentation does not yet make future closure liabilities sufficiently visible.

The central issue is that decommissioning is treated mainly as an ex-post disposal or write‑off issue rather than as a phase to be planned from the outset of the asset lifecycle. The current framework appears to activate formal procedures once an asset has already become obsolete, damaged, unusable or surplus, at which point a commission determines whether parts and materials can be reused and whether the remainder should be written off under the applicable authority. That is a narrower logic than infrastructure decommissioning as understood in international practice, where end-of-life obligations, environmental risks, dismantling methods, residual values and reuse options are considered before or during project development, not only when the asset is ready to leave the balance sheet (Cabinet of Ministers of Ukraine, 2007[55]) (Verkhovna Rada of Ukraine, 2022[56]).

This matters because late and fragmented decommissioning increases both fiscal waste and environmental risk. Ukrainian construction norms do not normally include decommissioning costs in project-cost documentation, and that, where decommissioning is needed, a special commission is typically formed to determine reuse, transfer and write‑off, with the process dependent on permissions from the relevant manager and local council (OECD Mission to Kyiv, 2025). That approach may be administratively workable for individual cases, but it does not ensure that future closure liabilities are budgeted, that materials are systematically recovered, or that land and environmental remediation are planned in a consistent way. In the context of war damage, debris generation and ageing municipal infrastructure, those omissions are likely to become more significant (Cabinet of Ministers of Ukraine, 2026[58]).

U-LEAD’s recent guidance on destroyed municipal property confirms that end-of-life decisions are handled mainly through post-damage administrative and technical procedures. In February 2026, U-LEAD described the termination of ownership rights to destroyed municipal property as a complex process combining technical inspection, administrative decision making and registry action, and stressed that certified engineers or construction experts are needed to determine whether the asset should be restored or whether demolition is more expedient (U-LEAD with Europe, 2026[60]). This is useful local-level evidence, but it also underlines the broader weakness identified in this review: the system is still oriented towards documenting and regularising destruction after the event, rather than requiring earlier planning for decommissioning costs, salvage value, site remediation and material recovery as part of project preparation or asset lifecycle management.

3.7.3. Recommendations

The recommendations focus on three priorities: making end-of-life obligations visible earlier, creating a proportional cross-sector framework, and linking decommissioning more clearly to waste, reconstruction and local asset-management reforms.

Ukraine should move beyond disposal rules towards a more explicit decommissioning discipline for infrastructure assets. A practical first step would be national guidance requiring major projects and major rehabilitations to consider decommissioning or closure as part of design and lifecycle planning, including indicative cost treatment where future dismantling, remediation or waste‑management obligations are likely to be material. This does not require full precision at the appraisal stage, but it does require that end-of-life obligations cease to be invisible. Over time, sector guidance could differentiate between asset classes with limited closure risk and those, such as environmentally sensitive, networked or hazardous facilities, where costed decommissioning planning is a material part of prudent project design.

Ukraine should introduce a basic cross-sector decommissioning framework for public infrastructure, proportionate to sector risk and asset type. This framework should require project sponsors and asset owners to assess end-of-life scenarios for major assets and major rehabilitations to identify likely end-of-life obligations in proportion to asset and sector risk, including indicative treatment of dismantling, remediation and waste‑management costs where these are likely to be material. It should not be designed as a heavy additional approval layer for all projects, but as a structured requirement for asset classes where dismantling, contamination, salvage value or land restoration are material issues. Existing administrative rules on write‑off should remain, but they should sit downstream of earlier lifecycle planning rather than substitute for it.

Ukraine should also connect decommissioning policy to waste, reconstruction and local-asset-management reforms. In practical terms, this means standard guidance on when decommissioning costs should be reflected in project documentation, model procedures for assessing reuse and transfer options, and clearer links between asset closure decisions, demolition-waste recovery rules and local permitting. The new 2026 procedure on construction and demolition waste provides one useful anchor (Cabinet of Ministers of Ukraine, 2026[58]), but it should be complemented by guidance for infrastructure owners and local governments on budgeting, sequencing and documenting closure decisions. Over time, this would allow Ukraine to move from ad hoc disposal towards planned end-of-life management that protects environmental outcomes, reduces waste and captures more value from reusable materials.

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