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An extended article recently featured on the Construção Mercado (“Construction Market”) portal explored some of the core issues and contradictions being faced in the execution of the Minha Casa, Minha Vida (“My House, My Life”) program.  Some of the salient points have been outlined below and in a separate post, viewed by clicking here.

The article starts with a case study of a executed by the Tenda low income housing construction company (owned by the second largest developer in , Gafisa). Residents of the Residencial Bilbao condominium, in Ferraz de Vasconcelos, Greater São Paulo (delivered in 2009) outline their dissatisfaction in light of problems ranging from regular appearances of cracks and infiltrations to floors in all of the apartments not being leveled properly, flooding in the entrance halls (when it rains), parking spaces / vehicle circulation areas being too narrow and questions in relation to ownership rights.  Earlier this year, a wall close to the children´s play area collapsed, even after residents reported of cracks some three months before.  As at the start of June, despite the obviousness of the problem, a new wall had still not been mounted.  [See our YouTube channel for a range of similar reports in recent months].

From a more positive – albeit arguably naïve – perspective, it is commented that the program has a huge potential as a “niche” for construction companies struggling under difficult current market conditions.  With “returns guaranteed” under Strand 1 of the program and “almost certain” under Strands 2 and 3, it is claimed that “the commercial risks for companies is practically zero – particularly when taking into consideration the country´s high deficit level”.  As a result of a series of adjustments, complementary municipal support mechanisms and public land donations – the program has become, in turn, more attractive for construction companies to operate within.

However, whilst the Caixa Econômica Federal has officially informed that less than 1% of units being delivered possess some kind of construction-related problem, the data has been contested by the majority of professional sources consulted by the Construção Mercado.  Indeed, after 4 years of operation, the majority of the units have only been acquired recently which is likely to mean that defects and other ensuing practical problems have yet to come to the surface.

Resident complaints in relation to low quality standards have, indeed, become increasingly common – [enter the terms MRV, Tenda and Minha Casa, Minha Vida into Reclame Aqui site to see how regular such occurrences are happening] – which has much of the sector questioning whether Minha Casa, Minha Vida units are being delivered with inferior quality standards.  The principle problems are deemed to be in relation to the non-conformity with essential technical standards as well as a lack of due concern in relation to quality control and labour contraction procedures.  “When you visit building sites and completed projects, the differences in terms of quality standards can be seen.  Some are frankly shameful in relation to what should be standard practice,” commented Maria Angélica Covelo Silva, technology and management performance consultant at NGI Consultoria.

Luiz Zigmantas, president of the National Association of Caixa Econômica Federal Engineers and Architects (Associação Nacional dos Engenheiros e Arquitetos da Caixa, ANEAC) states that just 41% of units produced under the program have actually been monitored by the lending institution.  The other 59% is represented by developers using private resources (without the pertinent supervision of Caixa), subsequently only using the bank as financial agents – which, it is argued, is meaning that important engineering principles are being overlooked.

José Carlos Martins, president of the Brazilian Construction Industry Chamber of Commerce (Câmara Brasileira da Indústria da Construção, CBIC) questions: “If the financing is only happening after the unit is ready, how is it possible to understand what is happening during project execution?”  João Bosco Brito of the Association of Home Loan Borrowers of São Paulo and Surrounding Areas (Associação dos Mutuários de São Paulo e Adjacências, ) believes that it is more the case that developers are not building responsibly, adopting a more “relaxed” attitude to affordable housing projects.  He also commented that it has generally become the case that constructors are not responding to residents´ complaints in a timely manner – thereby requiring court action for repairs to be undertaken (by law, construction companies are required to provide a guarantee to resolve any issues in relation to damage incurred for 5 years after completion).

The Caixa Econômica Federal has recently indicated that they will be closing in on such practice: “we are not against the construction industry, but against the bad constructor – who we want to see moved away from this institution,” affirmed Teotônio Rezende, director of housing.  Part of this clamp down will be enforced via the “Observing Quality” (De Olho na Qualidade) initiative – which, within 14 days of launch, had already dismissed 111 real estate development companies from operating within the Minha Casa, Minha Vida.  According to the bank, more monitoring is already underway:  “Technical evaluations are now undertaken weekly and we are discussing solutions as to how problems can be identified earlier, including during the planning stages,” stated Luiz Zigmantas – president of ANEAC.  Alexandre Oliveira, of the São Paulo Construction Purchasing Association (Associação de Compras da Construção Civil de SP, -SP), stated that some parts of the country have better track records than others in terms of rigour.  Vanderley John of the Polytechnic School at the University of São Paulo (Poli-) also pointed to the need for constructors to be “punished” when errors are committed regularly: “constructors should pay for the losses incurred as a result of their actions.  If contractual agreements place strict controls on their operations, many of the problems being witnessed should disappear.”

The impending update and compulsory implementation of the 15.575 norm governed under the Brazilian Association of Technical Standards (Associação Brasileira de Norma Técnicas, ) (from 19th July 2013) is likely to create a range of further practical complications moving forward.  Barbara Kelch Monteiro, coordinator of building norms at the Brazilian Association of Architectural Offices (Associação Brasileira de Escritórios de Arquitetura, ) affirmed that “it is well known” that not all the buildings being mounted for low income groups will be able to attend to these new standards.  The good is that it will now be more easily determinable as to whether quality standards are up to scratch or not – if the latter is the case, then the norm stipulates for the correct measures to be undertaken (at the expense of the construction company).

Yet, naturally, such stipulations and measures are almost certain to create extra costs in what is already a pressured operational environment for the conventional Brazilian constructor.  At a government-sponsored event in April 2013, the director of housing production at the Brazilian Cities Ministry, Maria do Carmo Avesani, stated that: “today the program demands high performance levels from construction companies involved” but there is “no prevision for values to be adjusted upwards”.  For Vanderley John, this is probably a good idea: “if the ceilings are increased, the developer will just exploit the larger margins,” he commented.

Please click here for part 2.  For a full analysis of the reality of the Brazilian housing market specifically for low income groups please see the “Brazil without Favelas” report produced in conjunction with @feztapronto.

Source: http://www.brazilinvestmentguide.com/blog/2013/06/the-two-sides-of-the-minha-casa-minha-vida-program-brazil-social-housing-technical-issues/

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