Circular No. 02/2000/TT-BXD guiding the adjustment of the construction project budget estimate

CIRCULAR

Guidelines for adjusting the budget estimate of construction projects

BASED ON Article 1 of Decree No. 10/2000/NĐ-CP dated March 27, 2000 of the Government regarding the minimum wage in enterprises being VND 180,000/month;

BASED ON the Decision adjusting electricity prices, gasoline, and oil prices issued by the competent authority;

The Ministry of Construction guides the adjustment of the budget estimates for construction projects using the sources of capital specified in Articles 10, 11, and 12 of the Management Regulation on Investment and Construction issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government as follows:

I - ADJUSTMENT OF THE ESTIMATED VALUE OF CONSTRUCTION WORK:

1. Adjustment of labor costs:

Labor costs in the construction work estimate established based on the current basic construction unit price list of provinces and centrally administered cities shall be adjusted with the factor KNC = 1.25 times.

For construction projects that establish estimates based on the current basic construction unit price list of provinces and centrally administered cities and receive additional allowances, salary supplements, and other policies not included in the unit price or receive higher mobility allowances of more than 20% or higher unstable production allowances of more than 10%, these amounts will be added to the labor costs according to the guidance provided in the appendix attached to this Circular.

2. Adjustment of machinery costs:

Machinery costs in the construction work estimate established based on the current basic construction unit price list of provinces and centrally administered cities shall be adjusted with the factor KMTC = 1.04 times. This adjustment factor does not apply to the adjustment of machinery costs in the construction work estimate of projects where machinery costs are determined based on machine rates issued separately by the competent authority and not included in the machine rate table issued together with Decision No. 1260/1998/QĐ-BXD dated November 18, 1998 of the Minister of Construction.

- Common costs: Calculated as a percentage (%) of the adjusted labor costs in the installation and construction estimate. The amount of common costs is specified for each type of project in Table 2 of Appendix 2 of Circular No. 09/2000/TT-BXD dated July 17, 2000 of the Ministry of Construction.

Common expenses: Calculated as a percentage (%) relative to the adjusted labor costs in the construction work estimate. These common expenses are defined for each type of project in Table 2 of Appendix No. 2 of Circular No. 08/1999/TT-BXD dated November 16, 1999 of the Ministry of Construction.

Pre-tax income subject to tax: Calculated as a percentage (%) defined for each type of project in Table 2 of Appendix No. 2 of Circular No. 08/1999/TT-BXD dated November 16, 1999 of the Ministry of Construction relative to direct costs (adjusted labor costs and machinery costs) and the aforementioned common expenses.

4. Output Value Added Tax: Calculated at the applicable VAT rate for construction and installation work according to current regulations on the pre-tax estimated value of construction work before adjustment of the cost items mentioned above.

THE TOTAL ESTIMATE OF CONSTRUCTION PROJECTS

II - ADJUSTMENT OF OTHER COSTS IN THE TOTAL PROJECT ESTIMATE

1. Adjustment of the construction survey cost estimate:

The pre-tax construction survey cost estimate is determined based on the Construction Survey Estimate Norms issued together with Decision No. 177/BXD-VKT dated July 17, 1995 and the Circular guiding the establishment and management of construction survey pricing No. 22/BXD-VKT dated July 17, 1995 of the Ministry of Construction, which is adjusted with the factor KKS = 1.08 times..

2. Adjustment of investment consulting and construction costs; design costs; project management costs:

According to the provisions, investment consulting and construction costs (issued together with Decision No. 45/1999/QĐ-BXD dated December 2, 1999 of the Minister of Construction), design costs (issued together with Decision No. 01/2000/QĐ-BXD dated January 3, 2000 of the Minister of Construction), and project management costs (according to Circular No. 08/1999/TT-BXD dated November 16, 1999 of the Ministry of Construction) are calculated as a percentage (%) of the pre-tax estimated value of construction work or the pre-tax estimated value of construction work and equipment, since the pre-tax estimated value of construction work has been adjusted according to the content in Part I of this Circular, the existing percentage rates stipulated in the above documents still apply.

For consulting costs for preparing tender documents for purchasing materials and equipment and analyzing and evaluating tender documents for purchasing materials and equipment, calculated as a percentage (%) of the value of materials and equipment without VAT according to Decision No. 45/1999/QĐ-BXD dated December 2, 1999 of the Minister of Construction, is adjusted with the factor KTVT = 1.11 times.

Specifically, for urban planning construction work, the pre-tax cost estimate for this work is determined based on the Urban Planning Construction Price List issued together with Decision No. 502/BXD-VKT dated September 18, 1996 of the Minister of Construction, which is adjusted with the factor KQH = 1.07 times.

III - IMPLEMENTATION:

The adjustment of the construction project estimate according to the guidance of this Circular applies uniformly nationwide from January 1, 2000. This Circular shall not be applied to adjust the estimates for international bidding projects within the country and projects carried out by foreign contractors in Vietnam.

For important state construction projects permitted to establish separate unit prices (basic construction unit prices for projects), the unit price board shall determine the adjustment factors for labor costs, machinery costs, and other costs (if any) in the construction work estimate based on the policies allowed by the State for the project and the principles for adjusting the construction project estimate as guided by this Circular.

For new investment projects starting from the second quarter of 2000, the adjustment factors mentioned above must be calculated immediately when determining the total investment amount of the project.

For construction projects with remaining quantities carried over from the previous year to 2000, the Project Owner shall determine the value of the construction work completed up to December 31, 1999 and the remaining construction work to be executed from January 1, 2000 to apply the adjustment of the construction project estimate as prescribed in this Circular. Specifically, as follows:

1. Cases eligible for adjustment of the estimated value according to this Circular:

1.1 Remaining construction work quantities of projects continuing from January 1, 2000, applying designated tendering, bidding with price adjustments (excluding lump-sum contracts), but not yet completed or accepted.

1.2 The quantities of construction works subject to direct award or competitive bidding with adjustable price contracts (except for lump sum contracts) that were completed and accepted for inspection before January 1, 2000 but have not yet been settled or finalized shall be applied.

1.3 For additional construction works arising from causes not attributable to the contractor (for lump sum contracts and adjustable price contracts), the budgeted construction costs established based on the current basic construction unit prices of provinces and centrally-administered cities shall apply adjustment factors as stipulated in this Circular.

1.4 For projects or project components that have received investment decision approvals for total estimates and budgets but have not yet commenced or are currently undergoing competitive bidding or direct award, the investor must adjust the total estimate and budget according to the guidelines of this Circular and resubmit them for approval by the investment decision authority.

2. Cases where the budget value cannot be adjusted as prescribed in this Circular:

2.1 Investment projects implemented through construction in 2000 using the "lump sum contract" method, which have already been approved by the investment decision authority.

2.2 Quantities of work completed after January 1, 2000 and have already undergone acceptance and payment or have been settled in the final account.

During implementation, if there are any issues or difficulties, please report them to the Ministry of Construction for consideration and resolution.

ANNEX

CONSTRUCTION

ITEM OF CONSTRUCTION WORK

(Attached to Circular No. 02/2000/TT-BXD dated May 19, 2000 issued by the Ministry of Construction)

Where:

Article 24^{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.} - Group I

D^jvl , D^jnc , D^jm - Group II

of the jth construction work quantity;

F₁ - Group IV

F2 : Additional allowances (if any) calculated based on the wage grade that have not been included or are insufficient in the construction unit price;

h_1n : Coefficient representing the relationship between labor costs in the unit price and the minimum wage of the nth wage group;

- Group I : h_1.1 = 2,342

- Group II : h_1.2 = 2,493

- Group III : h_1.3 = 2,638

- Group IV : h_1.4 = 2,796

h_2n : Coefficient representing the relationship between labor costs in the unit price and the wage grade of the nth wage group;

- Group I : h_2.1 = 1,378

- Group II : h_2.2 = 1,370

- Group III : h_2.3 = 1,363

- Group IV : h_2.4 = 1,357

P : General cost rate (%);

TL : Pre-tax income;

g_XL : Pre-tax construction work budget value;

G_XL : Post-tax construction work budget value;

CL_vl : Material price difference (if any);

KNC, KMTC : Labor cost adjustment coefficient, construction machinery cost adjustment coefficient;

d.1. Amount of taxable income in Vietnam:^XL_VAT : Value-added tax rate applicable to construction and installation works;

VAT : Total output value-added tax (including value-added tax on input

TABLE 2

STANDARDS FOR COMMON COSTS AND TAXABLE INCOME CALCULATED IN ADVANCE