Circular No. 02/2011/TT-BXD guiding the determination and publication of construction price indices

CIRCULAR

Guidelines for determining and announcing construction price indices

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Pursuant to the Construction Law No. 16/2003/QH11 dated November 26, 2003;

Pursuant to the Law Amending and Supplementing Certain Provisions of Laws Related to Basic Construction Investment No. 38/2009/QH12 dated June 19, 2009;

Pursuant to Decree No. 17/2008/NĐ-CP dated February 4, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to the Government Decree No. 112/2009/NĐ-CP dated December 14, 2009 on Management of Construction Investment Costs,

The Ministry of Construction issues guidelines for determining and announcing construction price indices as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

This Circular guides the determination and announcement of construction price indices for:

a) Establishing and adjusting total investment costs, construction project estimates, tender package estimates, bid prices, adjusting construction contract prices, and converting construction investment costs;

b) Building and announcing construction price indices periodically within provinces and centrally-administered cities;

c) Managing construction investment costs.

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

a) Organizations and individuals related to the management of construction investment costs in projects using 30% or more state capital;

b) Encouraging organizations and individuals related to the management of construction investment costs in projects using less than 30% state capital and other sources of funding to apply the guidelines set forth in this Circular.

Article 2. Interpretation of Terms

In this Circular, the following terms are understood as follows:

1. Construction project price index reflects the degree of fluctuation in construction project prices over time.

2. Representative construction projects selected for determining the construction price index are new construction projects with appropriate usage functions according to classification standards, constructed using common construction technology processes and commonly used building materials.

3. Types of construction projects for which the construction price index is announced are collections of construction projects classified according to current regulations.

4. Base period is the chosen reference point for comparison.

5. Comparison period is the period for which the construction price index needs to be determined relative to the base period.

6. Construction work price index reflects the degree of fluctuation in construction work costs over time.

7. Equipment price index reflects the degree of fluctuation in equipment costs over time.

8. Other cost price index reflects the degree of fluctuation in certain types of costs such as project management, consulting, and other costs over time.

9. Construction material price index reflects the degree of fluctuation in construction material costs in construction project estimates over time.

10. Construction labor price index reflects the degree of fluctuation in labor costs in construction project estimates over time.

11. Construction machinery price index reflects the degree of fluctuation in construction machinery costs in construction project estimates over time.

12. Material type price index reflects the degree of fluctuation in prices of each type of construction material over time.

13. Labor type price index reflects the degree of fluctuation in prices of each type of construction labor over time.

14. Machinery group price index reflects the degree of fluctuation in prices of machines within each construction machinery group over time.

Article 3. Classification of Construction Price Indices

1. Construction price indices are determined according to projects, types of construction projects, including:

a) Construction project price index.

b) Price indices according to cost structure include:

- Construction works price index;

- Equipment price index;

- Other costs price index.

c) Price indices according to cost factors include:

- Construction materials price index;

- Labor price index for construction works;

- Construction machinery price index.

d) Price indices according to main input factors include:

- Main construction material price index;

- Main labor price index for construction works;

- Main construction machinery group price index.

2. For specific construction projects, the calculation of all or some of the aforementioned price indices under Clause 1 of this Article depends on specific purposes and requirements in cost management work and the investment phase of construction projects.

Article 4. Principles for Determining Construction Price Indices

The determination of construction price indices must ensure the following principles:

1. Construction price indices must objectively reflect the fluctuations in market prices for construction at localities.

2. The determination and publication of construction price indices must be timely and consistent with regulations on construction project cost management.

3. When determining construction price indices by type of project for publication, it is necessary to select a representative list and quantity of projects to calculate.

4. Construction price indices are calculated as an average over the selected time period, excluding certain compensation, support, and resettlement expenses, interest during construction, and initial working capital for production and business operations. The unit of measurement for construction price indices is percentage (%).

5. The cost structure used to calculate construction price indices must be consistent with the cost structure stipulated in regulations on construction project cost management. These cost structures must be compiled from statistical data and remain fixed for a maximum period of five years.

Article 5. Management of Determination and Publication of Construction Price Indices

1. Provincial Construction Departments organize the collection of data, calculation, and periodic publication of construction price indices to serve as a basis for establishing and managing costs of construction projects within their jurisdiction.

2. For projects not included in the construction price indices published by the Ministry of Construction or central cities and provinces, the project sponsor shall organize the determination of price indices for the project and decide on their application. Specifically, for construction price indices applied to adjust construction contracts, prior agreement from the local Construction Department is required before implementation.

3. For construction projects along routes passing through multiple central cities and provinces, the project sponsor shall organize the determination of construction price indices for the project and decide on their application after obtaining agreement from the Ministry of Construction.

Article 6. Funding for the Implementation of Determination and Publication of Construction Price Indices

1. Funding for data collection, calculation, determination, and publication of construction price indices in central cities and provinces is balanced and allocated from the annual budget of the locality.

Based on the number of price indices that need to be published and the number of publications in a year, the Construction Department prepares a budget estimate to report to the provincial People's Committee for consideration and allocation of funding.

2. In cases where the project sponsor organizes the determination of construction price indices for application, the cost of implementing this work is included in other cost items in the total investment amount of the project.

Chapter II

METHODS FOR DETERMINING CONSTRUCTION PRICE INDICES

Article 7. Calculation Time Points

1. The time point selected for calculating construction price indices to be published:

a) The base year is determined as 2006.

b) The comparison time points are the months, quarters, and years of publication compared to the base year.

2. In cases where construction price indices are determined to establish and manage investment costs for projects, the investor must base their selection of the base time point and comparison time points on the project's progress and implementation conditions.

Article 8. Procedure for Determining and Publishing Construction Price Indices

The determination and publication of construction price indices shall be carried out in the following sequence:

Step 1: Establish a list of types of projects and select input cost factors.

Step 2: Collect and process calculation data and information.

Step 3: Determine construction price indices including: determining cost structures, calculating price indices according to cost structures, cost factors, and price indices for each type of input factor.

Step 4: Publish construction price indices.

Article 9. Establishment of Project Types List and Selection of Input Cost Factors

1. The number and list of project types for publication shall be based on management requirements, regulations on project management, investment cost management for construction projects, and classification and grade regulations for projects.

2. When determining construction price indices for a project type, representative projects for that type must be selected and listed.

The number of representative projects for a project type is determined based on specific conditions of each locality but must not be less than three projects.

4. Representative cost input factors are costs related to types of materials, labor, and construction machinery mainly used for the work or type of work. The selection of types of materials, labor, and construction machinery mainly used for calculating construction price indices is determined according to the principle that the costs for these types of materials, labor, and construction machinery must account for a large proportion (over 80%) of the total costs for materials, labor, and construction machinery corresponding to the work.

4. Representative input cost factors include costs related to types of materials, labor, and main construction machinery for projects or project types.

The selection of main construction materials, labor, and machinery for calculating construction price indices is based on the principle that the costs for these main materials, labor, and machinery must account for a significant proportion of the corresponding material, labor, and machinery costs of the project.

Article 10. Collection and Processing of Calculation Data and Information

a) Data on construction investment costs such as total investment amount, construction budget, final settlement of investment capital for completed works (if available), which have been approved including detailed cost items.

a) Investment cost data for construction projects such as total investment amount, construction project estimates, final settlement of investment capital for completed projects (if available), which have been approved, including detailed cost items;

2. Requirements for market price information of input factors:

2. Requirements for market price information of input factors:

a) Construction material prices are determined based on market prices provided by organizations with relevant functions, manufacturer quotations, and supplier price information. The list of materials included in the construction price index calculation must be consistent regarding type, specifications, and brand;

b) Construction labor prices are determined based on guidelines for determining market labor wages or announcements by provinces at different times;

c) Construction machine shift prices are determined according to the method for determining machine shift and construction equipment prices guided by the Ministry of Construction or according to the machine shift price lists announced by provinces at different times. The list of machines and construction equipment included in the construction price index calculation must be consistent regarding type, capacity, and origin.

a) For data and information to determine cost structure: Processing of collected data and information includes reviewing, checking, and adjusting data and information and the budget cost structure. Data on the budget cost structure need to be converted according to the budget structure specified at the base period. Data on total investment amount, construction budget, and final settlement of investment capital for completed works (if available) must be converted to the price level at the base period.

a) For data and information to determine cost structures:

- Processing collected data and information includes reviewing, checking, and adjusting data and cost structure estimates. Cost structure data must be converted according to the cost structure defined at the base year;

- Data on total investment amounts, construction project estimates, final settlement of investment capital for completed projects (if available) must be converted to the cost level at the base year.

b) For information on input factor prices: Collected data and information on input factor prices must be checked, reviewed, and adjusted specifically:

- Prices of various construction materials inputs are checked for consistency in type, specifications, and brand;

- Prices of various labor inputs are checked for consistency with the type and skill level of workers performing the work;

- Machine shift prices of various construction machinery inputs are checked for consistency in type, capacity, and origin of the machinery.

Article 11. Determination of Construction Price Indexes

1. The calculation of construction price indexes shall be carried out in accordance with the guidance set forth in the Appendix attached to this Circular.

2. For the determination of construction price indexes by type of project for publication, it may calculate the general construction price index applicable to the province or centrally governed city, or calculate the construction price indexes for each area within the region and aggregate them to obtain a general construction price index.

The division of areas for calculating the construction price index shall be decided by the provinces and centrally governed cities according to the administrative boundaries and construction market characteristics of their respective localities.

Article 12. Publication of Construction Price Indexes

1. The published construction price indexes include:

a) Construction project price index; cost structure price index: published quarterly and annually;

b) Cost factor price indexes; price indexes of various types of materials, labor, and main construction machinery groups: published monthly, quarterly, and annually.

2. Publication time points:

a) For construction price indexes published monthly: publication shall be conducted in the second week of the following month;

b) For construction price indexes published quarterly: publication shall be conducted in the second week of the first month of the following quarter;

c) For construction price indexes published annually: publication shall be conducted in the third week of the first month of the following year.

Chapter III

IMPLEMENTATION

Article 13. Responsibilities of the Ministry of Construction

1. Guide localities to organize the determination and publication of construction price indexes in accordance with the provisions of this Circular.

2. Implement the publication of construction price indexes quarterly and annually for the construction industry from 2012 pursuant to the Prime Minister's Decision.

3. Aggregate and store information on construction price fluctuations of provinces, centrally governed cities, and regions.

4. Support software for calculations and numerical data on the cost structure of certain representative projects for localities to refer to and apply when there are specific requirements.

5. Organize training and guide professional matters related to the calculation of construction price indexes upon request.

6. Review and provide comments on construction project price indexes for projects passing through multiple provinces and centrally governed cities organized by the investor to determine.

7. Conduct inspections and checks on the implementation of the provisions of this Circular.

Article 14. Responsibilities of the Provincial People's Committees

1. Direct the organization of the implementation of the provisions of this Circular and allocate regular budget funds to organize the determination and publication of construction price indexes.

2. Assign the Department of Construction to organize the implementation of the following tasks:

a) Take the lead and coordinate with relevant units based on the guidance of this Circular and the fluctuation of construction prices in the locality to timely determine and publish construction price indexes as a basis for establishing and managing investment costs of construction projects. If necessary, contracts can be signed with consulting organizations having capability and experience to perform some parts or the entire work of collecting data to determine construction price indexes. Consulting organizations must bear responsibility under the law for the authenticity and objectivity of the collected data;

b) Carry out the publication of construction price indexes in the locality starting from October 2011;

c) Organize the continuous monitoring of information on construction market prices in the locality; Update, store, and send to the Ministry of Construction information on construction market prices in the locality on a monthly basis;

d) Review and provide comments on construction price indexes applied to adjust construction contract prices organized by the investor to determine;

e) Report periodically on the publication of construction price indexes to the People's Committee of the province and the Ministry of Construction for monitoring and inspection.

Article 15. Responsibilities of the Project Investor

1. The organization shall ensure the objectivity, accuracy, and appropriateness of construction price indices determined in accordance with Clause 2 and Clause 3 of Article 5 of this Circular for management requirements and shall be responsible for their application. In cases where it does not have the conditions to determine construction price indices itself, it may enter into a contract to hire competent consulting organizations to perform such tasks. Consulting organizations determining construction price indices shall be responsible before the project investor and the law for ensuring the accuracy and reasonableness of the construction price indices they determine.

2. Solicit agreement opinions in accordance with Clause 2 and Clause 3 of Article 5 of this Circular prior to implementation.

Article 16. Transitional Provisions

The Ministry of Construction will continue to publish construction price indices for some centrally governed provinces and cities until September 2011.

Article 17. Implementation Provisions

1. This Circular takes effect from April 15, 2011.

2. In the course of implementation, if there are difficulties, organizations and individuals shall send their opinions to the Ministry of Construction for consideration and resolution./.