Circular No. 03/2005/TT-BXD guiding the adjustment of construction project budgets

CIRCULAR

Guidelines for adjusting the budget estimate of construction projects

Pursuant to Decree No. 36/2003/NĐ-CP dated April 4, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Implementing Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government on the wage scale, salary table, and allowance system for state-owned companies;

To adjust the budget estimate of construction projects according to the new wage scale, salary table, allowance system, and adjusted electricity prices and fuel prices decided by competent authorities for construction projects funded by state budget, state-guaranteed credit, state development investment credit, and state-owned enterprise development investment; the Ministry of Construction guides the adjustment of the budget estimates of basic construction projects from October 1, 2004, as follows:

I. ADJUSTMENT OF THE ESTIMATED VALUE OF CONSTRUCTION INSTALLATION

1. Adjustment of labor costs:

Labor costs in the construction installation budget estimate established based on the current basic construction price list of provinces and centrally-administered cities calculated according to the wage scale belonging to Group I of Salary Table A6 issued together with Decree No. 26/CP dated May 23, 1993 of the Government with the minimum wages set for each period by the Government shall be multiplied by the corresponding adjustment factor (signing and implementing Agreements_NC) specified in Table 1 of the attached annex.

For construction installation works of projects belonging to other groups of Salary Table A6, after being adjusted according to the new Group I adjustment factor as mentioned above, they shall be further multiplied by the following adjustment factors:

- Belonging to Group II: equal to 1.066

- Belonging to Groups III and IV: equal to 1.183

For construction projects establishing budget estimates based on the current basic construction price list of provinces and centrally-administered cities that enjoy additional allowances, salary supplements, and other policies not included in the unit price or enjoy higher mobility allowances at 20% more than the standard rate, these additional items shall be supplemented into labor costs according to current regulations.

2. Adjustment of machinery costs:

Machinery operation costs in the construction installation budget estimate established based on the current basic construction price list of provinces and centrally-administered cities calculated according to the minimum wages set for each period by the Government shall be multiplied by the corresponding adjustment factor (signing and implementing Agreements_MTC) specified in Table 1 of the attached annex.

The adjustment factor mentioned in the annex does not apply to the adjustment of machinery operation costs in the construction installation budget estimate where the machinery operation costs in the construction installation budget estimate are determined based on machine rates issued separately by competent authorities and not included in the machine rates issued together with Decision No. 1260/1998/QĐ-BXD dated November 18, 1998, Decision No. 10/2001/QĐ-BXD dated June 11, 2001, and Decision No. 38/2002/QĐ-BXD dated December 27, 2002 of the Minister of Construction.

3. Items of costs calculated as percentages in the estimated value of construction installation project budgets:

General expenses, pre-tax income, and value-added tax are calculated as percentages according to current regulations.

The contents of cost items in the estimated value of construction installation project budgets are as stipulated in current regulations.

II. ADJUSTMENT OF OTHER COSTS IN THE TOTAL PROJECT BUDGET ESTIMATE

1. Adjustment of Construction Survey Cost Estimate:

The survey construction cost budget estimate established based on the survey construction price list decided by the Chairman of the People's Committee of provinces and centrally-administered cities issued on the basis of the survey construction budget estimate standards issued together with Decision No. 06/2000/QĐ-BXD dated May 22, 2000 of the Minister of Construction, Circular No. 07/2000/TT-BXD dated July 12, 2000 of the Ministry of Construction guiding the establishment of survey construction prices and management of survey construction costs, the survey construction cost budget estimate with the minimum wages set for each period by the Government shall be multiplied by the corresponding adjustment factor (KKS) specified in Table 2 of the annex attached to this Circular.

2. Adjustment of labor costs in the test material and building component budget estimate:

Labor costs in the test material and building component budget estimate determined according to the Test Material and Building Component Standards and Unit Prices issued together with Decision No. 32/2001/QĐ-BXD dated December 20, 2001 of the Minister of Construction shall be multiplied by the adjustment factor KTN=1.52.

3. Some other costs calculated as percentages in the total project budget estimate: Shall be calculated according to current national regulations.

Specifically, for the pre-tax cost budget estimate for urban planning work based on the Urban Planning Price List issued together with Decision No. 502/BXD-VKT dated September 18, 1996 of the Minister of Construction shall be multiplied by the adjustment factor K_QHĐ=1.60 and the pre-tax cost budget estimate for comprehensive planning of the system of urban areas and rural residential zones within the province determined according to Decision No. 30/2001/QĐ-BXD dated December 18, 2001 of the Minister of Construction shall be multiplied by the adjustment factor K_QHT=1,27.

The adjustment factor for the planning construction cost budget estimate only applies from October 1, 2004 until the Construction Planning Cost Standard issued together with Decision No. 06/2005/QĐ-BXD dated February 3, 2005 of the Minister of Construction takes effect.

III. IMPLEMENTATION

1. For investment projects currently being prepared or have been prepared but not yet approved by competent authorities, the total investment amount of the project shall be adjusted appropriately according to the new wage system.

2. For construction projects of investment projects currently implementing design - total budget estimate, budget estimate, the estimated value of construction installation items and other cost items in the total budget estimate of the project shall be determined according to the guidance of this Circular.

3. For projects, project components that have been approved by competent authorities for total budget estimate, budget estimate but have not yet or are currently organizing bidding or direct contracting, the investor shall adjust the total budget estimate, budget estimate to submit for approval again by competent authorities.

4. For ongoing construction projects: The investor shall determine the value of completed construction volume up to September 30, 2004 and the remaining construction volume to be carried out from October 1, 2004 to apply the adjustment of the construction project budget estimate according to the provisions of this Circular.

5. For state-important construction projects permitted to establish individual unit prices (basic construction project unit prices), the unit price board shall base on the systems and policies allowed by the State for the project and the principles for adjusting the basic construction project budget as guided by this Circular, to determine the adjustment levels for labor costs, machinery operation costs, and other expenses (if any) in the installation and construction budget.

This Circular takes effect fifteen days after its publication in the Official Gazette and replaces Circular No. 05/2003/TT-BXD dated March 14, 2003, issued by the Ministry of Construction guiding the adjustment of basic construction project budgets.