Circular No. 03-BXD/VKT guiding the establishment of basic construction unit prices and the preparation of construction project budgets

CIRCULAR

OF THE MINISTRY OF CONSTRUCTION

Guidelines for establishing basic construction unit prices and preparing budgets for basic construction projects

Implementing Decision No. 92/TTg dated March 7, 1994 of the Prime Minister on strengthening management to prevent waste, loss, and corruption in investment and construction; Government Decree No. 05/CP dated January 26, 1994 on temporary regulations regarding the implementation of new salary levels for incumbent personnel in state agencies, the Communist Party, mass organizations, armed forces, and enterprises; and Document No. 4076/LĐBTXH/TL dated November 29, 1993 of the Ministry of Labor, Invalids, and Social Affairs on resolving wage benefits for construction workers, the Ministry of Construction provides guidelines for establishing basic construction unit prices and preparing budgets for construction projects as follows:

I. ESTABLISHING BASIC CONSTRUCTION UNIT PRICES

1. Local Basic Construction Unit Prices

a) Currently, along with implementing the new wage system, the Ministry of Construction has issued a set of basic construction budget norms according to Decision No. 56/BXD-VKT dated March 30, 1994, which revises unreasonable norms and supplements norms for types of construction work that were previously not covered, replacing the existing set of basic construction budget norms (annexed to Decision No. 22-UBXD dated April 12, 1982 of the State Basic Construction Committee). Thus, the main bases for establishing basic construction unit prices have changed. This situation requires localities to urgently develop new sets of basic construction unit prices that align with the new regulations to be applied from April 1, 1994, aiming to manage and conserve construction funds more effectively. The local basic construction unit prices this time are determined as follows:

Labor costs in the unit price include the basic wage of Group 1, Table A6 attached to Government Decree No. 26/CP dated May 23, 1993; the lowest level of mobility allowance (20%), average production instability allowance (10%), some additional wages (holiday, Tet, leave...), totaling 12%, and some direct labor costs allocated to workers amounting to 4% of the basic wage.

For types of work where wages are stipulated under Groups II, III, or IV of Table A6, the labor costs in the unit price for these types of work are also determined in the same manner.

Material costs in the unit price are calculated based on the first quarter (April 1994) market price level according to the price announced by the local Construction and Finance - Price Control Departments. In the revised set of norms, production and processing of door frames, various wooden doors, various metal doors, and decorative ironwork are not included, so it is recommended that the local Construction and Finance - Price Control Departments supplement the price list for these products and announce their monthly (quarterly) prices.

Machinery usage costs in the unit price are calculated based on the machinery rate table issued according to Decision No. 57/BXD-VKT dated March 30, 1994 of the Ministry of Construction.

The Institute of Construction Economics, Ministry of Construction, is responsible for guiding localities on technical aspects in developing local sets of basic construction unit prices according to the above regulations.

b) From now on, local sets of basic construction unit prices will only serve as a basis for determining the value of construction project budgets for planning and managing annual state-owned investment construction capital; they will not be directly used for settling completed construction work volumes.

To have a basis for settling completed construction work volumes, the parties involved in the contract must base themselves on the budget norms for each type of work, the monthly (quarterly) published material price levels of the locality, and any changes in machinery rates or wage adjustment coefficients at that time (if applicable) to determine the appropriate basic construction unit price corresponding to the current price level at the time of settlement or use the method of offsetting price differences for settled completed construction work volumes. Settlement authorities must verify the accuracy of the basic construction unit price or the price difference offset amount before payment. It is strictly prohibited to set a percentage adjustment for material costs to settle the entire project or sub-project.

For tendered projects, settlement shall be based on the winning bid price according to the tendering rules and specific provisions in the contract.

2. Project Unit Prices

Projects that establish individual unit prices should also adjust and revise the current project unit price sets. Among them:

The unit prices for construction works applying the budget norm 22/UBXD must now be adjusted according to the new budget norms.

The unit prices for construction works applying special norms must be reviewed and reported by the unit price committee to the management authority of the project for consideration and decision, while sending the results to the Ministry of Construction for monitoring. The labor cost in the project unit price is calculated according to the general method, including wages according to the wage system applicable in the construction area and allowances specified separately for the project by authorized agencies (if applicable).

In cases where certain projects apply higher wage unit prices than those stipulated by the new wage system, the previous wage unit prices will temporarily remain unchanged until further guidance is provided by the Ministry of Labor, Invalids, and Social Affairs - Ministry of Finance. For these projects, the project investors need to coordinate with the Ministry of Construction to adjust the common cost standards to suit each project.

II. PREPARING BUDGETS FOR CONSTRUCTION PROJECTS

The value of the construction project budget includes direct costs, common costs, taxes, and standard profit.

The estimated construction and installation value includes direct costs, common costs, tax, and prescribed profit.

1. Direct costs include material costs, labor costs, and construction machinery usage costs. For unexpected costs arising during the construction process, such as dredging costs, pumping water due to rain or underground water sources... these costs also fall under direct costs without being separated into a separate item called "other direct fees" as previously done, and they do not belong to common costs as stipulated in Circular No. 167/BXD-VKT dated July 4, 1990 of the Ministry of Construction.

Material costs, labor costs, and construction machinery usage costs are determined based on wages and basic construction unit prices corresponding to each work.

Specifically, for labor costs, if the project budget is established according to the local basic construction unit price and workers receive additional allowances, wage supplements, and other policies not included in the aforementioned basic construction unit price components or receive higher than 20% mobility allowance or higher than 10% unstable production allowance, then these amounts will be added to the labor costs following the guidance in Appendix 1 attached to this circular.

Some allowances apply only to specific projects according to decisions of the Ministry of Labor, Invalids, and Social Affairs or guidelines from the Ministry of Construction including:

Mobility allowance at 60% for those working on construction projects in high mountainous areas or remote islands.

Unstable production allowance higher than the average by 10%.

Freshwater supply costs for living purposes in places lacking fresh water are included in the project's installation budget along with freshwater for production according to the guidelines of the Ministry of Construction.

2. Common Costs: From now on, common costs do not include other direct fees and are calculated as a percentage of labor costs for each type of project as specified in Appendix 2 attached to this circular. Machinery management costs are calculated as a percentage of machinery usage costs and are already included in the Machinery Rate Table.

3. Tax and Fixed Profit: Determined as a percentage of the construction installation cost (including direct costs and common costs) according to current regulations.

The consolidated construction project budget table is detailed in Appendix 1 attached to this circular.

III. ADJUSTMENT OF INSTALLATION PROJECT BUDGET VALUE

Due to the inability to establish basic construction unit prices according to new regulations, adjustments to the installation project budget value only apply to construction works completed in the first quarter of 1994 and established according to existing basic construction unit price sets.

1. For projects that establish installation budgets according to current local basic construction unit prices.

a) Labor costs:

According to the new wage system, consistent with the labor cost content in the unit price mentioned in Section I, the installation labor cost budget for construction works belonging to Group I, Salary Scale A6 attached to Decree No. 26/CP dated May 23, 1993 of the Government is adjusted by a factor of 1.543 compared to the labor cost calculated according to the current local unit prices adjusted according to Document No. 301/BXD-KTTC dated March 23, 1993 of the Ministry of Construction.

For works or projects belonging to Group II, the adjustment factor is 1.640.

For works or projects belonging to Group III, the adjustment factor is 1.732.

For works or projects belonging to Group IV, the adjustment factor is 1.834.

b) Construction machinery usage costs:

Construction machinery usage costs are determined according to the machinery rate table issued by Decision No. 328/BXD-VKT dated December 31, 1993 of the Ministry of Construction, now supplemented with an additional 41% wage cost in the machinery rate.

c) Common costs, tax, and fixed profit:

Determined according to the provisions in Points 2 and 3, Section II of this circular.

2. For projects with individual unit prices, the adjustment of the installation project budget value is carried out based on adjusting and revising the project unit price as stipulated in Point 2, Section I of this circular.

IV. ADJUSTMENT OF SURVEY AND DESIGN PRICES

In line with the new wage system, survey and design prices are adjusted according to the factors listed in Appendix 3 attached to this circular.

V. IMPLEMENTATION

This circular replaces Circular No. 26/BXD-VKT dated December 31, 1993 of the Ministry of Construction.

Provinces and centrally-administered cities need to urgently establish new basic construction unit price sets according to the regulations in this circular to issue and implement from April 1, 1994. When establishing local basic construction unit price sets, if there are special local regulations, they must be discussed and agreed upon with the Ministry of Construction before implementation. Specifically, the basic construction unit price sets of Hanoi, Ho Chi Minh City, Hai Phong, and Quang Nam - Da Nang, Can Tho provinces must have written agreement from the Ministry of Construction before issuance.

To improve the quality of basic construction unit price establishment work and timely serve construction price management, localities should apply computers in establishing basic construction unit prices as well as preparing installation budgets for projects. The Ministry of Construction assigns the Institute of Construction Economics the responsibility to guide localities in calculating and adjusting basic construction unit prices on computers.

Accurately determining and strictly managing basic construction unit prices and installation budgets for projects is a measure against waste, loss, and corruption in basic construction. The Ministry of Construction requests the heads of central ministries and the chairmen of provincial people's committees to pay attention to directing the Construction Departments and related agencies to implement this work properly, ensuring both quality and time requirements.

During implementation, if encountering difficulties, please report promptly to the Ministry of Construction for joint research and resolution.

ANNEX 1

CONSOLIDATED INSTALLATION BUDGET TABLE FOR CONSTRUCTION PROJECTS
ESTABLISHED ACCORDING TO THE NEW WAGE SYSTEM
(Attached to Circular No. 03/BXD-VKT dated March 30, 1994 of the Ministry of Construction)

Note:

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.}: Quantity of construction installation work j;

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.}_vl, D^{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.}_nc, D^{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.}_{Granite, gabbro, decorative stone...}: material costs, labor costs, construction machinery costs in the basic construction unit price for type j installation work;

F₁: Overtime pay allowances (if any) calculated based on the minimum wage that have not been included or are insufficient in the basic construction unit price;

F₂: Allowances calculated based on rank wages (if any) that have not been included or are insufficient in the basic construction unit price;

P: General cost norms;

LT: Norm profit, tax;

G: Budgeted installation value;

CL_vl: Material price difference (if any);

ANNEX NO. 2

GENERAL COST NORMS
(Pursuant to Circular No. 03/BXD-VKT dated March 30, 1994 of the Ministry of Construction)

Unit of Measurement: percentage (%) relative to labor costs in the project estimate