Circular No. 04/2005/TT-BXD guides the establishment and management of project investment construction costs.

CIRCULAR

Guidelines for the establishment and management of project investment construction cost

Pursuant to the Construction Law No. 16/2003/QH11 dated November 26, 2003 of the National Assembly, session 4;

Pursuant to the Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on Management of Investment Construction Projects;

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

The Ministry of Construction hereby provides specific guidelines for the establishment and management of project investment construction costs as follows:

A - Principles for the establishment and management of project investment construction costs

1 - Project investment construction costs encompass all necessary expenses for constructing new, repairing, renovating, expanding, or re-equipping technical facilities. Due to the characteristics of production processes and construction products, each project investment construction has its own costs determined based on its technical features and construction requirements.

Project investment construction costs are represented through total investment ceiling, total budget estimate, construction project budget, payment price, and final settlement of investment capital upon completion and commissioning of the facility.

2 - The establishment and management of project investment construction costs must ensure the objectives and effectiveness of the project investment construction, while being simple, clear, and easy to implement. When establishing construction investment costs, it is necessary to ensure accuracy, completeness, rationality, and compliance with actual market requirements. For projects using foreign currency, the foreign currency amount should be recorded in the original currency in the total investment ceiling, total budget estimate, budget, and final settlement of the project as the basis for converting investment capital and calculating the total investment ceiling, total budget estimate, and construction project budget in domestic currency.

3 - Project investment construction costs are determined based on the volume of work, system of norms, economic-technical indicators, and state policies, while also aligning with the objective factors of the market during each period and managed according to the Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on the Management of Project Investment Construction Projects.

B - Establishment of Total Investment Ceiling, Total Budget Estimate, and Construction Project Budget

I - Total Investment Ceiling of Project Investment Construction

1 - Content of the Total Investment Ceiling of Project Investment Construction

The total investment ceiling of project investment construction (hereinafter referred to as the total investment ceiling) is a preliminary calculation of the costs of the project investment construction (hereinafter referred to as the project) determined during the project establishment phase or economic-technical report phase, serving as the basis for planning and managing investment capital, and determining the project's investment efficiency. For projects funded by state budget, the total investment ceiling represents the maximum cost that the Investor is permitted to use for the construction of the project.

The total investment ceiling includes: Construction costs; Equipment costs; Land acquisition and resettlement compensation costs; Project management costs and other costs; Contingency costs.

1.1 - Construction costs include: Costs of constructing works and sub-works within the project; Demolition and dismantling costs of old structures; Site leveling and preparation costs; Temporary construction costs, auxiliary construction costs serving construction (construction roads, electricity, water, workshops, etc.); Temporary housing at the site for living and construction management.

1.2 - Equipment costs include: Costs of purchasing technological equipment (including non-standard equipment requiring production or processing), training, and technology transfer costs (if applicable), transportation costs from port or purchase location to the project site, storage costs, warehouse fees, equipment preservation and maintenance costs at the site, taxes, and equipment insurance premiums; Installation costs of equipment and testing, calibration costs (if applicable).

1.3 - Land acquisition and resettlement compensation costs include: Compensation costs for houses, structures, crops on land, etc.; Resettlement implementation costs related to land acquisition and clearance compensation of the project; Land acquisition and clearance compensation committee costs; Land use costs such as rental costs during construction, infrastructure investment costs (if applicable).

The Investor is responsible for formulating plans and determining costs to submit to the competent authority for approval to organize and implement these activities.

1.4 - Project management costs and other costs include: General project management costs; Organizational implementation costs of land acquisition and clearance compensation work under the responsibility of the Investor; Design review and budget estimate verification costs; Tender document preparation costs, tender analysis and evaluation costs; Construction supervision costs, construction survey supervision, and equipment installation costs; Quality inspection and certification costs for construction projects; Acceptance, settlement, and conversion of investment capital costs; Project preparation costs; Architectural competition costs (if applicable); Construction survey and design costs; Interest costs of the Investor during construction through loan contracts or loan agreements (for ODA-funded projects); Registration fees and review costs; State Steering Committee costs, State Acceptance Council costs, international quality inspection costs, and construction deformation monitoring costs (if applicable); Initial working capital for production; Raw material, energy, and labor costs for unloaded and loaded trial operation periods (for production and business projects); Construction insurance costs; Audit, review, settlement approval, and other costs.

1.5 - Contingency costs: These are costs reserved for unforeseen quantities, price escalation factors, and unanticipated works during project implementation.

2 - Methods for Establishing the Total Investment Ceiling

The total investment amount is determined based on the main volume of work to be carried out according to the basic design of the project and other volumes estimated or determined according to the construction costs of similar projects with comparable economic-technical standards that have been implemented or according to the construction unit cost of the project. For a project consisting of multiple works, each work may apply the calculation methods prescribed in Points 2.1, 2.2, and 2.3 below to calculate the total investment amount.

2.1- Based on the basic design of the project.

2.1.1- Construction costs are calculated based on the main volumes from the basic design, other estimated volumes, and appropriate construction prices.

2.1.2- Equipment costs are calculated based on the quantity, type, value of each piece of equipment, or the total value of the entire production line (if purchasing complete equipment) at the market price at the time of preparing the project or according to the supplier's quotation, and estimating transportation, storage, installation costs for these pieces of equipment, and training and technology transfer costs (if applicable).

2.1.3- Land acquisition compensation and resettlement costs are calculated based on the volume of land to be compensated and resettled in the project and current state regulations on compensation and resettlement prices in the locality where the construction project is located, rental land costs during the construction period, and technical infrastructure investment costs (if applicable).

2.1.4- Project management costs and other costs are calculated according to current regulations or can be estimated at 10% to 15% of the total construction and equipment costs mentioned in Points 2.1.1 and 2.1.2, excluding interest on borrowed funds by the Investor during the construction period for production and business projects.

2.1.5- Contingency costs are calculated not exceeding 15% of the total costs specified from Point 2.1.1 to 2.1.4.

2.2- In cases where there are data from similar projects with comparable economic-technical standards that have been implemented, such data can be used to establish the total investment amount. In this case, it is necessary to convert these data to the time of preparing the project and adjust the uncalculated cost items to determine the total investment amount.

2.3- For common works such as residential buildings, hotels, roads, etc., the total investment amount can be determined according to standard prices or construction unit costs at the time of preparing the project and adjusting, supplementing the uncalculated cost items in the total investment structure.

2.4- Projects that must prepare an investment construction report to obtain investment approval before preparing the project can estimate the preliminary total investment amount according to the construction unit cost or the cost of a similar completed project.

II - Total Construction Budget Estimate

1- Contents of the total construction budget estimate

The total construction budget estimate of the project (hereinafter referred to as the total budget estimate) is the total anticipated costs necessary for investing in constructing the works and sub-works within the project. The total budget estimate is determined at the technical design stage for three-step designs, construction drawing design stage for two-step and one-step designs, and serves as the basis for managing construction costs.

The total budget estimate includes: Costs calculated according to the construction budget estimates of the works and sub-works including construction costs, equipment costs, other costs included in the construction budget estimate, contingency costs, project management costs, and some other project costs. The total budget estimate does not include: Land acquisition compensation and resettlement costs, including rental land costs during the construction period, technical infrastructure investment costs (if applicable), initial working capital for production (for production and business projects).

2- Methods for establishing the total budget estimate

The total construction budget estimate includes the construction budget estimates of the works and sub-works, project management costs, and other costs.

2.1- The construction budget estimates of the works and sub-works are established according to the provisions in Section III, Part B of this Circular.

2.2- Project management costs and other costs in the total budget estimate include:

2.2.1- Project management costs:

General project management costs; Costs for organizing land acquisition compensation and resettlement work under the responsibility of the Investor; Costs for reviewing or checking the design, total budget estimate, and construction budget estimate; Costs for preparing tender invitation documents, bidding invitation documents, analyzing and evaluating tender documents, and bidding documents; Costs for supervising construction, surveying construction, and installing equipment; Costs for inspecting and certifying the quality compliance of construction works; Costs for acceptance, settlement, and conversion of investment capital, and other management costs.

2.2.2- Other costs:

- Costs for preparing construction investment reports for national key construction projects, Group A projects, and construction investment project reports; economic-technical reports, scientific research related to the project (if applicable);

- Construction survey costs; Construction design costs; Architectural competition costs (if applicable);

- Commencement, inauguration, publicity, and advertising costs (if applicable);

- Traffic safety inspection costs, cost of establishing norms and unit prices (if applicable);

- Costs for the State Steering Committee, State Acceptance Council (if applicable);

- International quality inspection costs (if applicable); Structural monitoring costs (if applicable);

- Project review fees (including basic design), construction permit fees (if applicable);

- Construction insurance costs;

- Raw material, energy, and labor costs for unloaded and loaded trial operation processes (excluding recoverable product values);

- Audit, review, and final approval of investment settlement costs;

- Some other costs.

For project management costs and other costs of projects using ODA funds, in addition to the above costs, there are some costs such as project documentation preparation costs, project documentation review, supplementation, and completion costs, international audit costs determined according to the guidance of international sponsors or prepared budgets submitted for approval by authorized persons.

2.3- The project management costs and other costs mentioned above are determined by preparing a cost estimate or calculated based on standard rates (%) according to current State regulations. Specifically, project management costs are calculated based on a percentage rate (%) as prescribed by the Ministry of Construction. Other costs specified above, if already included in the construction project cost estimate, shall not be duplicated in the total cost estimate.

2.4- When preparing the total cost estimate, certain cost items of the project that have no specific regulations or cannot be immediately calculated shall be temporarily estimated and included in the total cost estimate.

The total cost estimate is prepared in accordance with Appendix No. 1 of this Circular.

III- Construction Project Cost Estimate

1- Contents of the Construction Project Cost Estimate

The construction project cost estimate (hereinafter referred to as the project cost estimate) is determined based on the construction project. The project cost estimate includes the cost estimates for individual components and the work costs of each component within the project.

The project cost estimate is based on the quantities determined according to the technical design for three-stage design, construction drawing design for two-stage and one-stage designs, or from the requirements and tasks of the project to be implemented and the necessary unit prices and cost standards to implement those quantities. The contents of the project cost estimate include construction costs, equipment costs, other costs, and contingency costs.

2- Methods for Preparing the Project Cost Estimate

2.1- Construction Costs:

Construction costs in the project cost estimate are prepared for main projects, auxiliary projects, temporary projects serving construction, and temporary housing at the site for living and managing construction. Construction costs are determined through cost estimates.

The construction cost estimate includes direct costs, general costs, pre-tax income, and value-added tax.

- Direct costs include material costs, labor costs, machinery usage costs, and other direct costs. In detail as follows:

+ Material costs (including materials provided by the Investor), labor costs, machinery usage costs are determined based on the quantities according to the design and corresponding unit prices for construction works.

+ Other direct costs include water pumping costs, sludge dredging costs, material testing costs, labor and construction equipment transportation costs to the site and within the site, labor safety costs, and environmental protection costs for workers and the surrounding environment. Other direct costs are calculated at 1.5% of the total material, labor, and machinery usage costs mentioned above.

- General costs include production management and operation costs at the construction site of the construction enterprise, worker service costs, construction site service costs, and some other costs. General costs are calculated as a percentage (%) of direct costs according to the type of project specified in Table 2 of Appendix No. 3 of this Circular.

- Pre-tax income is calculated as a percentage (%) of direct costs and general costs according to the type of project specified in Table 2 of Appendix No. 3 of this Circular.

- Value-added tax for construction work according to current regulations.

Temporary housing costs at the site for living and managing construction are allocated in the cost estimate and calculated at 2% of the value of the construction cost estimate for new projects starting in remote areas, islands, projects outside urban areas and residential areas (Power transmission lines and substations, telecommunications lines, roads, pipeline systems, water supply and drainage, canals, dikes and dams) and 1% for other projects. For large and complex projects, the costs of temporary housing at the site for living and managing construction are separately estimated according to the design and approved by the Investment Decision Maker.

The calculation table for the construction cost estimate is prepared according to the provisions in Appendix No. 3 of this Circular.

2.2- Equipment Costs:

Equipment costs include procurement costs for equipment including training and technology transfer costs (if applicable); installation costs for equipment and testing/calibration (if applicable).

- Procurement costs for equipment are determined based on the quantity, type of each piece of equipment or the entire production line and the price per ton, per unit, or the entire production line equipment. For equipment whose price cannot be determined, it may be temporarily estimated based on the quotation from the supplier, manufacturer, or similar equipment available in the market at the time of calculation. Procurement costs for equipment include purchase price, transportation costs from port or place of purchase to the project site, storage costs at the port (for imported equipment), storage costs at the site warehouse, equipment preservation and maintenance costs, taxes, and insurance costs. Training and technology transfer costs (if applicable) are determined through cost estimates according to the specific requirements of each project.

For non-standard equipment that needs to be manufactured or processed, the costs for such equipment are determined based on the quantity of equipment to be manufactured or processed and the manufacturing or processing cost per ton (or a suitable unit) based on the characteristics and type of non-standard equipment, related costs as mentioned above, or based on the production or processing contract signed or the processing quotation of the manufacturer selected by the Investor.

If equipment is selected through bidding, the equipment cost is the winning bid price including all costs as mentioned above and other costs (if any) recorded in the contract.

- Installation costs for equipment and testing/calibration (if applicable) include direct costs (materials, labor, machinery, other direct costs), general costs, pre-tax income, and value-added tax. Installation costs for equipment and testing/calibration (if applicable) are prepared as construction costs as stipulated in point 2.1 above according to the provisions in Appendix No. 3 of this Circular.

2.3- Other Costs in the Project Cost Estimate:

Other costs in the project cost estimate include:

- Architectural recruitment examination costs (if applicable); Construction site investigation costs; Construction project design costs.

- Cost of establishing norms and unit prices (if applicable).

The aforementioned costs shall be budgeted or calculated based on cost norms as prescribed by the Ministry of Construction. In addition to these costs, depending on the nature of the project, the investment decision-maker may decide to supplement other cost items as necessary and shall bear responsibility for their decisions.

In cases where the project uses ODA funds, in addition to the aforementioned costs, if there are other related costs, such costs may be supplemented. For projects where foreign consultancy services are hired, consultancy costs shall be budgeted according to international practices consistent with the requirements for consultancy services for the project or the value of the consultancy contracts already signed and recorded in the budget estimate.

For projects consisting of only one construction project, the other costs in the project's budget estimate include both project management costs and other costs as stipulated at point 2.2, Section II above.

2.4- Contingency Costs:

            Contingency costs in the project budget estimate are calculated as a percentage of the total construction costs, equipment costs, and other costs specified in points 2.1, 2.2, and 2.3 above, but not exceeding 10% for projects in Group A and Group B, and 5% for projects in Group C.

The project budget estimate is prepared in accordance with the guidelines in Appendix 2 attached to this Circular.

C- Project Investment Cost Management

I- Total Investment Ceiling, Total Budget Estimate, Project Budget Estimate Management

1- Total Investment Ceiling Management.

When preparing a project, the total investment ceiling must be determined to calculate investment efficiency and to forecast capital. The authority to review, the content of the review, the review fee, and the approval authority are stipulated in Articles 9, 10, 11, and 12 of the Decree on Project Management for Construction Investment Projects No. 16/2005/NĐ-CP dated February 7, 2005, issued by the Government.

The total investment ceiling can be adjusted according to the cases stipulated in Clause 1 of Article 13 of the Decree on Project Management for Construction Investment Projects No. 16/2005/NĐ-CP dated February 7, 2005, issued by the Government.

When adjusting the project without changing the scale or investment objectives and without exceeding the approved total investment ceiling, the Investor is permitted to adjust the project independently. If the adjustment changes the basic design or exceeds the approved total investment ceiling, the Investor must submit it for review and decision by the Investment Decision-Maker. Any changes must be re-reviewed.

Specifically, for projects using state budget funds, if the total budget estimate is adjusted and exceeds the previously approved total budget estimate but does not exceed the approved total investment ceiling, the Investor must re-review and approve it, report to the Investment Decision-Maker, and bear responsibility for their approval. If the adjusted total budget estimate exceeds the approved total investment ceiling, it must be approved in writing by the Investment Decision-Maker.

2- Total Budget Estimate and Project Budget Estimate Management.

The total budget estimate and project budget estimate must be reviewed before approval. The Investor organizes the review of the total budget estimate and project budget estimate themselves.

Content of the review of the total budget estimate and project budget estimate:

- Checking the consistency between the design volume and the budget estimate volume.

- Verifying the accuracy of the application of economic-technical norms, cost norms, unit prices, the application of norms and unit prices, relevant policies, and cost items in the budget estimate as prescribed.

- Determining the value of the total budget estimate and project budget estimate after review.

The Investor approves the total budget estimate and project budget estimate after review and bears legal responsibility for the results of the review and approval.

If the Investor lacks the capacity to conduct the review, they may hire organizations or individuals with sufficient capacity to conduct a review as a basis for approval. Review costs or review fees for the total budget estimate and project budget estimate are regulated by the Ministry of Construction. Organizations or individuals conducting the review of the total budget estimate and project budget estimate bear legal responsibility and are accountable to the Investor for the results of the review.

The results of the review or review of the total budget estimate and project budget estimate are established according to the provisions in Appendix 4 of this Circular.

If consultancy services are hired to review the total budget estimate and project budget estimate, the review period shall not exceed 45 working days for Group A projects, 30 working days for Group B projects, and 15 working days for Group C projects from the date of receipt of complete valid documents.

The total budget estimate and project budget estimate can be adjusted according to the cases stipulated in Clause 1 of Article 13 of the Decree on Project Management for Construction Investment Projects No. 16/2005/NĐ-CP dated February 7, 2005, issued by the Government.

Adjustment of the total budget estimate and project budget estimate: If the design is changed contrary to the approved basic design, the Investor must report to the Investment Decision-Maker for review and decision.

If the design is changed but does not contradict the approved basic design, it is regulated as follows:

- Exceeding the total investment ceiling (by structure), the Investor reports to the Investment Decision-Maker for review and decision.

- Exceeding the total budget estimate but not exceeding the total investment ceiling (by structure): Due to changes in foreign exchange rates, the Investor adjusts independently without needing to re-approve and report to the Investment Decision-Maker; for projects using state budget funds, the Investor must report to the Investment Decision-Maker for re-approval. Due to changes in material prices, labor prices, and national policies, the Investor must re-review and re-approve while reporting to the Investment Decision-Maker. The Investor is responsible for the accuracy of the results of the review and approval.

- Not exceeding the approved total budget estimate even with changes in the cost structure within the total budget estimate, the Investor adjusts independently without needing to re-approve.

Projects using state budget capital, credit guaranteed by the State, State development credit, and State-owned enterprise development capital must have a general budget estimate approved before construction begins. For national key projects or Group A projects that need to start construction without having an approved general budget estimate, the construction project or its components must have design and estimates approved. The general budget estimate must be approved at the latest when 30% of the total investment value has been reached.

II- Management of budget estimate norms and construction unit prices

1- Management of construction budget estimate norms

1.1- Construction budget estimate norms (hereinafter referred to as norms) are issued and uniformly applied throughout the country by the Ministry of Construction and provide guidance for their application.

1.2- For construction works and installation tasks not included in the current system of norms, the Project Owner shall base on technical requirements, construction methods, construction conditions, and the method of establishing construction budget estimate norms according to Appendix No. 5 of this Circular to establish norms for such tasks or apply similar norms used in other projects as a basis for determining the tender package value for tendered packages (including EPC general contracts and international tenders). These norms must be sent to the Construction Department where the project is located, the Ministry of Construction, and the relevant sectoral management ministry for monitoring and inspection. In cases of direct assignment, the Project Owner must send these norms to the relevant sectoral management ministry or the Construction Department where the project is located for agreement with the Ministry of Construction to issue and apply them.

For construction works and installation tasks already included in the current system of norms but not suitable with construction methods or construction conditions or technical requirements of the project, the Project Owner together with the construction contractors, design consulting organizations, and specialized organizations on norms shall adjust those norms accordingly, and simultaneously send them to the relevant sectoral management ministry or the Construction Department where the project is located for agreement with the Ministry of Construction to issue and apply them.

1.3- Provincial Construction Departments and Construction Departments under centrally administered cities, and sectoral management ministries are responsible for collecting norms not included in the current system of norms and regularly sending them annually to the Ministry of Construction for research and issuance to supplement and apply universally.

2- Management of construction unit prices

2.1- Construction unit prices are established based on the construction budget estimate norms issued by the Ministry of Construction and norms for specialized construction tasks agreed upon by the Ministry of Construction. Construction unit prices in provincial areas can be determined based on basic construction budget estimate norms or comprehensive norms derived from the aforementioned norms as a basis for determining construction costs in the general budget estimate, project budget estimates for projects using state budget capital, credit guaranteed by the State, State development credit, and State-owned enterprise development capital. The Construction Department takes the lead in coordinating with relevant departments to establish and report to the provincial People's Committee for publication of material price lists, labor costs, and machinery usage fees suitable with specific local market conditions as a basis for establishing unit prices and adjusting the general budget estimate and project budgets.

Construction unit prices in provincial areas are established based on the following:

- Material price lists delivered to construction sites are calculated according to the guidelines of the Ministry of Finance and the Ministry of Construction regarding the announcement and control of construction material prices in the field of investment and construction.

- Labor cost lists are calculated based on the minimum wage, construction worker grades, allowances calculated on the minimum wage and grade wages at the local level, additional wages, and some other directly allocated costs to workers.

- Machinery and equipment operation price lists are calculated according to the guidelines of the Ministry of Construction.

Depending on the specific conditions of the locality, the Chairman of the provincial People's Committee may decide to adjust and supplement labor costs and machinery usage costs according to the principle that the adjusted minimum wage should not exceed twice the national minimum wage set by the Government to establish and adjust provincial area unit prices, and send the results for reporting to the Ministry of Construction.

2.2- When using the sets of construction unit prices prescribed in point 2.1 above to establish the general budget estimate and project budgets, for construction tasks not included in the aforementioned sets of unit prices, the Project Owner may use the norms established or adjusted according to the provisions of point 1.2 above to establish applicable unit prices.

2.3- During the process of establishing the general budget estimate and project budgets, if there are construction materials not included in the material price announcements of the Finance and Construction Departments, the Project Owner may base on prevailing market prices, manufacturer quotations, supplier quotations, or prices used in other projects to calculate.

2.4- For important national construction projects and Group A projects with large construction scales, complex technical requirements, and significant differences in material supply conditions, the Project Owner shall report to the Ministry of Construction about the establishment of a Construction Unit Price Board. The Construction Unit Price Board is headed by the Project Owner (or the Project Owner's representative) and includes members such as the Construction Department where the project is located, main contractors, and design consulting organizations. The Construction Unit Price Board is responsible for establishing norms, unit prices, and proposing cost management mechanisms for the project to be issued and applied by the Ministry of Construction.

2.5- For projects using ODA funds that employ foreign labor and import special materials, construction unit prices are established to include additional costs based on actual labor conditions and special materials. For special construction tasks requiring imported machinery, the difference in machinery costs is added to the general budget estimate and project budgets. The Project Owner reviews the rationality of these unit prices to determine the general budget estimate and project budgets.

The method of establishing construction unit prices is stipulated in Appendix No. 6 attached to this Circular.

III- MANAGEMENT OF PAYMENTS FOR CONSTRUCTION PROJECT INVESTMENT COSTS

1- PROVISIONAL ADVANCE ON ACCOUNT OF CONTRACT PRICE.

Provisional advance on account of contract price shall be implemented immediately after the contract becomes effective, except for cases where the parties to the contract have agreed otherwise as provided for in Article 41 of the Government's Decree on Project Management for Investment Construction Projects No. 16/2005/NĐ-CP dated February 7, 2005.

2- PAYMENT OF CONTRACT PRICE FOR CONSTRUCTION PROJECTS.

2.1- The payment of investment capital for works, groups of works, or all works related to project preparation, surveying, design, construction, supervision, and other types of construction activities must be based on the value of the actual volume of work completed at each stage and the payment method stipulated in the signed contract.

For costs associated with investment preparation tasks that are budgeted and submitted for approval by the Investor Decision Maker, these costs will be included in the total investment ceiling and total budget when the project is approved. If the project is not implemented, these costs will be settled from the enterprise's own funds or settled from the operating expenses of administrative and public service agencies or settled from the state budget funds allocated for the project in the plan for payment.

2.2- Payment of investment capital for construction projects shall be carried out based on the content and payment method stipulated in the signed contract and the actual volume of work completed. Depending on the duration of the contract, the nature of the contract, the parties may agree to apply one payment method or combine several payment methods as follows:

2.2.1- Lump Sum Payment: The Contracting Party pays the Contractor according to the lump sum price in the contract, applicable to packages of work with clearly defined quantities, quality, and time frame. In case there are changes outside the contract but not caused by the Contractor, the Investor Decision Maker will consider and resolve them according to the provisions stipulated in the signed contract.

Payments can be made in stages, based on the completion of individual tasks, or in one lump sum upon completion of the entire contract.

2.2.2- Fixed Unit Price Payment: The Contracting Party pays the Contractor for completed works according to the fixed unit price specified in the contract. The amount payable is determined by multiplying the actual volume of work completed with the fixed unit price specified in the contract. In case the volume of additional work exceeds 20% of the initial volume specified in the contract, the unit price for the additional volume may be renegotiated, but it cannot exceed the fixed unit price recorded in the contract. In case the volume of additional work does not have a unit price listed in the contract, the value of the additional work will be calculated based on the local unit price at the time of occurrence, if there is no local unit price, both parties will agree to establish a new price level and submit it for approval by the competent authority.

2.2.3- Adjustable Price Payment: Applicable to contracts where, at the time of signing, it is not possible to accurately determine the quantity, volume, or there is significant fluctuation in prices due to changes by the State or adjustments and supplements to policies by the State, and the contract duration exceeds 12 months.

2.2.4- The Project Owner must pay interest at the bank rate agreed upon in the contract to the Contractor for the completed work volume for which the Project Owner delays payment. The lending agency is responsible for compensating for losses caused by delayed payments.

D- Implementation

This Circular stipulates the establishment and management of project investment construction costs for all projects using state budget funds, credit guaranteed by the state, state development credit, and state-owned enterprise development capital.

Project owners using other sources of capital may apply the provisions of this Circular to establish and manage project investment construction costs.

For projects using Official Development Assistance (ODA) funds, if international agreements signed between the State or Government and the donor contain different provisions regarding the establishment and management of project investment construction costs compared to this Circular, they shall be implemented according to the provisions of those international agreements.

Some implementation contents will continue to follow the guidance of the Ministry of Construction.

This Circular shall be uniformly applied throughout the country fifteen days after its publication in the Official Gazette and shall replace Circular No. 09/2000/TT-BXD dated July 17, 2000, Circular No. 06/2003/TT-BXD dated April 14, 2003, and Circular No. 07/2003/TT-BXD dated June 17, 2003 of the Ministry of Construction guiding the establishment and management of construction project costs under investment projects. All previous regulations contrary to this Circular are hereby abolished.