Circular No. 05/2003/TT-BXD guiding the adjustment of the construction project budget estimate

CIRCULAR OF THE MINISTRY OF CONSTRUCTION

Guidelines for adjusting the budget estimate of construction projects

Implementing Decree No. 03/2003/NĐ-CP dated January 15, 2003 of the Government on adjusting salaries, social allowances, and reforming the salary management mechanism in one step. Based on the provisions in Point 2, Section II of Circular No. 04/2003/TT-BLDTBXH dated February 17, 2003 of the Ministry of Labor, War Invalids and Social Affairs guiding the implementation of adjustments to the minimum wage and allowances in enterprises. On the basis of electricity prices and oil prices adjusted by the competent authority.

To implement adjustments to the budget estimates for basic construction projects due to the above-mentioned changing factors for construction projects using state budget funds, state-guaranteed credit, state investment development credit, and state-owned enterprise investment development capital as stipulated in Articles 10, 11, and 12 of the Investment and Construction Management Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government and Clause 4, Points 2 and 3 of Clause 6 of Article 1 of Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government amending and supplementing certain articles of the Investment and Construction Management Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government; Clause 4, 5, 6, and 14 of Article 1 of Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain articles of the Investment and Construction Management Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government. After reaching consensus with the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Construction, guidelines for adjusting the estimates of basic construction projects are as follows:

I - ADJUSTMENT OF THE ESTIMATED VALUE OF CONSTRUCTION

1 - Adjustment of labor costs

Labor costs in the construction project estimate prepared according to the current basic construction unit price tables of provinces and centrally-administered cities calculated based on the minimum wage of 144,000 VND/month multiplied by adjustment factor KNC = 2.01, calculated based on the minimum wage of 210,000 VND/month multiplied by adjustment factor KNC = 1,38.

For construction projects within the inner city districts of Hanoi and Ho Chi Minh City, labor costs in the construction project estimate prepared according to the current local basic construction unit price tables calculated based on the minimum wage of 144,000 VND/month multiplied by adjustment factor KNC = 2.04, calculated based on the minimum wage of 210,000 VND/month multiplied by adjustment factor KNC = 1,40.

For construction projects preparing estimates according to the current basic construction unit price tables of provinces and centrally-administered cities that also receive additional allowances, salary supplements, and other policies not included in the unit price or receive higher mobility allowances at 20% or higher, or receive larger production instability allowances at 10% or higher, these amounts shall be added to labor costs according to current regulations.

2. Adjustment of machinery costs:

Machinery operation costs in the construction project estimate prepared according to the current basic construction unit price tables of provinces and centrally-administered cities; Among which, the wages of workers operating, repairing machinery and equipment are calculated based on the minimum wage of 144,000 VND/month multiplied by adjustment factor KMTC = 1.13, calculated based on the minimum wage of 210,000 VND/month multiplied by adjustment factor KMTC = 1,06.

The aforementioned adjustment factors do not apply to the adjustment of machinery operation costs in the construction project estimate where the machinery operation costs in the construction project estimate 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, 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. Cost items calculated as percentages of the estimated value of construction (general expenses, pre-tax income subject to tax, output VAT): Shall be calculated 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 ESTIMATE

1. Adjustment of Construction Survey Cost Estimate:

Pre-tax construction survey cost estimate prepared according to construction survey unit prices decided and issued by the Chairman of the People's Committee of provinces and centrally-administered cities based on the construction survey estimate standard 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 preparation of construction survey unit prices and the management of construction survey costs and the minimum wage of 210,000 VND/month, then the pre-tax construction survey cost estimate shall be multiplied by adjustment factor KKS = 1,18.

2. Certain cost items calculated as percentages of the total project estimate: Shall be calculated according to current national regulations.

Specifically, the pre-tax cost estimate for urban planning work determined based on the urban planning cost table issued together with Decision No. 502/BXD-VKT dated September 18, 1996 of the Minister of Construction shall be multiplied by adjustment factor KQHD= 1.50 and the pre-tax cost estimate for comprehensive planning of urban systems and rural residential areas within the province issued together with Decision No. 30/2001/QĐ-BXD dated December 18, 2001 of the Minister of Construction shall be multiplied by adjustment factor KQHT = 1,19.

III- IMPLEMENTATION

This circular applies uniformly nationwide from January 1, 2003 and replaces Circular No. 03/2001/TT-BXD dated February 13, 2001 and Circular No. 04/2002/TT-BXD dated June 27, 2002 of the Ministry of Construction guiding the adjustment of construction project estimates.

1. For investment projects currently being prepared or have completed feasibility studies or investment reports but have not yet been approved by the competent authority, the total investment amount of the project shall be adjusted appropriately according to the new salary system.

2. For construction projects of ongoing investment projects organizing design - total estimate, estimate preparation, the estimated value of construction works and other cost items in the total estimate of the project shall be determined according to the contents guided by this circular.

3. Projects and project components that have been approved by competent authorities for total budget estimates and budgets but have not yet or are currently organizing bidding or direct contracting, the project investors shall adjust the total budget estimate and budget to resubmit for approval by competent authorities.

4. For projects and project components applying direct contracting with quantities carried over from the previous year to 2003, the project investor shall determine the value of construction work completed up to December 31, 2002, and the remaining construction work to be implemented from January 1, 2003, to apply the adjustment of the basic construction project budget as stipulated in this Circular.

5. For projects and project components applying bidding through adjustable price contracts according to points a and b of Clause 2, Article 7 of the Bidding Regulations issued together with Decree No. 88/1999/NĐ-CP dated September 1, 1999, of the Government, with quantities carried over from the previous year to 2003, the project investor shall determine the value of construction work completed up to December 31, 2002, and the remaining construction work to be implemented from January 1, 2003, to apply the adjustment of the basic construction project budget as stipulated in this Circular.

6. The price value of the budget estimate shall not be adjusted according to this Circular for projects and project components that have been approved by competent authorities for bidding results under the "Turnkey Contract" method.

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

It is encouraged for construction projects of investment and construction projects not using the aforementioned sources of funds to apply this Circular to adjust the construction project budget.

The Ministry of Construction requests the People's Committees of provinces and centrally governed cities to instruct subordinate units to complete the establishment of the basic construction unit price system based on the new minimum wage levels mentioned above, no later than the third quarter of 2003.

During implementation, if there are any difficulties, it is requested that ministries, sectors, and localities report to the Ministry of Construction for consideration and resolution.