Circular No. 05/2007/TT-BXD guiding the preparation and management of construction investment costs

CIRCULAR

Guidelines for Establishing and Managing Construction Investment Costs

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;

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on Management of Construction Investment Costs;

The Ministry of Construction provides specific guidelines for establishing and managing construction investment costs as follows:

I. GENERAL PROVISIONS ON ESTABLISHING AND MANAGING CONSTRUCTION INVESTMENT COSTS

1. Construction investment costs are the total necessary expenses for constructing new, repairing, renovating, or expanding construction projects.

Construction investment costs are represented through the total investment ceiling index of the project at the stage of establishing the investment project, the construction budget estimate at the implementation stage of the investment project, the payment value, and the final settlement of the investment capital when the project is completed and put into operation.

2. Construction investment costs are established for each specific project, in accordance with the investment construction phase, design stages, and state regulations.

3. The establishment and management of construction investment costs must ensure investment objectives and effectiveness, while also ensuring the feasibility of the construction investment project, accuracy, completeness, rationality, and suitability with actual conditions and the requirements of the market mechanism.

4. The investor of the construction project bears full responsibility for managing construction investment costs from the preparatory stage of the project until its completion and putting it into operation.

This Circular stipulates the procedures for establishing and managing construction investment costs for projects using state funds, including state budget funds, official development assistance (ODA), state investment credit, state-guaranteed credit, and other state investment funds. For projects using other funds, the investor decides on the application of the provisions of this Circular.

For ODA-funded projects, if international treaties signed by competent authorities of the Socialist Republic of Vietnam contain different provisions on the management of construction investment costs compared to those in this Circular, such provisions shall be implemented according to the international treaties.

II. TOTAL INVESTMENT CEILING OF THE PROJECT AND CONSTRUCTION BUDGET ESTIMATE

1. TOTAL INVESTMENT CEILING OF THE CONSTRUCTION INVESTMENT PROJECT

1.1. Content of the Total Investment Ceiling of the Construction Investment Project

The total investment ceiling of the construction investment project (hereinafter referred to as the total investment ceiling) is the total estimated cost for constructing the project recorded in the investment decision and serves as the basis for the investor to plan and manage capital during the implementation of the construction project.

The total investment ceiling is calculated and determined during the project establishment phase, consistent with the project content and basic design; for cases where only an economic and technical report is prepared, the total investment ceiling is determined in accordance with the construction drawing design.

The total investment ceiling includes: construction costs; equipment costs; land compensation and resettlement costs; project management costs; construction investment consulting costs; other costs; and contingency costs.

1.1.1. Construction costs include: costs for constructing buildings and sub-projects; costs for demolishing and dismantling old structures; costs for leveling the construction site; costs for temporary and auxiliary construction works serving construction; costs for temporary housing at the construction site for living and construction management.

1.1.2. Equipment costs include: costs for purchasing technological equipment (including non-standard technological equipment requiring production and processing); costs for training and technology transfer; costs for installing equipment and testing/calibration; costs for transporting and insuring equipment; taxes and related fees.

1.1.3. Land compensation and resettlement costs include: costs for compensating houses, structures, crops on land, etc.; costs for implementing resettlement related to land compensation of the project; costs for organizing land compensation; costs for land use during construction; costs for infrastructure already invested.

1.1.4. Project management costs include the costs for organizing the implementation of project management activities from the preparatory stage, implementation stage to the completion acceptance and handover of the project for operation, including:

- Costs for organizing the preparation of investment reports, costs for organizing the preparation of investment projects or economic and technical reports;

- Costs for organizing the implementation of land compensation and resettlement work within the responsibility of the investor;

- Costs for organizing architectural design competitions;

- Costs for organizing the review of investment projects, economic and technical reports, total investment ceilings; costs for organizing technical design reviews, construction drawing design, and construction budget estimates;

- Costs for organizing the selection of contractors in construction activities;

- Costs for organizing quality, quantity, schedule, and construction cost management;

- Costs for organizing safety and environmental protection of the project;

- Costs for organizing the establishment of construction norms and unit prices;

- Costs for organizing material quality inspections and project quality certifications as required by the investor;

- Costs for organizing inspections and certification of project quality compliance;

- Costs for organizing acceptance, payment, and final settlement of contracts; payment and final settlement of construction investment capital;

- Costs for organizing acceptance and handover of the project;

- Costs for groundbreaking, inauguration, publicity, and advertising;

- Costs for organizing other management activities.

In cases where the project investor does not have sufficient grounds to determine the project management cost (cannot ascertain the total investment ceiling of the project) but needs to implement preparatory works for the project, the investor shall prepare a budget estimate for these works to submit to the investment decision-maker for approval as the basis for planning capital expenditure and implementing the work. These costs will be included in the project management costs of the total investment ceiling.

1.1.5. Investment construction consulting fees include:

- Construction survey costs;

- Investment report preparation costs (if any), project preparation costs or economic-technical report preparation costs;

- Architectural design competition costs;

- Construction project design costs;

- Technical design review costs, construction drawing design costs, construction project cost estimate preparation costs;

- Request document preparation costs, prequalification invitation document preparation costs, tender invitation document preparation costs, and proposal analysis and evaluation costs, prequalification submission document evaluation costs, tender submission document evaluation costs for selecting consulting contractors, construction contractors, equipment and material suppliers, and general contractors;

- Construction survey supervision costs, construction supervision costs, equipment installation supervision costs;

- Environmental impact assessment report preparation costs;

- Construction project cost standard and unit price preparation costs;

- Construction investment cost management fees: total investment ceiling, cost estimates, construction cost standards, construction project unit prices, contracts, etc.;

- Project management consulting costs;

- Material quality inspection costs, construction project quality certification costs according to the investor's requirements;

- Quality inspection and certification costs for compliance with construction project quality;

- Cost conversion fees for construction projects with implementation periods exceeding three years;

- Costs for other consulting services.

1.1.6. Other costs include necessary expenses that do not fall under construction costs; equipment costs; land clearance compensation costs, resettlement costs; project management costs, and investment construction consulting costs mentioned above, including:

- Total investment ceiling review costs;

- Explosive ordnance disposal costs;

- Construction project insurance costs;

- Equipment relocation costs and labor force movement costs to the construction site;

- International quality inspection costs, deformation monitoring costs;

- Traffic safety assurance costs for construction works;

- Audit, review, and final account approval costs for construction investment;

- Fees and charges as prescribed;

- Scientific research and technology-related project costs; initial working capital for construction projects aimed at business purposes, interest during construction period; costs for non-load and load testing processes before handover, excluding the value of recovered products;

- Other costs.

Other project costs that are not yet regulated or cannot be calculated immediately shall be temporarily estimated and included in the total investment ceiling.

1.1.7. Contingency costs include: contingency costs for unforeseen work volumes when preparing the project and contingency costs for inflation factors during the project implementation period.

For projects with an implementation period up to two years: contingency costs are calculated at 10% of the total construction costs; equipment costs; land clearance compensation costs, resettlement costs; project management costs; investment construction consulting costs, and other costs.

For projects with an implementation period exceeding two years, contingency costs are determined based on two factors:

- Contingency costs for unforeseen work volume factors are calculated at 5% of the total construction costs, equipment costs, land clearance compensation costs, and resettlement costs, project management costs, investment construction consulting costs, and other costs.

- Contingency costs for inflation factors are calculated based on the project implementation period and the construction price index for each type of construction project in each construction area.

The construction price index used to calculate contingency costs for inflation factors is the average of at least the last three years and must take into account the volatility of cost and price factors in the region and internationally. The time for calculating contingency costs for inflation factors is the project implementation period for construction projects.

1.2. Methods for determining the total investment ceiling

The total investment ceiling is determined according to the methods stipulated in Clause 1 of Article 5 of Decree No. 99/2007/ND-CP dated June 13, 2007, of the Government on Construction Investment Cost Management and the guidance provided in Appendix 1 of this Circular.

2. CONSTRUCTION BUDGET ESTIMATE

2.1. Content of the construction budget estimate

The construction budget estimate (hereinafter referred to as the project budget estimate) is prepared for each construction project and sub-project.

The project budget estimate includes construction costs, equipment costs, project management costs, investment construction consulting costs, other costs, and contingency costs of the project.

The project budget estimate is prepared according to the guidance provided in Appendix 2 of this Circular.

2.2. Method for determining the project budget estimate

2.2.1. Construction costs

Construction costs in the project budget estimate are prepared for construction projects, sub-projects, auxiliary projects, temporary projects serving construction, or parts, items, and tasks of construction projects and sub-projects. Construction costs are determined by preparing a cost estimate. For auxiliary projects, temporary projects serving construction, or simple and common projects, the construction cost estimate can be determined using the construction cost rate in the construction investment cost rate or by applying a percentage-based cost standard (hereinafter referred to as the percentage cost standard).

The construction cost estimate for construction projects and sub-projects is prepared according to the guidance provided in Appendix 2 of this Circular.

In cases where construction costs are calculated for each part, item, and task of construction projects and sub-projects, the construction costs in the project budget estimate and sub-project budget estimate are the aggregate of the costs of the aforementioned parts, items, and tasks.

The construction cost estimate includes direct costs, common costs, pre-tax income, value-added tax, and temporary housing costs at the construction site for living and construction management.

2.2.1.1. Direct costs:

Direct costs include material costs (including materials provided by the investor), labor costs, construction machinery usage costs, and other direct costs.

a. Material, labor, and construction machinery costs within direct costs shall be determined using one of the following methods:

- Based on quantity and comprehensive construction unit price.

- Based on quantity and detailed construction unit price.

- A combination of the above methods.

a.1. Determining material, labor, and construction machinery costs based on quantity and comprehensive construction unit price.

a.1.1. Determining quantity:

The quantity of construction work is determined from technical design drawings or construction drawing designs, tasks to be performed for the project, sub-project components, and is compiled from a group of installation works to form a structural unit or part of the project.

a.1.2. Determining comprehensive construction unit price:

The comprehensive construction unit price must correspond to the list and content of the quantity of construction work mentioned in point a.1.1 above. The comprehensive construction unit price is established based on detailed construction unit prices. The comprehensive construction unit price may only include material costs, labor costs, construction machinery costs, or fully include other direct costs, common costs, and pre-tax income. The method for establishing the comprehensive unit price is guided in Appendix 4 of this Circular.

Detailed construction unit prices used to determine the comprehensive construction unit price are defined as in point a.2.2 below.

a.2. Determining material, labor, and construction machinery costs based on quantity and detailed construction unit price.

a.2.1. Determining quantity:

The quantity of construction works is determined from technical design drawings or construction drawing designs, tasks to be performed for the project, sub-project components, consistent with the list and content of construction works in the detailed construction unit price.

a.2.2. Determining detailed construction unit price:

Detailed construction unit prices are established according to the guidance in Appendix 4 of this Circular, including material costs, labor costs, and construction machinery costs determined based on necessary consumption quotas and corresponding material prices, labor prices, and construction machinery prices. Detailed construction unit prices may only include material costs, labor costs, construction machinery costs, or fully include other direct costs, common costs, and pre-tax income.

- Material price: is the price of materials delivered to the construction site, determined in accordance with the project and linked to the location where the project is constructed. Material prices must be reasonable and consistent with the market price level at the construction site, determined based on quotations from manufacturers, supplier information, or prices applied to other projects with the same quality standards or prices announced by local authorities and must ensure competitiveness. In cases where materials are not available on the market or contractors produce construction materials according to the investor's requirements, material prices are taken at a reasonable level that meets the requirements set out regarding type, quality, quantity, supply schedule, etc., and ensures competitiveness.

When establishing construction project unit prices, it is necessary to check the consistency between the price and the type of materials used in the project according to the design.

- Labor cost: is calculated correctly and sufficiently based on minimum wage levels published by competent state agencies to ensure that workers' wages take into account the prevailing wage market level in each region for each type of worker and specific working conditions of the project, funding capacity, and payment capacity of the investor.

- Construction machinery cost (including rental cost): is calculated according to the guidance on the method for determining machinery and equipment operation costs issued by the Ministry of Construction to apply to the project or from the machinery and equipment operation cost table published by local authorities.

b. Other direct costs: are costs for necessary works directly serving the construction of the project such as moving labor forces within the construction site, labor safety, protecting the environment for workers and surrounding areas, water pumping costs, silt removal, material testing, etc., which cannot be determined from the design.

Other direct costs are calculated at 1.5% of the total material, labor, and construction machinery costs. For construction works in traffic tunnels, hydroelectric tunnels, mine shafts, other direct costs (including operating costs, regular maintenance costs for water supply, drainage, air supply, power supply systems serving construction within the tunnel) are calculated at 6.5% of the total material, labor, and construction machinery costs.

If the percentage-based calculation of other direct costs does not fit the actual situation, adjustments can be made based on actual conditions to make it appropriate.

2.2.1.2. Common Costs:

Common costs include enterprise management costs, production operation costs at the construction site, worker service costs, construction site service costs, and other costs. Common costs are calculated as a percentage (%) of direct costs or as a percentage (%) of labor costs in the budget estimate for each type of project.

For sub-projects corresponding to each type of project, each sub-project is considered an independent project and applies the common cost rate quota according to the type of project.

2.2.1.3. Pre-Tax Income:

Pre-tax income is calculated as a percentage (%) of direct costs and common costs according to regulations for each type of project.

The standard for common costs and pre-tax income is guided in Table 2.4 of Appendix 2 of this Circular.

2.2.1.4. Value Added Tax:

Value Added Tax for construction work is applied according to current regulations.

2.2.1.5. Temporary Housing Costs at the Construction Site for Living and Construction Management:

The cost for constructing temporary housing at the construction site for living and managing construction operations shall be calculated at 2% of the total direct costs, common costs, and pre-tax income for projects following routes outside urban areas and residential zones such as power transmission lines, postal communication lines, transportation roads, canals, pipelines, and other linear construction projects, and at 1% for all other projects.

For special cases (such as large-scale, complex projects, projects outside islands,...) if the cost item for temporary housing at the construction site for living and managing construction operations calculated according to the above ratio is not appropriate, the project investor shall base on actual conditions, prepare a budget to determine this cost appropriately and bear responsibility for their decision.

In the case of bidding, this cost item must be included in the bid package price, bid price, and be paid according to the contract price that has been signed.

The construction contractor may use this cost to build new, rent housing at the construction site, or rent vehicles to transport staff to and from the site, depending on the specific conditions of the project.

2.2.2. Equipment Costs

Equipment costs in the project budget include procurement costs for technological equipment (including non-standard technological equipment requiring production or processing); training and technology transfer costs; installation costs for equipment and testing, calibration.

Procurement costs for equipment include: purchase price (including design and manufacturing supervision costs), transportation costs from port or place of purchase to the project site, storage costs at warehouses, yards, and containers at Vietnamese ports (for imported equipment), preservation and maintenance costs at storage sites at the construction site, taxes and insurance premiums for construction equipment.

Procurement costs for equipment are determined based on one of the two methods below:

- For equipment with determined prices, it can be calculated based on the quantity and type of each piece of equipment or the entire production line and the price per ton, per unit, or the entire production line of equipment.

- For equipment without determined prices, it can be temporarily calculated based on the quotation from suppliers, manufacturers, or similar equipment prices on the market at the time of calculation or from completed projects with similar equipment.

For non-standard technological equipment requiring production or processing, these costs are determined based on the volume of equipment required for production or processing and the production or processing price per ton (or per unit of measurement) consistent with the nature and type of equipment according to the signed production or processing contract or based on the processing quotation of the manufacturer selected by the investor or the production or processing price of similar equipment from completed projects.

Training and technology transfer costs are determined by preparing a budget based on the specific requirements of each project.

Installation costs for equipment and testing, calibration are prepared as part of the construction cost budget.

If equipment is selected through bidding, the equipment cost includes the winning bid price and other costs listed above as stipulated in the contract.

The equipment cost for the project is prepared according to the guidelines in Table 2.5 of Appendix 2 of this Circular.

2.2.3. Project Management Costs

Project management costs in the project budget include necessary costs for the investor to organize and implement project management as specified in Section 1.1.4 of Part II of this Circular.

Project management costs are determined based on reference to the standard rates published by the Ministry of Construction or by preparing a budget.

2.2.4. Investment and Construction Consulting Costs

Investment and construction consulting costs in the project budget include costs as specified in Section 1.1.5 of Part II of this Circular. For projects with multiple works, the costs for preparing investment reports, project preparation, or economic-technical reports are not included in the investment and construction consulting costs of the project budget.

Investment and construction consulting costs are determined based on reference to the standard rates published by the Ministry of Construction or by preparing a budget.

2.2.5. Other Costs

Other costs in the project budget include costs as specified in Section 1.1.6 of Part II of this Circular, determined based on standard rates (%) or by preparing a budget. For projects with multiple works, the costs for reviewing the total investment amount, scientific research costs related to the project, initial working capital for business-oriented construction investment projects, interest during construction, costs for trial operation without load and with load according to the production process before handover (excluding recoverable product value), and other fees and charges are not included in other costs of the project budget.

For some specialized construction projects with unique cost factors, projects using ODA funds, in addition to the costs specified in Sections 2.2.3, 2.2.4, and 2.2.5 above, if there are other related costs, they will be supplemented. The investor decides and bears responsibility for their decision.

In cases where projects under a project must hire foreign consultants to carry out work, the consulting costs are prepared according to current regulations suitable for the requirements of using consultants for the project or the value of the signed consulting contract to be recorded in the budget.

Some costs that have not yet been regulated or cannot be immediately calculated are temporarily included in the project budget for financial planning.

2.6. Contingency Costs

Contingency costs are the costs reserved for unexpected work volumes and inflation factors during the construction period.

For projects with a duration of up to 2 years: contingency costs are calculated at 10% of the total construction costs, equipment costs, project management costs, investment and construction consulting costs, and other costs.

For projects with a duration exceeding 2 years, contingency costs are determined based on two factors:

- Contingency costs for unexpected work volumes are calculated at 5% of the total construction costs, equipment costs, project management costs, investment and construction consulting costs, and other costs.

- Provisions for cost factors due to price inflation shall be calculated based on the construction price index for each type of construction project according to region and construction period.

The time frame for calculating price inflation is the construction period of the project as approved in the construction progress plan.

For projects with multiple construction works, the investor may determine the total budget estimate of the project to facilitate project cost management. The total budget estimate of the project is determined by summing up the estimates of individual construction works within the project and certain items of costs under investment consulting fees and other costs not included in the individual construction work estimates.

III. MANAGEMENT OF INVESTMENT COSTS FOR CONSTRUCTION PROJECTS

1. MANAGEMENT OF TOTAL INVESTMENT LIMIT AND ESTIMATED COSTS FOR CONSTRUCTION PROJECTS

1.1. Management of Total Investment Limit

1.1.1. When preparing an investment project for construction or an economic-technical report for cases where an investment project is not required, the investor must determine the total investment limit to calculate the effectiveness of the construction investment. The authority to review and approve the total investment limit is carried out in accordance with Article 6 of Decree No. 99/2007/ND-CP dated June 13, 2007 of the Government on the Management of Construction Project Investment Costs (referred to as Decree No. 99/2007/ND-CP). The approved total investment limit is the maximum cost that the investor is permitted to use for construction investment and serves as the basis for the investor to prepare plans and manage capital when implementing construction investments.

1.1.2. The total investment limit can be adjusted in the cases stipulated in Clause 1 of Article 7 of Decree No. 99/2007/ND-CP.

For construction projects using state budget funds, if the adjusted total investment limit does not exceed the approved total investment limit, including changes in the structure of cost items within the total investment limit (including the use of contingency costs), the investor may adjust it independently and then report the adjustment results to the investment decision-maker; the investor bears responsibility for their own decisions. In cases where the adjusted total investment limit exceeds the approved total investment limit, the investor must seek approval from the investment decision-maker before making the adjustment.

For construction projects using state-guaranteed credit, state development investment credit, and other state investment capital, the investor decides independently and bears responsibility for adjusting the total investment limit.

Any portion of the adjusted total investment limit that differs from the approved total investment limit must be reviewed in accordance with Article 6 of Decree No. 99/2007/ND-CP.

1.1.3. Project management costs, determined by the investor to organize the implementation of project management tasks. For small-scale and simple projects with a total investment limit below one billion dong, if the investor does not establish a project management board but uses their specialized units for project management, the investor uses the project management fund to cover project management activities, overtime pay for staff concurrently managing the project in accordance with current regulations.

For projects applying the design, supply of materials and equipment, and construction general contracting model (EPC general contracting), the general contractor is entitled to a portion of the project management costs corresponding to the volume of project management work performed by the general contractor. The project management costs of the general contractor are agreed upon and specified in the contract.

If the project management board has sufficient capacity to perform some investment consulting tasks, the project management board is entitled to the costs incurred for performing such investment consulting tasks.

When hiring project management consultants, the consultant fee is determined based on the estimate based on the scope and volume of project management work hired by the investor and the applicable policies. In cases of hiring foreign consultants, the provisions of the Government shall apply.

1.2. Management of Construction Project Estimates

1.2.1. Construction project estimates must be reviewed before approval. Construction project estimates and sub-project estimates must include all cost factors as prescribed. The investor organizes the review of construction project estimates, which includes the contents stipulated in Clause 1 of Article 10 of Decree No. 99/2007/ND-CP.

1.2.2. If the investor lacks the capacity to review, they should hire organizations or individuals with sufficient capacity and experience to review the construction project estimates. Organizations or individuals reviewing the construction project estimates bear legal responsibility to the investor for the results of their review. The cost of reviewing the construction project estimates is decided by the investor.

1.2.3. After reviewing, the investor approves and bears legal responsibility for the results of approving the construction project estimates, which serve as the basis for determining tender prices, construction costs, and are the grounds for negotiating and signing contracts, and payment with contractors in cases of direct award.

1.2.4. Construction project estimates can be adjusted in the cases stipulated in Clause 1 of Article 11 of Decree No. 99/2007/ND-CP.

The investor organizes the review and approval of adjusted estimates.

2. MANAGEMENT OF CONSTRUCTION STANDARDS, CONSTRUCTION PRICES, AND CONSTRUCTION PRICE INDEXES

2.1. Management of Construction Standards

2.1.1. Construction standards include economic-technical standards and proportion standards as prescribed in Article 12 of Decree No. 99/2007/ND-CP.

2.1.2. The Ministry of Construction publishes the investment capital rate and construction standards: Construction project budget standard (Construction part, Surveying part, Installation part), Construction project repair budget standard, Construction material consumption standard, Project management cost standard, Investment consulting cost standard, and other construction standards.

2.1.3. Ministries and provincial People's Committees base on the method of constructing standards as guided in Appendix 3 of this Circular to organize the establishment and publication of construction standards for special construction works of the Ministry or locality that are not included in the system of construction standards published by the Ministry of Construction.

2.1.4. For construction standards already in the published system of construction standards but not suitable with construction methods, conditions, or technical requirements of the project, the investor organizes adjustments and supplements to make them appropriate.

2.1.5. For construction norms not included in the system of construction norms prescribed in Sections 2.1.2 and 2.1.3 above, the project sponsor shall base on technical requirements, construction conditions, and the method for establishing norms stipulated in Appendix No. 3 of this Circular to organize the establishment of such norms or apply similar construction norms used in other projects to decide on their application.

In cases where new construction norms mentioned above are used as the basis for setting unit prices for payment in tender packages funded by state budget funds and using direct award procedures, the project sponsor shall report to the investment decision-maker for consideration and decision. Specifically, for construction works under investment projects decided by the Prime Minister, the Minister of the relevant sector and the Chairman of the People's Committee of the province shall consider and decide.

2.1.6. The project sponsor may organize or hire organizations with capacity and experience to guide the establishment and adjustment of construction norms as specified in Sections 2.1.4 and 2.1.5 above. Consulting organizations bear responsibility for the rationality and accuracy of the norms they establish.

2.1.7. The project sponsor decides on the application and utilization of published or adjusted construction norms to establish and manage construction investment costs.

2.1.8. Ministries and provincial People's Committees shall regularly send annually published construction norms to the Ministry of Construction for monitoring and management.

2.2. Management of construction project prices

2.2.1. The project sponsor bases on the nature, special conditions of the project, the system of construction norms as specified in Section 2.1 of Part III above, and the method for setting construction project unit prices as guided in Appendix No. 4 of this Circular to establish and decide on the application of project unit prices as the basis for determining budgets and managing construction investment costs.

2.2.2. For projects using ODA funds that require the use of foreign labor, imported materials, imported construction equipment, and other special requirements, the construction unit prices shall be established by supplementing these costs according to actual conditions and the special characteristics of the project.

2.2.3. The project sponsor may hire professional consulting organizations or individuals with capacity and experience to perform tasks or parts of tasks related to the establishment of construction project unit prices. Consulting organizations and individuals bear responsibility before the project sponsor and the law for ensuring the rationality and accuracy of the construction project unit prices they establish.

2.2.4. Provincial People's Committees shall instruct the Construction Departments to base on the guidance of this Circular and the specific situation of the locality to publish systems of construction unit prices, machine rates, and construction equipment prices, material prices, etc., for reference during the determination of construction project prices.

2.3. Management of construction price indices

2.3.1. Construction price indices include: price indices for a group or type of construction projects; price indices based on cost structures; price indices based on material, labor, and construction machinery factors. Construction price indices are one of the bases for determining total investment amounts for construction project investment projects, construction project budgets, package prices, and contract payment prices.

2.3.2. The Ministry of Construction publishes methods for establishing construction price indices and periodically publishes construction price indices for project sponsors to refer to and apply. Project sponsors and contractors can also refer to and apply construction price indices published by consulting organizations with capacity and experience.

2.3.3. The project sponsor bases on price trend fluctuations and the special characteristics of the project to decide on appropriate construction price indices.

IV. IMPLEMENTATION

1. The transfer of management of construction project investment costs shall be implemented in accordance with Article 36 of Decree 99/2007/NĐ-CP.

2. The system of construction norms issued by the Ministry of Construction; norms issued by specialized ministries; local construction unit prices, machine rates, construction equipment prices, and building material prices issued before the effective date of Decree 99/2007/NĐ-CP shall be converted into publications for project sponsors to refer to and decide on their application or utilization as the basis for determining construction project prices and managing construction project investment costs.

3. Ministries and provincial People's Committees shall base on regulations on the management of construction project investment costs according to Decree 99/2007/NĐ-CP, the guidance of this Circular, and other related documents to organize the guidance on the establishment and management of construction project investment costs under their management.

The application of local government budget project capital norms, construction norms, construction project unit prices, and construction price indices for local government budget-funded projects shall be guided and regulated by the provincial People's Committees.

4. This Circular takes effect 15 days from the date of publication in the Official Gazette and replaces Circular No. 04/2005/TT-BXD dated April 1, 2005, of the Ministry of Construction guiding the establishment and management of construction project investment costs in investment projects and previous provisions contrary to this Circular.

During implementation, if there are difficulties, please reflect them to the Ministry of Construction for consolidation and research for resolution.