Circular No. 05/2009/TT-BXD on guiding the adjustment of construction project budgets

CIRCULAR

Guidelines for Adjusting Construction Project Budget Estimates

Pursuant to Decree No. 17/2008/NĐ-CP dated February 4, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to Decree No. 12/2009/NĐ-CP dated February 12, 2009 of the Government on Management of Investment Construction Projects;

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on Management of Investment Construction Costs; and Decree No. 03/2008/NĐ-CP dated January 7, 2008 of the Government amending and supplementing certain articles of Decree No. 99/2007/NĐ-CP dated June 13, 2007 on Management of Investment Construction Costs (hereinafter referred to as Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government);

CPursuant to Decree No. 110/2008/NĐ-CP dated October 10, 2008 of the Government stipulating the minimum wage levels for workers employed by companies, enterprises, cooperatives, production cooperatives, farms, households, individuals, and other organizations in Vietnam that hire labor (hereinafter referred to as Decree No. 110/2008/NĐ-CP dated October 10, 2008 of the Government);

Pursuant to Circular No. 03/2008/TT-BXD dated January 25, 2008 of the Ministry of Construction guiding the adjustment of construction project budget estimates (hereinafter referred to as Circular No. 03/2008/TT-BXD dated January 25, 2008 of the Ministry of Construction);

Pursuant to Circular No. 23/2008/TT-BLĐTBXH dated October 20, 2008 of the Ministry of Labor, Invalids and Social Affairs promulgating guidelines for implementing minimum wage levels for state-owned companies and limited liability companies wholly owned by the State.

The Ministry of Construction hereby guides the adjustment of construction project budget estimates as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. This Circular guides the adjustment of budget estimates from January 1, 2009 according to the minimum wage level in the region (where the construction project is located) as prescribed in Decree No. 110/2008/NĐ-CP dated October 10, 2008 of the Government for the remaining quantities of the construction project, tender package (hereinafter collectively referred to as construction project budget estimate) belonging to investment construction projects using state capital that are still ongoing but have not yet been decided by the Investor to continue managing investment construction costs under Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government.

It is encouraged for investment construction projects using other sources of funds to apply the regulations on adjusting construction project budget estimates as guided in this Circular.

2. Adjust the construction project budget estimate that has been prepared based on unit prices for building works, installation works, and construction survey works of provinces and centrally administered cities calculated according to the salary scale A.1.8 issued together with Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government stipulating the salary scale system, salary table, and allowance system in state-owned companies (hereinafter referred to as Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government) and the minimum monthly wage of VND 450,000 as specified in the annex attached to this Circular.

3. For construction projects that have established separate unit prices or machinery cost tables with the minimum wage level already approved by the competent authority, adjust according to the principles and methods provided in this Circular based on the new minimum wage level.

4. Adjust contract prices and settle actual work volumes from January 1, 2009 according to the contract and the agreed conditions signed in the contract. In cases where the parties have agreed in the contract not to adjust prices throughout the implementation period, the Investor and the construction contractor may negotiate supplementary contracts to ensure the rights of workers as prescribed.

II. SPECIFIC PROVISIONS

1. For construction project budget estimates prepared based on construction unit price lists of provinces and centrally administered cities calculated with the minimum wage of VND 450,000/month as stipulated in Decree No. 94/2006/NĐ-CP dated September 7, 2006 of the Government on adjusting the general minimum wage, with salary grades according to the salary table A.1.8 issued together with Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government, shall be adjusted as follows:

1.1. Adjustment of construction cost estimates

1.1.1. Adjustment of labor costs

Labor costs in construction cost estimates prepared based on local construction unit prices shall be multiplied by the appropriate adjustment factor (KĐCNC) corresponding to the new minimum wage level.

The adjustment factor (KĐCNC) is determined by dividing the new minimum wage level by the minimum wage level included in the unit price.

1.1.2. Adjustment of construction machinery costs

Construction machinery costs in construction cost estimates prepared based on local construction unit prices shall be multiplied by the appropriate adjustment factor (KĐC MTC) corresponding to the new minimum wage level and fuel, energy prices at the time of January 2009.

The adjustment factor for construction machinery costs (KĐCMTC) is determined by the weighted average method of costs by machinery group.

According to the above principle, the adjustment factor for construction machinery costs in construction cost estimates (KĐCMTC) of provinces and centrally administered cities is guided in the annex attached to this Circular. Provinces and centrally administered cities with special construction structures will be decided by the People's Committee of the province or city.

For construction projects implemented along routes through multiple provinces and centrally administered cities that have established separate machinery cost tables, the Investor shall calculate the adjustment factor and report it to the Investor for decision. In cases where the construction project belongs to an investment construction project decided by the Prime Minister, the Minister, Head of a ministry equivalent to a ministry, Head of a government agency, Chairman of the provincial People's Committee, Chairman of the economic group, or Chairman of the State-owned enterprise management council shall decide.

1.1.3. Cost items calculated as percentages in construction cost estimates.

Cost items calculated as percentages in construction cost estimates include: Other direct costs, common costs, pre-tax income, value-added tax, temporary housing at the construction site for living and construction management, which shall be implemented according to the regulations.

1.2. Adjustment of construction survey cost estimates.

The labor costs in the construction survey estimate (KDC NCKS) shall be adjusted according to the coefficients set out in the annex accompanying this Circular.

2. In cases where the construction project estimate prepared in accordance with point 1 of this section has been adjusted in accordance with the guidance of Circular No. 03/2008/TT-BXD dated January 25, 2008 of the Ministry of Construction, when implementing adjustments to the estimate based on the new minimum wage level, the labor costs and construction machinery costs in the construction cost estimate, and the labor costs in the construction survey estimate shall be further multiplied by the corresponding adjustment factor determined by dividing the adjustment factor according to the new minimum wage level specified in the annex accompanying this Circular by the adjustment factor already applied pursuant to Circular No. 03/2008/TT-BXD dated January 25, 2008 of the Ministry of Construction.

3. Other items of cost in the construction project estimate

The items of cost for project management investment in construction projects, design of construction projects, supervision of construction works and installation of equipment as stipulated in point 1 of Section I above shall be calculated as percentages in accordance with the prescribed regulations.

III. IMPLEMENTATION

1. The investor shall organize the implementation and approval of the results of adjusting the construction project estimate for remaining quantities carried out from January 1, 2009 of construction projects under construction investment projects as provided for in point 1 of Section I of this Circular. If the approved construction project estimate exceeds the total investment ceiling, the Investor shall report to the Investment Decision Maker for examination and decision. In cases where construction projects under construction investment projects are decided upon by the Prime Minister, the Minister, the Head of a ministry equivalent to a ministry, the Head of a government agency, the Chairman of the Provincial People's Committee, the Chairman of the Economic Group, and the Chairman of the State Capital Corporation shall make the decision.

2. For construction projects that have separate unit prices (unit price of construction projects), the Investor shall base on the system and policies permitted by the State to apply at the project and the principles for adjusting the construction project cost estimate as guided by this Circular, to determine the adjustment levels for labor costs, construction machinery costs, and other costs (if any) in the construction project estimate.

3. The adjustment of the construction project estimate for construction projects under construction investment projects shall be implemented in accordance with Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on Management of Construction Project Investment Costs, as decided by the Investor.

This Circular takes effect 45 days from the date of signature./.

ANNEX

(Issued together with Circular No. 05/2009/TT-BXD dated April 15, 2009 of the Ministry of Construction)

Adjusting the estimates of remaining quantities carried out from January 1, 2009 of construction projects under construction investment projects as stipulated in point 1 of Section I of this Circular.

1. Adjustment of construction cost estimates

1.1. Adjustment of labor costs, construction machinery costs

Labor costs and construction machinery costs in the construction cost estimate shall be multiplied by the adjustment factors (KĐCNC) and (KĐC MTC) specified in Table 1 of the annex to this Circular.

1.2. Items of cost calculated as percentage rates in the construction cost estimate.

Direct fees, common costs, pre-tax income, value-added tax, and construction costs for temporary housing at the site for living and construction management shall be calculated as percentage rates in accordance with the prescribed regulations.

2. Adjustment of construction survey cost estimates

Labor costs in the construction survey estimate shall be multiplied by the adjustment factor (KĐC NCKS) specified in Table 2 of the annex to this Circular.

3. Adjustment of cost estimates for material and component testing

Labor costs in the material and component testing estimate shall be determined according to the testing standards and unit prices for materials and components issued together with Decision No. 32/2001/QĐ-BXD dated December 20, 2001 of the Minister of Construction and shall be multiplied by the adjustment factor (KĐCNCTN) specified in Table 3 of the annex to this Circular.

4. Some items of cost calculated as percentage rates in the construction project estimate shall be calculated in accordance with current national regulations.

Table 1: ADJUSTMENT FACTORS FOR CONSTRUCTION COST ESTIMATES

Table 2: ADJUSTMENT FACTORS FOR CONSTRUCTION SURVEY COST ESTIMATES

Table 3: ADJUSTMENT FACTORS FOR MATERIAL AND COMPONENT TESTING COST ESTIMATES

REGULATIONS ON THE LIST OF AREAS APPLYING MINIMUM WAGE LEVELS BY REGION