Circular No. 06/2005/TT-BXD guiding the method for constructing machinery and construction equipment rates

CIRCULAR

Guidelines for the method
of establishing construction machinery and equipment rates

- Based on the Construction Law No. 16/2003/QH11 dated November 26, 2003 of the National Assembly, Session 4;

- Based on the Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on Project Management for Investment Construction Works;

- Based on 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 provides guidelines for the method of establishing construction machinery and equipment rates as follows:

I- General Provisions

1. Machinery and equipment for construction referred to in this Circular are types of machines and equipment that transmit motion through engines running on gasoline, diesel, electricity, or compressed air, used for construction work and installation of equipment at construction sites. Some types of equipment without engines such as trailers, barges, etc., but participating in the aforementioned works are also considered as construction machinery and equipment.

2. The construction machinery rate established according to this Circular (hereinafter referred to as the machinery rate) is used to determine the cost of construction machinery in unit prices for construction works, local construction unit prices to serve as a basis for preparing estimates, total project estimates, and applying to prepare tender prices, evaluate tender prices, and sign contracts for construction tendering and awarding.

3. The Table of Parameters for Establishing Construction Machinery Rates and Equipment included in the Appendix attached to this Circular stipulates standard levels for calculating machinery rates based on key technical parameters of the machine such as engine power, bucket capacity, crane lifting capacity, etc.

II- Method for Establishing Machinery Rates

1. Contents of Costs in Machinery Rates

The machinery rate is the estimated necessary cost for construction machinery and equipment to operate in one shift.

The items of costs included in the machinery rate include depreciation costs, repair costs, fuel and energy costs, labor wages for machine operators, and other machine-related costs.

2. Method for Establishing Machinery Rates

The general formula for establishing machinery rates (CCM):

CCM = CKH + CSC + CNL + CTL + CCPK (VND/shift)

Where:

- CKH : Depreciation cost (VND/shift)

- CSC : Repair cost (VND/shift)

- CNL : Fuel and energy cost (VND/shift)

- CTL : Labor wage for machine operator (VND/shift)

- CCPK : Other costs (VND/shift)

2.1. Depreciation Cost (CKH)

The depreciation cost included in the machinery rate is the expense related to the wear and tear of construction machinery and equipment during their usage period, determined by the following formula:

Where:

- Depreciation value (pre-tax price): Includes the purchase price of the machine and equipment (excluding costs for spare parts and accessories purchased together), transportation, handling, storage, warehousing, transportation from the port to the installation site, initial testing and commissioning costs, and other legitimate expenses directly related to the investment in the machine.

The depreciation value for calculating machinery rates in tender documents and contract awarding is the depreciation value of the type of machine and equipment put into construction work that matches the specific conditions of the contractor in the tender documents.

The depreciation value in the Appendix of this Circular is the price at the second quarter of 2005 and is used for reference when establishing unit prices for construction works and local unit prices.

- Recovery value is the remaining value of the machine and equipment after liquidation and is determined as follows:

Machines and equipment with a depreciation value of VND 10,000,000 (ten million dong) or more have a recovery value not exceeding 5% of the depreciation value. No recovery value is calculated for machines and equipment with a depreciation value less than VND 10,000,000 (ten million dong).

- Annual depreciation rate: The annual depreciation rate of machinery and equipment is specified in the Appendix of this Circular.

During the process of calculating machinery rates, the depreciation rate is determined in accordance with specific conditions to ensure compensation for the wear and tear of the machine, but if it exceeds 20% of the rate specified in the Appendix, it must be reported to the Ministry of Construction.

- Number of shifts per year: The number of shifts per year in the Appendix issued along with this Circular corresponds to the normal operating and usage conditions of the machine and equipment.

During the process of calculating machinery rates, the number of shifts per year is determined according to the principle of suitability with the operation procedures of each type of machine, the scale of construction projects, and other specific conditions, but it shall not be lower than the level specified in the Appendix.

2.2. Repair Cost (CSC)

The repair cost included in the machinery rate is the expense aimed at maintaining and restoring the operational capability of the machine to its standard operating condition.

Formula for calculating CSC:

Where:

- Depreciation value, number of shifts per year: Determined as per Item 2.1 - Clause 2 - Part II of this Circular.

- Annual repair rate: As prescribed in the Appendix issued along with this Circular.

The scope of repair work is determined according to the regulations on technical maintenance, regular repairs, operation procedures of each type of machine, and relevant regulations.

The repair rate specified in the Appendix of this Circular corresponds to the normal operating and usage conditions of the machine. During the process of calculating machinery rates, this cost is determined in accordance with actual conditions and the technical requirements of maintenance and repair work for each specific type of machine.

The repair rate specified in the Appendix of this Circular does not include the cost of replacing major components of the machine and equipment that are subject to significant wear and tear due to the nature of the work, such as drill bits and drill heads.

2.3. Fuel and Energy Cost (CNL)

The fuel and energy cost included in the machinery rate is the expense for fuel and energy that generates the power for the machine's operation (gasoline, diesel, electricity, or compressed air) and auxiliary fuels such as lubricating oil, adjustment fuels, auxiliary engine fuels, and transmission oils.

Formula for calculating CNL:

Where:

- CNLC: Main fuel and energy cost (liters/shift, kWh/shift, cubic meters/shift)

- Fuel and energy consumption rate (liters/hour, kWh/hour, m³/hour): The consumption rate of various types of fuel and energy such as gasoline, diesel, electricity, or compressed gas to generate power for machines to operate in one shift.

- Fuel and energy price: The price (pre-tax) of various types of gasoline, diesel, electricity, or compressed gas (VND/liter, VND/kWh, VND/m³) based on the price level at the time of calculation and the construction site area.

- CNLP : Additional fuel and energy cost

KP is the additional fuel and lubricant cost coefficient for one machine shift, defined as follows: - Gasoline engine: 0.03

- Diesel engine: 0.05

- Electric motor: 0.07

The fuel and energy consumption rates specified in the Appendix attached to this Circular are for machines operating under normal conditions. When calculating the shift price, these consumption rates are adjusted according to the usage conditions of the machine and related technical requirements.

The fuel and energy costs in the shift price are adjusted according to the principle of being consistent with changes in fuel and energy prices as prescribed by the competent authority.

2.4. Labor Cost for Machine Operators (CTL)

The labor cost for machine operators included in the shift price includes wages and corresponding allowances based on the operator's skill level as required by technical specifications.

Formula for calculating CTL:

Where:

- Skill-based wage is the monthly wage of the machine operator as stipulated.

- Additional wages and allowances are the total amount of additional wages and allowances calculated based on the skill-based wage and the minimum wage, including certain direct costs allocated to the machine operator as prescribed.

- Number of working days per month is the number of working days that the machine operator must work in a month as stipulated.

In the Appendix of this Circular, the components, skill levels of operators (or a group of operators) directly operating the machine, and the minimum skill level are specified. When calculating the shift price, it is necessary to determine the number and skill level of machine operators according to the operational requirements of each type of machine and equipment and the technical worker skill levels prescribed by the State.

The labor cost for machine operators is adjusted when state policies regarding wages change, following the principle of consistency with the timing and magnitude of changes prescribed by the competent authority and relevant contents in the contract. The adjustment of the minimum wage shall not exceed twice the general minimum wage prescribed by the Government.

2.5. Other Costs (CCPK)

Other costs of machines included in the shift price ensure the normal and effective operation of machines at the construction site.

Formula for calculating CCPK:

Where:

- Depreciation value, number of shifts per year: Determined as per Item 2.1 - Clause 2 - Part II of this Circular.

- The annual other cost standard is specified in the Appendix of this Circular.

Contents of other costs include:

- Insurance costs for machines and equipment during use;

- Maintenance and service costs for technical maintenance during storage;

- Registration inspection costs for various types;

a) Quarterly, the Ministry of Public Security shall report the revenue, expenditure, and balance on the temporary account from the reorganization of houses and land to the Ministry of Finance for monitoring and consolidation.

The other cost levels specified in the Appendix of this Circular are the maximum costs for a year corresponding to each type of machine. During the process of calculating the shift price, other costs are determined according to specific conditions but shall not exceed the levels prescribed in the Appendix.

III- Implementation Organization

1. The shift price of machines in the investment construction project costs for projects using state budget funds, state development credit funds, state-guaranteed credit funds, and state-owned enterprise development funds must be determined according to the provisions of this Circular.

Projects using other sources of capital are encouraged to apply the provisions of this Circular to determine and manage construction project costs.

2. Based on the guidance provided in this Circular, the People's Committee of the province directs the Department of Construction to take the lead and coordinate with relevant units to establish a shift price list suitable for local conditions to issue and guide its application for construction projects within the province. The Department of Construction reports the applied shift price to the Ministry of Construction for monitoring, summarizing, and resolving related issues.

3. According to the provisions of this Circular and the specific conditions of the project, the project investors and contractors in construction activities are responsible for establishing the applicable shift price for preparing the total estimate and project estimate. For machines and equipment not specified in the Appendix of this Circular, the investor, the sector management ministry, and the Department of Construction must report to the Ministry of Construction for issuance or agreement on issuance.

4. This Circular takes effect 15 days from the date of publication in the Official Gazette and replaces the previous Machine Shift Price Tables and Construction Equipment Price Tables issued with Decisions No. 1260/1998/QĐ-BXD dated November 18, 1998, No. 10/2001/QĐ-BXD dated June 11, 2001, No. 38/2002/QĐ-BXD dated December 27, 2002 by the Minister of Construction, and other circulars on machine shift prices issued by the Ministry of Construction prior to this.

For ongoing works carried out according to the guidelines of the Ministry of Construction.

Any difficulties encountered during implementation should be reported to the Ministry of Construction for consolidation and research to resolve them./.