Circular No. 06/2010/TT-BXD guiding the method for determining the cost of construction machinery and equipment in construction projects

CIRCULAR

Guidelines for determining the unit price of construction machinery and equipment

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

The Minister of Transport hereby promulgates this Circular stipulating the procedures and formalities for dredging and maintaining the maritime channels of Hai Phong and Saigon-Vung Tau managed by the Ministry of Transport, using state budget funds, piloted under the open bidding mechanism with lump-sum contracts ensuring the design standards of the channel routes from 2015 to 2016 based on the dredging and maintenance plans for maritime channels and lump-sum contracts without adjusting the implementation costs.

The Ministry of Construction provides guidelines for determining the unit price of construction machinery and equipment as follows:

Chapter I.

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the method for determining the unit price of construction machinery and equipment (hereinafter referred to as the unit price of machinery) for preparing and managing investment costs of construction projects.

Article 2. Principles for Determining the Unit Price of Machinery

1. The unit price of machinery is determined for each project, in accordance with technical requirements, construction conditions (such as atmospheric salinity, terrain, and similar conditions), construction methods, construction time of the project, and market prices of machinery units.

2. Investors, consulting organizations, and contractors shall base their determination of the unit price of machinery on the guidance provided in this Circular, the basic data for determining the unit price of machinery and construction equipment listed in the Appendix attached hereto, to determine the unit price of machinery suitable for the project as the basis for preparing and managing investment costs of the construction project.

3. Construction machinery and equipment (hereinafter referred to as machinery) specified in this Circular are types of machinery and equipment driven by engines, running on gasoline, diesel, electricity, compressed air, used for construction work and installation of equipment at construction sites. Some types of equipment without engines such as trailers, barges, and similar equipment participating in the aforementioned works are also considered construction machinery and equipment.

4. Costs for construction works including shelters for machinery, machinery foundations, electrical-water-compressed air systems, and similar construction works carried out on-site to serve the installation and operation of certain types of machinery such as cement mixing plants, asphalt concrete mixing plants, rail-mounted cranes, and similar equipment shall be separately budgeted according to construction methods and included in other costs of the project estimate.

Chapter II.

METHODS FOR DETERMINING THE UNIT PRICE OF MACHINERY

Article 3. Contents of Costs in the Unit Price of Machinery

The unit price of machinery is the estimated cost required for machinery and construction equipment to operate in one shift.

The contents of costs in the unit price of machinery are determined in accordance with the type of machinery used for construction works and the specific conditions of the project.

In general, the unit price of machinery includes depreciation costs, repair costs, fuel and energy costs, labor costs for machine operators, and other machinery costs, and is calculated according to the following formula:

C_CM TTĐ_SCL ĐMT_SC ĐMT_GT ĐMT_TL ĐMT_CPK   (VND/shift) (1)

Where:

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_CM: unit price of machinery (VND/shift)

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_SCL : depreciation cost (VND/shift)

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_SC: repair cost (VND/shift)

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_GT: fuel and energy cost (VND/shift)

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_TL: labor cost for machine operators (VND/shift)

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_CPK: other costs (VND/shift)

Article 4. Procedure for Determining the Unit Price of Machinery

Step 1: Prepare a list of machinery for the machinery unit price table as stipulated in Article 5 below.

Step 2: Determine the unit price of machinery as stipulated in Article 6 below.

Step 3: Guide the application of the machinery unit price table for projects as stipulated in Article 7 below.

Article 5. Establishing the List of Machines for the Construction Machinery Price Schedule

The list of machines for the construction machinery price schedule shall be determined according to the principles set forth in Clause 1 of Article 2 of this Circular and must ensure the following contents:

- Types of machines used must be suitable for the construction technology and construction organization methods of the project.

- Clearly specify the type of machine, the name of the machine, and some key economic-technical parameters (such as the bucket capacity of single-bucket excavators, the carrying capacity of trucks, the lifting capacity of cranes, and/or other key economic-technical parameters) for each machine in the list.

Article 6. Determining the Machine Hour Rate

1. Determining Depreciation Costs (C)_SCL)  

a) Depreciation costs included in the machine hour rate are the expenses related to the wear and tear of machines during their usage period.

b) Formula for determining depreciation costs:

Where:

- Original Cost: refers to all costs that the enterprise incurs to acquire the machine up to the point it is ready for use, including the purchase price of the machine and equipment (excluding costs for spare parts and accessories purchased together), import tax (if applicable), transportation, loading and unloading, storage, warehouse fees, installation and trial operation costs, and other legitimate costs directly related to the investment in the machine.

The original cost for calculating the construction machinery hour rate is determined based on the supplier's quotation, the purchase contract for the machine, or the original cost of similar machines from ongoing projects, in accordance with market conditions at the time of calculation.

- Annual Depreciation Rate: refers to the rate of average value reduction of the machine due to wear and tear (both tangible and intangible) over one year of use. The annual depreciation rate is calculated as a percentage.

The annual depreciation rate is determined according to principles consistent with the economic life of the machine and the usage period of each type of machine at the project site.

- Salvage Value: is the remaining value of the machine after disposal and is determined as follows:

For machines with an original cost of VND 10,000,000 (ten million dong) or more, the salvage value is less than or equal to 5% of the original cost. No salvage value is considered for machines with an original cost below VND 10,000,000 (ten million dong).

- Number of Hours per Year: refers to the number of useful hours of machine operation selected within one year.

The number of hours per year is determined according to principles consistent with the characteristics and operational procedures of each type of machine, the volume of construction work, the scale of the project, the construction schedule, and other specific conditions.

The number of hours per year is calculated based on the total number of hours of machine operation throughout its lifetime and the number of years of its lifetime.

2. Determining Repair Costs (C)_SC)     

a) Repair costs included in the machine hour rate are expenses for repairing and maintaining machines to maintain and restore their standard operating capacity.

b) Formula for determining repair costs:

Where:

- Original Cost, Number of Hours per Year: as defined in Clause 1 of Article 6 of this Circular.

- Annual Repair Rate: is determined according to technical maintenance regulations, regular repair schedules, machine operation procedures, machine quality, specific conditions of the project, and the working time of the machine.

c) Repair costs do not include expenses for replacing major spare parts of the machine's working components that have significant wear and tear depending on the nature of the work object, such as drill booms, drill bits, and similar replacement parts.

3. Determining Fuel and Energy Costs (C)_GT).

a) Fuel and energy costs included in the machine hour rate are expenses for fuel and energy that provide power for machine operation (gasoline, diesel, electricity, or compressed air) and auxiliary fuels like lubricating oil, adjustment fuels, engine hybrid fuels, and transmission oils.

b) Formula for determining fuel and energy costs

Where:

- Fuel and Energy Consumption Rate: the consumption rate of various types of fuel and energy (such as gasoline, diesel, electricity, or compressed air) required to generate power for machine operation in one hour (liters/hour, kWh/hour, cubic meters of compressed air/hour).

The fuel and energy consumption rate in one hour is determined according to principles consistent with the number of hours the machine operates in one hour and the corresponding hourly consumption rate for each type of machine.

- Fuel and Energy Price: the price (excluding VAT) of various types of gasoline, diesel, electricity, or compressed air at the time of calculating the machine hour rate and in the construction area of the project.

- Kp: the fuel and lubricant cost factor for one hour of machine operation.

The fuel and lubricant cost factor for one hour of machine operation is specified as follows:

- Gasoline Engine: 1.03

- Diesel Engine: 1.05

- Electric Motor: 1.07

c) In cases where the machine hour rate for certain types of machines used to perform specific tasks (such as construction surveying, material testing, structural component testing, and other similar tasks) includes fuel and energy costs already accounted for in material consumption rates in the project budget estimate, these costs will not be included in the machine hour rate.

The fuel and energy consumption rate for river workboats and high-speed boats when operating is calculated at 65% of the rate during travel.

4. Determining Labor Costs for Machine Operators (C)_TL)  

a) Labor costs for machine operators are expenses related to wages and allowances corresponding to the operator's skill level as required by technical specifications.

Wages for machine operators in the machine hour rate are determined based on accurately and fully accounting for labor wages and being consistent with the prevailing wage levels in the labor market of each region and province, for each type of operator, and specific conditions of the project.

b) Formula for determining labor costs for machine operators

Where:

- N_i : Number of Type i Machine Operators

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_TLi : Daily Wage Rate for Type i Machine Operator

- n : Number of Types of Machine Operators in One Shift

The composition, skill level, and number of machine operators for each type of machine are determined according to the requirements of the machine operation procedures, technical worker skill standards, and specific conditions of the project.

c) In cases where the cost of labor for operating machinery has already been calculated according to labor consumption in the construction project budget estimate (such as construction survey, material testing, component testing, structural testing, and other types of work), the cost of labor for operating machinery shall not be included in the machinery shift cost.

5. Determining other costs (C)_CPK) 

a) Other costs included in the machinery shift cost are expenses ensuring normal and efficient operation of machinery at the construction site, including:

- Insurance for machinery and equipment during usage;

- Maintenance and technical service activities related to machinery storage;

- Inspection fees for various types of machinery;

- Internal relocation of machinery within the construction site;

- Directly related management and usage costs for machinery at the construction site that have not been accounted for in other cost items in the unit price or project budget.

b) Formula for determining other costs

Where:

- Original Cost, Number of Hours per Year: as defined in Clause 1 of Article 6 of this Circular.

- Annual other cost rate: Used to serve the operations of machinery over a selected year and calculated as a percentage of the original cost.

The annual other cost rate is determined based on principles suitable for each type and size of machinery and corresponding operational conditions specific to the construction project.

Article 7. Guidelines for Using Machinery Shift Cost Tables

After determining the machinery shift cost for construction projects according to the provisions of Articles 3, 4, 5, and 6 above, guidelines for applying the machinery shift cost table in the process of establishing and managing investment construction costs should include the following main contents:

- Scope and application subjects of the machinery shift cost table.

- Basis for determining cost components in the machinery shift cost.

- Cases to note during the application of the machinery shift cost table.

Article 8. Determining Waiting Machinery Shift Costs and Machinery Rental Costs

1. Determining waiting machinery shift costs

a) Waiting machinery shift cost refers to the machinery shift cost of machines mobilized to the construction site for construction work but without work due to reasons not attributable to the contractor.

b) Waiting machinery shift cost includes depreciation costs, operator wage costs, and other costs. These costs are determined according to the machinery shift cost table of the construction project.

2. Determining machinery rental costs

a) Machinery rental cost is the fee paid by the lessee to the lessor for the right to use machinery for a certain period such as a shift, day, week, month, quarter, year, or to complete a certain volume of work measured in units like piece, kg, ton, meter.², m³.

b) Generally, machinery rental cost includes the following costs: depreciation cost; repair cost; fuel and energy cost; operator wage cost; other costs; transportation cost to and from the construction site; installation and dismantling cost; waiting time cost due to technology or construction methods; taxes, fees, and levies.

The cost items in the machinery rental cost are determined based on specific conditions of the construction project, rental form, and agreement between the machinery lessor and lessee.

Article 9. Adjustment of machinery shift prices

Machinery shift prices shall be adjusted in accordance with specific conditions of each project based on fluctuations in pricing factors for calculating machinery shift costs such as original cost, fuel price, energy, wage rates.

Machinery shift prices shall be adjusted using the following methods:

- Direct offset method;

- Adjustment factor method;

- Construction price index method:

1. Adjusting machinery shift prices using the direct offset method

The formula for determining the adjusted machinery shift price (C_CMĐC) using the direct offset method:

C_CMĐC = (C_SCL ĐMT_SC ĐMT_CPK) . K₁ ĐMT_GT . K₂ ĐMT_TL . K₃ (VND/shift) (7)

Where:

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_SCL, C_SC, C_CPK, C_GT, C_TL: depreciation costs, repair costs, other costs, fuel costs, energy costs, operator wages included in the machinery shift price at the initial time point.

- K₁: adjustment factor for original cost, determined according to formula (8)

- K₂: adjustment factor for fuel and energy costs, determined according to formula (9)

- K₃: adjustment factor for operator wage costs, determined according to formula (10)

2. Adjusting machinery shift prices using the adjustment factor method

The formula for determining the adjusted machinery shift price (C_CMĐC) using the adjustment factor method:

C_CMĐC TTĐ_CM . K_ĐC  (VND/shift) (11) 

Where:

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_CM: machinery shift price at the initial time point (VND/shift)

- K_ĐC: adjustment factor for machinery shift price

The adjustment factor for machinery shift price is calculated based on the adjustment factor for construction machine costs in the project estimate between the adjustment time point and the initial time point. The adjustment factor is taken from local announcements or guidance or calculated by the investor.

3. Adjusting machinery shift prices using the construction price index method

The formula for determining the adjusted machinery shift price (C_CMĐC) using the construction price index method:

   (VND/shift) (12)

Where:

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_CM: machinery shift price at the initial time point (VND/shift)

- K_MTC1: construction machinery price index at the initial time point

- K_MTC2: construction machinery price index at the adjustment time point

The construction machinery price index is guided by the Ministry of Construction or announced by the local authority where the project is located or calculated by the investor.

Chapter III.

IMPLEMENTATION

Article 10. Review and Approval of Machinery Shift Prices for Projects

1. The investor bases on technical requirements and specific construction measures of the project to organize the review and approval of machinery shift prices for the project simultaneously with the organization of the review and approval of unit prices for construction projects.

For construction projects that pass through multiple regions such as transportation roads, power transmission lines, canals, pipelines, and other linear construction projects, the investor decides on the machinery shift price for the project to establish and manage investment construction costs.

The investor may hire organizations or individuals with sufficient capacity and professional experience to consult on cost management to determine or review machinery shift prices before applying them.

2. The People's Committee of the province directs and assigns the Department of Construction to lead and coordinate with relevant departments to calculate and announce common machinery shift prices as a reference basis for establishing and managing investment construction costs based on guidance in this Circular and the specific situation of the locality.

3. Construction contractors implement machinery shift price management as stipulated in Article 27 of Decree No. 112/2009/NĐ-CP.

Article 11. Transitional Provisions

Implementation of machinery shift price determination for projects during the transitional period as provided for in Article 34 of Decree No. 112/2009/NĐ-CP.

Article 12. Effective Date

This Circular takes effect from July 15, 2010, and replaces Circular No. 07/2007/TT-BXD dated July 25, 2007, of the Ministry of Construction on guiding the method for determining machinery shifts and construction equipment for projects.

Any issues encountered during implementation should be reported to the Ministry of Construction for consideration and resolution./.