Circular No. 06/2016/TT-BXD guiding the determination and management of construction investment costs

CIRCULAR

Guidelines for Determining and Managing Construction Investment Costs

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Pursuant to the Construction Law No. 50/2014/QH13 dated June 18, 2014;

BASED ON Decree No. 62/2013/ND-CP dated June 25, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

BASED ON Decree No. 32/2015/NĐ-CP dated March 25, 2015 of the Government on the management of construction investment costs;

AT THE PROPOSAL OF the Director of the Institute of Construction Economics and the Director General of the Department of Construction Economics;

The Minister of Construction issues this Circular guiding the determination and management of construction investment costs.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

THIS CIRCULAR GUIDES IN DETAIL THE CONTENTS, METHODS FOR DETERMINING AND MANAGING CONSTRUCTION INVESTMENT COSTS INCLUDING THE PROVISIONAL TOTAL CONSTRUCTION INVESTMENT COST, TOTAL CONSTRUCTION INVESTMENT COST, BUDGET ESTIMATE, BUDGET ESTIMATE FOR A CONSTRUCTION CONTRACT, UNIT PRICE INDEX, CONSTRUCTION COST INDEX, MACHINE AND EQUIPMENT RENTAL COST INDEX.

Article 2. Applicability

1. The agencies, organizations, and individuals involved in determining and managing construction investment costs for projects using state budget funds and state capital outside the budget as prescribed in Clause 1, Article 2 of Decree No. 32/2015/NĐ-CP dated March 25, 2015 of the Government on the management of construction investment costs (referred to as Decree No. 32/2015/NĐ-CP) and public-private partnership (PPP) construction projects.

2. ENCOURAGEMENT IS GIVEN TO PROJECTS USING OTHER CAPITAL SOURCES TO APPLY THE PROVISIONS OF THIS CIRCULAR.

Chapter II

TOTAL CONSTRUCTION INVESTMENT COST

Article 3. Contents of total construction investment cost

1. The contents of total construction investment cost as stipulated in Clause 4, Article 4 of Decree No. 32/2015/NĐ-CP, wherein project management costs, construction investment consulting costs, and other costs are specified as follows:

a) Project management costs include the costs as stipulated in Clause 2, Article 23 of Decree No. 32/2015/NĐ-CP, which are necessary costs for organizing the implementation of project management tasks from the project preparation stage, project execution, and completion of construction and putting the project works into operation, including:

- Preparing feasibility study reports for construction investment (if applicable), proposals for investment policies (if applicable), feasibility study reports for construction investment or economic and technical reports for construction investment;

- Preparing construction survey tasks, construction surveys, and supervising construction surveys;

- Selecting architectural designs or design options through competitions or selection processes;

- Implementing compensation, support, and resettlement activities within the responsibility of the investor;

- Reviewing feasibility study reports for construction investment or economic and technical reports for construction investment;

- Preparing, reviewing, auditing, and approving technical designs, construction drawings, and construction budgets;

- Selecting contractors in construction activities;

- Managing construction quality, quantity, progress, costs, and contracts;

- Implementing and managing construction information systems;

- Ensuring labor safety and environmental hygiene of construction works;

- Establishing or adjusting construction unit prices of the works;

- Determining construction work prices and construction price indices;

- Inspecting construction work quality during final acceptance by state management agencies;

- Inspecting construction materials, components, products, and installed equipment;

- Testing and inspecting parts, sections, and entire construction works according to requirements;

- Controlling construction investment costs;

- Converting completed construction investment costs after acceptance and handover for use;

- Acceptance, payment, and settlement of contracts; payment and settlement of construction investment costs;

- Monitoring and evaluating construction investment projects;

- Acceptance and handover of construction works;

- Commencement, inauguration (if applicable), and publicity;

- Determining, updating, reviewing, and preparing construction contract budgets;

- Performing other management tasks of competent state authorities (if applicable);

- Performing other management tasks.

b) Construction investment consulting costs include the costs as stipulated in Clause 2, Article 25 of Decree No. 32/2015/NĐ-CP, which are necessary costs for implementing construction investment consulting tasks from the project preparation stage, project execution, and completion of construction and putting the project works into operation, including:

- Preparing construction survey tasks, construction surveys, and supervising construction surveys;

- Preparing feasibility study reports for construction investment (if applicable), proposals for investment policies (if applicable), feasibility study reports for construction investment or economic and technical reports for construction investment;

- Reviewing basic design and technological design of the project;

- Selecting architectural designs through competitions or selection processes;

- Designing construction works;

- Reviewing provisional total construction investment costs, construction designs, and construction budgets;

- Preparing and reviewing tender documents, invitation to tender documents, and evaluation of tender submissions for selecting contractors in construction activities;

- Reviewing contractor selection results in construction activities;

- Supervising construction and installation of equipment;

- Preparing environmental impact assessment reports;

- Preparing and reviewing construction unit prices, construction work prices, and construction price indices;

- Reviewing traffic safety measures.

- Applying the construction project information system;

- Controlling construction investment costs for projects;

- Providing management consultancy on construction investment costs including preliminary total construction investment cost (if applicable), total construction investment cost, construction budget estimate, construction tender price, construction contract price, construction norms and construction prices, contract payment and settlement, investment capital payment and settlement for construction projects, and other related tasks;

- Project management consultancy (in cases where consultancy services are hired);

- Specialized construction testing;

- Quality inspection of materials, components, construction products, and equipment installed in the project according to the requirements of the project owner (if applicable);

- Quality certification of project parts, sub-projects, and entire projects;

- Monitoring and evaluating construction investment projects (in cases where consultancy services are hired);

- Environmental monitoring and supervision consultancy;

- Converting completed construction investment capital after acceptance and handover for use;

- Performing other consultancy tasks;

c) Other expenses to carry out the following works include:

- Demining and explosive ordnance disposal;

- Construction project insurance during the construction period;

- International quality inspection, deformation monitoring of the project;

- Auditing, verification, and approval of final investment capital settlement;

- Inspection of acceptance work during construction and upon completion of sub-projects and projects by competent state management agencies;

- Scientific and technological research related to the project; initial working capital for construction projects aimed at business purposes, interest during the construction period; costs for trial operation without load and with load according to the production process before handover (excluding the value of recovered products);

- Resource taxes, fees, and charges as prescribed;

- Common items include the cost items specified in point a, Clause 5, Article 7 of this Circular;

- Expenses for performing other tasks;

2. In cases where a preliminary total construction investment cost is required, the content of the preliminary total construction investment cost shall be as stipulated in Clause 2, Article 4 of Decree No. 32/2015/NĐ-CP;

3. For projects that only require the preparation of an economic and technical report for construction investment, the content of the total construction investment cost shall be as stipulated in Clause 3, Article 4 of Decree No. 32/2015/NĐ-CP;

4. For projects using official development assistance (ODA), in addition to the contents calculated within the total investment mentioned above, other necessary cost items suitable for the specific characteristics and nature of the construction investment project using this source of funds shall be supplemented in accordance with current relevant laws, ensuring accurate and comprehensive calculation consistent with specific conditions and the market price level of the construction area.

Article 4. Methods for Determining the Total Investment Cost for Construction

1. The total investment cost for construction shall be determined according to one of the methods prescribed in Clause 2, Article 5 of Decree No. 32/2015/NĐ-CP as follows:

a) Determined based on the quantity of construction calculated according to the basic design and other necessary requirements of the project.

b) Determined based on the unit capital investment cost of the works.

c) Determined based on data on costs of similar projects that have been or are being implemented.

d) Combined application of the methods prescribed at points a, b, and c of Clause 1 of this Article.

2. The preliminary total investment cost for construction shall be determined according to the provisions of Clause 1, Article 5 of Decree No. 32/2015/NĐ-CP. In cases where conditions for determining the scale, capacity, or service capability according to the preliminary design plan of the project are not yet met, or although they have been determined but there is no published data on the unit capital investment cost of the works, the preliminary total investment cost for construction shall be determined based on cost data of similar projects regarding type, level, scale, capacity, or service capability that have been or are being implemented, and adjusted and supplemented with necessary additional costs.

3. Certain items of project management costs, investment consulting costs, and other project costs which have no regulations or cannot be immediately calculated shall be supplemented and estimated to be included in the total investment cost for construction.

4. The methods for determining the total investment cost for construction and the preliminary total investment cost for construction are guided in Appendix 1 of this Circular.

Article 5. Review, Audit, and Approval of the Total Investment Cost for Construction

1. The content of review, the authority for review, and approval of the total investment cost for construction shall be in accordance with the provisions of Article 6 of Decree No. 32/2015/NĐ-CP.

2. The template for the report on the results of review and audit of the total investment cost for construction is guided in Appendix 8 of this Circular.

Article 6. Adjustment of the Total Investment Cost for Construction

1. The approved total investment cost for construction may be adjusted in cases as prescribed in Clause 1, Article 7 of Decree No. 32/2015/NĐ-CP.

2. The addition of contingency costs due to price escalation as stipulated in Clause 4, Article 7 of Decree No. 32/2015/NĐ-CP shall be organized by the investor when the average construction price index of consecutive construction price indices announced by the competent state agency from the time of implementing the project to the time of adjustment exceeds the construction price index used in the approved total investment cost for construction.

3. For works not included in the list of construction price indices published by the Department of Construction and construction works along routes passing through multiple provinces and centrally governed cities as prescribed in Clause 4, Article 22 of Decree No. 32/2015/NĐ-CP, the average construction price index in Clause 2 of this Article shall be determined based on construction price indices from the time of implementing the project to the time of adjustment according to the method for determining the construction price index prescribed in Article 22 of this Circular.

4. The increased value of the total investment cost for construction due to the addition of contingency costs as prescribed in Clauses 2 and 3 of this Article includes the increased value due to the additional increase in the construction price index for the volume already completed up to the time of adjustment and the increased value due to changes in the construction price index (including anticipated market fluctuations) for the remaining volume to be completed.

5. The review, audit, and approval of the total investment cost for construction adjustments shall be carried out in accordance with the provisions of Clauses 1 and 2 of Article 7 of Decree No. 32/2015/NĐ-CP.

Chapter III

CONSTRUCTION ESTIMATE

Section 1

Project Construction Budget Estimate

Article 7. Content of the construction project budget estimate

1. The construction project budget estimate as prescribed in Clause 2, Article 8 of Decree No. 32/2015/NĐ-CP shall be determined for the construction project, sub-project, auxiliary works, temporary works serving construction. Among these, construction costs include direct costs, common costs, pre-tax income, value-added tax.

- Direct costs include material costs (including materials provided by the investor), labor costs, machinery and equipment construction costs.

- Common costs include enterprise management costs, production operation costs at the construction site, worker service costs, construction site service costs, and other service costs for management by the enterprise.

- Pre-tax income is the profit of the construction enterprise forecasted in advance in the construction project budget estimate.

- Value-added tax as prescribed by the State.

2. Equipment costs of the construction project, sub-project include cost items as stipulated in Point b, Clause 2, Article 8 of Decree No. 32/2015/NĐ-CP.

3. Project management costs include cost items as stipulated in Point a, Clause 1, Article 3 of this Circular.

4. Investment consulting costs for construction projects include cost items as stipulated in Point b, Clause 1, Article 3 of this Circular. For projects with multiple construction works, the investment consulting costs in the construction project budget estimate do not include consulting costs related to the entire project.

5. Other costs in the construction project budget estimate include cost items as stipulated in Point c, Clause 1, Article 3 of this Circular. Among them:

a) Common item costs include:

- Temporary housing costs on-site for living and construction management;

- Costs for labor safety and environmental protection for workers on-site and surrounding environment;

- Contractor's material testing costs;

- Labor force movement costs within the construction site;

- Non-routine water pumping and sludge removal costs;

- Special construction machinery and labor force (with skills under the enterprise's management, long-term employment contracts with the enterprise) transportation costs to and from the construction site;

- Traffic safety assurance costs serving construction (if applicable);

- Infrastructure restoration costs affected during construction (if applicable);

- Construction costs for shelters for machinery, machine foundations, power supply systems, compressed air systems, water supply and drainage systems on-site, installation and dismantling of certain types of machines (such as cement concrete mixing plants, asphalt concrete mixing plants, rail-mounted cranes, tower cranes, and other similar construction machinery and equipment);

b) Interest on loans during the construction period is not included in the construction project budget estimate. For construction projects with multiple works, other costs in the construction project budget estimate do not include mine clearance costs, explosive detection costs; auditing costs; review, approval of final accounts; scientific research and technology development costs related to the project; working capital for commercial construction projects; costs for non-load and load trial operations according to technological procedures before handover (excluding recovered product values); various fees and charges already calculated for the project.

6. Contingency costs include contingency costs for unexpected work volume factors and contingency costs for inflation factors during the construction period.

Article 8. Method for determining the construction project budget estimate

1. Determining construction costs

Construction costs may be determined according to each cost item or by consolidating cost items according to one of the methods specified in points a and b below.

a) Calculating based on volume and construction work price

- Construction material, labor, machinery, and equipment installation costs in direct costs are determined based on volume and construction work price. The volume of construction works is determined from technical design drawings or construction drawings, technical instructions, work requirements that must be carried out for the project, project components, and construction prices as stipulated in Articles 18 and 19 of this Circular. To align with the tender package budget estimate, the construction price for preparing the budget estimate can be a full construction price.

- Common costs are calculated as a percentage (%) of direct costs or labor costs in the construction budget for each type of project as guided in Table 3.7 and 3.8 of Appendix 3 of this Circular. For projects using ODA funds with international bidding, common costs are determined based on the prescribed percentage rate (%) in this Circular and supplemented with necessary costs according to the requirements of the international tender package, ensuring the principle of accurate and complete calculation.

- Pre-tax income is calculated as a percentage (%) of direct costs and common costs as guided in Table 3.9 of Appendix 3 of this Circular.

- Value-added tax as prescribed by the State.

b) Calculating based on material, labor, machinery, and equipment installation consumption volumes and corresponding price lists.

- Construction material, labor, machinery, and equipment installation costs in direct costs are determined based on material, labor, machinery, and equipment installation consumption volumes and corresponding price lists. The total consumption volume of various materials, labor, machinery, and equipment installations is determined based on the consumption of materials, labor, machinery, and equipment installations for each volume of construction work of the project, project components.

The determination of material, labor, and construction machinery price lists is regulated in Article 19 of this Circular.

Consumption volume price lists and construction material, labor, machinery, and equipment installation costs are determined according to the guidance in Tables 3.4 and 3.5 of Appendix 3 of this Circular.

- Common costs, pre-tax income, value-added tax as guided in point a, Clause 1 of this Article.

2. Determining equipment costs

a) Equipment costs are determined based on the quantity, type of equipment from technological design, construction, and corresponding equipment purchase prices. Equipment purchase prices are based on supplier quotations, manufacturer prices, or market prices at the time of calculation, or similar equipment projects (capacity, technology, origin) already completed or ongoing.

For equipment that needs to be manufactured or processed, these costs are determined based on the volume and quantity of equipment to be manufactured or processed and appropriate production or processing unit prices according to the nature and type of equipment under signed manufacturing or processing contracts, or based on processing product quotations from selected manufacturers or production or processing prices of similar equipment in completed or ongoing projects.

b) Training and technology transfer costs are determined by preparing budgets according to specific project requirements.

c) Installation costs, testing, calibration, and other related costs are determined by preparing budgets as with construction cost estimates.

3. Determining project management costs

Project management costs are determined based on the percentage rate (%) standard published by the Ministry of Construction used in calculating the total investment amount or by preparing budgets.

4. Determining construction investment consulting costs

a) Consulting costs in construction project budget estimates are determined based on the percentage rate (%) standard published by the Ministry of Construction or by preparing budgets. In cases where some construction investment consulting tasks are carried out before determining the construction project budget estimate, they are determined based on signed consulting contract values in compliance with state regulations.

b) If foreign consulting experts need to be hired, consulting costs are determined by preparing budgets consistent with consulting usage requirements, relevant authority regulations, and international practices. The method for determining foreign consulting expert hiring costs follows the guidance of the Ministry of Construction.

5. Other costs are determined based on the percentage rate (%) standards guided by competent authorities or by preparing budgets or based on signed contract values in compliance with legal provisions.

For certain specialized construction projects with unique cost factors, projects using ODA funds, if there are additional related costs, these should be supplemented, ensuring the principle of accurate and complete cost calculation, suitable for the specific conditions of the project and local market prices.

6. Determining contingency costs

a) Contingency costs for unexpected work volume factors are calculated as a percentage (%) of total construction costs, equipment costs, project management costs, construction investment consulting costs, and other costs.

b) Contingency costs for inflation factors are determined based on the construction project duration (in months, quarters, years), capital allocation plans, and construction price indices suitable for the type of construction project, taking into account domestic and international price fluctuations.

7. The methods for determining construction costs, equipment costs, project management costs, construction investment consulting costs, other costs, and contingency costs as stipulated in Clauses 1, 2, 3, 4, 5, and 6 of this Article are detailed in Appendix 2 of this Circular.

Article 9. Review, examination, and approval of construction project estimates

1. The content of review, the authority to review, and the approval of construction project estimates shall be implemented in accordance with the provisions of Article 10 of Decree No. 32/2015/NĐ-CP.

2. The template for reporting the results of reviewing and examining construction project estimates is guided by Appendix 8 of this Circular.

Article 10. Adjustment of Construction Project Estimates

1. Adjusted construction project estimates that have been approved shall be made in cases stipulated in Clause 1 and 4, and the authority to determine, review, and approve adjusted construction project estimates shall be determined in accordance with the provisions of Clauses 3 and 5 of Article 11 of Decree No. 32/2015/NĐ-CP.

2. The method for determining adjusted construction project estimates is guided in Part III of Appendix 2 of this Circular.

Section 2

Construction tender estimate

Article 11. Construction Tender Estimate

1. The content and method for determining the construction tender estimate shall be in accordance with the provisions of Article 13 of Decree No. 32/2015/NĐ-CP.

2. In cases where the approved construction project estimate is based on incomplete detailed unit prices of the project, when determining the construction tender estimate, it must be compiled according to the complete detailed unit prices of the project corresponding to the volume of work required to be carried out under the tender package as stipulated in Point b, Clause 2 of Article 13 of Decree No. 32/2015/NĐ-CP. The incomplete detailed unit prices of the project and the complete detailed unit prices of the project are regulated in Clause 1 of Article 18 of this Circular.

3. The common item costs of the construction tender estimate include one, several, or all costs determined in the approved construction project estimate, which are consistent with the scope of work, requirements, and technical instructions of the tender package, and are determined by cost standards published by competent authorities or by preparing an estimate. The total common item costs of the construction tender estimate shall not exceed the common item costs in the approved construction project estimate.

4. Contingency costs in the construction tender estimate include:

a) Contingency costs for unexpected work volume factors calculated as a percentage (%) of the total construction costs and common item costs of the construction tender estimate.

b) Contingency costs for price escalation factors determined based on the construction period of the tender package and the appropriate construction price index considering domestic and international price fluctuations.

c) The rate of percentage (%) used to determine contingency costs under Points a and b of this clause shall not exceed the percentage rate of contingency costs in the approved construction project estimate.

5. The construction tender estimate is determined in accordance with the guidance provided in Section 1, Part II of Appendix 2 of this Circular.

Article 12. Procurement Tender Estimate for Materials and Equipment Installation into the Project

1. The content and method for determining the procurement tender estimate for materials and equipment installation into the project shall be in accordance with the provisions of Article 14 of Decree No. 32/2015/NĐ-CP.

2. Installation, testing, and calibration costs for equipment include cost items similar to those in the construction tender estimate and are determined by preparing an estimate using the construction cost determination method specified in Clause 1 of Article 8 of this Circular.

3. Contingency costs in the procurement tender estimate for materials and equipment installation into the project include:

a) Contingency costs for unexpected work volume factors calculated as a percentage (%) of the total procurement costs for equipment; training and technology transfer costs (if applicable); installation, testing, and calibration costs; transportation, insurance costs; taxes, and other fees.

b) Contingency costs for price escalation factors determined based on the implementation period of the tender package and the appropriate construction price index considering domestic and international price fluctuations.

c) The rate of percentage (%) used to determine contingency costs under Points a and b of this clause shall not exceed the percentage rate of contingency costs corresponding to each factor in the approved construction project estimate.

4. The procurement tender estimate for materials and equipment installation into the project is determined in accordance with the guidance provided in Section 2, Part II of Appendix 2 of this Circular.

Article 13. Budget for the consulting tender package for investment construction

1. The content and method of determining the budget for the consulting tender package for investment construction shall be in accordance with Article 15 of Decree No. 32/2015/NĐ-CP.

2. Expert fees, management costs, other costs, pre-tax income, tax, and contingency costs shall be determined in accordance with the guidance of the Ministry of Construction.

3. Testing costs and specialized construction costs shall be determined based on the budget according to the method of determining construction costs as guided.

4. Contingency costs in the budget for the consulting tender package for investment construction include contingency costs for volume factors of work arising and contingency costs for price escalation factors, which are calculated at a percentage rate (%) as guided by the Ministry of Construction, but the total percentage rate (%) of contingency costs shall not exceed the corresponding percentage rate of contingency costs in the approved construction project budget.

5. Costs for purchasing professional liability insurance for investment construction consulting services for design and construction works of construction projects from Class II and above shall be included in other costs of the tender package. For the tender package of construction survey of projects from Class II and above, costs for purchasing professional liability insurance for investment construction consulting services are a separate cost item in the budget of the tender package.

6. The budget for the consulting tender package for investment construction shall be determined in accordance with the guidance provided in Section 3, Part II of Appendix No. 2 of this Circular.

Article 14. Budget for the mixed tender package

1. The budget for the design and construction tender package (EC) includes budgets for the works as stipulated in Articles 13 and 11 of this Circular.

2. The budget for the procurement of materials and equipment and construction tender package (PC) includes budgets for the works as stipulated in Articles 12 and 11 of this Circular.

3. The budget for the design-procurement-construction tender package (EPC) and the project preparation-design-procurement-construction tender package (turnkey) shall be in accordance with Clause 3 and Clause 4 of Article 16 of Decree No. 32/2015/NĐ-CP.

Article 15. Authority to determine, review, verify, and approve the budget for construction tender packages

1. The organization of determining, reviewing, verifying, and approving the budgets for construction tender packages shall be carried out in accordance with Clause 3 and Clause 4 of Article 12 of Decree No. 32/2015/NĐ-CP.

2. If the budget for a tender package has been approved but the selection of contractors has not yet been organized, the investor shall update it using the price index or prices and related policies, and approve it to replace the previously approved tender package price approximately 28 days before the tender opening.

3. In cases where the budget for a construction tender package exceeds the approved construction project budget, the investor must report to the investment decision-maker for consideration and decision.

Chapter IV

CONSTRUCTION RATES, CONSTRUCTION PRICES OF PROJECTS, AND CONSTRUCTION PRICE INDEXES

Section 1

Construction Quantities

Article 16. System and methods for establishing construction rates

1. Construction rates include economic-technical rates and cost rates, as stipulated in Articles 17 and 18 of Decree No. 32/2015/NĐ-CP.

2. Methods for establishing construction project budget rates:

a) Construction project budget rates are established in the following sequence:

- Establish a list of tasks, works, or building structures of the project reflecting technical and technological requirements, construction conditions, construction methods, and determine appropriate units of measurement.

- Determine the components of the work from preparation to completion of the task, work, or building structure of the project.

- Calculate and determine material consumption, labor, machinery, and construction equipment.

- Establish detailed rates based on the consolidation of material, labor, and machinery consumption.

b) The method for establishing construction project budget rates is as guided in Appendix No. 5 of this Circular.

3. Cost rates are determined in accordance with the guidance of the Ministry of Construction.

Article 17. Management of Construction Standards for Projects

1. The Ministry of Construction shall publish construction standards pursuant to Article 34 of Decree No. 32/2015/NĐ-CP for relevant agencies, organizations, and individuals to use, apply, and refer to in determining and managing investment construction costs.

2. Sectoral construction management ministries and provincial People's Committees shall organize the establishment of construction budget standards for specialized tasks with unique characteristics of the sector based on the method for determining construction budget estimates as guided in Appendix 5 of this Circular, in coordination with the Ministry of Construction. These standards will be published for the sector and locality and reported to the Ministry of Construction for monitoring and management as stipulated in Clause 2 of Article 19 of Decree No. 32/2015/NĐ-CP.

3. Project sponsors shall use, apply, and refer to the system of construction budget standards that have been published and are applicable under the same technology and conditions, or apply construction budget standards from projects already implemented under similar conditions to determine the total investment cost, construction budget, and manage investment construction costs. For construction works included in the published system of construction budget standards but not suitable for technical requirements, construction conditions, or specific construction methods of the project, the project sponsor shall organize adjustments and supplements to the construction budget standards according to Clauses 4 and 5 of Article 19 of Decree No. 32/2015/NĐ-CP as the basis for calculating construction investment costs.

4. Consulting contractors who prepare construction budgets based on project designs shall propose construction budget standards for new construction tasks or those requiring adjustment and supplementation to prepare budgets and ensure completeness of documentation for reporting to the project sponsor.

Section 2

Construction Project Price

Article 18. Content and Method of Establishing Construction Prices for Projects

1. Construction prices for projects include detailed unit prices of construction and comprehensive construction prices as prescribed in Clause 1 of Article 20 of Decree No. 32/2015/NĐ-CP.

a) Detailed unit prices are calculated for specific construction tasks of the project, including incomplete detailed unit prices (including material costs, labor costs, machinery and equipment costs) and complete detailed unit prices (including material costs, labor costs, machinery and equipment costs, general costs, and pre-tax income), serving as the basis for determining the construction budget and tender package budget.

b) Comprehensive construction prices are calculated for groups, types of construction tasks, structural units, or parts of the project, aggregated from the detailed unit prices of the project at point a of this clause, including incomplete comprehensive construction prices (including material costs, labor costs, machinery and equipment costs) and complete comprehensive construction prices (including material costs, labor costs, machinery and equipment costs, general costs, and pre-tax income), serving as the basis for determining the construction budget and total investment construction cost.

2. The method for establishing construction prices for projects is guided in Appendix 4 of this Circular.

Article 19. Management of Construction Project Costs

1. Provincial People's Committees shall assign the Department of Construction to lead and coordinate with relevant agencies to determine and publish construction material prices, construction labor unit prices, machinery and equipment operation prices, construction price indices, and construction project unit prices as the basis for managing construction prices as stipulated in Clause 2 of Article 36 of Decree No. 32/2015/NĐ-CP.

2. Construction material prices must be published periodically monthly and quarterly, ensuring sufficient updates on commonly used materials. Published material prices must correspond to quality standards, origin, and be consistent with market prices at the time of publication (specifying transportation distance). For border areas between provinces and centrally-administered cities, Departments of Construction need to exchange information before publishing to avoid significant differences.

3. Construction labor unit prices shall be determined and published based on guidelines from the Ministry of Construction, aligning with skill levels according to labor grades in the system of construction budget standards; consistent with local construction labor market wage levels; appropriate to the characteristics and nature of construction labor work; and meeting requirements for paying certain expenses that employees must bear according to regulations (social insurance, health insurance, unemployment insurance, and other payments).

4. Machinery and equipment operation unit prices shall be determined and published based on guidelines from the Ministry of Construction, consistent with local market prices at the time of publication.

Responsibilities of project sponsors, organizations managing investment construction costs, and construction contractors in managing construction prices

a) Project sponsors shall implement the determination and management of construction prices as prescribed in Articles 21 and 31 of Decree No. 32/2015/NĐ-CP.

b) Organizations managing investment construction costs shall implement the preparation and review of construction project prices and manage construction project prices as prescribed in Clause 2 of Article 21 and Article 32 of Decree No. 32/2015/NĐ-CP.

c) Construction contractors shall implement the management of construction project prices as prescribed in Article 33 of Decree No. 32/2015/NĐ-CP.

Section 3

Construction price index

Article 20. General Provisions on Determining Construction Price Indexes

1. The construction price indexes published shall be categorized by type of project and cost structure (including construction work price index, equipment price index, other cost price index), with cost factors comprising building materials price index, construction labor price index, machinery and equipment price index determined based on a representative list and quantity of projects for calculation purposes.

2. The construction price index shall be calculated as an average over the selected time period, excluding compensation costs, support costs, resettlement costs, interest during construction, and initial working capital for production and business operations (if applicable). The unit of measurement for the construction price index is percentage (%).

3. The cost structure used to calculate the construction price index must align with the cost management regulations for construction investment, compiled from statistical data and maintained until there is a change in the base period. The cost structure for payment contract price index is based on the tender package budget estimate structure.

Article 21. Classification of Construction Price Indexes

1. Construction price indexes are determined according to the project and type of project, including:

a) Cost factor price indexes include:

- Building material price index reflects fluctuations in the prices of building materials.

- Construction labor price index reflects fluctuations in the prices of construction labor.

- Machinery and equipment construction price index reflects fluctuations in the prices of machinery and equipment used in construction.

b) Cost structure price indexes include:

- Construction work price index reflects fluctuations in the prices of construction work.

- Equipment price index reflects fluctuations in the prices of equipment.

- Other cost price index reflects fluctuations in certain types of costs such as project management, construction investment consulting, and other project costs.

c) Construction price index by project type reflects fluctuations in the prices of each type of construction project.

2. Published construction price indexes include the types of price indexes specified in points a, b, and c of Clause 1 of this Article.

3. For specific construction projects or tender packages, the calculation of all or some of the price indexes mentioned in Clause 1 of this Article shall be based on the purpose and requirements of cost management and the cost structure of the tender package budget estimate.

Article 22. Method for Determining Construction Price Indexes

1. The construction price index for publication shall be determined through the following procedures:

a) Determine the calculation period including the base period and comparison period.

b) Establish a list of price indexes to be determined and select input factors.

c) Collect and process calculation data and information.

d) Determine the construction project price index including determining the cost structure, calculating the price index for each type of input factor, by cost factor, by cost structure, and the construction project price index.

2. The construction price index for a project is determined based on progress and implementation conditions to select an appropriate base period and comparison period. The cost structure for adjusting the budget estimate is the project's budget estimate structure. The cost structure for adjusting the contract price is the tender package cost structure.

3. The construction price index is determined in accordance with the guidelines in Appendix 7 of this Circular.

Article 23. Management of Construction Price Indexes

1. The People's Committee of the province shall allocate the annual local budget to instruct the Department of Construction to organize and implement the following tasks:

 a) To take the lead and coordinate with relevant units based on the guidance of this Circular and the fluctuation of construction prices in the locality to organize the determination and timely publication of the construction price index on the local territory in accordance with Clause 2, Article 36 of Decree No. 32/2015/NĐ-CP.

 b) To regularly update and store information on material and construction material prices, construction labor costs, machinery and equipment rental prices in the local construction market and send it to the Ministry of Construction monthly.

 c) To publish the construction price indexes monthly, quarterly, and annually and send them to the Ministry of Construction for monitoring and management.