Circular No. 07/2003/TT-BXD Amending and Supplementing Certain Points in Circular Guiding the Preparation and Management of Construction Costs for Projects under Investment Projects No. 09/2000/TT-BXD dated July 17, 2000

 

CIRCULAR

Amending and supplementing certain points in Circular on Guidelines for Establishing and Managing Construction Costs of Projects under Investment Programs Number 09/2000/TT-BXD dated July 17, 2000

_________________

Pursuant to Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government promulgating the Regulation on Investment Management and Construction.

Pursuant to Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government amending and supplementing certain provisions of the Regulation on Investment Management and Construction issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government.

Pursuant to Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain provisions of the Regulation on Investment Management and Construction issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government.

To implement the management mechanism for construction projects using state budget funds, state-guaranteed credit, state investment development credit, state-owned enterprise investment development capital, and other sources of capital invested and borrowed by enterprises without state guarantees as stipulated in Articles 10, 11, and 12 of Decree No. 52/1999/NĐ-CP, Clause 4, 5, and 6 of Article 1 of Decree No. 12/2000/NĐ-CP, and Clause 4, 5, and 6 of Article 1 of Decree No. 07/2003/NĐ-CP, the Ministry of Construction hereby guides the amendment and supplementation of certain points in Circular No. 09/2000/TT-BXD on Guidelines for Establishing and Managing Construction Costs of Projects as follows:

(1) Point 3, Section I is amended and supplemented as follows:

3. All construction works of investment projects using state budget funds, state-guaranteed credit, state investment development credit, state-owned enterprise investment development capital, and other sources of capital invested and borrowed by enterprises without state guarantees must be implemented according to the guidelines for establishing and managing construction costs set forth in this Circular.

(2) Paragraphs a, b, Clause 2.1.3, Point 2.1, Section II are supplemented as follows:

In the investment preparation stage:

- Costs for architectural design competitions for projects requiring special architectural requirements or as requested by the investor;

- Costs for surveying and assessing the current status when preparing investment projects for renovation and repair;

b. In the implementation stage:

- Quality inspection costs for construction works; (if applicable)

- Costs for applying inventions, patents, copyrights; (if applicable)

- Investment supervision and evaluation costs; (if necessary)

- Interest on loans during the investment period for construction works of production and business investment projects;

(3) A new point 2.3a, Section II is added as follows:

The EPC contract price includes all necessary costs for the EPC general contractor to perform the work as stipulated in the signed contract, including:

2.3a.1- Survey and design costs;

2.3a.2- Procurement and supply costs for materials and equipment, including spare parts;

2.3a.3- Construction and installation costs for the project, including temporary works;

2.3a.4- Inspection, testing, training, acceptance, and technology transfer costs;

2.3a.5- Project management costs;

2.3a.6- Other related costs;

2.3a.7- Taxes and fees;

(4) Point 2.3, Section II is amended and supplemented as follows:

2.3- Payment price for construction works

- For bidding cases: The payment price is the price agreed upon in the economic contract at the time of winning the bid, along with the conditions recorded in the economic contract between the investor and the construction enterprise.

- For designated bidding cases (including cases where the competent authority assigns the construction task): The payment price is the value of the approved project estimate item or separate construction work or the entire project based on the quantity actually completed and accepted in stages or monthly quantities according to the signed contract.

The payment price shall be carried out in accordance with each period of payment for completed volumes and can only be fully paid when there is a final settlement of the project item or the entire project with the Investor as stipulated in Clauses 2, 3, 4, 5 of Article 49 of the Regulation on Investment Management and Construction issued together with Decree No. 52/1999/NĐ-CP, and Points 1, 6, 8, 9, 12, 13 of Clause 17 of Article 1 of Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government and the guidance of the Ministry of Finance.

(5) Point 1, 8, Section III is amended and supplemented with Point 7a, Section III as follows:

1. Feasibility study report or investment report approved by the competent authority.

7a- Material prices delivered to the construction site for linear construction works or those far from concentrated residential areas.

8- Transportation, loading and unloading, warehousing, and storage costs as prescribed by the competent authority.

(6) Point 1, Section IV is amended and Point 2, Section IV is supplemented as follows:

1. Total project estimate

The total project estimate is determined according to the following principles:

- For projects with three-stage design: The basis for the total project estimate is the technical design.

- For projects with two-stage design: The basis for the total project estimate is the construction technical design.

2. Unit project construction estimate

The unit project construction estimate is determined based on the volume of construction work calculated according to the design, basic construction cost unit prices issued by the provincial People's Committee, or specific construction project cost unit prices (for projects with individual cost unit prices), common cost standards, pre-tax income, and output VAT.

The estimate for the cost of the package executed under the EPC contract form (survey-design-supply of materials and equipment contract) includes survey and design costs, procurement and supply costs for materials and equipment (including spare parts), construction and installation costs (including auxiliary works and temporary works), testing, acceptance, project management costs, taxes, and other costs.

The method for preparing the unit project construction estimate is guided in Appendix 2 attached to this Circular.

(7) Clause 3.1, 3.2, 3.3, Point 3, Section V is amended and supplemented as follows:

3. Regarding the total project estimate

3.1- All construction works, regardless of whether they are tendered or permitted to be directly contracted, must establish a general budget estimate in accordance with the contents, principles, and methods prescribed in this Circular.

3.1.1- Prior to the authorized person's approval of the general budget estimate, such estimate must be reviewed; the Project Owner is responsible for preparing the review and approval documentation in accordance with the provisions set out in Appendix No. 4 of this Circular.

3.1.2- The reviewing agency or specialized organization must ensure that the review includes the following contents:

- Checking the accuracy of the norms, unit prices, and their application, related systems, policies, and cost items as stipulated by the State.

- The consistency between the technical design volume or construction technical design and the general budget estimate.

- Determining the value of the general budget estimate for comparison with the approved total investment amount.

3.1.3- Upon completion of the review, the reviewing agency or specialized organization must prepare a document detailing the review results of the general budget estimate according to the contents specified in point 3.1.2 above and other contents based on the model document in Appendix No. 5 of this Circular.

3.2- The general budget estimate approved by the authorized person shall not exceed the approved total investment amount.

3.2.1- For construction works of investment projects using state budget funds, state-guaranteed credit, and state development credit:

3.2.1.1- The general budget estimate of construction works belonging to national key projects decided by the Prime Minister for investment and group A projects using state budget funds shall be reviewed by the Ministry of Construction, except for construction works of group A projects of certain Ministries and Sectors as stipulated in item a, Section 3.1, Clause 14, Article 1 of Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government.

3.2.1.2- The general budget estimate of construction works of group A projects using state-guaranteed credit and state development credit shall be reviewed by the relevant Ministries, Sectors, or localities themselves or by organizations specialized in norms, unit prices, and budgets before submitting to the authorized person for approval.

3.2.1.3- The general budget estimate of construction works of group B and C projects under the management of Ministries, Sectors, or central agencies shall be approved by the authorized person for investment after being reviewed by the competent agency managing construction at the investment decision-making level or by the competent agency managing norms, unit prices, and construction budgets (for projects where the investment decision-making level does not have such a functional agency).

3.2.1.4- The general budget estimate of construction works of group B and C projects managed by localities shall be approved by the Chairman of the Provincial People's Committee after being reviewed by the Department of Construction or the Department with specialized construction works (depending on the nature of the project).

3.2.1.5- The general budget estimate of construction works of group A, B, and C projects funded by enterprises using state-guaranteed investment capital or state development investment capital shall be reviewed by the enterprise itself or by organizations specialized in norms, unit prices, and budgets before submission to the authorized person for investment approval.

3.2.1.6- The delegation of authority to approve the general budget estimate from the authorized person to the immediate subordinate level or to the Project Owner to approve the budget estimates of individual construction works established according to detailed design drawings (detailed designs) shall be carried out in accordance with the provisions in item c, d, Section 3.1, Clause 14, Article 1 of Decree No. 07/2003/NĐ-CP of the Government.

3.2.2- For construction works of investment projects using state-owned enterprise development capital and other sources of capital invested and borrowed independently without state guarantees, the review and approval of the general budget estimate shall be conducted as stipulated in item 3.2.1.5 above.

3.2.3- For construction works of investment projects using international donor funds (including official development assistance ODA), implementation shall follow the Circular of the Ministry of Construction guiding the establishment and management of construction costs for projects using international donor funds.

3.3- The general budget estimate of construction works approved by the authorized person is the maximum limit of construction costs, serving as the basis for organizing tenders or direct contracting and managing costs during the project implementation. The authorized person approving the general budget estimate bears legal responsibility for the contents approved in accordance with Clause 2, Article 38 of Decree No. 52/1999/NĐ-CP of the Government and other legal regulations.

- In cases where group A projects consist of multiple component or sub-projects capable of independent operation, exploitation, or implementation according to phased investments recorded in the feasibility study report approval document or the investment policy decision document of the authorized body, the establishment, review, and approval of the general budget estimate of these component or sub-projects shall be carried out as if they were independent investment projects.

- Construction works of investment and construction projects using state budget funds, state-guaranteed credit, state development credit, state-owned enterprise development capital, and other sources of capital invested and borrowed independently without state guarantees must have a general budget estimate approved by the authorized body before commencement. In exceptional cases, if group A projects do not have an approved general budget estimate, they must obtain such an estimate from the authorized body within thirty percent of the total investment amount. In this case, when starting construction, there must be an approved budget estimate for the initial construction work and a valid tender contract.

(8) Appendices No. 2 and No. 3 are replaced by Appendices No. 2 and No. 3 attached to this Circular.

(9) New Appendices No. 4 and No. 5 are added to this Circular.

This Circular amends and supplements some points in Circular No. 09/2000/TT-BXD dated July 17, 2000, guiding the establishment and management of construction costs for projects and will be uniformly implemented nationwide fifteen days after its publication in the Official Gazette./.

 

ANNEX NO. 2

METHODS FOR ESTIMATING THE CONSTRUCTION PROJECT ESTIMATE
(Attached to Circular No. .../2003/TT-BXD dated ..., ..., 2003)

The construction installation project estimate value after tax includes the pre-tax construction installation project estimate value and the output VAT amount.

The pre-tax construction installation project estimate value for the construction work item includes direct costs, common costs, and taxable income calculated in advance.

Direct CostsDirect costs include material costs, labor costs, and machinery usage costs. Material costs, labor costs, and machinery usage costs are determined based on the volume of construction work and the corresponding construction unit price.

Labor costs in the aforementioned construction unit price specifically include:

- Basic salary according to Salary Table A6 issued together with Decree No. 05/CP dated January 26, 1994 of the Government.

- Allowances including: the lowest level of mobility allowance at 20% of the minimum wage, the lowest average level of production instability allowance at 10% of the basic wage, some additional wages (holiday, Tet, leave...) at 12%, and some direct costs allocated to workers at 4% of the basic salary.

For projects permitted by authorized state agencies to receive additional allowances and benefits not included in the labor costs mentioned above, or to receive a higher mobility allowance than 20% or a higher production instability allowance than 10%, these additional amounts shall be added to the labor costs in the project estimate according to the guidance provided in Table 1 (summary table of construction installation project estimates for construction works) of this annex.

Freshwater supply costs for daily use in areas lacking fresh water are included in the construction project estimate along with freshwater for production purposes.

Common costsCommon costs: Calculated as a percentage (%) of labor costs or machinery usage costs for construction work fully carried out by machinery in the project estimate. These common costs are specified according to each type of project in Table 2 of this annex.

Taxable income calculated in advance: Calculated as a percentage (%) of direct costs and common costs specified according to each type of project in Table 2 of this annex.

Unit of measurement: Percentage (%).

COMBINED ESTIMATE TABLE FOR INSTALLATION AND CONSTRUCTION PROJECT COMPONENTS

Where:

Article 24^{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.} : Quantity of installation and construction work item j

D^jvl , D^jnc , D^jm: Construction material, labor, and machinery costs in the construction unit price of the jth construction work.

F₁ : Additional allowances (if any) calculated based on the minimum wage that have not been included or are insufficient in the construction unit price.

F2: Additional allowances (if any) calculated based on the basic salary that have not been included or are insufficient in the construction unit price.

: Coefficient representing the relationship between labor costs in the unit price compared to the minimum wage of the nth salary group.

F2: Additional allowances (if any) calculated based on the basic salary that have not been included or are insufficient in the construction unit price.

h_1nTL: Taxable income calculated in advance.

- Group I : h_1.1 = 2,342

- Group II : h_1.2 = 2,493

- Group III : h_1.3 = 2,638

- Group IV : h_1.4 = 2,796

h_2n: Coefficient indicating the relationship between labor costs in the unit price compared to the wage grade of group n.

- Group I : h_2.1 = 1,378

- Group II : h_2.2 = 1,370

- Group III : h_2.3 = 1,363

- Group IV : h_2.4 = 1,357

P : General cost rate (%).

: Material difference (if any).

g_XL : Pre-tax Construction Installation Estimate Value.

G_xl : Post-tax Construction Installation Estimate Value.

CL_vl VAT: Total output VAT (including VAT paid when purchasing various materials, fuels, energy...

d.1. Amount of taxable income in Vietnam:^XL_VAT: Prescribed VAT rate for construction and installation work.

and the portion of VAT that the construction enterprise must pay).

TABLE 2

STANDARDS FOR COMMON COSTS AND TAXABLE INCOME CALCULATED IN ADVANCE

Unit of measurement: %

Type of Project

Common Costs

STANDARDS FOR PROJECT MANAGEMENT COSTS

(Attached to Circular No.: .../2003/TT-BXD dated ..., ..., 2003).

ANNEX NO. 3

I. APPLICATION PROVISIONS
1. Project management costs are calculated as the value of the standard rate percentages of construction and equipment costs in the approved total project estimate of the project or project component (sub-project) stated in the Investment Decision: specified in Tables 1 and 2, Section II of this annex: This standard rate is only used to create funding sources and is the limit for project management activities.

2. In cases where the approved construction or equipment costs fall within the range defined in the tables in Section II of this annex, the standard value will be determined using interpolation methods.

3. For projects with total construction or equipment costs in the total project estimate exceeding 20 billion VND, relevant Ministries, Sectors, Provincial People's Committees, and Municipalities directly under the Central Government shall negotiate with the Ministry of Construction to determine the project management cost standards.

4. Project management costs for projects managed by the Project Manager are calculated based on the standards set forth in the tables in Section II of this annex according to the scale and type of the project.

5. For projects applying the direct management model by the Investor, if a Project Management Board is not established, the Investor shall receive project management costs equal to 60% of the standards set forth in the tables in Section II of this annex. If a Project Management Board is established, the Investor shall determine the project management costs to be assigned to the Board based on the tasks assigned by the Investor and the standards set forth in the tables in Section II of this annex, but the maximum amount shall not exceed the prescribed standard rate.

4. Project management costs under the form where the Project Leader manages the project shall be calculated based on the cost standards set out in the tables in Section II of the Appendix to this Decree, according to the scale and type of construction works of the project.

5. For projects applying the form where the Investor directly manages the implementation of the project, if no Project Management Board is established, the Investor shall enjoy project management cost standards equal to 60% of the cost standards specified in the tables in Section II of the Appendix to this Decree. In cases where a Project Management Board is established, the Investor shall determine the level of management costs to be allocated to the Project Management Board based on the tasks assigned by the Investor to the Project Management Board and the cost standards set out in the tables in Section II of the Appendix to this Decree, but such level shall not exceed the maximum ratio already prescribed.

6. For projects implemented under the design-supply-construction general contracting model (referred to as EPC): The project owner shall be entitled to the project management cost standard at 60% of the standard costs specified in the tables in Section II of the annex.

7. For self-implemented projects, the project owner shall be entitled to the project management cost standard at 30% of the standard costs specified in the tables in Section II of the annex.

8. The funds of the Central Project Management Board shall be contributed by the subordinate Project Management Boards at a rate of 20% of the standard costs specified in the tables in Section II of the annex.

9. The project management costs for construction investment projects in mountainous areas and border regions shall be adjusted with a factor of 1.15; for construction investment projects on islands, the adjustment factor shall be 1.35 compared to the standards specified in the tables in Section II of the annex.

10. The project management costs for construction investment projects using foreign loans from the Government and international aid sources dedicated to construction investment (including Official Development Assistance - ODA funds) shall be adjusted with a factor of 1.2 compared to the standards specified in the tables in Section II of the annex.

11. For Project Management Boards operating on a part-time basis, the project management cost standard shall be calculated at 60% of the standard costs specified in the tables in Section II of the annex..

12. The costs for investment preparation activities (if any), carried out by the Project Management Board, shall be determined based on specific budget estimates submitted for approval by the competent authority and shall be supplemented into the Project Management Board's costs for the project. For special large-scale projects that require the establishment of an Investment Preparation Board, a budget estimate shall be prepared and submitted for approval by the authorized person.

13. This project management cost standard shall only take effect after this circular becomes effective.

II. TABLE OF PROJECT MANAGEMENT COST STANDARDS

1. COMPARED TO THE CONSTRUCTION INSTALLATION COSTS IN THE APPROVED TOTAL ESTIMATE

Unit of measurement: Percentage (%).

Common Costs

2. COMPARED TO THE EQUIPMENT COSTS IN THE APPROVED TOTAL ESTIMATE

Unit of measurement: %

Common Costs

ANNEX NUMBER 4
(Attached Circular number.../2003/TT-BXD dated...month... year 2003)

APPLICATION FOR REVIEW AND APPROVAL OF THE TOTAL ESTIMATE

PROJECT:...

Respectfully submitted to:...

- Based on Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government promulgating the Investment and Construction Management Regulations and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government amending certain provisions of the Investment and Construction Management Regulations.

- Based on Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain provisions of the Investment and Construction Management Regulations issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government.

- Based on the guiding circular...

- Based on the Decision approving the investment (or Investment Permit)...

The investor submits for review the total estimate of the project...under the investment project...with the following contents:

1. Contents for approval of the total estimate

- Name of the project...under the investment project...

- Investor:...

- Investor's representative:...

- Design and total estimate preparation agency:...

- Approved total investment amount...

- Total estimate for review and approval:...

2. Documents for the total estimate of the project include:

- Decision approving the investment by the competent authority.

- Decision approving the technical design or construction technical design.

- Project design and total estimate documents prepared based on the norms, unit prices, systems, and policies at the time of submitting the total estimate; key economic and technical indicators (with comparative analysis against the approved total investment in the feasibility study report)...

- Minutes of the acceptance of the total estimate documents between the investor and the consultancy agency preparing the total estimate.

- An attached annex detailing the list of project items and the explanation of the total estimate of the project.

The investor submits...for review of the total estimate of the project...

Project sponsors
(Signature, stamp)

Place of Receipt:

ANNEX NO. 5
(Attached Circular number.../2003/TT-BXD dated...month... year 2003)

RESULTS OF REVIEWING THE TOTAL ESTIMATE

PROJECT:...

Respectfully submitted to:...

The reviewing agency...has received document No...dated...from...requesting the review of the total estimate of the project...under the investment project...accompanied by the total estimate documents of the project.

1. BASIS FOR REVIEW:

- Based on Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government promulgating the Investment and Construction Management Regulations and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government amending certain provisions of the Investment and Construction Management Regulations.

- Based on Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain provisions of the Investment and Construction Management Regulations issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government.

- Based on the guiding circular...

- Based on the Decision approving the investment (or Investment Permit)...

- Based on document No...

- Construction and Installation Unit Price List No...

- Based on material price notification No...

- Relevant legal documents.

2. CONTENTS AND QUALITY OF THE TOTAL ESTIMATE DOCUMENTS OF THE PROJECT:

- Name of the project...under the investment project...

- Investor.

- Investor's representative.

- Design and total estimate preparation agency.

- According to the investment approval decision No...dated...of...

- Consulting agency for design and total estimate preparation.

General observations:

- Technical design description...

- Drawings...

- Summary of the estimate

3. RESULTS OF REVIEWING THE TOTAL ESTIMATE OF THE PROJECT:

- The correctness of applying the norms, unit prices, systems, and policies and the cost items according to the relevant regulations of the State related to the costs included in the total estimate.

- The consistency of the construction volume calculated from the design with the construction volume calculated in the total estimate.

- The total estimate value including equipment and comparison with the approved total investment according to the table below:

Contents of the cost items in the total estimate as detailed in the attached annex.

- Reasons for increase or decrease.

- Matters to note.

4. CONCLUSIONS AND RECOMMENDATIONS:

- The reviewing agency recommends...to consider and decide.

- Responsibilities of the investor and the consulting agency to complete the total estimate.

Head of the Reviewing Agency
(Signature, stamp)

Place of Receipt: