Circular No. 07/2007/TT-BXD guiding the method for determining the price of construction machinery and equipment in construction projects

CIRCULAR

Guidelines on the method for determining the hourly rate of construction machinery and equipment

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on managing construction project investment costs;

Pursuant to Decree No. 36/2003/NĐ-CP dated April 4, 2003 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Construction;

The Ministry of Construction hereby provides guidelines on the method for determining the hourly rate of construction machinery and equipment as follows:

I. GENERAL PROVISIONS

1. Machinery and equipment for construction referred to in this Circular are types of machines and equipment driven by 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 construction machinery and equipment.

2. The hourly rate of construction machinery and equipment for construction projects according to the guidelines in this Circular (hereinafter referred to as the hourly rate of machinery) serves as the basis for determining the machinery cost in unit prices for construction projects, construction project estimates, and for applying to prepare tender prices, evaluate tender prices, and conclude contracts for construction project contracting.

3. The hourly rate of machinery is determined based on the principle of being consistent with the price level, specific construction conditions, and construction time. Investors, consulting organizations, and contractors are responsible for calculating and determining the appropriate machinery hourly rates for construction projects in line with market construction prices, ensuring sufficient costs during machine usage, and maintaining competitiveness.

II. Method for Determining the Hourly Rate of Machinery

1. Contents of Costs in the Hourly Rate of Machinery

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

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

2. Method for Determining the Hourly Rate of Machinery

The general formula for determining the hourly rate of machinery (CCM):

CCM = CKH + CSC + CNL + CTL + CCPK (đ/ca)

Where:

- CKH: Depreciation cost (đ/ca)

- CSC: Repair cost (đ/ca)

- CNL: Fuel and energy cost (đ/ca)

- CTL: Labor wage for machine operators (đ/ca)

- CCPK: Other costs (đ/ca)

2.1. Depreciation Cost (CKH)

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

CKH = (Original cost - Salvage value) x Annual depreciation rate / Number of shifts per year

Where:

- Original cost: is the total expenses that the enterprise must incur to acquire the machinery until it reaches a ready-to-use state, including the purchase price of the machinery and equipment (excluding costs for spare parts and accessories purchased together), import tax (if applicable), transportation, handling, storage, warehouse fees, installation, trial operation, and other legitimate expenses directly related to the investment in machinery.

The original cost for calculating the hourly rate of machinery is determined according to the principle of suitability with the type of machinery put into construction projects and the specific conditions of the project.

- Salvage value is the remaining value of machinery and equipment after liquidation, calculated before establishing the hourly rate of machinery and determined as follows:

For machinery and equipment with an original cost of VND 10,000,000 (ten million dong) or more, the salvage value is calculated to be less than (or equal to) 5% of the depreciation base. No salvage value is calculated for machinery and equipment with an original cost of less than VND 10,000,000 (ten million dong).

- Annual depreciation rate: is the standard rate of decrease in the average value of machinery due to wear and tear (both tangible and intangible) after one year of use. The annual depreciation rate is calculated as a percentage of the depreciable value (original cost minus salvage value).

The annual depreciation rate is determined according to the principle of suitability with the economic life of the machinery and the usage time of each type of machinery at the project site.

- Number of shifts per year: is the average number of shifts worked by machinery in one year, calculated from the total number of shifts worked throughout the machinery's lifespan and the number of years in its lifespan.

During the calculation of the hourly rate of machinery, the number of shifts per year is determined according to the principle of suitability with the characteristics and operational procedures of each type of machinery, the volume of construction work, the scale of the project, construction progress, and other specific conditions.

2.2. Repair Cost (CSC)

The repair cost included in the hourly rate of machinery is the expense for repairing and maintaining machinery to maintain and restore its operational capacity to its standard operating condition.

Formula for calculating CSC:

CSC = (Original cost x Annual repair rate) / Number of shifts per year Where: - Original cost, number of shifts per year: as detailed in Section 2.1 - Item 2 of Part II.

- Annual repair rate: is determined according to technical maintenance regulations, regular repairs, operational procedures of each type of machinery, and relevant provisions corresponding to the number of shifts per year. In the annual repair rate, the cost of replacing large components of machinery and equipment, whose wear and tear mainly depends on the nature of the work object such as drill bits, drill heads, is not included.

2.3. Fuel and Energy Cost (CNL)

The fuel and energy cost included in the hourly rate of machinery is the expense for fuel and energy generating power for machinery operation (gasoline, diesel, electricity, or compressed air) and auxiliary fuels like lubricating oil, adjustment fuels, and drive engine fuels.

Formula for calculating CNL: CNL = CNLC + CNLP

Where:

- CNLC: Main fuel and energy cost CNLC = Fuel and energy consumption rate x Fuel and energy price

- Fuel and energy consumption rate (liters/shift, kWh/shift, m3/shift): the rate of consumption of various types of fuel and energy such as gasoline, diesel, electricity, or compressed air to generate power for machinery operation in one shift.

- Fuel and energy price: the price (pre-tax) of various types of gasoline, diesel, electricity, or compressed air (đ/liter, đ/kWh, đ/m3) calculated based on the current price at the time of calculation and the location of the construction project.

- CNLP: Auxiliary fuel and energy cost CNLP = CNLC x KP

Kp is the fuel, lubricant cost factor for one machine shift, defined as follows:

- Gasoline engine: 0.03

- Diesel engine: 0.05

- Electric motor: 0.07

The fuel consumption standard for river work vessels and high-speed boats when operating is calculated at 65% of the standard during travel.

In cases where the machine shift price of various machines and equipment to perform certain tasks (such as construction surveying, material testing, structural component and building structure testing, etc.) includes fuel and energy costs already accounted for in the budget estimate (material consumption), such costs shall not be included in the machine shift price.

Fuel and energy costs in the machine shift price are determined according to the principle of being consistent with the amount of fuel and energy consumed during the shift and the market prices of fuel and energy at each time point.

2. 4. Machine Operator Wages Cost (MOWC)

The machine operator wages cost included in the machine shift price consists of the wage and corresponding allowances based on the operator's technical level required for the machine operation.

The machine operator wages in the machine shift price are determined in accordance with the prevailing market wage levels in each region and province, for each type of operator and specific project conditions; the capital availability, payment capacity of the investor, and other requirements.

Formula for calculating MOWC: MOWC = (Wage Level + Allowances) / Number of Working Days in a Month

Where:

- Wage Level is the monthly wage of the machine operator.

- Allowances include all additional wages and allowances based on the wage level and minimum wage, including some direct expenses that can be allocated to the machine operator.

- Number of Working Days in a Month is the number of working days the machine operator must work in a month.

The composition and level of operators (or a group of operators) directly operating the machine are determined according to the operational procedures of each type of machine and equipment and the appropriate technical worker standards under specific conditions.

In cases where the machine shift price of various machines and equipment to perform certain tasks (such as construction surveying, material testing, structural component and building structure testing, etc.) includes labor costs already accounted for in the budget estimate (labor consumption), such costs shall not be included in the machine shift price.

2. 5. Other Costs (OCC)

Other costs included in the machine shift price are expenses ensuring normal and effective machine operation at the construction site.

Formula for calculating OCC:

OCC = (Original Cost x Annual Other Cost Rate) / Number of Shifts in a Year

Where:

- Original Cost, Number of Shifts in a Year: as detailed in Section 2.1 - Clause 2 - Part II of this document.

- Annual Other Cost Rate: the related cost rate serving the machine operations over a year, expressed as a percentage of the original cost, including:

+ Machine insurance during usage;

+ Machine storage and technical maintenance services;

+ Inspection fees;

+ Internal project machine relocation;

+ Other related management and usage costs at the construction site.

- The maximum annual other cost rate for each machine group is specified as follows:

+ Floating cranes: 7%;

+ Horizontal transport machines, specialized machines for tunnel construction, tower cranes, beam launching cranes, self-propelled concrete pumps, asphalt spraying machines, watercraft: 6%;

+ Handheld machines, electric winches, chain hoists, small electric water pumps (less than 4 kW), metal processing machines, specialized machines for construction surveying, measurement, and testing: 4%;

+ Other types of machines: 5%;

- Costs for constructing shelters, foundations, and utility systems (electricity, water, compressed air) at the site for machines like cement mixing plants, asphalt mixing plants, rail-mounted cranes, etc., should be separately budgeted according to construction methods and included in the other costs of the project.

3. Determining Machine Rental Price

Depending on the rental form, the rental price may include depreciation costs, repair costs, fuel and energy costs, machine operator wages cost, and other costs; transportation costs to and from the construction site, disassembly and installation costs, downtime costs due to technology or construction methods, taxes, fees, and levies.

The rental price is agreed upon between both parties according to the principle of the lessor offering a quote, and the lessee deciding after review.

III. Implementation Organization

1. The People's Committee of the province assigns the Department of Construction to base on Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on construction investment cost management, the method of determining the machine shift price as guided in this Circular, and the machine shift price list issued according to the method stipulated in Circular No. 06/2005/TT-BXD dated April 15, 2005 of the Ministry of Construction, to publish the machine shift price for reference in determining the machine shift price for construction projects within their jurisdiction; simultaneously determining the machine shift price for projects using local government funds.

2. Investors and consulting organizations base on the guidance in this Circular and the technical requirements and specific construction methods of the project to determine the machine shift price for establishing unit prices, budgets, and managing construction costs. Investors may hire consulting organizations or individuals with sufficient expertise and experience to review or verify the machine shift price before applying it. Contractors base on the method of determining the machine shift price as guided in this Circular, market machine shift prices, locally published machine shift prices, and their specific construction machinery and equipment conditions to determine the machine shift price as the basis for bidding prices. For linear construction projects passing through multiple regions such as roads, power transmission lines, irrigation, water supply and drainage, and other linear construction projects, investors determine the machine shift price for the project to establish unit prices, budgets, and manage construction costs.

3. For tender packages under projects funded by state budget funds implemented through direct award, the project owner must organize the determination of machinery rates to be submitted for approval by the investment decision-maker; in cases where the project is

This Circular takes effect fifteen days after its publication in the Official Gazette and replaces Circular No. 06/2005/TT-BXD dated April 15, 2005, issued by the Ministry of Construction on guiding methods for establishing machinery rates and construction equipment.

During implementation, if there are any difficulties, they should be reported to the Ministry of Construction for consolidation and study to resolve.