Circular No. 07/2012/TT-BXD guiding the determination and management of costs for hiring foreign consultants in construction activities in Vietnam

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

Article 1. This Circular guides the determination and management of costs for hiring foreign consultants to perform consulting services in construction activities in Vietnam, including: planning construction, urban planning (hereinafter referred to as planning construction), construction survey, investment project planning, building design, construction project management, construction supervision, contractor selection in construction activities, and other construction consulting services.

Article 2. In cases where international treaties to which Vietnam is a member provide different provisions from those set out in this Circular, such treaties shall be followed.

Article 2. Applicability

Article 3. This Circular applies to organizations and individuals related to the hiring of foreign consultants to perform consulting services for planning construction and consulting services at construction investment projects using 30% or more state capital.

Article 4. It is encouraged for organizations and individuals related to the hiring of foreign consultants to perform consulting services for planning construction and consulting services at construction investment projects using less than 30% state capital to apply the guidelines of this Circular.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

Article 5. "Foreign consultant" means a consulting organization established according to the laws of a foreign country, having a permanent establishment (or not having a permanent establishment) in Vietnam or a foreign individual performing consulting services in construction activities in Vietnam.

Article 6. "Agency organizing planning construction" means the agency entrusted with managing the process of preparing the planning construction project.

Article 7. Principles for Determining and Managing Costs of Hiring Foreign Consultants

Clause 1. The cost of hiring foreign consultants must be determined in accordance with the method and characteristics of the work requiring consultancy and the cost management requirements of the project owner, the agency organizing planning construction.

Clause 2. The cost of hiring foreign consultants must be accurately and appropriately determined based on the available funding sources or the payment capacity of the project owner, the agency organizing planning construction.

Clause 3. The cost of hiring foreign consultants must be consistent with the type of consulting work, the expertise level of the consulting experts, the salary level of the consulting experts in the country and region where they are hired, while ensuring competition, efficiency of the construction project, and feasibility of the planning construction project.

Clause 4. The determination of the cost of hiring foreign consulting experts must comply with Vietnamese regulations and international practices.

Clause 5. The cost of hiring foreign consultants is managed based on the agreement between the project owner or the agency organizing the planning construction project and the foreign consultant through the results of contractor selection and the consultancy hiring contract.

Clause 6. The project owner and the agency organizing the planning construction project are responsible for the economical and efficient use of the cost of hiring foreign consultants.

Chapter II

DETERMINATION OF COSTS FOR HIRING FOREIGN CONSULTANTS

Article 5. Estimating foreign consultancy fees in total investment costs, planning construction tasks

1. When preparing an investment project for construction works or planning construction tasks, the investor and the organization compiling the planning construction scheme must determine (estimate in advance) the cost of hiring foreign consultancy organizations based on the volume and type of consultancy work to be outsourced to foreign consultants.

2. Depending on the specific conditions of the construction works investment project or the planning construction scheme, the cost of hiring foreign consultants can be estimated according to one of the following methods:

a) Based on the consultancy fee for similar construction investment projects or planning schemes that have been or are being carried out in Vietnam by foreign consultants.

b) According to the rate percentage of construction and equipment costs (or construction costs) per unit area (or population) of similar planning schemes that have been or are being carried out in Vietnam by foreign consultants.

c) The tender estimate for hiring foreign consultants is determined based on the monthly-person (or daily-person) method, taking into account the structure, number of each type of specialist, specialist salaries, and other necessary expenses for the consultancy work.

d) Combining the above methods of determination.

Article 6. Determining the cost of hiring foreign consultants as the basis for selecting foreign consultancy contractors

1. Determining the price of the tender package for hiring foreign consultants when preparing the bidding plan:

a) The price of the tender package for hiring foreign consultants is determined based on the estimated cost of hiring foreign consultants within the total investment cost for construction works or planning construction tasks.

b) In cases where at the time of organizing the tender, the investor or the organization compiling the planning construction scheme needs to more accurately determine the price of the tender package (already determined according to the method mentioned in point a above) to serve as the basis for evaluating and selecting contractors, they may organize the preparation of the tender estimate for hiring foreign consultants based on specific conditions in the tender invitation documents and related information, and approve it as the basis for reviewing the selection results of foreign consultancy contractors.

2. Determining the tender estimate for hiring foreign consultants:

a) For tender packages for hiring foreign consultants that are subject to direct assignment, the investor or the organization compiling the planning construction scheme must organize the determination of the tender estimate for hiring foreign consultants.

b) The tender estimate for hiring foreign consultants is determined based on the monthly-person (or daily-person) method, considering the structure, number of each type of specialist, specialist salaries, and other necessary expenses for the consultancy work.

The investor is responsible for determining the appropriate structure and number of specialists in accordance with the requirements and tasks of hiring foreign consultants and ensuring the effectiveness of construction investment. If the investor lacks the capacity to carry out this task, they may hire consultants to perform it. Detailed content on determining the monthly-person (or daily-person) estimate is provided in the Appendix attached to this Circular.

3. In cases where the foreign consultancy contractor is the author of the selected architectural design competition proposal for construction works or the selected planning construction scheme and is designated to undertake subsequent consultancy tasks of the construction works investment project or the planning construction scheme, the foreign consultancy contractor may propose and prepare the tender estimate based on the monthly-person (or daily-person) method for the investor or the organization compiling the planning construction scheme to review, verify, and approve. The proposed tender estimate price shall not exceed the price proposed in the selected architectural design competition proposal for construction works or the selected planning construction scheme (if applicable).

Article 7. Determination of the Contract Price for Hiring Foreign Consulting Services

1. The contract price for hiring foreign consulting services shall be determined based on the financial proposal (the cost proposal for performing consulting work) of the foreign consulting contractor, the results of contract negotiations between the project investor, the agency organizing the planning scheme with the foreign consulting contractor, and the approved tender package price or budget estimate.

2. The foreign consulting contractor proposes the costs for performing consulting work based on the conditions, regulations, and guidelines stipulated in the reference terms and other provisions and guidelines in the tender documents and request for proposals. In cases where the foreign consulting contractor is a consortium consisting of domestic and foreign contractors, the costs for performing consulting work shall also be determined based on the specific workload assigned to each domestic and foreign contractor.

3. During the process of negotiating and finalizing the contract, if the contract price exceeds the bid price due to reasonable increases in workload, the project investor and the agency organizing the planning scheme shall consider and decide, but must ensure that it does not exceed the approved tender package price or budget estimate. If the contract price exceeds the approved tender package price or budget estimate without leading to an increase in the total investment amount, the project investor and the agency organizing the planning scheme may consider and decide without having to go through procedures to adjust the approved tender package price or budget estimate. If the total investment amount is exceeded, a report must be submitted to the investment decision-maker (or the person authorized for projects decided by the Prime Minister) and the authority approving the planning scheme (or the agency organizing the construction planning for planning schemes within the Prime Minister's approval authority) for consideration and decision to adjust the total investment amount according to the law.

Chapter III

MANAGEMENT OF COSTS FOR HIRING FOREIGN CONSULTANTS

Article 8. Management of Costs for Hiring Foreign Consultants when Estimating Costs for Hiring Foreign Consultants in the Total Investment Amount, Planning Tasks for Construction

1. The project investor and the agency organizing the construction planning have the responsibility to determine the types of consulting work requiring the hiring of foreign consultants when preparing investment projects for construction works and planning tasks for construction to serve as the basis for determining the costs for hiring foreign consultants.

2. The costs for hiring foreign consultants must be estimated immediately within the total investment amount of the project, within the planning task for construction to serve as the basis for determining the price of the tender package for hiring foreign consultants when formulating bidding plans, budget estimates, and managing capital according to regulations. In cases where foreign consultants are hired to prepare investment projects for construction works, the costs for hiring foreign consultants shall be determined by the person tasked with preparing the project and recorded in the bidding plan of the tender package for selecting foreign consultants to prepare the investment project for construction works.

3. The project investor and the agency organizing the construction planning have the responsibility to estimate the costs for hiring foreign consultants. In cases where the project investor and the agency organizing the construction planning lack the experience and capacity to estimate the costs for hiring foreign consultants, they shall hire a consulting organization with the necessary qualifications and capacity to perform this task. The consulting organization responsible for estimating the costs for hiring foreign consultants shall bear responsibility before the project investor, the agency organizing the construction planning, and the law for the results of the work performed.

Article 9. Management of costs for hiring foreign consulting services when selecting foreign consulting contractors

1. The project owner and the agency organizing the preparation of construction planning shall be responsible for determining the bid package price, the budget estimate of the bid package, and organizing the review and approval of the budget estimate for hiring foreign consulting services. In cases where the project owner or the agency organizing the preparation of construction planning lacks sufficient experience and capacity to perform these tasks, they shall hire a consulting organization with the necessary qualifications to carry out the work. The consulting organization undertaking the determination or verification of costs for hiring foreign consulting services shall bear responsibility before the project owner, the agency organizing the preparation of construction planning, and the law for the results of their work.

2. The project owner and the agency organizing the preparation of construction planning shall be responsible for organizing the review of the budget estimate of the bid package in cases where the foreign consulting contractor is permitted to prepare the bid package budget estimate based on a monthly-person (or daily-person) method. The investment decision-maker (or the person authorized for construction planning projects decided by the Prime Minister) shall approve the budget estimate of the bid package as the basis for negotiation, discussion, and signing of the contract; for construction planning projects within the territory of provinces and centrally-administered cities, the budget estimate of the bid package shall be approved by the People's Committees of the respective provinces and centrally-administered cities.

3. In the tender document or request for proposal for consulting services, the project owner and the agency organizing the preparation of construction planning must clearly specify the requirements and necessary documents that the foreign consulting contractor must provide to serve the purpose of reviewing, analyzing, and evaluating the financial proposals of the contractor.

4. The project owner and the agency organizing the preparation of construction planning may require the foreign consulting contractor to form a consortium or use domestic consulting subcontractors to reduce the cost of providing consulting services. Domestic consulting contractors have the responsibility to provide the necessary documents stipulated in the tender document or request for proposal to serve the purpose of reviewing and evaluating the financial proposals.

Article 10. Management of Costs for Foreign Consulting Organizations Hired

1. The foreign consulting contractor (and the domestic consulting contractor in the case of a consortium or subcontractor for the foreign consulting contractor) shall be responsible for providing all relevant documents related to the proposed costs for performing consulting work (financial proposal) in the bidding document or proposal according to the requirements specified by the project owner and the agency organizing the preparation of construction planning in the tender document or request for proposal.

2. The documents provided by the consulting contractor must ensure truthfulness, accuracy, and fully meet the requirements of the project owner and the agency organizing the preparation of construction planning. If necessary, the project owner and the agency organizing the preparation of construction planning may request the contractor to provide additional documents to clarify matters.

3. The monthly salary (or daily, hourly rate) of foreign consulting experts proposed by the contractor must be commensurate with the prevailing consulting salaries in the region or country where the expert holds citizenship and correspond to the expertise and capacity of the expert. The consulting contractor has the responsibility to prove the proposed salary level through appropriate documentation (audit confirmation, similar contracts...).

4. Other expenses of foreign experts in Vietnam must be determined in accordance with market prices and relevant regulations of the Vietnamese government, meeting the necessary requirements to support the performance of consulting work.

5. The monthly salary (or daily, hourly rate) of domestic consulting experts (in the case of a consortium or subcontractor for the foreign consulting contractor) shall be based on actual salaries, social welfare expenses, management fees, profits, other allowances in the audited financial report or confirmed by tax or finance authorities, or similar contracts carried out in the most recent year, and the annual wage inflation rate but not lower than the salary level of Vietnamese experts working under contracts with international contractors that have won bids in Vietnam or the salary level of domestic consultants working on projects funded by ODA according to current government guidelines.

Article 11. Management of Costs when Hiring Independent Foreign Consultants

1. The project owner and the agency organizing the preparation of construction planning shall be responsible for organizing the determination and approval of the cost estimate for hiring independent foreign experts to serve as the basis for evaluating and selecting such experts. The cost estimate for hiring independent foreign experts shall be determined based on the method of months-persons (or days-persons) based on the expected working time of the expert, the monthly salary (or daily salary) rate, and other related costs associated with the performance of the consulting work.

2. Independent foreign consultants shall be responsible for providing documentation to prove the proposed salary level (such as audit confirmation documents, similar contracts...) and other relevant documents to the project owner and the agency organizing the preparation of the construction planning scheme as the basis for evaluating and selecting independent consultants to perform the consulting work.

3. In cases where the project owner and the agency organizing the preparation of construction planning engage domestic consulting organizations and allow such organizations to use foreign consultants to participate in performing consulting tasks, the cost of hiring foreign consultants shall be determined as the cost estimate for hiring independent foreign experts mentioned above. The cost of hiring domestic consulting organizations shall be determined based on the month-person (or day-person) cost estimate according to the current guidelines issued by the State for that consulting work.

Article 12. Management of Contract Prices for Hiring Foreign Consulting Services

1. Depending on the nature and content of the work requiring foreign consulting services, the project owner and the agency organizing the preparation of the planning scheme may choose appropriate types of contracts and payment methods according to the current guidelines and regulations of the State.

2. Contracts signed with foreign consulting contractors must clearly specify the conditions, payment methods, and payment documentation. Cases where adjustments to the volume of work and contract price adjustments are permitted must be reflected in the contract signed with the foreign consulting contractor.

3. The project owner and the agency organizing the preparation of the planning scheme shall be responsible for implementing cost control to ensure that payments to foreign consulting contractors, joint venture contractors, and domestic subcontractors comply with the provisions of the contract and supervise the implementation process of the foreign consulting service contract to ensure progress, quantity, and quality of the consulting service products in accordance with the signed contract.

Chapter IV

IMPLEMENTATION

Article 13. Implementation Organization

1. This Circular takes effect from December 15, 2012, and replaces Circular No. 09/2007/TT-BXD dated November 2, 2007, of the Ministry of Construction guiding the determination and management of costs for hiring foreign consulting services in construction activities in Vietnam. Cases that have been or are being implemented according to Circular No. 09/2007/TT-BXD before this Circular takes effect are not required to follow this Circular.

2. The Minister, Heads of Ministries equivalent to Ministries, Chairmen of People's Committees of provinces and centrally governed cities, Boards of Directors of State-owned Corporations, Economic Groups, and Heads of units concerned are responsible for organizing the implementation of this Circular.

3. Organizations and individuals during the implementation process, if encountering difficulties, are advised to report to the Ministry of Construction for study and resolution./.