Circular No. 08/1997/TT-BXD guiding the adjustment of the construction project budget estimates

CIRCULAR

Guidelines for adjusting the budget estimate of construction projects

Pursuant to Decision No. 1062/TC-QĐ-CSTC dated November 14, 1996 of the Ministry of Finance on the regime for managing, using, and depreciating fixed assets.

Based on decisions adjusting electricity and oil prices issued by competent authorities.

The Ministry of Construction guides the adjustment of budget estimates for construction works using state funds as follows:

I. ADJUSTMENT OF THE ESTIMATED VALUE OF CONSTRUCTION INSTALLATION

1. For labor costs:

In accordance with Point 1 of Article 1 of Decree No. 28/CP of the Government: State-owned enterprises may apply an adjustment factor not exceeding 1.5 times the minimum wage set by the State as a basis for calculating unit labor prices. However, for enterprises in the construction industry, the conditions for applying the increased wage adjustment factor differ from those of other industrial sectors. The Ministry of Labor, War Invalids and Social Affairs is currently presenting to the Prime Minister a proposal for implementing Decree No. 28/CP of the Government regarding wages in the construction sector.

Therefore, pending issuance of guidance documents for adjusting wages in the construction sector, temporarily apply a wage adjustment factor of 1.2 times based on the minimum wage of 144,000 VND. For construction projects that adopt local construction cost unit prices and receive additional allowances, salary supplements, or other benefits not included in the unit price or receive higher mobility allowances or larger non-stable production subsidies, these should be added to labor costs according to the guidelines in Appendix 1 attached hereto.

For important national projects permitted by competent authorities to include special allowances and policies in the calculation of labor costs, such adjustments should be submitted to the competent authority for review and approval.

2. Machinery costs:

Machinery costs in the construction cost unit prices of provinces and centrally-administered cities shall be adjusted by a factor of 1.15 times, without applying this adjustment factor to machine rates published separately outside the Machine Rate Table issued pursuant to Decision No. 57/BXD-VKT dated March 31, 1994 of the Ministry of Construction.

3. Common costs, taxes, and interest:

Common costs are calculated as a percentage (%) of labor costs in the estimate for each type of construction project or specialized construction field (not according to individual construction tasks) as stipulated in Appendix II attached hereto.

Taxes and interest are calculated as a percentage (%) of direct costs (materials, labor, and machinery) and common costs, as specified in Appendix II. Equipment value does not include tax and interest.

The common costs, taxes, and interest provisions in this Circular replace those in Circular No. 23/BXD-VKT dated December 15, 1994 of the Minister of Construction.

II. IMPLEMENTATION

According to the provisions of this Circular, ministries, sectors, provinces, and centrally-administered cities shall base their guidance on specific conditions of their industries and regions to apply to the volume estimates of construction work in 1997, excluding volumes of construction work already settled in final accounts. They must immediately review, revise, and supplement outdated standards that are no longer appropriate to serve as the basis for developing new construction cost unit prices to replace current ones for application in 1998.

This Circular takes effect from January 1, 1997.

During implementation, if there are any issues or inconsistencies, please report them to the Ministry of Construction for consideration and resolution.

ANNEX 1

COMPREHENSIVE ESTIMATE TABLE FOR CONSTRUCTION WORKS IN DETAIL
ITEMS OF CONSTRUCTION WORKS
(Issued together with Circular No. 08/1997/TT-BCD-VKT
dated December 5, 1997 of the Ministry of Construction)

Note:

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.} - Volume of construction work item j

D^{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.}_vl, D^{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.}_nc, D^{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.}_{Granite, gabbro, decorative stone...} - Direct costs (materials, labor, and machinery) in the construction cost unit price of construction work item j

F1 - Additional allowances (if any) calculated based on the minimum wage not included or insufficiently included in the construction cost unit price

F2 - Additional allowances (if any) calculated based on the wage grade not included or insufficiently included in the construction cost unit price

H_1.n - Coefficient representing the relationship between labor costs in the unit price and the minimum wage of group n:

- Group I: h1.1 = 2.342

- Group II: h1.2 = 2.493

- Group III: h1.3 = 2.638

- Group IV: h1.4 = 2.796

H_2.n - Coefficient representing the relationship between labor costs in the unit price and the wage grade of group n:

- Group I: h2.1 = 1.378

- Group II: h2.2 = 1.370

- Group III: h2.3 = 1.363

- Group IV: h2.4 = 1.357

P - Common Cost Ratio (%)

TL - Tax and Interest (%)

G_xl - Budget Estimate Value for Construction Work

CL_vl - Material Variance (if any)

signing and implementing Agreements_n, K_{Granite, gabbro, decorative stone...} - Adjustment Coefficient for Labor Costs and Machinery Costs

ANNEX 2

COMMON COST RATIO, TAXES AND INTEREST
(Issued together with Circular No. 08/1997/TT-BXD-VKT
dated December 5, 1997 of the Ministry of Construction)

Unit of Measurement: Percentage (%)

Note: Common costs are calculated as a percentage (%) of labor costs in the estimate.