Circular No. 09/2007/TT-BXD guiding the determination and management of costs for hiring foreign consulting services in construction activities in Vietnam

CIRCULAR

Guidelines for determining and managing costs of hiring foreign consultants

in construction activities in Vietnam

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

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

Pursuant to Decision No. 131/2007/QĐ-TTg dated August 9, 2007 of the Prime Minister on the issuance of regulations on hiring foreign consultants in construction activities in Vietnam.

The Ministry of Construction guides the determination and management of costs of hiring foreign consultants in construction activities in Vietnam as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. This Circular applies to organizations and individuals related to the hiring of foreign consultants to perform consulting services for investment construction projects and urban planning schemes using state funds (state budget funds, including official development assistance (ODA), state investment credit, state-guaranteed credit, and other state investment funds).

2. It is encouraged that organizations and individuals related to the hiring of foreign consultants to perform consulting services for investment construction projects and urban planning schemes using other funds apply the provisions of this Circular.

Consulting services in construction activities that can be hired from foreign consultants include preparing urban planning, conducting construction surveys, preparing investment construction project proposals, designing construction projects, selecting contractors, supervising construction works, managing projects, and other construction consulting services.

Costs of hiring foreign consultants shall be determined based on the agreement between the project owner or the agency organizing the urban planning scheme and the foreign consultant through a consulting service contract. The cost must ensure sufficient funding for hiring but must also be commensurate with the paying capacity of the hiring party, the project's capital sources, the capital usage for preparing the urban planning scheme, the level and type of consulting experts, while ensuring competitive principles and the efficiency of the investment construction project, the feasibility of the urban planning scheme. The determination of costs must comply with international practices and Vietnamese regulations.

Project owners and agencies organizing the urban planning scheme are responsible for identifying the types of consulting work that require hiring foreign consultants when preparing investment construction project proposals and urban planning tasks. The costs of hiring foreign consultants must be estimated within the total project investment amount, serving as the basis for budgeting and managing capital according to regulations.

In cases where the foreign consultant is the main contractor and hires domestic consultants to perform certain tasks, the costs shall be agreed upon by all parties but must ensure that the salary of domestic consulting experts is not lower than the salary of Vietnamese experts working under contracts with international contractors who have won bids in Vietnam, as guided by the Ministry of Labor, Invalids, and Social Affairs, or the consulting salary for domestic experts working on ODA-funded projects, as guided by the Ministry of Finance.

In cases where international treaties signed or joined by the Socialist Republic of Vietnam stipulate different methods for determining the costs of hiring foreign consultants compared to those specified in this Circular, such treaties shall be followed.

II. GUIDELINES FOR DETERMINING COSTS OF HIRING FOREIGN CONSULTANTS

1. Determining the costs of hiring foreign consultants when preparing investment construction project proposals and urban planning tasks:

1.1 When preparing investment construction project proposals and urban planning tasks, the project owner and the agency organizing the urban planning scheme must estimate (forecast) the costs of hiring foreign consultants within the total project investment amount and urban planning task based on the volume and type of consulting work requiring foreign consultants.

1.2 Depending on the specific conditions of the investment construction project and the urban planning scheme, the costs of hiring foreign consultants may be estimated within the total project investment amount and urban planning task according to one of the following methods:

a) Based on the costs of similar consulting work for investment construction projects and urban planning schemes already performed by foreign consultants.

b) As a percentage of the construction and equipment costs in the total project investment amount, or per unit area (or per capita) of the urban planning scheme. Estimating costs of hiring foreign consultants based on percentages depends on the scope and content of the consulting work requiring foreign consultants and relevant information on the costs of similar consulting work for investment construction projects and urban planning schemes already performed by foreign consultants.

c) Based on a monthly-person (or daily-person, hourly-person) budget. Determining costs based on a monthly-person (or daily-person, hourly-person) budget relies on forecasting the number of monthly-persons (or daily-persons, hourly-persons), the monthly-person (or daily-person, hourly-person) rate, the duration of the consulting work, necessary expenses for performing the consulting work, and other relevant regulations.

1.3 In cases where foreign consultants prepare investment construction project proposals, the costs of hiring foreign consultants are estimated within the pre-project preparation cost budget.

2. Determining the costs of hiring foreign consultants when selecting foreign consulting contractors:

            2.1 In cases of tendering to select foreign consulting contractors:

- The project owner determines the bid price for hiring foreign consultants based on the previously estimated costs of hiring foreign consultants within the total project investment amount, serving as the basis for organizing the selection of foreign consulting contractors in accordance with tendering laws.

- The foreign consulting contractor proposes the cost of providing construction consulting services based on a percentage of the construction costs and equipment costs within the total investment ceiling of the project or according to the monthly-person (or day-person, hour-person) budget but must be consistent with the content of the work, quality, progress, and other requirements stipulated in the tender documentation.

- The cost of hiring foreign consultants is determined through the results of the contractor selection process and the outcome of negotiations between the project sponsor and the foreign consulting contractor, not exceeding the approved bid package price.

            2.2 In cases where a foreign consulting contractor is designated:

- The project sponsor or the agency responsible for preparing the urban planning scheme bases the bid package price on the anticipated cost level within the total investment ceiling of the project or the task of preparing the urban planning scheme, serving as the basis for designating the foreign consulting contractor in accordance with current regulations.

- The foreign consulting contractor proposes the cost of providing construction consulting services based on a percentage of the construction costs and equipment costs within the total investment ceiling of the project, according to unit price calculated per unit area (or per capita) of the urban planning scheme or according to the monthly-person (or day-person, hour-person) budget, consistent with the requirements of the request for proposal (type of consulting work, form of hiring consulting services, consultant's expertise level, workload, progress of work completion, and other requirements). The determination of the monthly-person (or day-person, hour-person) budget follows the guidelines attached to this Circular.

- The project sponsor or the agency responsible for preparing the urban planning scheme organizes the review and evaluation of the costs proposed by the foreign consultant according to the requirements of the request for proposal, the requirements of the consulting work, and the form of hiring consulting services. If the foreign consultant proposes the cost of providing consulting services according to the monthly-person (or day-person, hour-person) budget, the project sponsor or the agency responsible for preparing the urban planning scheme organizes the verification of this budget to submit for approval by the investment decision-maker (or the person authorized for projects and urban planning schemes decided by the Prime Minister). Provincial People's Committees directly under the Central Government approve the monthly-person (or day-person, hour-person) budget for preparing urban planning schemes within their jurisdiction.

- The contract price for hiring foreign consultants is determined through the negotiation and discussion results between the project sponsor or the agency responsible for preparing the urban planning scheme and the foreign consulting contractor.

- In cases where a joint venture is formed between foreign and domestic consultants, the costs are determined based on the division of responsibilities and workload among the parties in the joint venture. The cost of the domestic consultant is determined based on the workload undertaken by the domestic consultant and the agreement among the parties. Specifically, the salary cost of the domestic consultant may apply the guidance provided in Point 6, Section I of this Circular.

- In cases where individual foreign consultant experts are hired, the costs may include all or part of the following expenses: the salary of the expert, travel expenses of the expert, office expenses, certain related expenses, and taxes payable. The salary of the expert, travel expenses of the expert, office expenses, and certain related expenses are determined according to the guidelines of this Circular. Taxes payable include value-added tax and other types of taxes, if applicable, as stipulated by current regulations.

III. MANAGEMENT OF COSTS FOR HIRING FOREIGN CONSULTANTS

1. Foreign consultants must have the responsibility to provide complete documentation proving the basis for determining the cost of the hired consulting services and relevant information about the costs of similar construction consulting services previously implemented. The basic salary level of the expert and related costs calculated based on the basic salary level of the expert such as social security costs, management costs, insurance costs, additional allowances, and profit must be reflected in the financial activity report of the consulting organization conducted in recent years that has been audited or in similar consulting service contracts already implemented or other relevant provisions. The project sponsor or the agency responsible for preparing the urban planning scheme has the responsibility to review and evaluate the above documents, and when necessary, may directly verify the information related to the costs of the construction investment project or the urban planning scheme implemented by the foreign consultant.

2. In cases where the negotiation and discussion results determine the cost of hiring foreign consultants to be higher than the cost of hiring foreign consultants anticipated within the total investment ceiling of the project or the task of preparing the urban planning scheme, the project sponsor or the agency responsible for preparing the urban planning scheme must report to the investment decision-maker (or the person authorized for projects decided by the Prime Minister) regarding the investment project or the approving authority for the urban planning scheme preparation work (or the agency responsible for preparing the urban planning scheme for urban planning schemes within the Prime Minister's approval authority) to consider and decide on adjusting the cost of hiring foreign consultants mentioned above.

3. The selection of foreign consultants must be carried out in accordance with the laws on bidding and through a contract between the project sponsor or the agency responsible for preparing the urban planning scheme and the foreign consulting contractor. The contract content, in addition to the provisions required by the laws on contracts, must clearly specify the number of monthly-persons (or day-persons, hour-persons), the expert's qualifications, progress, and completed products.

4. The project sponsor or the agency responsible for preparing the urban planning scheme bears the responsibility for supervising the implementation of the contract for hiring foreign consultants, ensuring the progress, quantity, and quality of the construction consulting service products in accordance with the signed contract.

5. Payment of the cost of hiring foreign consultants must comply with the terms of the signed contract and other relevant regulations.

6. The investor or the agency organizing the construction planning project may hire organizations or individuals with sufficient experience and capacity to determine the cost of hiring foreign consultants. In cases where a tender for foreign consultancy services is designated, the investor or the agency organizing the construction planning project may hire an organization with sufficient experience and capacity to review the preliminary budget before submitting it for approval. Organizations and individuals providing consultancy services shall be responsible under the law for the results of determining and reviewing the costs of hiring foreign consultants.

IV. IMPLEMENTATION

1. This Circular takes effect fifteen days from the date of publication in the Official Gazette.

2. The Minister, Heads of Ministries equivalent to ministries, Chairmen of People's Committees of provinces and centrally-run cities, Boards of Directors of State-owned Corporations, Economic Groups, and Heads of units related to this matter are responsible for implementing this Circular.

3. Any difficulties encountered during implementation should be promptly reported to the Ministry of Construction for study and resolution.