Circular No. 09/2019/TT-BXD guiding the determination and management of construction investment costs

CIRCULAR

Guidelines for Determining and Managing Construction Investment Costs

 

Pursuant to the Construction Law No. 50/2014/QH13 dated June 18, 2014;

Pursuant to Decree No. 81/2017/NĐ-CP dated July 17, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to Decree No. 68/2019/NĐ-CP dated August 14, 2019 of the Government on the management of construction investment costs;

Article 1. Amending and supplementing certain articles of Circular No. 11/2021/TT-BXD dated August 31, 2021, issued by the Minister of Construction guiding certain contents on determining and managing construction investment costs

The Minister of Construction issues this Circular guiding the determination and management of construction investment costs.

 

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the determination and management of construction investment costs for projects using state budget funds, state funds outside the budget, and public-private partnership (PPP) construction investment projects, including: preliminary total investment cost, total investment cost, construction budget estimate, construction tender price, construction norms, unit price of construction works, capital investment rate, and comprehensive unit price of structural parts of construction works.

Article 2. Applicability

1. Agencies, organizations, and individuals related to the determination and management of construction investment costs for projects using state budget funds, state funds outside the budget, and PPP projects.

2. Agencies, organizations, and individuals related to the determination and management of construction investment costs for construction investment projects, determining construction investment costs as the basis for fulfilling financial obligations to the State for projects using other sources of funds.

Chapter II

PRELIMINARY TOTAL INVESTMENT COST AND TOTAL INVESTMENT CONSTRUCTION COST

Article 3. Contents of Preliminary Total Investment Cost and Total Investment Construction Cost

1. The contents of the preliminary total investment cost and total investment construction cost as stipulated in Clause 2 and Clause 4 of Article 4 of Decree No. 68/2019/NĐ-CP dated August 14, 2019 of the Government on managing construction investment costs (hereinafter referred to as Decree No. 68/2019/NĐ-CP), wherein construction costs, equipment costs, project management costs, investment consulting costs, and other costs are specified as follows:

a) Construction costs and equipment costs include the costs as stipulated in Clause 2 and Clause 3 of Article 8 of this Circular.

b) Project management costs include the costs as stipulated in Clause 2 of Article 21 of Decree No. 68/2019/NĐ-CP, which are necessary costs for organizing the implementation of project management tasks from the preparatory stage to the completion of construction and putting the project's works into operation, specifically as follows:

- Supervising construction survey work;

- Selecting architectural design or choosing architectural design options for the works;

- Compensation, support, and resettlement work within the responsibility of the investor;

- Reviewing feasibility study reports or economic-technical investment reports;

- Preparing, reviewing, auditing technical designs, construction drawings, and construction budgets;

- Selecting contractors in construction activities;

- Managing quality, quantity, progress, construction costs, and construction contracts;

- Managing construction information systems; Collecting and providing data to serve the management of construction investment costs according to the requirements of competent state agencies;

- Ensuring labor safety and environmental hygiene of the works;

- Establishing or adjusting construction norms of the works;

- Determining the construction cost of the works and construction cost indices;

- Inspecting the quality of materials, components, construction products, and installed equipment;

- Testing the quality of work sections, sub-works, and entire works according to requirements;

- Controlling construction investment costs;

- Converting completed construction investment costs after acceptance and handover for use;

- Acceptance, payment, and settlement of contracts; payment and settlement of construction investment costs;

- Organizing and implementing supervision and evaluation of construction investment projects;

- Acceptance and handover of works;

- Commencement, inauguration (if applicable), publicity, and promotion;

- Determining and updating tender prices;

- Management tasks of competent state agencies (if applicable);

- Other project management tasks.

c) The contents of investment consulting costs include the costs as stipulated in Clause 2 of Article 23 of Decree No. 68/2019/NĐ-CP, which are necessary costs for performing investment consulting tasks at different stages according to the construction investment process, including: preparatory stage, implementation stage, and completion stage of putting the works into operation. Specifically as follows:

- Preparing and conducting construction surveys, supervising construction surveys;

- Preparing pre-feasibility study reports (if applicable), investment proposal reports (if applicable), feasibility study reports, or economic-technical investment reports;

- Reviewing basic design and technological design of the project;

- Reviewing compensation, support, and resettlement plans;

- Architectural design competition for construction works;

- Designing construction works;

- Reviewing total construction investment costs, construction design, and construction budgets;

- Preparing, reviewing, and evaluating tender documents, shortlist documents, and bid documents to select contractors in construction activities;

- Reviewing contractor selection results in construction activities;

- Supervising construction and installation of equipment;

- Preparing and reviewing construction norms, construction unit prices, and construction cost indices;

- Reviewing traffic safety;

- Applying construction information systems (BIM) (if applicable);

- Project management consulting (in cases where consultancy is hired);

- Specialized construction testing;

- Inspecting the quality of materials, components, construction products, and installed equipment according to the investor's requirements (if applicable);

- Testing the quality of work sections, sub-works, and entire works (if applicable);

- Supervising and evaluating construction investment projects (in cases where consultancy is hired);

- Preparing environmental impact assessment reports in accordance with laws on environmental protection;

- Converting completed construction investment costs after acceptance and handover for use;

- Performing other consulting tasks.

For construction survey costs, they include direct costs, indirect costs, advance tax income, and value-added tax, which are determined and managed like construction costs in the construction budget estimate.

d) Other costs include necessary expenses for implementing the investment construction project, determined according to the regulations of competent state agencies by standards or cost estimates appropriate to the system of policies to perform the works of the project, including the following costs:

- Demining and explosive ordnance disposal;

- Compulsory construction project insurance during the construction period;

- International quality inspection, deformation monitoring of the project (if applicable);

- Auditing, verification, approval of final account settlement of investment capital;

- Inspection work acceptance during the construction process and upon completion of individual project components, projects by competent state management agencies (in cases where it is necessary to hire experts to carry out together);

- Scientific and technological research related to the project; working capital for initial operation for construction investment projects with business purposes, interest on loans during the construction period; costs for unloaded and loaded trial run processes according to the production technology before handover (after deducting the value of recovered products);

- Resource taxes, fees, and charges as prescribed;

- Other costs (if any).

2. For projects that only require preparation of an Economic and Technical Investment Construction Report, the content of the total investment construction amount is stipulated in Clause 3, Article 4 of Decree No. 68/2019/NĐ-CP.

3. For projects using official development assistance (ODA) funds, and public-private partnership (PPP) projects, in addition to the items calculated in the preliminary total investment estimate, the aforementioned total investment construction amount will be supplemented with other necessary cost items suitable for the characteristics and nature of these investment construction projects using such sources of funding, in accordance with current relevant laws.

Article 4. Method for Preliminary Total Investment Construction Estimate Determination

1. The preliminary total investment construction estimate is determined according to the provisions of Clause 1, Article 5 of Decree No. 68/2019/NĐ-CP. In cases where conditions for determining the scale, capacity, or service capability according to the project's preliminary design scheme have not been met, or have been determined but lack published construction unit cost data, the preliminary total investment construction estimate is based on cost data from similar projects regarding type, level, scale, capacity, or service capability that have been or are being implemented, adjusted, and supplemented with necessary costs, while being converted to costs appropriate to the time of preliminary total investment estimate determination, construction location, and project characteristics and nature.

2. For projects implemented under turnkey contract form, construction costs and equipment costs in the preliminary total investment construction estimate are calculated mainly through the method of determining quantities of construction work based on preliminary design, combined with the use of unit cost or cost data from similar projects, ensuring the principle of accurate and comprehensive calculation to determine the turnkey contract tender budget.

3. The review and approval of the preliminary total investment construction estimate are regulated as follows:

a) For projects using state budget capital and state capital outside the budget, they are carried out in accordance with laws on public investment and investment.

b) For PPP projects, they are carried out in accordance with laws on PPP.

4. The basis for determining the turnkey contract tender budget is stipulated in Clause 2, Article 11 of this Circular. The investment decision-maker reviews and approves the turnkey contract tender budget.

5. Detailed methods for determining the preliminary total investment construction estimate are guided in Section 1 of Appendix 1 issued along with this Circular.

Article 5. Method for Determining the Total Investment Ceiling for Construction

1. The total investment ceiling for construction is established based on the contents of the feasibility study report for investment construction projects including: basic design, explanation of the basic design, applicable standards and regulations, technological and technical solutions, equipment; architectural and main structural solutions of the project; construction and primary material solutions, construction conditions of the project; implementation plan of the project and other necessary requirements consistent with the feasibility study report for investment construction.

2. The total investment ceiling for construction is determined according to one of the methods prescribed in Clause 2, Article 5 of Decree No. 68/2019/NĐ-CP, specifically as follows:

a) Determined from the quantity of construction calculated based on the basic design, the project implementation plan, the planned construction organization measures, actual conditions of project implementation, other necessary requirements of the project, and the system of construction norms, unit prices, related systems, and policies.

b) Determined from cost data of similar projects.

c) Determined based on the capital investment rate for construction projects.

d) Combining the methods prescribed in points a, b, and c of this clause.

3. The methods prescribed in points b and c of Clause 2 of this Article shall only be used for common construction projects.

4. Certain items of costs within the construction cost, equipment cost, project management cost, investment consulting cost, and other project costs if there are no provisions or calculation bases at the time of establishing the total investment ceiling for construction shall be supplemented and estimated to be included in the total investment ceiling for construction.

5. For projects implemented under the design, supply of technology equipment, and construction contract (EPC); design and construction contract (EC); design and supply of equipment (EP) forms, the construction cost and equipment cost in the total investment ceiling for construction must be primarily determined based on the method prescribed in point a of Clause 2 of this Article and combined with other methods.

6. Detailed methods for determining the total investment ceiling for construction are guided in Section 2 of Appendix No. 1 issued together with this Circular.

Article 6. Content, Authority for Review and Approval of the Total Investment Ceiling for Construction

1. The content of reviewing the total investment ceiling for construction is stipulated in Clause 1, Article 6 of Decree No. 68/2019/NĐ-CP.

2. The authority for reviewing the total investment ceiling for construction is carried out in accordance with the provisions of Clause 3 and Clause 4, Article 6 of Decree No. 68/2019/NĐ-CP. However, for projects that only require the preparation of an economic and technical report using state capital outside the budget, the review authority is implemented in accordance with Clause 5, Article 1 of Decree No. 42/2017/NĐ-CP dated April 5, 2017 of the Government amending and supplementing some articles of Decree No. 59/2015/NĐ-CP dated June 18, 2015 of the Government on project management for construction investment.

3. The authority for approving the total investment ceiling for construction is stipulated in Clause 7, Article 6 of Decree No. 68/2019/NĐ-CP.

4. The model report on the results of reviewing and auditing the total investment ceiling for construction is guided in Appendix No. 10 issued together with this Circular.

, Clause 1, Clause 2 Article 7a of this Regulation.. Preliminary Adjustment of the Total Investment Ceiling and the Total Investment Ceiling for Construction

1. The preliminary adjustment of the total investment ceiling for construction is carried out in accordance with the laws on public investment, investment laws, and laws on PPP.

2. The adjustment of the approved total investment ceiling is carried out in accordance with the provisions of Article 7 of Decree No. 68/2019/NĐ-CP.

3. The model report on the results of preliminary auditing and reviewing the total investment ceiling and the adjusted total investment ceiling for construction is guided in Appendix No. 10 issued together with this Circular.

Chapter III

 CONSTRUCTION ESTIMATE

Article 8. Contents of Construction Estimate

1. The contents of the construction estimate are stipulated in Article 8 of Decree No. 68/2019/NĐ-CP. The components of costs in the construction estimate are specified in detail from Clause 2 to Clause 7 of this Article.

2. Construction costs include direct costs, indirect costs, pre-tax income, value-added tax, and are specified as follows:

a) Direct costs include material costs (including materials provided by the investor), labor costs, and machinery and equipment construction costs.

b) Indirect costs include:

- General costs include: General management costs of the enterprise, production management and operation costs at the construction site, insurance costs for workers paid by the employer.

- Temporary housing costs for living and construction management.

- Costs for certain works whose quantities cannot be determined from the design such as: Labor safety and environmental protection costs for workers on the construction site and surrounding environment; material testing costs of the contractor; labor force movement costs within the construction site; non-routine water pumping and sludge dredging costs.

- Depending on the specific conditions of each project, construction work package, indirect costs may be supplemented with other indirect costs including: special construction machinery transportation costs to and from the construction site; traffic safety assurance costs serving construction (if any); infrastructure restoration costs affected by construction (if any); material storage yard costs (if any); construction costs for shelters for machines, machine foundations, power supply systems, air compressors, water supply systems at the site, installation and dismantling of certain types of machines (such as cement concrete mixing plants, asphalt concrete mixing plants, rail-mounted cranes, tower cranes, and other similar construction machinery and equipment).

c) Pre-tax income (the projected profit of the construction enterprise included in the construction estimate).

d) Value-added tax as prescribed by the State.

3. Equipment costs of the project, project components include cost items as prescribed in point b, Clause 2, Article 9 of Decree No. 68/2019/NĐ-CP.

4. Project management costs include cost items as prescribed in point b, Clause 1, Article 3 of this Circular.

5. Investment construction consulting costs as prescribed in point c, Clause 1, Article 3 of this Circular.

6. Other costs in the construction budget include cost items as prescribed in point d, Clause 1, Article 3 of this Circular. For projects with multiple works, other costs in the construction budget for each work do not include interest expenses during the construction period; demining and explosive disposal costs; auditing costs; review, approval of final accounts of investment capital; scientific and technological research costs related to the project; initial working capital for investment construction projects aimed at business purposes; costs for unloaded and loaded trial operation processes according to the production technology before handover (excluding the value of recovered products); fees, taxes, and other costs already calculated for the project.

7. Contingency costs include contingency costs for additional work volume factors and contingency costs for inflation factors during the construction period.

Article 9. Method for Determining Construction Budget

1. The basis for determining the construction budget is stipulated in Clause 1, Article 9 of Decree No. 68/2019/ND-CP.

2. Determination of Construction Costs

Construction costs can be determined based on individual cost items or a consolidated approach according to the methods specified in points a and b below:

a) Calculating based on quantity and unit price of construction works

- Direct costs include material costs, labor costs, machinery and equipment costs for construction which are determined based on the quantities of construction works and the unit price of construction works.

- Indirect costs are determined as a percentage (%) or by preparing a budget estimate according to the guidance provided in Section 3.1 of Appendix 3 issued together with this Circular.

- Pre-tax income is calculated as a percentage (%) of direct and indirect costs as guided in Table 3.11 of Appendix 3 issued together with this Circular.

- Value-added tax as prescribed by the State.

- Quantities of construction works are measured and calculated from technical design drawings, construction drawing designs, or FEED designs and technical instructions, requirements for work to be carried out in the project. The method for measuring the quantities of construction works is implemented according to the guidance of the Minister of Construction.

- The unit price of construction works used to calculate the construction cost estimate may be detailed or comprehensive unit prices suitable for the quantities of construction works measured and calculated from technical design drawings, construction drawing designs, or FEED designs and technical instructions, requirements for work to be carried out in the project. The content and method for determining the unit price of construction works are implemented according to the provisions of Article 18 of this Circular.

b) Calculating based on consumption of materials, labor, machinery and equipment, and corresponding cost factors' prices

- Direct costs including material, labor, machinery and equipment costs are determined based on the quantities of materials, labor, machinery and equipment and their respective cost factor prices.

- Quantities of various types of materials, labor, machinery and equipment are determined based on the quantities of construction works measured from technical design, construction drawing design, or FEED design and economic and technical norms.

- The price of building materials is determined according to the guidance in Table 4.1 of Appendix 4 issued together with this Circular.

- Labor, machinery and equipment costs are determined according to the guidance of the Minister of Construction.

- Indirect costs, pre-tax income, and value-added tax are determined as guided in point a of this clause.

3. Determination of Equipment Costs

a) Equipment costs are determined according to the provisions in point b, Clause 2, Article 9 of Decree No. 68/2019/ND-CP and the following provisions:

- The quantities, numbers, and types of equipment are determined from the technical design, construction design, and equipment list in the approved project.

- The purchase price of equipment is determined based on market prices or quotations from suppliers, manufacturers, or similar ongoing projects at the time of calculation.

- For equipment that needs to be manufactured or processed, these costs are determined based on the quantities and numbers of equipment to be manufactured or processed and the appropriate manufacturing or processing unit prices according to the nature and type of equipment as per signed manufacturing or processing contracts or quotations from selected manufacturers or similar ongoing projects at the time of calculation.

b) Management costs for purchasing (including supervision costs for equipment installation by suppliers), supervision costs for equipment installation by contractors; software licensing costs for project equipment, project technology equipment (if applicable); training and technology transfer costs; costs for manufacturing non-standard equipment (if applicable) are determined through budget estimates or based on cost standards issued by competent state authorities.

c) Installation costs for equipment are determined by preparing a budget estimate as for construction cost estimates according to the provisions of Clause 2 of this Article.

d) Testing, calibration, training, technology transfer, and other related costs are determined through budget estimates suitable for the actual work performed.

4. Determination of Project Management Costs

Project management costs are determined based on standard rates (%) or by preparing a budget estimate suitable for the project management organization form, scale, location, and duration of the project as issued by the Minister of Construction. The method for determining project management costs is implemented according to the guidance of the Minister of Construction.

5. Determination of Investment Consultancy Costs

a) Consultancy costs in the construction budget are determined based on standard rates (%), standard rates based on quantity, or by preparing a budget estimate suitable for the quantity, scope of work, regulations, and policies issued by the Minister of Construction or competent state authorities. In cases where some consultancy works for investment construction are carried out before determining the construction budget, they are determined based on the value of signed consultancy contracts in accordance with state regulations.

b) In cases where it is necessary to hire foreign consulting experts, the consulting costs shall be determined by preparing a budget that is consistent with the requirements for using consultants (quantity, quality), regulations of the competent authority, and international practices. The method for determining the cost of hiring foreign consulting experts shall follow the guidelines issued by the Minister of Construction.

c) The method for determining investment construction consulting costs shall be carried out according to the guidelines of the Minister of Construction. Specifically, the method for determining construction survey costs shall be implemented in accordance with Appendix No. 9 attached to this Circular.

6. Other costs shall be determined based on standard rates (percentages) according to the guidelines of the competent authorities or by preparing a budget or contract value in compliance with the law. In cases where certain other costs have not yet met the conditions for determination, they shall be estimated in the project construction budget.

For specialized construction projects with specific cost factors, projects funded by ODA, if there are additional related costs specified in international treaties, these costs shall be supplemented.

7. Determining contingency costs

a) Contingency costs for unexpected work volume factors shall be calculated as a percentage of the total construction costs, equipment costs, project management costs, investment construction consulting costs, and other costs.

b) Contingency costs for inflation factors shall be determined based on the construction project duration, tender package execution time, project implementation plan, tender selection plan, capital allocation plan, and construction price index (measured in months, quarters, years) suitable for the type of construction project taking into account domestic and international price fluctuations.

c) For projects with multiple construction works or projects that have approved tender selection plans, the contingency costs in the construction budget (total budget) shall be the sum of the contingency costs of each construction work or construction tender packages and the remaining contingency costs of the project not allocated to individual construction works or tender packages within the project. The allocation of contingency costs to each construction work for projects with multiple construction works or construction tender packages for projects that have approved tender selection plans shall be determined based on the nature of the work, the length of the work execution period, technical requirements, actual conditions, and other factors. Management of contingency costs shall be carried out in accordance with Article 15 of this Circular.

8. Methods for determining construction costs, equipment costs, other costs, and contingency costs are detailed in Appendices No. 2 and No. 3 attached to this Circular.

Article 10. Tender Package Budget

1. The tender package budget includes:

a) The construction work tender package budget;

b) The procurement of materials and equipment tender package budget;

c) The installation of equipment tender package budget;

d) The investment construction consulting tender package budget;

đ) The design and construction tender package budget (EC);

e) The design and procurement of materials and equipment tender package budget (EP);

g) The procurement of materials and equipment and construction tender package budget (PC);

h) The design, procurement of materials and equipment, and construction tender package budget (EPC);

i) The project preparation, design, procurement of materials and equipment, and construction tender package budget (turnkey);

k) Other construction tender package budgets.

The tender package budget is determined for each tender package, in accordance with the tender selection plan. If there is already a construction project budget or total budget, then there is no need to prepare a tender package budget.

2. Contents of the cost components of the tender package budget

a) The construction work tender package budget includes direct costs, indirect costs, pre-tax income, value-added tax, and contingency costs for unexpected work volume and inflation factors.

b) The procurement of materials and equipment tender package budget includes costs for purchasing materials and equipment, value-added tax; production, processing, and manufacturing costs for non-standard equipment (if applicable); contractor's management costs for procuring construction equipment; technology transfer training costs (if applicable); transportation, insurance, and other fees (if applicable); other related costs; and contingency costs for unexpected work volume and inflation factors.

c) The installation of equipment tender package budget includes costs for installation, testing, calibration, value-added tax, other related costs, and contingency costs for unexpected work volume and inflation factors.

d) The investment construction consulting tender package budget includes costs for experts, management, other costs, pre-tax income, taxes, and contingency costs for unexpected work volume and inflation factors.

đ) The design and construction tender package budget (EC) includes the budgets mentioned in points a and d of this clause.

e) The design and procurement of materials and equipment tender package budget (EP) includes the budgets mentioned in points b and d of this clause.

g) The procurement of materials and equipment and construction tender package budget (PC) includes the budgets mentioned in points a and b of this clause.

h) The design, procurement of materials and equipment, and construction tender package budget (EPC) includes cost items for design; procurement of materials and equipment, and construction within the approved investment limit.

i) The project preparation, design, procurement of materials and equipment, and construction tender package budget (turnkey) includes cost items within the project's approved investment limit as stipulated in point b, c, d, đ, e, and g of Clause 4, Article 4 of Decree No. 68/2019/NĐ-CP.

k) The contents of the cost components of other construction tender package budgets shall be determined based on the scope of work of the tender package.

3. The Project Owner shall determine the tender package budget when having sufficient capacity as prescribed by law. In cases where the capacity is insufficient, the Project Owner may engage organizations or individuals with adequate capacity to manage costs, as stipulated in the Decree on project management, to determine the construction tender package budget.

Article 11. Basis and method for determining the budget estimate of construction tender packages

1. The basis for determining the budget estimate of construction tender packages is specified as follows:

a) In cases where the investment construction project has been approved by the competent authority with the procurement plan selection, the construction budget estimate can be determined based on the costs of each construction tender package. At that time, the costs within the construction tender package shall be determined similarly to the cost components in the construction budget estimate as prescribed in Article 10 of this Circular.

b) For tender packages implemented before the technical design, construction drawing design, and FEED design have been approved, the tender package budget estimate shall be determined based on the approved total investment amount, consistent with the procurement plan, tender document requirements, or request document.

c) For tender packages to carry out investment preparation work, the tender package budget estimate shall be carried out based on the tasks, work outlines to be performed and the investment preparation work budget estimate, consistent with the procurement plan, tender document requirements, or request document.

d) For turnkey tender packages, the tender package budget estimate shall be determined based on the preliminary total investment amount approved, consistent with the pre-feasibility study report, approved investment decision, preliminary design, and scope of the tender package according to the approved procurement plan, tender document requirements, or request document. In cases where the pre-feasibility study report, approved investment decision, and preliminary design are not sufficient bases to determine the turnkey tender package budget estimate, the investor must clarify the preliminary design, requirements, standards, and criteria applicable to the tender package to determine the costs of the tender package appropriately.

2. The method for determining the budget estimate of construction tender packages is guided in Section 2 of Appendix No. 2 issued together with this Circular.

Article 12. Review, verification, and approval of construction budget estimates

1. The content of reviewing construction budget estimates is implemented in accordance with Clause 2, Article 10 of Decree No. 68/2019/NĐ-CP.

2. The authority to review and approve construction budget estimates is implemented in accordance with Clauses 3 and 4, Article 10 of Decree No. 68/2019/NĐ-CP. Specifically, for turnkey tender packages and mixed tender packages (EPC, EC, EP, PC), the tender package budget estimate must be organized for review and approval by the Investment Decision Maker before selecting contractors.

3. The template for reporting the results of reviewing and verifying construction budget estimates is guided in Appendix No. 10 issued together with this Circular.

Article 13. Adjustment of Construction Budget Estimates

1. The approved construction budget estimate may be adjusted in the cases stipulated in Clause 1 and Clause 3, Article 11 of Decree No. 68/2019/NĐ-CP and as follows:

a) In cases where the construction budget estimate is adjusted due to changes in geological conditions of the project, design loads, structural solutions, load-bearing structure materials, and construction organization methods affecting the load-bearing safety of the project, such adjustments must be reviewed again by the specialized agency on construction for the cost items affected by the design adjustment.

b) In cases where the cost structure is adjusted due to price escalation; volume adjustment according to the design that has been reviewed and approved, or design changes not falling under the case stipulated in point a of this clause, there is no need for another review by the specialized agency on construction. The investor is responsible for organizing the review and approval of the adjusted cost items after obtaining the consent of the investment decision maker.

c) The investment decision maker approves the adjusted construction budget estimate for the cases stipulated in point a of this clause. In cases where the cost structure is adjusted in the economic-technical report as stipulated in point b of this clause, the investor approves the adjusted construction budget estimate.

2. The method for determining the adjusted construction budget estimate is guided in Section 3 of Appendix No. 2 issued together with this Circular.

Article 14. Price of Construction Tender Package

1. The price of a construction tender package includes all necessary costs to implement the tender package, including direct costs, indirect costs, pre-tax income, taxes, fees as prescribed by law, and contingency costs for additional work volume and cost escalation factors for the scope of work within the approved tender selection plan.

2. The basis for determining the price of a construction tender package is stipulated in Clause 2, Article 12 of Decree No. 68/2019/NĐ-CP.

3. Direct costs of the tender package price are determined based on the construction budget estimate, the project construction budget estimate, or the construction tender package budget estimate.

4. Indirect costs of the construction tender package price are determined in accordance with the content, scope of work of each tender package.

5. Contingency costs in the construction tender package price are determined in accordance with the nature of the work, implementation time, and contract form of the tender package, including:

a) Contingency costs for additional work volume factors are calculated as a percentage (%) of the total costs of the tender package before contingency costs. In cases where the work volumes of the tender packages are specifically and accurately defined, the investor decides the contingency rate for additional work volume factors and it must not exceed 5%.

b) Contingency costs for cost escalation factors are determined based on the implementation period of the tender package and the appropriate construction price index according to the nature and type of work of the construction tender package, taking into account domestic and international price fluctuations.

c) Depending on each construction tender package, the level of contingency costs in the tender package price must not exceed the contingency costs in the preliminary total investment estimate, total investment estimate, construction budget estimate, or construction tender package budget estimate that have been approved.

d) The method for determining contingency costs for construction tender packages is carried out similarly to the contingency costs in the total investment estimate and construction budget estimate.

6. The costs of the construction tender package price must be determined or updated corresponding to the price level at 28 days prior to the tender closing date. If the price of the construction tender package, after updating, exceeds the approved construction tender package budget estimate or construction budget estimate and causes the total investment estimate of the project to exceed, then the investor must adjust the types and origins of materials and equipment to meet quality and technical requirements but at suitable prices without exceeding the total investment estimate and report to the Investment Decision Maker for approval. The Investment Decision Maker decides to use the contingency fee when determining or updating the tender package price.

Article 15. Use of Contingency Costs

The use of contingency costs is regulated in Clause 4, Article 11 of Decree No. 68/2019/NĐ-CP and as follows:

The Investment Decision Maker decides on the use of contingency costs for projects and construction budgets. Within the approved contingency costs, the investor decides on the use of contingency costs in accordance with the characteristics, nature, implementation time, and specific conditions of each construction tender package.

CHƯƠPART IV

DETERMINATION OF QUANTITIES AND PRICES FOR CONSTRUCTION PROJECTS

Section 1

Construction Quantities

Article 16. System of Construction Quantities

1. The system of construction quantities includes basic quantities, construction project budget estimates, and cost quantities as stipulated in Articles 13 and 14 of Decree No. 68/2019/NĐ-CP.

2. The method for determining construction quantities is guided by Appendix 6, Appendix 7, and Appendix 8 issued together with this Circular.

Article 17. Management of Construction Norms

The management of the construction norm system as prescribed in Article 15 of Decree No. 68/2019/NĐ-CP shall be implemented as follows:

1. New construction norms are construction budget norms not included in the existing construction norm system or construction norms already named in the existing construction norm system but using different construction technologies.

2. Adjusted construction norms are norms that have been modified in terms of consumption factors or norm values of issued construction norms to suit construction conditions, construction methods, specific technical requirements of projects, or all three factors.

3. When using the construction norms mentioned in Clause 1 and Clause 2 of this Article to determine construction unit prices which are higher than those applied under issued norms, the project investor must report to the Investment Decision Maker or the Minister of Construction, the Minister of the specialized construction management sector, or the Chairman of the provincial People's Committee for investment projects decided on by the Prime Minister, in coordination with the Ministry of Construction before implementation.

 Section 2

Construction Project Price

Article 18. Construction Project Price   

1. The construction project price as prescribed in Article 16 of Decree No. 68/2019/NĐ-CP is defined as follows:

a) Detailed construction unit price includes detailed and incomplete detailed construction unit prices.

b) Comprehensive construction price includes comprehensive and incomplete comprehensive construction prices.

2. Contents of costs constituting the construction project price

a) Contents of costs constituting detailed construction unit price:

- Incomplete detailed construction unit price includes direct costs for materials, labor, machinery and equipment for construction work.

- Complete detailed construction unit price includes direct costs, indirect costs, and pre-tax income.

b) Contents of costs constituting comprehensive construction price are defined as follows:

- Incomplete comprehensive construction price includes direct costs for materials, labor, machinery and equipment for construction work, and is compiled from the detailed construction unit price at point a of this clause.

- Complete comprehensive construction price includes direct costs, indirect costs, pre-tax income, and is compiled from the detailed construction unit price at point a of this clause.

3. Prices of cost elements in the construction project price

a) Construction material price is the price of a unit of material consistent with the unit of measurement in the construction norm (price for 1 m3 of sand, 1 kg of steel, 1 brick, etc.) published by competent state agencies or market price.

b) Construction labor unit price is the price calculated for a day's work of construction workers and is determined according to the guidelines of the Minister of Construction.

c) Machinery and equipment construction work shift price is the average price calculated for a shift and is determined according to the guidelines of the Minister of Construction.

4. Basis for determining the construction project price

a) Detailed construction unit price is determined based on construction norms and prices of corresponding cost elements or determined according to market prices suitable for the calculation period.

b) Comprehensive construction price is determined based on the compilation of detailed construction unit prices or determined according to market prices suitable for the calculation period.

5. Methods for determining the construction project price and construction material price are carried out according to the guidance in Appendix 4 attached to this Circular.

Article 19. Management of Construction Project Costs

The management of construction project costs shall be carried out in accordance with the provisions of Article 17 of Decree No. 68/2019/NĐ-CP and specifically as follows:

1. The People's Committee of the province shall assign the Department of Construction to take the lead and coordinate with relevant agencies based on the guidance of the Minister of Construction to determine and announce the prices of building materials, unit prices for construction labor, machinery rental rates and construction equipment, and construction price indices as the basis for managing construction project costs as stipulated in Clause 2, Article 35 of Decree No. 68/2019/NĐ-CP.

2. The project investors, consulting units (project investment feasibility studies, design, review), and appraisal units shall be responsible for selecting commonly used building materials that are environmentally friendly, energy-saving, and widely available on the market when preparing pre-feasibility study reports, feasibility study reports, construction designs, and determining investment costs to ensure cost savings, investment efficiency, and compliance with project requirements.

3. In cases where special types of building materials not commonly available on the market or imported must be selected due to architectural, structural, or other project requirements, they must be clearly explained in the pre-feasibility study report, feasibility study report, technical design description, construction drawing design, FEED design, and must be approved by the Investment Decision Maker or reviewed and approved.

CHAPTER V

CAPITAL INVESTMENT AND COMPREHENSIVE CONSTRUCTION COSTS FOR STRUCTURAL COMPONENTS OF PROJECTS

Section 1

Capital investment for construction projects

Article 20. Contents of Capital Investment for Construction Projects

1. Capital investment for construction projects (hereinafter referred to as capital investment) is the necessary cost for a unit of measurement (area, volume, length, etc.), capacity, or service capability according to the design to determine the construction project investment cost.

2. Capital investment includes construction costs, equipment costs, project investment management costs, construction investment consulting costs, and other cost items. Capital investment includes value-added tax for the aforementioned costs.

Capital investment does not include costs for implementing certain types of work according to specific project/construction requirements, specifically:

a) Compensation, support, and resettlement costs including land compensation costs, house compensation costs, compensation costs for structures on land, attached assets, surface water, and other compensation costs as prescribed; support amounts when the state recovers land; resettlement costs; organization costs for compensation, support, and resettlement; land use and lease costs during the construction period (if applicable); relocation costs, restoration costs for infrastructure that has been invested in and constructed (if applicable), and other related costs;

b) Interest on loans during the implementation of construction investments (for projects using borrowed funds);

c) Initial working capital (for construction projects aimed at production and business purposes);

d) Contingency costs within the total investment ceiling (contingency for additional work volumes and contingency for inflation factors during the project implementation period);

đ) Certain costs with unique characteristics for each project including environmental impact assessment and handling the project's effects on the environment; international quality inspection, deformation monitoring of the structure; quality inspection costs; special foundation reinforcement; foreign consulting fees.

Article 21. Principles for Determining the Investment Capital Rate for Construction Projects

1. The representative construction project selected for calculation must be consistent with construction standards, construction regulations, industry standards, classification and grading regulations for construction projects, have a tendency to be invested in and constructed, and be in line with the development trend of science and technology, economy, and society at the time of determination.

2. For each group and type of construction project, typical projects must be chosen in accordance with the classification and grading regulations for construction projects.

3. Technical guidelines and construction standards applied for calculating the investment capital rate must be complete and clear.

4. The investment capital rate must comprehensively and reasonably calculate all constituent costs, ensuring representativeness and comprehensiveness.

5. Data and information used to determine the investment capital rate must ensure reliability and be appropriate to the design phase.

6. The unit of measurement used for the investment capital rate must be selected appropriately according to the type of construction project.

Article 22. Methods for Determining the Investment Capital Rate for Construction Projects

The method for determining the investment capital rate shall follow the guidance provided in Appendix No. 5 issued together with this Circular.

Section 2

Comprehensive Construction Cost for Structural Components of Construction Projects

Article 23. Contents of the Comprehensive Construction Cost for Structural Components of Construction Projects

1. The comprehensive construction cost for structural components of construction projects includes all necessary expenses to complete a volume of work groups, types of construction works, and structural components of construction projects.

2. The comprehensive construction cost for structural components of construction projects comprises direct cost items, indirect cost items, pre-tax income, and value-added tax.

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1. The representative construction project selected for calculation must be consistent with construction standards, construction regulations, industry standards, classification and grading regulations for construction projects, and commonly invested in and constructed at the time of determination.

2. The list of construction works according to structural components of construction projects must be unified, scientific, and convenient for use. The selected structural component of the construction project must have sufficient information on symbols, dimensions, and quantities to measure volumes from design documents.

3. Data and information used for calculation must ensure reliability and be appropriate to the design phase.

4. The comprehensive construction cost for structural components of construction projects must comprehensively and reasonably calculate all constituent costs, ensuring representativeness and comprehensiveness.

5. Technical guidelines and construction standards applied for calculating the comprehensive construction cost for structural components of construction projects must be complete and clear.

6. The unit of measurement for the comprehensive construction cost for structural components of construction projects must be selected appropriately according to the type of work being calculated.

Article 25. Methods for Determining the Comprehensive Construction Cost for Structural Components of Construction Projects

CHAPTER VI

IMPLEMENTATION

Article 26. Method for Determining the Comprehensive Construction Cost for Structural Components of Construction Projects shall follow the guidance provided in Appendix No. 5 issued together with this Circular.

Transitional Provisions

The determination and management of construction investment costs during the transitional period as stipulated in Clause 1 and 2 of Article 36 of Decree No. 68/2019/NĐ-CP are specified as follows:

1. An ongoing construction investment project is a project that has received an investment decision and has implemented tasks after the project was approved such as conducting surveys for design purposes after the basic design stage; selecting contractors to implement the detailed design.

2. A construction investment project that has been approved but not yet implemented is a project that has been decided on investment by the competent authority but has not yet carried out the tasks mentioned in Clause 1 of this Article.

3. When adjusting the total investment ceiling or the construction budget estimate, the adjustment and updating of norms, construction costs, and tender package prices at 28 days before the tender opening date according to current regulations at the time of adjustment shall be decided by the Investment Decision Maker based on ensuring the principles of efficiency, progress, and cost savings of the project.

Article 27. Effectiveness

4. Construction tenders that have closed, selected contractors, and signed contracts shall be implemented according to the tender documents, bid documents, and contents of the signed contracts.

1. This Circular takes effect from February 15, 2020, and replaces Circular No. 06/2016/TT-BXD dated March 10, 2016, guiding the preparation and management of construction project investment costs.