Decision No. 10/2005/QD-BXD on Issuing the Cost Management Standards for Investment Construction Projects

DECISION OF THE MINISTER OF CONSTRUCTION

Regarding the issuance of Cost Standards for Project Management in Investment Construction Projects

THE MINISTER OF CONSTRUCTION

Pursuant to the Construction Law No. 16/2003/QH11 dated November 26, 2003 of the National Assembly of the Socialist Republic of Vietnam;

Pursuant to Decree No. 209/2004/NĐ-CP dated December 16, 2004 of the Government on management of construction work quality;

Pursuant to the Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on project management in investment construction projects;

BASED ON THE GOVERNMENTAL DECREE NO. 36/2003/NĐ-CP OF APRIL 4, 2003, PROVIDING THE FUNCTIONS, TASKS, POWERS, AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF CONSTRUCTION;

Based on the proposal of the Director of the Institute of Construction Economics and the Director of the Department of Economic Finance;

DECISION:

Article 1. The cost standards for project management in investment construction projects are hereby issued together with this Decision.

Article 2. This Decision shall take effect 15 days from the date of publication in the Official Gazette and shall replace Decision No. 15/2001/QĐ-BXD dated July 20, 2001 on the issuance of Cost Standards for Investment Consulting Services and Project Management Costs issued pursuant to Circular No. 07/2003/TT-BXD dated June 17, 2003 guiding the preparation and management of construction costs for projects under the Ministry of Construction.

Article 3. Ministries, ministerial-level agencies, agencies under the Government, People's Committees of provinces and centrally governed cities, State-owned corporations have the responsibility to implement this Decision./.

COST STANDARDS FOR PROJECT MANAGEMENT IN INVESTMENT

CONSTRUCTION PROJECTS

(Issued together with Decision No.: 10/2005/QĐ-BXD dated April 15, 2005

of the Minister of Construction)

PART I: APPLICATION PROVISIONS

1. The cost standards for project management in investment construction projects (hereinafter referred to as cost standards for project management) stipulated in this document serve as the basis for determining necessary costs for project management tasks from the time of investment approval to completion, acceptance, and commissioning. The cost standards for project management apply to projects using: state budget capital, ODA funds; credit guaranteed by the state; state investment development credit and state-owned enterprise investment development capital.

2. The cost standards for project management specified in Table II.1 in Part II of this document represent the maximum costs for project management tasks, including:

- General project management;

- Organizing land acquisition and clearance work within the responsibility of the investor;

- Reviewing technical design, construction drawings, estimates, and total estimates of the project;

- Preparing tender documents, inviting tenders, analyzing and evaluating tender documents to select consulting contractors; construction contractors; selecting general contractors in construction; architectural competition (if applicable);

- Supervising construction works; supervising installation of equipment; supervising construction survey;

- Testing and certifying the quality compliance of the project;

- Acceptance and commissioning of the project;

- Final accounting and conversion of investment construction capital;

- Performing other tasks (organizing investment project review, reviewing cost estimates of consulting tasks that require preparation of estimates and other tasks).

3. The cost standards for project management are determined based on the requirements of content and products of the tasks mentioned in Point 2 and are defined according to the type of project as follows:

- Civil projects;

- Industrial projects;

- Transportation projects;

- Water conservancy projects;

- Technical infrastructure projects.

4. Project management costs are calculated as a percentage (specified in Table II.1 in Part II of this document) of construction costs and equipment costs (excluding value-added tax) in the approved total investment amount. The investor is responsible for managing and utilizing project management costs appropriately to perform the above tasks and comply with relevant regulations.

5. It is encouraged to apply the cost standards for project management stipulated in this document to determine project management costs for investment construction projects funded by other sources.

6. When managing important projects approved by the National Assembly for investment and permitted to proceed, group A projects comprising multiple component projects or implemented in phases as recorded in the investment decision, project management costs are calculated according to the corresponding cost standards for each component project.

7. For projects applying the turnkey design, supply of materials and equipment, and construction (EPC) model, depending on the tasks assigned by the investor to the general contractor, the general contractor may be entitled to a portion of the project management costs commensurate with the workload assigned, through the content and workload specified in the contract signed with the investor. Project management costs for projects in remote areas are calculated according to the prescribed cost standards and adjusted with a factor k = 1.25; for projects on islands, they are calculated according to the prescribed cost standards and adjusted with a factor k = 1.35.

8. In cases where the investor hires organizations or individuals with the capacity to undertake some project management tasks, the investor must allocate from the project management fund calculated according to the prescribed standards to hire organizations or individuals to carry out these tasks. The cost of hiring organizations capable of performing specific professional tasks is determined as follows:

8.1 The cost of reviewing technical design, construction drawings, estimates, and total estimates of the project is calculated as a percentage (specified in Table III.1 and Table III.2 in Part III of this document) of construction costs (excluding value-added tax) in the approved total estimate or project estimate.

8.2 The cost of preparing tender documents, inviting tenders, analyzing and evaluating tender documents to select construction contractors is calculated as a percentage (specified in Table III.3 in Part III of this document) of construction costs (excluding value-added tax) in the approved total estimate or project estimate.

8.3 The cost of preparing tender documents and selecting suppliers of materials and equipment for the project is calculated as a percentage (specified in Table III.4 in Part III of this document) of equipment costs (excluding value-added tax) in the approved total estimate or project estimate.

8.4 The cost of supervising construction works is calculated as a percentage (specified in Table III.5 in Part III of this document) of construction costs (excluding value-added tax) and the cost of supervising installation of equipment is calculated as a percentageas specified in Table III.6 in Part III of this document.of equipment costs (excluding value-added tax) in the total project budget approved.

8.5 Fees for reviewing investment projects, costs for auditing final accounts of construction works as prescribed by the Ministry of Finance.

8.6 Costs for the following tasks shall be determined based on budgets, including: organizing compensation and land clearance work within the responsibility of the investor; selecting architectural designs (if applicable); choosing consulting contractors; selecting general contractors in construction activities; preparing construction survey tasks and supervising construction surveys; inspecting and certifying the quality of construction works; converting construction investment capital; hiring individuals or organizations to participate in reviewing investment projects, auditing cost estimates of required consulting tasks, and performing other tasks. The content of the budget is as directed in the annex attached to this document. The investor shall approve these cost budgets and bear full legal responsibility for their decisions.

8.7 When negotiating to sign contracts for engaging consultants to perform the tasks mentioned in Points 8.1; 8.2; 8.3; 8.4, construction costs and equipment costs shall be temporarily determined according to the construction costs and equipment costs in the approved total investment amount. The contract payment value will be calculated based on the construction costs and equipment costs in the approved total budget.

9. When the investor hires a consultant to perform some project management tasks for projects with bid documents prepared in two languages, the costs for these tasks shall be adjusted with a factor k = 1.2 compared to the costs calculated according to the norms stipulated in Part III of this document.

10. In cases where the total construction budget has not been reviewed after individual construction budgets have been reviewed, the review costs for these budgets shall only be calculated at 85% of the prescribed cost norms. When reviewing the total budget or adjusted budget, the review costs shall be determined based on a budget that matches the content of the total budget or construction budget adjustments but shall not exceed 50% of the prescribed cost norms in this document.

11. In cases where the consulting work has been completed according to the contract signed between the investor and competent organizations or individuals, but the project is not implemented or the consulting work must be redone according to the investor's requirements (not due to the fault of the consulting unit), the investor must pay the costs to carry out these tasks according to the contract content. If the consulting work products by competent organizations or individuals have been accepted but the consulting costs have not been paid according to the time stated in the contract, the investor must pay interest on the unpaid consulting costs according to the corresponding regulations and the delayed payment period.

12. In cases where the project implementation schedule or construction supervision period exceeds the prescribed duration, the investor must report to the Investment Decision Maker for consideration and decision on adjusting the project implementation schedule and construction supervision period. In such cases, project management costs or construction supervision costs shall be supplemented with additional costs corresponding to the extended period. The investor shall report to the Investment Decision Maker to decide on these supplementary costs.

13. In cases where construction costs and equipment costs in the total investment amount or construction costs and equipment costs in the approved total budget (or budget) fall between the two costs prescribed in Parts II and III of this document, the standard cost norms for project management costs and costs for hiring competent organizations to perform certain specialized tasks shall be determined using interpolation methods.

14. The investor is responsible for managing and using the project management fund calculated according to the norms stipulated in this document efficiently for activities during the project management process. For projects with special characteristics, if the project management costs determined according to the norms stipulated in this document are inappropriate, and for projects with construction costs and equipment costs in the approved total budget (or budget) exceeding 10 trillion VND, the investor shall report to the relevant industry management ministry or the Construction Department of the locality where the construction work is located to negotiate with the Ministry of Construction to determine appropriate project management costs.

15. The implementation of transitioning to apply the cost norms prescribed in this document shall follow the guidelines of the Ministry of Construction.

PART II: STANDARDS FOR PROJECT MANAGEMENT COSTS FOR CONSTRUCTION INVESTMENT PROJECTS (See attached file)

PART III: STANDARDS FOR HIRING COSTS OF ORGANIZATIONS WITH CAPABILITY TO PERFORM SOME SPECIALIZED TASKS DURING THE PROJECT MANAGEMENT PROCESS (See attached file)

ANNEX

GUIDELINES FOR THE CONTENT OF THE ESTIMATED COSTS FOR HIRING CONSULTANCY ORGANIZATIONS TO PERFORM SOME TASKS IN THE PROJECT MANAGEMENT PROCESS

(For specialized tasks that require cost estimation)