Circular No. 118/2007/TT-BTC guides the management and use of project management costs for investment projects funded by state budget funds.

CIRCULAR

Guidelines for managing and using project management costs

of projects funded by state budget funds

__________________________

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance.

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law No. 01/2002/QH11.

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on Management of Construction Project Investment Costs.

The Ministry of Finance provides guidelines for managing and using project management costs of projects funded by state budget funds as follows:

Part I

GENERAL PROVISIONS

1. Project management costs are all necessary expenses required for the project owner and project management board (PMO) to carry out project management tasks throughout the investment process of the project.

2. Scope and scope of application: All project owners and PMOs managing projects funded by state budget funds (SBF), including projects funded by Official Development Assistance (ODA) and government bonds, must manage and use project management costs according to current laws and specific guidance provided in this Circular, ensuring proper purpose, economy, and effectiveness.

3. Projects with total investment costs under seven billion dong do not need to prepare and approve separate budgets but must use project management costs according to the provisions set forth in Point 3 (3.2), Section IV, Part Specific Provisions of this Circular and not exceed the prescribed limit on project management costs as determined by the investment decision-making authority. Final settlement of project management costs shall be conducted concurrently with final settlement of completed projects.

4. Consulting enterprises implementing project management under consulting contracts are not within the scope of regulation of this Circular.

Part II

SPECIFIC PROVISIONS

I. PROJECT MANAGEMENT GROUPS

1. Group I: Includes PMOs established by the Minister, Head of a ministry equivalent to a minister, Head of other central agencies, Head of a government agency, Chairman of the People's Committee of provinces and centrally-administered cities to manage national key projects and large-scale Class A projects; having independent legal status; having staff members of the PMO receiving salaries from project management funds.

2. Group II. Includes project owners in cases where PMOs are not established and other PMOs not covered by Group I; staff members of Group II PMOs do not receive salaries from project management funds.

II. SPECIFIC PROVISIONS FOR PROJECT MANAGEMENT GROUPS

1. For Group I

1.1. Group I PMOs implement the accounting system of project owners according to current regulations of the State.

1.2. Annually, based on the allocated investment capital plan, the PMO prepares the annual project management cost budget, requests the financial department of the establishment authority to review and approve. The time for preparing and approving the annual project management cost budget starts from the date of the investment capital allocation decision and no later than January 31 of the planning year. The approval decision on the annual project management cost budget is sent to the PMO and the capital disbursement department for implementation.

a) In cases where the PMO is newly established or at the beginning of the planning year, if there is no approved annual project management cost budget decision, the PMO issues a request to the financial department of the establishment authority and the capital disbursement department to temporarily allocate funds from the state budget for expenditures (1, 2, 3, 5, 6, 7, 8, 9) specified in Point 3 (3.1) Section IV; among which:

- Salaries and other items with salary nature according to the actual pay scale, without additional salary adjustment factors;

- Public service payment, office supplies purchase expenses at levels sufficient to fulfill tasks.

The PMO is responsible for promptly processing payments and refunding temporary allocations after the annual project management cost budget is approved; the temporary allocation period does not exceed two months.

b) If the competent authority supports emergency funding for the PMO according to objectives or supports income for project managers, the PMO may supplement funding sources to cover objectives or support income for managers according to the competent authority's decision.

1.3. At the end of the planning year, the PMO prepares the annual project management cost settlement report and sends it to the financial department of the establishment authority no later than February 28 of the following year for review and approval.

1.4. When the project is completed and put into use, the PMO consolidates the project management cost settlements of all years with the final project completion report to submit to the competent authority for approval.

2. For Group II

2.1. After the project has been included in the capital plan and implemented; the PMO or project owner in cases where PMOs are not established prepares the entire project management cost budget for the entire implementation process,不分段直接翻译最后两行：

2.2. When the project is completed and put into use, the PMO or project owner in cases where PMOs are not established prepare the project management cost settlement together with the final project completion report to submit to the competent authority for approval of the settlement.

3. Control of project management cost payments

3.1. The capital disbursement control agency implements control over project management cost payments according to the approved budget, in accordance with current financial management regulations and specific provisions of this Circular.

3.2. During the usage period, the project owner (PMO) can proactively adjust items within the project management cost budget (without requiring written adjustments), but must not exceed the total value of the approved project management cost budget.

4. Handling of revenue from selling tender documents

The amount of revenue from selling tender documents is regulated by laws on bidding; the cost of organizing the bidding process cannot exceed the revenue obtained from selling tender documents; the remaining revenue obtained from selling tender documents after settling the necessary costs for organizing the bidding process, the project owner (PMO) remits to the state budget.

5. Procurement and use of transportation means

The procurement and use of transportation means such as cars for project management purposes (if applicable) must be budgeted separately and submitted to the competent authority for approval in accordance with the provisions of Decision No. 59/2007/QĐ-TTg dated May 7, 2007 of the Prime Minister on the issuance of standards, norms, and regulations for the management and use of transportation means in state agencies, public service units, and state-owned enterprises. The project sponsor (Project Management Board) shall not lease or lend assets of the project.

III. SOURCES OF PROJECT MANAGEMENT FUNDS

1. Project management funds for investment projects shall be allocated from the project's investment capital.

2. Norms for allocating project management funds:

2.1. For construction investment projects, the norm for allocating project management funds shall be determined based on the investment decision level's regulations, based on the cost norms for managing construction investment projects published by the Ministry of Construction.

2.2. For projects without construction costs and equipment or total construction and equipment costs less than 60% of the total investment amount of the project, the norm for allocating project management funds shall be determined according to the regulations of the investment decision level.

2.3. For ODA projects: if the project agreement specifies the management fund amount, it shall be implemented according to the agreement; if the project agreement does not specify the management fund amount, it shall be determined according to points 2 (2.1; 2.2) of Section III.

IV. PREPARATION OF THE PROJECT MANAGEMENT COST BUDGET

1. Basis for preparing the project management cost budget

- Investment decision

- Decision to establish the Project Management Board;

- Decision to allocate investment capital plan;

- Salary calculation table of staff (for Group I Project Management Boards)

2. Determining the total project management cost

2.1. Based on the approved total investment amount of the project and the norms prescribed by the investment decision level to determine the total project management cost (denoted as G_QLDA) according to Model No. 01/DT.QLDA attached;

2.2. Determine the value of investment construction consulting costs performed by the project sponsor (Project Management Board) (denoted as G_TV);

2.3. Determine the value of project management costs for tasks that must be outsourced to consultants (denoted as G_QLDA-TV);

2.4. Determine the value of project management costs for tasks that do not need to be carried out due to the project's specific characteristics, if any (denoted as G_QLDA-KTH);

2.5. The total project management cost portion available for use throughout the project management period by the project sponsor (Project Management Board) is determined according to formula (1) below, denoted as G_{d) The portion of the project management fee that the investor and PMB can use for each project throughout the project management period (denoted as}; which is the maximum limit for preparing the project sponsor's (Project Management Board) project management cost budget.

(1) G_{d) The portion of the project management fee that the investor and PMB can use for each project throughout the project management period (denoted as} = G_QLDA + G_TV  - G_QLDA-TV : bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_QLDA-KTH

3. Content of the project management cost budget

3.1. For Group I Project Management Boards:

Based on the project implementation schedule according to the plan, the Project Management Board allocates the project management cost (G_{d) The portion of the project management fee that the investor and PMB can use for each project throughout the project management period (denoted as}) already determined in Model No. 01/DT.QLDA to each year of the project implementation to include in the annual project management cost budget. The content of the annual project management cost budget includes:

(1). Salary expenses: grade salary according to the assigned salary fund, long-term contract salary for individuals receiving salary from the project according to the decision of the competent authority and current national regulations on salary system.

The determination of the salary fund for project management staff must ensure compliance with the staffing approved by the competent authority. In cases where other expenses are saved, the Project Management Board may apply an additional income adjustment coefficient for employees according to current regulations (currently Decision No. 198/1999/QĐ-TTg dated September 30, 1999 of the Prime Minister on salaries of construction management boards, Circular No. 32/1999/TT-LĐTBXH dated December 23, 1999 of the Ministry of Labor, Invalids and Social Affairs guiding the implementation of Decision No. 198/1999/QĐ-TTg dated September 30, 1999 of the Prime Minister on salaries of construction management boards).

(2). Salary allowances: position, responsibility, region, attraction, expensive, overtime, hazardous, dangerous, mobile, special allowance of the industry for individuals receiving salary from the project according to the decision of the competent authority under current regulations for state agencies and public service units.

(3). Contributions to social insurance, health insurance, trade union fees, and other deductions for individuals receiving salary from the project according to the decision of the competent authority under current regulations for state agencies and public service units.

(4). Bonus expenses: regular bonuses, ad hoc bonuses (if any) according to current regulations for state agencies and public service units.

(5). Welfare expenses: payment for leave, leave benefits, regular hardship assistance, ad hoc hardship assistance according to current regulations for state agencies and public service units.

(6) Overtime expenses: only calculated for individuals not receiving overtime allowances in item (2) of point 3 (3.1) of Section IV and in cases where overtime can be specifically calculated according to the attendance sheet and the Labor Law on working hours, rest periods, and related implementing regulations.

(7) Travel expense reimbursement according to current regulations for state agencies and public service units.

(8). Office supplies purchase expenses: office equipment, filing cabinets, desks and chairs, books and materials for professional use, office supplies according to current regulations for state agencies and public service units.

(9). Public utility service payment expenses: electricity for living, water for living, telephone charges, postal services, fax, environmental sanitation, payment for other services according to current regulations for state agencies and public service units.

(10). Expenses for purchasing assets serving management: fire extinguishing equipment, computers, computer software.

(11) Repair expenses.

(12). Rental expenses: rental of transportation means, office space, equipment for various uses, hiring experts.

(13). Conference and vocational training expenses according to current regulations for state agencies and public service units.

(14). Outbound and inbound delegation expenses (if any): air tickets, accommodation expenses, incidental expenses... according to current regulations for state agencies and public service units.

(15). Contingency reserve: calculated at 10% of the budget estimate.

3.2. For Group II Project Sponsors (Project Management Boards):

Based on the total amount of project management costs for the portion used by the Project Management Board (BQLDA) as determined in Model No. 01/DT.QLDA; the BQLDA shall prepare the budget estimate for project management costs for the entire implementation process of the project, without dividing it by year. The contents of the project management cost budget estimate include:_{d) The portion of the project management fee that the investor and PMB can use for each project throughout the project management period (denoted as}- Items (6) to (11) of Group I above:

- Project management allowance: only calculated for those directly performing project management tasks, including both BQLDA staff and investors' staff. The BQLDA bases the percentage of the allowance received by each staff member on the degree of time spent on project management and the specific source of project management costs. The maximum monthly project management allowance for an individual is equal to 50% of that individual's monthly salary and wage allowance.

- Contingency reserve, calculated at 10% of the budget estimate.

4. Documents for requesting approval of the project management cost budget estimate

- Request for approval document;

- Decision on establishment of the BQLDA; investment decision; plan allocation decision;

- Project management cost calculation sheet prepared by the investor (BQLDA) (Model No. 01/DT.QLDA);

For Group I BQLDA:

- Annual project management cost budget estimate (Model No. 02A/DT.QLDA); Salary calculation table for staff (Appendix F02A/DT.QLDA); For the investor (BQLDA) in Group II:

- Total project management cost budget estimate (Model No. 02B/DT.QLDA). V. REVIEW AND APPROVAL OF THE PROJECT MANAGEMENT COST BUDGET ESTIMATE

1. Procedure for reviewing the project management cost budget estimate:

- Review the content of work, calculation methods, and results in the project management cost calculation sheet prepared by the investor (BQLDA) according to Model No. 01/DT.QLDA.

- Review the appropriateness of the distribution of expenditure levels for each year and the planned year's expenditure level (for Group I BQLDA);

- Review the appropriateness of the expenditure items in the budget estimate with current national financial standards, norms, and regulations.

2. The head of the financial authority at the level that established the BQLDA approves the annual budget estimate of Group I BQLDA according to Model No. 03A/QĐ.QLDA. The investor approves the budget estimate of Group II BQLDA according to Model No. 03B/QĐ.QLDA.

3. The approval decision is sent to the investor (BQLDA), the payment agency, and related units.

4. The review and approval period for the project management cost budget estimate does not exceed 20 working days from the date all budget estimate documents are received as stipulated.

VI. SETTLEMENT OF PROJECT MANAGEMENT COSTS

1. Annual settlement documents for project management costs for Group I BQLDA include:

- Request for approval of settlement document;

- Annual project management cost settlement report according to Model No. 01/QT.QLDA;

- Reconciliation table of project management cost payment data according to Model No. 04/QT.QLDA;

- Expense vouchers generated during the year.

2. Settlement documents for project management costs when the project is completed

2.1. For Group I:

- Comprehensive settlement report of project management costs according to Model No. 02/QT.QLDA;

- Set of copies of decisions approving the annual settlement of project management costs of the project;

- Final year project management cost settlement report according to Model No. 01/QT.QLDA;

- Reconciliation table of final year project management cost payment data according to Model No. 04/QT.QLDA;

- Expense vouchers generated during the final year.

2.2. For Group II:

- Project management cost settlement report according to Model No. 03/QT.QLDA;

- Reconciliation table of project management cost payment data according to Model No. 04/QT.QLDA;

- Expense vouchers generated during the project implementation process.

3. Audit of project management cost settlement

- Verify the consistency between the proposed settlement figures and the approved budget estimate;

- Examine expense vouchers to ensure legality, rationality, validity, and compliance with current national expenditure regulations;

- Consider end-of-year advances (if any).

4. Approval decision for project management cost settlement

4.1. The approval decision for the annual project management cost settlement for Group I BQLDA is similar to the approval decision for the annual project management cost budget estimate according to Model No. 03A/QT.QLDA; it is sent to the investor (BQLDA), the payment agency, and related units.

4.2. The project management cost settlement for the investor (BQLDA) in Group II is approved collectively in the decision approving the completion project settlement.

VII. INSPECTION

1. Financial management and investment units under ministries, sectors, and localities shall organize inspections of the management and use of project management costs at investor (BQLDA) units within their jurisdiction to promptly correct any violations during the project management process.

2. Investors (BQLDA) shall organize quarterly inspections of the management and use of project management investment costs at their units, thereby drawing lessons to effectively manage such costs.

VIII. RESPONSIBILITIES OF RELATED UNITS

- Responsible for urging the BQLDA to prepare the budget estimate, prepare the settlement report, submit the budget estimate for approval, and submit the settlement for approval in accordance with the timeframes and contents specified in this Circular;

1. Responsibilities of the project sponsor

- Review and approve the project management cost budget estimate (for Group II BQLDA) in accordance with the timeframes and contents specified in this Circular.

2. Responsibilities of the BQLDA

- Prepare the budget estimate, prepare the settlement report, submit the budget estimate for approval, and settle project management costs in accordance with the timeframes and contents specified in this Circular.

- Bear full responsibility for the management and use of project management costs; for the accuracy of the data and the legality of the submitted documents.

3. Responsibilities of the reviewing and approving authority

- Bear responsibility for the results of the budget estimate review, audit, and project management cost settlement approval based on the documents submitted by the BQLDA.

- During the settlement audit process, have the right to recover or hold responsible for compensation for expenses made in violation of regulations, and require the BQLDA to comply with the submission of state budget revenues according to regulations.

4. Responsibilities of the payment control agency

- Bear responsibility for controlling and paying project management investment costs according to the approved budget estimate, in accordance with current national financial management regulations and specific provisions in this Circular.

- Shall be responsible for controlling and settling project management costs in accordance with approved estimates, in conformity with current State financial management regulations and specific provisions set forth in this Circular.

- Compare and confirm the amount of capital already paid for the final account report on project management costs; at the same time provide comments, evaluations, and recommendations to the auditing agency and the approving authority regarding the implementation by the project sponsor.

5. Responsibilities of ministries, sectors, and localities

- Regularly inspect the management and use of project management costs for projects funded by state budget funds within their jurisdiction; take measures according to the provisions of the law against individuals and units that violate the management and use of project management costs.

Part III

IMPLEMENTATION

1. This Circular shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Circular No. 98/2003/TT-BTC dated October 14, 2003, issued by the Ministry of Finance guiding the management and use of project management costs from state budget funds.

2. Project sponsors and Project Management Units (PMUs) that have approved the project management cost budget before this Circular takes effect shall continue to implement according to the approved budget until the end of the plan year for PMUs Group I and until the completion of the project for sponsors (PMUs) in Group II.

3. Specialized PMUs and Regional PMUs during the period not yet converted or dissolved as stipulated in Circular No. 02/2007/TT-BXD dated February 14, 2007, issued by the Ministry of Construction guiding certain contents on: Project investment construction planning, appraisal, approval; construction permits and organization of investment construction management as prescribed in Decrees No. 16/2005/NĐ-CP and No. 112/2006/NĐ-CP of the Government, shall continue to implement according to the provisions for PMUs Group I of this Circular./.