Circular No. 12/2000/TT-BXD guiding the management of construction investment costs for infrastructure works under Program 135

CIRCULAR

Guidelines for Managing Investment Costs for Infrastructure Construction Projects under Program 135

Pursuant to the Government Decree No. 15/CP dated March 4, 1994, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to Decision No. 135/1998/QĐ-TTg dated July 31, 1998 of the Prime Minister approving the program for socio-economic development in particularly difficult communes in mountainous areas, remote and far-flung regions (referred to as Program 135); Decision No. 197/1999/QĐ-TTg dated September 30, 1999 of the Prime Minister on managing the construction program for commune centers in mountainous and highland areas.

Pursuant to Circular Joint No. 416/1999/TTLT/BKH-UBDTMN-TC-XD dated April 29, 1999 of the Ministry of Planning and Investment, the Committee for Ethnic Minorities and Mountainous Areas, the Ministry of Finance, and the Ministry of Construction guiding management of investment and construction of infrastructure projects in particularly difficult communes in mountainous areas, remote and far-flung regions;

After reaching consensus with the Ministry of Planning and Investment, the Committee for Ethnic Minorities and Mountainous Areas, and the Ministry of Finance, the Ministry of Construction hereby guides the implementation of management of investment costs for infrastructure construction projects under Program 135 and the construction program for commune centers in mountainous and highland areas as follows:

PART I- SCOPE OF APPLICATION AND OBJECTS

1- This Circular guides the management of investment costs for small-scale infrastructure construction projects with technical simplicity and investment capital below one billion VND under the scope of Program 135 and the construction program for commune centers in mountainous and highland areas (hereinafter referred to collectively as Program 135). This Circular does not apply to other construction projects.
2- For infrastructure projects with investment capital of one billion VND or more, the management of investment costs shall be carried out in accordance with the provisions of the Regulation on Management of Investment and Construction issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government.

PART II - CONSTRUCTION COSTS

The construction cost for infrastructure projects under Program 135 is determined based on the volume of construction work of the project, a system of norms, economic and technical indicators, and current state policies consistent with the actual conditions of the project.
The total preliminary estimate for an infrastructure project is the total amount of necessary investment costs calculated specifically at the detailed design and construction stage, including: construction and installation costs, equipment costs (if applicable), other costs, and contingency costs. The items of cost in the total preliminary estimate are stipulated in Circular No. 09/2000/TT-BXD dated July 17, 2000 of the Ministry of Construction on Guidelines for Preparation and Management of Construction Costs for Projects under Investment Programs.
The construction preliminary estimate for infrastructure projects is prepared based on the volume of construction work calculated according to the detailed design, unit prices for construction and installation works issued by the People's Committee of the province, and expenses such as general expenses, pre-tax income, and output VAT (Annex 1 attached to this circular). Specifically as follows:
1- Labor costs in the unit price are applied according to the guidance in the local unit price list for construction and installation works. In cases where the project receives additional allowances calculated based on wages, these allowances are added to the labor cost in the preliminary estimate.
When it is necessary to separate labor costs in the construction and installation preliminary estimate to subcontract to local workers, it must be based on the Budget Estimate Norms, and the daily wage rate in the local unit price list for construction and installation works.
2- Material costs: Applied according to the regulations in the local unit price list for construction and installation works. For projects implemented by the commune itself or designated tendering using certain types of building materials extracted locally such as bamboo, reed, sand, gravel... the cost of these materials is calculated based on the actual purchase price consistent with the local market price of building materials and is adjusted for price differences in the construction and installation project preliminary estimate.
3- Machinery costs: Calculated according to the Machinery Rental Price List issued together with Decision No. 1260/1998/QĐ-BXD dated November 28, 1998 of the Minister of Construction.
4- General expenses and pre-tax income are applied according to the provisions in Annex 2 attached to this circular.
For the volume of construction and installation work done by the commune itself (undertaking the entire package of work), general expenses are calculated at 40% of the prescribed general expense level. The use of this expense is separately budgeted and must be approved by the People's Committee of the district based on actual implementation.
5- Value Added Tax (VAT) is applied according to current regulations. For infrastructure projects implemented by the commune itself, VAT is not included in the construction and installation project preliminary estimate.

PART III - OTHER EXPENSE ITEMS

I. INVESTMENT PREPARATION STAGE

1\. Infrastructure projects with a total investment value under VND 1 billion shall only prepare an Investment Report. The content of the Investment Report shall be prepared in accordance with Circulars No. 06/1999/TT-BKH dated November 24, 1999 and No. 07/2000/TT-BKH dated July 3, 2000 issued by the Ministry of Planning and Investment. Projects that prepare an Investment Report do not need to undergo review. The investor is responsible for submitting the Investment Report to the competent authority for investment decision-making.

2\. The cost for preparing the Investment Report shall be uniformly applied based on the total approved construction investment capital of the project. 0,37% the total investment capital for construction projects that have been approved by the competent authority.

II. IMPLEMENTATION STAGE OF CONSTRUCTION INVESTMENT

Some other expense items belonging to the implementation stage of construction investment are included in the project budget as follows:

1\. Compensation costs for land damage, property loss, crops, and land clearance for construction:

Determining compensation costs for land, property, crops, and land clearance for construction projects (if applicable) shall be carried out in accordance with Government Decree No. 22/1998/NĐ-CP dated April 24, 1998 regarding compensation for losses when the State requisitions land for national defense, security, national interests, and public interest purposes. The compensation unit price shall be applied according to the unit price issued by the Chairman of the Provincial People's Committee.

Based on the specific conditions of the locality and the approved land clearance and compensation plan, the Provincial People's Committee decides on the content and unit prices for land clearance and compensation work based on mobilizing local resources to the maximum extent possible for this purpose.

2\. Construction Survey Costs:

Construction survey costs such as geological drilling, hydrological surveys, soil and rock sampling tests, and mapping the current status of the construction area shall be determined based on the Construction Survey Budget Standards issued together with Decision No. 06/2000/QĐ-BXD dated May 22, 2000 and Circular No. 07/2000/TT-BXD dated July 12, 2000 of the Ministry of Construction and the Construction Survey Price List issued by the Provincial People's Committee.

3\. Construction Design Costs:

a\. For infrastructure projects under Program 135, due to their small scale and simple technology, the construction design process shall be implemented in one step (technical design - construction).

b\. For new design projects, the design cost shall be calculated based on the value of the construction and installation works (excluding VAT) approved by the competent authority. 2,7% c\. In cases where standard designs or reused designs are used, the design cost shall be calculated based on the new design cost multiplied by an adjustment factor of 1.

c. In cases where the project uses standard designs or reused designs, the design costs shall be calculated at the rate of new design costs multiplied by an adjustment factor equal to 0,5 .

4\. Cost (fee) for reviewing design, total estimate, and estimate:

a\. When the provincial construction management agency conducts the review of design, total estimate, and estimate of the project, the review fee shall be determined according to the fee level prescribed by the Ministry of Finance in Decision No. 141/1999/QĐ-BTC dated November 16, 1999.

b\. In cases where a consulting organization is hired to conduct the review of design, total estimate, and estimate of the project, the review cost shall be determined according to the cost level prescribed by the Ministry of Construction in Decision No. 14/2000/QĐ-BXD dated July 20, 2000. Specifically:

The design review cost shall be 0.18% of the construction and installation works estimate value (excluding VAT) approved by the competent authority.

The total estimate and estimate review cost shall be equal to the construction and installation works estimate value (excluding VAT) approved by the competent authority. 0,20% the construction work budget estimate value (excluding VAT) of the project approved by the competent authority.

5\. Tender organization costs:

For infrastructure projects that organize construction tenders in accordance with the Tender Regulations issued together with Government Decrees No. 88/1999/NĐ-CP dated September 1, 1999 and No. 14/2000/NĐ-CP dated May 5, 2000, the costs for preparing tender documents and evaluating tender submissions shall be calculated at 0.35% of the construction and installation works estimate value (excluding VAT) approved by the competent authority.

6\. Construction supervision costs:

Construction supervision costs for infrastructure projects are stipulated as follows:

a\. When hiring consultants to carry out construction supervision, the construction supervision cost shall be determined at 1% of the construction and installation works estimate value (excluding VAT) approved by the competent authority. 1,5% the construction work budget estimate value (excluding VAT) of the project approved by the competent authority.

b\. In cases where the project management board at the district or commune level (if any) carries out construction supervision themselves, the supervision cost shall be budgeted based on the specific conditions of the project and approved by the investment decision but shall not exceed the cost level specified in point a, Clause 6 of this Circular.

7\. Project Management Board costs: a\. The Project Management Board cost for infrastructure projects is generally determined as follows:

For district-level Project Management Boards, the Project Management Board cost shall be 1% of the construction and installation works and equipment estimate value approved by the competent authority.

For commune-level Project Management Boards (if any), the Project Management Board cost shall be 1% of the construction and installation works and equipment estimate value approved by the competent authority. 2,2% b\. Costs related to program management and activities of the Program Steering Committee at various levels of local government do not fall within the scope of Project Management Board costs and shall not be included in the project implementation costs.

For commune-level Project Management Units (if any), the project management unit cost shall be 2% b\. Costs related to program management and activities of the Program Steering Committee at various levels of local government do not fall within the scope of Project Management Board costs and shall not be included in the project implementation costs.

8\. Costs for temporary campsites serving construction:

For infrastructure projects approved by the competent authority to allow the establishment of temporary campsites for construction purposes, the cost for establishing temporary campsites must be separately budgeted by the construction unit and approved by the investment decision, but shall not exceed 1% of the construction and installation works estimate value (excluding VAT) of the project.

For infrastructure projects where the competent authority has approved the budget estimate allowing the construction of temporary shelters to serve construction activities, the cost of constructing temporary shelters must be separately prepared by the construction unit and must be approved by the investment decision-making body with a limit not exceeding 1% of the construction work budget estimate value (excluding VAT) of the project.

9\. During the project implementation period, the funds allocated for the above expenses shall not be diverted for other purposes.

III. PROJECT COMPLETION STAGE

1\. The final settlement of investment capital for infrastructure construction projects funded from various sources shall be carried out in accordance with Circular No. 70/2000/TT-BTC dated July 17, 2000 issued by the Ministry of Finance. The cost for reviewing and approving the final settlement of investment capital for construction projects shall be calculated based on the construction and installation works estimate value (excluding VAT) of the project being settled. 0,10% the construction work budget estimate value (excluding VAT) of the project upon final settlement.

2- The costs for acceptance, handover, and putting the project into operation (if applicable) shall be separately budgeted and included in the total estimated cost, project estimate.

PART IV - IMPLEMENTATION ORGANIZATION

This Circular applies only to infrastructure projects under Program 135 and the construction of commune centers under programs implemented according to Prime Minister's Decisions.
The preparation of infrastructure project estimates in accordance with the guidelines set forth in this Circular shall apply from October 1, 2000.
For projects that have been approved for total estimated costs, construction and installation budgets prior to October 1, 2000, or are currently undergoing design review and approval for total estimated costs and construction and installation budgets prepared before the aforementioned date, adjustments to construction investment costs in accordance with the provisions of this Circular shall not be made.
During implementation, if issues requiring supplementation or modification are identified, localities within the scope of Program 135 are requested to promptly report to the Ministry of Construction for study and resolution.

During implementation, if issues requiring supplementation or modification are identified, localities within the scope of Program 135 are requested to promptly report to the Ministry of Construction for study and resolution./.

ANNEX 1

CONSTRUCTION

ITEM OF CONSTRUCTION WORK

Of which :

Article 24^{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.} : Quantity of construction work item j.

D^jvl , D^jnc , D^jm : Material, labor, and machinery costs within the unit price of installation and construction work item j.

P: General cost rate (%).

TL: Pre-tax income subject to tax.

gxl: Estimated pre-tax construction value.

Gxl: Estimated post-tax construction value.

CLvl: Material variance (if any).

d.1. Amount of taxable income in Vietnam:^xl_VAT : Value-added tax rate prescribed for construction work.

VAT: Total output value-added tax (including input value-added tax paid when purchasing materials, fuels, energy... and the portion of value-added tax that the construction enterprise must pay).

F_nc: Additional allowances not included in the unit price specified in the local construction cost schedule (if any).

Appendix 2:

Type of Project

Common Costs