Circular No. 12/2017/TT-BXD guiding the determination and management of costs related to urban development investment

CIRCULAR

Guidelines for determining and managing costs related to urban development investment về đầu tư phát triển đô thị

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Pursuant to Resolution No. 1210/2016/UBTVQH13 dated May 25, 2016 of the Standing Committee of the National Assembly on classification of cities;

Pursuant to Resolution No. 1211/2016/UBTVQH13 dated May 25, 2016 of the Standing Committee of the National Assembly on standards of administrative units and classification of administrative units;

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. 11/2013/NĐ-CP dated January 14, 2013 of the Government on urban development investment management;

At the proposal of the Director of the Institute of Construction Economics, the Director of the Construction Economy Department, and the Director of the Urban Development Department;

The Minister of Construction hereby promulgates this Circular guiding the determination and management of costs related to urban development investment.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the determination and management of costs related to urban development investment including: preparation of proposals for city classification, preparation of urban development programs, preparation of files proposing urban development areas, and other related costs.

Article 2. Applicability

This Circular applies to organizations and individuals using state capital to determine and manage costs for preparing proposals for city classification, preparing urban development programs, preparing files proposing urban development areas, and other related costs.

Article 3. Principles for Determining and Managing Costs

1. Cost standards published in Appendix No. 1 attached to this Circular shall be referred to and used during the process of determining and managing costs for preparing proposals for city classification, preparing urban development programs, and other related costs.

2. Costs for preparing proposals for city classification and urban development programs determined according to the cost standards published in this Circular serve as one of the bases for determining the budget estimate for consultancy tender packages in accordance with the regulations.

3. Costs for preparing proposals for city classification and urban development programs determined according to the cost standards published in this Circular include expenses for direct labor, management fees, other related expenses during the implementation process, and pre-tax income; excluding film production costs illustrating current urban development status; and value-added tax as prescribed.

4. In cases where the population size of a city or the number of district-level administrative units of a province falls between two published scales in the Appendix attached to this Circular, interpolation methods shall be used to determine the cost level.

5. In cases where the population size of a city or the number of district-level administrative units of a province exceeds the published scale in this Circular, or if the costs for preparing proposals for city classification and urban development programs determined according to the cost standards in this Circular are not appropriate, a budget estimate shall be prepared to determine costs in accordance with the guidelines in the Appendix attached to this Circular.

Chapter II

DETERMINATION AND MANAGEMENT OF COSTS RELATED TO URBAN DEVELOPMENT INVESTMENT

Article 4. Determination of Costs

1. Costs related to urban development investment shall be determined according to cost standards:

a) Costs for preparing proposals for city classification shall be determined according to the cost standards at Table No. 1 (Appendix No. 1 attached to this Circular) corresponding to the type of city expected to be upgraded.

b) Costs for preparing provincial urban development programs shall be determined according to the cost standards at Table No. 2 (Appendix No. 1 attached to this Circular) multiplied by the number of district-level administrative units of the province.

c) Costs for preparing urban development programs for individual cities shall be determined according to the cost standards at Table No. 3 (Appendix No. 1 attached to this Circular) multiplied by the forecasted population size within the planning period as stipulated in the approved general planning scheme (excluding the forecasted population size based on vision).

2. Costs related to urban development investment shall be determined according to budget estimates:

a) Costs for preparing proposals for special-class city classification, national urban development programs, urban development programs for special-class cities, and files proposing urban development areas shall be determined by budget estimates based on tasks approved by competent authorities, contents, volumes of work to be performed, and cost items as guided in Appendix No. 2 attached to this Circular.

b) In cases where urban development programs or files proposing urban development areas need to be adjusted, adjustment costs shall be determined according to budget estimates but shall not exceed 70% of the costs determined according to the cost standards in this Circular (for work that has cost standards) and shall not exceed 70% of the approved budget estimate value (for work that must be determined by budget estimates).

c) Costs for review boards or obtaining opinions from organizations and experts during the review of proposals for city classification, urban development programs, and files proposing urban development areas shall be determined by budget estimates but shall not exceed 5% of the costs for preparing proposals for city classification, urban development programs, and files proposing urban development areas respectively.

d) Costs for announcing decisions recognizing city classifications, urban development programs, and urban development areas shall be determined by budget estimates but shall not exceed 2% of the costs for preparing proposals for city classification, urban development programs, and files proposing urban development areas respectively.

e) Travel and accommodation costs for inspection teams comparing proposal contents with actual urban development status in localities; travel and accommodation costs for local management agencies to report to higher-level review boards shall be determined according to budget estimates consistent with the regulations on travel expenses issued by the Ministry of Finance.

g) Costs for selecting consultancy contractors and reviewing budget estimates shall be determined based on the application of relevant regulations.

Article 5. Management of Costs

1. The People's Committees at all levels shall direct the preparation of capital plans for the works mentioned in Article 1 of this Circular within their administrative jurisdictions. The sources of funds to implement these works shall be balanced from local government budget funds or raised from other lawful sources of funding.

2. In cases where state management agencies directly (without hiring consulting units) carry out the preparation of urban classification projects, urban development programs, the costs shall be determined based on the budget estimate but not exceeding 70% of the cost level determined according to the standards published in this Circular. In such cases, the direct implementation costs of state management agencies shall be managed and utilized in accordance with the financial mechanism applicable to administrative state agencies.

3. In cases where consulting units are hired to prepare urban classification projects, urban development programs, and urban development area proposal files, the budget estimate shall include value-added tax and management costs through consulting contracts. The contents of consulting contracts for preparing urban classification projects, urban development programs, and urban development area proposal files must comply with the relevant laws on construction contracts.

4. The costs mentioned in points c, d, and e of Clause 2, Article 4 of this Circular shall be managed according to approved budget estimates. Payment of these costs must comply with relevant regulations.

5. The project investors may hire organizations or individuals with sufficient capacity and experience to undertake the determination and review of consulting costs for urban classification projects, urban development programs, and urban development area proposal files.

Article 6. Authority to Review and Approve Budget Estimates for Costs

1. For urban classification projects:

a) The People's Committee of provinces and centrally-administered cities (hereinafter referred to collectively as the provincial-level People's Committee) or the authorized level shall organize the review and approval of budget estimates for the preparation and review of special-class and Class I urban classification projects (for centrally-administered cities);

b) The People's Committee of districts shall organize the review and approval of budget estimates for the preparation and review of Class I urban classification projects (for cities under provinces and cities under centrally-administered cities), Class II, Class III, Class IV, and Class V urban classification projects.

2. For urban development programs and urban development area proposal files:

a) The Ministry of Construction shall organize the review and approval of budget estimates for the national urban development program and urban development area proposal files (for areas with administrative boundaries involving two or more provinces);

b) The provincial-level People's Committee or the authorized level shall organize the review and approval of budget estimates for the preparation and review of provincial-wide urban development programs and urban development area proposal files (for areas with administrative boundaries involving two or more districts within a province);

c) The district-level People's Committee shall organize the review and approval of budget estimates for the preparation and review of urban development programs for individual cities and urban development area proposal files (for areas with administrative boundaries within a district and proposed expansion areas).

3. The authority approving the costs for preparing urban development programs and urban development area proposal files is the authority approving the adjusted budget estimates.

Chapter III

IMPLEMENTATION

Article 7. Transitional Provisions

1. For urban classification project preparation, urban development program preparation, and urban development area proposal file preparation carried out under contracts, payment of costs shall be based on the signed contract terms.

2. For urban classification project preparation, urban development program preparation, and urban development area proposal file preparation where tendering has been organized but contracts have not yet been signed, the authority specified in Article 6 of this Circular shall decide on the application of this Circular's provisions to determine contract prices.

3. For urban classification project preparation, urban development program preparation, and urban development area proposal file preparation where budget estimates have been approved but tendering has not yet been organized, the authority specified in Article 6 of this Circular shall decide on the application of this Circular's provisions to adjust budget estimates.

Article 8. Effective Date

1. This Circular takes effect from February 1, 2018.

2. This Circular replaces Circular No. 23/2010/TT-BXD dated December 23, 2010 of the Ministry of Construction guiding the determination of costs for urban classification project preparation and review; Article 4 of Circular No. 12/2014/TT-BXD dated August 25, 2014 of the Ministry of Construction guiding the preparation, review, and approval of Urban Development Programs.

3. During the implementation process, if there are any difficulties, organizations and individuals are requested to send their opinions to the Ministry of Construction for consideration and resolution./.

ANNEX NO. 1

STANDARDS FOR COSTS RELATED TO URBAN DEVELOPMENT INVESTMENTS
Appendix issued together with Circular No. 12/2017/TT-BXD dated November 30, 2017 of the Ministry of Construction

Table 1. Standards for costs of urban classification project preparation

Note:

- The cost standard for urban classification project preparation at Table 1 applies to Class I cities directly under provinces. In cases where urban classification projects for Class I cities directly under the Central Government are prepared, the cost standard shall be adjusted with a factor k = 1.2.

- In cases where urban classification projects for cities in mountainous, highland, and island regions are prepared, the cost standard shall be adjusted with a factor k = 1.3.

Table 2. Standards for costs of provincial-wide urban development program preparation

Table 3. Standards for costs of urban development program preparation for individual cities

Note:- In cases where urban development programs for cities in mountainous, highland, and island regions are prepared, the cost standard shall be adjusted with a factor k = 1.3.

ANNEX NUMBER 2

GUIDELINES FOR PREPARING BUDGET ESTIMATES FOR CONSULTING FEES FOR WORKS REQUIRING COST DETERMINATION BASED ON BUDGET ESTIMATES

1. Content of budget estimates for consulting fees

The budgeted consulting service costs for tasks requiring cost determination according to the budget include: direct labor costs, management costs, other costs, pre-tax income, value-added tax, and contingency costs. The budgeted costs are summarized as follows:

2. Detailed guidance on determining the budgeted consulting service costs

2.1. Direct labor costs (Ccg): determined based on the number of direct laborers, working time of experts (number of months-person, days-person, or hours-person), and wages of direct laborers.

a) The number of direct laborers, working time of direct laborers (including engineers, architects, experts, technicians) is determined based on specific requirements regarding the content, volume of work, implementation schedule of each type of work, and the professional qualifications and experience of each type of laborer. The forecast of the number, type of laborers, and working time of each type of laborer must be reflected in the project outline for the consulting work. The project outline must be consistent with the scope, volume of work, content, and implementation schedule of the work to be budgeted.

b) Wages of direct laborers are determined based on market wage levels or according to regulations of the Ministry of Labor, Invalids, and Social Affairs corresponding to the professional qualifications and experience of direct laborers performing the work.

2.2. Management costs (Cql): are expenses related to the management activities of the consulting organization including: wages of the management department, expenses for maintaining the operation of the consulting organization, office expenses, insurance premiums under the responsibility of the consulting organization, etc. Management costs are determined as a percentage (%) of expert costs, specifically as follows:

2.3. Other costs (Ck): include expenses for purchasing materials, data, various types of maps, office supplies; depreciation expenses for equipment; travel expenses for laborers; conference, seminar, and documentary film production expenses illustrating urban development status, and other expenses (if any).

- Expenses for purchasing materials, data, various types of maps, office supplies: Determined based on the anticipated needs of each type of consulting work.

- Depreciation expenses for equipment: Determined based on the anticipated needs, quantity of equipment, and usage time of equipment to perform the work. The price of equipment is the common market price, and the depreciation rate of equipment is determined according to current regulations.

- Conference, seminar, and documentary film production expenses illustrating urban development status: Determined based on the anticipated needs of each type of consulting work.

- Other expenses (if any): Determined based on the anticipated needs of each type of consulting work.

2.4. Pre-tax income (TN): determined at 6% of (Direct labor costs (Ccg) + Management costs (Cql)).

2.5. Value-added tax (VAT):determined according to current regulations.

2.6. Contingency costs (Cdp):are expenses for unforeseen events during the implementation of consulting work. Contingency costs are determined at a maximum not exceeding 10% of the total of all aforementioned expenses.