Circular No. 14/2017/TT-BXD guiding the determination and management of costs for urban public services

CIRCULAR

Guidelines for determining and managing costs of urban public services

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WHEREAS, 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. 130/2013/NĐ-CP dated October 16, 2013 of the Government on production and supply of public goods and services;

Pursuant to Decree No. 38/2015/NĐ-CP dated April 24, 2015 of the Government on waste and scrap management;

Pursuant to Decree No. 79/2009/NĐ-CP dated September 28, 2009 of the Government on urban lighting management;

Pursuant to Decree No. 64/2010/NĐ-CP dated June 11, 2010 of the Government on urban greenery management;

Upon the proposal of the Director of the Construction Economy Department, the Director of the Technical Infrastructure Department, and the Director of the Construction Economy Institute;

The Minister of Construction hereby issues this Circular guiding the determination and management of costs of urban public services.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

Article 1. This Circular guides the determination and management of costs of the following urban public services:

- Collection and transportation of solid waste from urban areas;

- Maintenance of urban lighting systems;

- Maintenance and development of urban greenery systems;

Article 2. For other urban public services such as park management, zoo management, and other urban public service tasks, the People's Committees of provinces and centrally-administered cities shall apply the guidelines provided in this Circular in accordance with the specific conditions of each locality.

Article 2. Applicability

This Circular applies to organizations and individuals related to the determination and management of costs of urban public services as specified in Article 1 of this Circular.

Article 3. Principles for determining and managing costs of urban public services

1. Costs of urban public services must be accurately calculated, consistent with technical procedures, implementation conditions, market price levels, and local budget balancing capabilities.

2. Costs of urban public services determined according to the guidelines in this Circular serve as the basis for cost estimates; consideration and decision-making on service prices implemented through bidding or ordering for organizations and individuals providing urban public services, and serve as the basis for negotiation, signing contracts, payment, and settlement of contracts for these services.

3. Management of costs of urban public services must comply with relevant regulations concerning the production and supply of urban public goods and services.

4. The People's Committees of provinces and centrally-administered cities shall guide the determination and management of costs for other urban public services in accordance with the provisions of this Circular, adapting to the specific conditions of their respective localities.

Chapter II

DETERMINATION OF COSTS OF URBAN PUBLIC SERVICES

Article 4. Contents of Cost Estimates for Urban Public Services

Cost estimates for urban public services include direct costs (material costs; labor costs; costs of using vehicles, machinery, and construction equipment), common management costs, standard profit margins, and value-added tax (if applicable). The total cost estimate for urban public services is compiled according to the guidelines in Appendix 1 attached to this Circular.

Article 5. Determination of Components in Cost Estimates for Urban Public Services

1. Direct costs (DC) include material costs, labor costs, and costs of using vehicles, machinery, and construction equipment. Direct costs are determined according to the guidelines in Appendix 2 attached to this Circular.

2. Common management costs (CMC) include general expenses for administrative and managerial operations, indirect expenses serving management work, expenses for workers' services (including labor protection expenses, labor tools expenses), interest payments on bank loans and other financial institutions, social expenses that employers must pay to the state (social insurance, health insurance, trade union fees, unemployment insurance), various fees and charges, rental expenses for assets and factory premises (if applicable); depreciation and repair costs for fixed assets serving administrative and managerial operations, audit fees paid by enterprises, and other expenses related to the enterprise's general activities when providing urban public services.

Common management costs in cost estimates for urban public services are determined as a percentage (%) of direct labor costs. The People's Committees of provinces and centrally-administered cities shall consider and decide on the standard ratio of common management costs to determine cost estimates for urban public services but not exceeding the standard ratio below:

Unit of measurement: %

For urban public service tasks where the cost of using vehicles, machinery, and construction equipment exceeds 60% of direct costs, common management costs are determined at a standard ratio not exceeding 5% of the cost of vehicles, machinery, and construction equipment.

Standard common management costs set by the People's Committees of provinces and centrally-administered cities must be consistent with the system of standards, actual conditions of service provision, and local budget balancing capabilities.

3. Standard profit margin (SPM) is calculated at a rate not exceeding 5% of direct costs and common management costs in the cost estimate for implementing urban public services.

4. Value-added tax (VAT) - Column (7): Land area in land allocation decisions, lease decisions, or documents of the competent authority or actual land area managed and used (applicable to assets that are buildings and land).: Implemented according to the regulations of the Ministry of Finance. For certain urban public services not subject to VAT, input VAT is added.

Chapter III

MANAGEMENT OF COSTS OF URBAN PUBLIC SERVICES

Article 5. Management of Standard Budget Estimates for Urban Public Services

1. The standard budget estimates for urban public services published by the Ministry of Construction serve as the basis for provincial and municipal People's Committees under the Central Government to apply and adjust during the process of determining and managing costs for urban public services.

2. Provincial and municipal People's Committees under the Central Government shall organize adjustments to the standard budget estimates if local implementation conditions differ from those stipulated in the standard budget estimates system published by the Ministry of Construction; they shall also organize the establishment of standards for urban public service tasks not included in the standard budget estimates system published by the Ministry of Construction and coordinate with the Ministry of Construction before deciding to implement such standards.

3. Annually, provincial and municipal People's Committees under the Central Government have the responsibility to send adjusted or newly established standards to the Ministry of Construction for monitoring and management.

Article 6. Management of Costs for Urban Public Services

1. Provincial and municipal People's Committees under the Central Government shall direct specialized agencies to organize the establishment of unit prices, determine cost budgets for urban public services, and cost budgets for supervision and management of urban public services; they shall organize reviews and approvals or delegate approvals for unit prices and cost budgets.

2. Provincial and municipal People's Committees under the Central Government shall direct affiliated enterprises implementing urban public services to reorganize their structures, streamline management systems; develop investment plans for technology and machinery to improve labor productivity and reduce costs.

3. Specialized agencies of provincial and municipal People's Committees under the Central Government may hire organizations or individuals with sufficient qualifications and experience to provide consulting services for the establishment or review of standards, unit prices, and cost budgets to support the management of urban public service costs.

4. The Ministry of Construction shall periodically or urgently inspect the determination and management of costs for urban public services in localities.

Chapter IV

IMPLEMENTATION

Article 7. Transitional Provisions

1. For cost budgets for urban public services that have been approved by competent authorities before this Circular takes effect but have not yet signed contracts, provincial and municipal People's Committees under the Central Government shall direct specialized agencies to consider adjusting the cost budgets according to the provisions of this Circular.

2. For contracts signed before the effective date of this Circular, they shall be implemented according to the terms agreed upon in the contracts.

Article 8. Effective Date

1. This Circular takes effect from February 15, 2017, and replaces Circular No. 06/2008/TT-BXD dated March 20, 2008, issued by the Ministry of Construction guiding the management of costs for urban public services.

2. During the implementation period, if there are any difficulties, agencies and units are requested to report them to the Ministry of Construction for consideration and resolution./.