Circular No. 608-TC-NHKT Regarding the Reduction of Construction Budget Prices for Basic Construction Projects in 1962

CIRCULAR

Regarding the reduction of construction budgets for basic construction projects in 1962

On September 10, 1962, the Prime Minister issued Circular No. 89-TTg reducing the construction budget prices of basic construction projects in 1962 by 3.5%.

To implement the aforementioned decision of the Prime Minister, the Ministry of Finance guides the following detailed points for implementation:

1. According to the above-mentioned circular, all industrial, civil, transportation, irrigation (agricultural water management part), farm (construction of housing, transportation, and irrigation facilities part), etc., projects that have been budgeted according to old norms must now reduce their construction budget prices by 3.5%. Therefore, if these projects were previously allocated funds based on old budget prices with a deduction of 1% or 2.5% (as per previous Circular No. 1054 TC-NHKT-TH dated December 19, 1960 of the Ministry of Finance), they should not now be budgeted according to new norms but instead deduct an additional amount to reach 3.5%. If a 5% deduction was made from the construction budget price previously, then 1.5% must now be returned.

For projects that have been completed but have not yet had a final settlement between Party A and Party B, the final settlement must deduct 3.5%. If the last settlement has already been conducted, Party A and the finance department do not need to reclaim the amount from Party B, but must report this to the Ministry of Finance.

2. Cases where the 3.5% deduction does not apply:

- For the construction of temporary shelters and projects using bamboo, reed, and thatch, the 3.5% deduction does not apply because the new norms do not apply to such projects.

- For installation work, if it does not fall within the scope of the new regulations stipulated in the aforementioned Prime Minister's Circular No. 89-TTg, the 3.5% deduction does not apply.

- For projects completed in February 1962, the 3.5% deduction does not apply.

3. For local basic construction projects, provincial, municipal, and autonomous region administrative committees shall issue decisions based on the spirit of the Prime Minister's Circular No. 89-TTg to implement it locally.

4. Specifically, for the Thai Nguyen Steel Complex, funding will still be based on provisional unit prices, so the circular reducing construction budget prices by 3.5% does not apply, and funding will continue as currently provided.

However, once the official budget is approved according to the new norms, the adjustment will be made later.

5. For long-term projects that have been budgeted according to old norms and will continue construction into 1963, if it is deemed unnecessary to re-budget according to new norms, funding can still be provided based on the old budget, but the 3.5% deduction as stipulated in this circular must be applied.

6. For projects requiring a 3.5% reduction in budget prices, the financial plan for 1962 must also be reduced by an equivalent amount. However, to avoid adjusting the financial plan, the finance department will retain this amount in the financial plan and will not allocate it to the unit.

For example, if the financial plan for a unit in 1962 is 1 trillion VND for construction, including 1 trillion VND for project volume and 200 billion VND for preparation for 1963, the finance department will only allocate:

Part quantity: 1tr – 0tr 135 (3,5%) = 0tr965

Additional preparation portion:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Comm.:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             &

7. In order for the Ministry of Finance to be aware of the amount of money of each Ministry due to this budget price reduction, the purchasing offices and distribution departments must prepare statistical reports according to the attached model and submit them to the Ministry of Finance before October 30, 1962.

8. Apart from reducing the budget by 3.5% for basic construction units that undertake the work themselves, contracting enterprises still must implement the plan to reduce production costs as approved by their respective supervising ministries.

Upon receipt of this Circular, the purchasing offices and distribution departments are requested to discuss with the relevant units and immediately implement it.