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THE GOVERNMENT |
THE SOCIALIST REPUBLIC OF VIETNAM |
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No. 68/2019/ND-CP |
Hanoi, August 14, 2019 |
Pursuant to the Law on Government Organization dated June 19, 2015;
Pursuant to the Law on Construction dated June 18, 2014;
At the request of the Minister of Construction;
The Government hereby promulgates a Decree on construction cost management.
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1. This Decree provides for construction cost management of projects funded by state budget and external-source state capital and Public-Private Partnerships (PPP) projects with respect to preliminary total investment, total investment, construction estimates, construction contract package values, construction norms, construction prices, project management and construction consultancy cost; payment for and finalization of construction contracts; reimbursement and statement of construction costs; rights, obligations and responsibilities of investment deciders, investors, building contractors, advisory contracts for advisory contractors for construction cost management.
2. With regard to construction projects funded by official development assistance (ODA), regulations of international agreement and domestic regulations of the Law on Treaties shall apply.
1. This Decree applies to every organization and individual (hereinafter referred to as entity) related to construction cost management of projects funded by state budget and external-source state capital prescribed in Clause 1 and Clause 2 Article 60 of the Law on Construction, and PPP projects.
2. Regulations of this Decree may be applied to management of construction costs and determination of construction costs as the basis for discharging financial obligations to the State of projects funded by other sources.
Article 3. Construction cost management principles
1. Construction cost management must ensure achievement of investment targets and project proficiency which have been approved, appropriate for construction investment procedures prescribed in Clause 1 Article 50 of the Law on Construction, capital sources, investment form and execution methods. Construction costs must be calculated correctly and sufficiently for each project, construction, contract, conformable with design requirements, technical specifications, construction conditions, project execution plan, market prices at the construction site and expected price fluctuations during the investment process.
2. The State shall manage construction costs by promulgating legal documents, providing instructions, and inspect the implementation thereof; providing instructions on method for estimating and managing construction costs.
3. Investors are responsible for construction cost management from the project preparation stage to the completion and inauguration of the project up to the approved total investment, including the case in which the total investment is adjusted as prescribed in Article 7 of this Decree. Investors may hire cost management advisors that are qualified as prescribed in the Decree on construction project management to estimate, examine, control, and manage construction costs.
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5. With regard to infrastructure construction projects under the National target program on sustainable poverty reduction and National target program on new-style rural area building, the principles and methods of determining construction costs specified in this Decree shall be applied, and such projects shall be appropriate to their characteristics and nature.
6. Construction costs shall be managed according to the basis, contents, methods, and time of determination of cost items in the total construction investment, construction estimate, construction contract package values, construction norms, construction prices, construction price indexes that are unanimously used by investment deciders and investors during corresponding stages of cost estimation according to regulations on construction cost management of this Decree.
PRELIMINARY TOTAL INVESTMENT, TOTAL CONSTRUCTION INVESTMENT
Article 4. Preliminary total investment and total construction investment
1. Preliminary total construction investment is the initial estimation of construction cost of the project during the process of preparing the pre-feasibility study report or report on proposed investment guidelines for projects of group B and C in accordance with regulations of the Law on Public Investment. Preliminary total construction investment includes the expenditure items mentioned in Clause 2 of this Article.
2. Total construction investment is the total construction cost of the project which has been determined and is conformable with the fundamental design and other contents of the pre-feasibility study report. Total construction investment is inclusive of compensation, support, and relocation cost (if any); construction cost; equipment cost; project management cost; construction consultancy cost; other costs, and cost contingency for additional quantity of works and cost escalation.
3. If only an economic-technical report is required, total construction investment is the construction estimate prescribed in Article 8 of this Decree inclusive of compensation, support, and relocation cost (if any).
4. Costs of total construction investment:
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b) Construction costs include costs of construction of works and work items; temporary works and ancillary works serving the construction process; costs of dismantlement of construction works outside the scope of dismantlement and leveling included in the compensation, support, and relocation costs. Construction costs include direct costs, indirect costs, preliminary taxable income, VAT;
c) Equipment costs include cost of purchase of building equipment and technological equipment; cost of management of building equipment purchase by contractors; cost of purchase of software copyrights used for building equipment and technological equipment of a project (if any); cost of training and technology transfers (if any); cost of processing and manufacturing of nonstandard equipment (if any); cost of installation, testing, calibration; cost of testing equipment according to technical requirements; cost of transport, insurance; taxes and other relevant charges;
d) Project management costs include costs of performance of project management tasks from project preparation, project execution, construction completion and project inauguration. Regarding PPP projects, project management costs include project management costs of competent authorities, operating costs of project management boards affiliated to competent authorities executing projects and project management costs of investors;
dd) Construction consultancy costs include costs of consultancy on survey, preparation of pre-feasibility study reports and reports on proposed investment guidelines for projects of group B and C in accordance with regulations of the Law on Public Investment, preparation of feasibility study report or economic-technical reports; costs of designing and construction supervision, and relevant advisory costs;
e) Other costs are necessary expenditures on execution of construction project management such as costs of detection and destruction of bombs, mines and explosive materials; construction insurance costs during the construction period; fees and charges for appraising construction projects, designs and estimates; costs of auditing, verifying and approving cost statement and other necessary construction project execution costs other than those prescribed in Points a, b, c, d, and dd Clause 4 of this Article;
g) Cost contingency includes provision for additional quantity of works and contingency for cost escalation during the project execution.
1. The preliminary total construction investment of the project shall be estimated according to the scale or capacity in the preliminary design of the project, investment rate or information about costs of projects of similar types, scale, characteristics, whether they are completed or in progress, with analysis or assessment carried out to convert it to market prices around the construction site and with account taken of other necessary costs.
Projects executed under a construction contract to perform all tasks, including project preparation - design - equipment procurement - construction (hereinafter referred to as “Lump sum turnkey”), the preliminary total investment shall be determined according to the quantity based on preliminary design in combination with other methods to determine the contract package value.
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a) Determination according to construction quantity based on fundamental design, plans for project execution and implementation of oriented construction measure, other requirements of the project, construction norms, prices and relevant policies;
b) Determination from data about costs of similar works;
c) Determination according to investment rate;
d) Combining the methods prescribed in Points a, b, and c of this Clause.
3. The methods set forth in Points b and c of this Clause shall be only used for common construction works.
4. Projects executed under engineering, procurement and construction contracts (EPC for short); engineering and construction contracts (EC for short); engineering and procurement contracts (EP for short), the total investment shall be determined according to the methods specified in Point a Clause 2 of this Clause in combination with other methods.
5. Methods for determining total investment shall be adopted following guidelines of the Minister of Construction.
Article 6. Appraising, approving total construction investment
1. Total construction investment shall be appraised together with appraisal of the construction project. Appraisal contents:
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b) Suitability of the method for determination of total construction investment with characteristics, technical and technological requirements of the project;
c) Checking of sufficiency and suitability of quantities against fundamental design, plans for project execution and implementation of oriented construction measure and requirements of the project; conformity with regulations, instructions of the State with regard to the costs used for calculation of costs in total construction investment;
d) Determination of total construction investment after appraisal. Analyze the reasons for increase, decrease, and assess the assurance of investment efficiency according to the total construction investment determined after appraisal.
2. If the project only requires the economic-technical reports, the appraisal shall comply with Clause 2 Article 10 of this Decree.
3. The power to appraise total construction investment:
a) The State Appraisal Council established by the Prime Minister shall appraise projects of national importance;
b) Construction authorities shall appraise projects funded by state budget capital;
c) Specialized agencies affiliated to the investment decider shall appraise projects funded by external-source state capital.
d) Units in charge of PPP affiliated to competent authorities shall appraise projects executed in the form of PPP contracts. Specialized construction agencies shall comment on the suitability of prices and norms used to determine the total construction investment of the project and assess cost-effective design solutions of the project.
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5. Appraising authorities are entitled to invite experienced and qualified organizations or individuals to appraise total construction investment or request the investor to select a qualified construction cost manager according to the Decree on construction project management to verify the total construction investment for projects of national importance or projects of Group B or C that involve complicated techniques or high technologies before it is submitted for appraisal and approval.
6. Responsibilities of organizations and individuals invited to carry out appraisal or verification, appraisal or verification contents and cost of inviting such organizations and individuals
a) Organizations and individuals invited to carry out appraisal shall perform the tasks assigned by the appraising authority and take responsibility for the appraisal results as prescribed by law;
b) Contents of verification of the total construction investment are those mentioned in Clause 1 of this Article. Organizations and individuals in charge of the verification shall notify the appraising authority and investor, and take responsibility for the verification results as prescribed by law;
c) Costs of inviting organizations and individuals to appraise the total construction investment and costs of appraising the total construction investment shall be determined according to the cost norms imposed by competent authorities or according to the cost estimate.
7. The investment decider shall approve the total construction investment together with the project. . The approved total construction investment is the maximum permissible cost of construction project execution. If the value of the total construction investment is higher than that of the preliminary total investment, the investment decider shall approve the total construction investment after reaching an agreement with the investment guideline decider.
8. The application for appraisal of the total construction investment is part of the application for appraisal of the construction project according to Clause 2 Article 56 of the Law on Construction and the Decree on construction project management if the project only requires the economic-technical reports. The result of total investment appraisal/verification shall be given using the form provided by the Ministry of Construction.
9. The estimated costs of tasks performed at the investment preparation stage to make a pre-feasibility study report or investment preparation report shall be appraised and approved by the authority or unit performing tasks of the investment preparation stage. These cost items shall be updated to the total construction investment of the project after its investment guidelines are decided by a competent authority.
10. The estimated costs of tasks performed at the project preparation stage to make a feasibility study report shall be appraised by the specialized agency affiliated to the investment decider before it is submitted to the investment decider for approval. These cost items shall be updated to the total construction investment of the project for the purposes of estimating and managing construction costs.
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1. Approved total construction investment shall be adjusted according to Clause 5 Article 134 of the Law on Construction. The total construction investment shall be adjusted together with adjustment of the construction project, and adjusted if any cost incurred exceeds the total investment. The investment decider shall approve adjustment to total construction investment and construction project.
2. The increased or reduced total construction investment shall be appraised and approved as prescribed in Article 6 of this Decree.
3. If the adjustment is made to cost items including contingency cost due to the fact that prices are adjusted when price indexes increase higher than those included in contingency for cost escalation but the approved total construction investment is not exceeded, the investor shall make the adjustment and request the investment decider to grant approval.
4. The investment decider shall decide to use cost contingency of the construction project. The investor shall only decide to use cost contingency if the project only requires the economic-technical reports.
5. If the adjustment to total construction investment as prescribed in Clause 1 of this Article causes an increase or decrease to the scale of the project or group of projects, it is still managed according to the scale approved before adjustment. If the project is changed into the project of national importance or project of group A, the investment decider shall approve the adjusted total investment after reaching an agreement with the authority that decides on the investment guidelines according to the new scale (group) of the project.
CONSTRUCTION ESTIMATE AND CONSTRUCTION CONTRACT PACKAGE VALUE
Article 8. Contents of construction estimate
1. The construction estimate is the expenditure necessary at the stage before the selection of building contractors, works and contract packages for construction and is determined on the basis of the quantity of works derived from the engineering design regarding 3-step design or construction drawing regarding 2-step design or FEED in the case of EPC, EC or EP, required tasks, construction norms and prices.
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2. The investor of a project that consists of multiple construction works shall determine the construction estimate for each work.
A work construction estimate consists of: construction costs, equipment costs, project management costs, construction consultancy costs, other costs incurred in connection with the work and cost contingency.
The total construction estimate includes construction estimate of each work and project management costs, consultancy costs, other costs and cost contingency related to the project.
3. Regarding the project whose contractor selection plan is approved by the competent authority, the investor shall determine the construction estimate of the project according to the estimate of construction contract package on the list of contract packages included in the approved contractor selection plan. Then, the construction estimate consists of the estimate of construction contract package and project management costs, consultancy costs, other costs and cost contingency related to the project.
Estimates of construction contract packages include:
- Estimates of separate construction contract package, including estimate of construction contract package; estimate of equipment procurement contract package; estimate of equipment installation contract package; estimate of construction consultancy contract package; estimate of contract package for other cost items;
- Estimates of mixed contract packages, including estimate of EC contract package; estimate of PC contract package; estimate of EPC contract package; estimate of lump sum turnkey contract package), etc.
4. Cost items of the construction estimates, work construction estimates and estimates of construction contract packages shall comply with regulations of the Minister of Construction.
Article 9. Determination of construction estimate
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2. Cost items in a construction estimate are determined as follows:
a) Construction costs include direct costs of materials, manpower and building equipment determined according to the quantity of construction works measured and calculated according to the engineering design, construction drawing, technical specifications, required tasks of the construction, construction prices, indirect costs, preliminary taxable income, VAT determined according to the cost norms imposed by competent authorities or according to the estimate;
b) Equipment costs include cost of purchase of building equipment determined according to the quantity, types of equipment of equipment system derived from the construction and technology design, and corresponding purchase prices; cost of management of building equipment purchase by contractors; cost of purchase of software copyrights used for building equipment and technological equipment of a project (if any); cost of training and technology transfers; cost of processing and manufacturing of nonstandard equipment (if any); cost of installation, testing, calibration; cost of testing equipment according to technical requirements and regulations specified in contracts; cost of transport, insurance; taxes and other relevant charges determined according to the estimates or the cost norms imposed by competent authorities ;
c) Project management costs are determined as prescribed in Clause 3 Article 21 of this Decree;
d) Construction consultancy costs are determined as prescribed in Clause 3 Article 23 of this Decree;
dd) Other costs shall be determined by the percentage (%) or estimate or cost estimate of similar projects or works;
e) Cost contingency for additional quantity of works is expressed as a percentage (%) of total amount of the costs mentioned in Points a, b, c, d, dd of this Clause. Contingency for cost escalation is determined according to the duration of project execution, project execution plan, and construction price indexes with due account taken of domestic and international price fluctuation.
3. Methods for determining construction estimates, work construction estimates and estimates of construction contract packages shall comply with regulations of the Minister of Construction.
Article 10. Appraisal and approval of construction estimate
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a) The construction estimate of the project shall be appraised on the basis of concurrent appraisal of work construction estimate, estimate of construction contract package and other relevant cost items of the project;
b) If the scale of a project is group A or above and the investment decider allows the implementation of the engineering design or construction drawing tailored for each work or each construction contract package according to each stage of the project execution plan, the cost estimate of each work and estimate of construction contract package shall be appraised together with appraisal of the engineering design or construction drawing tailored for each work or each contract package;
c) The EPC, EC, EP contracts that have been awarded shall not undergo appraisal of their estimates;
d) If estimates of EPC, EC, EP contract packages are determined according to the FEED to form a basis for determination of the contract package value, they shall be appraised on the basis of the estimates made according to the FEED.
2. Contents of appraisal of construction estimate, work construction estimate and estimate of construction contract package:
a) Inspection of sufficiency and suitability of legal bases for determination of construction estimate;
b) Inspection of consistency of the quantity of the construction, quantity and types of equipment in the estimate with those derived from the construction and technology design;
c) Inspection of legitimacy of the application of construction norms, construction prices, and relevant regulations to determination of cost items of the construction estimate;
d) Determination of value of construction estimate after appraisal. Evaluation of the increase, decrease of cost items; analysis of the cause of such increase or decrease compared to the value of construction estimate that needs appraising.
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4. If the estimates of EPC, EC, EP contract packages are determined according to the FEED as prescribed in Point d Clause 1 of this Article, the power to appraise the construction estimate is specified in Clause 3 of this Article.
5. With regard to projects of national importance, projects of Group A, B, and C that apply complicated technologies or high technologies, the appraising authorities are entitled to invite organizations and individuals to appraise the construction estimate or request the investor to select a cost management advisor to verify the construction estimate before it is submitted to a competent authority for approval. Organizations and individuals invited to carry out appraisal or selected to carry out verification must be qualified as prescribed in the Decree on construction project management.
6. Responsibilities of organizations and individuals invited to carry out appraisal or verification, appraisal or verification contents and cost of inviting such organizations and individuals:
a) Organizations and individuals invited to carry out appraisal shall perform the tasks assigned by the appraising authority and take responsibility for the appraisal results as prescribed by law;
b) Contents of verification of the construction estimate are those mentioned in Clause 2 of this Article. Organizations and individuals in charge of the verification shall notify the appraising authority and investor, and take responsibility for the verification results as prescribed by law;
c) Costs of inviting organizations and individuals to appraise the construction estimate and costs of appraising the construction estimate shall be determined according to the cost norms imposed by competent authorities or according to the cost estimate.
7. The application for estimate approval is part of the application for approval for engineering design, construction drawing, and construction estimate prescribed in the Decree on construction project management. The result of construction estimate appraisal/verification shall be given using the form provided by the Ministry of Construction.
Article 11. Adjustment to construction estimate
1. An approved construction estimate shall be adjusted in the following cases:
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b) The design is changed in a way that is conformable with the fundamental design, adjusted fundamental design or the costs, including cost contingency, are adjusted due to the fact that prices are adjusted when price indexes increase higher than those included in contingency for cost escalation but the approved total construction investment is not exceeded.
2. The adjusted construction estimate shall be appraised and approved in accordance with regulations of the law on construction.
3. If the construction estimate is adjusted due to the fact that prices are adjusted when price indexes increase higher than those included in contingency for cost escalation but the value of the approved construction estimate is not changed, the investor shall adjust and approve it after reaching an agreement with the investment decider. In case the adjusted estimate must be approved by the investment decider, the investment decider shall consider granting approval and assume responsibility for such approval.
4. The investment decider shall decide to use contingency cost of the construction project. The investor shall only decide to use cost contingency if the project only requires the economic-technical reports.
Article 12. Construction contract package value
1. The construction contract package value is the approved value mentioned in the contractor selection plan as the basis for contractor selection. The construction contract package value is all the necessary costs calculated correctly and sufficiently to execute a contract.
2. The total construction investment, construction estimate of the project, work construction estimate and construction estimate that have been approved serve as the basis for determination and approval of the contract package value. The value of the construction contract package shall be determined as follows:
a) If the estimate of construction contract package is available, the value of the construction contract package is determined on the basis of the approved estimate of construction contract package;
b) If the estimate of construction contract package is not available, the value of the construction contract package is determined according to the cost structure of the estimate of construction contract package on the basis of the cost items in connection with the scope of the contract package specified in the total construction investment, construction estimate of the project and work construction estimate that have been approved.
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3. If the actual time for contractor selection is different from that specified in the project execution plan, the investor shall update the value of the construction contract package according to the market prices 28 days before the date of bid opening. If the updated value of the construction contract package is higher than the approved value and exceeds the total construction investment of the project, the investor shall adjust type and origin of equipment to ensure quality and technical requirements but set appropriate prices so that the total investment is not exceeded, and notify the investment decider for decision.
4. The investment decider shall decide to use the contingency cost when determining or updating the contract package value.
5. Methods for determining or updating the value of a construction contract package shall be adopted following guidelines of the Minister of Construction.
CONSTRUCTION NORMS, CONSTRUCTION PRICES AND CONSTRUCTION PRICE INDEXES
Article 13. Economic – technical norms
1. Economic - technical norms include the basic norms and construction estimate norms.
2. Basic norms include norms on use of materials, labour, capacity of building equipment. Basic norms applied to common construction activities shall be determined by conducting construction market surveys in accordance with construction standards, technical requirements, technologies and construction conditions. The basic norms applied to construction activities that involve new technologies shall be determined according to technology requirements and conditions for technology application.
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4. The economic - technical norms are the basis for construction cost management.
1. Cost norms include norms expressed as percentage (%), norms expressed as a value and norms expressed as quantity regarding construction consultancy costs.
2. Cost norms are the basis for determination of construction prices, estimated costs of some tasks, costs of construction investment including project management costs, consultancy costs, indirect costs, preliminary taxable income, other tasks, and other costs.
Article 15. Management of construction norms
1. Methods for determining basic norms, construction norms, construction estimate norms, cost norms and agreement on imposition of construction norms shall comply with regulations of the Minister of Construction.
2. According to the norm determination methods specified in Clause 1 of this Article, related Ministries and the People’s Committees of provinces shall determine or hire organizations and individuals qualified as prescribed in the Decree on construction project management to determine, adjust and verify the construction norms as the basis for imposing construction estimate norms on distinct tasks of their sectors or provinces after reaching an agreement with the Ministry of Construction.
3. Construction norms imposed are the basis for determination of total construction investment, construction estimate, and construction cost management.
4. With regard to building tasks that are not regulated by the imposed construction estimation norms or are regulated but not conformable with technical requirements, construction conditions, or construction solution:
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Advisors on making of estimates and management of costs of the project or contract package shall determine new construction estimate norms and adjusted construction estimate norms according to the design and specific requirements of tasks, contract package and project to form a basis for determination of construction estimate, work construction estimate and construction contract estimate;
b) When applying new construction estimate norms or adjusted construction estimate norms, if the construction norms are lower than those applying the imposed norms, the investment decider shall decide to approve such construction norms and apply them to the projects and works in order to determine construction estimate, work construction estimate and estimate of construction contract package and submit them to the Ministry of Construction. With regard to construction works of the projects in which investment is decided by the Prime Minister, related Ministers and Presidents of the People’s Committees of provinces shall grant approval;
c) The investor shall make a consolidated list of tasks of adjusting and establishing new norms not included in the list of norms imposed, notify the specialized construction agency of the list and conduct surveys to establish construction estimate norms during the construction process by following guidelines of the Ministry of Construction. The result of norm establishment shall be consolidated by the specialized construction agency and then sent to the Ministry of Construction. Costs of establishing norms shall be included in the total investment of the project.
5. Investors may hire cost management advisors that are qualified as prescribed in the Decree on construction project management to establish, adjust and verify the construction norms mentioned in Clause 4 of this Article.
6. The construction norms imposed by competent authorities shall be regularly reviewed, and new and adjusted norms shall be announced every 02 years. The funding for review shall be covered by the budget.
Section 2. CONSTRUCTION PRICES AND CONSTRUCTION PRICE INDEXES
Article 16. Construction prices
1. Construction prices include:
a) Specific construction unit costs that are the basis for determining the construction estimate;
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2. Specific construction unit prices are determined according to construction norms, prices for materials, structures, labour costs, equipment cost per shift, and other costs that are suitable for market prices in the same area as the construction site at that time and conformable with relevant regulations; or determined according to market prices.
3. Overall construction prices are determined according to specific construction unit.
Article 17. Management of construction prices
1. Methods for determining prices of building materials, labor cost, equipment cost per shift according to the market mechanism and basic data for determining equipment cost per shift shall comply with regulations of the Minister of Construction.
2. People’s Committees of provinces shall announce construction unit costs within their princes, and monthly or quarterly publish information about market prices of building materials and construction equipment; labor cost; equipment cost per shift, rent for construction equipment and machinery. Information serving price announcement shall be obtained from market surveys; selected contractors for construction projects executed within provinces; quotations of enterprises operating within provinces in the field of building material and equipment manufacturing, enterprises supplying and leasing construction machinery and equipment, distributors or agents of building materials and equipment manufacturers outside provinces.
3. Investors and contractors executing construction projects funded by state budget and external-source state capital and PPP construction projects within provinces shall specify prices in the notification of award sent to local specialized construction agencies as the basis for giving quotations.
4. According to the method for determination of construction prices provided by the Ministry of Construction, technical requirements, construction conditions, solutions and execution plan of the project, the investor shall determine specific construction unit prices and overall price of the work, which are the basis for the construction estimate, total investment, and construction cost management.
5. Investors may hire cost management advisors that are qualified as prescribed in the Decree on construction project management to perform the tasks or part of the tasks related to determination and verification of construction costs.
6. Costs of imposing prices of construction and announcing prices of building materials, labor cost, equipment cost per shift and cost of construction machinery and equipment shall be covered by the state budget.
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1. The construction price index is a figure that reflects the fluctuation of construction prices by time, and is the basis for determination, adjustment of the total construction investment, construction estimate, construction prices, values of construction contract packages, values of construction contracts, conversion of capital investment in construction, and construction cost management.
2. Construction price indexes include construction price indexes by type of construction, cost structure (including the price index of building works, price index of equipment, and price index of other costs), cost factors (including price index of building materials, price index of labour, price index of building equipment) and price index of some major materials.
3. Methods for determining construction price indexes and agreement on work construction price indexes shall comply with regulations of the Minister of Construction. The People’s Committees of provinces shall request specialized construction agencies to determine construction price indexes within their provinces according to the method provided by the Minister of Construction (including price indexes by type of construction, cost structure and cost factors prescribed in Clause 2 of this Article) as the basis for making monthly, quarterly, and annual announcements, and send reports to the Ministry of Construction for monitoring.
4. Investors in works that are not on the list of construction price indexes imposed by the Ministry of Construction or People’s Committees of provinces shall determine construction price indexes according to the method provided by the Ministry of Construction and decide the application of such price indexes to their works after reaching an agreement with the Ministry of Construction regarding construction works that involve 02 provinces or more, or with People’s Committees of provinces regarding construction works within provinces.
5. Investors may hire cost management advisors that are qualified as prescribed in the Decree on construction project management to calculate construction price indexes as prescribed in Clause 4 of this Article to form the basis for determination and management of construction costs.
6. The funding for collecting information, calculating and imposing construction price indexes of provinces shall be covered by annual provincial budgets.
Section 3. DATABASE OF CONSTRUCTION NORMS, CONSTRUCTION PRICES AND CONSTRUCTION PRICE INDEXES
Article 19. Database establishment
1. The database of construction norms, construction prices and construction price indexes serves as the basis for managing, controlling and creating a transparent market of construction norms, construction prices and construction price indexes.
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Article 20. Database management
1. The Ministry of Construction shall:
a) establish, manage and control the database of construction norms, construction prices and construction price indexes nationwide in a comprehensive manner;
b) establish and complete the system of codes and application software to manage the database of construction norms, construction prices and construction price indexes;
c) provide instructions on establishment of database; use of database management software; updating of database from related Ministries, People’s Committees at all levels and relevant entities.
2. Related Ministries and the People’s Committees of provinces shall:
a) aggregate, update and control software used for management of database of construction norms, construction prices and construction price indexes under their management in compliance with guidelines of the Ministry of Construction;
b) request specialized construction agencies to take charge of conducting market surveys and updating information promptly within their jurisdiction and areas under their management in order to aggregate and update it to the database of construction norms, construction prices and construction price indexes;
3. Investors, project management boards and relevant entities executing projects funded by the state capital and PPP projects shall provide data on bidding and cost statements of works and projects to specialized construction agencies under the guidance of the Ministry of Construction to update them to the database of construction norms, construction prices and construction price indexes.
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COSTS OF PROJECT MANAGEMENT AND CONSULTANCY
Article 21. Project management costs
1. Project management costs are necessary expenditures on performance of project management tasks from project preparation, project execution, construction completion and project inauguration.
2. Project management costs include salaries of project managers; wages of employees under contracts; allowances, bonuses; collective benefits; contributions (social insurance; health insurance; unemployment insurance; trade union fees, and other payments made by individuals receiving salaries from the project); cost of application of science and technology, work information system management, provision of advanced training for project managers; payment for public services; office supplies; communications, propagation; organization of relevant conventions; business trip allowances; lease; repair, purchase of assets serving project management; other costs, and cost contingency.
3. Project management costs are determined according to a rate (%) set by the Ministry of Construction or according to an estimate that suits the project management manner, duration, scale of the project, and characteristics of the project management tasks.
4. With regard to projects funded by external-source state capital and special projects, if the investor hires a project management consultant, then the project management consultancy costs shall be determined according to the contents, quantity of project management tasks, and agreement between the investor and the advisory organization in the project management contract.
5. With regard to small-scale renovation or repair projects that are defined in the Decree on construction project management and participated by the community, and the investor may make use of the whole apparatus to manage the project, the project management costs shall be determined according to estimate as prescribed in Clause 3 of this Article.
Article 22. Management of project management costs
1. With regard to projects funded by state capital and PPP projects, the project management cost determined according to Clause 3 Article 23 of this Decree is the maximum cost of managing projects in line with project progress. Project management costs shall be managed according to annual estimates that suit the project management tasks and relevant policies.
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3. The project management cost norms and methods for estimating project management costs shall comply with regulations of the Minister of Construction.
Article 23. Construction consultancy costs
1. Construction consultancy costs are necessary expenditure on performance of construction consultancy tasks from project preparation, project execution, construction completion and project inauguration.
2. Construction consultancy costs include expenditures on hiring consultants (salaries, allowances, bonuses, collective benefits, contributions including social insurance, health insurance, unemployment insurance, trade union fees, and other payments made by project consultants); costs of application of science and technology, work information system management, provision of advanced training for project managers; payment for public services; office supplies; communications, propagation; organization of relevant conventions; business trip allowances; lease; repair, purchase of assets serving project management (if any); management cost of advisory organization; other costs; preliminary taxable profit, taxes, and cost contingency. With regard to construction survey consultancy contracts and construction testing contracts, the contents of the contract estimate shall include the same costs as the construction contract estimate.
3. Construction consultancy costs are determined according to the norms imposed by the Building Administration or according to an estimate on the basis of the scope of consultancy, quantity of works to be performed, contract package execution plan and regulations on policies promulgated by the state.
4. The expenditure on hiring foreign consultants for certain tasks shall be estimated in accordance with their qualifications and international practice.
5. The construction consultancy cost norms (expressed as a percentage and quantity) and methods for estimating construction consultancy costs and expenditure on hiring foreign consultants shall comply with regulations of the Minister of Construction.
Article 24. Management of construction consultancy costs
1. The approved estimate of construction consultancy cost is the maximum cost of construction consultancy and may only be adjusted if the scope of works and progress of consultancy tasks are changed. Construction consultancy costs shall be managed via the construction consultancy contract.
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REIMBURSEMENT AND ACCOUNTING OF CONSTRUCTION CAPITAL
Article 25. Payment for construction contract
The payment for construction contract shall comply with the Decree on construction contracts.
Article 26. Reimbursement of construction costs
1. Within 07 working days from the day on which the application for reimbursement is fully received, the reimbursing body shall reimburse the construction costs at the request of the investor or the investor’s legal representative according to the investment plan.
2. The investor or the investor’s legal representative shall be responsible for the unit prices, quantity of works, and the amount of investment to be reimbursed in the application for reimbursement; the reimbursing body is not responsible for such information provided by the investor or the investor’s legal representative in the documents. During the payment process, if mistakes in the documents are found, the reimbursing body shall send a written request for completion of documents to the investor or the investor’s representative to complete the application.
3. Capital-providing bodies and investors are prohibited to impose illegal regulations on reimbursement of construction costs.
Article 27. Statement of construction costs
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2. The investment stated must not exceed the total investment that is approved or adjusted in accordance with law.
3. The investment stated is every legitimate cost incurred during the investment process to put the project into operation. Legitimate cost is every cost within the scope of the project, design, and estimate that are approved; construction contracts concluded in accordance with law, including revisions thereto that are approved intra vires. Regarding PPP projects, regulations on investment in public-private partnership shall be complied with.
4. The contractor shall prepare a cost statement of the contract with the investor in accordance with regulations of law on construction.
5. The investor shall prepare the cost statement and convert capital investment to submit them to the investment decider for approval within 9 months from the day on which the work is completed, transferred and put into operation.
With regard to independent works and work items of the project that are completed, put into operation, and need immediate settlement, the investor shall request the investment decider to consider.
6. The authority in charge of verifying and approving statements shall verify and approve statements within 9 months from the date on which the statements are fully received.
7. Within 6 months from the issuance of the decision to approve the cost statement, the investor shall settle the debts and project accounts at the reimbursing body. In case the cost statement of a completed project has been approved but the capital has not yet been fully allocated, the investor shall request the investment decider and relevant authorities to allocate capital so as to settle the debts and project accounts as prescribed.
8. With regard to projects funded by state budget, after the end of the fiscal year, the investor shall make an annual cost statement as prescribed by the Ministry of Finance.
9. The investor that fails to make the statement on schedule as prescribed in Clause 3 of this Article shall incur penalties in accordance with the Decree on penalties for administrative violations against regulations on construction; manufacture, extraction, and trading of building materials; management of infrastructure; real estate trading, development of residential houses, management and use of houses and office buildings.
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a) With regard to projects of national importance and other important projects in which investment is decided by the Prime Minister:
- The superior authority of the investor shall consider approving cost statements of subprojects funded by state budget;
- The investor shall consider approving cost statements of subprojects that are not funded by state budget.
b) With regard to other projects, the investment decider shall approve or another person to approve cost statements thereof as the projects are completed. Regarding PPP projects, regulations on investment in public-private partnership shall be complied with.
Article 28. Rights, obligations and responsibilities of the investment decider
1. The investment decider is entitled to:
a) approve estimated costs of tasks performed at the project preparation stage to make a feasibility study report, estimated costs of tasks performed to prepare engineering designs and construction drawings, total investment, construction estimates, values of construction contract packages, adjusted total investment, adjusted construction estimates and adjusted values of construction contract packages that exceed the total investment;
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c) decide the contract package value in the contractor selection plan, type and format of the contract;
d) decide the method of updating values of construction contract packages if the update values tend to exceed the total construction investment;
dd) Accept the selection of a qualified cost management organization as prescribed in the Decree on construction project management to verify the total investment and construction estimate, which are the basis for appraising and granting approval;
e) exercise other rights to cost management prescribed by relevant regulations of law.
2. The investment decider is obliged to:
a) ensure sufficient capital sources according to the project execution plan;
b) If the project is not provided with sufficient capital to serve the disbursement on schedule, thereby affecting the project execution plan and investment effectiveness, use other capital sources and request the authority approving investment guidelines to approve them so that the project is executed according to the plan;
c) expedite the preparation of cost statements as prescribed. Verify and approved cost statements as prescribed;
d) fulfil other obligations related to cost management prescribed by relevant regulations of law.
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a) fails to discharge the obligations set out in Clause 2 of this Article and other relevant clauses of this Decree except for force majeure;
b) increases the costs of a project and fails to execute the project on schedule, thereby leading to loss and waste since he/she decides to execute the projects while the capital plan is inconsistent with the project execution plan;
c) adjusts the total investment of a project against the law on construction.
Article 29. Rights, obligations and responsibilities of investors
1. The investor is entitled to:
a) decide to use cost contingency if the project only requires the economic-technical reports;
b) hire a construction cost management advisor qualified as prescribed in the Decree on construction project management to estimate, verify, control, and manage construction costs;
c) claim damages or file lawsuits as prescribed by law in case of the reimbursing body’s delay in payment of the state budget capital;
d) approve changes to construction solutions and technical requirements proposed by contractors as long as quality, progress, safety, and environmental protection are ensured and values of concluded contracts are not changed. Control the changes during the construction process related to changes in construction costs or construction progress acceleration;
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e) perform some construction consultancy tasks if qualified;
g) exercise other rights to cost management prescribed by relevant regulations of law.
2. The investor is obliged to:
a) organize the project planning, request competent authorities to appraise and approve the total investment or adjusted total investment;
b) organize the making of and adjustment to construction estimate, and then submit it to a competent authority for appraisal and approval;
c) organize the determination of new or adjusted construction estimate norms of the work and submit them to competent authorities for approval to form the basis for construction cost management;
d) organize the determination of construction prices, construction price indexes of the construction or the contract;
dd) give advances, make payments, and finalize contracts in accordance with regulations in the contracts with contractors;
e) organize the control of construction costs as prescribed;
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h) organize the making of the cost statement of the completed work in accordance with Article 27 of this Decree;
i) buy mandatory construction insurance or authorize contractors to buy insurance under a construction contract;
k) fulfil other obligations related to cost management prescribed by relevant regulations of law;
l) provide information and data on the project at the request of regulatory authorities; cooperate in or organize the collection of cost management information at the request of regulatory authorities.
3. The investor shall take legal responsibility if he/she:
a) fails to discharge the obligations set out in Clause 2 of this Article and other relevant clauses of this Decree except for force majeure;
b) increases the costs of a project and fails to execute the project on schedule, thereby leading to loss and waste since he/she manages and uses capital investment in an ineffective manner, and fails to promptly disburse capital investment.
Article 30. Rights, obligations and responsibilities of advisory contractors
1. The advisory contractor is entitled to:
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b) request the investor and relevant parties to provide information and documents serving the provision of consultancy on cost management;
c) exercise other rights under the cost management consultancy contract and relevant regulations of law.
2. The advisory contractor has the following obligations:
a) Perform the cost management consultancy tasks in accordance with regulations of this Decree and other relevant regulations of law;
b) Be responsible to the law and the investor for result of cost management consultancy;
c) Do not reveal information and documents about the cost management consultancy provided by the consultant without the consent of the investor or a competent authority;
d) Provide information and data on project cost management at the request of the regulatory authority and investor;
dd) Fulfill other obligations under the contract and relevant regulations of law.
3. The advisory contractor shall take legal responsibility if he/she:
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b) pay compensation for any damage to the investor (if any) under regulations of law on contracts and relevant regulations of law.
Article 31. Rights, obligations and responsibilities of the building contractor
1. The building contractor is entitled to:
a) decide the construction norms, construction prices, and relevant costs when making bids;
b) exercise other rights under the contract and relevant regulations of law.
2. The building contractor is obliged to:
a) buy insurance in accordance with regulations of law;
b) provide information and data on the project at the request of regulatory authorities; cooperate in or organize the collection of cost management information at the request of regulatory authorities;
c) fulfill other obligations under the contract and relevant regulations of law.
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a) fails to discharge the obligations set out in Clause 2 of this Article and other relevant clauses of this Decree;
b) pay compensation for any damage (if any) to the investor and relevant parties on account of the building contractor under regulations of law on contracts and relevant regulations of law.
STATE MANAGEMENT OF CONSTRUCTION COSTS
Article 32. The Ministry of Construction
The Ministry of Construction is responsible for uniform state management of construction costs and has the responsibility to:
1. provide specific instructions on determination and management of construction costs, including preliminary total construction investment, total construction investment, construction estimates, work construction estimates, estimates of construction contract packages, construction norms, construction prices, investment rate and overall construction prices of structures of works, project management costs, consultancy costs, construction price indexes, construction quantity measurement, adjustment to total investment and construction estimates; determination of prices of building materials, labor cost (including expenditures on hiring consultants), equipment cost per shift according to market mechanism; conversion of construction capital, and control of construction costs.
2. impose construction norms; cost norms; norms of degradation and basic data used for calculation of equipment cost per shift and rent for construction machinery and equipment; investment rate and overall construction prices of structures of works; national construction price indexes, regional (inter-provincial) price indexes and other economic - technical criteria. Conduct regular reviews and consolidate results of adjustment and addition to norms and announce them every 2 years.
3. Take charge of establishing, providing instructions and operating database of construction norms and prices.
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5. Promulgate regulations on management of construction costs of works under the National target program on sustainable poverty reduction and National target program on new-style rural area building.
Article 33. The Ministry of Planning and Investment
Take charge and cooperate with relevant authorities in tailoring capital investment plans for projects in accordance with the execution plans approved for projects and submit them to competent authorities for approval in accordance with regulations of the Law on Public Investment.
Article 34. The Ministry of Finance
1. Provide instruction on payment and statement of construction costs. Promulgate regulations on management, use of revenues from project management by investors and management boards of the projects funded by state budget.
2. Inspect the payment and statement of construction costs of the completed works and projects.
Article 35. Other Ministries and the People’s Committees of provinces
1. According to the method of making construction estimate norms provided by the Ministry of Construction, other Ministries and the People’s Committees of provinces shall establish and impose construction estimate norms on professional tasks under their management after reaching an agreement with the Ministry of Construction.
2. The People’s Committees of provinces shall provide instruction on estimating and managing construction costs; on a periodic basis, sufficiently and correctly announce prices of building materials, labor cost, equipment cost per shift, rent for construction machinery and equipment, construction price indexes; announce construction unit costs that suit local market prices; inspect the adherence to regulations on construction cost management within their provinces.
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Article 36. Transitional clause
1. The Government's Decree No. 32/2015/ND-CP dated March 25, 2015 on construction cost management shall apply to investment projects of that are approved before the effective date of this Decree and still in progress.
2. Regulations of this Decree shall apply to construction cost management of the projects that have been formulated, appraised, but not approved, or approved but are yet to be commenced; the adjustment to cost items in the approved total investment as prescribed in this Decree shall be decided by the investment decider on the basis of ensuring the project process and effectiveness in management. With respect to the tasks and packages whose contracts have been concluded, the concluded contracts shall be adhered to.
1. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the People’s Committees of provinces and central-affiliated cities, heads of political organizations, socio-political organizations, socio-political-professional organizations, relevant organizations and individuals are responsible for the implementation of this Decree.
2. The Ministry of Construction shall take charge and cooperate with relevant Ministries and regulatory bodies in providing guidelines for this Decree.
1. This Decree comes into force from October 01, 2019.
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PP. THE GOVERNMENT
THE PRIME MINISTER
Nguyen Xuan Phuc