Decision No. 2038/QD-TTg dated December 18, 2017 of the Prime Minister on approving the Scheme on improvement of the system of construction norms and prices

DECISION

Approving the Scheme on improvement of the system of construction norms and prices[1]

THE PRIME MINISTER

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to November 1, 2016 Resolution No. 05/NQ-TW of the 4^thplenum of the Party Central Committee (the XII^thCongress) on a number of major policies to further renew the growth model and raise the growth quality, productivity and competitiveness of the economy;

Pursuant to the Government’s Resolution No. 35/NQ-CP of May 16, 2016, on enterprise support and development until 2020;

Pursuant to the Government’s Resolution No. 27/NQ-CP of February 21, 2017, promulgating the Government’s Program of Action to implement Resolution No. 05/NQ-TW of November 1, 2016;

At the proposal of the Minister of Construction,

DECIDES:

Article 1.To approve the Scheme on improvement of the system of construction norms and prices (below referred to as the Scheme) with the following principal contents:

I. OBJECTIVES AND VIEWPOINTS ON IMPROVEMENT OF THE SYSTEM OF CONSTRUCTION NORMS AND PRICES

1. General objectives

To improve the system of construction norms and prices (including urban service norms and prices) to suit the socialist-oriented market economy and international integration process during 2017-2021 and subsequent years, thus contributing to raising the investment efficiency, creating a transparent and competitive construction market, and preventing loss and waste in construction investment.

2. Specific objectives

a/ Objectives by 2018

- To complete the review of the announced norms to address shortcomings in application and technology explanations provided in different decisions, including:

+ The system of construction cost estimation and urban public service price norms announced by the Ministry of Construction;

+ The systems of specialized cost estimation norms announced by the line ministries and provincial-level People’s Committees;

- To improve the methods of building a new system of construction norms and prices to suit Vietnam’s market economy and conform with international practices.

- To amend and supplement the system of legal documents on management of construction investment and urban service expenses.

b/ Objectives by 2021 and subsequent years

- To build a system of construction norms and prices by the new methods.

- To guide and popularize new mechanisms, policies and methods of elaborating construction norms and prices and volumes of new norms and prices.

- To train to build capacity for entities related to the building and management of the system of construction norms and prices.

-  To develop a database on construction norms and prices.

3. Viewpoints of renewal of the management of construction norms and prices

First, the renewal of the management of the system of construction norms and prices must be in line with the Party’s socio-economic development orientations, the State’s Constitution and laws, be suitable to the socialist-oriented market economy and international integration process, and realize the guiding viewpoint that the State controls the construction market and comprehensively manages the system of construction norms and prices applicable to state capital-funded construction projects and urban services and PPP projects.

Second, the renewal of the management of the system of construction norms and prices must ensure correct and complete calculation, synchronism, simplicity and transparency, clearly define the role and functions of the State and the market, and clarify the legal status, role, responsibilities and competence of the Ministry of Construction, ministries managing specialized construction works and local authorities and entities involved in the management, building and use of the system of construction norms and prices.

Third, to retain the existing construction norms and prices which still meet the renewal requirements and management practices and harmoniously combine the review and revision of the announced or promulgated construction norms and prices with the elaboration of new ones.

Fourth, to focus on renewing the models and process of management of the system of construction norms and prices to suit the requirements and capacity of the ministries, sectors, local authorities and entities with assigned tasks and decentralized powers.

Fifth, the renewal of the management of the system of construction norms and prices must ensure conformity with construction standards, sector standards, technical construction instructions, applied construction technologies, construction schedules and markets of the places where works are constructed.

Sixth, to actively involve organizations and enterprises in the building, use, management and supervision of the system of construction norms and prices.

II. ORIENTATIONS FOR IMPROVEMENT OF THE SYSTEM OF CONSTRUCTION NORMS AND PRICES

1. To renew the mechanism of management of construction norms and prices from announcement by the State for reference to promulgation by the State for application and permissible change in case the promulgated norms and prices are not suitable to state capital-funded construction projects and urban services and PPP projects

- The proposed shift from elaboration and management of the system of construction norms and prices to promulgation for application and permissible change in case the promulgated norms and prices are not suitable to state capital-funded construction projects and urban services and PPP projects will help address the arbitrary application of norms to elaborate unit prices, and provide a uniform basis for the application of information technology in the management (application of the building information modeling - BIM). Particularly, professional capacity, experience and finance must be concentrated on raising the quality of the building and management of the system of construction norms and prices, ensuring the uniformity, publicity, transparency and synchronism for all works and projects of the ministries, sectors and localities and entities involved in the management and use of the system of construction norms and prices.

- To issue adequate, specific and practical guidance to clarify regulations issued by the State for application and contents permitted to be changed, ensuring uniform understanding by state management agencies and related entities in the course of implementation.

2. To renew the methods of elaborating norms

- Construction norms shall be determined by the method of market survey to be conformable with construction regulations and standards, project standards, technical instructions and construction conditions.

- Every norm must has a code, a title and a unit of calculation and specify jobs to be performed, technology to be applied, conditions to be met and numeric value.

- Construction norms used for determining construction unit prices shall be changed from cost estimation norms to labor productivity norms, including material consumption norm, labor productivity norm and construction machinery productivity norm.

- Urban service norms shall be determined by the method of market survey to be conformable with construction technology and conditions.

3. To renew the method of determining construction prices and related contents

- Construction prices shall be determined by the method of market survey to be correct and adequate and suitable to construction conditions and market prices in construction locations.

- Construction cost estimates must be associated with implementation plans of projects and bidding packages. Cost estimates must separate fixed costs from variable costs. Equipment costs must fully include management expenses for the process of equipment procurement, preservation, installation and handover.

- The investment capital ratio and general construction prices of structural items of works shall be determined according to market prices, construction locations, types and sizes (capacity) of works and construction standards.

- Material unit prices shall be determined according to the types, standards, technical characteristics, commercial terms and origins of materials, and construction locations and areas.

- Construction labor unit prices shall be determined according to jobs, skills and construction locations.

- Construction machinery and equipment unit prices shall be determined according to hour, day, week, month and year suitable to each type of machinery and technology. Labor, energy and fuel costs shall be separated from machinery shift prices.

4. To assign tasks and decentralize powers in the building and management of the system of construction norms and prices in a clear and transparent manner and with clearly defined responsibilities

a/ Regarding construction norms

- The State shall promulgate mechanisms and policies relevant to the management and methods of elaboration of construction norms. The Ministry of Construction shall promulgate construction norms commonly applicable to state capital-funded construction projects and urban services and PPP projects; and reach agreement with the ministries managing specialized construction works and provincial-level People’s Committees on promulgation of specialized construction and urban service norms and special construction norms.

- The ministries managing specialized construction works shall promulgate specialized construction norms (after reaching agreement with the Ministry of Construction) for application in their sectors in accordance with regulations and methods issued by the Ministry of Construction.

- Provincial-level People’s Committees shall promulgate urban service norms and special construction norms (after reaching agreement with the Ministry of Construction) for application in their localities in accordance with regulations and methods issued by the Ministry of Construction.

- In case norms promulgated by the State are not suitable to specific works, entities that apply them may alter their numeric values after obtaining consent of the state management agency in charge of construction.

- Construction norms shall be elaborated by capable professional agencies, consultancy organizations and experts.

b/ Regarding construction prices

- The State shall promulgate mechanisms and policies relevant to the management of construction prices for state capital-funded construction projects and urban services and PPP projects nationwide. The Ministry of Construction shall promulgate methods of elaborating and managing construction and urban service prices.

- The Ministry of Construction shall promulgate investment capital ratios and general prices of structural items of works, construction price indexes, construction planning prices, project management and construction investment consultancy expenses, and construction prices for application nationwide.

- The ministries managing specialized construction works shall promulgate specialized construction prices for application to their sectors in accordance with regulations and methods issued by the Ministry of Construction.

- Provincial-level People’s Committees shall promulgate construction and urban service prices for application in their localities in accordance with regulations and methods issued by the Ministry of Construction.

- Construction prices shall be elaborated by capable professional agencies, consultancy organizations and experts.

5. To formulate policies to create conditions for consultancy firms and capable and qualified persons to participate in the economic management of sectors

- To set out criteria for organizations and individuals to participate in the elaboration, appraisal and management of construction and urban service norms and prices.

- To specifically define rights, obligations and responsibilities of organizations and individuals participating in the elaboration, appraisal and management of construction and urban service norms and prices.

- To study and choose for application appropriate models of providers of such public services as water supply, water drainage, solid waste disposal and cemetery services, ensuring suitability to local practical conditions.

6. To build a database on construction norms and prices to serve the management of construction investment and urban service expenses

- To build a database (including hardware and software) containing the complete system of construction norms and prices.

- The database on the system of construction norms and prices must be uniform and reliable to serve the management of construction norms and prices by the Ministry of Construction, ministries managing specialized construction works, regions, local authorities and related entities.

- To define rights, obligations and responsibilities of entities in providing information to serve the state management of construction norms and prices.

III. MAJOR SOLUTIONS

1. Organizing the review of the existing system of norms so as to address problems in application instructions and numeric values of unreasonable norms

- To comprehensively review current norms (including specialized norms and special norms) for unification of their codes and titles, jobs to be performed, conditions and technologies to be applied, units of calculation and numeric values.

- To study and elaborate norms which are not yet available and are needed to meet practical requirements (including norms for construction of works in maritime, island and border areas) according to strict procedures to ensure their conformity with the reality, and examine and control them according to uniform procedures.

- The Ministry of Construction shall assume the prime responsibility for reviewing, modifying, supplementing and improving the system of norms for common application which it has announced and specialized norms or special norms which the ministries managing specialized construction works or provincial-level People’s Committees have promulgated with the Ministry’s agreement.

- The ministries managing specialized construction works shall assume the prime responsibility for reviewing specialized norms under the regulations and guidance of the Ministry of Construction for promulgation after reaching agreement with the Ministry of Construction.

- Provincial-level People’s Committees shall assume the prime responsibility for reviewing special construction and urban service norms under the regulations and guidance of the Ministry of Construction for promulgation after reaching agreement with the Ministry of Construction.

2. Renewing and improving the system of mechanisms and policies and stepping up the reform of administrative procedures for the building and management of the system of construction norms and prices

a/ The Ministry of Construction shall assume the prime responsibility for revising and improving the Construction Law, decrees and circulars guiding the management of expenses for construction investment and public urban services according to the orientations stated in Section II, including:

- Construction Law No. 50/2014/QH13 of June 18, 2014.

- The Government’s Decree No. 32/2015/ND-CP of March 25, 2015, on the management of construction investment expenses.

- The Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts.

- The Government’s Decree No. 59/2015/ND-CP of June 18, 2015, on the management of construction investment projects.

- The circulars guiding the above decrees.

b/ The Ministry of Construction shall assume the prime responsibility for studying and providing guidance on the estimation and management of expenses related to the system of construction norms and prices according to the set orientations, including:

- Method of determining construction material use norms;

- Method of determining labor productivity norms;

- Method of determining construction machinery and equipment productivity norms;

- Method of determining public urban service norms;

- Method of determining construction investment project management and consultancy expense norms;

- Method of determining norms of indirect expenses in cost estimates: general expenses, general item expenses (other direct expenses, expenses for setting up accommodation tents for workers, etc.);

- Method of determining preliminary total investment capital and method of determining total investment capital;

- Method of estimating construction expenses of works;

- Method of determining investment capital ratios and general construction prices of structural items of works;

- Method of determining construction material unit prices;

- Method of determining construction labor unit prices;

- Method of determining construction machinery and equipment shift prices;

- Method of determining construction price indexes.

c/ To compile and issue volumes of construction and public urban service norms by new methods, specifically as follows:

- The Ministry of Construction shall assume the prime responsibility for compiling and issuing volumes of norms and prices:

+ Construction material norms;

+ Construction labor productivity norms;

+ Construction machinery productivity norms;

+ Commonly applicable urban service norms;

+ Investment capital ratios and general prices of work structure items;

+ Construction price indexes;

+ Construction planning prices;

+ Commonly applicable construction prices;

+ Construction investment project management and consultancy expense norms.

- The ministries managing specialized construction works shall assume the prime responsibility for compiling volumes of specialized norms and volumes of specialized unit prices for the following sectors:

+ Transport;

+ Industry and trade;

+ Agriculture and rural development;

+ National defense (norms of expenses for sweeping bombs, land mines and explosive objects).

- Provincial-level People’s Committees shall assume the prime responsibility for compiling volumes of special construction norms and urban service norms for application in their localities:

+ Special construction norms;

+ Volumes of norms of public urban services:

• Water supply;

• Water drainage and wastewater treatment;

• Garbage collection and disposal;

• Maintenance of parks and greeneries;

• Maintenance of cemeteries;

• Maintenance of urban lighting systems.

-  Volumes of local norms corresponding to volumes of norms for local application.

3. Raising the quality of construction, and management and control of the system of construction norms and prices

- To ensure close coordination between the Ministry of Construction and (i) the ministries managing specialized construction works in improving the system of construction standards and sector standards to serve as a basis for the renewal and improvement of the system of construction norms and prices, and (ii) provincial-level People’s Committees in building the system of special norms and local unit prices.

- To arrange sufficient human resources for building, managing and controlling the system of construction norms and prices in a continuous and practical manner according to the new procedures and models.

To assign tasks of building, managing and controlling the system of construction norms and prices to capable units, organizations and individuals.

- To concentrate on assessing the capacity of units, organizations and individuals participating in the elaboration of norms and contents related to construction prices, and based on assessment results to assign appropriate tasks to each entity participating in the building and management of the system of construction norms and prices.

4. Training and building capacity of organizations and individuals engaged in the building, management and control of the system of construction norms and prices

- To design a program on training in the system of legal documents and instructions on building and management of the system of revised construction and urban service norms and prices; and on the new system of construction norms and prices.

- To organize training for managerial officials of the State, enterprises, universities, research institutes and entities involved in the building and management of the system of construction and urban service norms and prices.

- To additionally supply experienced human resources to meet the requirements of the building and management of the system of construction norms and prices from the Ministry of Construction, ministries managing specialized construction works, local authorities and related entities.

- To additionally supply resources to related agencies studying and elaborating norms, determine expenses for monitoring and reviewing activities at construction works and projects where new technologies are applied, and coordinate with construction, supervision consultancy units in elaborating norms suitable to Vietnam’s conditions.

- To formulate policies to mobilize all social resources for capacity-building training for project owners, project management units, consultants and contractors.

5. Applying information technology and building a database on management and control of the system of construction norms and prices

a/ To build a system for collecting information and managing the database (consisting of hardware and software) relating to the building and management of the system of construction norms and prices, ensuring its uniformity and reliability.

Information in the database on construction norms and prices includes:

- Material use norms;

- Labor productivity norms;

- Construction machinery and equipment productivity norms;

- Public urban service norms;

- Project management and construction investment consultancy expense norms;

- Norms of indirect expenses in the cost estimation structure: general expenses and general item expenses (other direct expenses, expenses for setting up accommodation shelters for workers, etc.);

- Investment capital ratio and general construction prices of structural items of works;

- Construction material unit prices;

- Construction labor unit prices;

- Construction machinery and equipment shift unit prices;

- Construction price indexes;

- Public urban service prices.

b/ The responsibility to build and manage the database on construction norms and prices

- The Ministry of Construction shall:

+ Build, manage and comprehensively control the database on construction norms and prices nationwide.

+ Build and improve the system of indicators and encryption codes and applied software for managing the main database on construction norms and prices of the entire construction sector.

+ Guide the details and usage of the software and method of updating the database from the ministries managing specialized construction works to regions, localities and related entities.

- The ministries managing specialized construction works and localities shall:

+ Sum up, update and control the software for managing the database on the system of norms and market prices under the guidance of the Ministry of Construction.

+ Carry out market surveys and promptly update information according to their functions and areas under their management, and update such information to the database on construction norms and prices after reaching agreement with the Ministry of Construction.

- Professional units, consultants, specialized research institutes and experts shall:

+ Support project owners and management units in elaborating new construction norms, specialized and special norms.

+ Propose to competent agencies for approval and reach agreement with the Ministry of Construction on promulgation of new construction norms and prices to be updated to the database.

6. Promoting international cooperation in the management of construction norms and prices

- To propose Japan and international donors to support the project on methods of elaboration of construction norms and prices.

- To cooperate and exchange knowledge and experiences with the construction valuators associations of developed countries and countries with conditions similar to Vietnam’s.

- To carry out field surveys in Japan, China and the United States on building and management of the system of construction norms and prices.

7. Renewing the allocation of financial resources for the building and management of the system of construction norms and prices

- As construction norms and prices exert great impacts on investment efficiency of construction investment projects, helping prevent loss and wastage in construction investment and urban development and create a transparent and competitive market, to invest adequate financial resources from the state budget and other lawful sources in the building, revision and improvement of the system of construction norms and prices.

- To periodically allocate funds to the Ministry of Construction, ministries managing specialized construction works and provincial-level People’s Committees in reviewing, elaborating and managing specialized and special norms and unit prices applicable to their sectors and ministries.

- To allocate maximum state funds for non-business economic, scientific and technological projects of the Ministry of Construction and ministries managing specialized construction works for them to perform tasks within their respective functions and duties assigned under the Scheme; to allocate local budgets for performance of tasks of provincial-level People’s Committees specified in the Scheme.

- To use funds of each project for the elaboration of construction norms and prices of such project.

- To mobilize other lawful funding sources outside the state budget and state funds for the building and improvement of the system of construction norms and prices.

8. Properly organizing public information activities

- To formulate programs to popularize the role and importance of the system of construction norms and prices, assignment of tasks and decentralization of powers and other contents related to the renewal and improvement of the system.

- To announce the process of building and management and expected effects of the Scheme in the mass media so as the Scheme can soon be implemented, bring about investment efficiency for projects and contribute to fighting loss and wastage in construction investment and urban development.

IV. FUNDS FOR IMPLEMENTATION OF THE SCHEME AND FUNDING SOURCES

1. Funds for performance of tasks

The Ministry of Construction, ministries managing specialized construction works and provincial-level People’s Committees shall prepare annual cost estimates for performance of their assigned tasks, including:

- Reviewing and revising the existing norms by adding applicable regulations.

- Improving the methods of elaborating construction norms and prices suitable to the market mechanism and international practices.

- Studying international experiences and translating relevant documents.

- Building a system of basic norms, investment capital ratios and general prices of structural items of works, construction price indexes, construction planning prices, and project management and construction investment consultancy expenses by the new methods.

- Building models, management software and hardware devices.

- Organizing training to raise the qualifications, awareness about and sense of responsibility for the management of construction norms and prices as required by the Scheme.

- Designing teaching courses and training contents for all levels with new contents.

2. Funding sources

- To use non-business scientific and economic funds and regular expenditures annually allocated to the Ministry of Construction, ministries managing specialized construction works and provincial-level People’s Committees according to cost estimates.

- To additionally mobilize financial assistance from foreign countries and international organizations to support the implementation of the Scheme.

V. ORGANIZATION OF IMPLEMENTATION

1. The Ministry of Construction shall:

- Take the overall responsibility for managing the system of construction norms and prices.

- Assume the prime responsibility for, and coordinate with the ministries, sectors and local authorities in, implementing the Scheme.

- Assume the prime responsibility for renewing and improving mechanisms and policies related to the system of construction norms and prices.

- Assume the prime responsibility for building models and process of building, managing and controlling the system of construction norms and prices.

- Assume the prime responsibility for promulgating and guiding methods of building, managing and controlling the system of construction norms and prices nationwide.

- Assume the prime responsibility for revising the commonly applicable system of construction norms and prices (already promulgated and announced).

- Assume the prime responsibility for elaborating and managing investment capital ratios, construction price indexes, construction planning prices, and project management and work construction investment consultancy expenses nationwide.

- Assume the prime responsibility for elaborating the system of construction norms and prices by the new methods, construction standards, sector standards, technologies and specific works and reach agreement with the ministries managing specialized construction works and provincial-level People’s Committees before promulgation thereof.

- Assume the prime responsibility for building models and contents of training to build the capacity for building, managing and controlling the system of construction norms and prices.

- Assume the prime responsibility for building models of information collection, databases and management of the system of construction norms and prices.

- Strengthen the organization and build the capacity of organizations and individuals involved in the state management of construction norms and prices.

- Make annual estimates of expenses for performing the tasks to implement the Scheme according to the set schedule.

- Assume the prime responsibility for carrying out public information activities.

2. The Ministry of Planning and Investment, Ministry of Finance and Ministry of Science and Technology shall:

- Coordinate with the Ministry of Construction in studying and promulgating mechanisms and policies related to the management of construction norms and prices.

- Allocate funds for the implementation of the Scheme.

The Ministry of Finance shall assume the prime responsibility for guiding the finalization of costs of construction investment projects.

3. The ministries managing specialized construction works shall:

- Coordinate with the Ministry of Construction in elaborating standards and systems of construction norms and prices in the fields under their management.

- Assume the prime responsibility for building and managing systems of specialized construction norms, and reaching agreement with the Ministry of Construction prior to promulgation of such norms.

- Strengthen their organizational structures, build the capacity of organizations, individuals and other entities involved in the building and management of the system of specialized construction norms under their management.

- Organize their information systems and manage their specialized databases.

- Make annual estimates of expenses for performing the tasks to implement the Scheme according to the set schedule.

4. Provincial-level People’s Committees shall:

- Coordinate with the Ministry of Construction in managing the system of norms and prices of construction of special works in their localities.

- Assume the prime responsibility for building and managing systems of special construction and urban service norms, and reach agreement with the Ministry of Construction prior to promulgation of such norms.

- Guide the estimation and management of expenses for construction of works in their localities.

- Assign specialized agencies in charge of construction to assume the prime responsibility to perform tasks related to the building and management of construction norms and prices in their localities.

- Regularly update regulations, policies, material prices and conditions for supply of materials in order to update construction unit prices according to market prices.

- Allocate budgets for the building and management of the system of construction and urban service norms and prices in their localities.

Article 2.Implementation provisions

1. This Decision takes effect on the date of its signing.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and related organizations and individuals shall implement this Decision.-

For the Prime Minister
Deputy Prime Minister
TRINH DINH DUNG