Circular 02/2023/TT-BXD guiding a number of contents on construction contracts

CIRCULAR

Guiding some contents on construction contracts^[1]

Pursuant to the June 18, 2014 Law on Construction; and the June 17, 2020 Law Amending and Supplementing a Number of Articles of the Law on Construction;

Pursuant to the Government’s Decree No. 52/2022/ND-CP of August 8, 2022, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts (below referred to as Decree No. 37/2015/ND-CP);

Pursuant to the Government’s Decree No. 50/2021/ND-CP of April 1, 2021, amending and supplementing a number of articles of the Government’s Decree No. 37/2015/ND-CP of April 22, 2015, prescribing in detail construction contracts (below referred to as Decree No. 50/2021/ND-CP);

At the proposal of the Director of the Department of Construction Economics;

The Minister of Construction promulgates the Circular guiding some contents on construction contracts.

Article 1. Scope of regulation

This Circular guides in detail some contents on construction contracts; promulgates and guides the use of construction execution contract forms, construction consultancy contract forms, and engineering, procurement and construction (EPC) contract forms.

Article 2. Subjects of application

1. This Circular applies to organizations and individuals involved in the establishment and management of the performance of construction contracts under construction investment projects using public investment funds and projects using state capital other than public investment funds, and construction contracts between project enterprises and construction contractors implementing bidding packages under investment projects in the form of public-private partnership.

Organizations and individuals may use this Circular as reference when establishing and managing construction contracts of projects funded by other capital sources.

2. For construction contracts of projects using official development assistance (ODA) and concessional loans provided under treaties to which Vietnam is a contracting party, if these treaties contain regulations different from those of this Circular, the former shall prevail.

Article 3. Payment, temporary payment and dossiers of temporary payment of construction contracts

1. The payment of construction contracts must comply with Article 19 of Decree No. 37/2015/ND-CP.

2. In case of production of high-value structures or semi-finished products  or construction materials which must be stockpiled on a seasonal basis under Clause 7, Article 18 of Decree No. 37/2015/ND-CP, dossiers of advance payment must comprise the list of materials, structures and semi-finish products, showing the unit price and the total value of each of them. When making payment, the value of the completed work volume which is tested and accepted shall be reduced correspondingly to the value of the advance payment.

3. In case of temporary payment specified in Clause 4, Article 19 of Decree 37/2015/ND-CP, the value of and security interests for each temporary payment shall be decided based on conditions of the temporary payment to ensure efficiency and avoid loss of capital. Some of specific cases are as follows:

a/ For adjustable unit price-based contracts, if data for adjustment of unit prices and contract prices are unavailable on the due date, temporary payment shall be made based on the unit prices stated in the contracts.

b/ For products, jobs or works which are being processed and not yet completed according to the requirements set out in contracts, temporary payment shall be made based on the degree of completion of such products, jobs or works and their detailed unit prices stated in the contracts.

4. For products, jobs or works which are not yet completed due to different reasons, including cases in which contracts are terminated or one of the contractual parties fails to conduct pre-acceptance testing of the products, jobs or works, the responsibilities and obligations of each entity shall be clearly identified before the payment is made.

5. A dossier of temporary payment must comprise a record of pre-acceptance testing of the completed work volume or a confirmation of the completed work volume (in case the work volume is disqualified for pre-acceptance testing), a table of calculation of the arising payment amount (increase or decrease); a table of calculation of the temporary payment amount, and a request for temporary payment.

Article 4. Adjustment of work volume under construction contracts

1. The adjustment of work volume under construction contracts must comply with Article 37 of Decree No. 37/2015/ND-CP which was amended and supplemented under Clause 13, Article 1 of Decree No. 50/2021/ND-CP.

2. In case the adjustment of work volume among members in a joint-name entity of contractors does not result in a change in the price of the concerned construction contract, the project owner shall decide on such adjustment based on the agreement and consensus of members of the joint-name entity as well as the capacity and experience of each member, ensuring the safety, quality, efficiency and schedule of performance of the contract.

Article 5. Adjustment of contract performance schedule

1. The adjustment of contract performance schedule must comply with Article 39 of Decree No. 37/2015/ND-CP.

2. When adjusting contract performance schedule as specified at Point a, Clause 2, Article 39 of Decree 37/2015/ND-CP, the principal and contractor shall assess the impacts of force majeure events on the contract performance schedule to determine and decide on appropriate adjustment.

3. In case the contract performance is suspended at the request of a competent state agency as specified at Point d, Clause 2, Article 39 of Decree No. 37/2015/ND-CP:

a/ The principal and contract shall, based on the request of the competent state agency, assess the impact of the suspension on the contract performance schedule so as to identify and reach agreement on adjustment of the contract performance schedule.

b/ In case of incurring costs due to the extension of the contract performance time, the principal and contractor shall, based on the contract contents and guidance of the competent state agency on the event that results in the suspension of the contract performance, identify and reach agreement on incurring cost items in a reasonable manner.

Article 6. Adjustment of contract unit prices and prices

1. The adjustment of construction contract unit prices must comply with Article 38 of Decree No. 37/2015/ND-CP which was amended and supplemented under Clause 14, Article 1 of Decree No. 50/2021/ND-CP.

2. In case the adjustment of a construction contract price results in the modification or supplementation of the contract, the parties must sign an annex to the contract which shall serve as a basis for adjustment of the contract price. The project owner shall approve, or submit to competent authorities for approval, the adjusted estimates and incurred costs in accordance with the regulations on management of construction investment costs and  construction contracts so as to obtain grounds for signing the annex.

3. Methods for adjustment of construction contract prices

a/ The methods for adjustment of construction contract prices must comply with the guidance provided in Appendix I to this Circular. The application of the price adjustment methods must conform to the job characteristics, types of contract prices and payment currencies, and be agreed upon in the contracts.

b/ For construction consultancy contracts subject to time-based payment (on a monthly, weekly, daily or hourly basis), the adjustment of expert salary shall be calculated according to the formula for adjusting a labor cost element provided in Section I, Appendix I to this Circular.

Article 7. Use instructions and application of construction contract forms

1. The construction contract forms provided in this Circular are for reference and use by organizations and individuals when establishing, and managing the performance of, contracts for construction bidding packages so as to ensure construction contract contents specified in Clause 1, Article 141 of Law No. 50/2014/QH13 on Construction.

2. The construction contract forms provided in this Circular are forms of contracts between project owners and contractors. In case the principal is the general contractor or main contractor, involved parties may study and apply necessary contents of these contract forms in establishment and management of performance of their contracts.

3. The construction contract forms provided in this Circular include:

a/ The construction consultancy contract form provided in Appendix II to this Circular, which is used for consultancy contracts for making of feasibility study reports, construction surveying, construction engineering and construction supervision.

b/ The construction implementation contract form provided in Appendix III to this Circular.

c/ The EPC contract form provided in Appendix IV to this Circular, which is applied to all-in contracts. For contracts in the forms of fixed unit price-based contract, adjustable unit price-based contract, or combined price-based contract, involved parties shall comply with law and this Circular to modify and supplement the conditions and terms of the EPC contract form to serve the establishment of their contracts.

4. For simple and small-scale contracts, construction consultancy contracts and other combined contracts, involved parties shall refer to, and apply the construction contract forms provided in this Circular so as to adjust, modify and supplement the conditions and terms of such contract forms to serve the establishment of their contracts.

5. When using the construction contract forms provided in this Circular to negotiate and sign a construction contract, involved parties shall base on the specific requirements and conditions of the bidding packages and projects, and Decree No. 37/2015/ND-CP which was amended and supplemented under Decree No. 50/2021/ND-CP, other provisions of law, and this Circular. The following contents must be agreed upon in the contract:

a/ Specific provisions on payment terms, contract performance time, time limit for reply of documents, contract termination time, and similar cases.

b/ Assurance of contract performance and guarantee of advance payment as prescribed by law, in case the contractor is a member of a joint-name entity.

c/ A provision specifying that the contract’s payment currency and mode must not contravene requirements in the bidding dossier and the law on foreign exchange.

d/ Contract price adjustment methods, price data sources and price bases for contract adjustment, which must not contravene bidding dossiers and the law on construction contracts, for adjustable price-based contracts.

dd/ Based on the characteristics and conditions of bidding packages, the contract contents shall be adjusted and supplemented in an appropriate manner.

Article 8. Transitional provisions

1. Construction contracts which have been signed and performed before the effective date of this Circular must comply with regulations on construction contracts before the effective date of this Circular.

2. For construction contracts that are under negotiation and have not been signed, any contents that are not conformable with this Circular should be reported to persons competent to make investment decision for consideration and decision on the principles of ensuring the quality, schedule and efficiency of the construction investment projects and refraining from infringing upon the lawful rights and interests of the involved parties.

3. Contents of construction contracts in bidding dossiers and dossiers of requirements which were approved but have not been issued shall be adjusted in conformity with this Circular. If the bidding dossiers and dossiers of requirements have been issued, any adjustments to their contents related to the contracts shall be notified to all contractors that have purchased such bidding dossiers and dossiers of requirements for adjustment of contents of their bid dossiers and dossiers of proposals. In case a bid has been closed, to comply with Clause 2 of this Article.

Article 9. Effect

1. This Circular takes effect on April 20, 2023.

2. This Circular replaces the Minister of Construction’s Circular No. 07/2016/TT-BXD of March 10, 2016, guiding the adjustment of construction contract prices; Circular No. 08/2016/TT-BXD of March 10, 2016, guiding a number of contents on construction consultancy contracts; Circular No. 09/2016/TT-BXD of March 10, 2016, guiding construction execution contracts; and Circular No. 30/2016/TT-BXD of December 30, 2016, guiding engineering, procurement and construction contracts.-

For the Minister of Construction
Deputy Minister
BUI HONG MINH

* The Appendices to this Circular are not translated.