Circular No. 03/2004/TT-BXD dated May 07, 2005 of the Ministry of Construction guiding the implementation of the mode of general contractor for construction and installation of electricity generation projects entitled to designation of contractors

CIRCULAR

GUIDING THE IMPLEMENTATION OF THE MODE OF GENERAL CONTRACTOR FOR CONSTRUCTION AND INSTALLATION OF ELECTRICITY GENERATION PROJECTS ENTITLED TO DESIGNATION OF CONTRACTORS

Pursuant to the Investment and Construction Management Regulation promulgated together with the Government's Decree No. 52/1999/ND-CP and amended and supplemented by the Government's Decrees No. 12/2000/ND-CP and No. 07/2003/ND-CP;

Pursuant to the Government's Documents No. 797/CP-CN of June 17, 2003 on electricity projects started in 2003-2004 and Document No. 400/CP-CN of March 26, 2004 on the mechanism applicable to hydroelectric power projects;

With a view to speeding up the tempo to complete electricity generation projects, and concurrently bringing into full play the internal resources and creating conditions for raising the capability of State enterprises, the Prime Minister has permitted the application of the mode of construction and installation general contractors being conglomerates of contractors, formed from State corporations and companies for the construction and installation of electricity generation projects. The been agreed upon by contractors and investors. A conglomerate is headed by a principal contractor, which is called general contractor, while other contractors are called member contractors. General contractors shall have to organize the general administration of construction sites and coordinate construction and installation activities of member contractors, in order to ensure the tempo and quality of projects.
The Ministry of Construction hereby guides a number of contents in implementing the mode of general contractor for construction and installation of electricity generation projects as follows:

I. SIGNING MODES AND TYPES OF ECONOMIC CONTRACTS

1. Contract signing modes: Basing themselves on the written contractor designations by competent

a/ The first mode (hereinafter called mode 1): The investor signs a contract with the general contractor (which represents member contractors of a conglomerate), then the general contractor shall sign contract with every member contractor for performance of work portions already assigned under written agreements among the member contractors of the conglomerate and approved by the investor.

By this mode, the general contractors shall be answerable to investors for the volume, tempo and quality of the whole construction and installation work of projects under contracts already signed with the investors. The member contractors of conglomerates shall be answerable to the general contractors for the performance of work portions they undertake to perform under contracts already signed with the general contractors.

According to the Government's Document No. 797/CP-CN of June 17, 2003, for the hydroelectric power projects of Plei Krong, A Vuong, Quang Tri, Ban La and Buon Kuop, the signing of economic contracts shall be

By this mode, each member contractor of a conglomerate shall be answerable to the investor for the volume, progress and quality of the construction and installation work it performs under the contract signed with the

c/ Apart from being answerable for the volume, tempo and quality of the construction and installation work they perform under contracts, the general contractor and member contractors shall also be responsible to the heads of the superior management agencies and the Prime Minister for their assigned tasks.

2. Types of contracts: Economic contracts signed by mode 1 or mode 2 are contracts with price adjustment according to the current regulations.

3. To simplify the administrative procedures and save time for project execution, investors are encouraged to sign package contracts with contractors to perform such works as: preparation of construction sites, erection of makeshift tents, building of supporting works and public works in service of construction sites. Investors must notify contractors of the cost estimates of package-contracted works and make payments, thus ensuring the interests of the involved parties.

II. REQUIREMENTS ON CONTRACTUAL CONTENTS

1. Investors, general contractors and member contractors shall agree to incorporate in the contracts the following principal contents: Scope of work, responsibilities of contractual parties, mode of management of construction sites, organization of management of project work volume and quality, construction tempo, pre-acceptance test and payment mode compatible with the contract signing mode.

The settlement provisions of contracts between investors, general contractors and member contractors must be consistent and compliant with the legislation on contracts.

2. For contracts signed by mode 1, such a contract between the investor and the general contract must ensure that the investor assigns the general contractor to perform and bear responsibility for the volume, tempo and quality of the whole construction and installation work of the project. The general contractor must have full power to direct and administer all over the construction site in order to ensure the project's work volume, tempo and quality. The general contractor may also consider and adjust the work scopes and volumes of member contractors in cases where the latter fail to meet the requirements on tempo and quality of their assigned works.

Contracts between the general contractor and member contractors must state that the general contractor assigns member contractors to perform work portions and bear responsibility for the volume, progress and quality of such assigned works.

In cases where investors make payments through general contractors, the contracts between the investors and the general contractors must contain provisions on penalties to avoid the situation that the general contractors misappropriate capital or fail to transfer money in full and on time to member contractors according to the signed contracts.

3. For contracts signed by mode 2, such a contract between the investor and each member contractor must ensure that the investor assigns member contractors to perform and bear responsibility for the volume, tempo and quality of the assigned work portions. Member contractors shall commit to submit to the general direction and administration by the general contractor at the construction site. Contracts must clearly state the pre-acceptance test, handover, payment and construction and installation warranty of the project, and contain penalties in cases member contractors breach their commitments or fail to submit to the general contractor's direction and administration.

In the contract between the investor and a conglomerate's member being the general contractor, apart from the above-said requirements, the investor must create conditions for the general contractor to direct and administer the construction site, especially in assigning responsibilities to build and use supporting works to avoid wastefulness, responsibilities to use and protect construction site ground, and assuming the prime responsibility for briefing on the situation of the construction site in order to direct the implementation of the project construction and installation schedule.

III. QUALITY MANAGEMENT AND PRE-ACCEPTANCE TEST

1. The management of quality of construction works under electricity generation projects shall comply with the Regulation on management of quality of construction projects, promulgated together with the Construction Minister's Decision No. 18/2003/QD-BXD of June 27, 2003.

2. The elaboration of the construction drawing design and detailed cost estimates: The general contractor and member contractors shall have to organize the elaboration of construction drawing designs and detailed cost estimates for work items, then send them to the project management board for carrying out the procedures for approval thereof according to regulations. The general contractor shall coordinate with member contractors in elaborating the construction drawing design and detailed cost estimates, ensuring the general tempo and compatibility with the approved technical design dossier.

The general contractor and member contractors shall enjoy a designing charge for construction drawing design and detailed cost estimates equal to 40% of the value of designing costs according to the provisions of the Construction Minister's Decision No. 12/2001/QD-BXD of July 20, 2001.

3. Pre-acceptance test

- Pre-acceptance test of works and parts: The investor shall organize and directly conduct the pre-acceptance test of works and parts of the project, performed by the general contractor and each member contractor. Upon the pre-acceptance test of works and parts of the project performed by member contractors, the general contractor may join the investor therefor.

- Pre-acceptance test of completed project phases and items: The investor shall organize and directly conduct the pre-acceptance test of project phases and items performed by the general contractor and each member contractor. The general contractor must join the investor in the pre-acceptance test of project phases and items performed by member contractors, and at the same time hand over the completed project items to the investor.

- Each member contractor shall have to complete the dossier on completed work and relevant documents to serve the pre-acceptance test and hand over the work portion it has performed.

- Pre-acceptance test of works and parts: The investor shall organize and directly conduct the pre-acceptance test of works and parts of the project performed by the general contractor and member contractors respectively.

- Pre-acceptance test of completed project phases and items: The investor shall organize and directly conduct the pre-acceptance test of project phase or item performed by each member contractor with the participation of the general contractor.

- Each member contractor shall have to complete the dossier on completed work and relevant documents to serve the pre-acceptance test and hand over the work portion it has performed.

IV. ADVANCES AND PAYMENTS

1. Advances: Due to the fact that electricity generation projects are of large scale, require complicated techniques, their technical designs and total cost estimates cannot be promptly approved, and for their construction the contractors have to mobilize large volumes of equipment, supplies and manpower, etc., in order to ease difficulties met by the contractors, the investors and conglomerates of contractors may agree and propose the Prime Minister to permit the advance of capital to enable the contractors to ensure the set construction tempo.

2. Payment for completed work volume:

- The investor shall pay for the value of construction and installation volume performed by member contractors through the general contractor, then the general contractor shall have to pay in full and on time to member contractors strictly according to the signed contracts and other agreements.

- The investor shall directly pay for the value of construction and installation volume to each member contractor after obtaining approval of the competent representative of the legal person being the general contractor.

3. For construction and installation works not yet specified in the State-promulgated system of econo-technical norms, investors shall reach agreements with the Construction Ministry to organize the elaboration of econo-technical norms for such works and submit them for approval according to regulations.

For construction and installation works requiring separate unit costs, investors shall organize the elaboration of separate unit costs, and submit them for approval according to regulations.

V. GENERAL CONTRACTOR'S EXPENSES

By mode of construction and installation general contractors, general contractors shall have to organize the management and administration of construction sites and coordinate member contractors in performing the construction and installation, ensuring the projects' work volume, tempo and quality. As a result, general contractors shall enjoy management funds provided for in the Construction Ministry's Circular No. 09/2000/TT-BXD of July 17, 2000 and Circular No. 07/2003/TT-BXD of June 17, 2003. The funds enjoyed by general contractors shall be equal to 40% of the project management funds. In cases where the project management funds under the current regulations are not enough for the operations of the project management boards and general contractors, the investors and general contractors shall agree to propose the competent agencies to incorporate more funds in total cost estimates.

VI. CONTRACT PERFORMANCE GUARANTEE

For electricity generation projects eligible for designation of contractors, having large scales and total investment capital, and facing difficult construction conditions, for which the Prime Minister has designated conglomerates of contractors being fully capable and experienced State enterprises to perform every specific work thereof, in order to reduce procedures and capital difficulties for contractors, the investors and contractors shall agree possibly not to apply the form of guarantee for contract performance to the contractors already designated to execute such projects. In cases where investors do not require the making of contract performance guarantees, the general contractors must also not require member contractors to make contract performance guarantees.

VII. ORGANIZATION OF ADMINISTRATION OF CONSTRUCTION SITES

1. Conglomerates of contractors must make written agreements on division of works and responsibilities for each contractor; the general contractors' role of construction site administration; the coordination in rational use of supporting works and works in service of construction to avoid wastefulness; the use and protection of construction ground.

2. The general contractors shall have to administer construction sites, hold briefings, monitor the construction tempo and perform the administration of construction sites according to written agreements of contractors' conglomerates and other relevant works under the signed contracts.

Member contractors of conglomerates must submit to the direction and administration by general contractors in the administration of construction sites.

VIII. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect 15 after its publication in the Official Gazette.

2. The concerned agencies, units and enterprises shall have to organize the implementation of this Circular; and report arising problems (if any) to the Construction Ministry for solution.