Circular No. 05/2009/TT-BXD dated April 15, 2009 of the Ministry of Construction guiding the adjustment of work construction cost estimates

CIRCULAR

GUIDING THE ADJUSTMENT OF WORK CONSTRUCTION COST ESTIMATES

Pursuant to the Government s Decree No. 17/2008/ND-CP of February 4, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government s Decree No. 12/2009/ND-CP of February 12, 2009, on management of investment projects on the construction of works

Pursuant to the Government s Decree No. 99/2007/ND-CP of June 13, 2007, on management of work construction investment expenses (below referred to as Decree No. 99/200/VND-CP); and the Government s Decree No. 03/2008/ND-CP of January 7, 2008, amending and supplementing a number of articles of Decree No. 99/2007/ND-CP of June 13, 2007, on management of work construction investment expenses;

Pursuant to the Government s Decree No. 110/2008/ND-CP of October 10, 2008, prescribing the region-based minimum wage level applicable to laborers working in Vietnamese companies, enterprises, cooperatives, cooperative groups, farms, households, individuals and other-employers (below referred to as Decree No. 110/2008/ND-CP);

Pursuant to the Construction Ministry s Circular No. 03/2008/TT-BXD of January 25,2008, guiding the adjustment of work construction cost estimates (below referred to as Circular No. 03/ 2008/TT-BXD);

Pursuant to the Labor, War Invalids and Social Affairs Ministry s Circular No. 23/2008/TT-BLDTBXH of October 20, 2008, promulgating the Guidance on implementation of the region-based minimum wage level applicable to state companies and one-member limited liability companies in which the State owns 100% of charter capital;

The Ministry of Construction guides the adjustment of work construction cost estimates as follows:

I. GENERAL PROVISIONS

1. This Circular guides the adjustment of cost estimates from January 1, 2009, using the minimum wage level applicable based on regions (where works are constructed) under Decree No. 110/2008/ ND-CP, for the remaining volumes of works or bidding packages (below referred to as work construction cost estimates) under uncompleted state-funded investment projects on the construction of works for which investment deciders have not yet decided to change the management of work construction investment expenditures under Decree No. 99/2007/ND-CP.

It is encouraged to apply this Circular s provisions on the adjustment of work construction cost estimates to work construction investment projects funded with capital of other sources.

2. To adjust work construction cost estimates formulated using construction, installation and construction survey unit prices set by provinces or centrally run cities on the basis of wage scales in wage table A. 1.8 enclosed with the Government s Decree No. 205/2004/ND-CP of December 14, 2004, prescribing the system of wage scales and wage tables and allowances applicable to state companies (below referred to as Decree No. 205/ 2004/ND-CP), and the minimum wage level of VND 450,000/month, as prescribed in the Appendix to this Circular.

3. For works for which separate unit prices or machine shift costs have been formulated using the minimum wage level promulgated by a competent person, their construction cost estimates will be adjusted using the new region-based minimum wage level on the principles and methods guided in this Circular.

4. Adjustment of contractual prices or amounts paid for work volumes performed from January 1, 2009, under signed contracts and contractual terms: If the involved parties have agreed in a contract not to adjust prices during the implementation process, the investor and construction contractor may negotiate and supplement the contract in order to ensure laborers interests under regulations.

II. SPECIFIC PROVISIONS

1. Work construction cost estimates formulated using construction unit prices set by provinces or centrally run cities on the basis of the minimum wage level of VND 450,000/month under the Government s Decree No. 94/2006/ND-CP of September 7, 2006, adjusting the common minimum wage level, and wage scales in wage table A. 1.8 enclosed with Decree No. 205/2004/ND-CP. will be adjusted as follows:

1.1. Adjustment of construction cost estimates

1.1.1. Adjustment of labor expense

Labor expense in construction cost estimates formulated using local construction unit prices shall be multiplied by an adjustment coefficient (KDCNC) in compliance with the region-based minimum wage level.

The adjustment coefficient (K^DCNC) is equal to the new region-based minimum wage level divided by the minimum wage level already included in the unit price.

1.1.2. Adjustment of construction machine expense

Construction machine expense in construction cost estimates formulated using local construction unit prices shall be multiplied by an adjustment coefficient (K^DCMTC) in compliance with the region-based minimum wage level and fuel and energy prices applicable in January 2009.

The adjustment coefficient (K^DCMTC) of construction machine expense is determined by calculating the weighted average expense, depending on each group of machines.

According to the above principle, the coefficient for adjusting construction machine expense (K^DCMTC) in construction cost estimates made by provinces and centrally run cities is guided in the Appendix to this Circular. For provinces or cities with a peculiar construction structure, their People s Committees shall decide on the adjustment coefficient of construction machine expense.

For works constructed in lines running through several provinces or centrally run cities for which separate machine-shift price tables have been formulated, investors shall calculate and report adjustment coefficients to investment deciders for decision. For works under investment projects on the construction of works in which investment is decided by the Prime Minister, ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial-level People s Committees, chairmen of economic groups or chairmen of boards of directors of state corporations shall decide on adjustment coefficients.

1.1.3. Expenses calculated in proportion (%) to construction cost estimates

Expenses calculated in proportion (%) to construction cost estimates, including other direct expense, common expense, pre-calculated taxable income, value-added tax, expense for the construction of makeshift houses at construction sites for accommodation and construction administration, must comply with regulations.

1.2. Adjustment of construction survey cost estimates

Labor expense in construction survey cost estimates (K^DCNCKS) shall be adjusted using the coefficients specified in the Appendix to this Circular.

In case work construction cost estimates formulated under Point 1 of this Section have been adjusted under the guidance of Circular No. 03/ 2008/TT-BXD: When adjusting the cost estimate using the new region-based minimum wage level, labor expense and construction machine expense in construction cost estimates and labor expense in construction survey cost estimates shall be further multiplied by the corresponding adjustment coefficient which equals the adjustment coefficient using the new region-based minimum wage level specified in the Appendix to this Circular divided by the used adjustment coefficient under Circular No. 03/2008/TT-BXD.

3. Some other expenses in work construction cost estimates

Expenses for management of investment projects on the construction of works, work construction designing, construction supervision and installation of equipment of works specified at Point 1 of Section I above are calculated in a percentage (%) under regulations.

III. ORGANIZATION OF IMPLEMENTATION

1. Investors shall adjust, and approve results of adjustment of, work construction cost estimates for remaining volumes performed from January 1. 2009. of construction works under investment projects on the construction of works as specified at Point 1, Section I of this Circular. If approved work construction cost estimates result in an excess of the total investment, investors shall report such to investment deciders for consideration and decision. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial-level People s Committees, chairmen of economic groups or chairmen of boards of directors of state corporations shall decide on the adjustment of cost estimates for construction works under investment projects on the construction of works in which investment is decided by the Prime Minister.

2. For construction works for which separate unit prices have been formulated (work construction unit prices), investors shall, based on regimes and policies applicable to works as permitted by the State and principles of adjusting work construction cost estimates guided in this Circular, determine levels of adjustment of labor expense, construction machine expense and other expenses (if any) in work construction cost estimates.

3. Investors shall decide on the adjustment of construction cost estimates for works under investment projects on the construction of works under Decree No. 99/2007/ND-CP.

This Circular takes effect 45 days from the date of its signing.

APPENDIX

(To the Construction Ministry s Circular No. 05/2009/TT-BXD of April 15, 2009)

To adjust cost estimates of remaining volumes performed from January 1, 2009, of construction works under uncompleted investment projects as specified at Point 1, Section I of this Circular.

1. Adjustment of construction cost estimates

1.1. Adjustment of labor expense or construction machine expense

Labor expense or construction machine expense in construction cost estimates shall be multiplied by the adjustment coefficient (K^DCNC) or (K^I)CMTC) specified in Table 1 in this Appendix.

1.2. Expenses calculated in proportion (%) to construction cost estimates.

Other direct expense, common expense, pre-calculated taxable income, value-added tax and expense for the construction of makeshift houses at construction sites for accommodation and construction administration shall be calculated in percentage (%) under regulations.

2. Adjustment of construction survey cost estimates

Labor expense in construction survey cost estimates shall be multiplied by the adjustment coefficient (K^DCNCKS) specified in Table 2 in this Appendix.

3. Adjustment of cost estimates for testing construction materials and structure

Labor expense in cost estimates for testing construction materials and structure determined using norms and unit prices for testing construction materials and structure enclosed with the Construction Minister s Decision No. 32/2001/QD-BXD of December 20, 2001, shall be multiplied by the adjustment coefficient (K^DCNCTN) specified in Table 3 in this Appendix.

4. Other expenses calculated in proportion (%) to work construction cost estimates shall be determined
according to the State s current regulations.

Table 1. Adjustment coefficients for construction cost estimates

Table 2. Adjustment coefficients for construction survey cost estimates

Table 3. Adjustment coefficients for cost estimates for testing construction materials and structure

LIST OF GEOGRAPHICAL AREAS IN WHICH REGION-BASED MINIMUM WAGE LEVEL IS APPLICABLE