Circular No. 05/2016/TT-BXD dated March 10, 2016 of the Ministry of Construction providing guidance on determination of the unit labor cost in the construction cost management

CIRCULAR

Guiding the determination of unit labor cost in the management of construction investment costs[1]

Pursuant to the Government’s Decree No. 62/2013/ND-CP of June 25, 2013, defining the functions, duties, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 32/2015/ND-CP of March 25, 2015, on management of work construction investment costs;

At the proposal of the directors of the Construction Economics Department and the Construction Economics Institute;

The Minister of Construction promulgates the Circular guiding the determination of unit labor cost in the management of construction investment costs.

Article 1. Scope of regulation

This Circular guides the determination of unit labor cost to manage construction investment costs, including the total investment, construction cost estimates, cost estimates of bidding packages, construction costs, contract prices and construction price indices.

Article 2. Subjects of application

1. Agencies, organizations and individuals involved in the management of construction investment costs of construction investment projects using state budget and non-state budget funds and investment projects in the form of public-private partnership (PPP) shall apply this Circular.

2. Agencies, organizations and individuals involved in the management of construction investment costs of construction investment projects using other funding sources are encouraged to apply this Circular.

Article 3. Principles of determination and adjustment of unit labor cost

1. Unit labor cost determined under the guidance of this Circular must comply with the following principles:

a/ Being suitable to skill levels according to worker ranks in the system of norms of construction costs;

b/ Matching the local market wage of construction workers (including factors of wage compensation for living conditions) but not lower than the regional minimum wage set by the Government;

c/ Being suitable to characteristics of jobs of construction workers;

d/ Being sufficient for payment of some expenses payable by workers according to regulations (social insurance, health insurance and unemployment insurance).

2. Construction unit labor cost may be adjusted when occurs changes in the market wage of construction workers.

Article 4. Determination of unit labor cost

Unit labor cost of direct construction workers shall be determined by the following formula:

G_NC = L_NC x H_CB x (1/t)

In which:

- G_NC: unit labor cost per workday according to ranks of direct construction workers.

- L_NC: monthly input basic wage rate for determination of unit labor cost per workday according to ranks of direct construction workers, including wage allowances based on characteristics and nature of construction work that have taken into account market factors, and insurance premiums payable by workers according to regulations (social insurance, health insurance and unemployment insurance). Input basic wage rates are provided in Table 1, Appendix 1 to this Circular for reference.

- H_CB: wage ratio according to ranks of direct construction workers specified in Appendix 2 to this Circular.

- t: 26 working days in a month.

Article 5. Organization of implementation

1. Pursuant to this Circular, provincial-level People’s Committees shall direct provincial-level Departments of Construction to assume the prime responsibility for, and coordinate with related agencies in, surveying, determining and announcing unit labor cost as a basis for the formulation and management of construction investment costs in their localities.

2. In case the market wage of construction workers of a locality is higher than the unit labor cost determined on the basis of multiplying the highest input basic wage rate specified in Appendix 1 with the rank coefficient provided in Appendix 2 to this Circular and dividing such by 26 days, the provincial-level People’s Committee shall reach agreement with the Ministry of Construction before making announcement.

3. Input basic wage rate (L_NC) specified in Appendix 1 to this Circular shall be adjusted by the Ministry of Construction when occurs a change of above 10 percent in the market wage of construction workers.

Article 6. Transitional handling

1. For unit labor costs in total construction investment and construction cost estimates approved before the effective date of this Circular, investment deciders shall decide on the application of this Circular. Bidding packages under construction contracts signed before the effective date of this Circular may be executed under the signed contracts.

2. A number of construction investment projects that apply special wage rates and allowances permitted by competent agencies may continue such application until construction investment completion and operation of these projects.

Article 7. Effect

1. This Circular takes effect on May 1, 2016, and replaces the Ministry of Construction’s Circular No. 01/2015/TT-BXD of March 20, 2015, guiding the determination of unit labor cost in the management of construction investment costs.

2. Any problems arising in the course of implementation should be reported to the Ministry of Construction for consideration and settlement.-

For the Minister of Construction
Deputy Minister
BUI PHAM KHANH