Circular No. 07/2003/TT-BXD dated June 17, 2003 of the Ministry of Construction amending and supplementing a number of points in Circular No. 09/2000/TT-BXD dated July 17, 2000 guiding the elaboration and management of construction costs of works of investment projects

CIRCULAR

AMENDING AND SUPPLEMENTING A NUMBER OF POINTS IN CIRCULAR No. 09/2000/TT-BXD OF JULY 17, 2000 GUIDING THE ELABORATION AND MANAGEMENT OF CONSTRUCTION COSTS OF WORKS OF INVESTMENT PROJECTS

Pursuant to the Government's Decree No. 52/1999/ND-CP of July 8, 1999 promulgating the Investment and Construction Management Regulation;

Pursuant to the Government's Decree No. 12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Investment and Construction Management Regulation promulgated together with the Government's Decree No. 52/1999/ND-CP of July 8, 1999;

Pursuant to the Government's Decree No. 07/2003/ND-CP of January 30, 2003 amending and supplementing a number of articles of the Investment and Construction Management Regulation promulgated together with the Government's Decree No. 52/1999/ND-CP of July 8, 1999 and Decree No. 12/2000/ND-CP of May 5, 2000;

In order to implement the management mechanism applicable to construction works of investment and construction projects funded with the State budget capital, the State-guaranteed credit capital, the State's development investment credit capital, the State enterprises' development investment capital and/or other capital sources invested or borrowed and repaid by the enterprises themselves without the State's guarantees as specified in Articles 10, 11 and 12 of Decree No. 52/1999/ND-CP; Clauses 4, 5 and 6, Article 1 of Decree No. 12/2000/ND-CP and Clauses 4, 5 and 6, Article 1 of Decree No. 07/2003/ND-CP; the Construction Ministry hereby guides the amendment and supplementation of a number of points in Circular No. 09/2000/TT-BXD guiding the elaboration and management of construction costs of works of investment projects as follows:

1. Point 3, Section I is amended and supplemented as follows:

3. All construction works of investment projects funded with the State budget capital, the State-guaranteed credit capital, the State's development investment credit capital, the State enterprises' development investment capital and/or other capital sources invested or borrowed and repaid by the enterprises themselves without the State's guarantees shall comply with the guidance on elaboration and management of construction costs in this Circular.

2. Items a and b, Clause 2.1.3, Point 2.1, Section II are supplemented as follows:

a/ In the stage of investment preparation:

- Expenses for the contest and selection of architectural designs for works with special architectural requirements or at requests of investors;

- Expenses for the measurement, survey and assessment of practical conditions of land upon the formulation of projects for investment, renovation or repair;

b/ In the stage of investment execution:

- Expenses for the testing of the quality of construction works; (if any)

- Expenses for the application of patented inventions and copyrighted works; (if any)

- Expenses for investment supervision and evaluation; (if necessary)

- Loan interests paid in the course of investment in construction works of production and business investment projects.

3. The following new Point 2.3a is added to Section II:

EPC contract prices cover all necessary expenses for the overall EPC contractors to perform jobs under the signed contracts, including:

2.3a.1. Expenses for surveying and engineering;

2.3a.2. Expenses for procurement and supply of supplies and equipment, including reserve equipment;

2.3a.3. Expenses for construction and installation of works including makeshift works;

2.3a.4. Expenses for checking, test run, worker training, pre-acceptance test and hand-over, and technology transfer;

2.3a.5. Expenses for project management;

2.3a.6. Other relevant expenses;

2.3a.7. Assorted taxes and charges.

4. Point 2.3, Section II is amended and supplemented as follows:

2.3. Work payment prices

- For cases of bidding: Payment prices are those in economic contracts signed upon bid winning together with the conditions inscribed in economic contracts between investors and construction enterprises.

- For cases of contractor designation (including cases of assignment of the task of constructing works by competent authorities): Payment prices are estimated values of work items or separate construction/installation jobs or the whole construction works, which are approved on the basis of the executed volume tested before acceptance in each stage or the executed volume monthly tested before acceptance under the signed contracts.

Payment prices shall be effected in each period of payment for the completed volume and the full payment shall be made only when the settlement of work items or works with investors are completed as prescribed in Clauses 2, 3, 4 and 5 of Article 49 of the Investment and Construction Management Regulation promulgated together with Decree No. 52/1999/ND-CP, and Points 1, 6, 8, 9, 12 and 13, Clause 17, Article 1 of Decree No. 07/2003/ND-CP of January 30, 2003 of the Government, and the Finance Ministry's guidance.

5. Points 1 and 8, Section III are amended, and Point 7a is added to Section III as follows:

1. Feasibility study reports or investment reports approved by the competent authorities.

7a. Prices of construction materials carried to construction and installation sites for construction works being local sections of larger works or far from populated areas.

8. Freight, loading-unloading, warehousing and yard-storing charge rates as prescribed by competent authorities.

6. Point 1, Section IV is amended and Point 2 is added to Section IV as follows:

1. Total cost estimates of works

Total cost estimates of works shall be determined on the following principle:

- For works with 3-step designs: Total cost estimates shall be made on the basis of technical designs.

- For works with 2-step designs: Total cost estimates shall be made on the basis of technical designs for construction.

2. Cost estimates for construction and installation of work items

Cost estimates for construction and installation of work items shall be determined on the basis of construction and installation volumes calculated according to designs and capital construction unit prices promulgated by the provincial-level Peoples Committees or work construction unit prices (for works eligible for elaboration of separate unit prices), general expense norms, pre-calculated taxable incomes and output value added tax.

Cost estimates of bidding packages executed in the form of bidding contracts for surveying, engineering - provision of supplies and equipment -construction (EPC contracts), including expenses for surveying, engineering, procurement and provision of supplies and equipment (including reserve supplies and equipment), construction and installation costs (including those for support works and makeshift works), expenses for test run, pre-acceptance test for hand-over, project management, taxes and other expenses.

The method of making cost estimates for construction and installation of work items shall comply with the guidance in Appendix 2 to this Circular (not printed herein).

7. Clauses 3.1, 3.2 and 3.3, Point 3, Section V are amended and supplemented as follows:

3. Regarding total cost estimates of works

3.1. For all construction works, regardless of whether they are subject to bidding or permitted for contractor designation, the total cost estimates shall be made strictly according to the contents, principles and method guided in this Circular.

3.1.1. Before competent persons approve the total cost estimates, such total cost estimates must be evaluated. Investors shall have to make dossiers for evaluation and approval according to the contents prescribed in Appendix 4 to this Circular (not printed herein).

3.1.2. Specialized agencies or organizations which evaluate total cost estimates shall ensure the following evaluation contents:

- Examination of correctness of norms, unit prices and the application of norms, unit prices, relevant regimes and policies as well as expenditure items as prescribed by the State.

- Compatibility of the volume of technical designing or technical designing for construction with the total cost estimates.

- Determination of the value of total cost estimates for comparison with the already approved total investment capital.

3.1.3. When the evaluation is completed, the evaluating agencies or organizations must record in writing the results of evaluation of total cost estimates according to the contents at Point 3.1.2 above and other contents according to the form in Appendix 5 to this Circular (not printed herein).

3.2. Total cost estimates approved by competent persons must not exceed the approved total investment capital.

3.2.1. For construction works of construction investment projects funded with the State budget capital, the State-guaranteed credit capital and/or the States development investment credit capital:

3.2.1.1. The total cost estimates of works under important national projects with the investment therein being decided by the Prime Minister and group-A projects funded with the State budget capital shall be evaluated by the Construction Ministry, except for construction works of group-A projects of a number of ministries or branches defined in Item a, Section 3.1, Clause 14, Article 1 of the Government's Decree No. 07/2003/ND-CP of January 30, 2003.

3.2.1.2. The total cost estimates of works of group-A projects funded with the State-guaranteed credit capital and/or the State's development investment credit capital shall be evaluated by ministries, branches or localities themselves or by the specialized organizations in terms of norms, unit prices and cost estimates, before being submitted to competent persons for approval.

3.2.1.3. The total cost estimates of works of group-B and group-C projects managed by ministries, branches or central-level agencies shall be approved by the persons competent to decide on the investment after they are evaluated by the specialized agencies with the construction management function of the investment-deciding authorities or specialized agencies with the function of managing norms, unit prices and construction cost estimates (for projects in which the investment is decided by authorities which have no agencies with the above-said function).

3.2.1.4. The total cost estimates of works of group-B and group-C projects managed by localities shall be approved by the presidents of the provincial-level People's Committees after they are evaluated by the provincial Construction Services or other provincial Services having specialized construction works (depending on the nature of projects).

3.2.1.5. The total cost estimates of works of group-A, -B or -C projects invested by enterprises with investment capital guaranteed by the State or the State's development investment capital shall be evaluated by such enterprises themselves or by the specialized organizations in terms of norms, unit prices and cost estimates before being approved by the persons competent to decide on investment.

3.2.1.6. The competent persons' authorization of the approval of total cost estimates to their immediate subordinates or the approval of cost estimates for work items made according to construction design drawings (detailed designs) to investors shall comply with the provisions in Items a and d, Section 3.1, Clause 14, Article 1 of the Governments Decree No. 07/2003/ND-CP.

3.2.2. For construction works of construction investment projects funded with State enterprises' development investment capital and/or other capital sources invested or borrowed and repaid by the enterprises themselves without the State's guarantees, their total cost estimates shall be evaluated and approved according to the provisions in Items 3.2.1.5 above.

3.2.3. For construction works of construction investment projects funded by international donors (including official development assistance (ODA) capital), the Construction Ministrys circular guiding the elaboration and management of construction costs of works funded by international donors shall apply.

3.3. Total cost estimates of works approved by competent persons shall constitute the maximum limit of work construction costs and serve as a basis for organizing bidding or designating contractors and managing expenses in the course of project execution. Persons competent to approve total cost estimates shall be held responsible before law for the approved contents according to the provisions in Clause 2, Article 38 of the Government's Decree No. 52/1999/ND-CP and other relevant law provisions.

- In cases where a group-A project is composed of many component projects or mini-projects, which can either independently operate, be exploited or executed according to the investment phases, as inscribed in the documents approving the pre-feasibility study reports or written decisions on investment policies of competent authorities, the elaboration, evaluation and approval of total cost estimates of works of such component projects or mini-projects shall be effected as for works of an independent investment project.

- Construction works of investment and construction projects funded with the State budget capital, the State-guaranteed credit capital, the State's development investment credit capital, State enterprises' development investment capital and/or other capital sources invested or borrowed and repaid by the enterprises themselves without the State's guarantees, before commencing the construction thereof, must have their total cost estimates approved by competent authorities. In special cases where construction works of group-A projects have no approved total cost estimates, they must, after at least 30% of their total investment capital is executed, have their total cost estimates approved by competent authorities. In those cases, when the construction of works is commenced, there must be cost estimates for work items to be constructed approved by competent authorities and lawful construction-undertaking contracts.

8. Appendices 2 and 3 are replaced by new Appendices 2 and 3 enclosed with this Circular (not printed herein).

9. To add Appendices 4 and 5 to this Circular (not printed herein).

This Circular amends and supplements a number of points in Circular No. 09/2000/TT-BXD of July 17, 2000 guiding the elaboration and management of construction costs of works of investment projects and uniformly applies nationwide 15 days after its publication in the Official Gazette.