Circular 16/2019/TT-BXD guiding fees of project management and construction investment consultancy

CIRCULAR

Guiding the determination of project management and construction investment consultancy expenses^[1]

Pursuant to the Government’s Decree No. 81/2017/ND-CP of July 17, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 68/2019/ND-CP of August 14, 2019, on management of construction investment costs;

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

The Minister of Construction promulgates the Circular guiding the determination of project management and construction investment consultancy expenses.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

1. This Circular guides the determination of project management and construction investment consultancy expenses of projects using state budget funds or non-budget state funds and investment projects in the form of public-private partnership (below referred to as PPP projects) specified in Clause 2, Article 32 of the Government’s Decree No. 68/2019/ND-CP of August 14, 2019, on management of construction investment costs (below referred to as Decree No. 68/2019/ND-CP).

2. Projects using official development assistance (ODA) must comply with treaties and the Law on Treaties.

Article 2.Subjects of application

1. This Circular applies to agencies, organizations and individuals involved in the determination of project management and construction investment consultancy expenses of projects using state budget funds or non-budget state funds, and PPP projects.

2. Related organizations and individuals may apply this Circular in determining project management and construction investment consultancy expenses of projects using other funding sources for use as a basis for fulfillment of financial obligations toward the State.

Article 3.General guidance

1. Norms of construction investment project management expenses issued together with this Circular shall be used as a basis for the determination of construction investment project management expenses (below referred to as project management expenses) to perform management jobs of a project from the stage of project preparation, project implementation to construction completion and putting of the project’s works into operation and use.

2. Norms of construction investment consultancy expenses issued together with this Circular shall be used for the determination of construction investment consultancy expenses (below referred to as consultancy expenses) in conformity with contents and requirements of consultancy products and construction investment procedures.

3. In case a project management unit fully satisfies capacity conditions to provide project management consultancy for other projects or perform a number of consultancy jobs by itself, expenses for such consultancy jobs may be added to operation expenses of the project management unit. The management and use of the above-mentioned expenses for consultancy jobs must comply with current regulations.

4. For a project, work or bidding package whose expense level falls within the expense range provided in the Appendix to this Circular, norms of project management expenses or consultancy expenses shall be determined according to the following formula:

In which:

- Nt: to-be-calculated norm of project management expenses or consultancy expenses based on the level of construction cost or equipment cost or construction and equipment cost; unit of calculation: %;

- Gt: level of construction cost or equipment cost or construction and equipment cost for which the norm of project management expenses or consultancy expenses need to be calculated; unit of calculation: value;

- Ga: maximum level of construction cost or equipment cost or construction and equipment cost right above the cost level for which a norm needs to be calculated; unit of calculation: value;

- Gb: minimum level of construction cost or equipment cost or construction and equipment cost right below the cost level for which a norm needs to be calculated; unit of calculation: value;

- Na: norm of project management expenses or consultancy expenses corresponding to Ga; unit of calculation: %;

- Nb: norm of project management expenses or consultancy expenses corresponding to Gb; unit of calculation: %.

5. In case a project’s expense level (construction cost and equipment cost) is larger than the maximum expense level provided in Appendix 1 to this Circular or a particular project’s management expense determined according to the norms provided in this Circular is not enough to cover expenses, the project owner shall make estimates to determine project management expenses on the condition of ensuring the efficiency of the project.

6. In case the expense level of a project, work or bidding package is larger than the maximum expense level provided in Appendix 2 to this Circular or no norm is issued for certain consultancy jobs, the project owner shall make estimates to determine consultancy expenses under the guidance provided in Appendix 3 to this Circular.

7. Expenses for construction survey consultancy and specialized construction testing shall be determined like construction costs in construction cost estimates.

Chapter II

DETERMINATION OF PROJECT MANAGEMENT EXPENSES

Article 4.Items of project management expenses

Project management expenses determined according to the norms provided in Table 1.1 and Table 1.2 of Appendix 1 to this Circular shall be used as a basis for the determination of management expenses for a project, including: salaries of project managers and wages for contractual employees; salary-based allowances; bonuses and collective welfare; contributions (social insurance, health insurance and unemployment insurance premiums; trade union dues, and other deductions prescribed by law for persons salaried by the project); expenses for science and technology application, management of application of the Building Information Modeling (BIM) system, and capacity building training for project managers; payments for public service charges; expenses for supplies and stationery, public information and communication, and organization of relevant conferences; work trip allowances; expenses for hiring, repair and procurement of assets serving project management; other expenses and contingency amounts.

Article 5.Determination of project management expenses

1. Management expenses for a project in the total investment shall be determined on the basis of percentile norm (%), provided in Table 1.1 of Appendix 1 to this Circular, multiplied by construction cost and equipment cost (exclusive of value-added tax) in the project’s total investment.

2. Management expenses in work construction cost estimates or total cost estimates of a project shall be determined on the basis of the percentile norm (%), (of the same percentile norm used in calculating project management expenses in the approved total investment), multiplied by construction and equipment cost (exclusive of value-added tax) in the work construction cost estimates or total cost estimates of the project.

3. For construction investment projects at sea, on islands, along land borders, or in communes with extremely difficult socio-economic conditions (communes in coastal areas or on islands; border communes; communes in former resistance bases; or particularly disadvantaged villages) under the Government’s regulations, their management expenses shall be determined according to the norms provided in Table 1.1 of Appendix 1 to this Circular, with adjustment coefficient k = 1.35. For projects built in two  or more provinces or projects with separate works built in different provinces, their management expenses shall be determined according to the norms provided in Table 1.1 of Appendix 1 to this Circular, with adjustment coefficient k = 1.1.

4. For projects managed by their owners’ use of their legal entity status and capable professional apparatuses, their management expenses shall be determined according to the norms provided in Table 1.1 of Appendix 1 to this Circular, with adjustment coefficient k = 0.8.

5. In case of hiring project management consultants, expenses for hiring consultants shall be determined by cost estimation based on the contents and volumes of project management jobs agreed upon in project management contracts between project owners and consultancy contractors. The expenses for hiring project management consultants (inclusive of value-added tax) plus expenses for project management by the project owner must not exceed the project management expenses determined under the guidance of this Circular.

6. In case equipment cost is larger than or equal to 50% of the total construction and equipment cost in the approved total investment of a project, the norm of project management expenses shall be adjusted with coefficient k = 0.8.

7. For a project managed based on component projects, if each component project can be independently operated or used, or implemented in different investment phases, its management expenses shall be determined separately according to the size of each component project.

8. If performing several project management jobs that fall within the project owner’s responsibility, the general contractor may be paid part of project management expenses, depending on the jobs assigned by the project owner. Expenses paid to the general contractor for performing project management jobs shall be agreed upon between the project owner and general contractor and taken from the funding for project management and determined in the general contract price. The expenses for project management by the project owner and by general contractor must not exceed the project management expenses determined under the guidance in this Circular.

Article 6.Determination of project management expense of PPP projects

1. Expenses for project management by competent state agencies shall be determined by cost estimation in conformity with project management tasks and in compliance with relevant regimes and policies.

2. Expenses for the operation of project management units attached to competent state agencies shall be determined on the basis of percentile norm (%), provided in Table 1.2 of Appendix 1 to this Circular), multiplied by construction cost and equipment cost (exclusive of value-added tax) in the total construction investment of a project. For projects built in two or more provinces or projects with separate works built in different provinces, operation expenses of project management units attached to competent state agencies shall be determined according to the norms provided in Table 1.2 of Appendix 1 to this Circular with adjustment coefficient k = 1.1.

3. Expenses for project management by investors shall be determined under Article 5 of this Circular with adjustment coefficient k = 0.7

Chapter III

DETERMINATION OF CONSULTANCY EXPENSES

Article 7.Contents of consultancy expenses

Consultancy expenses determined according to the norms of consultancy expenses shall be used as a basis for the determination of expenses for consultancy jobs, including expenses for consultants (salaries, salary-based allowances, bonuses, collective welfare, social insurance, health insurance and unemployment insurance premiums, trade union dues, and other deductions prescribed by law for persons providing consultancy for projects); expenses for science and technology application; payments for public service charges supplies and stationery, and public information and communication; expenses for hiring, repair and procurement of assets serving project consultancy (if any); management expenses of consultancy organizations; other expenses; presumed taxable profits, excluding expenses for application of the BIM system, value-added tax, and contingency amounts.

Article 8.Determination of consultancy expenses

1. Consultancy expenses shall be determined on the basis of percentile norm (%) corresponding to the level of construction cost or equipment cost or construction and equipment cost.

2. Consultancy expenses shall be determined according to the types and grades of works under current regulations. Particularly for national defense and security works, consultancy expenses shall be determined according to norms of consultancy expenses of relevant civil works, industrial works, technical infrastructure works, transport works, and agriculture and rural development works.

3. Consultancy expenses determined according to the norms provided in Appendix 2 to this Circular are exclusive of expenses for formulation of foreign-language dossiers. Expenses for formulation of foreign-language dossiers may be added to consultancy expenses and shall be determined by cost estimation but must not exceed 15% of the consultancy expenses determined according to the norms provided in Appendix 2 to this Circular.

4. For foreign loan-funded projects, in case it is required to additionally make consultancy dossiers under international practices, or make separate reports at the request of donors, expenses for such jobs shall be determined by cost estimation in conformity with contents and requirements of each job.

5. In case of concurrently applying different coefficients adjusting norms of consultancy expenses, such coefficients shall be multiplied by norms of consultancy expenses.

6.  In case of hiring consultants to perform several consultancy jobs at the request of state management agencies in the process of acceptance test of construction works, expenses for hiring such consultants shall be determined by cost estimation in conformity with contents and scope of consultancy jobs to be performed.

7. In case of hiring domestic consultants to coordinate with foreign consultants in performing consultancy jobs, expenses for hiring consultants shall be determined by cost estimation but must not exceed twice those calculated according to the norms provided in Appendix 2 to this Circular. Expenses for hiring foreign consultants shall be determined on the basis of the number of consultants, their working period and salaries, and other necessary expenses for fulfilling the hired consultancy jobs. Expenses for hiring foreign consultants shall be determined under international practices in conformity with regulations of donors (if any) and conditions for providing consultancy services in Vietnam.

Chapter IV

ORGANIZATION OF IMPLEMENTATION

Article 9.Transitional handling

The determination of project management expenses and consultancy expenses in the transitional period specified in Article 36 of Decree No. 68/2019/ND-CP is specified as follows:

1. For ongoing construction investment projects approved before the effective date of Decree No. 68/2019/ND-CP, the norms of project management expenses and consultancy expenses provided in the Government’s Decree No. 32/2015/ND-CP of March 25, 2015, on management of construction investment costs, shall continue to be applied to determine project management expenses and consultancy expenses. In case project management bidding packages or consultancy bidding packages for which contracts are not yet signed after the effective date of this Circular, investment deciders shall decide to apply the norms of project management expenses and consultancy expenses provided in this Circular in adjusting prices of project management bidding packages or consultancy bidding packages on the condition of ensuring the projects’ schedule and efficiency.

2. For construction investment projects approved after the effective date of Decree No. 68/2019/ND-CP:

a/ For project management bidding packages or consultancy bidding packages for which the expense norms provided in Decree No. 32/2015/ND-CP of March 25, 2015, are applied in determining prices of management bidding packages or consultancy bidding packages, contractors are selected and contracts are signed before the effective date of this Circular, the signed contracts shall apply.

b/ For project management bidding packages or consultancy bidding packages for which contractor selection is not yet organized or is being organized before the effective date of this Circular, the norms of project management expenses and consultancy expenses provided in this Circular shall be applied in updating prices of project management bidding packages or consultancy bidding packages.

3. Project management contracts and consultancy contracts signed before the effective date of this Circular shall continue to be performed in accordance with relevant laws.

Article 10.Effect

This Circular takes effect on February 15, 2020.-

For the Minister of Construction
Deputy Minister
BUI PHAM KHANH

* The appendices to this Circular are not translated.