Circular No. 18/2008/TT-BXD dated October 06, 2008 of the Ministry of Construction providing additional guidance on a number of methods of determining construction expenses in work construction cost estimates prescribed in the Construction Ministry's Circular No. 05/2007/TT-BXD dated July 25, 2007, which guides the formulation and management of work construction investment expenses

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Issuing body:	Ministry of Construction	Effective date:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Official number:	18/2008/TT-BXD	Signer:	Cao Lai Quang
Type:	Circular	Expiry date:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Issuing date:	06/10/2008	Effect status:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Fields:	Construction , Tax - Fee - Charge

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THE MINISTRY OF CONSTRUCTION -----	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ----------
No. 18/2008/TT-BXD	Hanoi, October 6, 2008

CIRCULAR

PROVIDING ADDITIONAL GUIDANCE ON A NUMBER OF METHODS OF DETERMINING CONSTRUCTION EXPENSES IN WORK CONSTRUCTION COST ESTIMATES PRESCRIBED IN THE CONSTRUCTION MINISTRY'S CIRCULAR NO. 05/2007/TT-BXD OF JULY 25. 2007. WHICH GUIDES THE FORMULATION AND MANAGEMENT OF WORK CONSTRUCTION INVESTMENT EXPENSES

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. 99/ 2007/ND-CP of June 13, 2007, on the management of work construction investment expenses.

The Ministry of Construction provides additional guidance on a number of methods of determining construction expenses in work construction cost estimates prescribed in Section 2.2.1, Point 2, Part 11 of the Construction Ministry's Circular No. 05/2007/TT-BXD of July 25, 2007 (referred to as Circular No. 05/2007/ TT-BXD), as follows:

1. DETERMINATION OF CONSTRUCTION EXPENSES BASED ON VOLUMES AND COMPLETE UNIT PRICES FOR CONSTRUCTION OF WORKS

When applying complete unit prices for construction of works (including complete general unit prices and complete detailed unit prices for construction of works), construction expenses in work construction cost estimates are determined as follows:

1.1. Determination of construction expenses based on complete general unit prices for construction of works

The volume of construction activities used for determining the construction expense based on the complete general unit price for the construction of a work is determined according to the technical blueprint or working drawing design and to-be-performed jobs of a work or work item, and summed up from a group of construction activities to create a structure unit or part of the work.

The complete general unit price for the construction of a work shall be made corresponding to the list and contents of the volume of construction activities.

The complete general unit price for the construction of a work comprises material expense, labor cost, construction machine expense, other direct expense, general expense and pre-calculated taxable income, and shall be made on the basis of the detailed unit price for construction of a work.

The detailed unit price for the construction of a work applied to make the complete general unit price for construction of a work is guided in Appendix 4 to Circular No. 05/2007TT-BXD.

1.2. Determination of construction expenses based on complete detailed unit prices for construction of works

1.2.1. The volume of construction activities used for determining the construction expense based on the complete detailed unit price for the construction of a work shall be determined based on the technical blueprint or working drawing design and to-be-performed jobs of a work or work item according to the list and contents of construction activities in the detailed construction unit price.

1.2.2. The complete detailed unit price for the construction of a work comprises material expense, labor cost, construction machine expense, other direct expense, overhead expense and pre-calculated taxable income, and shall be calculated under the guidance in Appendix 4 to Circular No. 05/2007TT-BXD.

1.3. Determination of construction expenses by the combination method

Based on general or detailed volumes of construction activities determined under Sections 1.1 and 1.2 above, both types of complete unit prices for the construction of a work may be used for determining construction expenses in the work's construction cost estimate.

The determination of construction expenses based on the complete unit prices for construction of works is guided in Appendix 1 to this Circular.

2. DETERMINATION OF CONSTRUCTION EXPENSES BASED ON THE TOTAL CONSUMPTION VOLUME OF MATERIALS, LABOR AND CONSTRUCTION MACHINES AND THE CORRESPONDING PRICE LIST

Material, labor and construction machine expenses in construction expenses may be determined on the basis of the total consumption volume of materials, labor and construction machines and the price list of corresponding materials, labor and construction machines.

2.1. Determination of the total consumption volume of materials, labor and construction machines

The total consumption volume of materials, labor and construction machines shall be determined on the basis of the consumed materials, labor and construction machines for each volume of construction activities of a work or work item as follows:

- Determining each volume of construction activities of a work or work item as specified in Section 1.2.1 above.

- Determining volumes of materials labor and construction machines corresponding to each volume of construction activities under the technical blueprint or working drawing design of a work or work item based on the consumption of materials, labor and construction machines for the completion of a volume unit of construction activities according to construction regulations and standards and technical regulations.

- Calculating the total consumption volume of each material, labor or construction machine for a work or work item by adding up the consumed volume of all the same materials, labor and construction machines of different construction activities.

In calculation, it is necessary to specify the quantity, unit of calculation, categories and specifications of materials: the number of workdays applicable to each grade of workers: the number of machine shifts applicable to each construction machine and equipment according to their major technical specifications and codes in the price list of construction machine shifts of each work

2.2. Determination of the price list of materials, labor and construction machines

Material, labor and construction machine prices shall be determined as appropriate to each construction work and work construction location

Material, labor and construction machine prices shall be determined under Clause a.2.2. Section 2.2.1, Point 2, Part II of Circular No. 05/ 2007/TT-BXD.

Construction expenses shall be determined according to the total consumption volume of materials, labor and construction machines as guided in Appendix 2 to this Circular.

3. DETERMINATION OF CONSTRUCTION EXPENSES BASED ON THE CONSTRUCTION EXPENSE RATIO IN THE INVESTMENT CAPITAL RATIO OR ON CONSTRUCTED WORKS WITH SIMILAR ECONO-TECHNICAL SPECIFICATIONS

- Expenses for the construction of auxiliary works, makeshift works serving construction or ordinary and simple works may be determined on the basis of their area or use capacity and the construction expense ratio in the investment capital ratio for the construction of the works.

- Construction expenses of the above works may also be determined on the basis of construction expenses of constructed works with similar econo-technical specifications, and the conversion of expense items according to construction locations and the time of estimation.

Construction expenses determined based on the construction expense ratio in the investment capital ratio or on constructed works with similar econo-technical specifications are guided in Appendix 3 to this Circular.

4. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its publication in "CONG BAO." Problems arising in the course of implementation should be reported to the Ministry of Construction for synthesis, study and settlement.

FOR THE MINISTER OF CONSTRUCTION
VICE MINISTER

Cao Lai Quang

APPENDIX NO. 1

DETERMINATION OF CONSTRUCTION EXPENSES BASED ON COMPLETE UNIT PRICES FOR CONSTRUCTION OF WORKS
(Attached to the Construction Ministry's Circular No. 18/2008/TT-BXD of October 6. 2008)

1. Expenses for the construction of works, work items, parts, jobs or activities, including direct expenses, overhead expense, pre-calculated taxable income, value-added tax. and expense for building makeshift houses at construction sites for dwelling and construction management shall be determined according to Table 1.1 of this Appendix.

2. If the construction expense is projected for a part, a job or an activity, the construction expense in the cost estimate of a work or work item is calculated according to the following formula:

(1.1)

Of which:

+ g_i is the after-tax construction expense for part, job or activity No. i of a work or work item (i=l¸n).

Table 1.1. CONSTRUCTION EXPENSES DETERMINED BASED ON COMPLETE UNIT PRICES FOR CONSTRUCTION OF WORKS

Unit of calculation:...

No.	Expense items	Method of calculation	Code
1	Pre-tax construction expense		G
2	Value-added tax	G x T^{GTGT- XD}	GTGT
3	Post-tax construction expense	G + GTGT	G^XD
4	Expense for building makeshift houses at construction sites for dwelling and construction management	G x percentage x (1 + T^GTGT-XD)	G_XDNT
5	Total	G^XD + G_XDNT	G_XD

Of which:

+ In case the construction expense is determined on the basis of the construction volume and complete general construction unit price:

- Q_i is the volume of a group of activities or a structure unit or part No. i of a work (i=1¸n).

- D_i is-the complete general construction unit price (including direct expenses, overhead expense and pre-calculated taxable income) for the performance of a group of activities or a structure Unit or part No. i of a work.

+ In case the construction expense is determined based on the volume and complete detailed construction unit price:

- Q_i is the volume of construction activity No. i of a work (i=1¸n).

- D_i is The complete detailed construction unit price (including direct expenses, general expense and pre-calculated taxable income) for the performance of construction activity No. i of a work

+ G isthe pre-tax expense for the construction of a work

- T^GTGT-XD is the value-added tax rate prescribed for a construction activity.

+ G^XD is the after-tax expense for the construction of a work.

+ G_XDNT is the expense for building makeshift houses at construction sites for dwelling and construction management.

+ G_XD is the after-tax expense for the construction of a work and after-tax expense for building makeshift houses at construction sites for dwelling and construction management.

APPENDIX NO.2

DETERMINATION OF CONSTRUCTION EXPENSES BASED ON THE TOTAL CONSUMPTION VOLUME OF MATERIALS, LABOR AND CONSTRUCTION MACHINES
(Attached to the Construction Ministry's Circular No. 18/200&IT-BXD of October 6, 2008)

The determination of construction expenses based on the total consumption volume of materials, labor and construction machines shall be made in the following order:

- Determining each volume of construction activities of a work or work item;

- Determining the volumes of materials, labor and construction machines corresponding to each volume of construction activities according to the technical blueprint or the working drawing design of a work or work item based on the level of consumption of materials, labor and construction machines for the completion of a volume unit of construction activity according to construction regulations and standards and technical regulations, as in Table 2.1;

- Calculating the total consumption volume of each material, labor and construction machine for a work or work item by adding up the consumed volumes of all the same materials, labor and construction machines of different construction activities;

- Determining material, labor and construction machine prices as appropriate to each construction work and construction location;

- Determining material, labor and construction machine expenses in direct expenses based on the total consumption volume of each material, labor and construction machine and the corresponding material, labor and construction machine price as in Table 2.2:

- Determining construction expenses in the cost estimate for the construction of a work according to Table 2.3.

Table 2.1. CONSUMPTION OK MATERIALS, LABOR AND CONSTRUCTION MACHINES FOR CONSTRUCTION ACTIVITIES

No.

Code

Name of activity

Unit of calculation

Volume

Consumption level

Consumption volume

Material

Labor

Machine

Material

Labor

Machine

[1]

[2]

[3]

[4]

[5]

[6]

[7]

[8]

[9]

[10]

[11]

001

DM.001

Activity 1

m³

VI ..001

Fine sand

m³

VI..002

Oblong bricks for building walls

brick

NC.00I

Labor 3/7 days

workday

NC.002

Labor 3.5/7 days

workday

…..

M.00I

80-liter mortar mixer

shift

M.002

0.8-ton mast lilting

shift

002

DM.002

Activity 2

….

Table 2.2. MATERIAL, LABOR AND CONSTRUCTION MACHINE EXPENSES IN DIRECT EXPENSES

Unit of calculation:

No.

Code

Contents

Unit of calculation

Volume

Price

Money amount

[1]

[2]

[3]

[4]

[5]

[6]

[7] = [5] x [6]

Materials

1.1

VL.001

Fine sand

m³

1.2

VL.002

Oblong bricks for building walls

brick

….

Total

Labor

II.1

NC.001

Labor 3/7 days

workday

II.2

NC.002

Labor 3.5/7 days

workday

….

Total

III

Machine

III.1

M.001

80-liter mortar mixer-

shift

III.2

M.002

0.8-ton mast lifting

shift

….

Total

Note:

- Material, labor and construction machine needs (column 5) are calculated from the consumption levels of the same materials, labor and construction machines of all construction activities of a work or work item (columns 9, 10 and 11 in Table 2.1)

Table 2.3. CONSTRUCTION EXPENSES

No.	Construction items	Method of calculation	Code
I	DIRECT EXPENSES

1
	Material expense	Taken from Table 2.2	VL
2	Labor cost	Taken from Table 2.2	NC
3	Construction machine expense	Taken from Table 2.2	M
4	Other direct expense	(VL+NC+M) x percentage	TT
		Direct expenses		VL+NC+M+TT	T
II	OVERHEAD EXPENSE	T x percentage	C
III	PRE-CALCULATED TAXABLE INCOME	(T+C) x percentage	TL
		Pre-tax construction expense		(T+C+TL)	G
IV	VALUE-ADDED TAX	G x T^GTGT-XD	GTGT
		After-tax construction expense		G + GTGT	G^XD
V	EXPENSE FOR BUILDING MAKESHIFT HOUSES AT CONSTRUCTION SITES FOR DWELLING AND CONSTRUCTION MANAGEMENT	G x percentage x (1+T^GTGT-XD)	G_XDNT
		TOTAL		G^XD + G_XDNT	G^XD

Of which:

+ Overhead expense and pre-calculated taxable income norms are specified in TaBfe 2.4 of Appendix 2 to Circular No. 05/2007/TT-BXD.

+ G is the pre-tax expense for the construction of a work or work item.

+ T^GTGT-XD is the value-added tax rate prescribed for construction activities.

+ G^XD is the after-tax expense for the construction of a work or work item

+ G_XDNT is the after-tax expense for building makeshift houses at construction sites for dwelling and construction management.

+ G^XD is the after-tax expense for the construction of a work or work item and after-tax expense for building makeshift houses at construction sites for dwelling and construction management.

APPENDIX NO. 3

DETERMINATION OF CONSTRUCTION EXPENSES BASED ON THE CONSTRUCTION EXPENSE RATIO IN THE INVESTMENT CAPITAL RATIO OR ON A CONSTRUCTED WORK WITH SIMILAR ECONO-TECHNICAL SPECIFICATIONS

(Attadied to the Construction Ministry's Circular No. 18/2008/TT-BXD of October 6, 2008)

1. For auxiliary works, makeshift works serving construction or ordinary and simple works, construction expenses may be determined based on their area and use capacity and the construction expense ratio in the investment capital ratio for construction of the works.

The expense for construction of a work or work item (GXD) is determined according to this method as follows:

G_XD = S_XD x N + G_CTS-XD

Of which:

+ SXQ is the construction expense ratio in the investment capital ratio for the construction of a work, calculated for one unit of production or service capacity or for one unit of area of the work or work item.

+ N is the area or operation capacity of a work or work item.

+ G_CT-SXD is the lotal of expenses not yet included in the construction expense ratio in the investment capital ratio for the construction of a work, calculated for one unit of production or service capacity or for one unit of area of a work or work item.

2. Construction expenses of the above works may also be determined on the basis of the estimates of construction expenses of constructed works with similar econo-technical specifications and the conversion of expenses according to construction locations and the time of estimation.

Construction works with similar econo-technical specifications are those of the same category or grade and with a similar scale and capacity of equipment and technology chains (for production establishments).

Construction expenses of a work or work item (GXD) are determined according to this method as follows:

G_XD = G_XD* x H_T x H_KV ± G_CT-XD*

Of which:

+ G_XD is the expense for the construction of a similar work or work item already constructed.

+ H_T is the conversion coefficient applicable to the lime of estimation.

+ H_KV is the conversion coefficient applicable to the location of the to-be-constructed work.

+ G_CTXD*, is the total of expenses included or not yet included in the expense for the construction of a similar work or work item already constructed.-

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