Circular No. 23/2002/TT-BTC dated March 20, 2002 of the Ministry of Finance guiding the management and use of investment project management expenses from the state budget source

CIRCULAR

GUIDING THE MANAGEMENT AND USE OF INVESTMENT PROJECT MANAGEMENT EXPENSES FROM THE STATE BUDGET SOURCE

Pursuant to the March 20, 1996 State Budget Law, the May 20, 1998 Law Amending and Supplementing a Number of Articles of the State Budget Law and the current guiding documents;

Pursuant to the Investment and Construction Management Regulation issued together with the Government’s Decree No. 52/1999/ND-CP of July 8, 1999, Decree No. 12/2000/ND-CP of May 5, 2000 Amending and Supplementing a Number of Articles of the Investment and Construction Management Regulation issued together with the Government’s Decree No. 52/1999/ND-CP of July 8, 1999;

The Ministry of Finance hereby guides the management and use of investment project management expenses from the State budget source at the investor-units as follows:

Part I

GENERAL PROVISIONS

1. Investment project management expenses are all necessary expenses used by the investors for performing managerial tasks throughout the project investment process.

Investment project management expenses in the investment preparation period are those in service of the management of the activities in the investment preparation period, which are determined on the basis of the work volume suitable to the management requirements and the project size, ensuring the current financial regimes, and already approved by competent authorities.

Investment project management expenses in the project implementation period and the investment conclusion period are those in service of the management of the activities in the project implementation period and the investment conclusion period, which are determined on the basis of the norms of expenses for project management boards as guided by the Ministry of Construction, and already approved by competent authorities.

2. All units assigned by competent authorities to manage investment projects (hereinafter called investors or project management boards for short) which are using investment capital originating from the State budget source must use investment project management expenses for the right purposes, ensuring thrifty and efficient spending according to the State’s current financial regimes as well as the specific provisions of this Circular.

3. The finance agencies: The provincial/municipal Finance and Pricing Services, for projects managed by the provincial or municipal authorities; the Finance Sections, for projects managed by the urban and rural district authorities; the Finance Departments (Sections, Divisions), for projects managed by the ministries, branches, central agencies, Corporations 90 and 91, and independent companies (hereinafter called finance offices), shall manage investment project expenses for State budget capital-funded projects of the investors under their respective management, from the elaboration, evaluation and approval of cost estimates to the execution thereof and the approval of the final settlements according to the provisions of this Circular.

4. For projects managed by the commune authorities, the investors (project management boards) shall not have to elaborate detailed cost estimates and get the approval thereof but must manage and use the project management expenses in strict accordance with the contents of Section I and Section II, Part II of this Circular and settle them together with the expenditures of the completed projects according to regulations.

Part II

SPECIFIC PROVISIONS

I. PROJECT MANAGEMENT FUNDINGS

Project management fundings included in the projects total cost estimates approved by competent authorities shall cover:

1. Expenses for project management activities in the investment preparation period according to the cost estimates approved by competent authorities.

2. Expenses for project management in the project implementation and investment conclusion periods according to the norms prescribed in the Construction Ministry’s current circular guiding the elaboration and management of construction costs of investment projects.

3. Where the investors (project management boards) are permitted by competent authorities to perform by themselves a number of consulting jobs related to the projects investment and construction such as compilation of bidding dossiers, analysis and evaluation of bids, supervision of construction techniques, supervision of equipment installation, they shall calculate the expenses for the above-said consulting activities according to current regulations of the Ministry of Construction.

4. Where the investors (project management boards) undertake by themselves the compensation and ground clearance work, they shall include the expenses therefor in the cost estimates to be approved by competent authorities.

5. Where the investors (project management boards) undertake by themselves the reception and preservation (including safeguarding and maintenance) of supplies and equipment of the projects, they shall include labor expenses and other expenses for the above work in the cost estimates to be approved by competent authorities.

II. CONTENTS OF PROJECT MANAGEMENT EXPENSES

The project management expenses from the investment preparation to the project conclusion shall include:

1. Salaries: Salaries according to salary levels and scales from the allocated salary fund, salaries of employees working under long-term contracts (for individuals enjoying salaries from the projects by decisions of competent authorities);

2. Wages: Wages under contracts for seasonal or specific jobs;

3. Various salary allowances: Post, responsibility, region-based, attraction, cost-of-living, overtime work, hazard and danger, mobility, branches special allowances (for individuals enjoying salaries from the projects by decisions of competent authorities).

4. Bonuses: Regular and extraordinary (if any).

5. Collective welfare: Regular difficulty allowance, unexpected difficulty allowance, other allowances (if any).

6. Social insurance, medical insurance premiums, trade union fees, other contributions (for individuals enjoying salaries from the projects by decisions of competent authorities).

7. Charges for public services: Payment of electricity and water bills, purchase of fuel, payment of environmental sanitation charges and other charges.

8. Office supplies: Office equipment, specialized professional books and materials, stationery.

9. Communication: Telephone, postal, fax charges

10. Conferences: Materials, per diems for trainers, travel costs, meeting hall rents, accommodation expenses

11. Working trip allowances: Train, coach and air tickets, sojourn allowance, lodging expenses.

12. Assorted rents: Travel means, working building and land rents, rents of assorted support equipment, staff re-training expenses

13. Outbound delegations: air tickets, accommodations expenses, stipends, customs fees

14. Expenses for regular repairs and overhauls of assets of the management boards such as automobiles, motor vehicles, special-use vehicles, working offices

15. Expenses for professional activities: Special-use supplies, equipment and facilities other than fixed assets, labor safety equipment and others

16. Procurement of assets in service of management: Fire prevention and fighting devices, computers, computer software;

17. Contributions to the superior management boards (if any);

18. Other expenses: Paid fees and charges, guest receptions

III. ELABORATION OF PROJECT MANAGEMENT COST ESTIMATES

On the basis of the current project management characteristics, project management boards are divided into the two following groups:

- Group I: consisting of specialized project management boards, regional management boards, important-project management boards set up under the current Investment and Construction Management Regulation, which enjoy salaries directly from the source of project management expenses.

- Group II: consisting of investors and other project management boards not prescribed in Group I above.

1. For Group 1: Annually, on the basis of the assigned capital construction investment plans, the investors (project management boards) shall make project management cost estimates as guided in Appendix 1 attached to this Circular, then submit them to competent authorities for approval.

2. For Group II: When submitting to competent authorities for approval the study feasibility reports, the units assigned to prepare investment shall concurrently make and submit for approval the project management cost estimates for the investment preparation period.

After obtaining the investment decisions, having their investment projects included in the capital plans and deploying the project implementation, the investors shall make project management cost estimates for the investment execution period, make other cost estimates (if any) according to the provisions at Points 3, 4, and 5, Section I, Part II of this Circular, then submit them to competent authorities for approval. The elaboration and submission of cost estimates for approval shall be effected only once for the whole project implementation process; any cost estimate adjustments must be approved by competent authorities.

The total managerial cost estimates of all projects shall be distributed on a yearly basis so as to determine the annual permissible deduction levels for the management boards of Group-I projects; the total managerial cost estimate of each Group-II project must not exceed the current percentage of project management funding as prescribed by the State.

IV. EXECUTION

1. After approving the annual project management cost estimates (for Group I) and the management cost estimates of the whole projects (for Group II), the competent authorities shall send them to the investors (project management boards) and the investment capital-paying agencies for execution. Payments shall be controlled according to the approved cost estimates and the current financial management regimes.

2. Handling of proceeds from the sale of bidding dossiers: The bidding dossiers must be sold at the prices prescribed in the current Bidding Regulation; the expenses for organizing bids must not be greater than the proceeds from the sale of bidding dossiers; after settling necessary expenses for organizing bids, the investors shall remit the remainder of the proceeds from the sale of bidding dossiers into the State budget.

3. Handling of a number of cases related to Group I:

a/ If at the beginning of the budget year the project management cost estimates have not yet been approved, the investors (project management boards) shall send written requests to the payment-controlling agencies for advance amounts to be spent on the following operations:

+ Payment of salaries and amounts of salary nature;

+ Payment for the management of investment projects.

The monthly advances must not exceed the monthly spending levels of the preceding year. The investors (project management boards) shall have to complete the payment procedures and reimburse the advanced amounts as soon as they are assigned the cost estimates.

b/ Where they are provided with unplanned additional expenses, the investors shall be allowed to spend such expenses on human resources.

c/ The management boards of Group-I projects may apply the minimum wage-raise co-efficient under Circular No. 32/1999/TT-LDTBXH of December 23, 1999 of the Ministry of Labor, War Invalids and Social Affairs, which guides the implementation of the Prime Minister’s Decision No. 198/1999/QD-TTg of September 30, 1999 on salaries payable to the management boards of investment and construction projects, on the following principles:

+ The application of the minimum wage-raise co-efficient in order to set up the salary fund must not result in any increase of the project management costs currently prescribed by the Ministry of Construction;

+ The total project management cost estimates of the plan year shall be within the permissible deduction levels as prescribed at Item 2, Point 1, Appendix I attached to this Circular.

d/ Where the project management boards lease their assets, they must pay 100% of the collected revenues into the State budget.

V. EXAMINATION

Annually, the Finance and Pricing Services of the provinces and centrally-run cities, the Finance Sections of the urban and rural districts, the Finance and Accounting Departments of the ministries, the ministerial-level agencies, the agencies attached to the Government, the central agencies of mass organizations, the general departments, the Finance Sections (or equivalents) of corporations (90 and 91), and independent companies shall examine the management and use of project management expenses at the investor-units under their respective management so as to correct in time any errors made by the investors or project management boards in the project management process.

VI. SETTLEMENT

- At the end of the plan year (for Group I) or upon the project completion, hand- over and operation (for both groups), the investors (project management boards) must make the reports on the settlement of project management expenses, then submit them to competent authorities for approval. The method of making, verifying and approving the reports on the settlement of project management expenses shall comply with the guidance in Appendix II attached to this Circular.

VII. AUTHORITIES COMPETENT TO APPROVE COST ESTIMATES AND SETTLEMENT REPORTS

The authorities competent to approve cost estimates and reports on the settlement of project management expenses are stipulated as follows:

- For projects managed by the ministries, the ministerial-level agencies, the agencies attached to the Government, the central agencies of mass organizations, the Finance and Accounting Departments shall verify their cost estimates, verify and approve the reports on the settlement of project management expenses;

- For projects managed by corporations (90 and 91) or independent companies, the Finance and Accounting Departments (or equivalent levels) shall verify their cost estimates, verify and approve the reports on the settlement of project management expenses;

- For projects managed by the People’s Committees of the provinces or centrally-run cities, the Finance and Pricing Services shall verify their cost estimates, verify and approve the reports on the settlement of project management expenses;

- For projects managed by urban or rural districts, the district Finance Section shall verify their cost estimates, verify and approve the reports on the settlement of project management expenses.

VIII. ALLOCATION OF PROJECT MANAGEMENT EXPENSES

For Group I: Annually, on the basis of the notices of approval of the annual settlement of project management expenses, the investors (project management boards) shall allocate management expenses to component projects on the following principles:

+ For expenses for consultancy, compensation, reception and preservation of equipment of a particular project, they shall be directly allocated to such project;

+ The general management expenses shall be allocated in proportion to the component projects work volumes already completed in the year;

+ The value of the projects allocated annual management expenses shall be incorporated in the value of the settled investment capital of each component project when the investment capital of the completed project is settled.

IX. RESPONSIBILITIES

1. Responsibilities of the investors (project management boards):

- To make and manage the dossiers of estimation and settlement of project management expenses and other expenses (if any, as prescribed at Points 3, 4 and 5, Section I, Part II of this Circular) according to the plan year as well as the time tables and contents prescribed in this Circular; at the same time, to be accountable for the accuracy of data and the legality of dossiers;

- To abide by all the contents of the cost estimate allocation decisions and the notices of approval of annual settlement, issued by the approving agencies;

- To compare the paid capital amounts with the figures at the payment-controlling agencies;

- To supply sufficient documents related to the annual cost estimation and settlement at the approving agencies requests;

- To evaluate by themselves the cost estimate execution every three months, six months and nine months in order to draw experiences for more effective management.

2. Responsibilities of the verifying and approving agencies:

- To manage the investment project management expenses and other expenses of the projects (if any, as prescribed at Points 3, 4 and 5, Section I, Part II of this Circular) of the investors (project management boards) under their respective management from guiding the estimation to verifying and approving the settlement of expenses;

- To guide the investors (project management boards) to execute the investment project management expenses and make annual settlement thereof.

- To approve the cost estimates and settlement reports as requested;

- In the course of verifying, examining and approving the settlement reports, the verifying and approving agencies shall be entitled to reject wrong expenses, recover, or determine the liability to compensate, those amounts spent at variance with regulations, expenses not included in the approved cost estimates; and at the same time requesting the investors (project management boards) to remit into the State budget all amounts as prescribed;

- To be responsible for the results of the verification of the estimates and settlements of project management expenses.

3. Responsibilities of the payment-controlling agencies:

- To control the allocation and payment of investment project management expenses strictly according to the State’s current regulations;

- To check, compare and certify the capital amounts already paid with the data of the investors (project management boards) in the latter’s settlement reports;

- To comment, evaluate and propose to the verifying and approving agencies regarding the spending contents already executed by the investors, whether they comply with the State’s current financial regimes.

4. Responsibilities of the superior authorities of the investors:

- To guide the investors (project management boards) under their respective management to manage and use the project management expenses according to the provisions of this Circular.

- To coordinate with the verifying agencies in verifying the annual settlement reports of the investors (project management boards);

- To create legal conditions for the investors (project management boards) to recover the capital amounts paid in excess of the approved settled value.

5. Responsibilities of the ministries, branches and localities:

- To regularly supervise the investors (project management boards) other expenses and project management expenses;

- To take appropriate disciplinary measures against the investors (project management boards) that have committed serious violations in the management of investment projects.

Part III

IMPLEMENTATION PROVISIONS

This Circular takes effect for uniform implementation nationwide 15 days after its signing. The projects which have been completed or are being carried out before the time this Circular takes effect shall not be required to have their project management cost estimates re-approved but must settle the project management expenses on a yearly basis or upon the project completion according to the provisions of this Circular.

APPENDIX NO. I

GUIDANCE FOR MAKING INVESTMENT PROJECT MANAGEMENT COST ESTIMATES AND SUBMITTING THEM FOR APPROVAL
(Issued together with Circular No. 23/2002/TT-BTC of March 20, 2002 of the Ministry of Finance)

I.COST ESTIMATION:

1. Bases for making investment project management cost estimates include:

+ The decision to assign tasks to the investor;

+ The decision to set up the project management board;

+ The decision to assign the annual capital construction investment plan;

+ Competent authorities documents permitting the investor (project management board) to perform a number of consulting jobs: Compilation of bidding dossiers, analysis and evaluation of bids, supervision of construction techniques, supervision of equipment installation;

+ Document permitting the investor (project management board) to undertake by itself the compensation and ground clearance work, receive and preserve (including safeguarding and maintaining) supplies and equipment of the project and these jobs’cost estimates already approved by competent authorities.

2. Determination of permissible deduction levels:

On the basis of the already approved total cost estimate of each project assigned for management and the competent authority’s task-assigning document, the investor (project management board) shall determine the deduction level for each task of each project in order to sum up the source of deducted expenses according to form No. 01/DTBQL, these are the maximum deduction levels for the investors (project management boards) to perform their project management tasks:

+ Project management expenses in the investment preparation period (according to the approved cost estimate),

+ Project management expenses in the project implementation period (according to regulations),

+ Supervision of construction techniques and equipment installation (according to regulations);

+ Compilation of bidding dossiers (according to regulations);

+ Analysis and evaluation of bids (according to regulations);

+ Compensation and ground clearance (according to the approved cost estimate),

+ Reception and preservation of supplies and equipment (according to the approved cost estimate),

+ Others (according to the approved cost estimate).

3. Determination of the necessary spending contents for making cost estimates:

On the basis of the project management type and characteristics and the comparison of the two groups according to the provisions in Section III, Part II of this Circular, the spending contents permitted for making project management cost estimates shall be determined as follows:

3.1. For Group I: The project management expenses include those numbered from 01 to 18 in Section II of Part II above (form No. 02/A-DTBQL).*

The determination of the salary funds for project management personnel must ensure the right payrolls already approved by competent authorities (form No. 03/DTBQL)* and the plans on payroll raises or cuts according to the plan years (form No. 04/DTBQL).*

3.2. For Group II, the project management expenses are those numbered 2, 7, 8, 9, 10, 11, 12, 13, 15 and 18 in Section II of Part II above (form No. 02/B-DTBQL).*

4. Dossiers and forms:

- The written request for approval of the project management cost estimate;

- Form No. 01/DTBQL*: The sum-up of the source of deducted expenses;

- Form No. 02A/DTBQL*: Project management cost estimates made on a yearly basis (for management boards of Group-I projects);

- Form No. 02B/DTBQL*: Project management cost estimate of the whole project (for management boards of Group-II projects);

- Form No. 03/DTBQL*: Lists of public employees and salaries payable by year-end;

- Form No. 04/DTBQL*: Plans on increasing or reducing the numbers of public employees according to each salary level and scale as well as corresponding annual salary funds;

- Copies of documents: Decision to assign the annual capital construction investment plan; competent authorities documents permitting the investor (project management board) to perform a number of consulting jobs, to undertake by itself the compensation and ground clearance work, to receive and preserve supplies and equipment.

* Requirements on dossiers:

- The dossiers of management cost estimates of the investors (project management boards) must be compiled fully as required at Point 1 above. The data in the forms must be clear without erasure, with accompanied explanations to ensure easy understanding.

- The dossiers of project management cost estimates must be signed by the chief accountants and the investors (heads of the project management boards).

- The investors (project management boards) shall be answerable before law for the data and matters mentioned in the cost estimate dossiers.

II. APPROVAL OF COST ESTIMATES:

On the basis of the cost estimate dossiers sent to them, the finance agencies shall verify the following contents:

+ The legality of the cost estimate dossiers (explanations, reports made according to set forms’), ensuring their compliance with the State regulations on the time, form and legality.

+ The compatibility of the contents inscribed in the cost estimates with the criteria, norms and current financial regimes prescribed by the State.

The functional sections of the finance agencies must report the results of the verification based on the above contents to competent persons for decision to assign cost estimates. The cost estimate assignment decisions shall be made according to form No. 05/QD-GDT* in five copies (two kept by the decision-issuing agency, one by the payment agency and two by the investor).

III. TIME FOR MAKING AND APPROVING COST ESTIMATES:

Within 20 working days after receiving the notices of the investment plans, the investors (project management boards) shall make investment project management cost estimates and send them to the finance agencies for approval.

With 20 working days after receiving the complete cost estimate dossiers sent by the investors (project management boards), the finance agencies shall have to verify and approve the investment project management cost estimates for the latter to deploy their execution.-

APPENDIX II

GUIDANCE FOR MAKING, VERIFYING AND APPROVING THE REPORTS ON THE SETTLEMENT OF INVESTMENT PROJECT MANAGEMENT EXPENSES
(Issued together with Circular No. 23/2002/TT-BTC of March 20, 2002 of the Ministry of Finance)

I. MAKING OF THE REPORTS ON THE SETTLEMENT OF INVESTMENT PROJECT MANAGEMENT EXPENSES:

1. Making of the settlement reports:

- Upon the end of the annual plans (for Group I) or the completion and putting of the projects into use (for both Groups I and II), the investors (project management boards) shall have to make the reports on the settlement of project management expenses and other expenses (if any, as prescribed at Point 3, 4 and 5, Section I, Part II of this Circular), then submit them to competent authorities for approval. Such settlement reports shall include the contents as specified at Point 2, Part II of this Circular, analyze and evaluate the execution of the assigned cost estimates, and present the results achieved in the year, difficulties and constraints as well as solutions thereto.

2. Dossiers and forms of settlement reports:

a/ Dossiers and forms of the reports on the settlement of project management expenses (for Group I):

- The written request for approval of the report on the settlement of investment project management expenses;

- Form No. 01/QT-QLDA*: The sum-up of the annual settled investment project management expenses, with comparison and certification of the allocated capital amounts by the payment-controlling agencies;

- Form No. 02/QT-QLDA*: Settlement of investment project management expenses;

- Form No. 03/QT-QLDA*: Explanations of the annual settlement of investment project management expenses;

- Vouchers related to spendings in the year;

- Copies of such documents as the annual cost estimate assignment decision, the annual cost estimate adjustment decision (if any), the notice of approval of the preceding year’s settlement report.

b/ Dossiers and forms of the reports on the settlement of project management expenses of the completed projects:

* For Group I:

- The sum-up of the settled project management expenses already allocated to the project throughout the years;

- The copies of the notices of approval of the reports on the settlement of project management expenses throughout the years, which are related to the project’s investment execution duration.

* For Group II:

- Form No. 01A/QT-BQL: The report on the settlement of investment project management expenses;

- Vouchers related to spendings arising in the project implementation process; the cost estimate assignment decision and the cost estimate adjustment decision (if any).

3. Requirements on dossiers:

- The dossiers of the settlement of project management expenses of the investors (project management boards) must be compiled fully as required at Point I above. The data in the forms must be clear without erasure, proposals must be specific and explicit;

- Dossiers of the settlement of project management expenses must be signed by the chief accountants, the investors or the heads of the project management boards;

- The investors (project management boards) shall be accountable before law for the data and matters mentioned in the settlement dossiers.

II. VERIFICATION AND APPROVAL OF THE REPORTS ON THE SETTLEMENT OF INVESTMENT PROJECT MANAGEMENT EXPENSES:

1. Verification contents:

After receiving the settlement dossiers of the investors (project management boards), the finance agencies shall work out plans on verifying the settlement reports, notify the time and place for the investors (project management boards) and their superior authorities (if any) to join the verification.

On the basis of the settlement dossiers of the investors (project management boards) already sent to the finance agencies, the functional sections of the finance agencies shall base themselves on the current spending regimes of the State and the approved cost estimates to verify the following contents:

+ Checking the settlement dossiers (explanations of the reports, forms), ensuring their compliance with the State’s regulations on the form, contents and legality;

+ Comparing the data of the approved cost estimates and the values of the completed volumes to detect disparities and find out reasons therefor.

+ Examining the compatibility of spending vouchers with the arising economic operations, their legality and validity and compliance with the current spending regimes of the State;

+ Checking year-end advance amounts;

+ Checking the cash funds;

+ Checking the cost-accounting of arising economic operations, making of accounting books, taking stock of supplies, assets and cash funds.

After verifying the above contents, the verifying agencies and the investors (project management boards) shall make verification reports for use as a basis for competent authorities to approve the settlement dossiers. Such a verification report must include the following contents:

+ Unanimous opinions on the verification results;

+ Explanations of the investor;

+ Reservations of the investors;

+ Proposed measures to deal with amounts spent at variance with regulations or not included in the approved cost estimates.

On the basis of the settlement verification reports made jointly by the finance agencies’functional sections and the investors, the competent authorities shall consider and issue the approval notices which shall be made according to form No. 05/QT-QLDA* in five copies (of which two to be kept by the decision-issuing agency, one copy by the payment agency, and two copies by the investors).

2. Dossiers of verification and approval of settlement reports:

- The full dossiers and forms of the settlement reports as prescribed at Point 2 of Section I;

- Form No. 04/QT-QLDA*: The verification report;

- The explanations of the investor (project management board) (if any);

- Form No. 05/QT-QLDA*: The notice of approval of the settlement of investment project management expenses, enclosed with appendices No. 05A/QT*, 05B/QT*.

3. Time for making and approval of settlement reports:

After closing the accounting books, checking and ensuring the compatibility between the data on the accounting books and the data kept by the payment-controlling agencies, the investors shall make the settlement reports on the set forms, then send them to the finance agencies within 30 days as from the end of the plan year or the completion and putting of the projects into use.

Within 30 working days after receiving the settlement reports of the investors (project management boards), the finance agencies shall have to verify, approve and issue the notices of the results of the settlement verification to the latter. If within 10 days after receiving such notices the investors (project management boards) express no divergent opinions in writing, they shall be deemed as having accepted them for execution.-

* The forms are not printed herein