Circular No. 30/2016/TT-BXD dated December 30, 2016 of the Ministry of Construction on guiding the engineering, procurement and construction contracts

THE MINISTRY OF CONSTRUCTION

Circular No.30/2016/TT-BXD dated December 30, 2016 of the Ministry of Construction on guiding the engineering, procurement and construction contracts

Pursuant to the Law on Construction No. 50/2014/QH13 dated June 18, 2014;

Pursuant to the Government s Decree No. 37/2015/ND-CP dated April 22, 2015 on guidelines for construction contracts;

Pursuant to the Government s Decree No. 46/2015/ND-CP dated May 12, 2015 on quality management and construction maintenance;

Pursuant to the Government s Decree No. 59/2015/ND-CP dated June 18, 2015 on project management;

Pursuant to the Government s Decree No. 62/2013/ND-CP dated July 25, 2013 defining the functions, tasks, entitlements and organizational structure of the Ministry of Construction;

At the request of Director of Department of Construction Economics,

The Minister of Construction promulgates a Circular on guidelines for Engineering, Procurement and Construction contracts.

Article 1. Scope of adjustment

1. This Circular provides guidelines for Engineering, Procurement and Construction contracts (hereinafter referred to as EPC contracts) for construction projects prescribed in Clause 2 Article 1 the Government s Decree No.37/2015/ND-CP dated April 22, 2015 on guidelines for construction contracts (hereinafter referred to as Decree No. 37/2015/ND-CP), including: rules for applying EPC contracts; preparation and signing of EPC contracts; management of performance of EPC contracts; rights and obligations of entities entering into EPC contracts; EPC general contractors; guidelines for application of EPC contract template.

2. In case of any discrepancy between the text of an international treaty to which the Socialist Republic of Vietnam is a signatory or accedes and regulations of this Circular, such text shall prevail.

Article 2. Subject of application

1. Entities relating to the formation and management of EPC contracts within the scope prescribed in Article 1 hereof.

2. Entities relating to the formation and management of EPC contracts not within the scope prescribed in Article 1 hereof are recommended to apply this Circular.

Article 3. Rules for applying EPC contracts

1. According to characteristics, nature, and scope of each project, EPC contract package and regulations of law, the investment decision maker shall decide the form of EPC contract for such project and contract package, and take legal responsibility for the effectiveness of construction projects.

2. An EPC contract applies solely to construction projects and contract packages of which execution time is required to be shortened; or those with high requirements for engineering, technology and the uniformity from the engineering design, procurement, construction phases to the training in commissioning and project transfer phases.

3. An EPC contractor must meet requirements pertaining to experience, financial situation, practice and operation qualifications within the entire scope of work to be performed of the EPC contract, including: engineering design, procurement, provision of training services, commissioning, technology transfers, and construction in accordance with legislation on construction investment and requirements of Bidding Documents. The EPC contractor may not subcontract more than 60% of the work quantity within the EPC contract.

4. The EPC contract costs shall be managed in such a manner as not to exceed the EPC contract price in conformity with its agreements.

5. Engineering designs of projects or contract packages using EPC contracts must satisfy requirements prescribed in Clause 1 Article 54 of the Law on Construction No. 50/2014/QH13.

6. EPC contracts shall be concluded and managed in such a manner in accordance with regulations of law on construction contracts.

Article 4. Preparation and signing

1. During the contract preparation, signing, and performance, the Contractor is encouraged to propose initiatives, measures and apply its experience to complete the work specified in the EPC contract, ensure the safety, quality, schedule, objectives, requirements, and improve the effectiveness of the project/contract package.

2. The parties shall, before the signing of EPC contract, at least reach an agreement on the following contents:

a) Estimated scope of work

b) Location, routes, type, and level of facility; scope, capacity, and chosen procurement plan, use capacity;

c) Materials, and data on natural conditions, geotechnical engineering, hydrogeology, and hydrography of the area where the facility is built;

d) Requirements pertaining to construction engineering design and some initial design parameters;

dd) Plans for technology, engineering, equipment, and commerce; origin of equipment and products;

e) Plan for infrastructure connections within and beyond the scope of facility; fire prevention measures within the scope of EPC contract;

g) Construction-related measures, primary materials to be used;

h) Requirements pertaining to construction quality control, testing, commissioning, guarantees, and maintenance;

i) Solutions to architecture, ground, cross, and vertical section of the facility, sizes and main structure of the facility within the scope of EPC contract;

k) List and levels of standards, technical standards to be used in engineering, procurement, and construction;

l) Technical instructions on supply and equipment, technical services;

m) Requirements pertaining to qualifications of the Contractor in the contract package, including: qualifications in engineering, procurement and construction;

n) Requirements pertaining to environment protection, safety assurance, and fire prevention, and other issues.

o) Requirements pertaining to procedures for approval; numbers of documents and deadline for submission of these documents to the Employer;

p) Schedule and milestones for completion of essential work and/or items and the whole facility to be put into operation and use;

q) Allocate responsibilities between Employer and Contractor with respect to supply of electricity, water, communications, internal roads, and other available services in the facility, and processing of interface between contract packages within the same construction project;

3. Preparation

Terms, general and special conditions of the EPC contract must be prepared in conformity with guidelines prescribed in Article 18 hereof.

4. Signing

a) An EPC contract is signed only when all rules for signing of the construction contract prescribed in Article 4 of Decree No. 37/2015/ND-CP are satisfied.

b) Requirements for the EPC Contractor

The EPC Contractor must have obtained adequate operation and practice qualifications in accordance with law on construction investment, in particular:

- Its registered lines of business are consistent with the work of the contract package. If the Contractor is a joint venture, a joint venture agreement is required, in which a JV s Party acts as the head of the joint venture, takes general responsibility and commits to undertake the tasks assigned by Contractors, and registered lines of business of each JV s Party are consistent with the assigned tasks;

- It has adequate qualifications to perform tasks specified in the EPC contract, namely: experience engineering; qualifications as building contractors of projects/contract packages with equivalent technical requirements and scope. In the organizational structure of the Contractor, there are units in charge of design consultancy, processing and manufacturing, procurement and construction;

- It satisfies financial requirements of the project/contract package and proves its capital mobilization to perform the EPC contract.

c) The negotiation and signing of the EPC contract shall be carried out according to requirements in the Bidding Documents, Bids, approved results of bidder selection, or written direct contracting issued by competent authorities;

d) The schedule of negotiation and signing of the contract must be consistent with the general schedule and ensure the effectiveness of the project.

Article 5. Performance management

The performance of EPC contract shall be managed in accordance with Article 7 of Decree No. 37/2015/ND-CP and the following regulations:

1. Manage scope of the work according to objectives of the contract package and list of tasks specified in the contract; inspect whether documents on survey and engineering have applied to the tasks of EPC contract with accuracy, adequacy, and conformity.

2. Manage the schedule of tasks in conformity with the general schedule of the project and the EPC contract.

3. Inspect and manage quality and quantity of tasks to be performed in the EPC contract.

4. Manage expenses associated with tasks in the EPC contract; control, pay, and adjust the EPC prices.

5. Manage the safety, fire prevention, and environment hygiene;

6. Manage the adjustments to the EPC contract and its other necessary contents.

Article 6. Management of construction survey and construction design within the scope of EPC contract

1. The construction survey within the scope of EPC contract must be consistent with Section 1 Chapter IV of the Law on Construction No. 50/2014/QH13; Chapter II of the Government s Decree No. 46/2015/ND-CP dated May 12, 2015 on construction quality control and maintenance (hereinafter referred to as Decree No. 46/2015/ND-CP); Circular of the Minister of Construction on guidelines for construction quality control and maintenance; and regulations of relevant law provisions.

2. Management of construction design

a) The construction design within the scope of EPC contract must be consistent with regulations on design prescribed in the Law on Construction No. 50/2014/QH13; Chapter III of the Government s Decree No. 46/2015/ND-CP; Section 1 Chapter III of the Government s Decree No. 59/2015/ND-CP dated June 18, 2015 on management of construction projects (hereinafter referred to as Decree No. 59/2015/ND-CP); Circular of the Minister of Construction on guidelines for construction quality control and maintenance; and regulations of relevant law provisions.

b) Management of appraisal, assessment, approval and amendments to construction design:

- Engineering designs made by the Contractor must be appraised, assessed and approved as prescribed in Articles 24 and 25 of Decree No. 59/2015/ND-CP and Point e Clause 2 Article 32 of Decree No. 37/2015/ND-CP.

- The Contractor may create engineering designs for parts of the facility in accordance with technical stages which are submitted to construction authorities, investment decision maker, and investor for appraisal, assessment, and approval as prescribed.

- The appraisal of construction design shall be consistent with Article 83 of the Law on Construction No. 50/2014/QH13, other than regulations in Clause 7 Article 83 of the Law on Construction No. 50/2014/QH13; Circular No. 18/2016/TT-BXD dated June 30, 2016 of the Minister of Construction on guidelines for assessment and approval for projects and construction designs and estimates (hereinafter referred to as Circular No. 18/2016/TT-BXD); and regulations of relevant law provisions.

- The appraisal, assessment and approval for construction design shall apply to each construction part or item or the whole facility/project.

Article 7. Management of procurement of material and technological equipment within the scope of EPC contract

1. Prior to the procurement for EPC contract, the Contract shall submit requirements for the procurement to the Employer for its consent if agreed upon in the contract. The Employer’s consent will not diminish responsibility of the Contractor for the procurement for EPC contract.

2. The Contractor may perform the direct procurement or subcontract the procurement for the EPC contract. If the procurement is subcontracted, the Contractor shall, prior to the selection of subcontractors, reach an agreement with the Employer on requirements for the subcontractor provided that requirements pertaining to engineering, origin, technology specified in the signed EPC contract remains unchanged.

Article 8. Management of construction within the scope of EPC contract

1. The Contractor may begin the construction only when it satisfies all conditions prescribed in Decree No. 46/2015/ND-CP; Decree No. 59/2015/ND-CP; Circular No. 18/2016/TT-BXD; Circular of the Minister of Construction on guidelines for construction quality control and maintenance; and other relevant law provisions, namely: The engineering design of facility to be executed has been assessed, appraised, and approved as prescribed; a construction license for the part of facility to be executed has been obtained, except for cases eligible for exemption from construction licenses as prescribed.

2. The management of construction specified in the contract must be consistent with Chapter IV of Decree No. 46/2015/ND-CP; Circular of the Minister of Construction on guidelines for construction quality control and maintenance.

3. Management of selection of subcontractors: The selection of subcontractors must satisfy requirements prescribed in Article 47 of Decree No. 37/2015/ND-CP.

4. In case of any absent regulations on management of construction in this Circular, available regulations in Decree No. 37/2015/ND-CP and Circular No. 09/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for construction contract shall apply.

Article 9. Management of performance schedule of EPC contract within its scope

The parties shall reach an agreement on performance schedule of the contract prescribed in Article 14 of Decree No. 37/2015/ND-CP, in which the milestones of primary tasks must be specified: engineering, procurement, construction of main items which are consistent with schedule specified in the Bid, Proposal, and schedule of the project.

Article 10. Quality control within the scope of EPC contract

1. Tasks, items, and facilities to be delivered must meet quality conditions as prescribed in regulations on construction quality control and Article 13 of Decree No. 37/2015/ND-CP. The Contractor must adopt appropriate measures for controlling quality of the work performed by itself or the subcontractor.

2. All facilities, work items within the scope of EPC contract to be put into operation must meet the conditions prescribed in Clause 4 Article 31 of the Government’s Decree No. 46/2015/ND-CP dated May 12, 2015 on construction quality control and maintenance and Circular of the Minister of Construction on guidelines for construction quality control and maintenance.

Article 11. Management of safety, environment protection, and fire prevention within the scope of EPC contract

When the EPC contract is performed, apart from regulations prescribed in Article 48 of Decree No. 37/2015/ND-CP, the parties must comply with the following regulations:

1. The Employer shall inspect the Contractor’s adoption of measures for labor safety, environment protection, and fire prevention as agreed upon in the signed EPC contract and relevant law provisions. 

2. Labor safety management:

a) Adhere to applicable regulations of the Government on labor safety;

b) The Contractor shall provide training in safety for its labor and provide adequate personal protective equipment and necessary rescue equipment;

c) The Contractor shall regularly inspect, test, repair, and control protective equipment, scaffolding, working platforms, jacks, transporting, lifting, lighting and protective equipment, and standards for replacing those devices;

d) Ensure the availability of fences, lighting and protective system of the facility until its completion and delivery.

3. Management of environment:

a) The Contractor must adopt measures for environment assurance for labor on site and surrounding environment;

b) The parties shall inspect and monitor the construction environment protection, and be subject to the inspection of environment authorities. If the Contractor fails to comply with regulations on environment protection, the Employer or a competent authority is entitled to suspend the construction and require the Contractor to strictly adopt measures for environment protection;

c) Any entity causing harm to environment during the construction process shall take legal responsibility and compensate for damage at its/his/her faults.

4. Management of fire prevention:

a) Involved parties in the EPC contract must comply with regulations on fire prevention;

b) Install and maintain a system of fire safety so as to control, alert, or make reasonable predictions, and avoid possible occurrence of damage to people and property from fire;

Article 12. Management of amendments to EPC contract and other essential contents within the scope of EPC contract

1. The amendments to the EPC contract must be consistent with regulations in Section 5 Chapter II of Decree No. 37/2015/ND-CP.

2. The involved parties of the contract shall also, according to the characteristics and nature of the contract, apply other regulations of legislation on construction investment for the purpose of managing the contract performance properly.

Article 13. Management of contract price, payment and settlement of EPC contract

1. Lump sum contract is a basic form of contract price applicable to an EPC contract. If the EPC contract applies other forms of contract price as prescribed in Article 15 of Decree No. 37/2015/ND-CP, the investment decision maker shall, according to characteristics, nature, and scope of each EPC project/contract package, select an appropriate form of contract price, provided that it satisfies conditions prescribed in Clause 5 Article 15 of Decree No. 37/2015/ND-CP and take legal responsibility for the project s effectiveness.

2. When the form of lump sum contract is used, a price schedule of tasks and work items must be enclosed with EPC contract so as to facilitate the management of amendments to the EPC contract during its performance.

3. The payment of EPC contract shall be consistent with Article 19 of Decree No. 37/2015/ND-CP.

4. The settlement of EPC contract shall be consistent with Article 22 of Decree No. 37/2015/ND-CP.

5. The adjustments to the EPC contract price shall be consistent with Circular No. 07/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for adjustments to construction contract price.

Article 14. Rights and obligations of employer in management of contract performance

1. The Employer has rights to:

a) Refuse the acceptance of unqualified products as agreed upon in the contract; refuse the acceptance of technological equipment inconsistently with the contract in terms of quantity, quality, types, origin, and products in infringement of intellectual property rights;

b) Inspect the performance of the Contractor according to the signed contract without prejudicing the Contractor’s ordinary course of business;

c) Suspend the contract performance and request remedial measures upon the occurrence of any work performed by the Contractor that breaches agreed contents in the signed contract or violate regulations of law;

d) Request the Contractor to deliver documents relating to the products of the contract in accordance with the agreed contents;

dd) Consider a list of eligible subcontractors that have not been included in the EPC contract upon the Contractor s request;

e) Other rights as prescribed.

2. The Employer has obligations to:

a) Carry out the acceptance, payment, and settlement of contract on time as prescribed;

b) Assign key personnel to manage and perform the contract and notify the Contractor of such assignment in writing;

c) Provide the Contractor with information, materials, and means deemed necessary to perform the work as agreed upon in the EPC contract;

d) Accept, assess, approve or submit construction design to the competent authority for approval, including: description, spreadsheets, drawings, and relevant survey materials, maintenance procedures of facilities and work items as prescribed;

dd) Apply for construction licenses as prescribed, hand over the premises to the Contractor as agreed in the EPC contract;

e) Monitor whether the tasks have been performed in conformity with the signed contract; inspect whether measures for labor safety, environment protection, and fire prevention have been adopted in accordance with regulations of law;

g) Reach an agreement with the Contractor on Bidding Documents on procurement of technological equipment in conformity with the signed EPC contract;

h) Ensure copyright in the contract-related consultancy products;

i) Provide training courses in commissioning of facilities for administrative officers and workers;

k) Other obligations as prescribed.

Article 15. Rights and obligations of contractor in management of contract performance

1. The Contractor has rights to:

a) Require the Employer to provide information, materials, and working facilities relating to the work as agreed upon in the EPC contract;

b) Make proposals for tasks arising beyond the scope of the contract to the Employer; refuse to perform the work beyond the scope of the contract without consensus of the both parties or unlawful requirements set by the Employer;

c) Organize and manage the work performance in accordance with the signed contract;

d) Other rights as prescribed.

2. The Contractor has obligations to:

a) Provide sufficient personnel, materials, machinery, equipment, and other facilities deemed necessary to perform the work specified in the contract;

b) Receive, manage, store, and hand over materials and facilities provided by the Employer in conformity with the signed EPC contract;

c) Notify the Employer of information or materials that are insufficient or working facilities that are unsatisfied to perform the work of the EPC contract;

d) Keep secrets of information relating to the contract as agreed upon in the contract or as prescribed by law;

dd) Perform the work of contract in consideration of safety, quality, schedule and other arrangements as specified in the EPC contract;

e) Create construction designs of work items and main works in conformity with fundamental design or Front End Engineering Design that has been approved, and submit them to the competent authority or investor for assessment and approval as prescribed in Clause 2 Article 6 hereof and regulations of law on construction;

g) Carry out the procurement meeting requirements and schedule of the contract; submit a list of subcontractors to the Employer for acceptance; and reach an agreement on contents of the Bidding Documents of procurement of technological equipment in conformity with the EPC contract;

h) Provide training courses in commissioning of facilities, technology transfers, and technical services as specified in the EPC contract for administrative officers and workers;

i) Carry out testing, adjustments, and commissioning synchronously in the facilities and deliver the completed facilities to the Employer as agreed upon in the contract and in accordance with applicable law;

k) Ensure that any products provided does not constitute infringement of intellectual property rights as prescribed by law;

l) Deliver documents relating to the products of the contract to the Employer in accordance with the EPC contract;

m) Other obligations as prescribed.

Article 16. Rights and obligations of consultancy hired by employer in management of contract performance (to be applicable if the Employer hires a consultancy)

1. The consultancy of the employer has rights to:

a) Require the Employer to provide information, materials relating to the consulting tasks, and working facilities as agreed upon in the consulting contract in conformity with the EPC contract;

b) Propose changes to conditions for providing consultancy services in the interests of the Employer or upon the occurrence of any elements affecting the consulting service quality;

c) Refuse performance of unreasonable work beyond the scope of contract and unlawful requirements made by the Employer;

d) Have its consultancy service’s copyright protected as prescribed by law;

dd) Request the Employer to fulfill the obligations as specified in the EPC contract within its rights and responsibilities.

e) Other rights as prescribed.

2. The consultancy of the Employer has obligations to:

a) Complete the work on schedule and with quality as specified in the contract;

b) Store and return the materials and working facilities that have been provided by the Employer upon the completion of work as specified in the EPC contract.

c) Notify the Employer of information and materials that are insufficient and working facilities that are unsatisfied in writing;

d) Keep secrets of consultancy services as required by the contract or regulations of law;

dd) Sign documents relating to the management of EPC contract within the consulting obligations as specified in the consulting contract.

e) Other obligations as prescribed.

Article 17. Management of all-inclusive EPC contract

1. All-inclusive EPC contract means a form of contract relating to engineering, procurement and construction of all facilities in a construction project.

2. The management of all-inclusive EPC contract shall be consistent with regulations of Article 5 through Article 12 of this Circular within the entire scope of the project.

3. Rights and obligations of EPC general contractor: In accordance with Article 15 hereof within the entire scope of the project and the following obligations:

a) Manage scope of the work according to objectives of the contract package and list of tasks specified in the contract; inspect whether documents on survey, design and engineering have applied to the tasks of all-inclusive EPC contract with accuracy, adequacy, and conformity.

b) Manage the schedule of tasks in conformity with the general schedule of the project and the all-inclusive EPC contract.

c) Control all construction means and methods within the construction site of the entire project.

d) Make addition or replacement of subcontractors to ensure the quality, price, and schedule of the work specified in the contract with the investor’s consent;

dd) Manage expenses associated with the work in the contract; control, pay and adjust the contract price as agreed and relevant law provisions.

e) The EPC general contractor shall manage the operation within or beyond the construction site for the purpose of performing all-inclusive EPC contract safely and effectively; coordinate subcontractors to use auxiliary works and support facilities properly and un-wastefully; use and protect the premises and keep security and order at the construction site.

g) Cooperate with the investor in providing training courses in commissioning of the facilities for administrative officers and workers.

4. The all-inclusive EPC contract costs shall be included in its contract price.

Article 18. Guidelines for using EPC contract template enclosed with this Circular

1. The EPC contract template enclosed with this Circular includes 2 parts:

Part I. Bases for signing of contract

Part II. Terms and conditions of contract

2. Guidelines:

a) The EPC contract template enclosed with this Circular is a form of contract used by the investor and the contractor; in a case where the Employer is a contractor, this template shall be applied in such an appropriate manner.

b) The template is used for the purposes of reference and proper application in actual conditions of the project, facilities, and EPC contract package. In case of using the template, the involved parties shall reach an agreement in accordance with regulations Decree No. 37/2015/ND-CP, guidelines in this Circular and relevant regulations of law.

c) The parties shall reach an agreement on specific time limits, namely payment time limit, performance security time limit, deadline for reply, contract termination period, and similar time limits.

d) If the scope and work requirements in a specific contract package differ from those specified in the contract template, amendments may be allowed provided that they are consistent with regulations of Decree No. 37/2015/ND-CP.

dd) If the scope of acceptance work agreed by the parties differs from that specified in the contract template, amendments may be allowed provided that they are consistent with regulations of Decree No. 37/2015/ND-CP.

e) If the contractor is a joint venture, the parties shall reach an agreement on performance security and bank guarantee for advance payment in accordance with Decree No. 37/2015/ND-CP.

g) The parties shall reach an agreement on an advance amount in accordance with requirements of each type of work in the contract and Decree No. 37/2015/ND-CP.

h) The parties shall reach an agreement on type of currency and methods of payment in the contract in accordance with requirements of the Bidding Documents and regulations of law on foreign exchange.

i) This contract template shall apply to lump sum contract. In case of a contract applying fixed price, adjustable price, or mixed price, the parties shall make appropriate amendments to the contract in accordance with regulations of Decree No. 37/2015/ND-CP and this Circular.

Article 19. Transitional provisions and effect

1. Transitional provisions

a) With regard to an EPC contract which has been signed before the effective date of this Circular, the involved parties shall keep complying with regulations on construction contract before such effective date and arrangements specified in the contract.

b) With regard to an EPC contract in the progress of negotiation that has been not signed, any terms and conditions specified in this contract not consistent with this Circular shall be reported to the investment decision maker for decision in consideration of quality assurance, schedule, effectiveness of the construction projects without prejudicing rights and legitimate interests of the parties.

c) With regard to EPC contract-related contents in Bidding Documents or Request for Proposals, contents that have not been published not in accordance with this Circular shall be amended properly, those that have been published subject to amendments shall be communicated to all bidders that have bought Bidding Documents or Request for Proposals for appropriate amendments to their Bids and Proposals. In case of Bid closing, Point b of this Clause shall apply.

2. Other contents relating to the EPC contract not guided in this Circular shall be consistent with regulations of  Decree No. 37/2015/ND-CP, Circular No. 07/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for price adjustments to construction contracts, Circular No. 08/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for construction consulting contracts and Circular No. 09/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for construction.

3. This Circular takes effect on February 20, 2017.

For the Minister

The Deputy Minister

Bui Pham Khanh

*All Forms are not translated herein.