Decree No. 32/2015/ND-CP dated March 25, 2015 of the Government on the construction cost management

DECREE

On management of construction investment costs[1]

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 18, 2014 Construction Law;

At the proposal of the Minister of Construction,

The Government promulgates the Decree on management of construction investment costs.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree prescribes the management of construction investment costs, including total construction investment amounts, construction cost estimates, cost estimates of construction bidding packages, construction norms, construction prices, construction price indices, project management and construction investment consultancy expenses, payment and finalization for construction contracts; payment and finalization of work construction investment funds; and rights and obligations of investment deciders, project owners, construction contractors and consultancy contractors in the management of construction investment costs.

2. For construction investment projects using official development assistance (ODA), if a treaty to which the Socialist Republic of Vietnam is a contracting party contains provisions different from those of this Decree, the provisions of such treaty prevail.

Article 2. Subjects of application

1. This Decree applies to agencies, organizations and individuals involved in the management of construction investment costs of projects using state budget funds and non-budget state funds prescribed in Clauses 1 and 2, Article 60 of the Construction Law.

2. The provisions of this Decree may be applied to management of construction investment costs of projects using other funding sources.

Article 3. Principles of management of construction investment costs

1. The management of construction investment costs must ensure attainment of approved investment objectives and project efficiency and suit the process of construction investment prescribed in Clause 1, Article 50 of the Construction Law and funding sources used. Construction investment costs shall be correctly and fully calculated for each construction project, work and bidding package according to engineering requirements, technical instructions and construction conditions as well as market prices at the time of cost determination and in construction areas.

2. The State shall manage construction investment costs through promulgating, and guiding and examining the implementation of, laws and regulations; and guide methods of making and managing construction investment costs.

3. The project owner shall manage construction investment costs from project preparation to construction completion to put the project’s works into operation and use within the project’s approved total investment amount, even in case the total investment amount is adjusted under Article 7 of this Decree. The project owner may hire cost management consultants that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to make, verify, control and manage construction investment costs.

4. The inspection, examination and audit of construction investment costs shall be based on the grounds, contents, methods and time for determining total construction investment amounts, construction cost estimates, cost estimates of construction bidding packages, construction norms, construction prices and construction price indices of works which the investment decider and project owner have agreed to use in each corresponding stage of the cost formation process under this Decree’s provisions on management of construction investment costs.

Chapter II

TOTAL CONSTRUCTION INVESTMENT AMOUNTS

Article 4. Preliminary total investment amount and total construction investment amount

1. Preliminary total construction investment amount means the construction investment cost of a project which is estimated according to the preliminary design and other contents of the construction investment prefeasibility study report. The preliminary total construction investment amount includes the cost items specified in Clause 2 of this Article.

2. Total construction investment amount means all construction investment costs of a project which are determined according to the basic design and other contents of the construction investment feasibility study report. The total construction investment amount includes compensation, support and resettlement (if any) expenses; construction costs; equipment costs; project management expenses; construction investment consultancy expenses; other costs; and provisional amounts for additional volumes and inflation.

3. For projects which only require construction investment economic-technical reports, the total construction investment amount includes the cost estimate of the construction work prescribed in Article 8 of this Decree and compensation, support and resettlement expenses (if any).

4. Cost items constituting the total construction investment amount are specified as follows:

a/ Compensation, support and resettlement expenses include compensations for land, houses and works on land, assets attached to land and on water surface, and other compensations as prescribed; support amounts upon land recovery by the State; resettlement expense; expense for organization of compensation, support and resettlement; land use expense (if any) during construction; expense paid for built technical infrastructure (if any); and other relevant expenses;

b/ Construction costs include costs for dismantlement of works, ground leveling, and construction of works, work items, and makeshift and auxiliary works serving construction;

c/ Equipment costs include costs for procurement of work equipment and technological equipment; training and technology transfer (if any); installation, testing and adjustment; and transportation and insurance; and relevant taxes, charges and costs;

d/ Project management expenses include expenses for project management from project preparation, project implementation and construction completion to putting the project’s works into operation and use;

dd/ Construction investment consultancy expenses include expenses for consultancy on survey and preparation of prefeasibility study report (if any), preparation of feasibility study report and economic-technical report; engineering; and consultancy on construction supervision; and other relevant consultancy expenses;

e/ Other costs include costs for general items specified at Point dd, Clause 2, Article 8 of this Decree and costs other than those specified at Points a, b, c, d and dd of this Clause;

g/ Provisional amounts include the provisional amount for additional work volume and provisional amount for inflation in the course of project implementation.

Article 5. Determination of preliminary total construction investment amount and total construction investment amount

1. The preliminary total construction investment amount of a project shall be estimated on the basis of its scale and capacity of production or service according to the preliminary design of such project and investment rate or costs of completed or ongoing projects of similar type, scale and characteristics, with necessary adjustments and additions.

2. The total construction investment amount shall be determined according to one of the following methods:

a/ Based on the construction volume calculated according to the basic design and other necessary requirements of a project, with regard to:

- Compensation, support and resettlement expenses determined according to the project’s compensation, support and resettlement requirements and relevant regimes and policies of the State;

- Construction costs determined based on the volumes, groups and types of construction activities, structure units or components of construction works and general construction prices corresponding to the groups and types of measured and calculated construction activities, structure units or items of the construction work, and other relevant projected costs;

- Equipment costs determined based on the quantities and types of equipment or equipment systems under technological and technical plans and selected equipment, market prices of equipment, and other relevant costs;

- Project management and construction investment consultancy expenses, which must comply with Articles 23 and 25 of this Decree;

- Other costs determined in percentage (%), estimated, or based on data of completed similar projects;

- The provisional amount for additional work volume determined in percentage (%) of the total cost items mentioned above; the provisional amount for inflation determined based on the duration of project implementation, capital allocation plan and annual construction price indices as suitable to types of construction works, taking into account domestic and international price fluctuations;

b/ Based on the investment rate for work construction:

The total construction investment amount shall be determined based on the volume, area and capacity of production or service according to the basic design and publicized relevant investment rate suitable to the types and grades of works, time of making the total investment amount, construction region, and other costs to meet specific requirements of a project;

c/ Based on data on the costs of completed or ongoing similar works:

The total construction investment amount shall be determined based on the construction floor area and capacity of production or service according to a work’s design, its structure components and data on the costs of completed or ongoing works of the same types, grades, scale and capacity. The used cost data should be converted to the level at the time of making the total investment amount and in the construction region, with adjustments and additions to suit specific conditions of each project or work;

d/ Combination of the methods prescribed at Points a, b and c, Clause 2 of this Article.

3. For projects requiring only construction investment economic-technical reports, the cost estimate of the construction work in the total construction investment amount shall be determined under Article 9 of this Decree.

Article 6. Appraisal and approval of total construction investment amount

1. The total construction investment amount and the construction investment project shall be appraised simultaneously. Appraisal of the total construction investment amount must cover:

a/ Examining the suitability of the method of determining the total construction investment amount with the project’s characteristics, nature and technical and technological requirements;

b/ Examining the adequacy of volumes used to determine the total construction investment amount; the reasonability and compliance with the State’s regulations and guidance of cost items used to calculate or determine costs in the total construction investment amount;

c/ Determining the value of total construction investment amount after appraisal. Analyzing causes of increase or decrease and assessing whether or not the project’s investment efficiency is ensured with the value of the total construction investment amount after appraisal.

2. For projects requiring only construction investment economic-technical reports, the appraisal contents must comply with Clause 2, Article 10 of this Decree.

3. Competence to appraise the total construction investment amount:

a/ The State Appraisal Council established by the Prime Minister, for national important projects;

b/ Specialized construction agencies as decentralized, for projects using state budget funds;

c/ Specialized agencies of investment deciders, for projects using non-budget state funds;

d/ Competent state agencies, for projects with state capital contributions to be implemented in the form of project contracts or public-private partnership contracts.

4. Competence to appraise the total construction investment amount of projects requiring only construction investment economic-technical reports:

a/ Specialized construction agencies as decentralized, for projects using state budget funds;

b/ Specialized agencies under investment deciders, for projects using non-budget state funds.

5. Specialized construction agencies as decentralized and investment deciders may invite professionally capable and experienced organizations and individuals to appraise the total construction investment amount, or request project owners to select construction investment cost management organizations and individuals that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to verify the total construction investment amount as a basis for appraisal and approval. For group-A projects, or group-B and group-C projects involving complicated technical requirements or applying high technologies, their owners shall verify the total construction investment amount as a basis for appraisal and approval.

6. Investment deciders shall simultaneously approve the total construction investment amount and the project. The approved total construction investment amount is the maximum amount the project owner may use for implementing the construction investment project.

7. A dossier for appraisal of the total construction investment amount is the same as the dossier for appraisal of a construction investment project prescribed in Clause 2, Article 56 of the Construction Law and the Decree on management of construction investment projects, for projects requiring only economic-technical reports. The report on results of appraisal and verification of the total investment amount shall be made according to a form provided by the Ministry of Construction.

Article 7. Adjustment of total construction investment amount

1. The approved total construction investment amount may only be adjusted under Clause 5, Article 134 of the Construction Law. Investment deciders shall approve the adjusted total construction investment amount.

2. The adjusted total construction investment amount must include the approved total construction investment amount plus (or minus) the increased (or decreased) value. The increased (or decreased) value shall be verified and appraised as a basis for approving the adjusted total investment amount.

3. The project owner may adjust the structure of cost items, including provisional amounts if such adjustment does not change the value of the approved total construction investment amount, but shall report it to the investment decider and take responsibility for such adjustment.

4. In case the construction price index announced by a competent state agency during the period from the time of project implementation to the time of adjustment is higher than the construction price index used in the approved total investment amount and the provisional amounts in the approved total construction investment amount, including the provisional amount for inflation, have been used up, the project owner may determine an additional provisional amount for inflation.

5. In case the total construction investment amount adjusted under Clause 1 of this Article makes the project increase or decrease in scale (group), such project shall still be managed based on the scale (group) approved before adjustment.

Chapter III

CONSTRUCTION COST ESTIMATES

Section 1

COST ESTIMATES OF CONSTRUCTION WORKS

Article 8. Contents of cost estimates of construction works

1. Cost estimate of a construction work means all costs necessary for construction of a work which are determined in the stage of project implementation according to the technical design, construction drawing design and job requirements of such work.

2. The cost estimate of a construction work includes construction and equipment costs, project management and construction investment consultancy expenses, other costs and provisional amounts, specifically as follows:

a/ Construction costs include direct costs, overhead costs, presumed taxable income and value-added tax;

b/ Equipment costs include costs for procurement of work equipment and technological equipment, training and technology transfer, installation, testing and adjustment, and other relevant costs;

c/ Project management expenses include the expenses specified in Clause 2, Article 23 of this Decree for management of a project from project preparation, project implementation and construction completion to putting its works into operation and use;

d/ Construction investment consultancy expenses of a work include expenses for survey, engineering and construction supervision and other relevant consultancy expenses;

dd/ Other costs of a work include costs for general items and costs other than those specified at Points a, b, c and d of this Clause. Costs for general items include costs for construction of makeshift houses for accommodation and administration of construction at the construction site; transport of construction equipment and workers to and from the construction site; occupational safety; assurance of traffic safety for construction (if any); protection of the environment for workers at the construction site and in surrounding areas; restoration of the ground and technical infrastructure which are affected by construction activities (if any); and testing of materials of contractors, and other relevant costs;

e/ Provisional amounts of a work include provisional amount for additional volumes and provisional amount for inflation during the construction period.

3. For a project with many construction works, its owner may determine the total cost estimate for these works for cost management. The total cost estimate is the sum of cost estimates of construction works plus other relevant costs of the project.

Article 9. Determination of cost estimates of construction works

1. The cost estimate of a construction work shall be determined based on the volume calculated according to the technical design, construction drawing design, technical instructions, job requirements, and construction norms and prices of the work.

2. Costs in a cost estimate of a construction work shall be determined as follows:

a/ Construction costs include direct costs for materials, labor and construction machinery which are determined based on the volumes of construction activities and jobs measured and calculated according to the technical design drawing, construction drawing design, technical instructions and job requirements of the work, construction prices of the work, as well as overhead costs, presumed taxable income and value-added tax which are determined based on the cost norms issued or announced by a competent state agency;

b/ Equipment costs shall be determined based on the volumes, quantities and kinds of equipment according to technology and construction designs and purchase prices of equipment. Costs for training and technology transfer, and installation, testing and adjustment, and other relevant costs shall be estimated;

c/ Project management expenses shall be determined under Clause 3, Article 23 of this Decree;

d/ Construction investment consultancy expenses shall be determined under Clause 3, Article 25 of this Decree;

dd/ Other costs shall be determined in percentage (%), estimated or based on the value of the signed contract;

e/ The provisional amount for additional volumes shall be determined in percentage (%) of the total costs specified at Points a, b, c, d and dd of this Clause. The provisional amount for inflation shall be determined based on the duration of work construction, capital allocation plan and construction price index suitable to the type of construction work, taking into account domestic and international price fluctuations.

Article 10. Appraisal and approval of cost estimates of construction works

1. Cost estimates of construction works and technical designs and construction drawing designs shall be appraised simultaneously.

2. The appraisal of a cost estimate must cover:

a/ Examining the consistency of the construction volume and types and quantities of equipment in the cost estimate with those calculated according to the construction design and technology;

b/ Examining the properness and rationality of the application of cost estimation norms and construction price of the work and other relevant regulations in determining cost items of the cost estimate;

c/ Determining the value of the cost estimate after appraisal and proposing such value to a competent authority for consideration and approval. Assessing the increase or decrease in cost items and the value of the cost estimate subject to appraisal, and analyzing the causes of such increase or decrease.

3. The competence to appraise and approve cost estimates of construction works must comply with the Decree on management of construction investment projects.

4. For works under national important projects or projects of groups A, B and C involving complicated technical requirements or applying high technologies, specialized construction agencies as decentralized and investment deciders shall request project owners to select cost management consultancy organizations that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to verify their cost estimates as a basis for appraisal before submitting them to competent authorities for approval.

5. The approved cost estimates of construction works shall be used as a basis for determining the prices of bidding packages in contractor selection plans and negotiating and signing construction contracts in case of contractor appointment, if any. In case the price of a bidding package in the contractor selection plan is determined based on the total investment amount, it shall be updated according to the approved cost estimate of the construction work.

6. A dossier for appraisal of a cost estimate is the same as that for appraisal of technical designs, construction drawing designs and construction cost estimates prescribed in the Decree on management of construction investment projects. The report on results of appraisal and verification of the cost estimate of a construction work shall be made according to a form provided by the Ministry of Construction.

Article 11. Adjustment of cost estimates of construction works

1. The approved cost estimate of a construction work may only be adjusted in the following cases:

a/ The total construction investment amount is adjusted under Article 7 of this Decree;

b/ There is a design change or addition which is not contrary to the basic design or there is a change in the structure of cost items in the cost estimate, including provisional amounts, which does not lead to an increase in the approved total construction investment amount.

2. The adjusted cost estimate must include the approved cost estimate plus (or minus) the increased (or decreased) value. The increased (or decreased) value shall be verified and appraised to serve as a basis for approval of the adjusted cost estimate.

3. Project owners shall determine adjusted cost estimates of construction works as a basis for adjustment of contract prices, bidding package prices and total investment amount.

4. Project owners may adjust the structure of cost items, provided such adjustment does not change the value of approved construction cost estimates, including provisional amounts.

5. The competence to appraise and approve adjusted cost estimates of construction works must comply with the Decree on management of construction investment projects.

Section 2

COST ESTIMATES OF CONSTRUCTION
BIDDING PACKAGES

Article 12. General provisions on cost estimates of construction bidding packages

1. Cost estimates of construction bidding packages shall be determined for each bidding package according to contractor selection plans and approved cost estimates of construction works, and made before the selection of construction contractors.

2. The cost estimate of a construction bidding package includes cost estimate for a construction bidding package, cost estimate for a bidding package for procurement of supplies and equipment to be installed in the work, cost estimate for a bidding package for construction investment consultancy, or cost estimate for a mixed bidding package.

3. The project owner shall determine and update cost estimates of construction bidding packages, appraise and approve such estimates for replacement of prices of construction bidding packages stated in approved contractor selection plans, as a basis for making bidding dossiers or dossiers of requirements and evaluating and selecting construction contractors.

4. The project owner may hire cost management consultancy organizations and individuals that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to determine, update and verify cost estimates of construction bidding packages before approving them.

Article 13. Cost estimates of construction bidding packages

1. The cost estimate of a construction bidding package means all costs necessary for performing construction activities and jobs and building construction items and works within the scope of execution of the construction bidding package. The cost estimate of a construction bidding package includes construction costs, costs for general items and provisional amounts.

2. Construction costs shall be determined based on the to-be-performed volume of the bidding package and construction unit prices, specifically as follows:

a/ To-be-performed volumes of a bidding package include volumes of construction activities already measured and calculated upon determining construction costs in cost estimates of construction works and other additional volumes (if any) which are determined according to the design drawing and construction methods for separate works and activities for which construction methods, technical instructions and technical requirements for the bidding package are required;

b/ Construction unit prices means all costs (including direct costs, overhead costs, presumed taxable income and value-added tax) necessary for performing a volume unit of relevant construction activities of to-be-performed volumes of a bidding package. Construction unit prices shall be updated on the basis of unit prices used in the construction cost estimate that match market prices in the work construction area and must comply with the State’s relevant regimes and policies at the time of determination of the cost estimate of the bidding package as well as relevant technical instructions and technical requirements of the bidding package.

3. Costs for general items shall be determined based on cost norms publicized by competent state agencies, or estimated.

4. Provisional amounts in the cost estimate of a construction bidding package shall be determined in percentage (%) of the costs already determined in the cost estimate and implementation duration of such bidding package but must not exceed the percentage (%) of provisional amounts of the approved cost estimate of the construction work.

Article 14. Cost estimates of bidding packages for procurement of supplies and equipment to be installed in works

1. The cost estimate of a bidding package for procurement of supplies and equipment to be installed in a work must include costs for procurement of work equipment and technological equipment; training and technology transfer (if any); installation, testing and adjustment; and transportation and insurance; other relevant taxes, charges and costs; and provisional amounts.

2. Costs for procurement shall be determined based on the amounts and quantities as well as unit prices of supplies and equipment to be procured, specifically as follows:

a/ Amounts and quantities of to-be-procured supplies and equipment of a bidding package include amounts and quantities of to-be-procured supplies and equipment already measured and calculated when determining equipment costs in the cost estimate of the construction work and additional amounts and quantities (if any) of supplies and equipment according to the construction design, technologies, technical instructions and relevant technical requirements of the bidding package;

b/ Unit prices of supplies and equipment include the purchase prices of such supplies and equipment, transportation and insurance costs and relevant taxes and charges. Purchase unit prices of supplies and equipment shall be determined based on unit prices in the construction cost estimate that match market prices in the construction area and must comply with the State’s relevant regimes and policies at the time the cost estimate, technical instructions and relevant requirements of such bidding package are determined.

3. Costs for equipment installation, testing and adjustment include cost items like those in the cost estimates of construction bidding packages.

4. Provisional amounts in the cost estimate of a bidding package shall be determined in percentage (%) of the costs determined in the cost estimate and implementation duration of such bidding package but must not exceed the percentage (%) of provisional amounts of the approved cost estimate of the construction work.

Article 15. Cost estimates of construction investment consultancy bidding packages

1. The cost estimate of a construction investment consultancy bidding package means costs for performing one or several construction investment consultancy tasks within the scope of to-be-performed jobs of such bidding package.

2. The cost estimate of a construction investment consultancy bidding package must include expenses for consultants, management expenses, other expenses, presumed taxable income, taxes and provisional amounts. For construction survey consultancy or specialized construction testing bidding packages, their cost estimates must include the cost items like those in the cost estimates of construction bidding packages.

3. The cost estimate of a construction investment consultancy bidding package shall be determined based on consultancy expenses in the cost estimate of the construction work and additional volumes (if any) under the State’s relevant regimes and policies at the time of estimation.

4. Provisional amounts in the cost estimate of a bidding package shall be determined based on the characteristics and nature of the kinds of consultancy tasks and performance schedule but must not exceed the percentage (%) of provisional amounts determined in the cost estimate of the construction work.

5. For construction survey or construction engineering bidding packages of construction works of grade II or higher grade, their cost estimates must also include costs for construction investment consultancy professional liability insurance.

6. For consultancy bidding packages which must be performed prior to approval of their total construction investment amounts and cost estimates of construction works, their cost estimates shall be determined based on the jobs to be performed.

Article 16. Cost estimates of mixed bidding packages

1. The cost estimate of an engineering and construction (EC) bidding package must include the cost estimates of the jobs specified in Articles 15 and 13 of this Decree.

2. The cost estimate of a procurement and construction (PC) bidding package must include the cost estimates of the jobs specified in Articles 14 and 13 of this Decree.

3. The cost estimate of an engineering-procurement-construction (EPC) bidding package must include the cost items for engineering, procurement and construction in the total construction investment amount of the approved construction investment project.

4. The cost estimate of a project formulation-engineering-procurement-construction (turnkey) bidding package include the cost items in the total construction investment amount of the construction investment project as specified at Points b, c, d, dd, e and g, Clause 4, Article 4 of this Decree.

Chapter IV

CONSTRUCTION NORMS, WORK CONSTRUCTION PRICES AND CONSTRUCTION PRICE INDICES

Section 1

CONSTRUCTION NORMS

Article 17. Economic-technical norms

1. Economic-technical norms include basic norms and norms of cost estimates of construction works.

2. Basic norms include material use norms, labor norms and construction machinery productivity and equipment norms. Basic norms shall be used to determine norms of cost estimates of construction works.

3. Norm of cost estimates of work constructions means the necessary level of used materials, labor and construction machinery and equipment which is determined according to specific technical requirements, construction conditions and construction methods to complete a unit of work construction volume.

4. Economic-technical norms shall be used as a basis for management of construction investment costs.

Article 18. Cost norms

1. Cost norm may be calculated in percentage (%) and in value.

2. Cost norms shall be used as a basis for determining construction prices and cost estimates of certain jobs and costs in construction investment including project management expenses, construction investment consultancy expenses, overhead costs, presumed taxable income, costs for general items, and some other jobs and costs.

Article 19. Management of construction norms

1. The Ministry of Construction shall guide methods of making norms of construction cost estimates and publicize construction norms.

2. Based on the methods of making norms of construction cost estimates prescribed in Clause 1 of this Article, ministries managing specialized construction works and provincial-level People’s Committees shall make and publicize construction norms for specialized tasks of their sectors and localities after reaching agreement with the Ministry of Construction; and annually send these construction norms to the Ministry of Construction for monitoring and management.

3. Publicized construction norms prescribed in Clauses 1 and 2 of this Article shall be used as a basis for project owners to apply and refer to when determining total construction investment amounts and construction cost estimates, and managing construction investment costs.

4. For construction jobs not yet included in the system of publicized norms of construction cost estimates or already included in this system but failing to meet specific technical requirements, construction conditions or construction methods of works:

a/ Project owners shall determine new or adjusted norms of construction cost estimates or apply similar norms of cost estimates in completed or ongoing works as a basis for managing work construction investment costs;

b/ For construction bidding packages using state budget funds and applying the form of contractor appointment, project owners shall report to investment deciders for consideration and decision before such application. Particularly for construction works under investment projects decided by the Prime Minister, line ministers and chairpersons of provincial-level People’s Committees shall decide on such application.

5. Project owners may hire cost management consultancy organizations that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to make, adjust and verify norms of construction cost estimates prescribed in Clause 4 of this Article.

Section 2

WORK CONSTRUCTION PRICES AND
CONSTRUCTION PRICE INDICES

Article 20. Work construction prices

1. Work construction prices include:

a/ Detailed construction unit prices of a work determined for specific construction activities of such work as a basis for construction cost estimation;

b/ General construction prices determined for groups and types of construction activities, structure units or work items or works as a basis for determining construction cost estimates and total construction investment amounts.

2. Detailed construction unit prices of a work shall be determined based on the construction norms of that work, prices of supplies, materials and construction structures, labor costs, machine shift and construction equipment costs, and other necessary costs that match market prices in the construction area at the time of determination and comply with other relevant regulations, or shall be determined based on market prices.

3. General construction prices shall be synthesized from detailed construction unit prices of a work.

Article 21. Management of work construction prices

1. Based on the Ministry of Construction-guided methods of determining work construction prices, technical requirements and specific construction conditions and methods of a work, the project owner shall determine detailed construction unit prices and general construction prices of such work as a basis for determining the construction cost estimate and total construction investment amount, and for managing construction investment costs.

2. Project owners may hire construction investment cost management consultancy organizations that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to perform jobs related to the determination and verification of work construction prices.

Article 22. Construction price indices

1. Construction price indices means criteria showing chronological changes in work construction prices and serving as a basis for determining and adjusting total construction investment amounts, work construction prices, cost estimates of construction works, cost estimates of construction bidding packages and construction contract prices, converting work construction investment funds, and managing construction investment costs.

2. Construction price indices include construction price indices based on type of works, cost structure (including price index for construction, price index for equipment and price index for other costs), and cost items (including price index for building materials, labor cost index, and construction machinery and equipment price index).

3. The Ministry of Construction shall guide methods of determining construction price indices and publicize national construction price indices. Provincial-level People’s Committees shall assign provincial-level Construction Departments to determine types of construction price indices prescribed in Clause 2 of this Article based on the Ministry of Construction-guided methods of determining construction price indices, monthly, quarterly and annually publicize them and send them to the Ministry of Construction for monitoring and management. Funds for data collection and calculation and publicization of construction price indices in provinces and centrally run cities shall be covered by annual local budgets.

4. For works not yet included in the lists of construction price indices publicized by provincial-level Construction Departments and works built in lines running through different provinces and centrally run cities, project owners shall determine and decide to apply construction price indices for these works based on the Ministry of Construction-guided methods of determining construction price indices.

5. Project owners may hire cost management consultancy organizations that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to collect data and calculate construction price indices prescribed in Clause 4 of this Article for use as a basis for determining and managing construction investment costs.

Chapter V

PROJECT MANAGEMENT AND CONSTRUCTION INVESTMENT CONSULTANCY EXPENSES

Article 23. Project management expenses

1. Project management expenses means expenses necessary for performing project management tasks from project preparation, project implementation to project completion to put the project’s works into operation and use.

2. Project management expenses include salaries of project managers; wages for contractual employees; salary-based allowances; bonuses; collective welfare; contributions (social insurance, health insurance and unemployment insurance premiums; trade union funds, and other deductions prescribed by law for persons salaried by the projects); expenses for science and technology application, management of information systems of works and capacity building training for project managers; public service charges; expenses for supplies and stationery, public information and communication, and organization of relevant conferences; work trip allowances; expenses for hiring consultants; expenses for repair and procurement of assets serving project management; other expenses and provisional amounts.

3. Project management expenses shall be determined in percentage (%) publicized by the Ministry of Construction or based on cost estimation or data of similar projects as suitable to the form of project management, project implementation duration, and scope and characteristics of project management tasks.

4. In case owners of projects using non-budget state funds or projects with specific and separate characteristics hire consultants to manage such projects, project management consultancy expenses shall be estimated based on the contents and volumes of project management tasks agreed upon between project owners and consultants in project management contracts.

5. For small-scale upgrading or repair projects prescribed in the Decree on management of construction investment projects and projects with community participation, their owners may use their attached specialized units to manage project management expenses estimated under Clause 3 of this Article.

Article 24. Management of project management expenses

1. For projects using state funds, their management expenses determined under Clause 3, Article 23 of this Decree are maximum expenses for project management. Project management expenses shall be managed based on annual cost estimates suitable to project management tasks and compliant with relevant regimes and policies.

2. In case several jobs in the stage of project preparation are to be performed first, expenses for managing such jobs shall be estimated and added to project management expenses.

3. Project management expenses may be adjusted in cases of project adjustment prescribed in Clause 1, Article 61 of the Construction Law.

Article 25. Construction investment consultancy expenses

1. Construction investment consultancy expenses means expenses necessary for performing construction investment consultancy tasks from project preparation, project implementation to project completion to put the project’s works into operation and use.

2. Construction investment consultancy expenses include expenses for consultants; management expenses of consultancy organizations; other expenses including charges for use of information systems of works and professional liability insurance for construction survey and engineering tasks for works of grade II or higher grade; presumed taxable profits, taxes, and provisional amounts. Particularly for construction survey consultancy tasks and specialized construction testing jobs, consultancy expenses include items like construction costs in cost estimates of construction works.

3. Construction investment consultancy expenses shall be determined in percentage (%) publicized by the Ministry of Construction or estimated based on consultancy tasks of similar projects or works or determined based on estimation.

4. Expenses for hiring foreign consultants to perform several consultancy tasks shall be determined based on cost estimates in conformity with national regulations and international practices.

Article 26. Management of construction investment consultancy expenses

1. Construction investment consultancy expenses determined under Clause 3, Article 25 of this Decree shall be used as a basis for determining construction investment consultancy expenses in the total construction investment amounts and cost estimates of construction works, determining prices of bidding packages, and managing construction investment costs. Before selecting contractors to perform construction investment consultancy tasks, project owners shall determine cost estimates of construction investment consultancy bidding packages under Article 15 of this Decree as a basis for contractor selection.

2. Approved construction investment consultancy cost estimates are maximum costs for performing construction investment consultancy tasks and may be adjusted only upon any change in the scope of the tasks and performance schedule. Construction investment consultancy expenses shall be managed through construction consultancy contracts.

3. Owners or management units of construction investment projects that fully satisfy the prescribed capacity conditions for performing several construction investment consultancy tasks may add expenses for performing consultancy tasks to project management expenses.

Chapter VI

PAYMENT AND FINALIZATION OF WORK CONSTRUCTION INVESTMENT FUNDS

Article 27. Payment of construction contracts

The advance payment and payment and dossiers for payment for construction contracts must comply with the Decree on construction contracts.

Article 28. Payment of work construction investment funds

1. Within 7 working days after receiving a complete and valid dossier of request for payment, the investment fund-paying agency shall, based on the allocated funds, pay investment funds at the request of the project owner or his/her/its lawful representative.

2. The project owner or his/her/its lawful representative, but not the investment fund-paying agency, shall take responsibility for unit prices, volumes and value requested for payment in the payment request dossier. If detecting errors in the dossier, the investment fund-paying agency shall notify such in writing to the project owner or his/her/its lawful representative for correction.

3. The investment fund-paying agency and project owner are prohibited from setting illegal requirements in the payment of construction investment funds.

Article 29. Finalization of work construction investment funds

1. Construction investment funds for works, regardless of using state budget funds or non-budget state funds, shall be finalized after such works are completed.

2. To-be-finalized investment funds are all lawful funds used during construction investment to put a project’s works into operation and use. Lawful funds are all funds used within approved projects, designs and cost estimates and signed contracts, including adjustments and additions approved under regulations and intra vires. For projects using state budget funds, to-be-finalized investment funds must be within the approved or adjusted total investment amounts under law.

3. The project owner shall make a dossier for finalization of work construction investment funds and convert investment funds of the construction work which is completed, tested before acceptance, handed and put into use in order to submit it to the investment decider for approval within 9 months, for national important projects and group-A projects, 6 months for group-B projects, or 3 months for group-C projects, after the work is completed and put into operation and use. Six months after obtaining a decision approving finalization of investment funds of a completed project, the project owner shall settle all liabilities and close the project account at the investment fund-paying agency.

If immediate finalization is required for independent works or work items under construction investment projects which have been completed and put into use, project owners shall report such to investment deciders for consideration and decision.

4. For construction investment projects using state budget funds, after the end of a fiscal year, project owners shall finalize the use of investment funds according to the Ministry of Finance’s regulations.

5. Project owners that delay the finalization prescribed in Clause 3 of this Article shall be handled under the Decree on sanctioning of administrative violations in construction activities; real estate business; production, exploitation and trading of construction materials; management of technical infrastructure facilities; and development management of housing and working offices.

6. Competence to approve finalization of investment funds:

a/ For national important projects and other important projects the investment in which is decided by the Prime Minister:

- Project owners’ superior managing agencies shall approve finalization of investment funds of component projects using state budget funds;

- Project owners shall approve finalization of investment funds of component projects not using state budget funds.

b/ For other projects, investment deciders shall approve finalization of investment funds.

Chapter VII

RIGHTS AND OBLIGATIONS OF INVESTMENT DECIDERS, PROJECT OWNERS AND CONSTRUCTION CONTRACTORS IN THE MANAGEMENT OF CONSTRUCTION INVESTMENT COSTS

Article 30. Rights and obligations of investment deciders

1. Investment deciders have the following rights:

a/ To approve or authorize others to approve total investment amounts, cost estimates of construction works, adjusted total investment amounts, and adjusted cost estimates of construction works;

b/ To decide on prices of bidding packages in contractor selection plans, and on types and forms of contract;

c/ To approve the selection of construction investment cost management consultants that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to verify total investment amounts and cost estimates of construction works as a basis for appraisal and approval;

d/ To exercise other rights related to expense management under other relevant laws.

2. Investment deciders have the following obligations:

a/ To ensure sufficient investment funds for projects and works according to approved schedules;

b/ To approve finalization of investment funds within the prescribed time limit;

c/ To perform other obligations related to expense management under other relevant laws.

Article 31. Rights and obligations of project owners

1. Project owners have the following rights:

a/ To decide on methods of determining total investment amounts. To adjust structures of cost items, provided such adjustment does not result in an increase in the approved total investment amounts;

b/ To adjust and approve adjusted cost estimates of construction works, provided such adjustment does not result in an increase in approved cost estimates;

c/ To appraise or verify and approve cost estimates of construction bidding packages as a basis for making bidding dossiers or dossiers of requirements for contractor selection;

d/ To decide on the application of construction norms and work construction prices when determining construction cost estimates and price indices for construction works or bidding packages;

dd/ To hire construction investment cost management consultants that fully satisfy the capacity conditions prescribed in the Decree on management of construction investment projects to estimate, verify, control and manage construction investment costs;

e/ To claim compensation or initiate lawsuits under law for damage caused by delay of investment fund-paying agencies;

g/ To approve changes proposed by contractors in construction methods and technical requirements, provided that such changes ensure quality, schedule, safety and environmental protection and do not result in any change in the value of signed contracts. To control changes during work construction such as changes in construction investment costs or acceleration of construction progress;

h/ To approve proposals of engineering consultants or construction contractors concerning changes in supplies and construction materials, provided that such changes ensure technical, aesthetic, quality and schedule requirements based on the value of signed contracts;

i/ To perform several construction investment consultancy tasks when having full capacity conditions as prescribed;

k/ To exercise other rights related to expense management under other relevant laws.

2. Projects owners have the following obligations:

a/ To formulate work construction investment projects; to submit total investment amounts or adjusted total investment amounts to competent authorities for appraisal and approval;

b/ To make or adjust cost estimates of construction works and submit them to competent authorities for appraisal and approval;

c/ To determine new or adjusted norms of cost estimates of construction works for use as a basis for management of construction investment costs;

d/ To determine work construction prices and construction price indices for construction works and bidding packages;

dd/ To make advance payment, payment for and finalization of contracts signed with contractors under contractual terms;

e/ To control work construction investment costs under regulations;

g/ To decide on, and take responsibility for the accuracy and reasonability of, the value of payments they request investment fund-paying agencies to make to contractors;

h/ To make finalization reports on construction investment funds for completed works under Article 29 of this Decree;

i/ To buy insurance for works that require insurance;

k/ To perform other obligations related to expense management under other relevant laws.

Article 32. Rights and obligations of contractors providing consultancy on construction investment cost management

1. Contractors providing consultancy on construction investment cost management have the following rights:

a/ To provide consultancy on cost management tasks within their capacity conditions and scope of operation as prescribed in the Decree on management of work construction investment projects;

b/ To request project owners and related parties to provide information and documents serving the cost management consultancy;

c/ To refuse to comply with requests beyond the cost management consultancy tasks under the signed contracts;

d/ To request project owners to make payments under signed contracts; to be paid loan interests on late payment;

dd/ To exercise other rights under cost management consultancy contracts and other relevant laws.

2. Contractors providing consultancy on construction investment cost management have the following obligations:

a/ To perform cost management consultancy tasks under the signed contracts;

b/ To take responsibility before law and project owners for their performance of cost management consultancy tasks and pay compensation (if any) caused to project owners in accordance with the law on contracts and relevant laws;

c/ To keep secret information and documents related to their cost management activities unless it is permitted by project owners or competent authorities;

d/ To perform other obligations under contracts and relevant laws.

Article 33. Rights and obligations of construction contractors

1. Construction contractors have the following rights:

a/ To decide on construction norms, construction prices and other relevant costs when determining bids for bidding;

b/ During construction, to adjust construction methods provided that such adjustment ensures quality, schedule, safety and environmental protection after being approved by project owners or their lawful representatives, and does not result in any change in the value of signed contracts;

c/ To take the initiative in using advanced amounts and making payment for construction volumes serving the construction of works;

d/ To propose and reach agreement with project owners on construction norms and construction unit prices for additional work arising in the course of project implementation;

dd/ To claim payment of loan interests on late payment; to receive compensation for damage caused by late handover of construction grounds and other damage not caused by their fault;

e/ To exercise other rights under contracts and other relevant laws.

2. Construction contractors have the following obligations:

a/ To buy insurance for workers on construction sites;

b/ To pay compensation under the law on contracts and relevant laws to project owners and related parties for damage (if any) caused by their fault;

c/ To perform other obligations under contracts and relevant laws.

Chapter VIII

STATE MANAGEMENT OF CONSTRUCTION
INVESTMENT COSTS

Article 34. The Ministry of Construction

The Ministry of Construction shall perform the unified state management of construction investment costs and shall:

1. Guide in detail the contents, and methods of determining and managing, construction investment costs, including preliminary total construction investment amount, total construction investment amount, construction cost estimates, construction norms, work construction prices, project management and construction investment consultancy expenses, construction price indices, measurement of construction volumes, construction machine shifts and equipment prices, adjustment of total construction investment amounts, adjustment of construction cost estimates, determination of unit prices of construction labor, conversion of construction investment funds, and control of construction investment costs.

2. Publicize construction norms, wastage norms in calculating construction machine shifts and equipment prices, norms of project management and construction investment consultancy expenses, construction prices, investment rates for work construction, national construction price indices, and other economic-technical norms.

3. Inspect and examine the implementation of regulations on management of construction investment costs.

Article 35. The Ministry of Finance

1. To guide the payment and finalization of work construction investment funds. To prescribe the management and use of revenues from project management activities of owners and management units of projects using state budget funds.

2. To prescribe the rates and guide the use management of charges for appraisal of investment projects and designs, construction cost estimates and other expenses (if any).

3. To inspect and examine the payment and finalization of construction investment funds of projects using state budget funds and non-budget state funds.

Article 36. Ministries and provincial-level People’s Committees

1. Ministries and provincial-level People’s Committees shall, based on the Ministry of Construction-guided methods of making norms of construction cost estimates, make and publicize norms of construction cost estimates for specialized and specific tasks of their ministries and localities after reaching agreement with the Ministry of Construction.

2. Provincial-level People’s Committees shall guide the making and management of construction investment costs; publicize prices of construction materials, unit prices of construction workforce, construction machine shift and equipment prices, construction price indices and work construction unit prices to match market prices and examine the implementation of regulations on management of construction investment costs in their localities.

Chapter IX

IMPLEMENTATION PROVISIONS

Article 37. Transitional handling

1. For construction investment projects approved before the effective date of this Decree but not yet implemented or are being implemented, cost management tasks must comply with the Government’s Decree No. 112/2009/ND-CP of December 14, 2009, on management of work construction investment costs.

2. For construction investment projects already formulated and appraised but not yet approved before the effective date of this Decree, construction investment cost management tasks shall be adjusted and added to comply with this Decree.

Article 38. Organization of implementation

1. This Decree takes effect on May 10, 2015, and replaces the Government’s Decree No. 112/2009/ND-CP of December 14, 2009, on management of work construction investment costs.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, heads of political organizations, socio-political organizations and socio-political-professional organizations, and related organizations and individuals shall implement this Decree.

3. The Ministry of Construction shall assume the prime responsibility for, and coordinate with related ministries and sectors in, guiding the implementation of this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG