CIRCULAR

GUIDING THE ADJUSTMENT OF THE COST ESTIMATES OF CAPITAL CONSTRUCTION WORKS

In furtherance of the Government's Decree No. 03/2003/ND-CP of January 15, 2003 adjusting wages and social allowances and partially renewing wage management mechanism;

Pursuant to the provisions at Point 2, Section II of Circular No. 04/2003/TT-BTDTBXH of February 17, 2003 of the Ministry of Labor, War Invalids and Social Affairs guiding the adjustment of the minimum wage level and allowances in enterprises; On the basis of the adjusted electricity and petroleum prices decided by the competent agencies;

In order to adjust the cost estimates of capital construction works due to the above-mentioned changes in the construction works funded with State budget capital, State-guaranteed credit capital, State's development investment credit capital and development investment capital of State enterprises, prescribed in Articles 10,11 and 12 of the Regulation on Construction and Investment Management, issued together with the Government's Decree No. 52/1999/ND-CP of July 8, 1999, and Clause 4 and Points 2 and 3, Clause 6, Article 1 of the Government's Decree No. 12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Regulation on Construction and Investment Management, issued together with Decree No. 52/1999/ND-CP; Clauses 4, 5, 6 and 14, Article 1 of the Government's Decree No. 07/2003/ND-CP of January 30, 2003 amending and supplementing a number of articles of the Regulation on Construction and Investment Management, issued together with the Government's Decree No. 52/1999/ND-P of July 8, 1999 and Decree No. 12/2000/ND-CP of May 5, 2000;

After reaching agreement with the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Construction hereby guides the adjustment of the cost estimates of capital construction works as follows:

I. ADJUSTMENT OF THE VALUE OF CONSTRUCTION AND INSTALLATION COST ESTIMATES:

1. Adjustment of labor cost:

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Particularly for construction works in the urban districts of Hanoi and Ho Chi Minh cities, the labor cost in the construction and installation cost estimates, which are elaborated according to the sets of capital construction unit prices of the localities and calculated according to the minimum wage level of VND 144,000/month, shall be multiplied by the adjustment coefficient of KL = 2.04, and those calculated according to the minimum wage level of VND 210,000/month shall be multiplied by the adjustment coefficient of KL = 1.40.

For construction works which have their cost estimates elaborated according to the current capital construction unit prices of provinces and centrally-run cities and at the same time be applicable to additional wages, wage allowances or other regimes and policies not yet included in the unit prices, mobility allowance at the level of over 20% or allowances for unstable production at the level of over 10%, they shall be allowed to add these items into labor cost according to the current regulation.

2. Adjustment of construction machine cost:

The construction machine expenditure in the construction and installation cost estimates of construction works elaborated according to the current sets of capital construction unit prices of the provinces and centrally-run cities, in which the wages of workers operating and/or repairing construction machines and equipment are calculated according to the minimum wage level of VND 144,000/month, shall be multiplied by the coefficient of KCM = 1.13, and those calculated according to the minimum wage level of VND 210,000/month shall be multiplied by the coefficient of KCM = 1.06.

The above-mentioned adjustment coefficients shall not apply to the adjustment of construction machine cost in the construction and installation cost estimates of construction works which are determined according to shift-machine prices, promulgated separately by competent authorities and not included in the table of shift-machine prices issued together with Decision No. 1260/1998/QD-BXD of November 18, 1998, Decision No. 10/2001/QD-BXD of June 11, 2001 and Decision No. 38/2002/QD-BXD of November 27, 2002 of the Minister of Construction.

3. The costs calculated in percentage (%) of the value of the construction and installation cost estimates of construction works (general expenditures, pre-calculated taxable incomes and output value added tax) shall be calculated strictly according to current regulations.

The contents of expenditures in the value of the construction and installation cost estimates of construction works shall comply with the current regulations.

II. ADJUSTMENT OF OTHER COSTS IN THE TOTAL COST ESTIMATES OF CONSTRUCTION WORKS

1. Adjustment of cost estimates of construction surveys:

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2. Some other costs calculated in percentage (%) of the total cost estimates of construction works shall be calculated according to the State's current regulations.

Particularly, the pre-tax cost estimates for formulation of urban construction planning determined on the basis the table of prices of urban construction planning, issued together with the Construction Minister's Decision No. 502/BXD-VKT of September 18, 1996, shall be multiplied by the adjustment coefficient of KUP = 1,50, and the pre-tax cost estimates for formulation of master planning on the system of urban centers and rural population quarters in provinces, issued together with the Construction Minister's Decision No. 30/2001/QD-BXD of December 18, 2001, shall be multiplied by the adjustment coefficient of KMP = 1.19.

III. IMPLEMENTATION ORGANIZATION:

This Circular uniformly applies nationwide as from January 1, 2003 and replaces Circular No. 03/2001/TT-BXD of February 13, 2001 and Circular No. 04/2002/TT-BXD of June 27, 2002 of the Ministry of Construction guiding the adjustment of construction works' cost estimates.

1. For construction and investment projects with their feasibility study reports or investment reports being elaborated or having been elaborated but the investment therein not yet decided by the competent authorities, their total investment levels shall be adjusted to suit the new wage regime.

2. For construction works under construction investment projects with their dossiers of designs, total cost estimates and cost estimates being elaborated, the value of the construction and installation cost estimates of construction items and other expenditures in their total cost estimates shall be determined under the guidance of this Circular.

3. For construction works and items which have their total cost estimates or cost estimates approved by the competent authorities but the bidding or the appointment of contractors is being organized or has not yet been organized, the investors shall adjust their total cost estimates or cost estimates for submission to the competent authorities for re-approval.

4. For construction works and items which are subject to contractor appointment and have a certain work volume transferred from the preceding year to 2003, the investors shall determine the value of construction volume completed by the end of December 31, 2002 and the remaining work volume to be done as from January 1, 2003 so as to adjust the cost estimates of capital construction works according to the provisions in this Circular.

5. For construction works and items which are subject to the bidding form by the mode of contracts with adjustable prices according to the provisions at Points a and b, Clause 2, Article 7 of the Bidding Regulation, issued together with the Government's Decree No. 88/1999/ND-CP of September 1, 1999, and have a certain work volume transferred from the preceding year to 2003, the investors shall determine the value of construction volume already completed by the end of December 31, 2002 and the remaining construction volume to be done as from January 1, 2003, so as to adjust the cost estimates of capital construction works according to the provisions of this Circular.

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7. For the State's important construction works which are allowed to elaborate their own unit prices (capital construction unit prices), the Boards for unit price elaboration shall base themselves on the regimes and policies allowed by the State to be applied to such projects and the principles for adjustment of cost estimates of capital construction works guided in this Circular to determine the adjustment of labor cost, construction machine cost and other expenditures (if any) in the construction and installation cost estimates.

To encourage construction works under construction investment projects not funded with the capital sources mentioned above to apply this Circular to adjust their cost estimates.

The Ministry of Construction requests the provincial/municipal People's Committees to direct their attached units to complete the elaboration of the systems of capital construction unit prices on the basis of the above-mentioned new minimum wage level within the third quarter of 2003.

In the course of implementation, if meeting with any problems, the ministries, branches and localities are requested to report them to the Ministry of Construction for consideration and settlement.

FOR THE MINISTER OF CONSTRUCTION
VICE MINISTER




Tong Van Nga