CIRCULAR

GUIDING THE ADJUSTMENT OF WORK CONSTRUCTION COST ESTIMATES

Pursuant to the Government's Decree No. 17/2008/ND-CP of February 4, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;
Pursuant to the Government's Decree No. 12/2009/ND-CP of February 12, 2009, on management of investment projects on the construction of works
Pursuant to the Government's Decree No. 99/2007/ND-CP of June 13, 2007, on management of work construction investment expenses (below referred to as Decree No. 99/200/VND-CP); and the Government's Decree No. 03/2008/ND-CP of January 7, 2008, amending and supplementing a number of articles of Decree No. 99/2007/ND-CP of June 13, 2007, on management of work construction investment expenses;
Pursuant to the Government's Decree No. 110/2008/ND-CP of October 10, 2008, prescribing the region-based minimum wage level applicable to laborers working in Vietnamese companies, enterprises, cooperatives, cooperative groups, farms, households, individuals and other-employers (below referred to as Decree No. 110/2008/ND-CP);
Pursuant to the Construction Ministry's Circular No. 03/2008/TT-BXD of January 25,2008, guiding the adjustment of work construction cost estimates (below referred to as Circular No. 03/ 2008/TT-BXD);
Pursuant to the Labor, War Invalids and Social Affairs Ministry's Circular No. 23/2008/TT-BLDTBXH of October 20, 2008, promulgating the Guidance on implementation of the region-based minimum wage level applicable to state companies and one-member limited liability companies in which the State owns 100% of charter capital;

The Ministry of Construction guides the adjustment of work construction cost estimates as follows:

I. GENERAL PROVISIONS

1. This Circular guides the adjustment of cost estimates from January 1, 2009, using the minimum wage level applicable based on regions (where works are constructed) under Decree No. 110/2008/ ND-CP, for the remaining volumes of works or bidding packages (below referred to as work construction cost estimates) under uncompleted state-funded investment projects on the construction of works for which investment deciders have not yet decided to change the management of work construction investment expenditures under Decree No. 99/2007/ND-CP.

It is encouraged to apply this Circular's provisions on the adjustment of work construction cost estimates to work construction investment projects funded with capital of other sources.

2. To adjust work construction cost estimates formulated using construction, installation and construction survey unit prices set by provinces or centrally run cities on the basis of wage scales in wage table A. 1.8 enclosed with the Government's Decree No. 205/2004/ND-CP of December 14, 2004, prescribing the system of wage scales and wage tables and allowances applicable to state companies (below referred to as Decree No. 205/ 2004/ND-CP), and the minimum wage level of VND 450,000/month, as prescribed in the Appendix to this Circular.

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4. Adjustment of contractual prices or amounts paid for work volumes performed from January 1, 2009, under signed contracts and contractual terms: If the involved parties have agreed in a contract not to adjust prices during the implementation process, the investor and construction contractor may negotiate and supplement the contract in order to ensure laborers' interests under regulations.

II. SPECIFIC PROVISIONS

1. Work construction cost estimates formulated using construction unit prices set by provinces or centrally run cities on the basis of the minimum wage level of VND 450,000/month under the Government's Decree No. 94/2006/ND-CP of September 7, 2006, adjusting the common minimum wage level, and wage scales in wage table A. 1.8 enclosed with Decree No. 205/2004/ND-CP. will be adjusted as follows:

1.1. Adjustment of construction cost estimates

1.1.1. Adjustment of labor expense

Labor expense in construction cost estimates formulated using local construction unit prices shall be multiplied by an adjustment coefficient (KDCNC) in compliance with the region-based minimum wage level.

The adjustment coefficient (K^DCNC) is equal to the new region-based minimum wage level divided by the minimum wage level already included in the unit price.

1.1.2. Adjustment of construction machine expense

Construction machine expense in construction cost estimates formulated using local construction unit prices shall be multiplied by an adjustment coefficient (K^DCMTC) in compliance with the region-based minimum wage level and fuel and energy prices applicable in January 2009.

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According to the above principle, the coefficient for adjusting construction machine expense (K^DCMTC) in construction cost estimates made by provinces and centrally run cities is guided in the Appendix to this Circular. For provinces or cities with a peculiar construction structure, their People's Committees shall decide on the adjustment coefficient of construction machine expense.

For works constructed in lines running through several provinces or centrally run cities for which separate machine-shift price tables have been formulated, investors shall calculate and report adjustment coefficients to investment deciders for decision. For works under investment projects on the construction of works in which investment is decided by the Prime Minister, ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial-level People's Committees, chairmen of economic groups or chairmen of boards of directors of state corporations shall decide on adjustment coefficients.

1.1.3. Expenses calculated in proportion (%) to construction cost estimates

Expenses calculated in proportion (%) to construction cost estimates, including other direct expense, common expense, pre-calculated taxable income, value-added tax, expense for the construction of makeshift houses at construction sites for accommodation and construction administration, must comply with regulations.

1.2. Adjustment of construction survey cost estimates

Labor expense in construction survey cost estimates (K^DCNCKS) shall be adjusted using the coefficients specified in the Appendix to this Circular.

In case work construction cost estimates formulated under Point 1 of this Section have been adjusted under the guidance of Circular No. 03/ 2008/TT-BXD: When adjusting the cost estimate using the new region-based minimum wage level, labor expense and construction machine expense in construction cost estimates and labor expense in construction survey cost estimates shall be further multiplied by the corresponding adjustment coefficient which equals the adjustment coefficient using the new region-based minimum wage level specified in the Appendix to this Circular divided by the used adjustment coefficient under Circular No. 03/2008/TT-BXD.

3. Some other expenses in work construction cost estimates

Expenses for management of investment projects on the construction of works, work construction designing, construction supervision and installation of equipment of works specified at Point 1 of Section I above are calculated in a percentage (%) under regulations.

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1. Investors shall adjust, and approve results of adjustment of, work construction cost estimates for remaining volumes performed from January 1. 2009. of construction works under investment projects on the construction of works as specified at Point 1, Section I of this Circular. If approved work construction cost estimates result in an excess of the total investment, investors shall report such to investment deciders for consideration and decision. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial-level People's Committees, chairmen of economic groups or chairmen of boards of directors of state corporations shall decide on the adjustment of cost estimates for construction works under investment projects on the construction of works in which investment is decided by the Prime Minister.

2. For construction works for which separate unit prices have been formulated (work construction unit prices), investors shall, based on regimes and policies applicable to works as permitted by the State and principles of adjusting work construction cost estimates guided in this Circular, determine levels of adjustment of labor expense, construction machine expense and other expenses (if any) in work construction cost estimates.

3. Investors shall decide on the adjustment of construction cost estimates for works under investment projects on the construction of works under Decree No. 99/2007/ND-CP.

This Circular takes effect 45 days from the date of its signing.

FOR THE MINISTER OF CONSTRUCTION
VICE MINISTER




Cao Lai Quang

APPENDIX

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To adjust cost estimates of remaining volumes performed from January 1, 2009, of construction works under uncompleted investment projects as specified at Point 1, Section I of this Circular.

1. Adjustment of construction cost estimates

1.1. Adjustment of labor expense or construction machine expense

Labor expense or construction machine expense in construction cost estimates shall be multiplied by the adjustment coefficient (K^DCNC) or (K^I)CMTC) specified in Table 1 in this Appendix.

1.2. Expenses calculated in proportion (%) to construction cost estimates.

Other direct expense, common expense, pre-calculated taxable income, value-added tax and expense for the construction of makeshift houses at construction sites for accommodation and construction administration shall be calculated in percentage (%) under regulations.

2. Adjustment of construction survey cost estimates

Labor expense in construction survey cost estimates shall be multiplied by the adjustment coefficient (K^DCNCKS) specified in Table 2 in this Appendix.

3. Adjustment of cost estimates for testing construction materials and structure

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4. Other expenses calculated in proportion (%) to work construction cost estimates shall be determined
according to the State's current regulations.

Table 1. Adjustment coefficients for construction cost estimates

Region-based minimum

Wage
level

Adjustment
coefficient

Region I

Region II

Region III

Region IV

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VND 800,000/month

VND 740,000/month

VND 690,000/month

VND 650,000/month

For labor expense (K^DCNC)

1.78

1.64

1.53

1.44

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1.2

1.18

1.16

1.14

Table 2. Adjustment coefficients for construction survey cost estimates

Region-based minimum

Wage
level

Adjustment
coefficient

Region I

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Region III

Region IV

VND 800,000/month

VND 740,000/month

VND 690,000/month

VND 650,000/month

For labor expense (K^DCNCKS)

1.78

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1.53

1.44

Table 3. Adjustment coefficients for cost estimates for testing construction materials and structure

Region-based minimum

Wage
level

Adjustment
coefficient

Region I

Region II

Region III

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VND 800,000/month

VND 740,000/month

VND 690,000/month

VND 650,000/month

For labor expense (K^DCNCTN)

4.2

3.88

3.62

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LIST OF GEOGRAPHICAL AREAS IN WHICH REGION-BASED MINIMUM WAGE LEVEL IS APPLICABLE

Regions

Geographical areas

I

- Urban districts of Hanoi;

- Urban districts of Ho Chi Minh City.

II

- Gia Lam, Dong Anh, Soc Son, Thanh Tri, Tu Liem, Thuong Tin, Hoai Due, Dan Phuong, Thach That and Quoc Oai districts, and Son Tay town, of Hanoi;

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- Urban districts and Thuy Nguyen and An Duong districts of Hai Phong city;

- Urban and rural districts of Da Nang city;

- Ninh Kieu and Binh Thuy districts of Can Tho city;

- Ha Long city of Quang Ninh city;

- Bien Hoa city, Long Khanh town, and Nhon Trach, Long Thanh, Vinh Cuu and Trang Bom districts, of Dong Nai province;

- Thu Dau Mot town and Thuan An, Di An, Ben Cat and Tan Uyen districts, of Binh Duong province;

- Vung Tau city and Tan Thanh district of Ba Ria-Vung Tau province.

III

- Provincial cities (except those of Region II);

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- Bac Ninh city, Tu Son town and Que Vo, Tien Du and Yen Phong districts, of Bac Ninh province;

- Bac Giang city and Viet Yen and Yen Dung districts, of Bac Giang province;

- Hung Yen city and My Hao, Van Lam, Van Giang and Yen My districts, of Hung Yen province;

- Hai Duong city and Cam Giang, Nam Sach, Chi Linh, Kim Thanh and Kinh Mon districts, of Hai Duong province;

- Vinh Yen city and Phuc Yen town of Vinh Phuc province;

- Remaining rural districts of Hai Phong city;

- Mong Cai city and Uong Bi and Cam Pha towns of Quang Ninh province;

- Da Lat city and Bao Loc town of Lam Dong province;

- Nha Trang city and Cam Ranh town of Khanh Hoa province;

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- Remaining rural districts of Binh Duong province;

- Remaining rural districts of Dong Nai province;

- Tan An town, and Due Hoa, Ben Luc and Can Duoc districts, of Long An province;

- Remaining urban and rural districts of Can Tho city;

- Ba Ria town, and Chau Due, Long Dien, Dat Do and Xuyen Moc districts, of Ba Ria-Vung Tau province.

IV

- Remaining geographical areas.

Thông tư 05/2009/TT-BXD hướng dẫn điều chỉnh dự toán xây dựng công trình do Bộ Xây dựng ban hành