Vietnam: For EPC contracts, in addition to each stage’s implementation progress, is it also required to establish the progress for each type of work?
- Is the construction investment feasibility study report required for signing an EPC contract in Vietnam?
- For EPC contracts, in addition to each stage’s implementation progress, is it also required to establish the progress for each type of work?
- What are the regulations on the content and quantity of work in an EPC contract in Vietnam?
Is the construction investment feasibility study report required for signing an EPC contract in Vietnam?
Foundations for signing a construction contract in Vietnam are specified in Article 9 of Decree 37/2015/ND-CP as follows:
Foundations for signing construction contract
1. Foundations for signing a construction contract include requirements for performance of the tasks as agreed by the parties, result of selection of contractor, negotiation and completion of the contract and other relevant foundations.
2. As for EPC, EC and EP contracts, in addition to the foundations as specified in Clause 1 of this Article, a feasibility study report or approved FEED is also required.
3. As for Turnkey contracts, in addition to the foundations as specified in Clause 1 of this Article, other foundations such as project performance duties, investment policies, approved feasibility study report are also required.
In addition to the foundations mentioned in Clause 1 of this Article, the foundations for signing an EPC also include the construction investment feasibility study report or approved FEED.
Thus, the construction investment feasibility study report is not required for signing an EPC contract in Vietnam.
For EPC contracts, in addition to each stage’s implementation progress, is it also required to establish the progress for each type of work?
The time and progress of construction contract performance are specified in Article 14 of Decree 37/2015/ND-CP as follows:
Time and progress of construction contract performance
1. Time of construction contract performance is from the effective date of the contract till the parties have fulfilled their obligations under the signed contract.
2. The contractor shall establish a detailed implementation progress and make submission to the employer for approval.
3. The implementation progress must represent milestones of completion and handover of key works and products.
4. As for a construction contract for a large-scale bid package with a long implementation period, the implementation progress may be divided into individual stages.
5. As for a procurement contract, progress of equipment supply must represent milestones of handover of equipment of which quantity and types of equipment in each stage of handover must be specified.
6. As for an EPC contract or turnkey contract, in addition to each stage’s implementation progress, progress for each type of work (project establishment, engineering, procurement and construction) must be also established.
7. Speeding up contract implementation progress while product quality is ensured is encouraged. In case such speeding up brings about more efficiency to the project, the contractor shall be considered for rewards as agreed in the contract.
8. Revision of contract implementation progress is prescribed in Article 39 hereof;
Thus, as for an EPC contract, in addition to each stage’s implementation progress, progress for each type of work (project establishment, engineering, procurement and construction) must be also established.
What are the regulations on the content and quantity of work in an EPC contract in Vietnam?
The content and quantity of work in the construction contract are specified in Article 12 of Decree 37/2015/ND-CP as follows:
Content and quantity of work in construction contract
1. Content and quantity of work in a construction contract are subject matters and quantity of work that the employer signs with the contractor in accordance with scope of work and specified in the contract. Scope of work is determined on the basis of an invitation to bid (ITB) or request for proposals, bid documents, negotiation minutes and other relevant legal documents. Depending on specific construction contract type, scope of work shall be determined as follows:
a) Contract for consultancy: Establishment of planning, investment project; designing and survey; project management; management of construction contract performance; construction supervision; examination and verification of design, cost estimates and other consulting works in activities of investment and construction;
b) Construction contract: Supply of building materials, human force, working machinery and equipment, and construction in accordance with approved design document;
c) Procurement contract: Supply of equipment; instructions on installation, use, trial operation, official operation, training and technology transfer (if any) in accordance with approved design document;
d) EPC contract: Engineering, procurement of materials and equipment, construction; training and instructions on operation, maintenance, repair work; technology transfer; on-load/off-load trial operation; other works in accordance with approved design document;
dd) Turnkey contract: Establishment of investment project; engineering, procurement of materials and construction; training and instructions on operation, maintenance, repair work; technology transfer; on-load/off-load trial operation; handover of the works to the employer for operation; other works in accordance with approved project;
2. Revision of quantity of work in the contract is prescribed in Article 37 hereof;
Thus, for EPC contracts, the content and quantity of work include:
(i) Engineering, procurement of materials and equipment, construction;
(ii) Training and instructions on operation, maintenance, and repair work;
(iii) Technology transfer;
(iv) On-load/off-load trial operation;
(v) Other works in accordance with the approved design document.
LawNet
