Vietnam: What are the latest instructions of the Ministry of Construction for payment and temporary payment of construction contracts?
What does the application for temporarily paying construction contracts in Vietnam include?
Pursuant to Clause 5 Article 3 of Circular 02/2023/TT-BXD, the application for temporarily paying construction contracts in Vietnam includes:
Payment, temporary payment, and the application for the temporary payment of construction contracts
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5. An application for temporary payment includes: acceptance record of completed work or confirmation record of completed work (if not yet eligible for acceptance), a spreadsheet of payment value incurred (increase or decrease); a spreadsheet of provisional payment value and temporary payment offer
Accordingly, the application for temporarily paying construction contracts in Vietnam includes:
- Acceptance record of completed work or confirmation record of completed work (if not yet eligible for acceptance);
- Spreadsheet of payment value incurred (increase or decrease);
- Spreadsheet of provisional payment value and temporary payment offer.
What are the regulations on the payment of construction contracts in Vietnam?
Pursuant to Article 3 of Circular 02/2023/TT-BXD on the payment of construction contracts in Vietnam as follows:
Payment, temporary payment, and the application for the temporary payment of construction contracts
1. The payment of construction contracts shall comply with the provisions of Article 19 of Decree No. 37/2015/ND-CP.
2. In case of production of components and semi-finished products of great value, construction materials must be stocked according to the season to be advanced to comply with the provisions of Clause 7 Article 18 of the Decree No. 37/2015/ND-CP, the advance dossier must list the list, unit price and total value of each type of material, components, semi-finished products. When making a payment, it is necessary to deduct the value of the completed work to be accepted in proportion to the value that has been advanced according to the content of the contract.
3. The temporary payment as prescribed in Clause 4 Article 19 of Decree No. 37/2015/ND-CP is based on the specific conditions of each temporary payment to decide the temporary payment value and security interests for temporary payments, ensuring efficiency and avoiding capital loss. Some specific cases are as follows:
a) For contracts under adjusted unit prices, when there is no data on the adjustment of unit price and the contract price, the unit price in the contract shall be used to make temporary payment.
b) For products, construction works, and works that are under construction or have not been completed in accordance with the requirements of the contract, the temporary payment shall be made based on the level of completion for each specific case and details of the unit price of such products, construction work and work in the contract.
4. For products, construction works, and works that have not been completed due to reasons, including the contract being terminated or one of the contracting parties not accepting the product, the responsibilities, and obligations of each relevant entity must be clearly defined before making payment.
5. An application for temporary payment includes an acceptance record of completed work or confirmation record of completed work (if not yet eligible for acceptance), a spreadsheet of payment value incurred (increase or decrease); a spreadsheet of provisional payment value and temporary payment offer
Thus, the payment and temporary payment of construction contracts from April 20, 2023 is made as follows:
- The payment of construction contracts shall comply with the provisions of Article 19 of Decree No. 37/2015/ND-CP.
- In case of production of components and semi-finished products of great value, construction materials must be stocked according to the season to be advanced to comply with the provisions of Clause 7 Article 18 of the Decree No. 37/2015/ND-CP, the advance dossier must list the list, unit price and total value of each type of material, components, semi-finished products.
When making a payment, it is necessary to deduct the value of the completed work to be accepted in proportion to the value that has been advanced according to the content of the contract.
- The temporary payment as prescribed in Clause 4 Article 19 of Decree No. 37/2015/ND-CP is based on the specific conditions of each temporary payment to decide the temporary payment value and security interests for temporary payments, ensuring efficiency and avoiding capital loss.
Some specific cases are as follows:
+ For contracts under adjusted unit prices, when there is no data on the adjustment of unit price and the contract price, the unit price in the contract shall be used to make a temporary payment.
+ For products, construction works, and works that are under construction or have not been completed in accordance with the requirements of the contract, the temporary payment shall be made based on the level of completion for each specific case and details of the unit price of such products, construction work and work in the contract.
- For products, construction works, and works that have not been completed due to reasons, including the contract being terminated or one of the contracting parties not accepting the product, the responsibilities, and obligations of each relevant entity must be clearly defined before making payment.
What are the principles of performance of construction contracts in Vietnam?
Pursuant to Article 5 of Decree 37/2015/ND-CP, when performing construction contracts, contracting parties must ensure the principles of performance of construction contracts as prescribed in Clause 3, Article 138 of the 2014 Law on Construction as follows:
- The contractual parties shall properly implement their commitments in the contract regarding the scope of work, quality requirements, quantity, category, schedule, methods, and other agreements;
- Honesty, cooperation, and lawfulness;
- No infringement upon the interests of the State and community and lawful interests of other organizations and individuals.
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