Will adjustments in unit price be made only to contracts based on adjusted unit prices in Vietnam?
- Will adjustments in unit price be made only to contracts based on adjusted unit prices in Vietnam?
- As for a contract based on adjusted unit prices in Vietnam, what unit price will be used for making the advance payment if the payment period begins but data on adjustments to unit prices of the contract is not provided?
- What are the responsibilities of contractors in adjusting the progress of construction contracts due to force majeure events in Vietnam?
Will adjustments in unit price be made only to contracts based on adjusted unit prices in Vietnam?
Under the provisions of Clause 1 Article 6 of Circular 02/2023/TT-BXD on adjustments to unit prices and prices of construction contracts:
Adjustments to unit prices and prices of construction contracts
1. Adjustments to unit prices of construction contracts shall comply with the regulations in Article 38 of Decree No. 37/2015/ND-CP which are amended by Clause 14 Article 1 of Decree No. 50/2021/ND-CP.
2. If adjustments to prices of construction contracts result in adjustments and additions to such contracts, appendices must be signed as the basis for adjusting prices of such contracts. Investors shall be responsible for approving or appealing to approve revised and supplementary estimates according to regulations of law on management of work construction investment expenses and construction contracts to be the basis for addition of the signed appendices to such contracts.
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And, under Clause 2, Article 38 of Decree 37/2015/ND-CP amended and supplemented in Clause 14, Article 1 of Decree 50/2021/ND-CP:
Adjustments to unit prices and prices of construction contracts
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2. The adjustment to unit prices of construction contracts is prescribed as follows:
a) Adjustments in unit price are made only to contracts based on adjusted unit prices and time-based contracts as agreed by the two parties.
b) If the actual increased or decreased volume of work exceeds 20% of the corresponding volume of work specified in the contract and results in a change of over 0.25% of the contract value and over 1% of the unit price for such work or a unit price for the volume of additional work has yet to be specified in the contract, the parties shall agree to determine a new unit price according to the principles agreed upon in the contract with respect to the unit price for such volume so as to make a payment.
If the actual increased volume of work exceeds 20% of the corresponding volume of work specified in the contract, the new unit price shall only apply to the volume of work actually performed which exceeds 120% of the volume of work specified in the contract.
If the actual decreased volume of work exceeds 20% of the corresponding volume of work specified in the contract, the new unit price shall only apply to the entire volume of work actually completed and commissioned.
c) If actual completed quantity of work increases or decreases by a maximum of 20% of the respective quantity of work set out in the contract, the unit price as established in the contract shall be applied including the unit price being adjusted according to the agreement in the contract (if any).
d) Adjustments in unit price to the quantity of work that both the employer and contractor have reached an agreement on adjustment in unit price at the date of signing the contract shall be made in accordance with Clause 3 of this Article and the Ministry of Construction’s instructions.
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According to the above provisions, adjustments in unit price are made only to contracts based on adjusted unit prices and time-based contracts as agreed by the two parties.
Thus, in addition to contracts based on adjusted unit prices, the adjustment to unit prices of construction contracts will also made to the time-based contracts as agreed by the two parties.
As for a contract based on adjusted unit prices in Vietnam, what unit price will be used for making the advance payment if the payment period begins but data on adjustments to unit prices of the contract is not provided?
Payment, advance payment, and dossiers on advance payment for construction contracts are specified in Clause 3 Article 3 of Circular 02/2023/TT-BXD as follows:
Payment, advance payment and dossiers on advance payment for construction contracts
1. The payment for a construction contract shall comply with the regulations in Article 19 of Decree No. 37/2015/ND-CP.
2. In case production of structural elements and semifinished products with great values and building materials reserved by season is eligible for advance payment as prescribed in Clause 7 Article 18 of Decree No. 37/2015/ND-CP, the application for advance payment must list names, unit prices and total values of each type of materials, structural elements and semifinished products. When payment is made, the value of completed quantity which has been inspected and accepted must be reduced by an amount corresponding to the advanced value under the contract.
3. The advance payment as prescribed in Clause 4 Article 19 of Decree No. 37/2015/ND-CP shall be based on specific conditions of each advance payment to decide the advance payment value and guarantees for advance payments, thereby ensuring the efficiency and avoiding loss of capital. Some specific cases:
a) As for a contract based on adjusted unit prices, when the payment period begins but data on adjustments to unit prices and prices of the contract is not provided, the unit prices stated in the contract shall be used for making the advance payment.
b) For products and works which are in progress or unfinished as agreed upon in the contract, the degree of completion of each specific case and detailed unit prices of such products and works specified in the contract shall be bases for making advance payment.
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Thus, according to the above provisions, as for a contract based on adjusted unit prices, when the payment period begins but data on adjustments to unit prices and prices of the contract is not provided, the unit prices stated in the contract shall be used for making the advance payment.
What are the responsibilities of contractors in adjusting the progress of construction contracts due to force majeure events in Vietnam?
According to the provisions of Clause 2, Article 5 of Circular 02/2023/TT-BXD on adjustments to the progress of construction contracts:
Adjustments to progress of construction contracts
1. Adjustments to progress of construction contracts shall comply with regulations in Article 39 of Decree No. 37/2015/ND-CP.
2. When adjustments to progress of construction contracts prescribed in Point a Clause 2 Article 39 of Decree No. 37/2015/ND-CP are made, contracting parties and contractors shall be responsible for evaluating impacts of cases of force majeure on the progress of construction contracts for determining and deciding adjustments accordingly.
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And, according to the provisions of Point a, Clause 2, Article 39 of Decree 37/2015/ND-CP:
Adjustments to progress of construction contracts
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2. The progress of construction contracts is adjusted in the following cases:
a) Under effects of earthquake, storm, floods, tsunami, conflagration, enemy-inflicted disaster or other force majeure events;
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Thus, according to the above provisions, the contractor is responsible for assessing the impact of force majeure events on the progress of construction contracts to determine and decide to adjust accordingly.
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