How to pay for completed quantities using public investment capital in Vietnam?

1. How to pay for completed quantities using public investment capital in Vietnam?

According to Article 11 of Decree 99/2021/ND-CP on payment of costs of completed quantities, as follows:

1. For the jobs carried out under contracts (e.g. construction contracts, contracts for execution of projects without building part or component):

a) Payment for completed quantities made according to contracts must rely on the contract type, value and contractual terms and conditions. The number of payment intervals, payment phases, and points of time, documents and conditions must be clearly regulated in each contract. Investors shall be responsible for complying with requirements for application of contract prices under applicable regulatory provisions.

b) For turnkey contracts: Paying for completed quantities at the percentage rate of contract value or costs of construction works, items or quantities of work by respective stages of payment that contracting parties agree on in contracts, and without being subject to the requirement for confirming completed quantities in detail.

c) For fixed-price contracts: Paying for completed quantities according to the actually completed quantities (even including any increase or decrease accepted by competent authorities) successfully undergoing acceptance testing in each payment instalment and agreed-upon unit prices.

d) For adjustable-price contracts: Paying for completed quantities according to the actually completed quantities (even including any increase or decrease that occurs) successfully undergoing acceptance testing in each payment instalment and agreed-upon unit prices or unit prices adjusted according to agreements reached in contracts.

dd) For time-based contracts:

- Expert hiring costs are calculated by multiplying professionals’ pay rates and other associated expenses that involved parties agree on in contracts by the actually tested on-duty period (in months, weeks, days or hours).

- Expenses other than remunerations paid to professionals are paid according to the agreed-upon methods.

e) For mixed price-based contracts: Paying for completed quantities depending on types of contract referred to in point b, c, d and dd of clause 1 of this Article.

g) For quantities of work coming into existence (outside of contracts) without any contractual unit price, paying for completed quantities by agreement on supplements to contracts which is reached by contracting parties prior to contract commencement, and aligned with current regulations of relevant legislation.

h) Any adjustments in and/or to contracts shall be subject to regulations on contracts currently in force.

i) Investors entrust project management task to specialized or regional project management authorities to ensure that payment for completed quantities is made according to regulations laid down in entrustment contracts. Scope of activities involved in an entrustment contract must be stated in the contract.

Where the investor entrusts the specialized or regional project management authority with all of the tasks of project management (including withdrawing the budget and making transactions with the regulatory payment body), in addition to the scope of activities involved in entrustment, the investor shall be obliged to assign the account holder’s rights to the assignee and such assignment must be clearly stated in the contract.

k) Where it is mandatory to temporarily suspend the contractor from receiving a specific amount of money or a particular percentage of payment compared to the completed quantity for the purpose of final accounting for investments in the completed project, the investor must seek to reach agreement with the contractor and then such agreement must be clarified in the contract. The amount kept in the temporary custody as stated above shall be transferred to the deposit account that the investor opens at the State Treasury for management and settlement purposes in accordance with regulations.

2. For jobs carried out without being subject to any binding contract, payment shall be made according to the chart showing completed quantities. Investors shall be responsible for the accuracy and legitimacy of the completed quantities and amounts involved in payment requests according to the approved estimate of costs of jobs performed relevant to specific types of work.

3. For the completed mandates or projects, if the amounts of funding that is equal to the amounts stated in the approved final accounts have not yet been disbursed in full for them after obtaining consent to the final account for investments in these mandates or projects, regulatory payment bodies shall consult the decision on approval of the cost estimate and budgeted investments assigned in the year of a project to control disbursements and disburse funds to the project.

2. What are time limits for advance disbursement and payment of annual funds and time limits for control and payment of funds of regulatory payment bodies in Vietnam?

Article 13 of Decree 99/2021/ND-CP stipulates time limits for advance disbursement and payment of annual funds and time limits for control and payment of funds of regulatory payment bodies in Vietnam, according to which:

1. Regarding time limits for advance disbursement:

The annual budget for investment in a project may be disbursed in advance till end of December 31 in the planning year (except in case of advance funding for compensation, support and residential resettlement, the advance disbursement is made till end of January 31 in the year following the planning year).

2. Regarding time limits for payment for completed quantities:

The annual budget for a project shall be paid for completed quantities successfully tested till end of December 31 in the planning year by end of January 31 in the year following the planning year (including paying for recovery of the advance funding).

3. In case of extension of the time limit for disbursement of funds as per the Law on State Budget, the Law on Public Investment and other written documents providing instructions about implementation of laws currently in force of the Government, the time limit for disbursement shall be subject to the competent authority’s decision.

4. Time limits for control and payment of funds: Within 03 working days of receipt of a full set of payment request documents from investors as provided in this Decree, based on contracts (or approved estimates of costs of jobs performed without any binding contracts) and investors’ requests, regulatory payment authorities shall carry out control and disbursement of funds for projects and recover the advance funding as per regulations. For funds disbursed in advance according to “pay first, check later” approach, the time limit for control and disbursement of these funds shall be within 01 working day of receipt of all documents required herein.

Best Regards!