Vietnam: What are the methods for determining adjusted estimates in investment projects on application of information technology?
According to Appendix 6 issued together with Circular 04/2020/TT-BTTTT (effective from April 9, 2020), the methods for determining adjusted estimates in investment projects on the application of information technology in Vietnam are specified as follows:
The adjusted estimates apply in cases of detailed design adjustments as prescribed. For contracts that have been signed, the determination of adjusted estimates only applies to arising works that must be estimated according to the regulations on contract management and must be consistent with the contents agreed upon in the contract.
Depending on the specific conditions of each project, if it is deemed that determining the adjusted estimates following the guidelines in sections 1, 2, and 3 of this Appendix is complicated, the Investor may consider preparing adjusted estimates according to the guidelines in Appendix 2 of this Circular.
The adjusted estimate (G^DC^) is determined by the approved estimate (G^PD^) plus (or minus) the increased (or decreased) value (GPDC). The adjusted estimate (G^DC^) is determined by the following formula:
G^DC^ = G^PD^ ± GPDC (6.1)
The adjusted estimates are determined by two factors: adjusted volume (increase, decrease, arising) and price fluctuations.
GPDC = GPDCm + GPDCi (6.2)
Where:
- GPDCm: Adjusted estimate due to volume change factor;
- G^BS^i: Adjusted estimate due to price fluctuation factor.
1. Adjusted estimate part due to volume change factor
1.1. Adjusted construction cost due to volume change (GPDC x Lm) is determined by the following formula:
Where:
- Qi: changed construction work volume (increase, decrease, arising);
- Di: corresponding construction price for the changed construction volume at the adjustment time,
1.2. Adjusted equipment cost due to volume change factor (GPDCTBm) is determined by the following formula:
Where:
- Qj: changed equipment type volume (increase, decrease, arising);
- Dj: corresponding equipment price for the changed equipment volume at the adjustment time.
2. Adjusted estimate part due to price fluctuation factor
2.1. Determine the adjusted construction cost (GPDCXL)
2.1.1. Determine adjusted material cost (VLĐC)
The adjusted material cost (VLĐC) is determined by the following formula:
Where
+ Qj: is the work volume of work j;
- : is the adjusted material price for work j.
The adjusted material price of work j is determined by the following formula:
- Di: material consumption of material i (i=1÷n) calculated for one unit of work volume in the economic-technical norms;
- 
: price difference value of one unit of material i at the adjustment time compared to the material price in the approved estimate or in the winning bid estimate not yet signed in the contract;
Material prices at the adjustment time are determined in accordance with technical standards, types, and material quality as required for the project and calculated to the site. The price of one material unit is determined based on selecting the appropriate price level among the price quotations from the manufacturer or material supplier or the price of the material type with similar standards and quality that are being used in another project and calculated to the site.
2.1.2. Determine the adjusted labor cost (NCĐC)
The adjusted labor cost (NCĐC) is determined by the following formula:
Where
+ Qj: is the work volume of work j;
+ 
: is the adjusted labor price for work j.
The adjusted labor price for work j is determined by the following formula:
DG^NCDC^ = B x gCLNC (6.8)
- B: labor consumption calculated by direct labor days based on the average rank for one unit of work volume in the estimating norms;
- gCLNC: price difference value of the labor work i at the adjustment time compared to the labor price in the approved estimate or in the winning bid estimate not yet signed in the contract (i=1÷n);
2.1.3. Determine the adjusted construction machinery cost (MTCĐC)
The adjusted construction machinery cost (MTCĐC) is determined by the following formula:
Where
+ Qj: is the work volume of work j;
+ ĐGMTCĐC: is the adjusted construction machinery price for work j.
The adjusted material price for work j is determined by the following formula:
- Mi: main construction machinery operation hours of machine i (i=1÷n) calculated for one unit of work volume in the economic-technical norms;
- Gi^MTCDC^: price difference value of one unit of construction machinery i at the adjustment time compared to the construction machinery price in the approved estimate or in the winning bid estimate not yet signed in the contract;
Construction machinery costs at the adjustment time are determined according to current regulations.
Construction cost supplements are consolidated as follows:
TABLE 6.1: ADJUSTED CONSTRUCTION COST ESTIMATION
| No. | COST ITEMS | CALCULATION METHOD | NOTATI ON |
|---|---|---|---|
| 1 | DIRECT COSTS | ||
| 1 | Adjusted material costs | VLĐC | |
| 2 | Adjusted labor costs | NCĐC | |
| 3 | Adjusted construction machinery costs | MTCĐC | |
| Direct cost | VLĐC+NCĐC+MTCĐC | T | |
| II | COMMON COSTS | NCĐC x ratio | C |
| III | TAXABLE INCOME BEFORE TAX | (T+C) x ratio | TL |
| Pre-tax construction costs | (T+C+TL) | GXLDCTT | |
| IV | VALUE ADDED TAX | GXLDCTT x VAT-XL | VAT |
| Post-tax construction costs | GXLDCTT + VAT | GPDCXL |
2.2. Determine the adjusted equipment cost (GPDCTBi)
The adjusted equipment cost is determined by the sum of the adjusted procurement costs 
,. Installation costs; software installation; inspection, calibration of equipment, and software adjustment and other adjustment costs.
2.2.1. Adjusted procurement cost (GPDCTBm)
Where:
- Qj: equipment volume;
- Dj: price difference value of equipment at the adjustment time compared to the equipment price in the approved estimate or in the winning bid estimate not yet signed in the contract.
2.2.2. Installation costs; software installation; inspection, calibration of equipment, and software adjustment are determined as adjusted construction costs.
3. Determine the adjusted project management cost, adjusted consulting cost, and adjusted other costs (applicable in cases of volume change)
The adjusted project management cost, the adjusted consulting cost, and other adjusted costs (applicable in cases of volume change) are determined as guided in Appendix 2 issued together with this Circular. In which, the volume (construction cost, equipment cost) needed for calculation determination is the volume after adjustment.
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