What are principles for review of investment expenses of completed investments in public investment-funded projects in Vietnam?
What are principles for review of investment expenses of completed investments in public investment-funded projects in Vietnam? What is review of construction expenses of completed investments in public investment-funded projects in Vietnam?
Please advise. Thankyou.
1. What are principles for review of investment expenses of completed investments in public investment-funded projects in Vietnam?
In Clause 1, Article 40 of Decree 99/2021/ND-CP stipulates as follows:
1. Principles:
a) Review the compliance with regulations on contracts and decisions on approval of contractor selection results of competent authorities; types of contracts (irrespective of contractor selection forms). Check data on expenses and items that investors integrate into the final accounts. Where necessary, agencies in charge of reviewing the final accounts shall check as-built dossiers in order to calculate successfully-tested completed quantities in accordance with regulations.
b) For expenses for construction of temporary or auxiliary facilities needed for project development activities, and expenses for construction of temporary housing and administrative offices on site of which items have separate designs and cost estimates: The review process is the same as the process for review of independent construction bids.
c) For expenses for construction of temporary or auxiliary facilities needed for project development activities, and expenses for construction of temporary housing and administrative offices on site of which the percent ratio (%) to total expenses for implementation of the main construction bid (without separate designs or cost estimates) is calculated: Review the application of the percent ratio (%) according to the results of review of the main construction bid.
c) For expenses for construction of temporary or auxiliary facilities needed for project development activities, and expenses for construction of temporary housing and administrative offices on site which is calculated on the lump-sum basis, the review thereof shall be the same as that of the construction bid carried out in the form of turnkey contracts.
2. What is review of construction expenses of completed investments in public investment-funded projects in Vietnam?
According to Clause 3, Article 40 of Decree 99/2021/ND-CP stipulates as follows:
3. Review of construction expenses:
a) For the contracts that the investors execute by themselves:
Where investors sign contracts with dependent accounting units for execution of these bids, the review of these bids shall be based on the contractual price form and carried out under regulations laid down in points b, c, d, dd and e of this clause.
Where the investor signs an agreement to assign tasks to a unit affiliated to the investor for execution of the bid, the review shall be carried out as follows:
- Compare items and quantities shown in the calculation chart of amounts to be settled upon the investor’s request with those shown in the report on acceptance testing of quantities in order to determine the successfully-tested completed quantities in accordance with law on construction.
- Check the consistency between the unit prices used in the calculation chart of amounts to be settled upon the investor’s request and those used in the approved final accounts.
- The amount to be settled shall be calculated by multiplying the successfully-tested completed quantities as prescribed by (x) the reviewed unit prices.
b) For the turnkey contracts:
Compare the items and quantities of work performed in the calculation chart of amounts to be settled upon request of the investor and the contractor (hereinafter referred to as A – B final accounting) with those shown in the report on acceptance testing of completed quantities according to contractual requirements in order to determine the successfully-tested completed quantities under regulations in force.
Compare the unit prices shown in the calculation chart of amounts eligible for A-B final accounting with those shown in the calculation chart of contractual value. Where the contractor fully conform to requirements, perform jobs according to the completed quantities and unit prices specified in the contract or the calculation chart of contractual value, the amount eligible for final accounting is exactly the price of the entire turnkey contract; there is no need to re-compute the detailed quantities and unit prices already approved by competent authorities according to the contract awarding decision.
c) For the fixed-price contracts:
- Compare the items and quantities of work performed in the calculation chart of amounts requested for A-B final accounting with those shown in the report on acceptance testing of completed quantities according to contractual requirements in order to determine the successfully-tested completed quantities under regulations in force.
- Compare the unit prices shown in the calculation chart of amounts requested for A-B final accounting with those shown in the calculation chart of contractual value and documents attached to the contract.
- The amount eligible for final accounting is calculated by multiplying the completed quantities successfully tested in accordance with regulations by (x) the fixed unit price specified in the contract.
d) For adjustable-price contracts:
- Based on the contract, clarify the scope and forms of adjustment to the contract.
- The amount eligible for final accounting is calculated by multiplying the completed quantities successfully tested in accordance with regulations by (x) the unit price used in the final accounting process.
Where there is any adjustment to the quantities, it is mandatory to consult the report on acceptance testing of completed quantities to determine the completed quantities successful tested in accordance with regulations.
In case of adjustment to the unit price, it is obligatory to conform to the principles of adjustment to the unit price that are specified in the contract in order to determine the unit price used for final accounting.
Where there is any adjustment to regulatory policies, it is mandatory to consult contractual terms and conditions and policies applied in line with the contract execution period (already specified in the contract) to determine the adjusted value. There is no need to make any adjustment when the execution period is extended to be greater than the period agreed upon in the signed contract through the contractor's fault.
dd) For the mixed price-based contracts:
In this type of contract, it is mandatory to clearly point out the scope of activities involved in the work, item of work, or list out work corresponding to specific types of contracts like turnkey, fixed-price or adjustable price-based contracts. The partial review of the contract or the review corresponding to specific types of contract shall be subject to point b, c or d of this clause, respectively.
e) Where expenses are further incurred, in order to carry out the review, it is mandatory to consult regulations regarding adjustments to specific types of contract and regulations of relevant law.
Best Regards!
