How is the Construction Price Index Determined for Localities?

The determination of the construction price index for localities is stipulated in Appendix II of Circular 13/2021/TT-BXD. To be specific:

- The selection of the quantity and list of types of buildings according to the types of buildings to be announced is based on management requirements, regulations on project management, construction investment cost management, and the characteristics of the types of buildings in the area. The Provincial People's Committee, based on the List of types of buildings in Section IV of this Appendix, selects and determines the list of types of buildings for which the construction price index is announced for the locality.

- When determining the construction price index for a type of building, representative buildings for that type must be selected. The number of representative buildings for the type is determined depending on the specific conditions of each locality but shall not be less than 3 buildings. A representative building is an extensively invested building within the type of buildings constructed in the locality.

- Based on the characteristics of the local construction market, the Provincial People's Committee decides whether to determine the common construction price index for the entire province/city or to determine the construction price index for each area within the province/city and then aggregate them to obtain the common construction price index.

The division of areas to calculate the construction price index is decided by the provinces and cities based on administrative boundaries and the characteristics of the local construction market or according to the zoning regulations of minimum regional wages as prescribed by the Government of Vietnam.

In the event of area division for calculation, the local construction price index is calculated using the weighted average method between the construction price indexes of each area in the locality with the corresponding weights and is performed according to the following formula:

	(2.15)

In which:

: The proportion of investment capital value in construction of area t in the total investment capital value in construction of the locality in the year before the calculation year;

: The construction price index of area t;

n : The number of areas within the locality;

The determination of the regional construction price index is performed as in clause 5 of Section I of this Appendix.

Sincerely.