Amendments to methods of determination of construction costs of PPP projects as of February 15, 2020

Amendments to methods of determination of construction costs of PPP projects as of February 15, 2020 (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

On December 29, 2023, the Minister of Construction issued Circular 14/2023/TT-BXD amending a number of articles of Circular 11/2021/TT-BXD providing guidance on determination and management of construction investment costs in Vietnam.

Amendments to methods of determination of construction costs of PPP projects as of February 15, 2020

According to Clause 2 of Article 1 of Circular 14/2023/TT-BXD amending Article 9 of Circular 11/2021/TT-BXD amending regulations on determination of construction costs of projects utilizing public investment funding, non-public investment state capital, investment projects in public-private partnerships (hereinafter referred to as “PPP projects”) as of February 15, 2024:

Construction costs include detailed unit costs and total construction costs. Construction costs are determined under clause 2s and 3 Article 24 of the Decree 10/2021/ND-CP and the detailed instructions given in Appendix IV  to Circular 11/2021/TT-BXD.

Investors may use construction costs prescribed in clauses 1 and 2 Article 26 of the Decree 10/2021/ND-CP and clauses 1 and 2 Article 8 herein, as a basis to determine and manage construction investment costs. In case where construction costs are determined based on detailed unit costs or total construction costs on the basis of construction norms, costs of building materials, labor unit costs, per-shift costs of machines and equipment may be determined under clauses 3, 4 and 5 in Article 9 of Circular 11/2021/TT-BXD.

Costs of building materials:

- Costs of building materials announced by competent regulatory authorities under clause 3 Article 8 of Circular 11/2021/TT-BXD  serve as a basis for determining construction costs.

- With respect to building materials of which costs have not yet been announced or are already available but their categories are not appropriate to technical standards and regulations, quality requirements, supply capacity and other specific conditions laid down for each project or construction work, costs of these building materials used for determining construction costs shall be collected, aggregated, analyzed, assessed and selected by consulting sources of information on costs of building materials under the instructions given in point b section 1.2.1.1 Appendix IV to Circular 11/2021/TT-BXD. Selection of costs of building materials must ensure objectivity, transparency and effectiveness of the project.

- When preparing a feasibility study report, engineering design and determining construction investment costs for a construction work or project, building materials meeting less mineral consumption, energy saving and eco-friendly requirements are preferred on condition that investment effectiveness and conformance to the project’s requirements are ensured.

- If any project needs particular types of building materials, those not common on the market or imported ones, explanatory notes to the pre-feasibility study report, the feasibility study report, the economic-technical report and the construction design should be given in detail.

- Assessment criteria employed to selection of costs of building materials used for determining construction costs shall conform to the instructions given in point a Section 1.2.1.1 Appendix IV to Circular 11/2021/TT-BXD.

- Methods for determining costs of building materials on site shall conform to the instructions given in section 1.2.1.2 Appendix IV to Circular 11/2021/TT-BXD.

Note: With respect to any construction project located in at least 02 provincial-level administrative units, the investor shall take charge of determining construction costs under the provisions of clause 3 Article 26 of the Decree 10/2021/ND-CP to facilitate determination of costs, ensure anti-wastefulness and effectiveness for the project as well as adaptation to the capability of supplying resources according to the project implementation plan.

More details can be found in Circular 14/2023/TT-BXD taking effect on February 15, 2024.

Nguyen Ngoc Que Anh

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