Method for determination of construction costs in Vietnam as of February 15, 2024

Method for determination of construction costs in Vietnam as of February 15, 2024 (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 Circular 11/2021/TT-BXD guiding the content of determining and managing construction investment costs.

Method for determination of construction costs in Vietnam as of February 15, 2024

From February 15, 2024, construction costs will be determined as follows:

(1) 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 (amended in Circular 11/2021/TT-BXD).

(2) 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 of Circular 11/2021/TT-BXD (amended in Circular 11/2021/TT-BXD), 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 of Article 9 of Circular 11/2021/TT-BXD (amended in Circular 11/2021/TT-BXD).

(3) Costs of building materials:

- Costs of building materials announced by competent regulatory authorities under clause 3 Article 8 herein 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 (amended in 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 (amended in 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 (amended in Circular 11/2021/TT-BXD).

(4) Unit labor costs

- Unit costs of building labor announced by competent regulatory authorities under clause 4 Article 8 herein serve as a basis for determining construction costs.

- If any unit cost of building labor announced by competent regulatory authorities is inappropriate to particularities of the construction job, work or project, the investor must conduct a survey to determine the unit cost of building labor according to the method prescribed in the Circular providing instructions about methods for determination of economic-technical indicators and construction quantity takeoff before making their decision to apply such unit cost when determining construction costs.

While determining unit costs of building labor, provincial Departments of Construction shall follow instructions about accuracy and relevance of bases and methods for determining unit costs of building labor upon the investor's request.

- Investors shall send dossiers on results of determination of unit costs of building labor under point b of this clause to provincial Departments of Construction for their monitoring and management; these dossiers should describe bases, methods and results of determination of unit costs of building labor, forms (if any) according to the stipulated method; on an annual basis, upon receipt of these dossiers, provincial Departments of Construction shall compile consolidated reports for submission to the Ministry of Construction of Vietnam.

(5) Per-shift costs of building machines and equipment:

- Per-shift costs of building machines and equipment announced by competent regulatory authorities under clause 5 Article 8 of Circular 11/2021/TT-BXD (amended in Circular 11/2021/TT-BXD) serve as a basis for determining construction costs.

- In case where per-shift costs of building machines and equipment have not yet been announced by competent regulatory authorities, or have been announced but inappropriate to their uses and conditions for implementation of a construction work or project, the investor shall conduct a survey for determination of per-shift costs of building machines and equipment according to the method prescribed in the Circular providing methods for determination of economic-technical indicators and construction quantity takeoff before making their decision to such unit costs when determining construction costs.

While determining per-shift costs of building machines and equipment, provincial Departments of Construction shall follow instructions about accuracy and relevance of bases and methods for determining per-shift costs of building machines and equipment upon the investor's request.

- Investors shall send dossiers on results of determination of per-shift costs of building machines and equipment under point b of this clause to provincial Departments of Construction for their monitoring and management; these dossiers should describe bases, methods and results of determination of per-shift costs of building machines and equipment, forms (if any) according to the stipulated method; on an annual basis, upon receipt of these dossiers, provincial Departments of Construction shall compile consolidated reports for submission to the Ministry of Construction of Vietnam.

(6) 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.

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