Tightening the Management and Utilization of Project Management Fees

Following the implementation process, aside from the accomplishments achieved, Circular 05/2014/TT-BTC dated January 06, 2014, of the Ministry of Finance stipulating the management and use of project management costs for investments using state budget funds, has revealed numerous limitations such as lax management of expenditure by PMUs; and the lack of basis for allocating project management costs to the actual volume of work performed annually...

Amending and issuing Circular 72/2017/TT-BTC to replace Circular 05/2014/TT-BTC is appropriate to meet practical needs. Circular 72/2017/TT-BTC stipulates the management and use of revenue from project management activities of investors, project management boards using state budget funds (including projects using official development assistance (ODA) and concessional loans from foreign donors balanced into the state budget).

Applicable to investors, PMUs, organizations, and individuals involved in the management, use, inspection, audit, and payment control of revenue from project management activities of investors, PMUs using state budget funds (including projects using official development assistance (ODA) and concessional loans from foreign donors balanced into the state budget).

For projects using official development assistance (ODA) and concessional loans from foreign donors, in case the regulations on the management and use of revenue by investors, PMUs in this Circular differ from the agreements between the Government of Vietnam and the donor or international treaties that Vietnam participates in, the agreements and international treaties shall prevail.

The Circular also stipulates the revenue from project management activities of investors, including revenue from project management costs calculated in the total investment value of the projects assigned for management and implemented as decided by competent authorities. This funding is determined by budgeting or applying project management cost norms as prescribed by the Ministry of Construction.

Revenue from fees deducted and retained from performing project management tasks such as: Appraising basic designs, construction designs; appraising construction estimates and other activities as per current regulations.

Revenue of specialized PMUs, regional PMUs from consulting service activities for other investors, other PMUs such as: managing projects assigned by other investors, entrusted as per the regulations in Circular 16/2016/TT-BXD dated June 30, 2016, of the Ministry of Construction guiding the implementation of some articles of Decree 59/2015/ND-CP dated June 18, 2015, of the Government of Vietnam on the forms of project investment construction management organization; contractor selection organization, construction supervision, equipment installation, design appraisal, estimate examination, and other consulting activities. The revenues shall comply with the signed contracts, not contrary to the law...

Regarding obligations to the state budget, specialized PMUs and regional PMUs with revenue from consulting services for other investors, other PMUs, and other legitimate revenues not included in the investment costs of the projects assigned for management, must register, and fully pay all types of taxes, fees, and charges as per current laws on taxes, fees, and charges.

Additionally, annually after covering expenses, paying taxes and other obligatory contributions, the surplus of revenue over regular expenses (if any), PMUs shall allocate at least 25% to form the Operational Development Fund. Concurrently, they shall allocate an income supplementation fund up to a maximum of 3 times the base salary, rank, grade, and allowance for officials and public employees as prescribed by the state....

The Circular also specifies: At the end of the plan year, within 90 days from the end of the fiscal year as per legal regulations, PMUs must prepare financial reports as per applicable accounting policies for investor units, and concurrently prepare and submit financial settlement reports to competent authorities as stipulated in Clause 1, Article 21 for approval as a basis for preparing the budget for the next year.

For project management costs by investors, PMUs not settled in previous years due to the implementation of regulations in Circular 10/2011/TT-BTC, Circular 17/2013/TT-BTC, and Circular 05/2014/TT-BTC of the Ministry of Finance replacing these circulars, there is no need to re-settle according to this Circular.

For projects that have submitted completion financial settlement reports for approval before this Circular takes effect, the project management revenue and expenditure reports shall be prepared as per Circular 05/2014/TT-BTC without recalculating project management costs according to the values stipulated in this Circular.

With many new points, experts believe that Circular 72/2017/TT-BTC of the Ministry of Finance will contribute to limiting lax expenditure management by PMUs, while tightening the management and use of revenue from project management, particularly for projects by investors using state budget funds.

Source: Xay Dung Newspaper

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE