Vietnam: Construction insurance must ensure investment capital for investors

According to Article 8 of the Circular No. 39/2015/TT-BNNPTNT of the Ministry of Agriculture and Rural Development of Vietnam, project owners and investors negotiate and sign contracts to comply with the provisions of Articles 19, 31, 40, 43, 47, 48, 52, 53, 55, 56, 58, 59, 60 and 62 of Decree No. 63/2014/NĐ-CP, Decree No. 37/2015/NĐ-CP dated April 22, 2015 and comply with the following provisions:

1. The project owner and investor must stipulate specific responsibilities for the contractor performing the bidding package to avoid contract disputes (legal consultants can be hired during the negotiation and signing of contracts). The specific conditions of the contract must clearly stipulate the cases to be adjusted, the method and scope of the contract price adjustment as well as how to handle the volumes arising from the contract during the execution of the contract in accordance with Vietnam’s regulations and the Sponsor's regulations, detailed regulations on compensation, rewards, penalties for quality, progress etc. contract suspension or termination to bind each party to ensure the implementation according to the requirements of progress, quality of works, payment and disbursement.

2. For construction and installation bidding packages of the type of package contracts, in the course of contract negotiation and finalization, relevant parties must review the work, technical requirements and progress according to the approved design to negotiate the specific conditions of the contract, the investor is responsible for the accuracy of the quantity, workload and value of the contract.

3. Works insurance can form a separate bidding package (for one, a group or for the entire construction and installation bidding packages of the whole project) or be combined into a construction and installation bidding package. In case of incorporation into a construction and installation bidding package, the contractor shall add insurance costs to the bid price on the basis of the insurance requirements specified by the investor for this work in the Bid Document, Request for Proposals, and be responsible for the performance of work (item) insurance until the contract contract obligations are fulfilled.

Note: Construction work insurance costs must be based on the nature, characteristics, performance time, impact level and construction conditions of each item or work to determine the appropriate deductible level, ensuring benefits and investment capital for investors when incidents occur.

View more details at the Circular No. 39/2015/TT-BNNPTNT of the Ministry of Agriculture and Rural Development of Vietnam, effective from December 10, 2015.

Le Vy

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