Vietnam: Principles of payment for completed volumes of work under the construction contracts

Vietnam: Principles of payment for completed volumes of work under the construction contracts (Illustrative image)

Under Circular 85/2014/TT-BTC on the payment for completed volumes (including investment projects in technical infrastructure serving forest protection and development, and forestry operation projects) for work under the construction contracts, the payment shall be made as per the contract: according to the contract price and conditions specified in the contract. The number of payments, payment stages, payment time, and payment conditions must be specified in the contract. Contract payment shall be made according to the following principles:

- For lump-sum contracts: Payment is made on the basis of the percentage of the contract price or the price of the construction work, category of work, and volume of work corresponding to the payment stages specified in the contract.

- For fixed unit price contracts: Payment is made on the basis of the actual volume completed (including approved increased or decreased volume, if any) verified and the unit price in the contract.

- For adjustable unit price contracts: Payment is made on the basis of the actual volume completed (including approved increased or decreased volume, if any) verified and the adjusted unit price due to price escalation under the agreements in the contract.

- For time-based contracts:

+ Expert fees are determined based on the salary for experts and related costs agreed by both parties in the contract multiplied by the actual verified working time (monthly, weekly, daily, hourly).

+ Other expenses beyond the remuneration for experts are paid according to the method stipulated in the contract.

- For contracts that combine different contract types: Payment is made corresponding to the aforementioned types of contracts.

- For additional volumes of work outside the contract, the payment for these additional volumes (outside the contract) without unit prices in the contract, shall be made according to the supplemental contractual agreements made before execution and in line with relevant legal regulations. In cases of additional work volumes, both the investor and the contractor must sign a supplemental appendix to the contract under the following principles:

+ If the additional work volume exceeds 20% of the corresponding work volume stated in the contract, or the additional volume has no unit price in the contract, payment is made on the basis of a new unit price mutually agreed upon according to the principles in the contract regarding unit prices for additional volumes;

+ If the additional volume is equal to or less than 20% of the corresponding work volume stated in the contract, the unit price in the contract, including any adjusted unit price as agreed in the contract (if any), is applied for payment;

+ For fixed unit price contracts and time-based contracts, when fuel, materials, and equipment prices implemented under State stabilization measures fluctuate abnormally or when the State changes tax and salary policies directly affecting the contract price, payment is made on the basis of adjusted unit prices if approved by the investment decision maker and agreed upon in the contract;

+ For adjustable unit price contracts, unit prices in the contract are adjusted for work volumes that at the time of contract signing, both the tendering party and the contracting party agreed would be subject to price adjustments due to price escalation after a certain period from the contract's effective date.

+ For lump-sum contracts and percentage-based contracts, in case of reasonable additional work volumes outside the signed contract scope (for construction contracts, these are volumes outside the scope required by the design; for consultancy contracts, these are volumes outside the consultancy tasks to be performed). In such cases, where volume adjustments do not change the investment goal or exceed the approved total investment, both the investor and the contractor shall calculate, agree upon, and sign a supplemental appendix to the contract; if the adjusted volumes result in exceeding the approved total investment, the investment decision maker's approval is required; if no consensus is reached, these additional work volumes will form a new package, and the selection of a contractor for this package will follow prevailing regulations;

Details can be found in Circular 85/2014/TT-BTC effective from August 15, 2014.

Ty Na

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