What is Investment Capital Cost?

According to Decision 1161/QD-BXD, investment capital rate (or construction project investment capital rate) is understood as the necessary costs to invest in building a new project calculated per unit of area, capacity, or service capability according to the project's design. This serves as a basis for determining the total investment level of a project, preparing and managing costs for the construction project at the project preparation stage, and may also be used in determining the value of land use rights, the actual value of assets as basic construction products when determining enterprise value for equitization in accordance with the guidance of competent management authorities.

The investment capital rate includes costs such as construction, equipment, project investment management, investment consultancy, and other costs, and includes value-added tax for these costs.

Additionally, the costs in the investment capital rate do not include expenses per the specific requirements of the project/construction such as:

- Compensation, support, and resettlement costs including: land compensation, housing, works on land, assets attached to land, on water, and other compensable costs as prescribed; support when the state recovers land; resettlement costs; costs for organizing compensation, support, and resettlement; land-use costs during construction; payments for technical infrastructure already constructed and other related costs;- Loan interest during the investment construction period (for projects using borrowed capital);- Initial working capital (for investment projects aimed at production or business purposes);- Contingency costs in the total investment amount (contingency for arising works and contingency for price escalation during the project implementation period);- Other costs include: environmental impact assessment and handling the project's impacts on the environment, international quality inspection, deformation monitoring of the project; quality inspection costs; special reinforcement for project foundations; costs for hiring foreign consultants.

The use of the investment capital rate is guided by Decision 1161 as follows:

Firstly, when using the announced investment capital rate, it is necessary to base on the type and level of the project, the timing of determining the total investment, the area of investment, and other costs suitable to the specific requirements of the project to supplement, adjust, convert accordingly. Specifically:

- Supplement necessary costs per the specific requirements of the project/construction.- Adjust and convert the investment capital rate in cases related to production capacity scale; differences in production capacity unit measurements; investment capital rate criteria to determine the total investment for expansion works; location-specific factors, geological foundation of the construction, etc.- Adjust and convert the published investment capital rate to the calculation time.

Secondly, when determining the investment capital rate criteria, it is based on the methods of determining construction project investment capital rate and the comprehensive structural component construction cost.

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