Vietnam's new policy on construction takes effect from October 15, 2021

New policy on construction takes effect from October 15, 2021 (Artwork)

1. Guidance on occupational safety and health costs and construction safety assessment costs in Vietnam

These are new regulations in Circular 10/2021/TT-BXD of Vietnam effective from October 15, 2021. As follows:

Occupational safety and health costs and expenses

According to Article 15 of Circular 10/2021/TT-BXD stipulating the costs of ensuring occupational safety and health in the construction of works include:

- Costs incurring from formulating and implementing safety measures;

- Costs incurred from occupational safety and health training activities; costs incurred from technical inspection of occupational safety for machinery and equipment; costs incurred from activities of communication and dissemination of information and public awareness about occupational safety and health

- Costs of provision of tools and personal protective equipment for employees

- Costs of fire and explosion prevention and control activities;

- Costs of prevention and control of dangerous and harmful factors and improvement of working conditions; costs of assessment of occupational safety risks.

These expenses are an content of indirect costs in the construction costs of the work construction estimate, determined according to the guidance in the Circular detailing on a number of regulations on the determination and management of construction investment costs.

 Construction safety assessment costs

According to Article 18 of Circular 10/2021 of Vietnam, the cost of construction safety assessment is a component of the cost of consulting services for construction maintenance, including:

- Costs incurred from conducting surveys and making records of the current state of the construction project (if any).

- Costs of construction safety assessment activities. 

- Costs incurred from hiring an organization to review the construction safety assessment plan, costs incurred from hiring a supervision consultant organization to perform the construction safety assessment (if any).

- Other associated costs.

2. General cost norms based on direct costs from October 15, 2021

According to Circular 11/2021/TT-BXD of Vietnam, general costs under direct costs are determined by the norm of percentage (%) multiplied by direct costs in the construction estimate. The norm of percentage (%) of general costs determined according to pre-tax construction costs in the total investment of the approved project is guided in the following table:

Unit: %

Note:

- In case a construction investment project has many types of works, the percentage (%) of general costs in the construction estimate is determined according to the type of work corresponding to the pre-tax construction cost in the total investment of the approved project.

- For projects requiring only economic - technical reports, the norm of the ratio of general costs to construction costs is determined according to the provisions in column [3] of the table above corresponding to the type of work.

- In case the work construction contractor has to organize the exploitation and production of all kinds of earth, stone, sand and gravel materials to serve the construction of the work, the general cost in the estimate for determining the material price shall be equal to the rate of 2.5% on labour cost and construction machine cost.

3. Increase the norm of project management costs from October 15, 2021

According to Circular 12/2021/TT-BXD of Vietnam, from October 15, 2021, the norm of project management costs has increased compared to Circular 16/2019/TT-BXD, such as:

- For civil works ≤ 10 billion: the norm of project management cost is 3,446% (currently, Circular 16/2019 stipulates 3,282%).

- For industrial works ≤ 10 billion VND: the norm of project management cost is 3.557% (currently, Circular 16/2019 stipulates 3,453%).

Similarly, the norm of project management costs of other works also increased compared to the norm specified in Circular 16/2019.

Refer to the detailed Project management cost norms applied from October 15, 2021 in the table below:

Note:

- Project management costs determined according to the norms in the above table, excluding contingency costs; expenses for the investor to directly perform the appraisal (without hiring a consulting unit to verify) of the construction design, deployment after the basic design and appraisal of the construction estimate. 

- The cost for the investor to directly appraise the above works is determined by 80% of the cost of verifying the design and construction estimate according to the guidance in Circular 12/2021 of Vietnam and added to the source of management costs. project.

- Project management expenses of aviation construction investment projects are determined under cost norms of civil works.

4. Average construction labor cost frame from October 15, 2021

According to Circular 13/2021/TT-BXD of Vietnam, the average unit cost of construction labor from October 15, 2021 is regulated as follows:

Unit: VND/day

Note:

- The average construction labor unit price announced in the above table is announced for 04 regions according to Vietnam's regulations on regional minimum wages.

- For remote and isolated areas (sparsely populated areas, located deep in forests, mountains or flooded areas, far from economic and cultural centres, inconvenient traffic, difficult to travel, economy is often backward and underdeveloped) and islands, the average unit labor price bracket is adjusted with a coefficient of no more than 1.2 compared to the above average unit price bracket.

Bao Ngoc

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