Vietnam: Construction estimate and 03 things you should to know

Construction estimate and 03 things you should to know (Source: Internet)

1. What is construction estimates?

According to Clause 1, Article 11 of Decree 10/2021/ND-CP, construction estimates refer to all expected costs necessary and identified according to construction design implemented after fundamental design or technical drawing design in case projects only require construction investment economic-technical reports.

2. Content of construction estimate in Vietnam

Construction estimate according to Clause 2, Article 11 of Decree 10/2021/ND-CP include: construction costs, equipment costs, project management costs, construction investment consultancy costs, other costs and backup costs.

Costs above are elaborated under Points b, c, d, dd, e, and g Clause 2 Article 5 of Decree 10/2021/ND-CP, other than construction investment consultancy costs and other costs for the whole projects as follows:

- Construction costs include:

+ Construction costs for constructions and work items of projects;

+ Temporary and/or auxiliary constructions and work items serving construction progress;

+ Deconstruction cost for constructions beyond deconstruction scope serving land clearance affairs identified under compensation, assistance and relocation costs;

- Equipment costs include:

+ Cost for purchasing construction and technology equipment;

+  Administrative cost for equipment purchase (if any);

+ Cost for purchasing copyrights of software serving construction and technology equipment (if any);

+ Training and technology transfer costs (if any);

+ Costs for processing, manufacturing equipment to be processed (if any);

+ Cost for installing, experimenting, calibrating;

+ Cost for conducting test operation of equipment based on technical requirements (if any);

+ Transportation costs;

+ Insurance;

+ Tax and fees;

+ Other relevant costs;

- Project management costs refer to costs necessary to organize management of implementation and implement management affairs from project preparation, project execution to conclusion of construction, bringing project constructions into operation and settlement of construction investment capital and are elaborated under Article 30 of Decree 10/2021/ND-CP;

- Construction investment consultancy costs refer to costs necessary to perform construction investment consultancy affairs from project preparation, project execution to conclusion of construction, bringing project constructions into operation and settlement of construction investment capital and are elaborated under Article 31 of Decree 10/2021/ND-CP;

- Other costs include costs necessary to execute construction investment projects, include:

+ Costs for clearing and disarming mines, explosive ordnances;

+ Costs for moving specific construction machinery and devices to and from construction sites;

+ Costs for guaranteeing traffic safety during construction period;

+ Costs for returning technical infrastructure damaged by construction period to its original state;

+ Costs for material storage;

+ Costs for constructing sheltering structures for machine, machine foundation, electrical and compressed air supply systems, on-site water supply systems, installing and/or dismantling machines; construction insurance costs during construction period;

+ Costs for registering international standards and monitoring construction deformation processes;

+ Costs for accounting, inspection and approval of investment capital settlement;

+ Costs for examining acceptance inspection during construction period and at completion of constructions and work items performed by agencies specialized in construction or councils established by Prime Minister of Vietnam;

+ Conducting scientific and technology research, applying and utilizing new materials related to projects;

+ Initial working capital for construction investment for business purposes, loan interests during construction period;

+ Costs for conducting unloaded and loaded test operation for technology and manufacturing lines before transfer (other than salvageable product value);

+ Costs for appraising construction investment feasibility reports, construction investment economic-technical reports;

+ Resource taxes, fees and charges as per the law and other necessary costs to execute construction investment projects not specified under Points a, c, d, and dd of Article 5 of Decree 10/2021/ND-CP;

- Backup costs include costs for additional work load and inflation that occurs during project execution.

3. Revision of construction estimates in Vietnam

The revision of construction estimates according to Article 15 of Decree 10/2021/ND-CP stipulates as follows:

- Approved construction estimates shall be revised according to Clause 4 Article 135 of Law on Construction:

+ Adjusting the total construction investment amount under Clause 1, Article 61 of Law on Construction:

++ Being affected by natural disasters, environmental incidents, enemy sabotage, fires or other force majeure factors;

++ Appearance of factors likely to bring about higher efficiency for the project when the project owner has proved the financial and socio-economic efficiency brought about by the project adjustment;

++ Change of construction planning which directly affects the project;

++ When the construction price index promulgated by the Ministry of Construction of Vietnam or the provincial-level People’s Committee during the project implementation is higher than the construction price index used for calculation of inflation in the approved total investment amount of the project.

+ The design is permitted to be modified or supplemented not against the basic design or the estimated construction cost structure is permitted to be changed but must not exceed the approved total construction investment amount;

+ The adjustment of the work construction estimate must be appraised and approved according to the provisions of the law on construction.

- Construction estimates for revision includes unrevised construction estimates and revised construction estimates. Details related to revised construction estimates must be appraised according to Article 13 of Decree 10/2021/ND-CP.

- Entitlement for appraisal and approval of revised construction estimates shall conform to regulations on entitlement for appraisal and approval of revised construction design implemented after fundamental design under Decree on elaborating to regulations on management of construction investment projects.

- In case revised construction estimates exceed approved estimates but not approved total construction investment, investors organize revision, report to investors for acceptance prior to approval.

- In case revised estimates do not exceed approved estimates but alter structure of costs in total construction investment, investors shall organize revision, approval, report to investment deciders and are responsible for revision results.

Quoc Dat

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