Thông tư 14/2019/TT-BXD về hướng dẫn xác định và quản lý chỉ số giá xây dựng do Bộ trưởng Bộ Xây dựng ban hành

CIRCULAR

PROVIDING INSTRUCTIONS ON DETERMINATION AND ADMINISTRATION OF CONSTRUCTION PRICE INDICES

Pursuant to the Government's Decree No. 81/2017/ND-CP dated July 17, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 68/2019/ND-CP dated August 14, 2019 on administration of investment and construction expenses;

Upon the request of the Director of Institute of Construction Economics and the Director of Construction Economics Department;

Minister of Construction hereby promulgates the Circular as a manual for determination and administration of construction price indices.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. Scope of application: This Circular provides instructions for determination and administration of construction price indices for the purposes of identifying and adjusting total investment, construction cost estimates, construction package prices, contract value, converting investment capital and managing investment costs.

2. Subjects of application:

a) Entities and persons involved in determination and administration of construction price indices of investment and construction projects funded by state budget and non-budgetary capital, and other public-private partnership (PPP) investment projects.

b) Other entities and persons are encouraged to apply this Circular to determination and administration of construction price indices for projects funded by other capital sources.

Article 2. Classification of construction price indices

1. Price indices, including:

a) Construction price index by a building type refers to an indicator showing the extent of fluctuation in total cost of a classification of construction works or projects over time.

b) Construction price index by cost structure, including construction cost index referring to an indicator showing the level of fluctuation in costs of construction activities over time; equipment cost index referring to an indicator showing the level of fluctuation in costs of building equipment used in a construction work over time; other cost index referring to an indicator showing the level of fluctuation in several costs, e.g. project management and investment consulting and other costs, of a construction work over time.

c) Construction price index by cost factor, including building material cost index referring to an indicator showing the level of fluctuation in costs of building materials used in a construction work over time; building labor cost index referring to an indicator showing the level of fluctuation in costs of personnel working for a construction work over time; building machinery and equipment cost index referring to an indicator showing the level of fluctuation in costs of machines and equipment items for use at a construction work over time.

d) Construction price index by main building material type refers to an indicator showing the level of fluctuation in costs of main building materials over time.

2. With respect to a particular construction project, calculation of all or some indices stated in clause 1 of this Article shall depend on purposes and requirements of administration of investment and construction expenses.

Article 3. Principles for determination and administration of construction price indices

1. Once already being determined, a construction price index must reflect any fluctuation in local market prices in a fair and appropriate manner.

2. Determination and public disclosure of construction price indices must be timely and conformable to regulations on administration of construction investment expenses.

3. It shall be obliged that a particular list and quantity of representative construction works are defined before calculation and public disclosure of a construction price index.

4. A construction price index is calculated according to a mean formula during the specified period of time without taking into account several costs of compensation, support and resettlement, lending interest incurred during construction period and initial outlay. A construction price index is expressed in percent (%).

5. Cost structure used for calculation of construction price indices must correspond to the cost structure covered by regulations on administration of construction investment expenses, be based on statistical data and be used in a stable manner until there is any change in a benchmark point of time.

6. Management and use of construction price indices must comply with regulations related to management of construction investment expenses.

7. During the process of determining price indices, entities specialized in construction need to carry out review and assessment of these price indices by using information about those of adjacent regions or localities in order to ensure they adapt to tendencies of fluctuation in the regional market and there is none of great difference between local price indices.

Chapter II

DETERMINATION OF CONSTRUCTION PRICE INDICES

Article 4. Steps

1. Determining the calculation point of time, including the benchmark and comparison points of time.

2. Making a list of construction price indices in question and choosing input factors.

3. Collecting and processing data and figures needed for calculation of construction price indices.

4. Determining construction price indices.

Article 5. Time

1. Time of determination of construction price indices to be publicized by provincial-level People’s Committees shall include:

a) Benchmark point of time is the year 2020. Ministry of Construction shall update their regulations on time of determination of construction price indices in case of any change in the benchmark point of time so that they are adjusted to local contexts.

b) Comparison point of time is a month, quarter or year of publication of construction price indices compared to the benchmark point of time.

2. In order to determine a price index for use in a particular construction project, the project owner shall rely on progress and conditions for implementation of that project to decide on the proper benchmark or comparison point of time.

Article 6. Listing of construction work or project classifications and selection of input cost factors

1. Quantifying and listing out classifications of construction works and projects by their types before publication thereof shall be subject to administration requirements, regulations on administration of investment and construction projects as well as construction investment expenses, and particular characteristics of local construction projects. Provincial-level People’s Committees shall rely on the Classification List of construction works or projects in Appendix 3 hereto to decide to choose the classification list of construction works or projects as subjects of calculation of construction price indices to be publicized within their remit.

2. In order to calculate a construction price index for a type of construction work or project, it shall be obliged that construction works or projects typical for such type must be chosen. The number of construction works or projects typical for a building type shall be determined, depending on particular local conditions, but shall not be less than 3. Typical construction works or projects are those commonly developed out of others of the same type at a locality.

3. If a price index is determined for a particular construction work or project, such work or project is a typical one.

4. Typical input cost factors are costs of main building materials, labor and machinery used by a single construction work or project, or construction works or projects of the same type. Main building materials, labor or machines are selected for the purpose of calculation of construction price indices according to the principles in which costs thereof must be greater in proportion than costs of corresponding ones used for construction works or projects (80% in total).

Article 7. Collection and processing of data and figures needed for calculation of construction price indices

1. Requirements concerning collection of data and figures needed for determination of cost structures:

a) Data about construction investment expenses, including total investment, cost estimates, finalization of construction investment costs incurred upon completion of construction works or projects (if any), which obtain approval must include expense-related entries and accounts.

b) Policies and regulations pertaining to administration of construction investment expenses, building labor, machinery or equipment, and other related costs, which remain in effect on the date of calculation.

2. Requirements concerning information about market prices of input factors:

a) Costs of building materials: Building material costs shall be calculated as per Ministry of Construction’s Circulars providing instructions on computation and administration of construction investment expenses. Building materials qualified to be listed as input values for use in calculation of construction price indices must be identical in terms of their types, formations and product markings or labels. As for calculation of construction price indices for construction works, building material costs shall be the same as those specified in local notices. If there is none of such local notices, these costs shall be market costs which are relevant to construction sites and appropriate in terms of types, formations, markings and labels of building materials used in these construction works, and conform to requirements concerning determination of building material costs in accordance with Ministry of Construction’s Circulars providing instructions on determination and administration of construction investment expenses.

b) Construction labor costs shall be calculated according to unit labor costs publicized by provincial-level People’s Committees. If there is none of public notices of such unit labor costs from provincial-level People’s Committees, construction labor costs shall be determined according to the method of determination of construction labor cost that is specified in the Ministry of Construction’s instructions.

c) Building machinery and equipment cost per shift may be determined according to machinery costs per shift, or costs of hiring of building machines and equipment, which are publicized by provincial-level People’s Committees. If there is none of public notices of the latter from provincial-level People’s Committees, the former shall be determined according to the method of determination of building machinery and equipment costs per shift that is specified in the Ministry of Construction’s instructions. Machines and equipment qualified to be listed as input values for calculation of construction price indices must be identical in terms of their type, capacity and origin.

3. Processing of data used for calculation of construction price indices:

a) Processing of figures and data used for determination of cost structure: Processing of collected data and figures shall include review, checking and correction of data, figures and estimated cost structure. Figures related to estimated cost structures must be converted according to the estimated cost structures regulated at the benchmark point of time. Data on total investment, cost estimate and final accounts of costs incurred upon completion of construction and investment projects (if any) must be converted to price levels determined at benchmark points of time.

b) Processing of information about input costs: Collected figures and data pertaining to input costs must be checked, reviewed and corrected in the following specific regulations: Costs of input materials of different kinds must be checked to ensure conformity in terms of their types, formations, markings and labels. Costs of input labor of different kinds must be checked to ensure conformity in terms of construction labor classes and ranks. Costs of machinery and equipment of different kinds per shift must be checked to ensure conformity in terms of their type, capacity and origin.

Article 8. Methods of calculation and determination of construction price indices

1. Construction price index shall be defined as the weighted geometric mean of rates of price (construction price index) fluctuation in typical input factors and corresponding weight values. Calculation of construction price indices shall be subject to instructions given in Appendix No. 1 hereto.

2. After considering characteristics of local markets, provincial-level People’s Committees shall decide the general construction price index for use in all cities and provinces, or separate construction price indices for use in particular areas within cities and provinces and then synthesize them to get the general construction price index. Division into multiple areas for the purpose of calculation of construction price indices shall be subject to decisions at the municipal or provincial level according to local characteristics of administrative subdivisions and construction markets, or conform to the Government’s regulations on regional division of region-specific minimum pay rates.

3. Regional construction price index shall be defined as the weighted geometric mean of construction price indices for use at provinces or centrally-affiliated cities within a region and corresponding weight values.

4. National construction price index shall be defined as the weighted geometric mean of construction price indices for use in specific regions and corresponding weight values.

5. Price index for a particular construction work shall be determined on the basis of cost structure of that construction work and input costs (or price indices) provided that it such index is relevant to work conditions and construction sites.

6. Cost structure used for calculation of a construction price index qualified to be adopted as a basis for contract value adjustment shall be based on contractual price structure. In case of lack of details necessary for determining the cost structure according to the contract value, such index shall be determined according to construction package cost estimate or construction cost estimate which has already been approved.

Chapter III

ADMINISTRATION OF CONSTRUCTION PRICE INDICES

Article 9. Authority over determination and calculation of construction price indices

1. Ministry of Construction shall be authorized to calculate and determine regional (inter-provincial) and national construction price indices.

2. Provincial-level People’s Committees shall authorize specialized construction authorities to take control of determining construction price indices under clause 1 of Article 2 herein.

3. Determination of and agreement on construction price indices that have not yet appeared in the list of price indices approved by the Ministry of Construction or provincial-level People’s Committees shall be subject to clause 4 of Article 18 in the Government’s Decree No. 68/2019/ND-CP dated August 14, 2019.

Article 10. Promulgation and public disclosure of construction price indices

1. Authority and frequency of promulgation and public disclosure of construction price indices:

a) Regional and national construction price indices shall be promulgated by the Ministry of Construction on a quarterly and yearly basis by using the table 1.1 in Appendix 4 herein.

b) Other construction price indices specified in clause 1 of Article 2 herein shall be publicized under the authority of provincial-level People’s Committees on a monthly, quarterly and yearly basis according to tables 1.2, 1.3, 1.4 and 1.5 in Appendix 4 herein.

2. Time of promulgation and public disclosure:

a) Construction price indices publicly disclosed on a monthly basis shall be publicized in the third week of the following month.

b) Construction price indices promulgated and publicly disclosed on a quarterly basis shall be publicized in the third week of the first month of the following quarter.

b) Construction price indices promulgated and publicly disclosed on a yearly basis shall be publicized in the third week of the first month of the following year.

3. Manners of promulgation and public disclosure of construction price indices:

a) Construction price indices promulgated under the authority of the Ministry of Construction shall be publicized on its website no later than 2 days after receipt of the approval decision;

b) Construction price indices promulgated under the authority of provincial-level People’s Committees shall be publicized on websites of local construction authorities not later than 2 days after receipt of the approval decision.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 11. Responsibilities of the Ministry of Construction

1. Guiding, inspecting and pushing localities to carry out calculation, determination and public disclosure of construction price indices as provided herein.

2. Providing training courses in determination and administration of construction price indices.

3. Retaining information about construction price indices of centrally-affiliated cities and provinces which is necessary for their administration, control and development of transparent markets.

4. Promulgating regional (inter-provincial) and national construction price indices.

Article 12. Responsibilities of provincial-level People’s Committees

1. Directing implementation of this Circular and use their regular budget expenditures for determination and public disclosure of construction price indices within their remit.

2. Authorizing their specialized construction affiliated agencies to perform the following activities:

a) Preside over and cooperate with other relevant units in taking into consideration instructions given in this Circular and situations of construction price fluctuation at localities in carrying out determination and calculation of construction price indices that they could be made available to the public. Where necessary, they may hire a competent cost management counseling body designated in accordance with regulations in force to determine and calculate construction price indices. This body shall be legally liable for quality of their services.

b) Take charge of regular oversight of information about local construction market prices; update, store and send Ministry of Construction information about local construction market prices on a monthly basis.

3. Publicly disclose construction price indices on a monthly, quarterly or yearly basis, and send them to the Ministry of Construction for its supervision and control. Time of public disclosure of construction price indices prescribed herein shall start from January 2021. In 2021, in order to carry out conversion of construction price index values in case of any change in the benchmark point of time, publicize construction price indices by types of construction works or projects, cost structures and cost factors with the benchmark year 2020 in accordance with regulations laid down herein and other point of time selected in accordance with the Circular No. 06/2016/TT-BXD dated March 10, 2016 of the Ministry of Construction. Methods of conversion of construction price index values employed in case of any change in the benchmark point of time shall be subject to regulations in Appendix No. 2 hereto.

Article 13. Responsibilities of owners of construction works or projects

Taking charge of determination and calculation of construction price indices as provided in clause 3 of Article 9 herein in order to ensure objectivity, accuracy and conformity to administrative requirements, and bearing their sole responsibility for use thereof. Where necessary, they may hire a competent cost management counseling body designated in accordance with regulations in force to determine and calculate construction price indices. This counseling body shall be responsible to the owner of construction work or project and laws for accuracy and rationality of construction price indices that they have determined and calculated.

Article 14. Transition provisions

1. Ongoing determination and use of construction price indices shall be subject to regulations laid down in Article 36 in the Government’s Decree No. 68/2019/ND-CP dated August 14, 2019 on administration of construction investment expenses.

2. During the period of pending determination of cost structures at benchmark points of time prescribed herein, construction authorities can continue to calculate, determine and publicly disclose construction price indices according to the methods regulated in the Circular No. 06/2016/TT-BXD dated March 10, 2016 of the Ministry of Construction, and then submit them to provincial-level People's Committees to put them to use till 2020.

Article 15. Entry into force

1. This Circular shall enter into force on February 15, 2020.

2. Regulations regarding construction price indices specified in Article 20, 21, 22, 23 and 24 in the Circular No. 06/2016/TT-BXD dated March 10, 2016 of the Ministry of Construction, providing instructions on determination and administration of construction investment expenses, shall be abolished from this Circular's entry into force.

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