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THE MINISTRY OF
CONSTRUCTION
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 06/2008/TT-BXD
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Hanoi, March 20,
2008
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CIRCULAR
GUIDING
THE MANAGEMENT OF COSTS OF URBAN PUBLIC-UTILITY SERVICES
Pursuant to the Governments
Decree No. 17/2008/ND-CP of February 4. 2008, providing for the functions,
tasks, powers and organizational structure of the Ministry of Construction:
Pursuant to the Governments Decree No. 31/2005/ND-CP of March 11, 2005, on production
and provision of public-utility products and services;
Pursuant to the Finanee Ministers Decision No. 06/2005/QD-BTC of January 18,
2005. promulgating the Regulation on calculation of prices of assets, goods and
services.
In order to raise the use
efficiency of state budget capital, improve the quality of urban public-utility
services and encourage organizations and individuals of all economic sectors to
provide urban public-utility services, the Ministry of Construction guides the
management of costs of urban public-utility services as follows:
I. GENERAL PROVISIONS
1. Subjects of application and
scope of regulation
1.1. Cost management is applied
to the following urban public-utility services:
- Collection, transport and
landfill disposal of garbage:
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- Maintenance of public lighting
systems:
- Maintenance and development of
trees.
1.2. For some other urban
public-utility services such as waste processing and non-landfill disposal,
management of cemeteries, parks and zoos and some other services, provincial/
municipal Peoples Committees shall apply the guidance in this Circular
depending on practical conditions in their localities.
1.3. All organizations and
individuals that manage or use state budget capital for the provision of the
above-said urban public-utility services shall abide by the provisions of this
Circular.
2. General principles on the
management of costs of urban public-utility services
2.1 Costs of urban
public-utility services calculated under the guidance in this Circular are used
for competent state agencies to determine cost estimates for urban
public-utility services and serve as a basis for the negotiation, consideration
and decision on the prices of public-utility services provided through bidding,
order placement or plan assignment to organizations and individuals providing
urban public-utility services.
2.2. Costs of urban
public-utility services must be properly calculated and managed in conformity
with practical conditions and objective requirements of the market mechanism.
II. ESTIMATED COSTS OF URBAN
PUBLIC-UTILITY SERVICES
Estimated costs of urban
public-utiliry services include material cost, labor cost, cost of machine and
equipment use, general management expense and profit ratio. The estimated costs
of urban public-utility services are determined as follows:
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=
+
General
management expense
+
Profit
ratio
1. Volume of each urban
public-utility service
The volume of each urban
public-utility service is determined according to plans or unplanned tasks
assigned by competent state agencies.
2. Unit cost of each urban
public-utility service
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2.1. Material cost means
expenses for principal and subsidiary materials used in the provision of urban
public-utility services. Material cost is determined accordins to this formula:
Material
cost
=
∑
Wastage
limit of each type of material for the perfomance of a volume unit of urban
public-utility service
x
Price
of each relevant type of material
The prices of materials must be
reasonable and suitable to market prices and determined according to the price
quotations of producers or suppliers, the prices already applied to other works
of similar quality standards or prices announced by localities, and must be
competitive (material prices constituting the unit price is exclusive of
value-added tax).
2.2. Labor cost means all
expenses for laborers directly engaged in the provision of-urban public utility
services and are determined as follows:
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=
∑
Norm
on workdays of workers of a certain grade sei for the performance of a volume
unit of urban public-utility services
x
Workday
wage of workers of relevant grande
The workday wage of workers of
relevant grade must be properly calculated, consisting of all amounts of wage,
additional wage and wage-based allowances (including wage supports). The
workday wage is determined on the basis of the minimum wage level prescribed by
a competent state agency in order to ensure payment of wage to laborers, taking
into account the prevailing wage level on the labor market in each region for
each type of workers and specific working conditions, limit of capital sources
and payment capability of localities.
2.3. Cost of machine and equipment
use means expenses for machines and equipment used for the provision of urban
public-utility services:
Cost
of-machine and equipment use
=
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Norm
of shift-based wear of each machine and equipment for the volume unit of
urban public- utility service
x
Cost
of a shift of relevant machine and equipment
The cost of a shift of relevant
machine and equipment is determined under the guidance in the Construction
Ministrys Circular No. 07/2007/TT-BXD of July 25, 2007. guiding the method of
determining costs of shifts of construction machines and equipment or the table
of costs of shifts of machines and equipment prescribed by local
administrations.
3. General managemen: expense
means management expense of an enterprise, general expense for direct
management (including labor tools), expense in service of workers: expenses for
payment of interests on loans from banks and other credit institutions:
mid-shift meal allow ances. charges, fees and expenses for hiring assets and
workshop ground (if any), audit expenses and other expenses.
General management expense in
the estimated cost of urban public-utility services shall be decided by
provincial/municipal Peoples Committees but must not exceed 70% of direct labor
expense and determined according to specific conditions of each locality and
each urban public-utility service. If the cost of machine and equipment use
represents more than 60% of the direct cost, the general management expense
must not exceed 5% of the cost of machine and equipment use.
Provincial/municipal Peoples
Committees shall consider and make decisions in special cases in which the
percentage of general management expense exceeds the above rates.
4. Profit ratio must not exceed
5% of the direct cost and general management expense in the estimated cost for
the provision of public-utility services.
III. CONTRACTS ON THE
PROVISION OF URBAN PUBLIC-UTILITY SERVICES
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2. Contractual price
Contractual price is a sum of
money which the principal commits to pay to the contractor for a work volume
performed according to quality, schedule and other requirements specified in
the contract. The contracting parties shall clearly state in the contract all
elements constituting the contractual price, including taxes, charges and
responsibilities of involved parties to pay relevant taxes and charges.
Contracting parties shall base
themselves on bidding dossiers, bids, cost estimates, goods orders and assigned
plans approved by competent state agencies and negotiation results to determine
contractual prices. Contractual prices may take the following forms:
2.1. Package contractual price
(package or pro-data prices specified in the Bidding Law) is a contractual
price which is kept unchanged throughout the course of performance of the
contract regarding works falling under the signed contract, except cases where
adjustments are permitted as specified in the contract (if any) the form of
package contractual price appiies to works or bidding packages of which the
work volume, quality and implementation time have been clearly
identified or to some cases
where it is impossible to determine the work volume but the contractor has
capacity, experience and documents to calculate and determine package prices
and accept to take related risks:
2.2. Contractual price based on
fixed unit prices (unit price-based or time-based prices specified in the
Bidding Law) is a contractual price which is deteimined on the basis of the
pre-calculated work volume and the unit price for each work which is fixed and
kept unchanged throughout the course of performance of the contract, except
when adjustments are permitted as specified in the contract (if any). The form
of contractual price based on fixed unit prices applies to works or bidding
packages of which work the volume cannot be exactly identified but unit prices
can be determined and the contractor has enough capacity, experience and
documents to calculate and determine fixed unit prices and related risks. Fixed
unit prices are kept unchanged throughout the course of performance of the
contract, except when adjustments are permitted as specified in the contract.
2.3. Contractual price based on
adjustable prices is a contractual price calculated on the basis of the work
volume and unit prices of works under the contract which may be adjusted in
cases specified in the contract.
The form of contractual price
based on adjustable prices applies to works or bidding packages of which the
work volume or cost elements used for determining unit prices cannot be exactly
identified at the time of signing the contract due to the lack of necessary
conditions.
Contractual prices based on
adjustable prices (at the time of signing contracts) will be adjusted when it
is possible to determine work volume and unit prices as prescribed in tp.e
contract.
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IV. ORGANIZATION OF
IMPLEMENTATION
1. The Ministry of Construction
shall publicize wastage limits of materials and workday norms for the
performance of a volume unit of urban public-utility services: and regularly or
irregularly inspect the management of costs of urban public-utility services in
localities nationwide in accordance with this Circular.
2. Provincial/municipal Peoples
Committees shall:
- Elaborate for publicization or
promulgation norms which have not yet been included in the system of norms for
estimation of costs of urban public-utility services publicized by the Ministry
of Construction or which have been included in the publicized system of norms
but are inappropriate to local technical processes or specific conditions in
service of the provision of urban public-utility services in their localities.
- Guide and provide for the application
of norms and unit prices as well as the formulation and approval of estimated
costs of urban public-utility services in their localities;
- Reorganize state companies
performing public-utility tasks under their management according to Chapter III
of the Governments Decree No. 31/2005/ND-CP of March 11, 2005, on the
production and provision of public-utility products and services;
- Formulate mechanisms and
policies to encourage organizations and individuals to provide urban
public-utility services in order to reaiize tne Partys and States guidelines on
socialization of the provision of urban public-utility services in localities;
- Annually, send norms and unit
prices already publicized or promulgated to the Ministry of Construction for
monitoring and management.
3. For urban public-utility
services with comparatively stable prices, competent agencies may use these
prices to estimate costs of urban public-utility services, taking into account
fluctuations in market prices (if any).
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5. Transitional provisions:
Signed contracts which are being performed or estimated costs (prices of urban
public-utility services) which have been approved by competent authorities are
not required to be readjusted or re-approved; provincial/municipal Peoples
Committees shall consider and make decision on the application of this Circular
when necessary.
6. This Circular takes effect 15
days after its publication in CONG BAO and replaces the. Construction Ministrys
Circular No. 17/2005/TT-BXD of November 1, 2005, guiding the methods of
formulating and managing costs of urban public-utility services.
Any problems arising in the
course of implementation should be reported by localities to the Ministry of
Construction for guidance and settlement.
FOR THE MINISTER
OF CONSTRUCTION
VICE MINISTER
Dinh Tien Dung