Recommendation on a change of the mechanism for a reduction of estimates unit price difference / project bidding price of works using state capital and works using non-state capital
Thu, 14 Dec 2017 22:59:00 | Print | Email Share:
Name of recommendations: Recommendation on a change of the mechanism for a reduction of estimates unit price difference / project bidding price of works using state capital and works using non-state capital
Status: Responded
Recommended by units: The Vietnam Association of Contractors
Official letter: 1389/PTM - VP, dated: 2017-06-13
Recommended contents:
The method of determining the unit price of works using state capital and works using non-state capital has created an unworthy precedent; there are many reputable and capable contractors that do not want participating in bidding packages using state capital for many reasons, including price and payment issues. In case of participation, if wining the contract, then it also find every ways to adjust the price as is still widely seen in public works today. This is due to (i) unreasonable salary costs. Labor cost is calculated by the state as not appropriate, 20-30% lower than the actual wage, (ii) rigid budget structure is not flexible.
To resolve the above situation, it recommends that:
• The Government and the Prime Minister have a mechanism to adjust the wage levels in the market-oriented unit price, expand the salary framework in the professional guidance documents.
• To renovate the estimation methodology, issue cost norms for general cost price without over-estimating unit prices.
Responded by units: The Ministry of Construction
Official letter: 1862/BXD - PC, dated: 2017-08-11
Responded contents:
1. Reflections on "unreasonable wage costs, unprofitable unit labor costs, 20-30% lower real wages"
In implementing the Government's regulations on management of construction investment costs, the Ministry of Construction issued circulars guiding the determination of labor unit prices in management of construction investment expenses (Circular No. 01/2015 / TT-BXD dated March 20, 2015, Circular No. 05/2016 / TT-BXD dated 10 March 2016). Accordingly, the provincial-level People's Committees shall have to investigate, survey, determine and publicize construction works unit prices, which shall serve as basis for elaboration and management of construction investment costs in localities.
The construction labor quotas according to the survey results must ensure the principles compatible with the skill levels according to the labor rank in the system of works construction cost norms; It is in line with the labor market price level of each locality; in line with the characteristics and nature of work of construction workers; satisfying the requirement to pay only a number of expenses which are payable by the laborers according to regulations; must not be lower than the minimum wage set by the Government. This principle will ensure that the labor unit price is calculated on the basis of the actual wage level in the market.
2. Reflection on "rigid, non-flexible budget structure"
The structure of works construction cost estimates has been finalized and adjusted in line with the scale, nature and type of works and specific contents already guided by the Ministry of Construction in Circular No. 06/2016 / TT-BXD on May 10, 2016. There are some existing problems in the estimation method, the system of norms, the system of construction unit prices due to the publication of provinces, the price of machinery and equipment, etc. will be overcome by the Ministry of Construction in the project of completing the system of norms and construction prices (submitted to the Prime Minister in Report No. 31 / TTr-BXD dated July 05 2017). This proposal relates to the inadequacies of the law on tendering which should fall under the responsibility of the Ministry of Planning and Investment.
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