Pricing of construction contracts

On 29 July 2010 the Ministry of Construction issued Circular No. 08/2010/TT-BXD guiding price adjustment methods regarding construction contracts for projects funded with 30 per cent of the capital provided by the state.

Circular No.8 regulates the principles regarding price adjustments.

Price adjustments can only be possible during the implementation of the signed contract, including the extended period as agreed in the contract; the project owner is entitled to approve the adjusted price if the new price does not exceed the approved total invested capital.

Otherwise, it will be decided by the person who has the power to make such investment. Price adjustment methods are also stipulated in the details of the Circular.

For instance, for lump sums and percentage based contracts, price adjustments are permitted only in respect to quantity beyond which the parties have agreed to.

In these circumstances, the parties must sign an appendix which specifies additional works and the respective unit prices. Regarding lump sum contracts, the parties shall determine the new unit prices for additional works in the absence of prior agreement; otherwise the agreed unit prices shall be applied.

(Source: Bizconsult Law Firm)