Thông tư 01/2002/TT-BXD của Bộ Xây dựng về việc hướng dẫn thực hiện dự án theo hình thức hợp đồng thiết kế - cung ứng vật tư, thiết bị - xây dựng (EPC)

CIRCULAR

GUIDING THE EXECUTION OF PROJECTS IN FORM OF ENGINEERING-PROCUREMENT-CONSTRUCTION (EPC) CONTRACTS

In furthering its functions, tasks and powers defined in the Government’s Decree No. 15/CP of March 4, 1994 the Ministry of Construction hereby guides a number of contents on the execution of projects in form of engineering-procurement-construction contracts (turn-key contracts), which are prescribed in Article 62 of the Regulation on Investment and Construction Management, issued together with the Government’s Decree No.52/1999/ND-CP of July 8, 1999, as follows:

I. GENERAL PROVISIONS

1.This Circular guides the application of form of engineering-procurement-construction contracts to projects and bidding packages with the use of State budget capital, State-guaranteed credit capital, State’s development investment credit capital and State enterprises development investment capital, which has been approved in the investment decisions (for projects) or bidding plans (for bidding packages).

2.Projects and bidding packages executed in form of engineering-procurement-construction contracts with foreign direct investment capital or other capital sources may also apply the provisions of this Circular together with the regulations or agreements of the capital-providing organizations.

3. Interpretation of words and phrases

3.1. Engineering-procurement-construction contract (abbreviated to EPC contract) or turn-key contract means the written agreement concluded between a project investor and a contractor or a contractor partnership (referred collectively to as general EPC contractor) for performing the jobs on designing- provision of supplies, equipment and technical services- construction and installation of a project or bidding package.

3.2. Investor’s requirement dossier means documents compiled by the investor to further clarify and specify orientations for the major contents and requirements of the project mentioned in the already approved feasibility study report.

The contents of the investor’s requirement dossier must be complete and explicit so that the contractor may determine the work scope, estimate the work volume and prices in order to sign the EPC contract.

3.3. Payment plan means the document determining the total payment value of an EPC contract, which states the number of payment times or payment periods (monthly, quarterly or annual) according to the schedule and volume of jobs to be done under the contract.

The payment plan shall be elaborated by the general EPC contractor and approved by the investor, which shall serve as basis for making capital advance and payment for the completed work volume under the contract.

3.4. Investor’s consultant means the consulting organization selected by the investor for the performance of a number of jobs such as preparation of contracts, elaboration of technical designs- total cost estimates and bidding dossiers (if necessary), supervision of the contract performance process, issuance of project-use certificates (if any) and other consulting jobs at the investor’s request.

3.5. Subcontractor means the contractor on consultancy, survey, design, provision of supplies, equipment and technical services, construction and installation that directly signs a subcontract with the general EPC contractor.

3.6. Subcontract means the contract signed between the general EPC contractor and a subcontractor for the execution of part of the general EPC contractor’s work under the EPC contract.

II. A NUMBER OF CONTENTS IN DEPLOYMENT AND PERFORMANCE OF EPC CONTRACTS

1. Preparation of EPC contracts

In order to execute a project or bidding package in form of EPC contract, the project investor should proceed with a number of the following preparatory jobs:

1.1. Compilation of the investor’s requirement dossier:

Based on the contents of the already approved feasibility study report and total investment of the project, the investor shall compile the investor’s requirement dossier with the following contents:

a/ The project’s or bidding package’s requirements on capacity, exploitation and use capability; the extent of application of technical criteria under the current regulations; the requirements on technical-technological and commercial solutions; the technical instructions on supplies, equipment, technical services, raw materials and materials to be supplied to the project or bidding package; the requirements on the contractor’s professional capabilities and experiences;

b/ The preliminary design in the approved feasibility study report; the concrete architectural requirements and initial designing parameters as well as technical norms, rules and standards to be applied to designing and construction; the natural conditions of the construction location; the requirements on quality management, test, trial operation and maintenance of the project;

c/ The work scope and execution plan, including: the classification of jobs on the provision of machinery, supplies and/or equipment; electricity and water supply; roads and communication lines to the construction location; instructions on the on-the-spot supplying source of materials; locations of support projects, and deadlines for performance of the key jobs;

d/ The cost estimates for execution of the EPC project or bidding package;

e/ The information related to the ratification procedures; the number of dossiers and documents to be submitted; the details on the location of the construction site; the environmental protection and assurance of safety, fire and explosion prevention and fight and other matters;

The contents of the investor’s requirement dossier shall constitute part of the EPC’s bidding dossier.

1.2. Preparation of designing documents for EPC contract hand-over; elaboration, evaluation and ratification of the technical design.

a/ In cases where the investor already has technical design and total cost estimates, the EPC contract hand-over shall be effected on the basis of the approved technical design and total cost estimates.

b/ In cases where the preliminary designing dossier in the approved feasibility study report fails to fully meet the requirements of the EPC contract hand-over, the investor shall have to supplement and complete it to suit the concrete requirements of the project or bidding package before submitting it for evaluation and approval to serve as basis for EPC contract hand-over.

c/ The investor assigns the general EPC contractor to elaborate the technical design on the basis of the investor’s requirement dossier (or bidding dossier).

In this case, if the general EPC contractor makes new suggestions on the design, which, however, still ensure the requirements of the project or bidding package, the investor shall have to report such suggestions to the competent authorities for consideration and decision.

d/ The evaluation and ratification of the design of an EPC project or bidding package shall be effected as follows:

- For the project or bidding package with EPC contract hand-over effected on the basis of the preliminary design, which has already been supplemented and completed according to the provisions of Point b, this Clause, the investor shall organize the evaluation and submission of the supplemented and completed designing dossier for ratification. The general EPC contractor shall have to elaborate the technical design and report it to the investor for acceptance before approval.

- In cases where the general EPC contractor elaborates the technical design according to the provisions at Point c, this Clause, the general EPC contractor shall have to submit it through the investor for evaluation and approval according to current regulations.

1.3. The scope of job performance under an EPC contract covers: the project’s main item, the other items to ensure the synchronous and complete operation and use of the whole project according to the ratified design; the jobs in service of construction such as the building of workers’ makeshifts, the support works, the construction site’s internal roads and communication lines to the construction location (if any), electricity supply, water supply and drainage, communication and other jobs included in the EPC contract’s contents.

Depending on the specific characteristics of each project or bidding package, the investor may agree to assign the general EPC contractor to perform a number of other jobs belonging to the project but not included in the EPC contract.

1.4. Selection of the general EPC contractor

a/ The investor shall select the general EPC contractor through bid appointment or bidding on the basis of considering and accepting the appointed bidder’s offer on the satisfaction of the project’s or bidding package’s requirements or the bid winner’s bid.

The appointment of the general EPC contractor must be approved by the person competent to decide investment on the basis of the investor’s written proposal for bid appointment (except for special cases to be decided by the Prime Minister).

The bidding for selection of the general EPC contractor shall comply with the provisions of the bidding legislation.

b/ The contractor or contractor partnership selected to be the general EPC contractor must meet the following main criteria:

- Having business registration compatible with the contents of jobs of the project or bidding package executed under the form of EPC contract.

In cases where a contractor partnership is selected to be the general EPC contractor, one contractor must represent such partnership and assume the general responsibility and commitment must be made to perform jobs according to the division of responsibilities among the contractors.

- Having adequate capabilities and experiences to perform the functions and tasks of the general EPC contractor, such as: having executed projects or bidding packages of equivalent size; being capable of drawing up a list of suitable sub-contractors; the contractor or contractor partnership organizationally structured with coordinating units in the fields of designing consultancy, processing and manufacturing, provision of supplies and equipment as well as construction and installation;

- Being capable of meeting financial requirements of the project or bidding package.

1.5. The negotiation and signing of the EPC contract must be based on the approved bidding results (in case of bidding) or the appointed bidder’s offer on the satisfaction of the project’s or bidding package’s requirements (in case of bid appointment).

The investor shall have to report to the person competent to decide the investment on the contents of the contract before it is signed and comes into force.

1.6. The EPC contractual prices shall be formulated and determined on the basis of the investor’s requirement dossier (or bidding dossier); the offer on the satisfaction of the project’s or bidding package’s requirements (or the bid winner’s bid) as well as the results of contract negotiation between the investor and the general EPC contractor.

a/ In case of bidding for execution of the project or bidding package, the EPC contractual prices shall be determined on the basis of the bid-winning prices already approved by the person competent to decide the investment.

b/ In case of bid appointment, for projects or bidding packages on the building of dwelling houses, schools or stores..., the EPC contractual prices shall be determined right at the time of signing the contract on the basis of the execution cost estimates in the investor’s requirement dossier.

With regard to large-scale projects and bidding packages with technical complexities, the EPC contractual prices shall be temporarily determined on the basis of the execution cost estimates in the investor’s requirement dossier, then be officially determined after the ratification of the technical design-total cost estimates.

c/ In principle, the EPC contractual prices must not exceed the approved prices of the bidding package or the investment capital level of the EPC bidding package within the total investment level of the ratified project.

1.7. The general EPC contractor shall provide supplies and/or equipment according to the contents of the EPC contract in form of direct procurement, competitive sale offers, bidding or appointment of bidder-supplier.

In case of bidding for supplies and/or equipment provision, the general EPC contractor shall have to compile the bidding dossier for supplies and/or equipment provision and reach agreement with the investor thereon.

The contents of the supplies and/or equipment provision contract must accord with the contents and schedule of performance of the EPC contract.

2. Responsibilities and powers of the investor, the general EPC contractor and relevant agencies and units

On the basis of the provisions of the Regulation on Investment and Construction Management, issued together with the Government’s Decree No.52/1999/ND-CP and Decree No.12/2000/ND-CP, the responsibilities and powers of the investor, the general EPC contractor and concerned agencies and units in execution of projects in form of EPC contracts are specified as follows:

2.1. Responsibilities and powers of the investor include:

a/ Managing the project’s capital and making payment to the general EPC contractor according to the payment plan and execution tempo;

b/ Compiling the investor’s requirement dossier and bidding dossier (in case of bidding) and submitting these documents for approval.

c/ Assigning the general EPC contractor to elaborate the detailed technical design and bidding dossier on the provision of supplies and/or equipment (if any) of the project or bidding package. In cases where the project or bidding package has special technical characteristics, the investor may report to the competent persons thereon for the latter to consider and decide the hiring of consultants to elaborate the technical design-total cost estimates and bidding dossier on supplies/equipment provision.

d/ Submitting for ratification (or reaching agreement on ratification of) the technical design-total cost estimates and project execution plan; filling in the ratification procedures or reaching other agreements.

e/ Making compensation, sweeping and deactivating unexploded bombs and mines (if any), clearing and handing over the construction ground to the general EPC contractor;

f/ Applying for construction permit (if any);

g/ Signing contracts with the general EPC contractor for the advance execution of items in preparation for construction such as roads, power and water supply systems, communication lines to the construction site and other technical works;

h/ Reaching agreement with the general EPC contractor on the design drawing for construction of the project’s main items and the bidding dossier on the procurement of supplies and/or equipment (in case of bidding);

i/ Reaching agreement with the general EPC contractor on the list of subcontractors;

j/ Conducting field supervision directly or through consultants, the designing, supplies and/or equipment provision, construction and installation, pre-acceptance test, trial operation and other works;

k/ Organizing pre-acceptance test and filling in procedures for the issuance of project-use certificate (if necessary);

l/ Organizing the training of the contingent of cadres managing and operating the project;

m/ Suggesting, proposing the competent authorities to permit the application of the project’s preferential regimes and policies (if any) to the general EPC contractor.

2.2. Responsibilities and powers of the general EPC contractor include:

a/ Receiving and managing the whole construction ground, preserving the project’s center, framework and landmarks and regulating joint activities among subcontractors (if any);

b/ Making the detailed technical design;

c/ Elaborating and reaching agreement with the investor on the construction design drawing according to the approved technical design dossier;

d/ Elaborating and reaching agreement with the investor on the bidding dossier on supplies and/or equipment provision and organizing the selection of bidder therefor (if any);

e/ Mapping out and reaching agreement with the investor on the schedule for execution of construction stages or project’s main items;

f/ Elaborating and reaching agreement with the investor on the payment plan;

g/ Selecting subcontractors through bidding or bid appointment;

h/ Accepting and managing the use of project items (if any) outside the EPC bidding package, which are handed over by the investor;

i/ Organizing the system of management of project construction quality;

j/ Conducting the experimentation and adjustment as well as trial operation of the whole project; participating in providing guidance and training of workers-operators, transferring technologies, technical documents and know-hows (if any) related to the operation, use and maintenance of the project; handing over the project to the investor according to the provisions of the EPC contract;

k/ Adopting measures to ensure conditions for environmental sanitation, fire and explosion prevention and fight and labor safety on the construction site;

l/ Signing contracts with domestic or foreign consultants (if necessary) for performance of a number of the general EPC contractor’s tasks;

m/ Providing the project warranty according to current regulations.

2.3. The ministries, branches, localities as well as the investor’s superior agencies and units shall have to:

a/ Consider and settle matters as well as procedures related to the deployment and execution of EPC projects and bidding packages according to their respective functions and powers such as: evaluate and ratify the investor’s requirement dossier (or bidding dossier), the document on appointment of the general EPC contractor (or EPC bidding results), the technical design-total cost estimates, the amendments and/or supplements (if any) to the design according to their assigned responsibilities.

b/ Direct the settlement of problems arising in the course of execution of EPC projects or bidding packages.

3. Performance of EPC contracts

3.1. An EPC contract shall be signed with the following major contents:

a/ The subjects and objects of the contract;

b/ The performance duration;

c/ The contract’s conditions;

d/ The contractual prices, pre-acceptance test and payment;

e/ The use of subcontractors;

f/ The project warranty;

g/ The effect of the contract and settlement of disputes.

The EPC contract shall also include such appendixes as drawings and technical instruction; requirement dossier of the investor; written agreements between the investor and the general EPC contractor; bidding dossier and bids (or the bidders’ offers) and other relevant documents.

3.2. The EPC contractual prices shall be adjusted only when the contract clearly prescribes the price-adjusting scope, extent and methods. The principles for adjustment of the EPC contractual prices shall be as follows:

a/ With regard to the volumes arising beyond the contract not due to the contractor’s faults such as the amendment and/or supplementation of the design or due to changes in the project’s geological conditions:

- For the volumes arising from the jobs already listed in the contract, the prices shall be adjusted according to the unit prices of the already signed contract (taking into account the inflation rate).

- For the volumes arising from the jobs not yet listed in the contract, the investor shall have to reach agreement with the general EPC contractor on the determination of the unit prices applicable thereto under the State’s current regulations.

b/ For the EPC contract other than a package contract with the performance duration of over 12 months, from the 13th month on, the contractual prices of a number of major supplies and construction materials and the labor costs may be considered for adjustment.

c/ In case of major changes in the State’s regimes and/or policies applicable to investment and construction, which affect the structure of contractual prices, the EPC contractual prices shall be adjusted to suit such changes.

d/ The general EPC contractor shall have to calculate, justify and reach agreement with the investor on price adjustments.

3.3. The prices for EPC contract-settlement shall be made on the basis of the following principles:

a/ The EPC contract payment price is the contractual price and the conditions inscribed in the contract, which must conform with the provisions at Points 1.6 and 1.7, Clause 1 and Points 3.1 and 3.2, Clause 3, Section II of this Circular.

b/ When deploying the contract performance, the investor shall advance capital to the general EPC contractor (except for cases otherwise agreed upon by the two parties). The level of advance capital and the recovery thereof are prescribed as follows:

- The initial advance capital level for the general EPC contractor shall be equal to at least 15% of the value of the EPC contract (excluding the value of the technological equipment);

- The advance of capital for the procurement of technological equipment and technical services shall be determined according to agreement between the general EPC contractor and the producer or supplier and must accord with the implementation tempo of the EPC contract;

- The advance of capital from the general EPC contractor to subcontractors shall be made according to the current regulations on investment and construction management;

- The advance capital shall be recovered gradually in each payment period and wholly recovered when the payment reaches 80% of the value of the completed volume.

c/ The investor shall make payment to the general EPC contractor according to the work performance tempo, the bid-winning prices or the value of the already signed contract and other contractual conditions on the basis of the work volume already completed and accepted in each execution period or the completed project item.

- With regard to the construction and installation work, the payment shall be made on the basis of the completed work volume, the payment plan and the payment request card of the general EPC contractor.

- With regard to the procurement and provision of supplies and/or equipment, the payment shall be made according to the already signed procurement and provision contract;

- With regard to the consulting work undertaken by the general EPC contractor, the payment shall be based on the already completed and accepted consultancy work volume in each period or according to the consultancy-performance duration.

3.4. Use of subcontractors and subcontracts

a/ The general EPC contractor shall select subcontractors through bidding or bid appointment. The list of the already confirmed subcontractors must be approved in writing by the investor.

The general EPC contractor must not subcontract major works of the project (to be performed by domestic contractors) or the bidding packages, which are decisive to the quality and the project completion deadline. The subcontracting of other works of the general EPC contractor must be approved in writing by the investor, who must not refuse to issue such approval without plausible reasons.

b/ The signing of subcontracts between the general EPC contractor and subcontractors must accord with the contents of the EPC contract and the provisions of the legislation on contracts.

c/ Within the scope of performing works of the EPC contract, subcontractors shall not have direct ties with the investor and shall only take responsibility before the general EPC contractor for the works subtracted to them under the subcontracts.

3.5. Supervision of contract performance and pre-acceptance test of the project

a/ The investor shall directly or through their consultants inspect and supervise the contract performance according to the already signed contents and current regulations on management of the construction projects’ quality, including:

- Inspecting the general EPC contractor’s system of managing and ensuring the project’s quality.

- Supervising the quality of construction, processing, manufacture and installation of equipment throughout the process of construction; making records and notifying the general EPC contractor (verbally or in writing) when detecting those activities, not compatible with the ratified design or the applied technical norms and criteria so that the latter may redress or adjust them.

- Inspecting and certifying the work volumes arising not due to the contractor’s faults in order to make supplements and payment.

b/ The general EPC contractor shall have to meet all requirements on the project volume and quality as prescribed in the EPC contract, including:

- Organizing the quality-control system for inspection, supervision, test and acceptance of the project under current regulations;

- Replying (verbally or in writing) and handling the investor’s proposals related to the construction project’s quality;

- Preparing all dossiers and documents for the phased pre-acceptance test of the completed project or project items according to regulations.

c/ The pre-acceptance test between the investor and general EPC contractor shall be conducted according to phases or the completed project or project items.

- Before starting the construction, the investor should reach agreement with the general EPC contractor on the method of phasing the project completion for acceptance and furthering the construction, and determine the important construction periods which affect the quality, execution tempo and safety of the project in the operation, exploitation and use thereof.

- The investor shall assume the prime responsibility in organizing the pre-acceptance test on the basis of evaluating the practical situation of the completed work volume and examine the project acceptance dossier as well as the relevant documents submitted by the EPC general contractor. For projects with complicated technical requirements, the investor shall have to organize the pre-acceptance test at technical stops or important construction stages.

3.6. The general EPC contractor shall provide warranty for the whole project with the warranty duration and cost prescribed as follows:

a/ The warranty duration shall be determined according to the producer’s or supplier’s agreement (or regulations) for machinery and equipment, and according to the State’s current regulations, for construction projects or project items.

b/ The warranty cost levels shall be determined according the agreement between the investor and the general EPC contractor for machinery and equipment, and according to the State’s current regulations, for construction projects or project items.

III. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect 15 days after its signing.

2. The ministers, the heads of the ministerial-level agencies, the presidents of the People’s Committees of the provinces and centrally-run cities, the Managing Boards of the corporations and the heads of relevant units shall have to organize the implementation of this Circular.