Several Contents Of Construction Consultancy Contract

Please see detailed scope of work, workloads, and products of different types of construction consultancy contracts in the article A number of types of construction consultancy contracts

1. Quality

The quality shall be conformable to that prescribed in the consultancy contract and provisions of laws on construction projects and project quality management and other regulations and standards. Any defect at the contractor’s fault shall be remedied in accordance with terms of the consultancy contract.

2. Acceptance and transfer

–  Proofs of acceptance of works under the consulting contract are as follows:

+  The consultancy contract is signed by both parties.

+  Approved construction surveying plans (for construction surveying); or approved feasibility study reports (for feasibility study reports); or approved design plans, drawings (for project design); or approved responsibilities and process of construction supervision (for construction supervision).

+  Construction survey reports (for construction surveying); or feasibility study reports (for feasibility study reports); or construction drawings (for project design); or approved construction supervision documentation (for construction supervision).

+  Applicable laws, regulations, and standards.

– Acceptance records shall specify works qualified for being approved and works needing accomplishing (if any).

Every agreement by parties on the schedule and progress of consultancy contract execution shall conform to clauses 1, 2, and 3, Article 14 of the Decree No. 37/2015/ND-CP and the following contents:

–  The contract progress shall specify the order of work, milestones, schedule, and date of acceptance (for both acceptance by stage or final acceptance) and transfer date.

–  The parties shall draw up execution plans to ensure the contract progress as agreed.

–  Adjustments to contract schedule shall be made in accordance with clause 2, Article 12 Circular No. 08/2016/TT-BXD

The consulting contract prices and applicable provisions shall conform to Article 15 of the Decree No. 37/2015/ND-CP and the following contents:

– The contract price may include costs of materials, labour, construction vehicles, temporary works, common costs, costs of construction surveying proposals and reports, surveyors’ travel expenses, estimated taxable income, and VAT;

– The contract price of consulting contracts for feasibility study reports or project design or construction supervision may include:

+ Consultancy fees (consultant salary and additional costs), costs of materials and machine/equipment, management fees, estimated taxable income professional, and VAT.

+  Costs of products accomplishing after meetings, reports, and appraisals.

+  Expenses for field researches.

+  Traveling expenses during the acceptance at requests of the hirer.

+  Expenses for supervision of building works’ conformity to designs (for project design consulting contracts).

+  Other relevant expenses.

–  The contract price excludes:

+  Expenses for meetings by the hirer.

+  Fees for documents assessment and approval.

+  Other negotiable expenses not included in the contract prices.

The payment, payment documents, currency, and methods of payment shall be conformable to Articles 19, 20, and 21 of the Decree No. 37/2015/ND-CP and the following contents:

–  There may be lump-sum contract or other types of contracts.

–  The contract shall be paid by period of time (month, quarter, etc.) or by stage or by work item.

–  The due date is decided in the contract by the parties.

1. Adjustments to workloads

The workloads shall be adjusted in accordance with Article 37 of the Decree No. 37/2015/ND-CP, Article 16 of Circular No. 08/2016/TT-BXD, and the following contents:

–  Any force majeure event causing changes in workloads shall be dealt with in accordance with the laws.

–  For lump-sum contracts: the workload shall be reasonably adjusted as the basis for adjusting contract value at the hirer’s requests (whether an increase or decrease) under the laws.

–  Fixed-price contracts and adjustable price contracts shall conform to Article 14 of the Decree No. 37/2015/ND-CP.

–  The parties shall negotiate the price of workload whose cost is not included in the contract price prior to the execution.

The workload price shall be calculated according to terms of the contract and provisions of laws on construction cost management. The contract Annexes as the basis of contract settlement shall be signed by the parties.

Where the parties fail to reach an agreement on the additional workload price, the additional workload shall be included in a new contract and contractor selection for carrying out the new contract shall be made in accordance with current provisions of laws.

2. Adjustments to the contract schedule

The contract schedule shall be adjusted in accordance with Article 39 of the Decree No. 37/2015/ND-CP, Article 16 hereof, and the following contents:

–  Where the contract is finished behind schedule by the contractor’s fault, the contractor shall propose remedies to stick to the schedule. If there is no remedy, the contractor shall request the hirer to grant and extension. All additional expenses or damage to the hirer shall be paid by the contractor.

–  Where the contract is finished behind the schedule by the hirer’s fault, the hirer to grant the contractor an extension. Any damage to the contractor shall be reimbursed by the hirer.

3. Adjustments to the contract price

The contract price shall be adjusted in accordance with the Circular 07/2016/TT-BXD guiding the adjustments to contract prices issued by the Ministry of Construction.

4. Adjustments to the others

Any adjustment other than those specified in Items 1, 2, and 3 above shall be made in accordance with terms of the contract and relevant provisions of laws.

–  Every hirer has rights prescribed in clause 1, article 25 of the Decree No. 37/2015/ND-CP and shall be entitled to:

+  Request amendments and addition to consulting services that fail to meet the agreed quality stipulated in the contract.

+  Request the contractor to replace unqualified consultants.

–  Every hirer has obligations prescribed in clause 2, article 25 of the Decree No. 37/2015/ND-CP and shall:

+  Provide contractors with information related to the project and bidding documents; facilitate the field researches or the construction site access by the contractor.

+  Send qualified staff to work with the contractor.

+  Facilitate the consultation on construction and customs clearance (if any).

+  Be responsible for the completion and accuracy of their given documents. Reimburse the contractor’s damage if the hirer provides inaccurate and incomplete information.

–  Every contractor has rights specified in clause 1, Article 26 of the Decree No. 37/2015/ND-CP and shall be entitled to:

+  Request the hirer to pay for consulting services on due date and late payment interests of loans under provisions of laws.

+  For construction supervision: request the hirer to suspend the construction if the quality fails to meet technical requirements or the construction technique is unsafe.

–  Every contractor has obligations prescribed in clause 2, article 26 of the Decree No. 37/2015/ND-CP and shall:

+  Collect necessary information for the contract execution as follows:

The contractor shall collect information that may affect the projects schedule, contract prices or their responsibilities, or potential risks during the consultation.

The contractor shall be totally liable for errors occur at their faults that affect the consultation.

+  Comply with applicable laws, regulations, and standards; and guarantee the compliance with provisions of laws by sub-consultants (if any) and prime consultants.

+  Submit reports and documents to the hirer at a required quantity within a certain period of time. The contractor shall promptly report all information related to their consultation that may hinder or affect the project schedule and proposal solutions.

+  Present and defend their consultation viewpoints in meetings between competent authorities hold by the hirer.

+  Have their consulting works or documents created by qualified specialists under provisions of laws. The contractor shall allocate their staff or sub-contractor’s experienced staff specified on the list of staff approved by the hirer to perform consulting services.

+  Appoint competent and qualified representatives to deal with issues at any time the hirer requests up to the date of acceptance (for feasibility study reports) or up to the completion date or transfer date (for design consultation).

+  Provide documents required for meetings, appraisals or reporting, etc. at a quantity agreed in the contract.

+ Comply with instructions and requirements of the hirer if such instructions and requirements are in accordance with provisions of laws.

+  Participate in acceptance of works by stage, acceptance of work items or the project, and equipment testing, if the hirer requests.

+  Compensate for damage occurred by their faults.

–  The contractor’s staff must satisfy all requirements for qualifications and experiences under provisions of laws on construction.

–  Expected staff’s title, qualifications, and working duration shall be specified in the contract. In the event of staff replacement, the contractor shall submit the hirer an explanation about reasons for replacement, and the new staff’s profile. The new staff must be at least as qualified as the displaced staff.

Risks and force majeure events shall be dealt with in accordance with Article 51 of the Decree No. 37/2015/ND-CP and the following contents:

–  Force majeure events include karst topography, antiquities, archeological sites or sludge bag, etc. both parties may not anticipate as the time of contract conclusion.

–  Responsibilities for risks:

+ Where any risk estimated in the contract price occurs, the damage shall be reimbursed at the contractor’s account.

+  Where any risk covered by the insurance occurs, the damage shall be reimbursed by the insurer and shall not be included in the contract price.

+  The contractor shall compensate for damage, losses or costs (including legal costs and charges) incurred in connection with the contractor’s fault.

+ The hirer shall reimburse all damage, losses, and expenses (including legal fees and charges) incurred in connection with their fault.

–  Notification of force majeure:

+  Either party encountering force majeure events shall send a notification of the force majeure event to another party in which the consequences shall be specified.

+  The party encountering force majeure events is entitled to delay the performance of contract during the time of force majeure.

–  Responsibilities for force majeure:

+  If the performance of contract is delayed or any expense is incurred due to any force majeure event that is notified to the hirer under terms of contract, the contractor is entitled to:

~  Grant an extension of completion time under terms of the contract 

~  Have additional expenses covered under terms of contract.

+  The hirer shall consider approving the contractor’s requests.

+  The payment obligations of the parties shall not be affected by force majeure event consequences.

–  Contract termination due to force majeure events, settlement or obligations fulfillment.

+  If the period of delay due to force majeure is longer than that in the notification, either party has the right to terminate the contract.

+  In this case, the hirer shall pay for:

~  Every work has been done at the price included in the contract.

~  Costs of equipment or materials sent to the contractor or items that the contractor is deemed to deliver (as the time of payment by the hirer, such equipment and materials are the hirer’s assets (and liabilities) and shall be used by the hirer).

See more issues related to construction contracts:

– Types of construction contracts;

– A number of fundamental issues about construction contracts (part 1);

– A number of fundamental issues about construction contracts (part 2);