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Legal Update

New Decree on Quality Management of Construction Works in Vietnam

22 April 2013
Mayer Brown JSM Legal Update

On 6 February 2013, the Government of Vietnam issued Decree No. 15/2013/ND-CP guiding the implementation of the Construction Law dated 26 November 2003 (Decree 15). Decree 15 came into effect on 15 April 2013 and replaces Decree No. 209/2004/ND-CP dated 16 December 2004, and Decree No. 49/2008/ND-CP dated 18 April 2008. It also replaces a number of clauses in Decree No. 12/2009/ND-CP dated 12 February 2009. Provisions in Decree 15 on utilising information concerning the capabilities of organisations and individuals for contractor selection, however, will take effect on 1 September 2013.

Pursuant to Decree 15, the following key changes have been introduced:

Types of Construction

Decree 15 sets out more types of construction works to its purview, and also more detailed explanations, with examples, of each type of construction work. Below is a summary:

  • Building works - this shall include dwelling house and works for public. Works for public consist of construction works for education, health, culture, commerce and service, and communication.
  • Industrial works - this shall include works for construction materials manufacturing, coal mining, the petroleum industry, heavy industry, energy, chemical, light industries and aquatic products, and the canned food processing industry.
  • Transportation works - this shall include roads, railways, bridges and tunnels.
  • Works for agriculture and rural development - this shall include irrigation works (reservoir, dams, embankments and works for fresh water supply for living and production activities) and works for forestry, salt production, fisheries, and livestock.
  • Technical/urban infrastructure works - this shall include works for water supply, drainage, waste treatment and other works (public lighting, parks, urban cemeteries, garages for automobiles and motorcycles) and technical tunnels.

This classification provides clarity and is consistent with the variety of construction projects in Vietnam.

Technical Instructions/Specifications

Decree 15 places importance on technical specifications, which shall serve as the basis for preparing bid invitation dossiers, and for carrying out construction supervision, implementation and inspections. The investors shall prepare and approve the technical specifications in line with the technical designs or other designs prepared after basic design. The specifications must also conform with the national technical codes and standards, and the preparation of technical specifications is compulsory for works of special grade, grade I and grade II. For other works, technical specifications may be prepared in the form of an explanation on the design.

Public Information on Capabilities of Organisations and Individuals in Construction Works

Organisations and individuals involved in construction works have to provide the relevant State authorities with information regarding their capabilities in the construction field. Within 30 days of receipt of such information, it will be at the discretion of the State authorities to make such information public on their website.

Inspection on Completion of Construction Works

In the old decree, the construction contractor was required to inspect the works before requesting the investor to inspect them. This step is now eliminated and the investors shall take responsibility for organising the inspection of completed construction works.

Warranty of Construction Works

Decree 15 provides that construction contractors and equipment suppliers are responsible for warranty of construction and equipment. Warranty shall start from the date of the handover of the project or the delivery of the equipment (as the case may be). Previously, a percentage was given for the amount of warranty money that needs to be paid (it was either 3 percent or 5 percent of the contractual value, depending on the type of construction works). Decree 15 is however silent on this point and it appears now that it shall be discussed and agreed between the investors and contractors.

Accidents during Construction Works

Unlike the previous decree, Decree 15 classifies and grades incidents that occur according to the following main headings: work incidents; incidents causing the loss of safety; and incidents of fire. Based on the damage that occurs, such incidents are graded at four levels, as follows: (i) very serious level, (ii) level 1, (iii) level 2 and (iv) level 3. Immediately after any such incidents occur, investors must (verbally, briefly) report the incident to the People's Committees of the Commune Level and report in writing to the People's Committees of all levels within 24 hours. In the case of human loss of life or injury, investors must report to the Ministry of Construction. At the same time as reporting, the investor must conduct the dismantling and clearance of the site.

For inquiries related to this Legal Update, please contact Quynh-Anh Lam, Nguyet NguyenElaine Chew or your usual contacts with our firm.

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