Ministry of Construction, Administration of the Pricing of Contracts for Construction Projects Procedures

Promulgated: 5 November 2001
Effective: 1 December 2001
Interpreting authority: State Council department in charge of construction
Applicability: For the purposes of these Procedures, "construction projects" refer to projects for the construction of buildings and municipal infrastructure; and "municipal infrastructure projects" means civil projects for city streets, public transportation, water supply and drainage, gas and heat supply, landscaping, environmental protection and hygiene, sewage treatment, garbage disposal, flood prevention, underground public facilities and ancillary facilities of the above (Article 2). Awarding and pricing of contracts in other projects may also be administered with reference to these Procedures (Article 22).

Main contents: According to the Procedures, working drawing estimates and reserve prices and bid prices for tendering shall consist of costs (direct and indirect), profits and taxes, and may be prepared on the labour and material unit price basis, which requires the indirect costs, profits and taxes to be separated from the calculation of direct costs, or on the all-in unit price basis, which incorporates all costs, profit and taxes (Article 5). For a project subject to tender, the reserve price and bid prices may be prepared on the basis of the bill of quantities (Article 8). For a project not subject to tender, the contract shall be concluded on the basis of the working drawing estimates prepared by the contractor (Article 11). Contract prices may be fixed, variable or determined on the basis of costs plus compensation (Article 12). Reserve price, tender bid price, audit of final account and project cost determination documents shall be signed and sealed by cost engineers (Article 17). Cost engineers and construction cost consulting firms are liable to punishment under the Procedures if they act fraudulently in preparing, auditing or evaluating costs and prices of construction projects (Articles 19 and 20).