Circular 01/2025/TT-BXD: Determining Construction Investment Costs in 2026 – Common Mistakes During Project Finalization

As construction projects face increasing pressure regarding schedules, costs, and transparency, accurately determining project costs under the latest regulations has become a key factor affecting both legal compliance and financial efficiency. Circular 01/2025/TT-BXD provides a clearer legal framework; however, in practice, many investors and contractors continue to make mistakes during the project finalization stage, resulting in disallowed costs and delays in approval. This article helps businesses understand the regulations correctly and identify common errors through a practical checklist.

Overview of Cost Determination Principles Under Circular 01/2025/TT-BXD

Circular 01/2025/TT-BXD stipulates that the determination of construction investment costs must comply with several fundamental principles:

• Be consistent with the approved total investment budget.
• Accurately reflect the actual work volume completed.
• Comply with applicable norms, unit prices, and current regulatory policies.
• Ensure transparency, completeness, and auditability.

According to the regulation, construction investment costs consist of various components, including:

• Construction costs.
• Equipment costs.
• Project management costs.
• Construction investment consultancy costs.
• Other costs and contingency costs.

An important point to note is that the Circular requires not only “correct figures” but also the correct methodology and sufficient supporting evidence.

Notable Changes Affecting Project Finalization

Compared with previous regulations, Circular 01/2025/TT-BXD introduces several changes that directly affect the project finalization process:

First, stronger requirements regarding cost determination evidence.

Expenses must not only be supported by documentation but must also demonstrate that the cost determination methodology is appropriate and compliant.

Second, stricter control over the application of norms and unit prices.

Using outdated norms or norms that are inconsistent with current regulations may result in downward adjustments of project costs.

Third, clearer responsibilities for relevant parties.

The Circular specifically clarifies the responsibilities of investors and consulting firms in preparing, monitoring, and controlling project costs.

As a result, project finalization is no longer simply a process of compiling figures but has become a comprehensive verification process of the entire project cost management system.

Common Mistakes During Construction Investment Cost Finalization

From an auditing perspective and based on practical experience reviewing project finalization dossiers, common mistakes can generally be classified into the following categories:

1. Errors in Determining Actual Work Quantities

This is the most common error and often has the greatest impact on the final settlement value.

Many projects record payment quantities that do not match:

• As-built documentation.
• Acceptance and handover reports.
• Actual construction work performed.

In some cases, quantities are duplicated or include portions of work that were never completed.

Consequences include:

• Reduction of the approved final settlement value.
• Significant time spent providing explanations.
• Negative impacts on the investor’s credibility.

Verification Checklist

• Has the final settlement quantity been reconciled with the as-built documentation?
• Are there any additional works outside the contract that have not yet been approved?

2. Applying Incorrect or Outdated Norms and Unit Prices

Using outdated norms or norms that are inconsistent with the project's implementation period is a very common mistake.

Additionally, some entities:

• Develop their own norms without sufficient justification.
• Apply incorrect adjustment coefficients.

Under Circular 01/2025/TT-BXD, all applied norms must:

• Have a clear basis and justification.
• Be approved by the competent authority.

Verification Checklist

• Are the applied norms compliant with the regulations effective at the time of construction?
• Is there sufficient documentation supporting any adjustments to the norms?

3. Additional Costs Outside the Contract Without Adequate Documentation

During construction, additional work and unforeseen expenses are almost inevitable.

However, many additional cost items:

• Are not approved in a timely manner.
• Lack contract amendments or supplementary agreements.
• Lack confirmation records or supporting minutes.

As a result, during finalization:

• There is insufficient legal basis for recognition of these costs.

Verification Checklist

• Have all additional works and costs been formally approved?
• Are all contract appendices and supporting documents available?

4. Errors in Cost Classification

Incorrect classification of costs among categories (construction, equipment, consultancy, project management, etc.) may result in:

• Misstatement of the total investment value.
• Incorrect cost structure.
• Difficulties in monitoring and obtaining approval.

Particular attention should be paid to borderline costs that are often misclassified, such as:

• Equipment installation costs.
• Testing and commissioning costs.
• Construction supervision consultancy fees.

Verification Checklist

• Have all costs been classified according to current regulations?
• Are there any cases where costs have been shifted to another category to justify recognition?

5. Inconsistent Legal Documentation and Supporting Evidence

A classic but still recurring issue in many projects is inconsistency in documentation.

Common issues include:

• Figures that do not match across different documents.

• Missing signatures or official seals.

• Incomplete acceptance and handover documentation.

As project reviews become increasingly rigorous, these shortcomings may lead to:

• Rejection of the finalization dossier.

• Delays in the approval process.

Verification Checklist

• Are figures consistent across all documents?

• Have all required signatures and seals been obtained?

Auditor’s Perspective: Why Do These Mistakes Keep Reoccurring?

Although regulations are becoming increasingly clear, these mistakes continue to occur due to three primary reasons:

First, Many businesses still view project finalization as a process of “formalizing documents” rather than controlling project costs from the beginning.

Second, There is often insufficient coordination among technical, accounting, and legal departments, resulting in inconsistent data.

Third, Many organizations fail to update themselves promptly regarding new regulations, particularly changes introduced by Circular 01/2025/TT-BXD.

The Right Approach: Control Costs From the Beginning of the Project

To minimize finalization risks, businesses should change their approach.

First, Establish a comprehensive cost management system covering all stages of the project, from planning and design to construction and completion.

Second, Standardize project documentation from the outset and ensure that every expense has sufficient legal support.

Third, Conduct periodic reviews throughout the project instead of waiting until the finalization stage. Early control not only reduces the risk of cost disallowances but also significantly shortens the approval process.

Conclusion

Circular 01/2025/TT-BXD establishes a higher standard for construction investment cost management.

Under the new framework, project finalization is no longer merely a process of summarizing figures; it is a comprehensive review of the project's reasonableness, legality, and transparency.

A high-quality finalization dossier is not created at the end of the project. Rather, it is the result of strict and consistent control from the very beginning.

The earlier a business prepares and implements proper controls, the lower its risks will be—and vice versa.

Viet Australia
Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.