Decree 35/2023/NĐ-CP: "The advance for construction contract does not exceed 30% of the contract value"

On June 20, 2023, the Government issued Decree 35/2023/ND-CP amending the Decrees in the field of state management of the Ministry of Construction, including the amendment of the contract advance ratio.

The Advance For Construction Contract Does Not Exceed 30% Of The Contract Value.

Details are as follows:

 - A contract advance must not exceed 30% of the contract value at the time of signing (including provisions, if any). In cases where a higher advance is required, the investment decision-maker's permission must be obtained.

Previously, Clause 5 and Article 18 of Decree 37/2015/ND-CP stipulated that the contract advance must not exceed 50% of the contract value at the time of signing (including any provisions).

- For projects for which the investment decision maker is the Prime Minister, the higher advance shall be decided by the Minister, the Head of the ministerial-level agency, and the President of the People's Committee of the province.

The advance ratio, the number of advances, the time of the advance, and the repayments of the advance must be specified in the bidding documents, the request for proposals, or in the draft construction contract sent to the contractor. Advance terms must be specifically agreed upon by the parties, written in the contract in accordance with the laws, and in accordance with the contract performance schedule.

Time For Making Construction Contract Advance

Based on the provisions of Clause 2 of Article 18 of Decree No. 37/2015/ND-CP, the contract advance can only be made after the construction contract takes effect.

Particularly for construction implementation contracts, there must be a ground clearance plan as agreed in the contract, and the order must have received an advance guarantee (if any) corresponding to the value of the contract. See more details in Decree 35/2023/ND-CP, effective June 20, 2023.

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