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OPINIONS OF THE MINISTRY OF CONSTRUCTION, NATIONAL DEVELOPMENT AND REFORM COMMISSION, MINISTRY OF FINANCE, STATE-OWNED ASSETS SUPERVISION AND ADMINISTRATION COMMISSION OF THE STATE COUNCIL AND OTHERS ON SPEEDING UP THE REFORM AND DEVELOPMENT OF THE CONSTRUCTION INDUSTRY
 
(No.119 [2005] of the Ministry of Construction promulgated on July 12, 2005)
     
     
SUBJECT : REFORM AND DEVELOPMENT OF THE CONSTRUCTION INDUSTRY
ISSUING DEPARTMENT : MINISTRY OF CONSTRUCTION, NATIONAL DEVELOPMENT AND REFORM COMMISSION, STATE-OWNED ASSETS SUPERVISION AND ADMINISTRATION COMMISSION OF THE STATE COUNCIL AND OTHERS
ISSUE DATE : 07/12/2005
IMPLEMENT DATE : 07/12/2005
LENGTH : 4,318 words
TEXT :
The construction industry is a backbone industry of the national economy with large capacity for admitting employment and high degree of industry conjunction. More than 50% of the fixed assets investment in the whole society cannot form a new production capacity or use value unless it is made through the construction industry, and the added value in the construction industry accounts for about 7% of the GDP. The technology progress and level of land, energy, water and material saving in the construction industry are, to a great extent, affecting and determining the change of the ways of economic growth of our country and the speed and quality of the whole national economic growth. The construction industry has provided jobs for nearly one third of the abundant rural labor force, and has played an important role in solving the issue concerning "agriculture, countryside and farmers".

However, there are still a lot of problems in the construction industry and the project construction management system of our country: the modern market system is immature, the reform on the state-owned construction enterprises is not deep enough, the cost of resources and energy is high in the construction industry and the technological progress is rather slow, they are of low international competitiveness, the engineering consulting service system is underdeveloped, and the market-orientation level in the construction on government investment projects is relatively low, the government project construction supervision system needs to be perfected. In order to boost the reform and development of construction industry of our country, we hereby bring forward the following opinions:



I. THE GUIDELINES AND TARGETS FOR ACCELERATING THE REFORM AND DEVELOPMENT OF CONSTRUCTION INDUSTRY OF OUR COUNTRY

The guidelines for boosting the reform and development of construction industry shall be: to bring into full play the fundamental role of the market in the allocation of resources under the macro-guidance of the government and in light of the requirements for perfecting the socialist market economic system, and carrying through the scientific view of development and building a harmonious society, promote the enterprises to speed up the reform on their systems and mechanisms and technology progress through orderly competition; improve the supervision ability of the government and solve the key issue that restricts the reform and development of the construction industry, properly handle the various interest relationships in the process of reform, maintain social stability and promote the overall, coordinated and sustainable development of the construction industry of our country.

The targets for boosting the reform and development of the construction industry shall be: to establish and perfect a modern market system that meets the requirements for expanding the opening to the outside world according to the commitment of our country made at its entry into the WTO, and create a construction market environment of fair competition and good order; speed up the innovation on state-owned construction enterprises to boost the vigor and the market competitiveness of the enterprises, and foster large enterprise groups with international competitiveness; make great effort to boost the technological progress of construction enterprises so as to ensure that they adhere to a new way to industrialization and to improve the level of saving land, energy, water and materials in the construction industry; perfect the standard system in project construction so to establish a market-based cost mechanism; reform the ways of organization and implementation of construction projects so as to improve the level of marketization for the construction on government investment projects and improve the comprehensive returns of fixed assets investment; shift government functions, perfect the quality of project construction and safety supervision mechanism so as to bring into better play the role of the construction industry as the backbone industry in national economic growth.



II. SPEEDING UP REFORM ON THE PROPERTY RIGHT SYSTEM OF ENTERPRISES SO AS TO REALIZE SYSTEMIC AND INSTITUTIONAL INNOVATIONS

A modern property right system shall be established. The establishment of the modern property right system is the intrinsic requirements for perfecting the basic economic system, and is the basis for building a modern enterprise system. To reform the property right system of state-owned construction enterprises, we shall establish joint stock enterprises with multi-investors by means of introducing strategic cooperative partners, regulating the listing on the stock market, establishing Sino-foreign joint ventures, and holding each other's shares, so as to develop an economy of mixed ownerships. Large construction enterprises shall, taking the reform of the property right system and the modern enterprise system as a turning point, and in light of the principle of basing the reform on the local regions and that of specialized development, incorporate and reorganize their subsidiaries, rationalize the property right link among all levels of companies so as to realize the optimum allocation of resources and bring into full play the overall advantages of group companies.

The enterprise management mechanism shall continue to be transformed. The construction enterprises shall do research and formulate a target and strategy for their development, which shall focus on their main businesses, strengthen management, and earnestly improve the core competitiveness and operating efficiency of the enterprises. The reform of the system of labor and personnel shall be further deepened so as to establish a talent selection and appointment mechanism featured by market-orientation. The relevant state provisions concerning social security and the performance of obligations for paying insurance premiums shall be followed. The mechanism of incentives and restrictions for enterprises shall be perfected. We should probe into the various effective ways of distribution. For the enterprises in the category of project design and consulting, positive probes shall be made for implementing the share right incentive mechanism according to the relevant state provisions. The social management functions shall be taken away from enterprises step by step so as to separate their main business from accessory businesses and turn their secondary lines of business into independent companies, and to properly solve the problem of surplus employees.

Policies and measures for deepening the enterprise reform. The policies of reform of state-owned industrial enterprises promulgated by the relevant departments of the State Council and the local people's governments shall apply to the reform of state-owned construction enterprises. The people's governments at all the provinces, autonomous regions, and municipalities directly under the Central Government may, according to the reality of their own regions, formulate policies and measures for supporting the reform of state-owned construction enterprises. The competent administrative departments of construction at all levels shall, together with the state-owned assets management departments, support the institutional reform of state-owned construction enterprises in a lawful way, and positively coordinate with them in solving the difficulties and problems in system reform. The state-owned construction enterprises shall conduct reforms according to laws and regulations and relevant policies of the state and dispose of the state-owned assets fairly, openly and lawfully so as to avoid the loss of state-owned assets.



III. OPTIMIZING THE INDUSTRIAL STRUCTURE TO MEET THE DEMANDS FOR MARKET DEVELOPMENT

The adjustment to the industrial structure of the construction industry shall be speeded up. The construction enterprises shall, oriented towards the market and in combination with their own advantages, speed up the management restructuring or expand the service fields to develop into large powerful enterprises or focus on its core business to develop into professional enterprises with specialized products and with their own characteristics, so as to form step by step a contractor system consisting of such contracting enterprises as general contractors, special contractors and labor service subcontractors, and form a project consulting service system consisting of enterprises such as survey, design and supervision enterprises, and form an industrial structure with the mutual reliance and coordinated development of large, medium and small enterprises, and comprehensive enterprises with professional enterprises, so as to satisfy the demand of multi-investors and diversified ways of organization and implementation of construction projects.

Great efforts shall be made to boost the way of construction on general contracting for a project. The way of construction on general contracting for a project shall be boosted in construction projects such as special projects, large public buildings and infrastructure with the technique as the mainstay. Large design and construction enterprises shall expand the functions of the enterprises through merger and reorganization and other various forms, improve the project management system, and develop into comprehensive engineering companies with such service capability for the whole process of project construction as design, purchase, construction management and examination on trial production. Enterprises that have the qualification of survey, design and construction by general contracting shall be encouraged to carry out business of general contracting of projects within the scope of construction projects allowed by their level of qualification. The enterprises undertaking any project under general contracting may select by themselves the subcontractors of construction, etc. stipulated in the contract or recognized by the construction entity, and shall take overall responsibility for the quality, safety, progress and cost of the project stipulated in the contract.

The project consulting service system shall be positively developed. It is an important measure for improving the overall quality of the construction projects of our country and the investment returns of construction projects to foster and develop the engineering consulting service system that provides technological and management service to investors. The existing qualification management measures and qualification standards for enterprises such as project survey, design, consulting, supervision, bid invitation agency, and cost consultation and other enterprises shall be improved to support the enterprises that have ability to expand service fields. An overall plan shall be made to establish and perfect the practicing system of registration on professionals in the project construction fields, and improve the quality of the registered practicing personnel. The feasibility study reports on construction projects shall be objective and justifiable so as to provide a scientific basis for investment decision-making. It shall be advocated to have a third party to carry out the design and consultation on key construction projects, and earnestly optimize the construction scheme. Enterprises that have the qualification for project survey, design, construction, supervision, cost consultation and bid invitation under entrustment, shall be encouraged to carry out project management business within the scope of construction projects allowed by their qualification grades so as to improve the professional and scientific level of the construction project management.

The restructuring of construction design enterprises shall be accelerated. Efforts shall be made to build a batch of large and comprehensive construction design enterprises with internationally first-class design theory and design technology, which oriented towards large public buildings. Scheme design shall be strengthened and preliminary design ability shall be expanded to enhance the functions of early stage consultation and afterwards project management on construction projects, and peel off the design of construction map step by step. It is encouraged for some of the construction design enterprises to merge with large construction enterprises to bring into play the advantages of unification of design and construction so as to promote the combination and development of the design and construction technologies. Great efforts shall be made to form a number of professional design firms led by registered architects or registered engineers so as to promote the development of personal creation of construction, boost the design and creation, and improve the technical level and service quality. The construction design firms shall, according to the stipulations of the contract or the approval of the construction entities, select by themselves the subcontractors for structural design and other professional design, and shall be responsible for the rationality and integrity of the design of construction projects.



IV. DEVELOPING AND EXPANDING PREDOMINANT ENTERPRISES AND TAKING AN ACTIVE PART IN INTERNATIONAL COMPETITION

Large construction enterprise groups with international competitiveness shall be formed through reorganization and conglomeration. Large construction enterprises with rather strong overseas competitiveness and comprehensive strength shall be encouraged to serve as leading enterprises in the drive to combine and merge enterprises that undertake scientific research, design, and construction, and shall make trans-professional and trans-regional reorganizations in light of the principles of market demand, complementary advantages, enterprise's free will and governmental guidance, so as to form a batch of large construction enterprise groups with rich capital, intensified talents, advanced technology, and ability of scientific research, design, purchase, construction management and financing. The construction enterprise groups shall strengthen strategic management, absorb from various sources excellent management talents who are adapted to international management, improve their ability to integrate production elements around the world, develop core and superior technologies, perfect the sales networks in major countries and regions, and reach to the advanced level as that of the same industry overseas in respect of business scale, technology quality safety management level and the rate of net assets proceeds of their own enterprises.

Enterprises are encouraged to take part in international competition. Construction enterprises shall bring into play the technology and management advantages of their own to boost the strength for expanding international market. The relevant departments of the government shall speed up the formulation and perfection of regulations on the contracting of projects overseas, and further perfect the regulatory means and measures, and take various economic means to support the development of overseas contracting of projects.



V. STRENGTHENING TECHNOLOGICAL INNOVATION AND TRANSFORMING THE WAYS FOR ECONOMIC GROWTH

The technological progress of the construction industry shall be based on standardization, industrialization and information, and be achieved by means of scientific organization and management, with construction projects as the carrier, through incessantly improving the technical level, management level and production capacity of the construction industry. Great efforts shall be made to develop buildings that can save energy, land, water, and materials, and strictly adopt the construction materials that are good for the environment and energy-saving, and no discarded products may be used. Efforts shall be made to develop standard construction components and parts and to increase the proportion of industrial production in the construction parts, improve the level of mechanized work on construction, and follow the path of industrialization, so as to promote the fundamental change of ways of economic growth in the construction industry.

Large construction enterprises are the mainstay of the technological innovation of construction enterprises. We should establish enterprise technology centers, increase the input of technological elements, attach importance to the training of talents, strengthen the standard construction of enterprises, strengthen research and development on techniques and engineering technologies, attach importance to the digestion and innovation of the introduced technologies, and the summarization and improvement of construction methods, and develop patents and special technology that are of self-owned intellectual property rights. Efforts shall be made to improve the width and depth of the application of information technologies in the construction industry, and improve the level of computer-aided designs, popularize the application of computers in project management, construction technology and enterprise management. The designers shall implement the principle of saving resources and protecting the environment, carefully optimize design schemes, so as to ensure that the production technique of the production construction projects, the main equipment and major projects are superior, applicable and reliable, ensure that the civil construction projects are applicable and economic, and beautiful where possible. Great efforts shall be made to honor excellent design and quality projects and the leading technological personnel who have made great contributions. The survey, design and construction enterprises shall positively adopt new technologies, new techniques, new equipments and new materials, and the construction entities shall, for those that have saved investment or improved benefits due to technological innovation, give corresponding physical awards.



VI. LAYING EMPHASIS ON DEVELOPING LABOR SERVICE SUBCONTRACTING ENTERPRISES AND DOING A GOOD JOB IN THE TRAINING AND EDUCATION ON MIGRANT WORKERS

Much effort should be made to develop labor service enterprises. The competent government departments shall formulate support policies to encourage migrant workers to establish labor service subcontracting enterprise and encourage local regions to set up labor service centers so as to export migrant workers in an organized way, and regulate the employment acts in construction. Supervision over the environment of construction sites and sanitation status shall be strengthened, and construction enterprises are encouraged to carry out certification on health, safety and environment, improve the working and living conditions of the construction sites. Construction enterprises shall sign labor contracts according to law with migrant workers, and pay wages of migrant workers in full amount. No one may delay the payment of wages of migrant workers by any reason. Construction enterprises shall attach high importance to work safety, and handle formalities for work-related injury insurance for migrant workers that have labor relationship with them in a timely manner, and handle accidental injury insurance for migrant workers who undertake dangerous work in construction sites according to the relevant provisions, which shall be regarded as an important supplement for work-related injury. Any region that has the conditions may probe into the possibility of taking part in medi-care programs that are suitable for migrant workers. The government at the area where migrant workers are massively exported shall establish labor service bases to positively carry out order-based training and targeted provision of migrant workers. The government at the place where many migrant workers come to work shall establish labor employment management service information systems for the construction industry, and plan as a whole for the work of employment guidance, skill training and protection of rights and interests, and provide legal consultation and aid to migrant workers. The competent governmental departments shall perfect regulations and systems and strengthen supervision and investigate into and punish those acts of infringing upon the rights and interests of migrant workers.

Importance shall be attached to the training and education of migrant workers. Improving the production operational skill of migrant workers is a fundamental measure for ensuring project quality and work safety. The governments at the places where migrant workers come from shall, according to the Plan on Training National Migrant Workers in 2003 to 2010 forwarded by the General Office of the State Council, bring the rural laborers in the construction industry into the Sun Project for Transferring and Training Rural Laborers, strengthen organization and coordination, and ensure that there are adequate capital teachers and training bases, and do a good job in training migrant workers according to the peculiarities of their locality. No migrant worker without necessary training on operational skill and knowledge of work safety may start to work.



VII. IMPROVING OF THE PROJECT CONSTRUCTION STANDARD SYSTEM, AND ESTABLISHING THE MARKET-BASED COST FORMATION MECHANISM

The reform of the project construction standard system shall be further deepened. We should try to develop mandatory clauses on construction standards step by step into the technological regulations, and technological legislation shall be speeded up. The management systems on project initiation, compilation, approval and implementation of technical laws and regulations as well as technical standards shall be perfected, and the social power shall be fully motivated to increase the capital input and absorb mature and applicable scientific and technological fruits, so as to speed up the formulation or revision of standards for project construction. The information building on these standards shall be accelerated to establish and perfect an advanced and applicable standard system of project construction with reasonable structure and wide scope of coverage. We shall fully draw on the experiences on superior international standards, and positively take part in the international standardization work to improve the overall standardization level in the project construction field of our country, and accelerate the step so as to keep in pace with the international standards for project construction.

The mechanism of market-based project cost formation shall be established. The supporting measures for the method of pricing through bill of quantity shall be perfected. The project cost management system adapting to the mechanism of market economy shall be established in light of the requirements for the development and reform of investment system and construction industry. The project cost information system shall be established to strengthen guidance to pricing acts in the construction market and to release the information on the standard of consumption and price that reflects the average social level. The supervision and inspection on the price settlement system of construction projects shall be strengthened.



VIII. REFORMING THE WAYS OF CONSTRUCTION ON GOVERNMENT INVESTMENT PROJECTS TO IMPROVE THE INVESTMENT BENEFITS OF CONSTRUCTION PROJECTS

The way of carrying out construction projects based on government investment shall be reformed. The core for the reform is to establish a way of organization and implementation of construction projects featured by clear rights and obligations, effective restrictions, professionalism, socialization and market-orientation. The non-profit government investment projects shall be organized and implemented through selected enterprises that have the ability of project management, and transfer such projects to the entities using them after the construction passes the completion-related check and acceptance. The construction entities, project legal persons and the various construction enterprises shall assume corresponding liabilities for project quality, construction term and cost according to the stipulations of the contract. The provinces and municipalities that have the required conditions may also set up special institutions consisting of professional technicians, and shall be responsible for the construction of government-invested projects.

The government-invested projects shall be constructed according to law by strictly observing construction procedures, and applying the method of public bidding and pricing through workload checklists, and shall, on the basis of technical and commercial bid appraisal, reasonably decide the bid winner whose bid is the lowest. Risk management on government-invested projects shall be strengthened. The provinces, autonomous regions, and municipalities directly under the Central Government that have conditions may apply centralized payment through state treasury. The relevant departments shall strengthen supervision over the quality and safety of government investment projects and establish and perfect the systems of checking, auditing, follow-up appraisal and responsibility investigation.



IX. INNOVATING GOVERNMENT SUPERVISION SYSTEM TO MAINTAIN A GOOD MARKET ENVIRONMENT

Great efforts shall be made to change the government functions. The competent administrative departments of construction at all levels shall change their minds, strengthen their consciousness of service, and perfect the administrative examination and approval responsibility system. Researches on the development plan and industrial policy of construction industry shall be strengthened, and the building on regulations and systems shall be reinforced to establish and perfect the project construction management system which is in keeping with the market economy. The principle of simplification, unification and efficiency shall be followed to integrate resources such as project quality, safety, and market management to realize "one-stop" service and centralized and unified law enforcement in the field of project construction.

The enterprise qualification and personal qualification management system shall be improved. Foreign-funded investment enterprise qualification management system shall be perfected rigorously according to the relevant commitments China made upon its entry into the WTO, and the reform of the enterprise qualification management system shall be accelerated according to the market rules, adjust the qualification standards, streamline the procedures for examination and approval, and support enterprises to expand their market. The system of registered practicing professionals shall be perfected, the engineering technicians may obtain the registration qualification of several relevant industries (professionals) at the same time through examination, and the engineering technicians that have several registration qualifications shall register and practice at one construction enterprise. The relevant departments shall strengthen supervision over the market access and market acts of construction enterprises and registered practicing personnel according to law.

A modern market system shall be established. Industrial monopoly and regional blockade shall be broken completely so as to maintain a nationally unified, open, competitive, and orderly construction market environment. The bidding system shall be perfected by adjusting the scope of mandatory bidding so as to realize the realty owners' self-determination whether to make bid invitation on non-government-invested projects under the precondition that the public security and public interests are not affected. The tangible construction market shall perfect computer management system to expand service functions. A project risk management system shall be established and perfected to popularize the systems of bidding guaranty, project payment guaranty and guaranty for contract performance, push forward the systems of construction project insurance, installation project insurance and project quality insurance, and the work-related liability insurance systems in project design, project supervision and other project consultation institutions, so as to regulate the acts of the market operators by economic means. A nationally interconnected project construction credit system shall be established to announce to the general public the performances of various construction enterprises, intermediary institutions and various registered practicing personnel, and the acts in violation of laws and regulations. A mechanism of credit supervision and punishment for bad faith shall be implemented so as to promote the fundamental change of the order of the construction market.

The industry associations and social intermediary institutions shall be fostered and developed. The building of industrial associations shall be strengthened to turn them into independent, fair and self-operated self-disciplinary industrial organizations. Industrial associations at all levels shall establish and perfect the industrial self-disciplinary mechanism so as to provide services for their members, reflect the appeal and request of their members, regulate the acts of their members and earnestly maintain the interests of their members. Such intermediary service institutions as project quality testing, construction judicial authentication, insurance agency, information consultation, legal counsel, shall be fostered and regulated so as to bring into play the role of intermediary service functions, so as to provide such services as coordination, communications, appraisal and supervision for the various market subjects taking part in the project construction activities. The competent administrative departments of construction at various levels shall make efforts to support the work of the industrial associations and attach importance to the role of other intermediary organizations, and establish and perfect construction market supervision and construction enterprise service system by combining administrative law enforcement, industry self-discipline and intermediary services together.

All the provinces, autonomous regions, municipalities directly under the Central Government and the relevant departments of the State Council shall, in combination with the reality of their own districts and departments, formulate plans for the reform and development of the construction industry, strengthen their guidance and coordination to promote the sustainable and sound development of the construction industry and construction enterprises of our country.
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