Latest News

Cannonway Awarded Contract On Major LNG Project in Malaysia....

Read More

New Regulations on Qualifications for Construction-related Enterprises

On 26 June 2007, the PRC Ministry of Construction issued several new regulations on the administration of construction-related qualification certificates. These new regulations are:

• Regulations on the Administration of Qualifications for Construction Enterprises (Construction Qualification Regulations)
• Regulations on the Administration of Qualifications for Survey and Design Enterprises (Survey and Design Qualification Regulations)
• Regulations on the Administration of Qualifications for Construction Supervision Enterprises (Construction Supervision Qualification Regulations)

Summary

• These new regulations will become effective from 1 September 2007 and will repeal the previous regulations on the administration of qualifications for construction enterprises, survey and design enterprises, and construction supervision enterprises which were issued by the Ministry of Construction in 2001 respectively.
• It appears from these new regulations that the qualification approval process has been improved, compared with the provisions under the old qualification regulations.
• Under the new regulations, the construction, survey and design, and construction supervision qualifications are valid for five years and renewable at the expiry date, subject to certain conditions being satisfied.
• The issuance of these new qualification regulations indicates a further endeavour by the PRC construction authorities to regulate the PRC construction and engineering market. Take note, however, that the Ministry of Construction will need to issue further rules as to implementation of these regulations. There is legal uncertainty as to how these regulations will be implemented in practice.

Here is an outline discussion of these new regulations.

Construction Qualification Regulations

According to the Construction Qualification Regulations, a construction enterprise must obtain a construction licence before it can engage in construction activities such as house building, construction of infrastructure, installation of construction equipment and pipelines, and undertaking of fitting out works. A construction enterprise must comply with the relevant qualification requirements in terms of registered capital, personnel, technical equipment and track record on completed projects in order to obtain an appropriate construction qualification.

An enterprise holding a construction qualification is permitted to undertake EPC works and perform project management and other related technical consulting services that are within the scope of work as permitted by its construction qualification. Construction qualifications are classified into three categories: general contracting, specialised contracting and labour subcontracting. There are different grades for each category of construction qualifications and the construction authority under the State Council will issue further rules to lay down the standard and scope of work for each category of construction qualifications.

Survey and Design Qualification Regulations

An entity is required to obtain a survey or design qualification before it can undertake construction survey or design activities in China, and the survey and design works undertaken must fall within the scope of its qualification. In order to obtain a survey or design qualification, the entity is required to comply with certain requirements in terms of registered capital, technical personnel, technical equipment and track record. An enterprise holding a survey or design qualification is permitted to undertake EPC works and perform project management and other related technical consulting services which are within the scope of work as permitted by its survey or design qualification.

Survey

Survey qualifications can be classified into three categories: (i) comprehensive survey qualification; (ii) specialised survey qualification; and (iii) labour survey qualification. If an entity has obtained a comprehensive survey qualification, it will be permitted to undertake all types of project survey works, except for oceanic engineering projects. An entity holding a specialised survey qualification may only undertake survey works that fall within the scope of its qualification.

Design

Design qualifications can be classified into three categories: (i) comprehensive design qualification; (ii) industrial design qualification; (iii) specialised design qualification; and (iv) special item design qualification.

An entity holding a comprehensive design qualification can undertake design works of all industry and all size, but a holder of other type of design qualifications may only undertake design works according to the scope and grade of their design qualification.

Construction Supervision Qualification Regulations

According to the relevant provisions of the Construction Supervision Qualification Regulations, an entity engaging in construction supervision activities must hold an appropriate construction supervision qualification and the construction supervision services performed by it must be within the scope of work permitted by its qualification.

Construction supervision qualifications are classified into three categories: (i) comprehensive qualification; (ii) specialised qualification; and (iii) “partnership qualification”.

“Partnership qualification” is a completely new concept. According to the Construction Supervision Qualification Regulations, the holder of “partnership qualification” appears to be a partnership formed by at least three registered construction supervision engineers.

Under the Construction Supervision Qualification Regulations, a holder of comprehensive qualifications can supervise construction projects of all sizes and in all industries. To apply for a comprehensive qualification, the applicant is required to have a minimum registered capital of RMB 6 million and must comply with certain personnel requirements. For example, it should be equipped with at least 60 registered construction supervision engineers and 5 registered cost surveyors.

A holder of specialised qualifications may only undertake construction supervision works which fall within the scope of work as permitted by its qualification in accordance with the regulations.

A holder of partnership qualification is only permitted to supervise the projects which are listed as grade-3 projects as set out the regulations. Further, it is not permitted to supervise construction projects which are subject to mandatory construction supervision requirements.