Laws and Regulations
Chinese Law
Source: Ministry of Commerce Website, PRC
REGULATIONS OF SHANGHAI MUNICIPALITY ON THE ADMINISTRATION OF CONSTRUCTION MARKET
Tuesday, October 21, 1997 Posted: 10:54 BJT(0254 GMT)
(Valid From:1997.12.01)
(Adopted at the 39th Session of the Standing Committee of the 10th Shanghai Municipal People’s Congress on October 21, 1997)
- CHAPTER I GENERAL PROVISIONS
- CHAPTER II PROFESSIONAL QUALIFICATIONS AND OCCUPATIONAL QUALIFICATIONS
- CHAPTER III CONSTRUCTION PROJECT CONTRACTING
- CHAPTER IV PROJECT CONTRACT AND CONSTRUCTION COST
- CHAPTER V CONSTRUCTION PROJECT QUALITY AND SAFETY
- CHAPTER VI LEGAL LIABILITY
- CHAPTER VII SUPPLEMENTARY PROVISIONS
CHAPTER I GENERAL PROVISIONS
Article 1 With a view to strengthening the administration of construction market, maintaining the order of construction market, guaranteeing the quality of construction project and its construction safety and protecting the legitimate rights and interests of parties or persons concerned, the present Regulations are formulated in accordance with the relevant state laws and regulations, and in line with the actual conditions of this Municipality.
Article 2 Units and individuals, who are engaged in the administration of construction market and construction activities for construction projects in the administrative area of this Municipality, shall abide by the present Regulations.
Article 3 The Shanghai Municipal Construction Commission (hereinafter referred to as SMCC) shall be the administrative competent authorities responsible for the municipality’s construction market; the Shanghai Municipal Construction Industry Administrative Office (hereinafter referred to as SMCIAO) shall be responsible for the concrete administration of construction market within the Municipality. The related professional departments within the Municipality shall be responsible for the administration of construction activities within their respective professional fields, in accordance with the division of duties provided by the State laws and administrative regulations.
The district/county construction administrative department shall, within its scope of authority, be responsible for the administration of construction market in the area under its jurisdiction.
The related administrative departments shall coordinate their work in implementing the present Regulations according to their respective duties.
Article 4 Construction activities shall adhere to the unification of project quality, safety for construction and economic benefit, and follow the principle of openness, fairness and impartiality as well as honesty and trustworthiness.
Article 5 Construction activities shall be carried out by the systems of holding professional qualifications for units in construction industry, of registering occupational qualifications for professional technicians, of reporting construction projects for approval, of calling for tenders and tendering, of licensing construction, of controlling quality and of supervising safety.
Construction activities shall practice the systems of contracting-out agency, of construction cost consultation, and of construction project supervision.
Article 6 Researches on constructional science and technology and training of personnel shall be encouraged while the development and adoption of any new building techniques, technological processes, new equipments, new materials and modern methods of management shall be supported so as to promote the growth of construction industry.
CHAPTER II PROFESSIONAL QUALIFICATIONS AND OCCUPATIONAL QUALIFICATIONS
Article 7 The following units in this Municipality shall not be engaged in construction activities unless they have registered at the industrial and commercial administrative department and obtained the certificates of professional qualifications issued by the relevant State department or the SMCC:
1. Units that under take survey, design and construction for construction projects; and
2. Units that undertake contracting-out agency, supervision and cost consultation for construction projects.
Article 8 A nonlocal unit shall, with the professional qualification certificate issued by a construction administrative department above the provincial level, and relevant materials, submit a written application to the SMCC, and carry out construction activities in the Municipality only after getting the business contracting permit upon approval of the application.
Article 9 The legal persons and other organizations from Hong Kong Special Administrative Region, Macao and Taiwan or other countries engaged in construction activities shall obtain the business contracting permit upon approval by both Shanghai foreign economic relations and trade administrative department jointly with the SMCC, and register at the industry and commerce administrative department, before they are allowed to engage construction activities in this Municipality.
Article 10 The professional technicians in construction activities, subject to the application of the system of registering occupational qualifications according to the State provisions, can engage in the business within the scope of registration only after having passed the qualification examination and obtained the registration certificate of occupational qualifications.
The registered professional technicians in construction activities shall undertake business upon the unified acceptance of commission by the work units which they belong to.
Article 11 The SMCC, which ratifies and issues the certificates of professional qualifications and business contracting permits according to the provisions of the present Regulations, shall within 30 days after receiving an application, make a decision in writing on whether to approve or disapprove it. In case of disapproval, the written decision shall state the reasons therefor.
Article 12 Those who have already obtained the certificates of professional qualifications and the business contracting permits shall submit themselves to the annual examination and verification by the SMCC, SMCIAO or the district/county construction administrative department.
Article 13 A unit engaged in construction activities shall go through the registration procedures for change or cancellation at the administrative department of industry and commerce in case of its change of name, split-off, merger, cancellation or shut-down. For split-off or merger, the unit shall go through the formalities for alteration of professional qualifications with the original examination and approval department while the change of name, cancellation or shut-down shall be reported to the original examination and approval department for the record.
CHAPTER III CONSTRUCTION PROJECT CONTRACTING
Article 14 After obtaining the approved filing document for a proposed construction project, the construction unit shall, with the related approval documents, go through the formalities, within the specified time limit, for reporting the construction project for approval with the SMCIAO or the district/county construction administrative department in the area where the construction project takes place, according to their respective competence for examination and approval.
Article 15 Any unit in charge of construction that contracts out a construction project shall satisfy the following requirements:
1. Possessing the legal person status or being an organization established according to law;
2. Having funds compatible with the construction project; and
3. Having professional and managerial personnel appropriate for the management of the construction project.
Any unit in charge of construction that does not satisfy the requirement under Item 3 of this Article shall entrust a construction project contracting-out agency (hereinafter referred to as the contracting-out agency) with the appropriate professional qualification grade to do the contracting out instead.
Article 16 Contracting-out can be done in the case that the survey item or design item of a construction project shall meet the following requirements:
1. Having the filing document for the proposed construction project;
2. Having the fundamental data as required for the survey and design of the construction project; and
3. Having the prospectus for design requirement.
Article 17 Contracting-out can be done in the case that the construction item of a project shall meet the following requirements:
1. The preliminary design scheme has been approved;
2. The construction project has been incorporated the annual construction plan; and
3. Construction drawings and relevant technical materials needed for the construction are available.
Article 18 Contracting out those items of survey, design and construction in a construction project to one single construction project contractor shall comply with the provisions of Article 16 herein.
Article 19 A construction project may be contracted out through calling for tenders or negotiations of bids, or direct competitive bidding.
If a construction project is contracted out through call for tenders, it may be done either on open basis or on an inviting basis.
Article 20 The following construction projects shall, when their in total investment or building areas have exceeded the prescribed limits, be contracted out through call for tenders or competitive bidding:
1. Invested by the government;
2. Invested by the institutional unit;
3. Invested by the state-owned enterprise;
4. Invested by the national asset holding enterprise;
5. Invested by the collective economic organization; or
6. Other construction projects specified by the Shanghai Municipal People’s Government
For the special construction projects such as secret projects, military facility projects and those projects specified in the preceding paragraph of this Article, the units in charge of construction may choose the modes of contracting-out themselves, and be subject to the supervision of the SMCIAO or the district/county construction administrative department.
Article 21 Where contracting-out through calling for tenders is employed, the procedures shall comply with the relevant provisions on the administration of calling for tenders, the standardized method of appraising tenders shall be adopted, and the supervision of the SMCIAO or the district/county construction administrative department shall be exercised.
Article 22 The construction project contracting-out unit (hereinafter referred to as the “contracting-out unit”) shall contract out a construction project to the construction project contractor (hereinafter referred to as the “contractor”) with appropriate professional qualification grade and business scopes.
Article 23 The items of survey, design and construction of a construction project may wholly be contracted out to one contractor under a general contract; or they may likewise be separately contracted out to contractors under individual contracts.
Where the unit in charge of construction or a general contractor contracts out the items of construction, the single item project in the construction project shall be the minimum subject-matter of a contract.
Article 24 A general contract unit for design may sub-contract to other design with units single item projects as the minimum subject matter of a contract.
A general contract unit for performance may sub-contract to other performing units with unit works as the minimum subject matter of a contract.
Nonlocal general contractors for design and performance shall conduct contracting-out business only after getting approval from the SMCIAO.
A sub-contractor shall organize the accomplishment of all contracted business on its own and is not allowed to resub-contract it to any others.
Article 25 The following construction project business shall not be sub- contracted:
1. Survey and design items of a construction project business contracted by survey and design units with the professional qualifications of Grade C or below; or
2. Construction item of a project contracted by performing units with the professional qualifications of Grade D or professional grade or non- graded level.
Article 26 Where it is agreed in a construction project contract (hereinafter referred to as the contract) the contractor shall purchase the building materials, structural members and fittings, and equipment, the contracting-out unit shall not require the contractor to purchase the building materials, structural members and fittings, and equipment from such manufacturers or suppliers as designated by the contracting- out unit.
Where it is agreed in a contract that the contracting-out unit shall purchase by itself, or require the contractor to purchase, the building materials, structural members and fittings, and equipment used from such manufacturers and suppliers as designated by the former, the contracting-out unit shall provide the basis for their characteristics and quality. In case of any quality or safety problems arising therefrom, the contracting-out unit shall be liable for the consequences.
Article 27 Any contractor engaged in contracting activities for construction projects shall hold the certificate of professional qualifications or business contracting permit and contract for construction projects within the prescribed business scope.
Article 28 The contractor shall hold itself responsible to the contracting-out unit as agreed in the contract while the sub-contractor shall likewise do the same to the general contractor if a construction project is sub-contracted.
Article 29 The contractor is not allowed to sub-contract to others its wholly contracted construction project business.
Article 30 The contracting-out agency shall contract to accept the commission business of contracting-out construction projects according to its approved professional qualification grade and business scope.
The contracting-out agency shall not transfer to any others the commission business of contracting-out construction projects.
Article 31 The following construction projects shall be subject to supervision:
1. Key construction projects of the State and this Municipality;
2. Large- and medium-size projects for the cause of public welfare;
3. Housing projects;
4. Projects funded by donations or loans from foreign governments or international financial organizations; and
5. Other projects stipulated by the Shanghai Municipal People’s Government.
As commissioned by the unit in charge of construction the construction project quality supervising unit (hereinafter referred to as the supervising unit) shall, according to its approved professional qualification grade and business scope, and on the basis of the relevant laws, rules and regulations, and technical criteria, design documents, and supervision contract, exercise supervision and issue a corresponding written report.
Article 32 The supervising unit shall not be engaged in the following activities:
1. Having subordinate or business relationship with the contractor of the construction project, or with the suppliers of building materials, structural members and fittings, and equipment, and accepting from the unit in charge of the construction project the commission of supervision.
2. Colluding with the contractor of the construction project or the suppliers of building materials, structural members and fittings, and equipment to employ trickery; or
3. Transferring supervision business.
Article 33 The unit in charge of construction shall, when a construction project is in a condition to start construction, apply to the SMCIAO or district/county construction administrative department for the construction permit with the following materials:
1. Planning permit for the construction project;
2. Voucher for entering funds into the account book;
3. Documents certifying that the construction site is already leveled, accessible by road and supplied with running water and electric power;
4. Copy of the contract for undertaking the construction project; and
5. Materials needed for reporting the quality control and safety supervision for the construction project to a high body.
The SMCIAO or district/county construction administrative department that ratifies and issues the construction permit for construction project according to the provisions in the preceding paragraph of this Article, shall, within 30 days after receiving an application, make a written decision as to whether to approve or disapprove it. In case of disapproval, the written decision should state the reasons therefor.
Where no construction permit has been obtained for a construction project, construction shall not proceed.
CHAPTER IV PROJECT CONTRACT AND CONSTRUCTION COST
Article 34 For a construction project, the contracting parties shall sign a contract between them.
The contract for a construction project shall be made out in written form, taking the exemplary text designed by the State and this Municipality as reference.
The major terms and conditions of the contract for a construction project awarded through calling for tenders shall conform with the main contents of the tender-inviting documents, of the tender and of the tender-winning notice.
Article 35 The construction project norm and the cost calculating method shall be drawn up by the SMCC together with the relevant departments in accordance with the relevant provisions of the State and this Municipality, and with the market price change of building materials, labor, machinery equipment, etc., and shall be regularly published by the SMCC.
Article 36 The construction cost for a project shall be decided by the contracting parties through calling for tenders or negotiation with reference to the construction project norm and cost calculating method issued by the SMCC on the basis of the specific characteristics of a construction project and the market supply and demand.
Article 37 Engineering expenses for a construction project shall be settled according to the price as agreed in the contract or to the construction project norm and the cost calculating method as agreed in the contract.
The unit in charge of construction and the general contractor shall pay the engineering expenses to the contractor as agreed in the contract while the general contractor shall, where the construction project has been sub-contracted, pay the sub-contractors the engineering expenses as agreed in the sub-contract.
Article 38 Where the engineering volume as agreed in the contract has increased or decreased, the contracting parties may determine the engineering expenses for the increased or decreased volume through negotiation, or they may decide the engineering expenses for the increased or decreased volume by consulting the construction project cost consultancy (hereinafter referred to as the consultancy) entrusted by both parties, or entrusted by one party and approved by the other. But the contracting-out unit shall not delay implementing the contract under the pretext of cost consultation.
Article 39 The consultancy shall, within its approved professional qualification grade and business scope, accept commission from the unit in charge of construction or the contractor to engage in corresponding consultation services.
The standard for charging consultation service fees shall be set by the SMCC together with the Shanghai Municipal Price Control Bureau according to the principle of combining the actual engineering volume and the approved norm.
The consultancy shall be obligated to keep confidential the materials and documents provided by the entrusting unit.
The consultancy having property interests relationship with one of contracting parties is not allowed to accept business entrusted by either of them.
The consultancy is not allowed to transfer its consultative business.
CHAPTER V CONSTRUCTION PROJECT QUALITY AND SAFETY
Article 40 The quality of survey, design and construction for a construction project and the safety in the process of construction shall accord with the relevant criteria set by the State or the trade; or they shall, where there are no such criteria, comply with the local criteria for the construction project in this Municipality.
Article 41 The unit in charge of construction shall organize the contractors of survey, design and construction for a construction project to disclose their real technical intentions about the survey, design and construction documents, and provide appropriate technical materials and other necessary conditions.
The unit in charge of construction shall, as agreed in the contract, be responsible for the construction project quality, construction safety and site management.
The unit in charge of construction shall, within 6 months after the completion acceptance of a construction project, submit gratuitously the completion record of the construction project to the municipal urban construction archives or the district/county urban construction archives according to the relevant provisions.
Where the unit in charge of construction has contracted out all items of survey, design and construction of a construction project to one contractor under a general contractor, then this general contractor shall bear the responsibilities as specified in the first paragraph of this Article.
Article 42 The contractors in charge of the survey and design of a construction project shall be responsible for the quality of the documents they have drawn up on survey and design for the construction project.
The documents on survey and design for the construction project shall conform with the provisions of the relevant laws, rules, regulations and technical criteria for construction project survey and design. In design, clear indications shall be given of the quality requirement for the building materials and equipment to be used as well as their specifications, characteristics, etc.
The contractor of design for a construction project shall not designate certain manufacturers of building materials and equipment.
Article 43 The general contractor of construction for a construction project shall, as agreed in the contract, be responsible for the engineering quality and the management of construction safety for the construction project.
The sub-contractor of construction for a construction project shall, as agreed in the sub-contract, be responsible for the quality of the construction project undertaken by itself and submit to the management of the general contractor of construction.
Article 44 The contractor of construction for a construction project shall carry out effective management on the construction site by strengthening the management of civilized construction, organizing construction scientifically and controlling pollution and damage caused by dust, waste gases and water, solid waste materials, noise and vibration to the environment on the construction site.
The contractor of construction for a construction project shall, according to the rules, report to the relevant departments promptly any quality or casualty accidents that happen in the course of construction.
Article 45 The supplier shall take the full responsibility for the quality of building materials, structural members and fittings, and equipment they have provided for the construction project.
Article 46 The professional personnel carrying out construction management and the operation workers in construction projects shall implement the system of taking up posts after training, under which only those who have been trained in construction engineering safety, professional ethics and related technical skills and have obtained the qualification certificates can take up their respective posts.
Article 47 After the completion of the construction project, the contractor shall conduct self-examination of the project quality; the unit in charge of construction shall be responsible for the overall completion acceptance and the supervising unit shall produce a written report on completion acceptance if the unit in charge of construction has consigned the job to it; and the SMCIAO and the district/county construction administrative department shall exercise supervision and administration on the quality of the construction project.
The construction project shall not be made available to users if it is substandard in quality.
Article 48 The municipal and the district/county labor administrative departments shall be responsible for the supervision on labor protection for construction safety in construction projects in this Municipality.
The SMCIAO and the district/county construction administrative departments shall be responsible for the supervision and administration of construction safety for construction projects under the professional guidance of the labor administrative department.
Article 49 The performing unit shall first be responsible for repairing, remaking and rebuilding if there are, after the construction project is put into use, any quality problems caused by such factors, except force majeure, as survey, design and construction or by the building materials, structural members and fittings, and equipment used in the project within the warranty period of the project as provided by the State or this Municipality; the cost thus incurred shall be borne by the responsible parties.
Article 50 The SMMCC, SMCIAO and the district/county construction administrative department shall, according to law, accept the complaints about the construction project quality from citizens, legal persons and other organizations and deal with such complaints promptly.
Article 51 This Municipality encourages units in charge of construction and contractors to have their construction projects insured.
CHAPTER VI LEGAL LIABILITY
Article 52 The SMCIAO or the district/county construction administrative department shall mete out punishments on one of the following acts of violating the present Regulations by ordering suspension of construction activities, giving warning or confiscating illegal gains, and may impose on it a fine of RMB 5,000 up to RMB 50,000.
1. Any unit who hasn’t yet obtained the certificate of professional qualifications or the business contracting permit but is already engaged in construction activities in this Municipality;
2. Those professional technicians who are engaged in construction activities without having obtained the occupational qualification certificates, where the system of occupation registration must be implemented according to the provisions of the State; or
3. Any unit engaged in construction activities has failed to go through the necessary formalities according to the provisions in the event of its change of name, split-off, merger, cancellation or shut-down its existence or close its business.
Article 53 The SMCIAO or the district/county construction administrative department shall mete out punishments on one of the following acts of violating the present Regulations by ceasing the construction activities, giving a warning or confiscating the illegal gains, and may impose on a fine that is equal to 1% to 3% of the contract value, which should amount to no less than RMB 5,000 but no more than RMB 200,000:
1. The construction project should have been, but was not, contracted out through calling for tenders;
2. The construction project should was contracted out to the contractor without the corresponding professional qualification grade and business scope;
3. The construction project has been contracted out in violation of the provisions of the general contract;
4. The construction project has been contracted out in violation of the provisions of the sub contract;
5. The construction project should have been, but was not, contracted through bidding;
6. The construction project business has been contracted by a contractor beyond its professional qualification grade and business scope;
7. The construction project should have been subjected to supervision, but was not commissioned for supervision; or
8. The contracted business of a construction project has been recontracted to others.
Article 54 If the unit in charge of construction fails to go through the formalities within a time limit for reporting a proposed construction project for approval, or for applying for the construction permit, the SMCIAO or the district/county construction administrative department shall order it to cease the construction, or give it a warning, and may impose on it a fine of more than RMB 5,000 and less than RMB 50,000.
Article 55 If any contracting-out agency, supervising unit or construction cost consultancy accepts business beyond its own professional qualification grade and business scope or fails to perform the required obligations, the SMCIAO or the district/county construction administrative department shall order it to cease all construction activities, give it a warning or confiscate its illegal gains, and may impose on it a fine of more than RMB 5,000 and less than RMB 50,000.
Article 56 The SMCIAO or the district/county construction administrative department shall mete out punishments on one of the following acts of violating the present Regulations by giving the party concerned a warning, ordering it to cease the construction or confiscating its illegal gains, and may impose on it a fine equal to 1% to 3% of the contract value, which should amount to no less than RMB 5,000 but no more than RMB 200,000:
1. Violating the provisions on construction project quality control, safety supervision or construction site management;
2. Causing substandard project quality and casualties, for which the unit in charge of construction or the units engaged in survey, design or construction for the project shall be responsible; or
3. Delivering for using the construction project that has not been up to the required standard.
Article 57 Any unit shall be regarded as automatically closing its business with its certificates becoming invalid if it has not applied for the annual examination as required within a time limit and still take no such action even after being prompted by the SMCC, SMCIAO or the district/county construction administrative department; if any unit has failed to pass the annual examination, the SMCIAO shall order it to make correction within a time limit, during which the SMCIAO shall lower its professional qualification level by one grade or shall reduce its business scope; if any unit has failed to pass the annual examination for two years in succession, the SMCC shall then lower its professional qualification level by one grade; and in the case of the one with the lowest professional qualification grade, its professional qualification shall be cancelled or the business contracting permit revoked.
Article 58 The SMCC may mete out punishments on those contractors of survey, design, and construction for a construction project, and on those contracting-out agencies, supervising units and construction cost consultancies for having violated the present Regulations by degrading the professional qualification, withdrawing temporarily or revoking the certificate of professional qualifications or the business contracting permit according to the seriousness of their cases.
Article 59 The individuals with a direct responsibility and their unit legal representatives causing substandard quality of the construction project, casualty accidents and other losses of lives and property, or disturbance in the order of contracting the construction project, shall be given the disciplinary sanction; they shall, in case of their misconduct constituting a crime, be prosecuted, in accordance with law, for their criminal liabilities.
Article 60 The SMCC, SMCIAO or the district/county construction administrative department shall, if issuing the certificate of professional qualifications, the business contracting permit and the construction permit for a construction project or making wrong decisions in violation of the present regulations, be ordered by its higher competent authorities to make correction, or to make revocation; in case of its misconduct causing economical losses, they shall make compensation for them according to law.
Article 61 Construction administrative personnel shall observe law and discipline and enforce the law justly. Those personnel who have committed misprision, abused their power, or blended the law for selfish ends shall be punished with disciplinary sanction by the units to which they belong or by their higher competent authorities; in case of their misconduct constituting a crime, they shall be persecuted, in accordance with law, for their criminal liabilities.
Article 62 If the party concerned does not accept the specific administrative act, it may apply for reconsideration or take legal proceedings in accordance with the Regulations on Administrative Reconsideration and the Administrative Litigation Law of the People’s Republic of China.
Where the party concerned has neither applied for reconsideration nor brought an action within the legal time limit, nor implemented the specific administrative act, the department that has made the administrative act shall apply to the people’s court for enforcement.
CHAPTER VII SUPPLEMENTARY PROVISIONS
Article 63 The definitions of some relevant technical terms used in the present Regulations are as follows:
1. The construction project refers to civil engineering works, piping works and the related equipment installation works, decoration and fit- up works, etc.;
2. Construction activities refer to those activities such as survey, design and construction for a construction project, the related constructing-out agency, construction cost consultancy, construction project supervision and the like;
3. The single item project refers to the works of a construction project that consists of several unit works having independent design documents and being able to independently yield their specific functional benefit after their completion.
4. The unit works refer to the part of a project that is separately designed, may be constructed independently and is an constituent part of the whole single item project.
5. Resub-contracting refers to the act of transferring the contracted project to somebody else without exercising the function of management as performed by a contractor.
Article 64 The Shanghai Municipal People’s Government may formulate the related administrative procedures on the basis of the present Regulations.
Article 65 The SMCC is responsible for the interpretation of the present Regulations in their specific application.
Article 66 The present Regulations shall become effective on December 1, 1997.