Q: Is it true that new Chinese construction bidding regulations require the bidding party to submit the cost breakdown according to a specific given format that includes "profit margin?"

Usually, contractors do not give out their profit margins when bidding. So this raises three questions:
Is it, in fact, law to note the "profit margin" on a bidding tender?
If this is a law, does the regulation apply to both "primary" (building) and "secondary" (interiors) construction?
Under what circumstances would this law be in effect -- public projects, private commercial projects, Olympic venues, etc.?

A: On July 1, 2003, the Chinese Ministry of Construction published a "Code of Valuation with Bill Quantity of Construction Works." This code very clearly stipulates that the bidding document must include cost breakdown and profit margin.

For any publicly bid project, particularly for government projects that are processed through state tendering agencies, it is mandatory to comply with this new code for both primary (building) and secondary (interior) construction.

The only exception is for a foreign investment project when the bidding is processed by the owner (by invitation), rather than through state tendering agencies.

Thanks to Randolph W. Tucker, P.E., who is executive vice president of The RJA Group Inc., a global fire protection and security consulting firm that has worked on construction projects in more than 60 countries. The RJA Group's Rolf Jensen & Associates Inc. subsidiary has established a representative office in Shanghai and plans to open a second location in Beijing by mid-2004. He can be reached at rtucker@rjagroup.com.

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