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Ministry of Finance and Economic Affairs

The Public Projects Procedures Act, No. 84/2001

CHAPTER I
General Provisions.
Article 1
In this act, a public project refers to the construction, maintenance or changes in a structure paid for by the Treasury in part or in full, provided the estimated cost to the Treasury amounts to no less than 5 million ISK. The Ministry of Finance may amend the abovementioned amount in accordance with price changes. The provisions of the Act also apply to the purchase and lease of assets, as applicable.

The tender of public projects shall be according to the Act on Public Procurement.

Article 2
The procedure concerning a public project from its initiation until its completion follows a certain path, divided into four phases as follows: Preliminary study, cf. Articles 3-5, planning phase, cf. Articles 6-10, construction phase, cf. Articles 11-15 and completion assessment, cf. Articles 16.

CHAPTER II
Preliminary Study.
Article 3
The preliminary study is a research and comparison of the available alternatives for the fulfilment of the requirements for which the project is intended.

The report on the preliminary study must include alternative projections. These projections shall be twofold. On the one hand, they must project the investment cost, including the cost of projection, and on the other, the projection of an annual cost of operation, including the cost of borrowing and revenue, if applicable. The report shall explain the reasons behind the choice amongst alternatives, including cost-benefit calculations used for the comparison of alternatives. A report of the preliminary study shall also include proposals regarding the location and size, as well as initial drafts of the proposed project, if applicable.

Article 4
The preliminary study shall take place under the auspices of the competent ministry, government agency, municipality or other prospective ownership entities. If an entity other than a ministry has conducted the preliminary study, the report according to Article 3 shall be sent to the competent ministry.

The competent ministry presents a proposal to the Ministry of Finance regarding budget appropriations for individual projects on the basis of initial inquiries as well as on the priority of projects to be determined when drafting the fiscal budget. Proposals for priority within the same group of projects shall be presented to the Budget Committee of the Althingi before it decides on its proposals regarding the distribution of appropriations for investment in the fiscal budget bill.

If a ministry is unable to present a proposal to the Ministry of Finance regarding the appropriation for a project following the preliminary study it has received, such a decision must be communicated to entities concerned as soon as possible and the reasons for it accounted for.

Article 5
In the case when an appropriation for a public project has been included in the fiscal budget without a prior preliminary study, such a study shall nevertheless be made, in accordance with the provisions of Articles 3 and 4 of the present Act.

CHAPTER III
Planning Phase.
Article 6
The planning of a public project takes place under the auspices of the competent ministry, government agency, municipality or other prospective ownership entities in consultation with the Government Construction Contracting Agency.

When a public project in which the government or other entities take part enters into the planning phase, a contract shall be concluded between prospective ownership partners and those entities that undertake the planning. The participation of the Treasury in the cost of planning is subject to the written consent of the Ministry of Finance to that contract.

Article 7
The planning of public projects shall be twofold:

Final blueprints and technical specifications of the proposed project, a list of materials, a precise cost projection for the project, a description of the responsibilities and division of work among the entities involved in the construction, a time schedule for the construction and payment and financing schedule for the construction period. The Minister of Finance shall define the requirements on the making and presentation of cost projections and present those to the Government and Government authorities.

An operation projection for at least five years following completion of the project.

Article 8
Following the completion of the planning phase according to Article 7, the competent ministry shall forward the plan to the Ministry of Finance for review.

The plan shall be accompanied with sufficient documentation regarding land rights and other rights necessary for the prospective construction, as needed.

Article 9
In the case when a plan for a public project is in full accordance with the provisions of Articles 7 and 8 and based on realistic assumptions in the view of the Ministry of Finance, the plan as a whole, or a clearly defined part thereof that will reach a useable stage, shall come under consideration in drafting the fiscal budget for the coming year.

If the Ministry of Finance does not include such a plan in the fiscal budget, it shall inform the entities concerned thereof as soon as possible and simultaneously explain the reasons.

Article 10
The fiscal budget bill shall include the amount appropriated for the fiscal year for the project concerned and the report accompanying the bill shall include those financial commitments that will be incurred in subsequent fiscal years in accordance with the plan. In the case of appropriations for individual groups of projects, the points mentioned in item 1 shall be included in the proposals and the special report of the Budget Committee of the Althingi. Fiscal budget bills for subsequent years shall similarly indicate the amounts necessary, according to a revised projection, to complete a project in due time.

CHAPTER IV
Construction Phase.
Article 11
In this Act, the term construction phase includes construction contracts, the actual construction, its supervision and closure inspection. Construction includes both labour and materials.

Tender specifications, project descriptions and construction contracts shall be in accordance with the plan according to Article 9

Article 12
A construction project that is solely financed with government funds may not begin until:

An authorisation is at hand in the fiscal budget.

The competent ministry decides to use the authorisation.

The Ministry of Finance confirms that funds are available in accordance with the financing plan according to Article 7.

In the case of a joint project of the government and another entity, a public project may not begin before funds have been appropriated for it in the fiscal budget and a contract has been signed by the competent ministry and the entity with the co-signature of the Ministry of Finance to ensure that funds will be available during the construction period in accordance with the financial projection according to Article 7.

If a municipality is involved and the financial projection assumes a contribution from a municipal treasury, it will suffice that a written statement is received from a municipal government declaring that funds will be made available from the financial projection of the municipality over the construction period as defined by the financial projection according to Article 7.

Article 13
In the case of a joint project of the government and a municipality, the municipality shall conduct the tender, prepare the contract with contractors, keep the accounts and manage payments for the project unless otherwise negotiated, or the Minister of Finance decides otherwise.

The Public Projects Cooperation Committee may stipulate that a municipality in charge of tenders for a project shall seek the consent of the Government Construction Contracting Agency for its tender specification before it is made public.

When appropriations for joint projects of the government and a municipality are based on a predetermined unit price, cf. Chapter XII of Act no. 80/1996 on secondary schools, the municipality shall be in charge of the tender and the construction phase, unless otherwise negotiated.

Article 14
The contract with a contractor shall be signed by the competent ministry. In the case of a joint project of the government and a municipality or another ownership entity, the contract shall be signed by both or all parties, unless otherwise negotiated, cf., however, Paragraph 3, Article 13.

Article 15
In the case where the cost and time projections are not realised due to price changes or for technical reasons, the competent ministry shall, as soon as possible, present proposals to the Ministry of Finances for an amended payments schedule. If the Ministry of Finance agrees to the amended payments schedule, it shall become the basis for appropriation proposals in the fiscal budget bill for the following year. In the case of a joint project of the government and another entity, the agreement of that entity for the amended payments schedule is also required.

CHAPTER V
Completion Assessment
Article 16
Upon completion of a construction project and a closure inspection, a completion assessment shall be carried out. The assessment shall determine how well the implementation of the project followed the projection. A comparison shall also be made with similar construction projects that already have been assessed.

The Government Construction Contracting Agency shall set further rules on the nature of the completion assessment and ensure that completion assessment reports are presented to the Budget Committee of the Althingi, The Public Projects Cooperation Committee and ownership entities.

CHAPTER VI
The Supervisory Management of Public Construction Projects.
Article 17
Public projects come under the Minister of Finance, who oversees the implementation of this Act.

The Ministry of Finance is in charge of the financial supervisory management of public construction projects, i.e. the preliminary study phase cf. Articles 3-5 and the planning phase cf. Articles 6-10. The Government Construction Contracting Agency is in charge of the supervisory management of the public construction phase, cf. Articles 11-15 and the completion assessment, cf. Article 16.

Municipalities and other ownership entities shall manage those aspects referred to in Articles 4, 6 and 13, as further specified therein.

The Ministry of Finance is authorised to entrust individual government entities with the management of further defined groups of public construction projects, provided these entities have the facilities to carry out these tasks.

Article 18
The Public Projects Cooperation Committee acts as advisor to the Ministry of Finance regarding the financial implementation of this Act, cf. Chapters I-IV. The Committee consists of three members: The chairman of the Budget Committee of the Althingi or a specially appointed representative of the Committee, the chief executive of the Government Construction Contracting Agency and the director general of the Ministry of Finance who chairs the Committee. Competent ministries are entitled to having a representative attend meetings where cases in their sphere of influence are being addressed. When the Committee deliberates on joint projects of the Government and a municipality, a representative of the Union of Local Authorities in Iceland is entitled to attend its meetings, unless a municipality wishes to appoint its own representative to attend meetings.

The task of the Committee is to review the opinions of the ownership entities of a public project during the preparation and construction phase and investigate the preliminary study and planning phase as a prerequisite to the construction phase. In addition, the Committee observes the financial aspect of a public project.

If the Committee feels that the implementation of a particular issue in a case sent by a joint ownership entity to the competent ministry is unduly delayed, the committee shall see to it that the matter is rectified.

The Minister shall set more detailed regulations for the Committee.

CHAPTER VII
The operation of the Government Construction Contracting Agency.
Article 19
An agency, the Government Construction Contracting Agency, shall be operated under the auspices of the Government and be in charge of the management of construction projects on behalf of the Government, unless otherwise specified in this Act. The agency shall act as advisor to ministries and government agencies on construction technology issues and the preparations of projects. The Government Construction Contracting Agency is under the jurisdiction of the Ministry of Finance.

Article 20
The Government Construction Contracting Agency shall promote efficiency in all public project procedures. In order to fulfil these requirements it shall:
a. Act as advisor and work on the coordination of the preparations and the planning phase of public projects;
b. prepare and carry out tenders and contracts with contractors;
c. manage accounts and payments for projects unless otherwise negotiated or if the Minister of Finance decides otherwise;
d. take the initiative in publishing guidelines regarding the dimensions of spaces and the quality of public buildings;
e. create and maintain a file on government real estate that will be used by ministries and government agencies in supervising real estate trading;
f. promote the development of a contractor market and increased competition;
g. promote efficiency and professional working methods regarding construction projects.

The Government Construction Contracting Agency is authorised to entrust private entities with the implementation of individual tasks assigned to the agency in accordance with the provisions of the article.

Article 21
The Minister of Finance appoints the chief executive of the Government Construction Contracting Agency for a period of five years and he is responsible for the operation of the agency. The chief executive defines major emphases, tasks and working methods of the agency and is in charge of hiring its personnel.

Article 22
The Government Construction Contracting Agency sells its services to ministries and government agencies according to a list of tariffs confirmed by the Minister of Finance. The list of tariffs shall be determined with the objective that the income of the agency can cover its operation cost.

Article 23
The Minister of Finance can further specify the implementation of the present Act by a regulation.

Article 24
This Act takes effect immediately. Simultaneously, the Public Projects Procedures Act, no. 63/1970, is no longer effective.


Passed by Althingi, May 20th, 2001.



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Disclaimer: This section of the site details available translations on legislation relating to the Government Offices in Iceland. In case of any discrepancies between the translations and the original text in Icelandic, the original text as published in the Icelandic Legal Gazette prevails.

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