Geondallyeon Opposes 'Application of Standard Market Unit Prices for Construction Under 10 Billion Won' Statement

Hayonghwan Ha, President of the Gyeonggi Province Chapter of the Korea Construction Association (right), is submitting a "Statement Opposing the Application of Standard Market Unit Prices for Construction Projects Under 10 Billion KRW in Gyeonggi Province" to Myungwon Kim, Chairman of the Construction and Transportation Committee of the Gyeonggi Provincial Council (left).

The Korea Federation of Construction Organizations (KFCO) announced on the 13th that it submitted a statement of opposition to the Gyeonggi Provincial Council on the 11th regarding Gyeonggi Province's initiative to apply the 'Standard Market Unit Price for Construction Projects Under 10 Billion KRW.'

The submission of the opposition statement followed the request made last month by Gyeonggi Province's 'Standard Market Unit Price Application Innovation Task Force' to the provincial council to enact an ordinance primarily applying the standard market unit price to construction projects under 10 billion KRW.

The standard market unit price system calculates construction costs based on unit prices accumulated from previously executed projects by work type. It amounts to only about 86% of the price calculated according to the general application standard, the standard quantity estimate. The higher regulation, the Ministry of the Interior and Safety's directive 'Guidelines for Preparing Estimated Prices,' also stipulates that it should not be applied to projects under 10 billion KRW.

This is intended to ensure quality and safety for small- to medium-sized projects where economies of scale are difficult to achieve. Applying the standard market unit price to projects under 10 billion KRW raises a very high risk of causing a chain reaction of damage to small and medium construction companies, materials and equipment suppliers, and workers. Accordingly, the National Policy Coordination Meeting in 2015 also excluded the application of the standard market unit price to projects under 10 billion KRW.

Regarding Gyeonggi Province's push to apply the standard market unit price to small-scale projects, KFCO and related organizations stated, "This is not only an unfair measure that ignores the realities of the construction industry and pushes small and medium enterprises to the brink, but it will inevitably have adverse effects on job reduction and the local economy. Therefore, we urge the withdrawal of this policy."

Going forward, KFCO and each organization plan to continue joint responses nationwide with construction operators until the initiative to expand the application of Gyeonggi Province's standard market unit price to projects under 10 billion KRW, which is part of the effort to undercut unit prices for small and medium construction projects, is withdrawn.

The opposition statement included participation from 16 organizations affiliated with KFCO, including the Korea Construction Association, Korea Specialty Contractors Association, Korea Mechanical Equipment Construction Association, Korea Housing Association, Korea Residential Construction Association, Overseas Construction Association, Korea Institute of Architects, Korea Construction Equipment Association, Korea Aggregate Association, Korea Construction Technology Management Association, Korea Construction Technicians Association, Korea Engineering Association, Construction Mutual Aid Association, Mechanical Equipment Construction Mutual Aid Association, Engineering Mutual Aid Association, and Korea Real Estate Development Association, as well as the Specialty Construction Mutual Aid Association, Korea Electrical Contractors Association, Korea Information and Communication Contractors Association, Korea Facility Maintenance Association, and Korea Fire Protection Association.