Dunchon Jugong Reconstruction Construction Team: "No Issue with Construction Cost Increase"

Statement on Protests and Complaints Raised by the Union Side

The construction consortium for the Dunchon Jugong reconstruction project, including Hyundai Engineering & Construction, has stated that the controversy over the increase in construction costs is "based on a legally concluded contract" and that there is no problem.

On the 8th, the consortium released a statement saying, "We have no choice but to proceed according to the construction contract and related laws," and added, "We hope the Dunchon Jugong project will be normalized." The consortium consists of four companies: Hyundai Engineering & Construction, HDC Hyundai Development Company, Lotte Construction, and Daewoo Construction. Hyundai Engineering & Construction is the lead company.

The Dunchon Jugong reconstruction project involves transforming the Dunchon Jugong Apartments in Dunchon-dong, Gangdong-gu, Seoul, into a complex called ‘Dunchon Olympic Park Avenue Pre’ with 12,032 households. The project includes buildings from three basement levels up to a maximum of 35 floors, totaling 12,032 households. Among these, 4,786 units are planned for general sale, but the sales have been continuously delayed.

The consortium explained, "If the project continues to be delayed, it will inevitably have to stop funding the project costs and relocation loans," and added, "The consortium has been carrying out construction without receiving any construction payments since demolition and groundbreaking, but it has only suffered astronomical losses such as upfront construction financing costs." They further pointed out, "Due to the rise in raw material prices, there is inevitably a huge disruption in construction execution," and "It is difficult to carry out normal construction due to additional requests from the association for changes in finishing materials."

Additionally, the consortium stated, "We have not refused to cooperate with the association’s lawful procedures and contract-based requests for the project, nor do we have any reason to do so," and added, "We have no choice but to proceed according to the construction change contract and related laws, and we hope the Dunchon Jugong reconstruction project will be normalized."

The initial construction cost for the Dunchon Jugong reconstruction was about 2.6 trillion KRW. Last June, the construction companies signed a contract with the previous association to increase the construction cost to about 3.2 trillion KRW. The current association is opposing this, claiming that the previous chairman signed the contract without following proper procedures and therefore cannot recognize it.

The consortium also refuted the association’s claim that "the consortium is conducting construction blindly."

The consortium explained, "The contract method between the association and the consortium is not a detailed bidding system where detailed design documents can be calculated like public projects, and the client provides a bill of quantities for bidding. Due to the nature of private construction without detailed designs at the initial stage, the Dunchon Jugong reconstruction was contracted based on a unit price contract calculated through a lawful process with the association, based on the project implementation approval documents," they said.

They continued, "The planned schedule was already submitted to Gangdong-gu Office in December 2019, and for the association’s sales work, it was also submitted with the approval of the supervision team in July 2020," adding, "Since then, we have been submitting monthly major schedules to the supervision team under the management and supervision of Gangdong-gu Office, and recently, we also submitted a revised schedule showing a four-month delay to the supervision team and the association due to reasons for construction delays."