On the 9th, the Seoul Metropolitan Government announced that it will promote the ‘Strengthening of Construction Cost Verification System’ to prevent disputes between associations and contractors caused by excessive construction cost estimates and cost increases during maintenance projects.
The city plans to provide prior consultation to estimate appropriate construction costs before signing contracts with contractors upon request from project implementers of redevelopment and reconstruction projects. If construction costs increase after contract signing, the city will conduct thorough verification to reduce conflicts arising from cost increases.
To this end, Seoul plans to delegate the pre-consultation on construction costs and cost verification tasks to the Seoul Housing and Communities Corporation (SH Corporation), a maintenance project support organization under Article 114 of the Urban and Residential Environment Maintenance Act, based on its accumulated experience and know-how in land development, housing construction, and maintenance project operations. Until now, the Korea Real Estate Board has mainly handled construction cost verification, limiting the choice of verification agencies.
Additionally, the city will minimize conflicts caused by construction cost increases even after verification by organizing and operating a ‘Construction Cost Conflict Mediation Advisory Group’ and expanding the dispatch of ‘Maintenance Project Coordinators.’ The advisory group will be composed of members from the city’s Construction Technology Review Committee to listen to opinions from associations and contractors regarding verification results and provide advice on the appropriateness of cost calculations to facilitate amicable agreements. Furthermore, the ‘Maintenance Project Coordinators,’ who played a significant role in resuming construction at the Dunchon Jugong Apartment complex, will be dispatched early in conflict situations to prevent prolonged disputes.
Meanwhile, Seoul requests improvements to the system to address limitations such as the lack of penalties for failing to comply with the ‘Construction Cost Verification Request System,’ introduced by the 2019 amendment of the Urban and Residential Environment Maintenance Act, which has been effective in calculating appropriate construction costs and reducing disputes between associations and contractors.
Han Byung-yong, Director of the Seoul Housing Policy Office, said, "Through the strengthening of the construction cost verification system, we expect increased transparency in redevelopment and reconstruction projects and reduced conflicts over construction costs." He added, "We will continue to improve related systems and procedures to quickly supply quality housing throughout Seoul."
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