Prohibition of Individual Promotion and Mandatory Verification of Construction Costs... Seoul City Strengthens 'Contractor Selection Criteria'

From now on, individual promotions will be prohibited during the selection of constructors in redevelopment and reconstruction zones managed by Seoul City, and alternative designs outside the maintenance plan will be impossible. Regarding construction costs, which have recently been the biggest point of conflict between associations and construction companies, mandatory verification will be implemented.

Apartments in Seoul as seen from Namsan, Seoul.
[Photo by Yonhap News]

Seoul City announced on the 8th that it will completely revise the ‘Seoul Metropolitan Government Public Support Maintenance Project Constructor Selection Criteria’ to expedite the selection of constructors.

In March this year, to promote the swift and smooth progress of maintenance projects, the city pushed for an amendment to the 「Seoul Metropolitan Government Urban and Residential Environment Maintenance Ordinance」, advancing the timing of constructor selection from after the project implementation plan approval to after the association establishment approval.

The city viewed that selecting constructors at the early stage of the project without specific architectural plans could lead to problems such as opaque construction cost increases and indiscriminate alternative design proposals. To minimize these side effects, a T/F (task force) composed of experts from various fields was formed, and the revision proposal was prepared.

The revision proposal includes ▲ adding ‘lump-sum bidding’ in addition to the existing itemized bidding ▲ limiting the scope of alternative designs to ‘within the maintenance plan’ ▲ prohibiting individual promotions outside joint promotional briefings and shared promotional spaces ▲ invalidating bids from companies violating the scope of alternative designs or individual promotion prohibition ▲ strengthening public prior review and management/supervision ▲ mandating verification of apartment performance requirements and construction costs.

First, to allow associations to choose the bidding method suitable for the conditions of the project area, the method was improved to allow ‘lump-sum bidding’ in addition to the previously only permitted ‘itemized bidding’.

Also, to prevent excessive construction cost increases after constructor selection and disputes between associations and constructors arising from this, mandatory verification of construction costs at the initial project implementation plan approval stage was specified. Design drawings prepared for all bids must maintain the level of ‘basic design drawings’ to prevent opaque construction cost increases caused by unclear design documents.

Next, to prevent bidders from indiscriminately proposing alternative designs when only the maintenance plan exists and the architectural plan is not yet finalized, the scope of alternative designs, which previously allowed minor changes to the project implementation plan, will be limited to ‘within the maintenance plan.’ Minor maintenance plan changes such as expanding the floor area ratio by less than 10% or changing the maximum height will not be permitted.

Additionally, to eradicate overheated and exaggerated promotions using so-called ‘OS agents,’ individual promotions by bidders outside joint promotional briefings and shared promotional spaces will be prohibited.

The authority of the mayor or public supporters (district heads) to conduct prior review and management/supervision during the constructor selection process will be strengthened, and if a bidder proposes designs outside the scope of the maintenance plan or violates promotional regulations or other standards, the bid will be invalidated.

Meanwhile, to improve the quality of apartment housing, Seoul City will introduce systems such as construction project management consulting for maintenance projects and mandatory submission of apartment performance requirement documents to enable associations to present desired apartment performance or secure expertise in construction work.

To prevent recent issues such as missing rebar during construction, inter-floor noise after move-in, and leaks, and to ensure the quality and performance desired by associations, the ‘Apartment Performance Requirement Document’ must be presented mandatorily during on-site briefings.

This revision proposal will go through an administrative notice period, review by the Regulatory Reform Committee, and important document examination before final confirmation and announcement. Opinions on the revision can be submitted until October 4.

Han Byung-yong, Director of Seoul City Housing Policy Office, said, “If conflicts or disputes arise during the ‘constructor selection,’ which has the greatest impact on the promotion of maintenance projects, all damages will fall on the good-faith association members and residents, so ensuring a fair selection process is very important,” and added, “We will establish a fair and transparent constructor selection culture to protect residents’ property rights and swiftly supply high-quality housing.”