Unable to Reflect Construction Cost Increases Such as Raw Material Prices and Labor Costs
City Reviewing New Bid Announcement with Increased Construction Costs
One of the pressing projects in Cheonan City, Chungnam Province, the Cheonan Station expansion and reconstruction project, has hit a red light in its progress after failing to select a contractor for the third time. Cheonan Station panorama.
The expansion and renovation project for Cheonan Station, a key issue in Cheonan City, South Chungcheong Province, has hit a major setback as the selection of a contractor has failed for the third time.
According to Cheonan City, Cheonan Station, which opened as a temporary station in 2003, has an average daily passenger count of 32,000 based on departures and arrivals, making it the ninth busiest among 340 stations nationwide (excluding urban subway stations) and classified as a first-grade station.
However, the station was originally built as a temporary facility to be used for only three years until a privately funded station could be constructed. Repeated failures to build the new station have left Cheonan Station with the label of a "temporary station" for 20 years.
In response, the city is pushing forward with a project to expand and renovate the station at 239 Daheung-ro, with a total floor area of 15,555 square meters and a total project cost of 112.1 billion KRW.
The first step began in May with a bid for the core part of the project: the expansion and renovation of the station building. The National Railroad Authority, which is overseeing the project, set the construction budget at 68.9 billion KRW. However, no companies have expressed interest in bidding, not in the first round in May, the second in July, nor by the deadline for the third round on August 6.
With no contractor willing to take on the expansion and renovation, not only the construction but also subsequent internal work such as electrical signaling and communications cannot even be considered at this stage.
The main reason companies are avoiding the Cheonan Station project appears to be the failure to reflect increased construction costs due to rising raw material prices and labor costs. In particular, the nature of railway station construction requires work to be done at night or early morning when trains are not operating, which means restricted work hours and additional labor costs for night shifts, according to the construction industry.
Believing that a third round of bidding was virtually impossible, Cheonan City held a meeting on the deadline, August 6, with the National Railroad Authority, Cheonan Station, and other related agencies to discuss countermeasures for the failed contractor selection.
The meeting was attended by Mayor Park Sangdon of Cheonan, Lee Seonghae, Chairman of the National Railroad Authority, Lee Jeongnam, Head of Cheonan Station, and others. They agreed to re-announce the bid after adjusting the construction cost premium, increasing material and labor costs, and securing more night work hours to ensure smooth progress of the project.
In particular, it is reported that an in-depth review was conducted regarding the adjustment of construction costs. The city is strongly considering increasing the construction budget first while keeping the total project cost unchanged. If the third bidding failure is confirmed, a new announcement reflecting the increased construction costs will be made as soon as possible to meet the original schedule of starting construction by the end of this year and completing it by the end of 2028.
Mayor Park Sangdon stated, "In the first half of this year, 51.7% of large-scale public construction bids over 30 billion KRW promoted by the government and local governments failed. We will work closely with relevant agencies to ensure that citizens do not feel skeptical or anxious about the project's progress and will do our best to manage the schedule."
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