Need for Measures on Sunk Costs, Budget Waste, and Contract Issues
Kim Nayoon, Gwangju City Council Member, "Careful Consideration from Various Perspectives"
As Gwangju City is considering suspending the ‘Gukrakgang Station Silo Road’ cultural regeneration project, voices urging the preparation of countermeasures have emerged.
Kim Nayoon, a member of the Gwangju City Council (Democratic Party, Buk-gu 6), stated during the administrative audit of the Gwangju City Culture and Sports Office on the 11th, “I understand that Gwangju City is considering suspending the Gukrakgang Station Silo Road regeneration project, which has been ongoing since 2020, due to changes in conditions and increased construction costs,” adding, “Additional measures are needed regarding the budget and contract issues related to the construction, as well as the sunk costs.”
The ‘Gukrakgang Station Silo Road’ cultural regeneration project aims to transform the abandoned modern cement silo (a cargo storage warehouse) at Gukrakgang Station, the smallest simple station in South Korea located in Singa-dong, Gwangsan-gu, into a unique complex cultural space for Gwangju City. The detailed facilities will include exhibition spaces, citizen activity areas, and a cafeteria.
Councilor Kim said, “The project scale has been significantly reduced from the originally planned 1,165㎡ (5 floors) to 384.45㎡ (2 floors) due to rising construction costs and urban planning facility issues. Additionally, the land lease contract has been signed for five years since November 2022, costing 27.55 million KRW annually,” and added, “Since the 5G shuttle train project, which was originally planned to proceed together, was suspended in November last year, there is some regret regarding the timing of reviewing the linked projects.”
He continued, “The problem lies in the follow-up measures due to the suspension of construction. Out of the total budget of 4.3 billion KRW (1.9 billion KRW national funds, 2.4 billion KRW city funds), 1.54 billion KRW has been spent so far, of which 1.49 billion KRW is national funds,” and said, “Sunk costs such as design fees and rent amount to about 450 million KRW, and in-depth review is needed regarding compensation for construction delays and cancellations, as well as material contracts.”
Councilor Kim also added, “If the project is suspended due to various changes in circumstances, it will result in waste of the budget and administrative efforts invested so far,” and urged, “I hope careful consideration will be given from various perspectives, including the project’s effectiveness and potential for citizen utilization and development.”
Meanwhile, Gwangju City postponed the construction contract start for the ‘Gukrakgang Station Silo Road’ cultural regeneration project from September to the end of the year after delaying it in July. The project progress rate is 30%, and the design service is currently temporarily suspended.
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