Seoul City Actively Mediates to Resolve Conflicts in Construction-Halted Redevelopment Sites

Dispatch of Conflict Site Coordinators and Implementation of Construction Cost Verification

The Seoul Metropolitan Government is actively mediating in maintenance project sites facing the risk of construction suspension.

On the 25th, the construction of the 'Olympic Park Foreon' project in Dunchon-dong, Gangdong-gu, Seoul, which had been halted due to intensified disputes over construction costs ahead of next month's move-in, resumed. Officials are working at the Olympic Park Foreon construction site in Gangdong-gu. Photo by Jo Yongjun

On the 4th, Seoul City announced that it is conducting close management throughout the entire maintenance project process, including △dispatching coordinators △implementing construction cost verification △holding resident briefings for maintenance projects such as reconstruction and redevelopment sites.

At the Dunchon Jugong Reconstruction (Olympic Park Foreon) site, where construction was halted for six months due to conflicts over construction costs, conflicts were resolved through more than 10 mediation meetings and interviews, and construction resumed. This project received completion approval on the 25th of last month and began occupancy on the 27th.

In Eunpyeong-gu Daejo 1 District, where construction was suspended for five months starting January this year, about 180 billion KRW in construction costs were not paid to the contractor due to the absence of an executive body. A coordinator dispatched by the city mediated conflicts such as reorganization of the executive body and resumption of construction, and construction resumed in June.

Additionally, coordinators were dispatched to sites such as Cheongdam Samik (reconstruction), Mia 3 District (redevelopment), and Anam 2 District (redevelopment). At Cheongdam Samik, the contractor Lotte Construction even posted banners announcing construction suspension. As a result of the coordinator’s dispatch and mediation efforts, both parties agreed on the scope of the increase in July and signed a revised contract in August.

At Mia 3 District (redevelopment), where conflicts over construction costs with the contractor GS Construction escalated into litigation and it was expected that residents would have difficulty moving in on time, residents began moving in from the end of August. The conflict was resolved through mediation by the coordinator, agreeing on 11 billion KRW, about one-third of the originally requested increase of 32.6 billion KRW by GS Construction.

Anam 2 District is one of the projects where occupancy was delayed due to the contractor Jinheung Enterprise exercising a lien because of overdue construction payments. After a coordinator was deployed, mediation on payment dates led to a dramatic agreement, and residents began moving in from August 23.

The Seoul Housing Corporation (SH Corporation) is also implementing a system that verifies construction costs for maintenance projects experiencing conflicts over cost increases. In the first half of this year, construction cost verification was conducted at Haengdang 7 District and Sinbanpo 22nd Complex, and if verification is needed, related documents can be submitted by the contractor and verification requested from SH Corporation.

At Haengdang 7 District, an agreement was reached between the association and the contractor (Daewoo Construction) at 28.2 billion KRW, which is 53% of the 52.6 billion KRW initially proposed, resolving the conflict in June. At Sinbanpo 22nd Complex (reconstruction), it was also verified that only 66.1 billion KRW, 75% of the 88.1 billion KRW initially proposed by the contractor (Hyundai Engineering), was reasonable for the increase.

In addition, since last March, the ‘Expert Pre-Consulting System’ has been implemented to supplement the association’s lack of expertise by reviewing harmful clauses before contractor selection and contract signing. The city operates a ‘Construction Cost Conflict TF’ composed of departments in charge of maintenance projects to ensure timely use of various public support systems prepared by the city, monitors requests for construction cost increases in districts where contractor selection has been completed, and prepares for conflicts.

Han Byung-yong, Director of the Seoul Housing Office, said, “Since we have established a construction cost conflict system by mobilizing all available means, many conflicts will be resolved early in the future,” adding, “For efficient conflict resolution, associations need to properly understand the system and apply it to their practical work, and actively request support from the early stages of conflict.”