14 Months of Conflict Over Construction Costs
"Move-in to Proceed Smoothly by March This Year"
The negotiation at the redevelopment site of Jangwi 4 District in Seongbuk-gu, Seoul, which was on the verge of construction suspension due to conflicts over construction costs, was finally settled with a 30.5 billion KRW increase in construction expenses.
The Jangwi 4 District Association and the construction company in Seongbuk-gu, who were in conflict over construction costs, reached an agreement through mediation by the Seongbuk District Office. After signing the agreement on the 18th, (from left) Kim Chang-won, head of the Jangwi 4 District Association, Choi Kyung-joo, chairman of the Seongbuk Conflict Mediation Committee (Deputy Mayor), and Kim Seok-il, head of GS Construction Urban Maintenance Team 2, are taking a commemorative photo. Provided by Seongbuk-gu.
Seongbuk-gu (Mayor Lee Seung-ro) announced on the 18th that after 14 months of conflict between the association and the construction company, which raised concerns about delayed completion, the district office made persistent mediation efforts and reached an agreement regarding Jangwi 4 District.
That afternoon, the Jangwi 4 District association and the construction company GS Engineering & Construction agreed to a 30.5 billion KRW increase in construction costs and signed the agreement. The association, GS Engineering & Construction, and the district office agreed to cooperate for the swift completion of construction and smooth move-in.
GS Engineering & Construction had requested an additional 49 billion KRW in construction costs due to rapid price increases and unexpected construction work after the start of Jangwi 4 District construction. The association, however, decided to pay only 15 billion KRW for design changes, which sparked the conflict.
In response, Seongbuk-gu formed a Conflict Mediation Committee composed of the district office, Seoul city, and coordinators, holding six meetings to prevent construction suspension and mediate the construction cost conflict. During this process, a mediation proposal of 24 billion KRW was drawn up, but while the association accepted it, the construction company demanded an additional 7 billion KRW, failing to find a resolution.
Through several mediation meetings, the association pushed for additional negotiations amounting to 30.9 billion KRW to upgrade the apartments by changing finishing materials and to ensure smooth move-in by the end of March this year. However, some association members opposed and requested changes to the specialized items, causing the negotiations to face difficulties again.
On the 11th, the district office reconvened the Conflict Mediation Committee and proposed a mediation plan where the association and the construction company would decide on unconstructed items through visits to completed apartments, excluding already constructed specialized items. Both parties accepted the plan, negotiated additional specialized items such as insulation films, and through the Conflict Mediation Committee, drafted an agreement for 30.5 billion KRW. This marked the end of the 14-month-long negotiation.
Kim Chang-won, head of the Jangwi 4 District association, said, "There were several crises not only due to conflicts with the construction company but also internal disagreements within the association. However, the Seongbuk-gu Conflict Mediation Committee persistently created opportunities for communication and presented a trustworthy plan, allowing us to complete the negotiation without reaching the worst-case scenario of construction suspension. I am grateful."
Kim Seok-il, head of the Urban Maintenance Team 2 at GS Engineering & Construction, said, "We deeply appreciate the passionate mediation efforts of Seongbuk District Office during the conflict process, and since the association made a significant decision, we will do our best to repay with the highest quality until the completion."
Mayor Lee Seung-ro of Seongbuk-gu said, "This result was possible thanks to the association, construction company, Conflict Mediation Committee, and Seoul city coordinators who united their hearts. We are focusing administrative power on proactive conflict management and minimizing resident damage in the process of Seongbuk's leap as a premium residential city through various residential maintenance projects."
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