Ulsan City Achieves First Results in Subcontract Payment Guarantee Fee Support Program

First Results from Ulsan City's Subcontract Payment Guarantee Fee Support Project
Local Construction Company Wins 10 Billion KRW Earthwork Subcontract
HDC I&C Receives 11 Million KRW in Guarantee Fee Support

Ulsan City has achieved its first results from the "Subcontract Payment Guarantee Fee Support Project," which has been implemented this year to support local construction companies.

The project site that saw these results is the "Ulsan Jung-gu Bangu-dong Apartment Construction Project," where a local construction company participated as a subcontractor in earthwork worth 10 billion KRW, commissioned by the main contractor, HDC I&C.

The subcontracted process was in the "earthwork" field, an area where external companies have traditionally had a high participation rate, making it relatively difficult for local companies to enter.

Ulsan City conducted multifaceted business activities and customized promotions to connect excellent local companies to major processes such as earthwork, resulting in local companies successfully winning subcontracts.

Accordingly, HDC I&C, which signed a subcontract with a local company, will receive support for the subcontract payment guarantee issuance fee, amounting to about 11 million KRW.

Currently, Ulsan City is also actively conducting business activities targeting local construction companies for the first half of 2025.

This year, 22 local companies have been selected for the "Corporate Credit Evaluation Support Project," which includes consulting on construction capability evaluation, corporate credit rating, and cash flow grading, helping them meet the practical requirements for registration as partner companies with major construction firms.

Ulsan City plans to continue improving relevant systems so that local companies can expand their real subcontracting opportunities in the apartment housing market, and to strengthen cooperation with private construction companies.

An Ulsan City official stated, "This case is significant as it is the first time that the actual fee has been supported since the introduction of the system, and it is meaningful that a local company participated as a competitive subcontractor. By alleviating the burden of guarantee fees, we will promote mutual growth between major construction firms and local companies, and lay the foundation for the sustainable development of the local construction industry."

The subcontract payment guarantee system is a system in which, if the main contractor fails to pay the subcontractor, the guarantee institution pays the corresponding amount on their behalf.

Issuing a subcontract guarantee usually incurs fees ranging from several million to tens of millions of KRW, which has been a significant financial burden for main contractors.

In response, Ulsan City revised relevant ordinances and, starting in January this year, introduced the "Subcontract Payment Guarantee Fee Support Project," which supports 50% of the guarantee issuance fee up to a maximum of 30 million KRW for private apartment construction projects (with over 100 units) where a subcontract agreement is signed with a Ulsan-based company.

The main contractor is eligible for support, provided the subcontractor is a company registered in Ulsan.