[Changes in the Second Half of the Year] Comprehensive Reform of Local Contract Regulations... Minimum Bid Rate Raised

Improving Local Contract Regulations to Support the Construction Industry
New Disaster and Crowd Safety Systems to Be Introduced in October

Starting this month, local contract regulations will be improved to reduce the burden on the regional construction industry and promote fair competition. The improvements include raising the minimum bid rate, increasing the indirect labor cost ratio, and expanding design compensation fees.

The core of this reform is a uniform 2 percentage point increase in the minimum bid rates for construction projects subject to eligibility screening with a contract value of less than 30 billion won. Specifically, the minimum bid rates will be adjusted as follows: ▲ For projects under 1 billion won, 89.745% ▲ For projects between 1 billion and 5 billion won, 88.745% ▲ For projects between 5 billion and 10 billion won, 87.495% ▲ For projects between 10 billion and 30 billion won, 81.995%.

Additionally, the ratio of indirect labor costs paid to management and support personnel not directly involved in construction will be increased by 1 to 4 percentage points, depending on the type, scale, and duration of the project. For sectors such as architecture, civil engineering, and landscaping, the recognized labor cost can now be up to 19.0% higher than before.

In technical proposal bidding, where bidders submit technical proposals, the design compensation fee will be increased even if the bidder does not win the contract. For general bids, the rate will rise from 1.0% to 1.4%, and for regional mandatory joint contracts, it will increase from 1.5% to 2.1%, respectively.

The mandatory scope for construction all-risk insurance will also be expanded. Previously, only high-difficulty projects worth 20 billion won or more required insurance, but going forward, this requirement will apply to high-difficulty projects of 10 billion won or more, as well as projects involving risk.

Yonhap News

Starting October 1, new systems will be implemented to respond to disasters and accidents caused by large crowds, such as the Itaewon tragedy.

According to the government, amendments to the Enforcement Decree of the Framework Act on Disaster and Safety Management will introduce the institutionalization of safety management plans, the implementation of fact-finding surveys and emergency safety inspections, and the establishment of a legal basis for safety orders.

These measures are intended to ensure that safety measures are prepared in advance and to reduce the possibility of accidents in situations where crowds may gather, such as festivals, performances, sporting events, and rallies.

The government has established a basis for conducting fact-finding surveys and emergency safety inspections at locations or events where large crowds are expected. If risks are identified during these inspections, authorities will be granted the power to directly order safety measures from event organizers or facility operators.

This serves as an administrative tool that enables immediate intervention when signs of an accident are detected, with the goal of improving the effectiveness of the response.