Construction Companies with Many Sites but No Fatal Accidents... Reducing Penalty Burden

[Asia Economy Reporter Je Moon-won] The government has maintained the basic framework for strengthening the penalty point system for poor construction work but has prepared an incentive plan to reduce the penalty burden for construction companies with many sites and few fatal accidents.

The Ministry of Land, Infrastructure and Transport (MOLIT) announced on the 19th that it has re-notified the amendment to the Enforcement Decree of the 'Construction Technology Promotion Act' containing this content. The amendment announced by MOLIT this time includes changing the current 'average' method, which divides the total penalty points per site by the number of sites, to a 'sum' method for calculating poor construction penalty points.

Poor construction penalty points are imposed when defects or accidents occur or are likely to occur at a construction company's site. Accumulating points results in business disadvantages.

The previous amendment included changing the penalty points for joint contracts (consortiums) from individual allocation based on the existing investment ratio to a unified allocation to the consortium representative company. In this case, large construction companies with many sites would be disadvantaged, leading to opposition from many construction companies.

Accordingly, in the re-legislation, MOLIT maintained the framework of switching the penalty point allocation method from average to sum but introduced incentives to improve the system so that large construction companies with many sites do not receive excessive penalty points.

To this end, construction companies with no fatal accidents will receive a 20% reduction in poor construction penalty points measured in the next half-year period. If there are no fatal accidents consecutively for each half-year period, the reduction rate will continue to increase, reaching 59% in the fourth half-year period.

Additionally, for construction companies that have undergone more than 10 inspections per half-year, a 'management excellence ratio' will be applied each half-year. This means that if the ratio of sites inspected but not penalized is high, penalty points will be reduced.

If the management excellence ratio is 95% or higher, 1 point will be deducted; if it is 90% or higher but less than 95%, 0.5 points will be deducted; and if it is 80% or higher but less than 90%, 0.2 points will be deducted.

The plan to impose penalty points only on the consortium representative company has been completely removed. The re-amended bill also systematizes penalty points according to the importance of the structure and the degree of defect, and adjusts the penalty point criteria by deleting penalty point standards in cases where there are overlapping sanctions such as criminal penalties.

A procedure has also been established allowing ordering agencies to request that the construction company have the 'Penalty Point Review Committee,' composed of external members, review whether the penalty points were fairly imposed when penalty points are assigned. The amendment to the Enforcement Decree will be implemented in January 2023 after a preparation period.

This content was produced with the assistance of AI translation services.