LH Issues 'Main Contractor Joint Subcontracting' for 8 Districts to Prevent Unfair Subcontracting Practices

[Asia Economy Reporter Moon Jiwon] Korea Land and Housing Corporation (LH) announced on the 25th that it plans to issue orders for complex development construction worth 660 billion KRW in eight districts this year, including Yeongcheon High-Tech Park District, using the 'main contractor joint subcontracting' method.

The main contractor joint subcontracting method differs from the existing method where the main contractor, a general construction company, and the subcontractor, a specialized construction company, perform the work in a vertical structure of primary and subcontracting. Instead, they jointly bid on an equal footing and share contract roles.

This method can prevent unfair subcontracting practices by the primary contractor. Specialized construction companies can secure appropriate construction costs, which has the advantage of improving construction quality.

Since 2009 until last year, LH has utilized the main contractor joint subcontracting method in 14 cases in the complex development sector, but issues such as unclear responsibility for defects and construction delays were pointed out.

Accordingly, LH diversified the ordering methods by introducing types such as 'zone separation type' and 'work type selection type.' The zone separation type separates subcontractor work types by zones to minimize interference between work types and disputes over defects, while the work type selection type allows bidders to select subcontractor work types.

In addition, LH decided to revise the joint supply standard agreement to prevent the possibility of defect disputes between contractors.

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