"Removing Construction Cost Bubbles"... Gyeonggi-do Expands Application of 'Standard Market Unit Prices'

Starting from the second half of this year, applied to public construction projects under 10 billion KRW newly ordered

[Asia Economy Reporter Ra Young-cheol] Gyeonggi Province announced on the 6th that "starting from the second half of this year, it plans to implement a new standard market unit price application method for public construction projects under 10 billion KRW by utilizing the governor's discretionary items without revising the ordinance."

According to the province, this method first calculates the estimated price using the 'standard market unit price' and 'standard quantity,' then deducts the difference from discretionary items such as the general administrative expense ratio and reflects it in the design documents for ordering.

Article 232 of the Ministry of the Interior and Safety's Enforcement Rules of the Act on Contracts to Which Local Governments Are Parties stipulates that local government heads may adjust the general administrative expense ratio within 6% when determining the estimated price based on cost calculation.

The province explained, "Since the standard quantity calculation method results in prices 4-5% higher than the standard market unit price, the local government head can adjust this according to the relevant law, effectively applying the standard market unit price."

Earlier, last month, Governor Lee Jae-myung sent a letter (June 8) requesting cooperation for ordinance revision to the Construction and Transportation Committee of the Provincial Council and held a meeting (June 10), but the construction industry opposed it, calling it 'price cutting for small and medium construction projects,' and the committee decided not to submit the revision bill after internal discussions.

The province expects that by applying the newly prepared method to public construction projects under 10 billion KRW newly ordered in the second half of this year, it will reduce construction cost inflation by about 4-5%, saving approximately 10 billion KRW annually in the budget.

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