Seoul City Implements Measures to Improve Construction Environment and Raise Awareness of Unfair Practices

Establishment of Fair Trade Practice Tasks for Construction Work to Improve Awareness of Unfair Practices
Improvement of Cost Reflection Procedures for Safety Management Expenses and Mandatory Inclusion of Industrial Safety and Health Management Expenses in Unit Price Contract Work

[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government announced on the 1st that it will establish measures to enhance fairness in the construction sector and strengthen safety at construction sites in accordance with the enforcement of the Serious Accidents Punishment Act, and will begin implementing them from March.

The measures include preparing the ‘Fair Trade Practice Tasks for Construction Work,’ mandating the submission of the ‘Certificate of Non-Existence of Illegal Subcontracting and Unfair Special Clauses,’ and the compulsory inclusion of safety management costs and industrial safety and health management costs. These aim to improve unfair practices and unreasonable cost calculation methods in construction work and strengthen safety management at construction sites.

The ‘Fair Trade Practice Tasks for Construction Work’ consists of 10 promises that ordering parties must keep and 10 promises that primary and subcontractors must keep, with a total of 10 tasks each. These are planned to be practiced by ordering parties, primary contractors, and subcontractors participating in construction projects. The newly prepared ‘Fair Trade Practice Tasks for Construction Work’ were selected based on unfair cases raised through audits and complaints so far, and serve as a guideline presenting inspection items to break unfairness in construction work, going beyond merely expressing intent.

Furthermore, to satisfy citizens’ right to know, enhance transparency in the construction industry, and increase public trust, Seoul plans to disclose the construction completion statements for Seoul city-ordered projects with contract amounts exceeding 1 billion KRW starting in October. To this end, the city will begin improving the ‘Construction Notification’ system it operates in March and complete the work before October.

Seoul will strengthen the submission of the ‘Certificate of Non-Existence of Illegal Subcontracting and Unfair Special Clauses’ by primary contractors and construction project managers when subcontracting contracts are made. This is to preemptively filter out unfair special clauses by comparing cases based on the unfair special clause review guidelines, even if the primary or subcontractor is unaware of such clauses included in the subcontract agreement.

Seoul plans to thoroughly review safety management costs from the ordering stage to ensure no omission occurs. To address issues such as quality degradation and safety accidents caused by insufficient reflection of safety management costs by ordering parties, a manual for reflecting safety management costs that ordering parties, designers, supervisors, and constructors must review will be prepared to prevent omission of safety management costs.

Industrial safety and health management costs, which were previously applied on a per work order basis for annual unit price contract projects exceeding 20 million KRW, have been expanded to be reflected based on the total contract amount to strengthen safety management at small-scale construction sites. Seoul continuously develops and applies the ‘Seoul-type Standard Quantity’ for construction types that do not sufficiently reflect Seoul’s site conditions in the ‘Standard Construction Work Quantity,’ which serves as the basis for construction cost estimation. This year, procedures such as on-site inspections are underway to verify and develop additional construction types.

Additionally, to address issues such as increased construction payments (incurrence of indirect construction costs) due to reasons like construction period extensions and the rise in lawsuits caused by passive responses from ordering institutions, Seoul has decided to establish and operate the ‘Indirect Cost Payment Review Committee.’ After internal review and deliberation by the ordering institution, negotiations with the construction company will be conducted. If negotiations fail, the case will be submitted to Seoul’s ‘Indirect Cost Payment Review Committee’ for professional and objective review to reflect appropriate indirect construction costs, minimizing disputes between ordering parties and constructors.

Han Je-hyun, Director of Safety General Office at Seoul City, said, “This plan was prepared as part of the process to correct unfair practices in the construction industry. In particular, regarding the enforcement of the Serious Accidents Punishment Act starting from January, construction sites will establish thorough safety measures, and ordering institutions will pay safety management costs, making Seoul a fairer and safer city.”

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