Dunchon Jugong Construction Consortium Initiates Lien Exercise... "Construction Halted Due to Association's Fault"

The Dunchon Jugong Reconstruction Complex in Gangdong-gu, Seoul, the largest reconstruction project in history, is facing a construction halt crisis. As conflicts over project costs between the association and the construction companies reach a peak, the Dunchon Jugong Construction Consortium (including Hyundai Engineering & Construction and three other companies) has announced a construction stoppage starting on the 15th. The photo shows a banner announcing the construction halt at the reconstruction site on the 14th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Ryu Tae-min] As construction at the Dunchon Jugong Apartment reconstruction project in Gangdong-gu, Seoul has come to a halt, the construction consortium has stated that the suspension of work is due to the fault of the union.

On the 15th, the Dunchon Jugong Construction Consortium (Hyundai Engineering & Construction, HDC Hyundai Development Company, Daewoo Engineering & Construction, Lotte Engineering & Construction) issued a statement citing reasons for the unavoidable suspension of construction, including the union’s denial of the construction contract amendment, delays in the construction schedule caused by the union’s fault and refusal to accept schedule extensions, and delays in sales to secure project funding.

The consortium said, “Since the groundbreaking on February 15, 2020, we have endured numerous difficulties to ensure the early move-in of union members and have carried out approximately 1.7 trillion KRW worth of credit construction work to date,” adding, “We regret to inform you that construction on the Dunchon Jugong project has been suspended as of April 15, 2022.”

The consortium further stated, “Following the approval of the ‘Construction Contract Amendment’ at the union’s extraordinary general meeting on December 7, 2019, we formally signed the amended construction contract with the union on June 25, 2020. Based on this amended contract, we have been carrying out construction for 12,032 households (including commercial units), but the union is denying the very existence of the amended construction contract that serves as the basis for the work, leaving us without contractual or legal grounds to continue construction.”

They also explained, “To date, the union has caused over nine months of construction delays through unilateral delays in providing design documents, delays in finalizing PVC window specifications, and requests to halt construction. Furthermore, the union has refused already agreed-upon approvals for finishing materials and unilaterally instructed the application of specific companies’ finishing materials under the pretext of upgrading the apartments, continuously delaying the construction period.”

The consortium emphasized, “The union has not finalized a normal project schedule, making the timing for securing project funds uncertain. The only way for the consortium to secure funds for construction is through sales revenue, but the union has repeatedly ignored the consortium’s requests to proceed with sales operations.” The consortium’s position is that it is currently difficult to secure additional internal funding to continue construction as the union has not finalized schedules for union members and general sales.

They added, “We can no longer trust the union’s executive committee and advisory group, who continue to provide distorted information, and we express concerns that the current situation may be prolonged.”

In response, the union held an emergency general assembly on the afternoon of the 13th and conditionally approved a motion to terminate the construction contract. The condition is if the construction stoppage continues for more than 10 days. Unless there are unforeseen circumstances, the union is expected to submit the contract termination motion as planned on the 25th, after 10 days of construction suspension. Additionally, on the 16th, the union plans to hold a general meeting to process a motion to cancel the resolution related to the disputed construction cost increase.

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