GS Construction "Will Bear All 550 Billion KRW Rework Costs... A Decision to Restore Brand"

No Cost Sharing with Joint Contractors Dongbu and Daebo Construction
GS Construction: "We Will Proceed in Close Consultation with the Client"

GS Construction will bear the entire cost of 550 billion KRW expected to be spent on the complete reconstruction of the apartment complex in Geomdan New Town, Incheon, where the accident occurred. This is interpreted as a decision made to restore the brand even at the expense of financial loss.

Regarding the collapse accident in the underground parking lot of an apartment in Geomdan New Town, Incheon, the construction company GS Construction announced on the 5th a plan for a complete reconstruction of the entire apartment complex where the accident occurred. The reconstruction plan covers a total of 17 buildings and 1,666 households. The photo shows the AA13-2 block apartment construction site in Geomdan New Town, Incheon, on the afternoon of the 6th. [Image source=Yonhap News]

On the 6th, GS Construction announced its position on the complete reconstruction of the Geomdan apartment through a public disclosure. According to the disclosure, GS Construction plans to reflect a loss of about 550 billion KRW in the first half of 2023, considering demolition costs, new construction costs, and costs related to prospective residents.

GS Construction’s stance is to bear all the costs for the complete reconstruction. A GS Construction official explained, “The funds will be invested in installments over about five years, from demolition to the completion of the new apartments,” adding, “We will bear all the costs related to the reconstruction. Although it is a large expense, we made this decision to restore our brand even if it means taking a financial hit.”

Earlier, on the 5th, GS Construction issued an apology stating, “We deeply acknowledge our responsibility as the contractor and will do our best to manage the accident,” and “Reflecting the opinions of prospective residents, we will completely reconstruct the entire Geomdan complex and provide all compensation for delays in move-in.”

However, some raised concerns that conflicts might arise over the reconstruction schedule and cost-sharing since GS Construction announced the complete reconstruction unilaterally without consulting co-contractors Dongbu Construction and Daebo Construction, as well as the client LH (Korea Land and Housing Corporation). GS Construction holds a 40% stake and leads the construction of the accident site apartments, while Dongbu Construction and Daebo Construction each hold a 30% stake.

Nonetheless, since GS Construction has unilaterally announced that it will bear all reconstruction costs, the possibility of disputes over cost-sharing among the companies is considered somewhat reduced. An industry insider said, “We were surprised by GS Construction’s announcement of the complete reconstruction without prior consultation, but it is fortunate that they declared they will bear the entire cost of about 550 billion KRW.”

A GS Construction official stated, “We plan to re-disclose specific details as they are determined regarding this matter,” and added, “We will proceed in close consultation with the client going forward.”

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