Standard Lump-Sum Contract Revised... Adjustment Possible Considering Price Fluctuations

The Ministry of Land, Infrastructure and Transport announced on the 29th that the revised notice of the 'Standard Construction Contract for Private Construction Projects,' which includes specifics on price fluctuation adjustment methods, prior agreement on dispute resolution methods, and basic matters related to the delivery payment linkage system, will be enforced starting from the 31st.

Currently, the standard construction contract has ambiguous detailed criteria regarding price fluctuation adjustments, making it difficult for contracting parties (private clients and construction companies) to adjust contract amounts despite recent rapid increases in construction costs.

Accordingly, the price fluctuation adjustment criteria will be clarified by adopting the 'item adjustment rate' or 'index adjustment rate' methods currently applied in public construction projects, and the method for calculating adjustment amounts will also be specified in detail.

Additionally, while dispute resolution methods such as mediation (through the Ministry of Land, Infrastructure and Transport Construction Dispute Mediation Committee) or arbitration (through arbitration institutions under the Arbitration Act) are possible, there was a concern that disputes could be delayed due to disagreements between contracting parties after a dispute arises because the resolution method was not predetermined.

Therefore, the revision requires contracting parties to agree on either mediation or arbitration as the dispute resolution method at the time of signing the construction contract, before any dispute occurs.

Furthermore, in accordance with the amendment to the Act on the Promotion of Mutual Growth between Large and Small Enterprises, matters related to the delivery payment linkage system, scheduled to be implemented from October, have also been incorporated.

Kim Sang-moon, Director of the Construction Policy Bureau at the Ministry of Land, Infrastructure and Transport, stated, "Through this revision of the notice, we expect that price fluctuation negotiations in private construction projects will proceed smoothly, and that if contract disputes arise, they will be amicably resolved through the Construction Dispute Mediation Committee and other means."

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