SH Construction Cost Verified Sinbanpo 22nd Phase... "2.2 Billion KRW Reduction Justified"

Seoul City to Expand Construction Cost Verification for SH Corporation

Seoul Housing and Communities Corporation (SH Corporation) received a result from its construction cost verification that it is reasonable to reduce 22 billion KRW from the contractor's requested increase for 'Sinbanpo 22nd Complex' in Jamwon-dong, Seocho-gu, Seoul. Following the completion of the pilot project, the Seoul Metropolitan Government decided to expand the application of construction cost verification to all projects in Seoul.

SH Corporation Exterior View

According to Seoul City on the 29th, SH Corporation analyzed the contractor's requested increase of 88.1 billion KRW for Sinbanpo 22nd Complex and concluded that a 25% reduction, amounting to 22 billion KRW, is appropriate. They proposed reducing 16 billion KRW from the 64.6 billion KRW increase due to design changes by adjusting unit prices and quantities, and also suggested a 6 billion KRW reduction from the 23.5 billion KRW inflation adjustment.

The Sinbanpo 22nd reconstruction association initially selected Hyundai Engineering as the contractor in 2017 and signed a contract at 5.7 million KRW per 3.3㎡, but in April, just before construction began, they were asked to increase the price to 13 million KRW per 3.3㎡. Consequently, they requested SH Corporation to verify the costs before changing the contract. SH Corporation's analysis concluded that an appropriate price would be around 12.04 million KRW per 3.3㎡. The significant increase in construction costs for Sinbanpo 22nd was attributed to the small scale of 160 households, high financial costs due to post-sale, and the use of premium finishing materials.

Prior to Sinbanpo 22nd, SH Corporation completed construction cost verification for Haengdang 7 District in Seongdong-gu. Based on the verification results, an agreement was reached between the association and the contractor, Daewoo Engineering & Construction, reducing the proposed 52.6 billion KRW by 53% to 28.2 billion KRW.

Going forward, Seoul City will accept applications for construction cost verification for redevelopment projects. Redevelopment associations in Seoul can request SH Corporation to verify construction costs by submitting relevant documents from the contractor when verification is needed. Kim Heon-dong, President of SH Corporation, stated, "We will utilize SH Corporation’s 35 years of experience and accumulated capabilities to help resolve conflicts arising from rising construction costs and project delays in redevelopment projects." SH Corporation plans to implement a 'Construction Cost Verification Management Card' based on the pilot project results. This management card aims to prevent omissions or changes during the actual construction phase when high-priced materials or products promised by the contractor are not listed in the detailed statements.

Han Byung-yong, Director of the Housing Office at Seoul City, said, "If proper progress management is conducted in districts where project implementation approval has been completed, construction can begin within 5 to 6 years." He added, "We will actively utilize the city’s conflict management know-how to manage conflicts not only related to construction costs but throughout the entire redevelopment process, striving for rapid housing supply and market stabilization."

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