"Breath of Relief" as Early Payment of Daegum Brings Warm Holiday to Construction Partners

Jungheung Group Pays 100 Billion KRW in Construction Fees Early
POSCO, Hyundai Development, Dongbu, Kolon Also Join the Initiative
Partner Companies Say, "Receiving Funds Before the Holiday Provided Relief"

"From the subcontractor's perspective, this is the time when funds are most needed, so by releasing the progress payments before the holiday, they were able to smoothly pay labor costs and material costs, which provided much-needed relief."

A representative from Company A, a partner of the Jungheung Group, said, "The tougher the economy gets, the more severe the cash flow difficulties become, but early disbursement is providing significant help in operations." Progress payments are a term used in the construction industry referring to money received based on the portion of the overall construction work that has been completed. Jungheung Group paid a total of 100 billion KRW in construction payments in cash early to the subcontractors of Jungheung Construction and Jungheung Togeon on the 21st, before the Lunar New Year holiday. The company also made early payments amounting to 130 billion KRW before last year's Chuseok holiday.

Construction companies taking the lead in 'early payment' of transaction amounts. From the top left clockwise: Dongbu Construction, POSCO E&C, DL E&C, Joongheung Group. Provided by each company.

The construction industry is taking the lead in 'win-win' cooperation despite the difficult business conditions. By making early payments to partner companies before the holidays, they contributed to alleviating cash flow difficulties. Not only Jungheung Group but also other major companies such as DL E&C, POSCO E&C, HDC Hyundai Development Company, Dongbu Construction, and Kolon Global joined the 'early payment' movement. Considering that partner companies need a lot of funds temporarily for salaries, bonuses, and other expenses during the holidays, the payment schedules were moved up. Thanks to this, employees of partner companies were able to enjoy a warmer Lunar New Year than in previous years.

DL E&C made early payments of 285.1 billion KRW to partner companies, and POSCO E&C paid 42 billion KRW early. The recipients were 633 small and medium-sized enterprises working with POSCO E&C. All payments were made in cash. Since 2010, POSCO E&C has been the first in the industry to pay all transaction amounts to SMEs in cash. Dongbu Construction paid 80 billion KRW, and HDC Hyundai Development Company paid 6.5 billion KRW early before the Lunar New Year holiday. Kolon Global also decided to pay 190 billion KRW in transaction amounts earlier than originally scheduled.

Early payment of transaction amounts occurs every year considering the special nature of the holidays. However, this year there is a more notable reason. Due to the triple hardship of increasing unsold units, rising construction costs, and project financing (PF) insolvency, even the contractors who need to pay partner companies are facing difficulties securing liquidity. For example, Shindongah Construction, ranked 58th in construction capability evaluation, had unpaid construction fees amounting to 214.6 billion KRW in 2023 and recently entered rehabilitation procedures. Despite the recession and increasing unpaid construction fees, they continued to extend a warm hand to their partner companies.

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