"Low Bidding in Public Construction Subcontracts Persists... Need for Payment Realism"

There have been claims that subcontracted construction work in public projects is still being carried out at low prices, highlighting the need for payment normalization and fairness.

According to the June 30 report titled "Realization of Construction Costs in Public Projects" by the Korea Construction Policy Research Institute (KCPRI), insufficient reflection of rising construction costs in public projects has led to bid failures and project delays in major national projects.

The report diagnosed that under these circumstances, subcontracted construction work is still being performed at low prices due to the ineffectiveness of the appropriateness review of subcontract contracts.

The report stated, "Despite the presence of subcontractors who bid at the lowest price, re-bidding is conducted, resulting in unfair subcontract contracts and low-priced subcontracted construction work," adding, "While the government's measures to revitalize the construction industry focus on primary contracts by proposing plans to realize construction costs and expand construction investment, policies related to the realization and fairness of subcontract payments are insufficient."

Subcontracted construction work corresponds to the production stage directly related to the quality and safety of facilities. Since it is closely connected to the livelihoods of construction material and equipment suppliers, workers, and others in the lower economic strata, it is suggested that fairness along with the realization of subcontract payments is necessary. However, subcontract contracts are often concluded at the lowest price, causing construction cost disputes and project delays.

The report also stated, "The Framework Act on the Construction Industry introduced an 'appropriateness review of subcontract contracts' to prevent low-priced subcontracting and ensure the quality and safety of facilities, but its effectiveness is lacking," and added, "To realize construction costs in subcontract contracts, it is necessary to delete the exception clause for the appropriateness review of subcontract contracts under the Framework Act on the Construction Industry."

Furthermore, it said, "The Subcontracting Act introduced the disclosure of construction subcontract bidding results, but its scope is very limited," and added, "To ensure fairness in subcontract contracts, it is necessary to expand the 'disclosure of construction subcontract bidding results' under the Subcontracting Act to all projects subject to the simplified comprehensive evaluation bidding system (for projects with an estimated price of 10 billion KRW or more)."

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