Hyundai E&C Implements Partner-Based Performance-Sharing Compensation System

Hyundai Engineering & Construction (Hyundai E&C) is introducing a partner-centered performance sharing system to strengthen mutual cooperation and promote shared growth within the construction industry.

On July 29, Hyundai E&C announced the launch of a "performance-sharing Value Engineering (VE) compensation system," which allows the company to share the results of design, procurement, and construction optimization based on proposals from partner companies. Hyundai E&C will use VE ideas for design, procurement, and construction suggested by its partners to innovate quality, improve work processes, and reduce costs. Through this system, 50% of the value created by partner companies will be compensated. Hyundai E&C is the first domestic construction company to officially introduce such a performance compensation system.

Hyundai Engineering & Construction Gyedong Building, Jongno-gu, Seoul. Provided by Hyundai Engineering & Construction

원본보기 아이콘

The "performance-sharing VE compensation system" operates according to a standard procedure consisting of seven steps. Partner proposals undergo a first feasibility review and a second effectiveness evaluation, followed by the submission of a VE proposal, contract modification, construction execution, and performance settlement. Methods for compensation and standards for settlement have been established to enhance the effectiveness of the system. The evaluation framework prioritizes quality and safety. Hyundai E&C thoroughly reviews VE proposals, including whether they meet the client’s quality standards, the possibility of project delays, and any potential decrease in safety. Only proposals that are confirmed to be effective and feasible are adopted.

Hyundai E&C will first implement this system at domestic and overseas sites involving materials and subcontract contracts in its civil engineering, new energy, and plant business divisions. The company plans to consider expanding the system to its building and housing business divisions in the future. For partner companies, this marks the first official channel where creative ideas can be converted into economic results, thereby providing both motivation and opportunity for technical proposals.

A Hyundai E&C representative stated, "This system is significant in that it institutionally accepts technical proposals from partner companies and establishes a structure to convert them into tangible results," adding, "We plan to further advance our technology-based cooperation system to strengthen long-term business competitiveness."

Since March, Hyundai E&C has been operating a "Partner Excellent Technology Proposal Center" to discover the technical capabilities of partner companies and expand their application at construction sites. Not only registered partners but also any domestic or overseas company with construction-related technology or product capabilities can submit proposals through the company’s website. In the four months since its launch, more than 150 proposals have been received, with outstanding technologies contributing to quality improvement and process efficiency. In addition, Hyundai E&C operates various win-win programs such as the Shared Growth Fund, Technology Expo, and Safety Guide system, providing effective support for the growth of its partner companies.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.