The South Korean government is conducting special inspections on construction cost assessments and increases for redevelopment and reconstruction projects, while the city of Seoul is moving to delegate additional cost verification to the discretion of project associations. As the government enhances oversight and Seoul relaxes procedures, there are growing concerns about whether both speed and transparency in urban renewal projects can be achieved.
According to the Seoul city government, it is revising the 'Seoul Special City Public Support Redevelopment Project Contractor Selection Criteria' to ease the mandatory additional cost verification for public-supported redevelopment projects.
In December 2023, Seoul plans to introduce additional verification procedures separate from legal obligations to prevent conflicts between project associations and contractors over construction cost increases. Associations that announce bids for contractor selection after December 28 will be required to request cost verification before notifying members of the sale, regardless of whether there are cost increases.
However, concerns have been raised that requiring uniform verification for all projects, even those without cost increases or requests from members, could extend project timelines and increase costs. Verification typically takes 60 to 75 days and incurs fees based on the scale of the construction costs.
In response, the city announced plans to improve the verification system on August 12 and issued a notice of partial amendments to the contractor selection criteria on September 10. The amendments will allow associations to decide on additional verification based on project conditions while maintaining the legal verification requirements.
A Seoul city official stated, “The administrative notice was completed on September 30, and it is currently undergoing internal review. We expect to implement it by November at the latest.”
While Seoul pursues the autonomy of additional verification, the government is examining compliance with legal verification obligations. The Ministry of Land, Infrastructure and Transport and local governments conducted an investigation from August 27 to September 22 of 568 redevelopment and reconstruction sites nationwide that had selected contractors. They found that 138 sites had not conducted the required verification under the Urban and Residential Environment Maintenance Act.
The Ministry plans to conduct special on-site inspections at 16 of these sites starting October 19 and will provide administrative guidance to the remaining 122 sites to ensure compliance with verification requirements. They will focus on assessing the appropriateness of cost calculations and compliance with relevant laws regarding contracts and verification.
Experts suggest that rather than uniformly expanding cost verification, it may be more effective to operate based on necessity. Lee Tae-hee, a researcher at the Korea Construction Industry Institute, stated, “Focusing verification on high-importance projects is not a bad idea.” This approach would concentrate verification efforts on larger projects or those with significant economic and social impacts.
Lee emphasized the need to enhance procedures for appeals, re-verification, and mediation to reduce disputes over construction costs and project delays. He added that if additional verification is left to the discretion of the associations, they must adequately explain the basis for omitting verification and the details of cost calculations to ensure transparency for members.
* This article has been translated by AI.
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