Concerns have emerged among members regarding the 'responsibility completion commitment' proposed by Hyundai Engineering & Construction to win the contract for the 'Hannam District 4' redevelopment project, in competition with Samsung C&T, as being virtually meaningless.
According to documents obtained by Chosun Biz on the 10th, Hyundai Engineering & Construction submitted the responsibility completion commitment to the Hannam District 4 redevelopment association on the 18th of last month.
The commitment states, 'The party (Hyundai Engineering & Construction) will not stop construction under any circumstances, except for force majeure reasons due to natural disasters, internal disturbances, war, and pandemics, as well as reasons for which the party (Hyundai Engineering & Construction) is not responsible,' when examining this document.
Initially, the responsibility completion commitment that the Hannam District 4 association sought to apply to the construction company's bidding guidelines did not contain any mention of 'excluding reasons for which the construction company is not responsible.'
The past responsibility completion commitment prepared by the association included the statement, 'The party (construction company) assures the association that it will complete the work responsibly without stopping or delaying construction for any reason, regardless of whether it is the party's (construction company's) fault, by the planned completion date.'
In response, some members of the Hannam District 4 association are expressing dissatisfaction, stating that the content of Hyundai Engineering & Construction's responsibility completion commitment implies that construction can be effectively halted at any time.
In fact, Hyundai Engineering & Construction submitted a responsibility completion commitment to receive project financing (PF) loan guarantees from the Korea Housing & Urban Guarantee Corporation (HUG) for the halted Dunchon Jugong reconstruction project and the Daecho District 1 redevelopment project. In the case of the Dunchon Jugong reconstruction, the former executive body of the association denied the construction change contract signed by the previous committee, leading to a conflict over increased construction costs, during which the construction consortium, including Hyundai Engineering & Construction, halted work for six months. Similarly, in the Daecho District 1 redevelopment, Hyundai Engineering & Construction paused work for five months due to reasons including unbilled construction costs and the absence of the association president.
A member (Mr. A) met at the Hannam District 4 redevelopment site said, "Hyundai Engineering & Construction submitted a responsibility completion commitment, but included a toxic clause stating, 'excluding reasons for which the party is not responsible,'" adding, "Hyundai Engineering & Construction has a precedent of halting construction in cases where it is not at fault, such as the previous Dunchon Jugong reconstruction and Daecho District 1 redevelopment, so it is indeed unsettling for the Hannam District 4 members."
An industry insider stated, "Typically, in the responsibility completion commitments that construction companies are required to submit to obtain PF loan guarantees from HUG, there is no wording stating 'excluding reasons for which the construction company is not responsible,' and it appears Hyundai Engineering & Construction inserted a loophole clause to evade responsibility in case variables arise later, leading to legal disputes."