The Suwon Yeongtong Byeokjeokgol Doosan, WOOSUNG, and Hanshin Apartments, the first remodeling project in the metropolitan area with a scale of 2,000 households, is facing difficulties in its project due to the construction company's demand for an increase in construction costs.
According to the maintenance industry on the 6th, the remodeling association of the Suwon Byeokjeokgol Doosan, WOOSUNG, and Hanshin Apartments has been negotiating with the construction company Daewoo E&C since August last year regarding the increase in construction costs, but has yet to narrow down the differences.
Earlier, Daewoo E&C was selected as the construction company in July of the same year after proposing a construction cost of 5.95 million won per 3.3㎡ in the bidding for the remodeling of the Suwon Byeokjeokgol Doosan, WOOSUNG, and Hanshin Apartments in May 2022. Subsequently, in April this year, it requested an increase in the construction cost to 7.95 million won per 3.3㎡, approximately a 34% increase from the original bid.
Daewoo E&C proposed a total construction cost of 585.8 billion won at the time of bidding, but has since requested the association to finalize a contract for 782.7 billion won after increasing the amount by about 200 billion won.
A representative from Daewoo E&C noted, "This complex is a remodeling project won during the spread of the novel coronavirus infection (COVID-19), and the construction raw material prices have risen over the past three years, so an increase in construction costs is unavoidable."
However, the association remains firm that it cannot accept an increase in construction costs close to 200 billion won.
Kim Do-kyung, chairman of the Suwon Byeokjeokgol Doosan, WOOSUNG, and Hanshin Apartments remodeling association, said, "I requested detailed information regarding the increase in construction costs, but Daewoo E&C has only provided itemized amounts on four sheets of A4 paper, refusing to submit additional materials."
In particular, Daewoo E&C has not fulfilled its promise to lend business expenses, making it difficult for the project to proceed smoothly. Chairman Kim said, "Daewoo E&C promised to lend 14.9 billion won interest-free before project financing (PF) so that the association could use it for operational costs, but it is not keeping that promise, stating it will provide the funds only after the contract is signed or confirmed."
In response, a representative from Daewoo E&C stated, "Initially, we converted a 10 billion won bid deposit into business expenses to support the association's project, and afterward, we provide operational expenses to the association regularly every month and also support necessary urgent business expenses (for wind tunnel testing services, performance-based design services) as essential business expenses for project progress, so it is difficult to accept demands for prepayment of costs that have not occurred and costs identical to previous expenditures."
The remodeling project of the Suwon Byeokjeokgol Doosan, WOOSUNG, and Hanshin Apartments completed all procedures about three years after the establishment of the association in December 2021, and received approval for the remodeling project plan last January. Currently, only the general meeting procedure to determine the members' contributions remains. However, negotiations regarding construction costs with Daewoo E&C have not progressed, resulting in the general meeting being postponed for three months from June to September this year.
A representative from Daewoo E&C acknowledged, "It is true that we are facing difficulties regarding negotiations on construction costs," while adding that they will make efforts to continuously communicate with the association to derive an optimal solution.
This complex is an apartment building that marks its 29th year since completion, located at 973-3 Yeongtong-dong, Yeongtong-gu, Suwon, Gyeonggi Province. It is the first remodeling project conducted in the metropolitan area with a scale of approximately 2,000 households. The existing structure, with a maximum of 20 floors and 18 buildings comprising 1,842 households, is set to be reborn as a new apartment building with 1,956 households through horizontal and independent remodeling expansions.