Daewoo Engineering & Construction said on the 10th that it proposed business terms in the Seongsu 4 District redevelopment bid that could significantly reduce the financial burden on association members.
Daewoo Engineering & Construction offered an amount lower than the construction cost estimated by the association (1.3628 trillion won, 11.4 million won per pyeong). The construction cost Daewoo Engineering & Construction submitted at the bid is 1.3168 trillion won, 10.99 million won per pyeong. A Daewoo Engineering & Construction official said, "While we will lower construction costs, we will apply a level of design completeness, finishes, and product quality that is at or above high-end."
Daewoo Engineering & Construction also proposed the project financing interest rate as "CD-0.5%," which deducts 0.5% from the CD (certificate of deposits) rate. Applying the CD rate of 2.75% as of Feb. 4 next year, the effective financing rate would be 2.25%, a rate at the lowest level.
It also reduced the burden of construction cost increases due to inflation. In typical maintenance projects, the inflation index is applied based on the bid deadline, but Daewoo Engineering & Construction decided to apply it based on the "timing of signing the contract with the association." In addition, it proposed a condition under which Daewoo Engineering & Construction would bear the portion of price increases occurring for 12 months after the contract.
Daewoo Engineering & Construction expects that about 22.5 billion won will be saved by deferring construction cost increases, and plans to minimize the rate of construction cost hikes even after the 12-month deferral by applying the lower of the "construction cost index" and the "consumer price index."