The additional construction cost conflict between the Cheolsan Jugong 8th and 9th complex reconstruction (Cheolsan Xi The Heritage) association and the construction company GS Engineering and Construction has been resolved.
GS Engineering and Construction and the association finalized additional construction costs of 52 billion won, approximately 10% lower than the proposal offered by the Gyeonggi Province Dispute Mediation Committee.
According to the maintenance industry on the 9th, the Cheolsan Xi The Heritage association held a board meeting on the 7th and decided to pay GS Engineering and Construction 52 billion won in additional construction costs. As a result, GS Engineering and Construction is expected to accept the board decision, bringing an end to friction with the association.
Last month, the Gyeonggi Province Dispute Mediation Committee proposed a mediation plan for 59.6 billion won in additional construction costs for the Cheolsan Jugong 8th and 9th complex reconstruction association. The amount agreed upon this time is approximately 13% (7.6 billion won) lower than the Gyeonggi Province Dispute Mediation Committee's proposal. When compared to the amount requested by GS Engineering and Construction for additional construction costs, it is about half.
Earlier, GS Engineering and Construction demanded 103.2 billion won in additional construction costs from the association in January. The amount, according to GS Engineering and Construction at the time, reflects costs generated by the association's requests and design changes, as well as inflation. They also declared that if negotiations on the contract amount adjustments were not completed by the time of occupancy, it would be unavoidable to restrict residents' entry.
GS Engineering and Construction signed a contract for construction costs of 877.6 billion won with the association in December 2019 and commenced construction on the complex in December 2021. Three years later, in February 2022, they requested an increase of 41.6 billion won from the original construction costs, making the contract amount 919.2 billion won after the first adjustment.
In December 2023, the second contract amendment was conducted with an increase of 58.5 billion won from the first adjusted amount, totaling 977.7 billion won. Subsequently, on January 22, they demanded a third adjustment from the association, requesting to re-sign the construction contract for 1.08 trillion won after increasing the second construction cost adjustment by 103.2 billion won.
If the agenda for confirming the additional construction cost of 52 billion won passes the association's general meeting, the construction cost for Cheolsan Xi The Heritage will increase to 1.0297 trillion won. Cheolsan Xi The Heritage will be built by reconstructing the Cheolsan Jugong 8th and 9th complex in Cheolsan-dong, Gwangmyeong, Gyeonggi Province, with three basement levels and 40 above-ground floors, comprising a total of 3,804 units.
A representative from the association noted, "Soon, through the delegate council and the general meeting in May, we will finalize the additional construction cost of 52 billion won," adding, "There will be no disruptions to the occupancy starting at the end of next month."
The friction caused by GS Engineering and Construction's demand for additional construction costs is not limited to the Cheolsan Jugong 8th and 9th complex.
GS Engineering and Construction is also involved in a legal dispute with the reconstruction association of Sinbanpo 4 District (Maple Xi) in Seocho-gu, Seoul, regarding additional construction costs, scheduled for occupancy in June. In December of last year, it requested a total of 486 billion won in additional construction costs from the association and filed a claim for 257.1 billion won regarding inflation before the start of construction.
Additionally, GS Engineering and Construction reached an agreement after a year-long construction cost dispute with the redevelopment association of Jangwi 4 District (Jangwi Xi Radiant). In September last year, GS Engineering and Construction demanded an additional 49 billion won in construction costs due to increased costs.
The Jangwi 4 District redevelopment association expressed that 15 billion won, corresponding to the design change amount, is appropriate, showing disagreements with GS Engineering and Construction on additional construction costs. Although there were warnings of construction suspension, GS Engineering and Construction and the association agreed to provide an additional 30.5 billion won for construction costs in February.
A representative from GS Engineering and Construction said, "We are fortunate to have reached a harmonious agreement with the association through the strict verification and systematic mediation by the Gyeonggi Province Dispute Mediation Committee and Gwangmyeong City."