GS Engineering and Construction is considering changing the business model of the public sale apartments in the Incheon Geomdan New Town, which is undergoing a complete reconstruction due to a parking lot collapse, to a 'private participation public sale.' The decision is based on the judgment that if the project is carried out under the existing 'construction responsibility CM (Construction Management) public sale' model, the use of private materials would be limited, making it difficult to deliver quality suitable for the 'Zai' brand.
However, the client, Korea Land and Housing Corporation (LH), stated that it is difficult to change the previous business model as contracts have already been made with construction companies for electrical, communication, and fire safety works.
According to GS Engineering and Construction and LH on the 21st, GS Engineering and Construction inquired with LH about changing the business model of the public sale apartments in Incheon Geomdan New Town AA13-2 block to a 'private participation public sale.'
Previously, there was a parking lot collapse at the public sale apartments in Incheon Geomdan New Town AA13-2 block in 2023. As a result, GS Engineering and Construction announced a complete reconstruction. The company is currently progressing with follow-up processes after completing the demolition work. The apartment complex was completed for sale in 2021.
Currently, the public sale apartment project is being conducted under the construction responsibility CM model. This model allows the construction company to participate from the planning stage, reflecting the construction company's know-how in the design (pre-conservice), and to carry out the work within the agreed construction cost ceiling after consulting with the client before the design is completed.
The private participation public sale proposed by GS Engineering and Construction is a project jointly implemented by LH and private construction companies to supply various public dwellings by leveraging private technologies and brands. LH provides the land, while private construction companies are responsible for housing construction and sales. Although it is public housing, there is an advantage in that private brands and technologies can be utilized.
GS Engineering and Construction believes that for the apartments undergoing complete reconstruction to apply the 'Zai' brand, the project must proceed under the private participation public sale model. Future residents are requesting that the 'Zai' brand be applied instead of the LH brand 'Andante' for the reconstructed apartments. GS Engineering and Construction holds the position that to apply the 'Zai' brand, it must be able to use private materials that meet their previously used materials and specialized designs.
However, if the project proceeds under the previous construction responsibility model, it must be carried out within the agreed construction cost, and materials must also be procured through state-acquired materials. GS Engineering and Construction argues that while the 'Zai' brand could be applied if the existing business model is followed, the quality will not differ from existing public dwellings.
LH has expressed difficulty with this request from GS Engineering and Construction, as it has already contracted for the construction management services for 'Incheon Geomdan AA13-1/2 block apartment construction (reconstruction) supervision under the previous construction model.'
An LH official noted, 'Changing the current business model to a private participation public housing project may lead to several issues related to contracts with separate construction companies for electrical, communication, fire safety, etc., contracted under relevant laws. This could result in delays in the project timeline and delays in occupancy.' The official added, '(Changing the business model) requires careful and thorough examination according to relevant laws, regulations, and agreements.'
A representative from GS Engineering and Construction stated, 'We are discussing details with the client to fulfill the agreements made with the future residents and will do our best until completion.'
Incheon Geomdan AA13 1·2 block consists of 25 buildings of 25 stories above ground and 2 stories below, with a total of 1,666 units. It is divided into 702 units in block 1 and 964 units in block 2. The site of the accident is in block 2.