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Photo = Yonhap news |
[Alpha Biz= Paul Lee] GS Construction has demanded an additional 490 billion KRW for the “Shinbanpo 4 District Reconstruction Project (Maple Xi)” scheduled for completion in June, targeting the union.
Of this amount, 257.1 billion KRW—attributable to financial costs and inflation-related price increases—was contested through a lawsuit filed with the court. Unable to reach an agreement with the union regarding construction costs, GS Construction has also requested mediation from the city of Seoul.
If the construction cost dispute continues, delays in the Maple Xi project’s completion cannot be ruled out. Maple Xi is a large-scale development consisting of 3,307 units, and any delay in its occupancy is expected to significantly impact the rental market in the Banpo area.
According to a report from Chosun Biz on Monday, GS Construction requested an additional 486 billion KRW in construction costs from the union in December of last year. This would require each member to pay an additional 150 million KRW in contributions. The reason for the additional costs includes 228.8 billion KRW for changes in design and specialized construction, and 257.1 billion KRW due to changes in business plans, project duration, and changes in construction conditions (including financial costs).
GS Construction filed a lawsuit with the Seoul Central District Court on December 6 last year over the 257.1 billion KRW, citing that the union rejected the request on the grounds that it violated the original “joint business agreement” and lacked supporting evidence. GS Construction has appointed Kim & Chang, the largest law firm in Korea, to represent them in the lawsuit.
The 257.1 billion KRW additional cost consists of several components: 31 billion KRW for inflation-related costs before construction based on the agreement, 96.7 billion KRW for costs due to changes in the construction environment, 18.5 billion KRW for financial costs resulting from project delays, 77.7 billion KRW for increased contribution fees due to reduced sales unit numbers, and 33.2 billion KRW for general administration and profit related to the increased construction costs compared to the original bid.
A union representative stated, "We believe there is no basis for agreeing to the 257.1 billion KRW requested under the financial cost and other related categories."
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
