韩国国土部就加德岛新机场填海工程6000亿韩元成本增额能否纳入合同向法制处申请法律解释

South Korea's Ministry of Land, Infrastructure and Transport has asked the Ministry of Government Legislation for a legal interpretation on whether construction costs that surged after bidding for the Gadeokdo New Airport site preparation project can be reflected in the contract amount. Raw material prices have soared following the outbreak of war involving Iran, and estimated cost increases so far exceed 600 billion won ($430 million). At stake is whether the ministry can defuse objections from regional builders — some of which have threatened to withdraw from the consortium unless costs are adjusted — and keep the project on track to break ground this year.
The ministry submitted the request on the 27th, seeking clarification on provisions in the enforcement decree of the State Contracts Act governing contract adjustments for price fluctuations, industry officials said on the 30th.
The core question is whether increases in raw material, fuel and labor costs incurred between the bid announcement and the signing of the main contract can be factored into the contract. Under the current enforcement decree, contract amounts can in principle be adjusted once 90 days have passed since the contract was signed and the item or index adjustment rate has moved by 3% or more. Adjustments within 90 days are allowed when natural disasters or sharp increases in raw material prices make performance of the contract difficult. What remains unclear is whether cost increases arising after bidding can be reflected in advance when the main contract has not yet been signed.
The government announced the tender for the Gadeokdo New Airport site preparation project last December, with a construction period of 106 months and a total project cost of 10.7 trillion won ($7.7 billion). The tender, held in January and February this year, failed twice as only the Daewoo Engineering & Construction consortium participated, and the government designated the consortium as a private contract counterparty in February. The consortium has since carried out basic design work and offshore ground surveys.
But the outbreak of war between the United States and Iran shortly after the bidding sent international oil prices and the cost of raw materials such as steel and cement sharply higher. The construction cost index rose 5.8% between the tender announcement late last year and June this year, according to the construction industry. Applying that rate directly to the total project cost yields additional costs of more than about 620 billion won ($445 million). Industry officials argue that the impact of higher fuel and material costs is greater than for other civil engineering projects, given that the work requires concentrated deployment of vessels and heavy equipment for large-scale offshore landfill and soft ground treatment.
Thirteen builders based in Busan and Gyeongsangnam-do that joined the consortium are weighing withdrawal unless construction costs are brought in line with reality. Their combined stake accounts for about 13% of the consortium. The regional firms have been pressing the government and Daewoo Engineering & Construction for measures since last month, saying that proceeding at the current project cost could leave each of them with losses in the tens of billions of won.
The ministry plans to complete the legal interpretation and cost negotiations by September, sign the main contract in October and hold a groundbreaking ceremony for the initial portion of works at the Gadeokdo site in November. Even if the Ministry of Government Legislation finds that the increase can be reflected, the full 620 billion won would not be added. The government is considering a plan to identify and reflect only those costs that contractors could not reasonably have foreseen, such as higher fuel prices, raw material costs and maritime freight rates stemming from the war in the Middle East. "We are in talks to reflect in the contract increase only the portion of price growth that spiked unusually fast because of the war, excluding natural inflation," a ministry official said.