"Construction costs for Gadeok Island New Airport need to reflect market realities... Government must establish effective measures"

[Financial News] Concerns are growing locally that construction could be delayed as discussions drag on over how to bring construction costs for the Gadeok Island New Airport site development project in line with current market conditions.

On the morning of the 21st, 22 local civic groups, including the Busan Citizens’ Alliance for Decentralization and Balanced Development, held a press conference in the briefing room of the Busan Metropolitan Council and urged the government to devise measures to bring construction costs in line with current market conditions.
For the project, the Daewoo Engineering & Construction consortium submitted its basic design documents on the 7th. Under the government’s plan, the main contract process must be completed by November, with construction on the early-work portion scheduled to begin that month.
However, the government continues to delay measures on how to reflect increases in raw material prices, fuel costs, labor costs, and ocean freight rates that occurred before the main contract is signed. If this situation continues, participating construction companies are bound to withdraw, the contract will be delayed, and the start of early construction work will be disrupted.
The Gadeok Island New Airport construction project is a massive national undertaking with construction costs of approximately 10.9 trillion won and a construction period of 106 months. The construction cost index has risen sharply since the bid notice was issued last year, raising concerns that simply applying the increase could create an additional burden in the range of 600 billion won.
The groups pointed out, "The core issue is that although the government recognizes the need to bring construction costs in line with current market conditions, it has been unable to quickly finalize a solution. The Ministry of Planning and Budget and the Ministry of Land, Infrastructure and Transport (MOLIT) appear to be passing responsibility back and forth over whether the issue should be resolved by revising the Guidelines for Managing Total Project Costs or by amending the Special Act on the Construction of Gadeok Island New Airport."
They explained, "If revising the Guidelines for Managing Total Project Costs is the fastest and most effective solution, the Ministry of Planning and Budget should immediately take the necessary measures. Then, to establish a clearer institutional framework, MOLIT could draw up a proposal through consultations between the ruling party and the government, while lawmakers could introduce and pass a bill to amend the Special Act on the Construction of Gadeok Island New Airport."
Cho Jeong-hee, standing representative of the Council of Busan Civic Organizations, said, "With construction about to begin, the Ministry of Planning and Budget and MOLIT are merely watching each other’s moves and passing the buck over whether to include raw material and labor costs in the project budget. The government must clearly state which ministry will resolve this issue. Do not delay any longer; the main project cost must be finalized."
[email protected] Byeon Ok-hwan Reporter