MOLIT to conduct special inspections at 16 of 138 redevelopment and reconstruction sites without construction cost verification

[Financial News] The government will conduct special on-site inspections at 16 of the 138 redevelopment and reconstruction sites that have not undergone legally required construction cost verification. The inspections aim to prevent harm to association members and delays to projects by examining how construction costs were calculated and increased, as well as how the associations are operated.
On the 14th, the Ministry of Land, Infrastructure and Transport (MOLIT) said it would begin special on-site inspections at 16 redevelopment and reconstruction sites on the 19th, together with local governments and the Korea Real Estate Board. The inspections will take place in two rounds: from the 19th to the 30th of this month and from the 9th to the 20th of next month.
The inspections follow cases in which construction costs were set or increased excessively during redevelopment projects without the legally required verification procedures being followed. Another reason for the inspections is that rising construction costs have increased the burden on association members, while disputes between associations and contractors have delayed project schedules.
MOLIT and local governments previously conducted a comprehensive survey from August 27 to September 22 of construction cost increases, whether projects were subject to verification, and compliance with procedural requirements at redevelopment projects in their jurisdictions. The survey found that 138 of the 568 redevelopment and reconstruction sites nationwide with contractors selected had not undergone construction cost verification, despite being subject to it under the Act on the Improvement of Urban Areas and Residential Environments.
The 16 sites for special inspection were selected based on applications from local governments and analysis of the comprehensive survey results. MOLIT is responsible for drawing up the inspection plan, overseeing and coordinating the process, and compiling and announcing the results. The Korea Real Estate Board will examine the adequacy of construction cost calculations and the reasons and calculations behind increases.
Local governments will investigate whether relevant laws and association bylaws have been violated. External experts will review the adequacy of association operations, budget execution, service procurement methods, contracts, and procedures.
If violations of relevant laws, including the Urban Improvement Act, are confirmed during the inspections, corrective orders and administrative guidance will be issued. If evidence of suspected serious crimes such as embezzlement, breach of trust, or fraud is found, the cases will be referred to investigative authorities.
The inspection results will be provided to the relevant association members. Major cases involving legal violations will be organized by type and distributed to associations nationwide, and will also be used as training materials for association executives.
For sites among the 138 that have not completed construction cost verification but are excluded from the special inspections, MOLIT and local governments will provide administrative guidance to ensure they undergo the verification process individually.
“Through these special on-site inspections, we will prevent harm to members of redevelopment project associations, improve the adequacy and transparency of construction cost contracting, and resolve disputes,” said Yoon Young-jung, MOLIT’s director general for housing renewal policy.
[email protected] Choi Ga-young Reporter