Maple Xi Reconstruction Cost Dispute: GS E&C Files ₩257 Billion Lawsuit
A dispute over construction costs for the reconstruction of ‘Maple Xi’ (Shinbanpo District 4) in Jamwon-dong, Seocho-gu, Seoul, has escalated into a legal battle. GS E&C has filed a lawsuit against the association, demanding an additional construction fee of approximately 257 billion KRW.
According to industry sources on the 10th, GS E&C filed a lawsuit against the Shinbanpo District 4 Reconstruction Association at the Seoul Central District Court in December last year. The claim amounts to 257.065 billion KRW, with GS E&C arguing that the cost increase was inevitable due to factors such as inflation, design changes, and rising financial expenses.
The additional costs cited by GS E&C include pre-construction inflation (31 billion KRW), adjustments for changes in construction conditions (96.7 billion KRW), financial costs due to extended project duration (18.5 billion KRW), financial costs from a reduction in general sales units (77.7 billion KRW), and general administrative expenses and profit margin on increased costs (33.2 billion KRW).
GS E&C emphasizes that the prolonged project duration, reduced general sales units, and increased financial costs were not due to the construction company's fault, asserting that their demand for additional costs is justified.
The company has also requested the Korea Real Estate Board to verify the 228.8 billion KRW in costs related to design changes and project enhancements.
If the requested cost increases are fully accepted, the construction cost per 3.3㎡ for ‘Maple Xi’ would rise from 5.64 million KRW to 7.97 million KRW. This is a significant increase from the 4.99 million KRW set when GS E&C won the contract in 2017. However, this figure is comparable to other redevelopment projects in the Gangnam area, such as Jamsil Jinju (8.11 million KRW), Cheongdam Samik (7.65 million KRW), and Banpo Jugong Complex 1 District 3 (7.86 million KRW).
The construction cost issue surrounding ‘Maple Xi’ has been a point of contention in the past. In late 2022, GS E&C requested an increase in construction costs due to design changes and rising financial expenses. The two parties reached an agreement to adjust the total construction cost to 1.13 trillion KRW and extend the construction period by eight months. However, disagreements over additional costs have persisted.
A GS E&C representative stated, “We requested negotiations with the association regarding cost increases caused by external factors such as COVID-19 and the Russia-Ukraine war, but our request was not accepted, leaving us no choice but to proceed with litigation.” The company also noted that it would seek to resolve the dispute amicably through verification by the Korea Real Estate Board and mediation by the Seoul Metropolitan Government.
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Maple Xi Reconstruction Cost Dispute: GS E&C Files ₩257 Billion Lawsuit
A dispute over construction costs for the reconstruction of ‘Maple Xi’ (Shinbanpo District 4) in Jamwon-dong, Seocho-gu, Seoul, has escalated into a legal batt
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