[비즈한국] As the redevelopment project in Apgujeong District 4, Gangnam-gu, Seoul—considered a major maintenance project this year—enters the full-scale builder selection process, criticism is mounting regarding the bidding guidelines. Points have been raised that the guidelines are overly conservative or amateurish, as they impose excessive liability on construction companies for project delays resulting from failed alternative design approvals, while also containing contradictory regulations across different bidding documents.
According to the maintenance industry, the Apgujeong District 4 redevelopment association will hold its 2nd General Meeting of Delegates for 2026 on the 19th to vote on the builder selection plan and the draft bidding guidelines. The current guidelines require participating construction companies to submit a commitment letter for guaranteed completion and propose a construction payment method based on "progress payments from sales proceeds." The association plans to issue the tender notice on the 27th of this month following the delegates' approval, with the goal of selecting a builder in May. The estimated construction cost for the Apgujeong District 4 redevelopment project is 2.1154 trillion won (12.5 million won per 3.3㎡), with the bid bond alone amounting to 100 billion won.
The agenda item was previously rejected during the 1st General Meeting of Delegates for 2026 held on the 6th. It is reported that the delegates insisted on including a requirement for a guaranteed completion commitment and the condition for progress payments from sales proceeds, which were omitted from the initial draft. A guaranteed completion commitment is a promise by the builder to complete construction within a specified period, excluding force majeure events such as natural disasters. It typically carries a condition to assume the developer's loans in case of violation. Progress payments from sales proceeds refer to a method where construction costs are paid based on the progress rate as sales revenue is generated.
Industry observers describe the current bidding guidelines as excessively conservative. The regulation regarding submission of a commitment letter for alternative design approval responsibility and cost burden is a prime example. The association requires that if an alternative design proposed by a builder in a future bid is rejected or denied approval due to the builder's fault, or if the project cannot be executed due to inability to implement conditional approvals, the builder must bear the redesign costs and pay liquidated damages for the duration of the delay. Measures such as forfeiture of the bid bond for non-compliance were also included.
The alternative design approval liability letter is a self-rescue measure recently introduced by some associations to prevent unrealistic alternative designs. An alternative design refers to a plan proposed by a builder or others that reinforces the functionality and utility of the original design provided by the project owner. Some recent maintenance sites have adopted such commitments to prevent project delays caused by sluggish approval processes for alternative designs. However, some point out that these letters discourage creative alternative designs that could enhance the value of the complex. In particular, Apgujeong District 4 is quite strict with its sanction levels, requiring the payment of contractual liquidated damages in case of project delays.
Others point out that the Apgujeong District 4 bidding guidelines are amateurish. According to the builder selection plan draft contained in the documents for the upcoming delegates' meeting on the 19th, the association allows each bidder an opportunity (within 20 minutes) to explain their company and promotional video during a joint briefing. However, the draft bidding guidelines contained in the same materials state that companies should keep their company introduction and promotional video within 30 minutes. The builder selection plan and the bidding guidelines, which specify the promotion time for the joint briefing, are essentially in conflict with each other.
These are not the only contradictory bidding guidelines. According to the draft bidding guidelines in the delegates' meeting materials, the Apgujeong District 4 builder cannot request an increase in construction costs even if the actual geological conditions during excavation differ from the geological survey report provided by the association, or if construction methods must be changed due to such discrepancies. Conversely, the draft construction contract included in the same materials states that the contractor may request an adjustment of the contract amount in the aforementioned case. In that event, both parties agree to negotiate and adjust the contract amount within the range calculated based on the contract's design change clause.
An official in the maintenance industry commented, "The Apgujeong District 4 alternative design approval liability commitment is analyzed to be even stricter than that of Apgujeong District 2, which requires the builder to 'bear costs such as construction, moving expenses, and financial costs due to inflation in case of project delays.' If the liability for failed alternative design approvals is excessively high, construction companies are likely to either not propose alternative designs or submit ones that are effectively no different from the original design. The errors currently found in the bidding guidelines seem likely to cause confusion for construction companies regarding what content to rely on for their bids."
Kim Yun-soo, the head of the Apgujeong District 4 association, said, "There are complexes where the approval process is being delayed due to unrealistic alternative designs. While the union members want creative alternative designs, they must remain within the limits of the maintenance plan that has received the final notification, such as ventilation corridors or skylines. We plan to identify and resolve the errors found in the bidding guidelines immediately."
The Apgujeong Apartment District in Gangnam-gu, Seoul, is considered the biggest battleground for maintenance projects this year. Starting with District 4 this month, District 5 plans to issue a bid notice for builder selection in the first half of the year, followed by District 3 in the second half. Since District 4 is selecting its builder first—with a construction cost of 2.1154 trillion won—the results are expected to influence the competition landscape for the remaining districts. Currently, Samsung C&T028260, Hyundai E&C000720, DL E&C375500, and GS E&C006360 are expressing interest in winning the contract. District 2, the largest maintenance project last year (2.7489 trillion won), was awarded to Hyundai E&C through a private contract.