(C) KED Global

Seoul, South Korea — A recent survey conducted by the Korea Construction Association (KCA) and the Construction & Economy Research Institute of Korea (CERIK) reveals that nearly half of all construction projects completed over the last three years have resulted in financial losses for the builders.

According to the results, based on a survey of 150 companies from September 11 to November 6, 2025, a significant 43.7% of projects completed between 2023 and 2025 were found to be operating at a deficit.

The primary reasons cited for these losses were underestimation of construction costs and the failure to adjust contract amounts during the execution phase, particularly in light of sharp increases in material and labor costs since 2020. The association points out that these rapidly escalating costs are not being adequately reflected in project agreements.

Schedule Pressure and Regulatory Reforms

The survey also highlighted issues with project scheduling. Among 123 respondents, 64.1% stated that project periods were not appropriately calculated, leading to financial penalties (liquidated damages) or the need for costly fast-track construction (Dol-Gongsa) in 22% of all projects.

In response, the KCA plans to push for legislative changes, including the prompt passage of a revised State Contract Act that would mandate the payment of additional costs stemming from time extensions on long-term continuous contracts. The association is also promoting the expansion of the 'minimum bidding price' rule to cover projects up to 30 billion KRW (from the current 10 billion KRW) and allow appeals against unfair preliminary price estimations.

Furthermore, the KCA emphasized the need for legal revisions to the Framework Act on the Construction Industry to address a lack of legal provisions regarding contract amount adjustments for private sector projects, a gap that currently leads to construction halts and market confusion.