KRW 116 trillion invested in 2008 (14% of GDP),

1.82 million jobs created (8% of total employment)

Overseas construction has been the key source of foreign capital(orders worth of USD 47.6 billion received in 2008)

Low productivity (57% of manufacturing industry, sluggish performance since the 1990s)

Public works have displayed poor performance such as delayedconstruction period and increased construction costs

Low level of technology and prevailed corruption and irregularities

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* Measures to advance the construction industry have been developed based on the recommendations from the Construction Industry Advancement Plan submitted by the private sector. (Jan. 2009)

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- Uniform regulatory regimes as seen in the contractor - subcontractor system and separated order issuance, which are mandated according to the relevant laws

- Bidders turn to brokers only for lobby activities

- Venders are being negligent of technical development

* Comprehensive companies: 5, Specialized companies: 25 business types Limitation in business among different business types

- Performance has been unsatisfying because the order issuance and contracting methods are determined based on the construction cost

* Wasting huge amount of social cost for lobby activities to over 3,000 judges pool

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* CM at Risk, turn - key

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Owner forms flexible production system satisfying the characteristicsof construction

* Utilizing a professional company as a prime contractor using CM, and utilizing a main contractor type joint venture

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Technology development will be facilitated including connecting designswith construction, while design businesses will become largerand specialized

* Several private contracts, and turn - key projects are not included in separated order (’09, 4% further 60%)

Construction efficiency will be increased including saving costsfor fair management and shortening construction period

Facilitating and verifying turn-key methods

Expanding the application of technical proposal biddingfor constructions requiring advanced technologies and creativity

- Applying to not only high-level construction, but also constructions requiring a reduced construction period

- Introducing the submission of proposal outline for detailed design

Introducing a bidder proposed tendering system where a bidder estimatesand proposes construction methods and volumes

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* Technological development including new technology and construction methods will be facilitated

Stricter construction guarantee evaluation

Rigorous PQ criteria

* 【 Current 】 Construction Guarantee 【 Future 】 General Insurance Companies

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- Refuse to warrant dumping bids by insolvent builders

- Open the market so that owners can choose guarantee companies

* Include specific categories such as construction performance and technology

- Reinforce the evaluation standard of PQ

- Grant full autonomy to capable owners

Evaluate bid price based on objective data

Appraise elements besides price if necessary, and allow the proposalof alternatives

Capable owners can organize their own evaluation committee

Avoid corruption by disclosing the list of membersbefore the evaluation as well as the results

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- Incapable owners should depend on the central permanent evaluation committee (with around 50 members)

- Members from the private sector should also submit asset reports and are subject to punishment

Budget has been wasted due to expensive CM

Appraise performance by project stageand utilize it in developing plans and budgeting

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* 63% (681.6 B won) of projects are not obligated to undergo supervision

* Construction cost, increase of project time, safety, change in design, and reconstruction

Move the focus away from price to technological capability

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Cost-plus-fee contract will replace percentage-of-construction-costcontract in design cost payment

Stricter builder management with new punishment clauseson insolvent companies

Specification system should focus on performance instead of materialsand standards

Enhance the guideline for shop drawing so that blueprintscan be actually applied in construction sites

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Impose fines 50 - fold of the bribe

Review methods to liquidate the company in case of repeatedoffense during a certain period

Regulate unfair practices in subcontracting such as not reflectingadditional project cost

Expand guarantee to include subcontracting, equipment,and material cost

Promote a consultative body for the parallel cooperationbetween prime contractors and subcontractors

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Restructuring of the industry to be implemented by 2011(Complete legal amendment by Sep. 2012)

Complete urgent tasks by the end of September 2009

* Reform institutions on government projects: Enforcement Decree of the Act on Contracts to which the State is a Party, Enforcement Decrees of the Act on Electrical Communication Business Act, Information and Communication Work Business Act

* Ease regulations on entering the construction industry: Enforcement Decree of the Framework Act on the Construction Industry

* Permanent evaluation committee on turn-key projects: Enforcement Decree of Construction Technology Management Act (Dec. 2009)

* Eradicate barriers between construction businesses, and open the construction guarantee market

Set up a taskforce among relevant ministries for continuous monitoringand follow-up measures

Implement and evaluate pilot projects to improve public delivery and tender / award system

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* Pursue initiatives through Korea National Housing Corporation, Korea Land Corporation, Korea Water Resources Corporation, and Korea Rail Network Authority

Run programs to build capabilities of owners