Competition Breeds Lower Bid Prices for Construction Projects

The bids with the rock-bottom lowest price are being awarded contracts nowadays as Korea continues to adjust to the new business climate under the International Monetary Fund(IMF) bailout system.
In October 1998, the government announced an open bid for the paving of the Suwon-Osan highway that had a proposed budget of 16 million dollars. The project was given to a firm which submitted a budget of only 11 million dollars, 69 percent of the expected costs.
During the same period, the bidding price for the construction of the high speed railway between Susack and Hwajon was only 70 percent of the suggested amount.
The aggressive pricing is a result of the current economic recession. Prior to the IMF bailout successful bids were 84.6 percent of the suggested costs while since the end of 1998 they are averaging 72.7 percent.
Because there are fewer projects, the intense competition has led to lower prices, which has many experts worrying about the potential for inferior quality of construction.
Hwashik Bong : trojans@joongang.co.kr