• Journal of Arbitration Studies
• /
• v.15 no.3
• /
• pp.303-324
• /
• 2005

Turnkey project in construction which accounts for about $10\%$ of the total annual construction orders in the nation is expected to grow in size as an effort to strengthen international competitiveness and improve quality of construction work. However, problems of turnkey project in construction raise concern for many possible cases of possible claims. Based on the understanding that bidding guidelines which plays a critical role in turnkey project in construction actually contain some unequal clauses and causes for problems which undermine development of turnkey construction and further create possible cases of claims, the paper aims to identify and analyze the unequal clauses and problems contained in the guidelines in order to make suggestions for improvement. Among all the turnkey construction orders that has been placed since 2000 when domestic turnkey project in construction became relatively formulated, 13 constructions costing more than 50 billion won were selected for this study since their construction scale were large enough that the bidding guidelines for them were regarded as containing little difference among one another. In order to enhance construction technology and to prevent claims while trying to achieve the original purpose of Turnkey system, the parties involved in or schedule to take part in Turnkey project including ordering institution, Construction Company and Design Company should make an effort to have more reasonable bidding guidelines drawn up.

• Journal of the Korean Society for Railway
• /
• v.8 no.5
• /
• pp.460-469
• /
• 2005

Turnkey contract system is an effective ordering system for the ordering organizations that technical engineers are insufficient for their construction projects. It is possible to reduce project duration and to improve project quality in an integrated contract system between design and construction. However, owners can have a difficulty caused from unitary responsibility system. This study analyzes present situation and problems of turnkey contract system including railway projects. The result includes various methods for improving the system based on the analysis of bid price and selection procedure.

• KDI Journal of Economic Policy
• /
• v.32 no.2
• /
• pp.144-170
• /
• 2010

This paper considers the effect of various types of procurement auction system on competition focusing on the rate of successful bidding. We analyze the number of bidders and the rate of successful bids using online procurement data of the Public Procurement Service. The average number of bidders is 301 and the average rate of successful bids is 87.42% while the weighted average rate is 75.13%. These numbers show that there is quite strong competition among bidders and the rate is lower as the expected price is higher. When we analyze the data of price procurement auction, the rate is also shown to be lower as the expected price is higher. Furthermore, the rate decreases as the number of bidders increases which naturally makes the competition stronger. Meanwhile, the analysis finds that the inclusion of the onsite bidding, the PQ(Pre-Qualification) result, or major-10 winning companies cannot explain the rate much in our data. In case of turnkey-alternative, the average rate of successful bidding for 484 cases record 90.20%. The average is 84.89% with 120 alternatives and 91.97% with 364 cases of turnkey. The reason why the rate of turnkey-alternative is lower than that of price procurement auction is the lack of competition as well as the systematic difference. By setting up a model, we are able to explain the difference in rate caused by the respective reason. When we suppose there are 3 bidders in case of price procurement auction for a project that exceeds 100 billion won, the rate is expected to be around 64%. This implies that difference of 26% is caused by the systemic difference and 3% by the lack of competition. Therefore, we conclude that the difference in rate between turnkey-alternative and price procurement auction is caused mainly by the systemic difference. In case of PPP(Public Private Partnership) projects, among 154 projects in total, only 40% has more than 2 bidders that compete. The average number of bidders is 1.88 which is less than 2, and the average rate of successful bids is 90%. In sum, under the price procurement auction, there is strong competition which is reflected by the rate of successful bids. However, there is room to decrease the rate by strengthening the competition under the turnkey-alternative. Also with PPP projects, we expect the rate can be steadily reduced with revived competition among bidders.

• KSCE Journal of Civil and Environmental Engineering Research
• /
• v.34 no.6
• /
• pp.1881-1891
• /
• 2014

Full system of turnkey deliberation committee in 2010 was abolished and permanent Deliberation committee was introduced. So far, ordering organization selected the best method suitable for the design and comprehensive evaluation method in the turnkey bid construction. Comprehensive evaluation method have bid price design score coordination, weighted basis, the best design approach fixed amount, five successful bidder decision method in addition. Design deliberation branch committee in the successful bidder decision way configured and operated branch members of special design consultation committee, But main agent changed from committee deliberation pull system to permanent committee deliberation, as well as and The lobby burden was not improved. This similar to the past at the portion of the design deliberation and the way of the design deliberation in the turnkey bid construction. Therefore it is necessary to improve the design deliberation system. In other words, design score and technology competition should be adapted to determine a successful bid. This study suggested the operating system of the design deliberation, the decision method problems of the successful bidder and ways to improve the design deliberation.

• Korean Journal of Construction Engineering and Management
• /
• v.11 no.2
• /
• pp.35-44
• /
• 2010

Currently, the unit price of public construction projects are not being evaluated appropriately for several reasons. First, the evaluation of the unit price differ per nature of the bidding process and its estimation process. In fact, pricing is determined to meet the total price in turnkey projects and to pass the low bid price deliberation process in unit price projects, and thus, such prices cannot be said to be reasonable prices per public project. After the contract is awarded, however, the prices determined without taking into consideration the characteristic of each bidding process and price estimate process are used for the valuation of progress payment, design changes, and escalation. Furthermore, this is also being applied to other low bid deliberation process as actual public project unit price, thereby affecting other processes as well. In effect, this system increases the risks for both the owner and the bidder who have determined the unit price. This research examines the risk factor and its extent in order to properly manage it in preparation for the future.

• KSCE Journal of Civil and Environmental Engineering Research
• /
• v.33 no.2
• /
• pp.771-780
• /
• 2013

Inspection system which was performed in the past selected the final winning bidder by separating Pre-Qualification, the basic design evaluation and price evaluation. However, turnkey and alternative bidding construction has selected way to determine the successful bidder as the best design and the most low cost method, comprehensive evaluation method (bid price adjustment, design score adjustments, weights standard), the best design and the fixed amount method from january 1, 2010 to the present. Due to these institutional problems, orders institutions were often a way to determine the successful bidder to apply differently for identical or similar construction. Therefore this study winning bidder selection criteria through analysis of construction the number and construction order performance, order performance by work division and institutional orders, the weights bidder order performance and orders status of turnkey alternative tendering construction to civil part performed in domestic.

• Korean Journal of Construction Engineering and Management
• /
• v.24 no.5
• /
• pp.44-51
• /
• 2023

Selecting appropriate bidding system in construction projects considering the characteristic of project can be a make-or-break element, so the understanding for bidding system of public construction projects is ever more important from the perspective of both the owner and the contractor. The design-build bidding is commonly referred to as turnkey in Korea, and is a bidding method that is often applied to large public construction projects because it allows new technologies to be applied to the design and facilitates risk management for the owner. In this bidding method, there are only two factors (design score and price score) that affect the selection of the winning bidder, so it is important to understand the influence of each factor, but there is little research on the subject. This study aims to provide a basis for establishing bidding strategies for understanding the influence between design score and price score by analyzing various design-build bidding data of public construction projects. The results of the study show that design score is the factor that has more influence on the ranking of bidders in all three weighted evaluation methods: design-emphasized, price-emphasized, and equalized evaluation. In addition, we found that the correlation between design and price scores was not significant due to the unique bid evaluation structure in Korea.

• Korean Journal of Construction Engineering and Management
• /
• v.21 no.2
• /
• pp.30-38
• /
• 2020

Inadequate cost management has widely been recognized as one of the most problematic areas in the Korean construction industry as many believes that public cost references are not reasonably reflecting the market conditions. 'Total Project Cost Management Guideline' developed by Ministry of Economy and Finance(MOEF) to govern public budget control has been identified as one of the main reasons for this problem. This study attempts to thoroughly review 'Total Project Cost Management Guideline' itself and quantitatively analyze the impact of it on project cost during procurement process. Different procurement methods are considered including turnkey & alternative, private contract, qualification examination, and lowest price bidding system in this quantitative impact analysis of 'Total Project Cost Management Guideline'. Analysis results shows that this governmental process works mainly as a constant cost-cutting tool throughout the procurement process.

• Journal of Internet Computing and Services
• /
• v.15 no.4
• /
• pp.57-65
• /
• 2014

Risk factors are the reason behind cost overruns and delays in long-term large-scale IT service projects. Major risks originate from the integration of complex IT system components, including software, hardware, and solutions; the competitive bidding process; the turnkey and firm-fixed price nature of contracts; and the project execution environment. We have identified several risk factors such as delay in acceptance, low quality of deliverables, delay in payment, adding and changing requirements and scope, unclear definition of roles and responsibilities of the buyer and supplier, and unclear procedures of change and quality management during the project execution phase. One needs to manage risks proactively before signing the contract. In order to weed out or lower the risk factors well in advance, we need to identify and remove risk factors contained in contract clauses and attached contract documents. We propose a checklist for assessing IT service project contracts. To validate the checklist's utility, we applied it to an IT service project in the finance industry. The results show that the checklist is effective in identifying and removing risk factors pertaining to IT service projects.

• Korean Journal of Construction Engineering and Management
• /
• v.10 no.6
• /
• pp.107-116
• /
• 2009

As the Fundamentals of Construction Business Act was revised in December 2004 and its implementing ordinances and enforcement regulations were adjusted in June 2005, the screening system of low price subcontracting has been an obligation to the public owners, having brought about arguments for and against since it enacted in 1983. The statutes for low price subcontracting have been reinforced from this year; for example, it underlines to submit to a project and builds an information network of subcontracting works. The system's original intention was that prevents shoddy and fraudulent constructions caused by low price subcontracting and precludes disturbances of fair trade by screening that whether it satisfies the conditions or not in advance. But, the criterion for the existing low price subcontracting has several issues having held up a true mirror to the real situation. It is arguable to discharge an important task with the primary purpose. This dissertation have researched the problem with a deposit of subcontract and the low price subcontracting basic rate are being used by the criteria for deciding whether it is a low price subcontracting or not, so showing the plan of reformation based on the findings, it wishes to contribute toward making the most of the system's essential intent.