Issue Focus

January 2006, the Ministry of Land, Infrastructure and Transport introduced the direct construction obligation system, which requires construction companies to directly construct a certain portion of the construction work contracted as a general contractor, in order to ensure proper construction of construction projects and promote sound development of the construction industry.

● In addition to the direct construction obligation system stipulated in the “Construction Industry Framework Act,” a policy has been announced to strengthen and expand the direct construction obligation and scope of general contractors for domestic metropolitan and local government (local government) construction projects with the goals of improving unfair subcontracting practices and enhancing quality through responsible construction.
- The Ministry of the Interior and Safety will introduce a “direct construction evaluation system” that will reflect the direct construction ratio of bidders in the evaluation for all general construction projects worth KRW 3 billion or more ordered by local governments from January 1, 2025.
- The Seoul Metropolitan Government has been promoting various forms of direct construction expansion policies since 2016, and recently announced plans to make direct construction mandatory for key major types of work with the goal of achieving ‘Zero Defective Construction in Seoul.’

● However, the direct construction policy, which is being strengthened centered on local contracts, is likely to cause various problems, such as causing confusion in the construction production system that has been maintained for a long time, which is different from the original purpose of the direct construction obligation system, and it is expected to cause various adverse effects, including the contraction of the local construction industry.

● Therefore, this study examines the issues of the direct construction obligation system from various angles, focusing on the changes in the local contract system for the introduction of direct construction evaluation and the Seoul Metropolitan Government policy promoting the direct construction expansion policy, and proposes reasonable policy improvement measures based on the identified problems.