Real Estate Practice Group
Resolving Large-Scale Construction Cost Disputes: A Victory in Additio…
2026-02-10
Resolving Large-Scale Construction Cost Disputes: A Victory in Additional Construction Costs and Inflation-Adjusted Claims
1. Fact Summary and Background
• Client Situation: The Plaintiff (Counter-defendant) in this case, Company P (hereinafter "the Contractor"),
served as the contractor for a housing redevelopment project
in the Uijeongbu area. Despite successfully completing the construction, the Contractor
was unable to recover payments due to disagreements with the Association regarding construction cost increases and unpaid balances.
• Case Background: The Defendant (Counter-plaintiff), the Jangam District 4 Housing Redevelopment Association (hereinafter "the Association"),
contested the claims, arguing that the additional costs lacked contractual grounds or
were excessive. Furthermore, the Association filed a counterclaim against the Contractor, citing reasons such as construction delays.
• Key Review Matters: The primary points of contention included the appropriateness
of cost adjustments based on price fluctuations (ESC), the recognition of additional costs resulting from design changes,
and the finalization of unpaid amounts during the post-completion settlement process.
2. Key Legal Issues
• Interpretation of Price Adjustment Clauses: Legal interpretation of how the contractual provisions
regarding price fluctuations should be applied to actual claims for construction cost increases.
• Requirements for Recognizing Additional Costs: Establishing the existence of "actual input costs" and
"implied agreement" to allow the Contractor to claim costs for additional work
that may not have followed formal prior approval procedures by the Association.
• Validity of Set-off and Liquidated Damages Claims: Assessing whether the Association’s claims of negligence
against the Contractor (e.g., liquidated damages for delay) were specific and legally sound enough
to be set off against the outstanding construction payments.
3. Execution and Achievement
• LKP’s Role and Arguments:
o Conducted a precise analysis of the actual construction records
and the evolution of design drawings to prove that the additional work was essential
for the project's progress and that the Association was aware of these changes.
o Demonstrated through expert appraisal and objective indicators
that the cost increases due to price fluctuations were calculated
legitimately in accordance with the contractual formulas.
o Logically refuted the Association’s counterclaim regarding construction
delays by highlighting force majeure factors and the procedural legitimacy of the timeline, thereby minimizing the Contractor's liability.
• Result for the Client: The court accepted a significant portion
of the Contractor's claims and ordered the Association
to pay the unpaid construction costs along with delayed interest. (Plaintiff victory)
• Significance of the Case:
o This case is meaningful as it presented specific settlement standards
that consider not only the literal interpretation of the contract
but also the actual input process at the construction site—a common point of friction in large-scale redevelopment projects.
o It secured the Contractor’s right to legitimate payment while providing
a legal foundation for the Association to finalize the project by clarifying ambiguous debt relationships.







