LH Alters Public Housing Construction Cost Calculation Method to Save 400 Billion Won by 2030

▲ Korea Land and Housing Corporation (LH)

The Korea Land and Housing Corporation (LH) announced today (September 28) that it plans to drastically overhaul its public housing construction cost calculation method, aiming to cut construction costs by 45.1 billion won in the second half of this year and by an annual average of 100 billion won through 2030.

LH has been exploring various institutional improvement measures to reduce project costs as the target volume for public housing construction continues to increase while project cost burdens grow due to rising material and labor expenses.

Accordingly, LH has rationally reformed the construction cost calculation method starting from the design stage this year, improving the application method of standard market prices to reduce unnecessary cost increase factors.

Previously, the design unit price was determined by comparing the unit price calculated using the standard production rates with the standard market price and applying the lower of the two. Under the revised criteria, the lower of the expected contract unit price and the standard market price will be adopted as the design unit price to drive down project costs.

LH explained that this approach will expand participation opportunities for contractors with competitive pricing during the bidding process, thereby lowering actual contract unit prices.

The items and scope eligible for standard market prices will also be expanded.

While standard market prices were previously applied only to some items comparable to standard market prices among standard unit cost tables (based on standard production rates), the comparison scope will now be extended to district-specific special unit cost tables.

LH applied these improvements on a priority basis to the bidding volume for the second half of this year (34 blocks, 19,677 households) and confirmed a project cost reduction of 45.1 billion won. The corporation projects that cumulative project cost savings will reach approximately 400 billion won (397.7 billion won) by 2030.

An LH official stated, "We plan to continuously expand items subject to standard market prices and upgrade the calculation methods to secure appropriate budgets, while actively utilizing the saved financial resources to expand the supply of public housing."

(Photo courtesy of LH, Yonhap News)

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