| Title |
Improvement of Risk Management and Contract Price Adjustment Systems in Domestic Public Construction Using the United Kingdom NEC4 Contract Model |
| DOI |
https://doi.org/10.5659/JAIK.2026.42.8.407 |
| Keywords |
NEC4 Contract; Early Warning System; Forward-looking Assessment; Deemed Acceptance; Risk Contingency Fund |
| Abstract |
The South Korean public construction contract system relies on a retrospective settlement method that requires post-event verification of actual
costs. This approach creates structural inefficiencies, including administrative delays and increased financial liquidity risks for contractors.
Rather than viewing these challenges as the result of institutional gaps alone, this study identifies them as consequences of rigid budget
controls and audit requirements that prevent existing procedures from operating effectively in real time. To address these systemic limitations,
the study examines the key procedural features of the United Kingdom’s NEC4 contract, particularly its early warning process and
forward-looking assessment approach, and proposes institutional improvements for the domestic public construction sector. The findings suggest
that a pre-agreement method based on forecasted costs immediately following an event is essential for maintaining project continuity. To
reduce delays caused by administrative inaction, a deemed acceptance mechanism within a specified timeframe should be legally established.
In addition, the Enforcement Decree of the Act on Contracts to Which the State Is a Party should be revised to create contingency
provisions and grant project managers greater commercial authority. Finally, protections for proactive administrative decision-making should be
expanded to reduce audit-related liability for decision-makers. |