A legal revision has been made in the information and communications construction sector to strengthen contract fairness and protect smaller firms. A mutual guarantee obligation will be introduced for private projects, and signing up for liability insurance will become mandatory.

The Ministry of Science and ICT said on Monday that the State Council approved revisions to the Information and Communications Construction Business Act. The key points are to establish fair contract order in the sector and to protect and foster construction businesses to lay the foundation for industry growth.

The core is to make mutual guarantees mandatory. For privately ordered projects, if a contractor guarantees contract performance to a project owner, the owner will also be required to guarantee payment of construction costs to the contractor or provide collateral. Until now, private projects, unlike publicly ordered projects, had no clear provisions on performance guarantees or guarantees for payment of construction costs. The ministry expects mandatory mutual guarantees to strengthen protection of rights between contracting parties.

The revision also provides a basis to build and operate a supervision management system. Under current law, a service provider in charge of construction supervision is barred from assigning a supervisor to multiple projects at the same time. But without a nationwide integrated management system, there have been limits in checking duplicate reporting or false assignments in advance. Once the supervision management system is built and operated, transparency and reliability in supervision work are expected to improve.

Training for new companies will also be mandatory. Under the revision, newly registered information and communications construction businesses must complete education on relevant laws and practical work within six months after registration. The measure aims to prevent violations in advance and support stable market settlement, as there have been cases in which new businesses faced disadvantages such as administrative penalties because they were not familiar with relevant laws.

Construction businesses must also mandatorily subscribe to insurance or mutual aid coverage to secure liability for damages if poor construction management causes damage to the completed structure or a third party. It also provides a basis for public-sector project owners to include the cost in contract expenses.

The ministry said it sees the legal revision as a foundation for shared growth in the information and communications construction market, worth about 20 trillion won, with about 13,000 businesses participating.

Choi Woo-hyuk (최우혁), director general of the Information Security and Network Office at the ministry, said, "The government will continue to reflect opinions from the field to create a stable management environment for construction companies, and strengthen institutional support to establish fair contract order and create a safe construction environment."