Fierce competition is expected among South Korean construction companies to win a 1.4 trillion won ($1.29 billion) mega project to build two units of a power plant.

The order placed by the state-run Korea Hydro & Nuclear Power for Shin-Kori power plant units 5 and 6 in Ulsan is considered to be the single largest public construction project of the year.

“It is the most important public construction project of this year, not only because of its huge scale but also because of the construction achievement that would help builders win other nuclear power projects overseas,” a construction firm official said. 

With many large companies having shown interest in winning the bid, Hyundai E&C, Daewoo E&C, Samsung C&T, Doosan Heavy Industrial, Daelim Industrial and SK E&C are reportedly seeking to form consortiums.

The submission deadline for prequalification for the Shin-Kori plant is Jan. 19.

“The project will become the eye of a typhoon in the public construction sector,” a Construction Association of Korea official said. “The bidding competition among local contractors will be cutthroat to the last minute.”

This is the first project that the country’s nuclear power plant operator adopted the Best Value Contracting system in place of the traditional low-bid system.

Under the new bidding system, each bidder’s technical capability will take up 80 percent of the whole evaluation while the bid price will take the remaining 20 percent to decide the final winner of the project.

This means that forming a consortium with a builder with sufficient technology and related experience will be a more crucial factor than a low bid.

Eight builders ― Hyudai E&C, Samsung C&T, Daelim Industrial, Daewoo E&C, GS E&C, SK E&C, Doosan Heavy Industry and Dongah Construction ― have experience in constructing nuclear power stations.

By Park Han-na (hnpark@heraldcorp.com)