Science ministry sets 30-day deadline for payment guarantees on ICT construction work

The science ministry said Thursday it has revised its enforcement rule for the ICT construction business law, setting a 30-day window for ordering parties to guarantee payment to contractors and allowing builders to stop work when that guarantee does not come.

The rule takes effect Oct. 22, the same day as the amended Information and Communications Technology Construction Business Act and its presidential decree.

An ordering party must provide a payment guarantee or collateral to the contractor within 30 days of receiving the contractor's guarantee of contract performance. The amount is calculated from the contract sum, minus any advance payment, for projects running four months or less; longer projects use a formula tied to how often progress payments are made.

The guarantee can take the form of cash, including cashier's checks issued by a post office or a bank, or a guarantee bond issued by the ICT mutual aid association, an insurance company, the Korea Credit Guarantee Fund, a bank or the Housing and Urban Guarantee Corporation. Where an ordering party finds it difficult to provide a guarantee or collateral, it may instead pay an insurance or mutual-aid premium set by those institutions.

If a guarantee is not provided, a contractor may formally demand performance and suspend work, using registered mail with proof of content, an electronic document carrying a verified digital signature, a certified electronic address, or any other method that objectively confirms the demand was sent and received.

The rule also establishes a training system for ICT construction operators and introduces a new certificate of completion, with the form set out in a new appendix to the regulation. The revision was issued as a Ministry of Science and ICT ordinance.