Fast and transparent construction payment system : Seoul Payment Monitoring System

Date 2015-06-25 Category E-Government Updater scaadmin
Seoul Metropolitan Government
Last Update

Background Information and Product Introduction

+ After payment from client to original contractor is made, payment to the sub-contractor and/or construction/material/equipment/workers is either late or less, which is an unfair practice in the construction industry. The Seoul Payment Monitoring System has been introduced to improve these practices and foster a fair contract culture.
+ In order to protect the vulnerable members of the society, by guiding the original contractors, sub-contractors, construction/material/equipment/workers, a fair contract in the construction owned by Seoul, Payment Monitoring System was built
+ By linking Seoul and financial institutions, sub-contractor claims are to be paid exactly as promised. Payment date and amount can be checked through the Seoul Payment Monitoring System, which supports fair trade


• Transfer of payments for public contracts

+ The price to be paid by Seoul to contractors, construction workers, and equipment/material suppliers can be transferred via the Internet to sub-carriers.
+ Payments can be made per usage to fixed accounts, advance accounts, labor accounts and general accounts
+ Sub-carrier payments are guaranteed.

• Realtime monitoring of payments and simplified work

+ Can be checked immediately after payment transfer instructions through Seoul Payment Monitoring System
+ Seoul sub-organizations can check their payment history before payment.
+ Through Seoul Payment Monitoring System, by being able to check payment history, there is no need for submission and checking of Seoul payment evidence material, labor cost claims or copies of bankbooks Realtime.

• Realtime monitoring of receipt
Payment receipt history for construction workers, and equipment / materials providers can be checked in real-time without signing up.
• Automatic SMS notification for business processes such as payment
• Payment means provided for early payment (funding policy)
• Interface with ERP(Enterprise Resource Planning) system available

Application Example and Operation Outcome

• Immediate e-Payment reduces irregularities with subcontracted applicable agencies
Compared to last year, reports of sub-contract irregularities have decreased by 78 cases from 326 to 248.
By the end of June 2014, the number of cases was 110.
(Sub-contract irregularities call center operation performance, 2013)
• High usage rate - a scale of 1,953 billion won
By the end of July 2014, through the payment monitoring system, applied a total of 1,953 billion won to 1,465 construction sites.
• Best practice benchmarking by central government agencies, local governments, and private enterprises

Seoul Special Operations Strategy

• Close cooperation with the banks and districts
The mayor, district representatives and bankers for diffusing application to the 25 districts, have signed a mutual business agreement (MOU).
• Seoul obliged use of Seoul Payment Monitoring System
By amending the related ordinance, Seoul obliged the use of Seoul Payment Monitoring System when notifying and making new contracts, and encouraged to use to other affiliated organizations by making an application guideline.
• Regular training for Seoul Payment Monitoring System users
To help an easier use of the system, regular training is conducted twice a month for new Seoul Metropolitan Government workers and contractors.

Major Expectations

• Protect the socially weak by guaranteeing payment of subcontract fee, equipment/material use fee, and construction workers’ wage
• Solve problems of unpaid construction payments in realtime checking
• Reduced business related payments
• Domestic and International Certificates and Awards

+ Received UN Public Executive ‘Integrity Construction Administration System’ field (public service anti-corruption) excellence award. (May 2013)
+ Received the grand prize for 2013 Seoul Anti-Corruption Contest Award
+ Received 2013 Republic of Korea IT Innovative Creation of Future Science Award
+ Citizens recommend the top two from the ‘100 Seeds of Hope’. Received social innovation hope studio empathy award.
+ Received the prime minister’s award for the public information competition in the 2011 Public Sector organized by MOPAS

Law Provisions

• Seoul Special City process ordinance on sub-contracting and partnership process. (13.10.4)
• Framework Act on the Construction Industry Article 34 (Sub-contract payments)
• Established contract 9. Construction General Terms and Conditions Article 43 section 2(Confirmation of sub-contractor payment)
Article 43 Section 3 (Division management of labor costs and payment confirmation)
• Fair Transactions in Subcontracting Act Article 13 (Sub-contract payment)