– A Hyundai Corporation-Led Consortium Has Finally Sealed a Deal Following Two Years of Fierce Competition
— The Consortium Has Been Awarded a Contract by Uzkimyosanoat (UKS) to Construct a Chemical R&D Center Valued at KRW 52.4 Billion
The Infra Solution Team in the Infra & Machinery Division won a contract from UKS to build a chemical R&D center worth KRW 52.4 billion (USD 37.55 million) on August 30, 2024, HC’s first Economic Development Cooperation Fund (EDCF) project.
▲Hyundai Corporation Consortium Members Attending the Chemical R&D Center Construction Contract Signing Ceremony Held in Tashkent, Uzbekistan, on September 12
■ HC Has Finally Accomplished its Mid-to-Long-Term Goal of Winning an EDCF Project that Has Been Pursued for the Past Four Years
The Uzbekistan chemical R&D center construction is a significant and monumental project chosen as a representative infrastructure scheme at a business forum held when Korean President Yoon Suk Yeol made a state visit to Uzbekistan in June. The R&D center, valued at KRW 52.4 billion, will be built in Tashkent, Uzbekistan and is projected to make great contributions to improving the competitiveness of the manufacturing industry there by cultivating R&D workforce in high value-added chemical products, new materials, and fuel.
This is HC’s first EDCF project to be implemented using the financial aid that the Export-Import Bank of Korea offers Uzbekistan. The EDCF is Korea’s national policy fund established in 1987 to provide loans to developing nations for their industrialization and economic development and to facilitate economic exchanges between Korea and such nations. The Ministry of Economy and Finance outsourced the financial assistance to the Export-Import Bank of Korea.
Announcing its plan to approve and provide KRW 11.7 trillion and KRW 5 trillion worth of loans, respectively, for three years from 2023 to 2025, the Export-Import Bank of Korea has continuously expanded its financial aid to developing economies. Against this backdrop, HC’s Infra & Machinery Division has worked hard to win EDCF projects since 2021.
■ Establishment of a Hyundai Corporation-Led Consortium
The Infra Solution Team has established a Hyundai Corporation-led consortium to take part in this project. As the project manager, HC is expected to lead the project for 24 months. Unlike other projects, EDCF programs require participants to closely communicate with clients and the Export-Import Bank of Korea to meet specific criteria. Unfamiliar procedures and minor mistakes have often led to the disqualification of bidders. Considering its lack of experience in EDCF projects, the team has made sincere efforts to form a consortium for two years since 2023 to tide over such difficulties.
PR Kim Tae-yeon, an expert in civil engineering, has played a leading role in thoroughly analyzing the risks of prospective partners and actively carrying out business activities including project development and partner sourcing. As a result, the team was able to find a competent and reliable partner in spite of the recent slump in construction. This project is forecast to serve as an opportunity to cooperate with partners having a lot of experiences in EDCF projects, reduce various risks, learn relevant knowhow, and network with local reseasrch system providers.
▲Chemical R&D Center Construction Contract Signing Ceremony Held in Tashkent, Uzbekistan
■ Difficulties in Bidding and Negotiation Processes
The consortium participated in bidding in March and was selected as the priority-negotiating partner in May. After four months of intense negotiations, it was chosen as the final contractor on August 30, ending a long and difficult journey.
HC encountered the first hurdle when it prepared a 5,000-page proposal after a bidding announcement was made following a feasibility study. PR Kim Tae-yeon, a former construction designer, discovered technical errors in the plan and the bill of quantities from the client, which had resulted from technological and cultural differences between Korea and Uzbekistan.
He reported them to the client and the Export-Import Bank of Korea, delaying the bidding deadline from November 2023 to March 2024. Thereafter, for four months, together with partners, the team revised the original proposal and its copies consisting of over 20,000 pages before managing to submit the bidding proposal before the deadline.
▲(Left) Proposal Submissions for UKS
(Right) PR Kim Tae-yeon Participating in Bid Opening
While conducting negotiations after being chosen as the priority-negotiating partner, the Hyundai Corporation-led consortium faced a myriad of difficulties. In particular, based on a feasibility study implemented before the spread of the COVID-19 pandemic, the project budget was set. However, inflation and HR costs rose sharply during the pandemic, leading to a significant shortfall in the budget.
To weigh the profitability, Director Choi In-beom of Infra & Machinery Division and Infra Solution Team Leader Kwak Ho-min entered into intense negotiations with the Vice President of UKS, with EDCF project staff volunteering to work overtime and on weekends to contribute to conducting value engineering and revising and reviewing contracts. As a result, HC was able to meet the budget requirement of USD 37.55 million on which Korea and Uzbekistan agreed and to successfully conclude the final agreement.
▲PR Kim Tae-yeon Negotiatiang with UKS Staff on the Project
In connection with this achievement, team leader Kwak Ho-min said, “This success in winning our first EDCF project is largely due to the effort and commitment shown by all team members, enduring long and difficult processes. We will continue to work hard to build a pipeline for acquiring two to three EDCF projects a year and to make it a major source of income for our team.”
▲UKS Management Visiting HC’s Head Office in July, Appreciating HC Members’ Active Engagement
This success heightened the possibility of the Infra Solution Team winning additional projects from Uzbekistand, the biggest EDCF partner in Central Asia, laying the groundwork for making inroads into its neighboring countries including Kyrgyzstan in the future. Based on this achievement of landing the EDCF agreement in training and R&D, the team is expected to actively participate in more EDCF projects in various fields including health and transport infrastructure.