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Hyundai Engineering

Sustainability Report

01. Sustainability Overview 03. HSE Management02. Value Management 04. Talent Management 05. Win-Win Management 06. Sharing Management 07. Sustainability Review

About This Report

About this ReportThis report is Hyundai Engineering’s fourth sustainability report that includes the company’s performance in the economic, social, and environmental responsibilities. While maintaining the framework of the previ-ous report, the key issues reflecting the construction industry trends and stakeholder opinions are reported in depth through case studies. In particular, it contains the company’s activities and performances of sustainability strategy and action plans.

Reporting Scope and BoundaryThe reporting covers the Seoul Head Office and domestic and overseas project sites, and it is separately noted if the scope or boundary of the data of overseas subsidiaries and projects sites is different. The eco-nomic data may be different from that of the previous report due to the merger and changes in measuring standard. Some environmental data have been confined to those of some domestic and overseas project sites. There may be some differences from the figures contained in previous reports as a result of correc-tions or revisions made after year-end closure.

Reporting PeriodThe report covers the company’s management performance for the two years from 1 January 2014 to 31 December 2015. For quantitative performance, track records of the past three years have been disclosed for readers to identify the changing trends. Information associated with 2016 is also reported for some key agenda or significant activities and performances.

Reporting Preparation and Verification CriteriaHyundai Engineering prepared this report in accordance with the Core Option provided under the GRI G4 Guidelines reflecting the GRI supplementary indicators given in the construction and real estate section, ISO 26000, the UNGC 10 Principles and UN SDGs. Financial information in this report was prepared through the accounting audit of PwC, an independent auditing agency. Non-financials were verified by Deloitte Anjin LLC, an independent assurance agency, and the statement of verification is available on p.70~71.

Cover Story

‘Steering On Values’ is Hyundai Engineering’s slogan that embraces its will to drive its sustain-ability management based on the values that are significant to its key stakeholders. The graphics of the cover describes Hyundai Engineering’s commitment to lead a better future infinitely.

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Contents

Intro

Highlights & History 4

CEO Message 6

Sustainability Overview

About Hyundai Engineering 10

Hyundai Engineering’s Vision 12

Strategies for Sustainability Management 14

Governance 16

Ethics Management 18

Sophistication of Risk Management 21

Sustainability Issues

Value Management

Creating Future Growth Engines 27

Strengthening Quality Management 31

Expansion of Customer Satisfaction Management 33

HSE Management

Upgrading the HSE Management System 35

Spread of Environmental Management 36

Enhancement of Safety and Health Management 40

Talent Management

Strengthening Global Talent Competency 43

Spread of the Talent-oriented Corporate Culture 45

Win-Win Management

Implementation of Shared Growth 49

Fair Trades by Establishing a Fair Trade Order 52

Sharing Management

Strategic Implementation of Social Contribution 55

Expansion of Global Social Contribution 58

Sustainability Review

Economic Performance 62

Social Performance 63

Environmental Performance 66

Stakeholder Engagement and Materiality Testing 68

The 3rd Party Assurance Statement 70

GRI G4 Index 72

Key Awards & Membership in Associations 76


• Acquired the Family-friendly Corporation Cer-

tification from the Ministry of Gender Equality

and Family

• Became the only major domestic construction

company to be nominated as one of the ‘Top

100 Companies with Best Performance in Job

Creation of 2015’

Talent Management

•�Established the GHG inventory system

in 2015

•�Achieved 15 million man-hours of zero

accidents in the Ustyurt Gas Chemical

Complex (UGCC) in Uzbekistan

HSE Management

• Ranked 7th in 2016 Appraisal of Execution Capacity/

Credit Rating of AA-

• Ranked 21st in ‘The 2016 Top 225 International De-

sign Firms’ by the Engineering News-Record (ENR)

Value Management

“ Technological Independence and Do-mestic and Overseas Market Expansion”

1974 •Founded (Feb. 11)

1980 •Merged with Halla Engineering

1985 •Executed the first overseas consulting

project among Korean private companies

(5th and 6th power projects in Nepal,

etc.)

1988 •Merged with the Engineering Center of

Hyundai Heavy Industries Co., Ltd.

“ Growth into Total Engineering Company”

1994 •Selected as the ‘Most Excellent Company’

and won the ‘Best CEO Award’ (KMA)

1994 •Received ISO 9001 (Quality Management

System) certification

1996 •Won the Prime Minister’s Award at the 2nd

Environmental Technology Award (HAF

Process Technology)

� •Received ISO 14001 (Environmental

Management System) certification

1998 •Developed the first Sludge Composter in

Korea, named Hyundai Sludge Composter

(HSC)

“ System Establishment and Management Advancement”

2000 •Acquired the Iran South Pars Phase

1 and 2 Project (design and engineering

of world’s largest gas plant)

2001 •Received the New Environmental

technology Certificate for the HANT

(Hyudai Advanced Nutrients Treatment)

process for the first time in Korea

2008 •Won the grand prize in construction engi-

neering in Korea Technological Innovation

Management Award

2009 •Received OHSAS 18001 (Safety and Health

Management System) certification

� •Opened the e-procurement system

1970s~80s 1990s 2000s

History

Highlights

4


• Honored in the Shared Growth Sector of the

‘2nd Porter Prize for Excellence in CSV’

• Opened the Welding Training Center in Turk-

menistan

Sharing Management

• Rated ‘Excellent’ in the 2015 Win-Win

Index

• Held the regular Partner CEOs Seminars

Win-Win Management

“ Continuous Challenge based on a 40-year-long Success”

2010 •Ranked first in the Korean Sustainability Index (KSI)

2011 •Acquired the certification of Korea Electric Power

Industry Code (KEPIC)

2012 •Won the grand prize at the U.S. Spotlight Awards

with the HEC Sustainability Report

2013 •Won the presidential commendation of the govern-

ment decoration for the merit of job creation

2014 •Acquired the Corporate Credit Rating of AA-

•Launched an integrated company (merged with

Hyundai AMCO)

2010s 2015s 2016s

“ Steps Towards Becoming A Sustainable Company”

2015 •Ranked first in order acquisitions

abroad (USD 5.76 billion/according

to the International Contractors

Association of Korea)

•Ranked Industry No.1 in the ‘Best

Companies to Work for’

•Won the second Porter for Excellence

in CSV

•Joined the Korean Association for

Supporting UN SDGs

“Aim for the World’s Best Company”

2016 •Ranked 21st in The Top 225

International Design Firms by the

Engineering News-Record (ENR) of

the U.S.

•Ranked 7th in the Appraisal of

Execution Capacity (The Ministry of

Land, Infrastructure and Transport)

• Conducted the first company-wide ethics diagno-

sis and tailored ethics training

• Initiated the establishment of the Compliance

System in 2016

Ethics Management

5


CEO Message

CEO & President of

Hyundai Engineering

Kim, Wee Chul

July 2016

6


Hyundai Engineering will provide better values to customers by

strengthening its inherent competitiveness and securing future

growth engines, and create a sustainable future through differ-

entiated growth strategies.

Dear distinguished stakeholders,

I would like to extend my gratitude to you for your continued interest in and support for

Hyundai Engineering.

Hyundai Engineering is making strides as a global engineering company by creating excellent

performance both socially and economically driven by its unique corporate culture and differ-

entiated management strategies since its foundation.

Under the strategy of creating new economic values by fulfilling corporate social responsibil-

ity, we have been making all-out efforts to establish a system for sustainability management

based on the motto, ‘Steering on Values’, since 2014.

We are promoting our sustainability management strategy in five core aspects for the val-

ues that our key stakeholders consider important. In addition, we are striving to enhance

the internalization of sustainability management through such organizations as the Steering

Committee and Value Facilitators.

Accordingly, Hyundai Engineering achieved excellent outcomes in each core area of sus-

tainability management: the green certification for carbon reducing manufacturing technol-

ogy, one of the Top 100 Excellent Companies with Best Performance in Job Creation, Fami-

ly-friendly Certified Corporation, and the Shared Growth Sector of the ‘2nd Porter Prize for

Excellence in CSV’, in 2015.

Furthermore, we are making more vigorous efforts to become both a flexible and strong

company befitting the global standard by redefining and sharing our unique corporate culture

through the establishment of the “New Corporate Culture”.

By doing so, Hyundai Engineering set the three aims, ‘Pioneer, Professional and Humanist’

as cultural forces to continue sustainable future growth, and strives to create a future-ori-

ented corporate culture.

Hyundai Engineering will provide better values to customers by strengthening its inherent

competitiveness and securing growth engines for the future. The company will also make ef-

forts to establish differentiated growth strategies and bring out a sustainable future growth.

Despite the difficult business environment due to the continuous domestic and international

economic downturn, every employee at Hyundai Engineering, including myself, will consider

it an opportunity. We will ensure that Hyundai Engineering becomes a company that creates

and shares sustainable future values along with stakeholders based on the fundamentals of

a company, the corporate culture and management strategies.

I sincerely ask for your continuous interest and encouragement, and hope that you will join

us on a journey towards Hyundai Engineering’s bright future.

Sincerely,

7


01

SUSTAINABILITY

OVERVIEW

04. Talent Management03. HSE Management02. Value Management01. Sustainability Overview 06. Sharing Management05. Win-Win Management 07. Sustainability Review

About Hyundai Engineering 10


Strategies for Sustainability Management 14

Governance 16

Ethics Management 18

Sophistication of Risk Management 21

SUSTAINABILITY

OVERVIEW

01


About Hyundai Engineering

A Global Engineering Company that Creates the Future with the Best Technology

Since its foundation in 1974, Hyundai Engineering has provided top-notch engineering services with world-

class competitiveness in various areas including process plants, power & energy plants, commercial and res-

idential building works, infrastructure & environment, and asset management. The company has performed

creative businesses by expanding its entry into new and renewable energy sectors in water, the environment,

nuclear power, wind power, solar power and tidal power, thereby enhancing the quality of people’s lives and

contributing to the growth of the national economy.

Hyundai Engineering provides optimized technologies and solutions catered to customer needs in the Middle

East, Europe, Africa, Latin America and Central Asia, as well as North America. As of June 2016, the company

is running business at 172 project sites (including the designing business) in 28 countries by operating 18

subsidiaries and 23 branches.

•Kia Motors Project in Mexico •Hillstate Gwanggyo in Korea

• Ethane Cracker, PE, PP Project in Turkmenistan

• Kandym Field Gas Processing Plant Project in Uzbekistan

• GMS Northern Power Transmission Project in Laos

• Bacman 3 (35MW) Geothermal Plant Project in the Philippines

KRW 2,375 billion KRW 918 billion KRW 2,938 billion

Major Projects

(2015)

Business Portfolio

Oil & Gas

Chemical & Fertilizer

Petrochemical

Refinery

Offshore Facilities

LNG Facilities

Steel & Nonferrous Metals

Process Plant

Combined Cycle Power Plant

Coal-Fired Power Plant

Cogeneration Power Plant

Nuclear Power Plant

Power Transmission/ Substation & Distribution

Geothermal Power Plant

Diesel Power Plant

Power & Energy Plant

Apartment, Officetel

Complex building, Industrial facility

R&D Center

Culture/Education/Sports facility

Hotel, Office, Sales facility,

Public facility/Army installation,

Medical facility

Building Works

About Hyundai Engineering (As of the end of 2015)

Company name Hyundai Engineering Co., Ltd.

Date of foundation February 11 1974

Address 75 Yulgok-ro, Jongno-gu, Seoul, Korea

Total assetsKRW 6,412 billion (Liabilities: KRW 3,727 billion, Equity: KRW 2,685 billion)

Volume or orders received KRW 10,016 billion

Sales KRW 7,349 billion

Number of employees 5,832

Business portfolioProcess Plant, Power & Energy Plant, Building Works, Infrastructure & Environment, Asset Management

Sales* (2015)

Introduction of Process Plant Projects

Introduction of Power & Energy Plant Projects

Introduction of Building Works Projects


10

https://eng.hec.co.kr/business/bizintro/process_plant.asp

https://eng.hec.co.kr/business/bizintro/power_energy.asp

https://eng.hec.co.kr/business/bizintro/construction.asp

• Highway Line No. 30 Sang-

ju-Yeongdeok Construction Work (Section 11) Project

• Rajamandala Hydroelectrical Power Plant Project in

Indonesia

• Asset management for Woori W Tower in Korea

•�Asset management for the KT office building in Korea

KRW 549 billion KRW 561 billion

Harbor

Roads & Bridges

Complex Development

Hydro Power & Water Resource Development

Water Supply & Sewerage System

Renewable Energy

Environmental Facilities

Infrastructure & Environment

Facility Management

Property Management

Consulting for Lease

Consultancy for P&S (Purchasing & Selling)

Global Asset Management

Asset Management

Countries with Project Entry

Hyundai Engineering is expanding its overseas market through

localization and exploration of new markets.

Process PlantGreece, Nigeria, Algeria, Tunisia, Saudi Arabia, United Arab Emirates, Oman, Iran, Iraq, Yemen, Kuwait, Qatar, Uzbekistan, Kazakhstan, Turk-menistan, Taiwan, Bangladesh, Vietnam, India, China, Thailand, Pakistan, Korea, Mexico and Venezuela

Power & Energy PlantBulgaria, Romania, Libya, Madagascar, Algeria, Kenya, Saudi Arabia, Iraq, Kuwait, Nepal, Malaysia, Mongolia, Bangladesh, Vietnam, Indonesia, Thailand, Philippines, Korea, Nicaragua, Uruguay and Chile

Building WorksGermany, Russia, Slovakia, Czech, Libya, Dubai, Turkey, Turkmenistan, Vietnam, India, China, Cambodia, Korea, Australia, U.S., Mexico, Brazil and Belgium

Infrastructure and the EnvironmentChina, Thailand, Equatorial Guinea, Oman, Azerbaijan, Turkmenistan, Nepal, Sri Lanka, Singapore, Indonesia, Cambodia, Pakistan, Korea, Fiji and Colombia

Asset ManagementGermany, Russia, Slovakia, Czech, India, China, Korea and the U.S.

*Others: KRW 8 billion

Introduction of Infrastructure & Environment Projects

Introduction of Asset Management Projects

Global Network


11

https://www.hec.co.kr/business/bizintro/infra_environment.asp

https://www.hec.co.kr/business/bizintro/asset_management.asp

https://eng.hec.co.kr/business/bizintro/infra_environment.asp

https://eng.hec.co.kr/business/bizintro/asset_management.asp

https://eng.hec.co.kr/business/global/globalNetwork.asp

Hyundai Engineering’s Vision

Hyundai Motor Group’s Vision & Mission

Core Values

We refuse to be compla-

cent, embracing every op-

portunity for greater chal-

lenge, and are confident in

achieving our goals with

unwavering passion and in-

genious thinking.

Driving force

Commitment

PassionCreativity

We promote a customer

-driven corporate culture

by providing the best qual-

ity and impeccable service

with all values centered on

our customers.

Understanding customer needs

Pursuing the top quality

Strengthening customer re-lationships

Satisfying customers

We respect the diversity of

cultures and customs, as-

pire to be the world’s best

at what we do, and strive

to become a respected glo-

bal corporate citizen.

Legal com-pliance

Global compe-tency

Diversity

Global citizenship

Mutual respect Fair treatment

Capacity building

Capacity execution

We believe the future of

our organization lies in the

hearts and capabilities of

individual members, and

will help them develop their

potential by creating a co-

rporate culture based on

respect for their talent.

Internal

External

We create synergy through

a sense of ‘togetherness’

that is fostered by mutual

communication and coop-

eration within the compa-

ny and with our business

partners as well.

Sharing

Shared Growth

Synergy

Trust

Vision

We always move forward to the next goal after each success, and create a better future with a challenging spirit.

Realization of Possibilities

Our vision of unlimited responsibility for the safety and happiness of the customer is realized in our quality man-agement, which leads to the creation of unlimited value for our society.

Unlimited Sense of Responsibility

We offer value, better products and better services for people, and make the lives of our customers more af-fluent.

Respect for Mankind

We realize the dream of mankind by creating a new future through ingenious thinking and continuously challenging new frontiers.

Under Hyundai Motor Group’s vision of “Together for a better future,” an embodiment of our belief and commitment, we provide satisfaction to our customers, and think beyond the external growth of

the corporation to share our success with a variety of stakeholders.

Together for a better future

Management Philosophy

Customer Challenge Collaboration People Globality


12

Long-Term

Strategy

•Strategic seizing of new markets •�Use of the Group’s domestic &

overseas network

• Initiating future-growth engine projects and securing balanced business portfolios

•�Maximizing internal synergies and creating synergies within the Group

•�Risk management for preemptive responses

•�Strengthening management competency for the successful execution of projects

•�Creating a corporate culture based on the core values of the Group

•�Intensifying talent & organizational competencies of global standards

•�Establishing and strengthening the sustainability management system

Enhanced Management SystemBusiness Diversification

Strengthening BusinessesGlobal Market Development


MissionAt Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and

technology we provide engineering, procurement, construction and maintenance services, and we simultaneously practice the core elements of our management by reinforcing ethics, creating value, cultivating talents, growing together and simply sharing to improve the quality of life for

the people in the communities where we operate, in Korea and around the world.

Goal

Orders

KRW 16 trillion

ENR Ranking (Int’l Design Firms)

15 th

Appraisal of Execution Capacity

7 th

Revenue

KRW 11 trillion

Vision

GLOBAL PREMIER ENGINEERING PARTNER

Global

A global performing leader to the highest

standards

Engineering

From business planning to operation & main-tenance, we provide

complete services for a project’s cycle

Premier

We believe in providing best quality and cutting

edge technology

Partner

We improve the communities where we work and live to ensure a sustainable future for generations to come

Long-term

Strategy


13

Strategies for Sustainability Management

System for Sustainability Management

Hyundai Engineering has established and operates an efficient sustainability management system. To this end,

the company identifies areas of interest for each stakeholder by selecting core factors for sustainability manage-

ment for each of them. The company has selected strategic tasks as medium and long-term tasks in five core

areas and in the aspect of ethics management.

At Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and technology we provide engineering, procurement, construction and maintenance services, and we

simultaneously practice the core elements of our management by making ethics a cornerstone, creating value, cultivating talents, growing together and simply sharing to improve the quality of

life for the people in the communities where we operate, in Korea and around the world.

Mission

We are committed to becoming a prosocial company by performing systematic economic, social and environmental activities focusing on our stakeholder values

Sustainability Management Charter

Value Management Talent ManagementHSE ManagementCore Factors

Stakeholder Requirements

•�Strengthening quality management, and generating stable profits through the initiation of prospective business projects

•�Continuously raising the corporate value by intensifying the competency of eco-friendly technologies

•�Enhancing corporate competitiveness by intensifying internal and external customer satisfaction management

•�Enhancing safety & health management and strengthening environmental management by focusing on HSE management

•�Guaranteeing the wellbeing of employees and workers through the safe management and operation of sites

•�Engaging in resolving global environmental issues through activities for climate change response

• Conducting activities to secure top talents to reinforce business competencies

•�Supporting the management of various training programs and career development of employees for strengthening their competency

•�Expanding efforts to promote the respect for employees’ diversity by establishing a system for human rights management

Activities of 2014~2016

• Establishing the quality evaluation system•�Conducting the on-site quality evalua-

tion (162 sites) and special inspection (24 times)

•�Implementing quality training for employees appointed to domestic and overseas sites (81 times)

•�Achieving eco-friendly technology certifications (5 cases) and technological development (2 cases)

• Completing the setup of the GHG inventory

•�Establishing management regulations and operating them for the Head Office and domestic sites

•�Completing the development of online training for HSE

•�Distributing HSE training materials on sites and producing them in four languages

• Developing and applying an evaluation system for top foreign talents

•�Acquiring the certification for an excellent family-friendly company

•�Diagnosing the corporate culture and managing a task force for a new corporate culture

•�Devising a competency model for major job functions

•�Establishing the setup of an HRD system

Future Directions

• Establishing a management system for customer satisfaction

•�Strengthening corporate competitiveness by raising the satisfaction of internal customers

• Reducing risks by strengthening on-site safety and health management

•�Raising responsiveness to climate change

• Preventing social issues on human rights in Hyundai Engineering and partners by establishing a system for human rights management

Strategic Tasks of 2017~

• Implementing activities to strengthen internal/external customer satisfaction

• Sophisticating the on-site safety and health management system

•�Strengthening the execution of strate-gies to respond to climate change

• Establishing and monitoring strategies for human rights management

Strategic Tasks of 2014~2016

•Reinforcing on-site quality management•�Intensifying eco-friendly technological

competencies

• Strengthening the HSE management system

• Securing top talents continuously •�Strengthening the development of

core talents


14

Governance for Sustainability Management

Hyundai Engineering shared this sustainability management system with the managers in charge, team leaders

and officers of each division. It also plans to share the future sustainability management system, strategic tasks

and action plans with its key external stakeholders (customers, partners, peer businesses, local communities,

etc.) as well as its internal stakeholders.

Name of organizations Key agenda Frequency

Steering Committee Semiannual inspection of strategic tasks progress and feedback Semiannually

Value FacilitatorInformation sharing concerning items promoted and required for

collaboration among organizationsQuarterly

Operational Status

Strategic Tasks for Sustainability Management

In order to implement systematic strategies for sustainability management, Hyundai Engineering established

core values for each stakeholder and devised and continued to initiate 10 strategic tasks. The company selected

seven strategic tasks for 2017 and onwards, and plans to set action plans for each strategic task and systemi-

cally implement them.

Win-Win Management Sharing Management Ethics Management

•�Expanding activities to support excellent partners, and exploring and developing overseas partners

•�Pursuing win-win management by operating programs to support shared growth

•�Strengthening activities to support the setup of partners’ sustainability management systems

•�Strengthening social contribution activities with a focus on global sites

•�Initiating community-based social contribution activities by resolving social issues in a region where a site is located

• Conducting social contribution activities by dynamically utilizing business competency

• Establishing a system for sustainability management

•�Spreading training for ethics management and taking the initiative to facilitate it

•�Taking the initiative to sophisticate the system for ethics management encompassing internal and external stakeholders in business operations

• Training for partners’ overseas entry•�Activities to support excellent partners

(increasing opportunities to take part in bidding, etc.)

•Expanding the overseas vendor pool •Supporting training for partners•�Signing contracts for the contribution of

investment sources for shared growth and training

•Initiating financial support programs

• Establishing the New Hope School (No. 3 and No. 4)

•�Engaging in medical volunteering aligned with each site

•Managing the track records of overseas sites•�Supporting activities in overseas sites

(giving mileage points, inspecting appropriate technologies)

• Launching the code of conduct within the code of ethics

•�Diagnosing ethics management and implementing the pledge

•Training on ethics management: over 24 times•�Conducting ethics management communication

17 times a year (posters, letters, newsletters, etc.)

• Preventing potential CSR risks through the current status check of partners

• Enhancing the social awareness of Hyundai Engineering by strengthening global site-oriented social contribution activities

• Strengthening the system for ethics management to intensify activities to prevent the corruption and irregularities of internal and external stakeholders in business operations

• Strengthening partners’ competency for sustainability management

• Strengthening global CSV (Creating Shared Value) activities

• Expanding the scope of the operation of ethics management and sophisticating the monitoring system

• Exploring partners and strengthening support for them

• Facilitating win-win cooperation for shared growth

•Expanding global social contribution • Settling the Sustainability Management Committee

•Sophisticating the ethics management system


15

Governance

Shareholder Status

The total number of shares (common shares) issued by Hyundai Engineering stood at 7,595,341 as of the end

of June 2016. The largest shareholder is Hyundai Engineering and Construction, which holds 38.6% of the total

number of issued and outstanding shares.

Composition and Operation of the Board

Board Composition

Hyundai Engineering’s board of directors consists of three internal executive directors, including the represent-

ative director, and one non-executive director as of the end of June 2016. The representative director serves as

the chair of the board. The directors are elected by a majority of affirmative votes of the shareholders present

at a general shareholders meeting based on the board of directors’ recommendation of candidates who have

overall experiences and knowledge about the construction industry. The directors play advisory roles through-

out corporate management based on expertise and experiences, and provide help to corporate management

through rational decision-making.

Board Operation

Hyundai Engineering enacted its Board Regulations to ensure the efficient operation of the board. It does not

have any sub-committees whose authority is delegated by the board. In accordance with Article 30 of the

Articles of Incorporation (methods of convocation and voting at the board), a board meeting is summoned by

the chairman of the board or a director designated by the board and upon convocation the board meeting, it is

notified to each director and auditor in writing or orally by one day before the board meeting. However, upon

the consent of all the directors and auditors, board meetings can be organized routinely. The regular board

meetings are held once each quarter, as a rule, whereas its extraordinary meetings may be held as and when

required. The board adopts its resolutions with majority affirmative votes of the directors present at a meeting

represented by a majority of the directors. Directors who are absent may participate in board resolutions via a

video conference system.

Board Composition (As of June 2016)

Type Name Duty Position

Executive or internal directors

Kim, Wee Chul Chief Executive Officer President of Hyundai Engineering

Sung, Sang Rok Head of Process Plant DivisionExecutive Vice President of Hyundai Engineering

Lee, Sang Kook Head of Finance & Accounting DivisionSenior Vice-President of Hyundai Engineering

Non-executive or external directors

Jung, Soo Hyun Management Supervisor CEO & President of Hyundai E&C

Auditor Kim, Gwang Pyeong Auditor Director of Hyundai E&C

1) As of the end of June 20162) Changes in the equity ratio of the largest shareholder due to the merger in April 2014 (Hyundai E&C’s equity ratio: 72.6% → 38.6%)

Hyundai Engineering & Construction 38.6%

Jung, Eui Sun 11.7% Hyundai Glovis 11.7%

Hyundai Engineering Co., Ltd. 4.3%

Others 10.4%

Jung, Mong Koo 4.7%

Hyundai MOBIS 9.3%

Kia Motors Corporation 9.3%


16

Key Agenda at the Board

Dates of board meetings held Key agenda

Number of agenda

Jan. 2014 Five including the approval of the Merger Agreement Contract 5

Feb. 2014 Six including the 13th General Shareholders’ Meeting & the Merger Agreement 6

Apr. 2014 Three including the approval of launching a new branch 3

May ~ Jun. 2014 Six including the change of compliance program officer 6

Jul. ~ Aug. 2014 Five including the surety for the interim loan payment for Wireye Amco Town 5

Sep. ~ Oct. 2014 Five including the 6th issuance of non-guaranteed public bonds 5

Dec. 2014 Four including the launching of Iran Office, appointment of the office president, and POA approval 4

Jan. 2015 Four including the approval of 2014 financial statement (14th) 4

Feb. 2015 Approval of the 14th General Shareholders’ Meeting and the agenda 1

Mar. 2015 Four including the approval of issuing corporate bonds 4

May ~ Jun. 2015 Two including the approval of trading products and service with the affiliates 2

Jul. ~ Sep. 2015 Six including the approval of launching the East Timor Branch 6

Oct. ~ Dec. 2015 Four including the real estate tenancy from a specially related person 4

Operation of the Audit System

Hyundai Engineering appoints one auditor who routinely audits the company’s accounting, financial informa-

tion, business status, and the status of the company’s business and property conditions. In accordance with

Article 26 (duties of auditors) of the Articles of Incorporation, an auditor audits directors’ job functions and

the company’s accounting and business operations, prepares an audit report on closing financial statements

and reports it to general shareholders’ meeting. The auditor may attend a board meeting to express his/her

opinions. He/She may report to the board or the general shareholders’ meeting when he believes that a director

has committed or is feared to have committed a violation of any statutes or the company’s Articles of Incorpo-

ration. Furthermore, the auditor may exercise the right to supervise the directors’ performance and may also

demand overall management-related information as required to perform his/her duties.

Nomination of Directors and Auditors

Hyundai Engineering’s directors and auditors are elected at a general shareholders’ meeting among candidates

recommended by the board. Directors and auditors are elected through majority affirmative votes of the voting

rights represented by the shareholders present at the general shareholders meeting, and the affirmative voting

with one quarter or more of the total number of issued shares represented. The cumulative voting scheme pro-

vided under Article 382-2 of the Commercial Act is not applied to elect two or more directors.

Evaluation and Compensation of Directors

The limit of the directors’ remuneration is determined by majority affirmative votes of the voting rights repre-

sented by the shareholders present at the general shareholders meeting held with one quarter or more of the

total number of issued shares represented. Their remuneration and retirement allowance are paid within the set

limit. The limit of the directors’ remuneration as determined at the 2015 general shareholders meeting was KRW

5.5 billion. The actual paid amount is disclosed on the stock exchange digital disclosure system each quarter.

Remuneration Paid to Directors (As of the first quarter of 2016)

Type Number of personsTotal remuneration (KRW in millions)

Average remuneration per person (KRW in millions)

Executive directors 5 278 56

Auditor 1 - -

Total 6 278 46


17

Ethics Management

System of Ethics Management

Hyundai Engineering enacted the code of ethics in 2009 to create an institutional basis to implement ethics

management, help employees make proper value judgments on corporate ethics, and establish a standard for

actions. Meanwhile, the company is suggesting systematic and consistent ethical action standards by establish-

ing a specific code of practice and action plans.

Behavior Guidance for Ethics Management

Hyundai Engineering clarified its directions for ethics management and established a systematic ethics manage-

ment system. The company developed the 10 action guidelines in May 2014 to enable its employees to properly

respond to the types of ethical dilemmas they might encounter in the course of their work, and to help them

utilize information or counseling services in consultation with the ethics management organization in cases

where it may be difficult to make sound judgments by themselves.

Ethics Management Training

Tailored Ethics Management Training

Needs for tailored training that is more effective, focused and proper for the company’s condition and nature

are rising. Accordingly, Hyundai Engineering conducts ethics training for executives and team leaders by inviting

external specialists on ethics management. The company is creating a corporate ethics culture and inducing

employees to practice ethical acts through such selective and concentrated ethics training.

Conducting Tailored Ethics Management Training in 2016

5 areas (1. Basic ethics at work, 2. Business performance attitudes, 3. Financial benefits for stakeholders, 4. Sound transactions with partners, 5. Protection of corporate assets)

Conducting a company-wide ethics survey (November 2015)

Conducting a 45-minute session and a 15-minute discussion

Conducting training for nine teams on basic ethics at work, and nine teams on the domestic and overseas anti-corruption laws

(April 2016, 9 sessions)

Selecting two high-risk areas (1,3) as training subjects (2016)

Selecting teams related to the subjects

We will preemptively manage ethics risks by continuously

conducting ethics management training in the future.

“

”

Type Unit 2013 2014 2015

Training hours Hours of training per employee Hour 8 1 1

Training cost Total training cost KRW 10,000 1,517 350 690

Number of trainees Total number of trainees Number of individuals 2,222 (online) 757 (offline) 3,525 (offline)

Performance of Ethics Management Training

Company-wide Ethics Management Training

As the internal and external codes of ethics have intensified, the company conducts company-wide ethics man-

agement for employees to be aware of the code of ethics and establish and internalize a proper ethics culture

in the company.

Status of Ethics Management Training

Type 2014 2015

Targeting all employees

Leaders’ training

Site construction technicians

Training for new/experienced and overseas employees

Partner training

Dissemination education for team leaders (93 project sites, 104 teams at the head office)Training for section managers or higher (600 people)

157 executives and team leaders

-

Routine

195 companies

3,066 people (including the employees dispatched to other companies)

51 executives and 115 team leaders

8 training sessions and 293 employees

Routine

80 companies

Code of Ethics

Introduction of Ethics Management


18

https://eng.hec.co.kr/mngcenter/ethics/ethicsIntro.asp

https://eng.hec.co.kr/mngcenter/ethics/ethicsStandard.asp

Ethics Management Communication

Cyber Audit Office

Hyundai Engineering conducts cyber audits of all its business units, in addition to site audits, as part of its drive

to establish a transparent management across the company. To that end, the Cyber Audit Office has estab-

lished standards of ethical value judgment and transparent behavior, and displays its Ethics Charter, Code of

Conduct and Action Guidelines, so as to enable the company’s executives and employees to practice ethics

management during the performance of their duties. It also promotes these standards among its customers and

business partners. In particular, the Internet-based reporting center collects information concerning illegitimate

or corrupt practices and unfair trading, as well as ideas that might prove helpful to corporate management from

stakeholders both in and outside the company, including its customers, partners, executives and employees,

without filtering, to improve the institutions and reflect the improvements in corporate management. It has also

established a transparent process for handling whistle blowers’ reports on illegitimate, corrupt or unfair prac-

tices and discloses the results thereof, thus enhancing transparency in operating the online reporting center.

Sending the CEO’s Letter on Ethics

The CEO’s strong commitment and continuous action are crucial for the ethics management to root in the

company. Therefore, the company distributes the Ethics Letter that embeds the CEO’s will to practice ethics

management and improve the performance. The Ethics Letter of the CEO is sent to employees and business

partners twice a year, and it is also shared through the online board of the groupware.

CEO & President’s Ethics Management Footage

Ethics Management Posters and Newsletters

The company prepares and distributes ethics management posters and newsletters for employees to easily ac-

cess issues and information on ethics management. Posters are produced twice a year and the printouts are

posted in offices and meeting rooms, etc. The posters are shared through pop-up notifications in the groupware.

The newsletter on ethics management to convey various types of information including ethics management

trends and issues is produced on a monthly basis, emailed to executives and team leaders and posted in the

groupware.

Ethics Management Poster Ethics Management Newsletter


19

Human Rights Approach

Hyundai Engineering complies with the 10 principles in the four areas of human rights, labor, environment and anti-corruption suggested by the UNGC

(United Nations Global Compact) by joining it. The company endorses labor standards suggested by the International Labour Organization as well as the

Universal Declaration of Human Rights adopted at the UN General Assembly.

Hyundai Engineering complies with standards of labor, human rights and working conditions in all countries and regions where the company performs

business. The company’s human rights are applied to all stakeholders equally to not only its employees but also its customers, partners and commu-

nities.

Hyundai Engineering strives to reflect stakeholders’ interest and expectations to management activities on human rights issues by identifying them

through continued communication. The company is expected to conduct training to raise employees’ awareness of human rights to prevent factors that

may infringe upon their potentially vulnerable human rights, and disclose human rights-related activities and performances through its sustainability

report.

Principle of Human Rights

07The company strives to prevent

factors of infringement against the basic rights and human rights of

local residents in places of its project sites.

06The company pursues sustainable

development that minimizes environmental impacts accompanied

in management activities and considers the environment.

05The company provides a safe and decent working environment, and

conducts education and training to prevent safety accidents.

04The company guarantees a

collective agreement and freedom of association pursuant to laws on

labor relations in each country and region.

02The company does not discriminate against employees for reasons for gender, race, religion, skin color,

age, nationality, disability or marital and social status.

01The company complies with

standards for working conditions prescribed in laws on labor relations

in each country and region, and abides by regulations on labor hours

and paid leaves prescribed in each country and region where its

project sites are located.

03The company strives to fundamentally

prohibit and prevent wrong labor practices including the employment of illegal workers as well as forced

labor and child labor.

Special Page. Human Rights Policy


20

Sophistication of Risk Management

Risk Management System

Hyundai Engineering utilizes the risk sensing1) technique, which is a capability to detect and identify risk fac-

tors. Through this technique, the company manages various risks, including macro-environmental risks, risks

from industrial competition and technological diversification, and internal risks, that may affect the corporate

management.

1) Risk Sensing: a capability to detect and respond to core risk factors

Risk Management Organization

Hyundai Engineering formed the Chief Risk Officer (CRO) Organization, aligned with that of Hyundai Motor

Group, in order to systematically collect information about risks and effectively respond to the potential risk

factors. The CRO Organization consists of the CEO, the Head of Planning Office, and the Business Planning

Team Leader. Hyundai Engineering also appinted a working-level team in charge of core risk sensing and man-

agement, thereby creating a systematic structure of risk management connecting from the working-level to

the top management of the Hyundai Motor Group. Management risks are monitored quarterly, and the results

of regular monitoring have been reported to the Group CRO Organization for 13 times from 2013 to the 1st

quarter of 2016.

Definition and Management of Core Risks

Hyundai Engineering selected 10 core risks based on the impact of risks on the overall management environ-

ment, possibilities of occurrence and vulnerability. They include macro-environmental risks, industrial envi-

ronmental risks and strategy and operational risks. 10 core risks were selected and are managed and the risk

levels of the indicators are continuously monitored. Core risks are reviewed on a quarterly basis or routinely to

be renewed. The company devises prior responsive measures against each risk, thus establishing an organized

responsive system to minimize the damage when risks occur.

Strengthening of Risk Management Competency

Hyundai Engineering performs various activities to strengthen its competency in risk management. The com-

pany plans risk response measures through the results of quarterly monitoring of management risks based on

the ad-hoc or regular risk sensing activities. Furthermore, the company solidifies the basis for executing of risk

management through the corporate workshops, seminars, and meetings related to the management risks.

Definition and Management of Top 10 Core Risks (As of first quarter-end, 2016)

KRI

Type of Risk

Aggravation in executing projects

Progress rate, rate of cost of goods sold,

recovery period of the unpaid, interim payment

of the unclaimed

Violation to regula-tions and Sanctions

Penalty, legal violation, completion

ratio of ethics training

Occurrence of safety accidents

Accident rate, rates of death in industrial accidents,

environmental accidents

Risk related to over-seas advancement

Country credit rating, travel warning grade

Failure to maintain or secure the workforce

Turnover ratio, the degree of employment

preference

KRI*

Type of Risk

Expansion of cur-rency volatility

Currency exchange rate fluctuation (dollar, euro)

Intensified competition

Oil price fluctuation, amount of overseas

project orders of domestic companies

Failure to optimize business plans

Order placement, revenues, profit/loss, profit ratio,

net cash liquidity, collection of bills, debt ratio

Setback of the housing market

Housing transaction volume, unsold

housing rate

Construction quality defects

Project Quality Index (PQI)

Hyundai Motor Group

Group Risk Management Committee

Group CRO Organization

Hyundai Engineering

CRO, CEO

Risk management unit manager (Head of Planning Office)

Person in charge of working level risk management (Management and

Planning Team Leader)

Risk monitoring (Management and Planning Team)

* Key Risk Index


21

Financial Risk Management

Hyundai Engineering is exposed to diverse financial risks arising from its business activities, including market

risk, credit risk, currency exchange risk and liquidity risk. Its risk management program focuses on the unpre-

dictability or uncertainty of the financial market, and concentrates on minimizing effects that are potentially

unfavorable to the company’s financial performance.

Currency Exchange Risk Management

As it generally takes two or more years until the payment or expenditure of foreign currency, the time of pay-

ment or expenditure of the currency transactions are often uncertain, depending on the completion of projects

after contracting. Hyundai Engineering, therefore, attempts to minimize the currency exchange risks by aligning

the currencies of receipt and payment from the beginning of the contract bidding, and if the two currencies are

different, it applies the currency fluctuation to manage such risks.

Liquidity Management

A business may go bankrupt if it fails to secure or maintain an optimum level of liquidity even though it posts a

net profit. Hyundai Engineering, therefore, endeavors for the cash flow-focused management, thereby properly

allocating and managing the short- and long-term liquidity. The company conducts preemptive activities to

prevent liquidity crises by thoroughly managing the liquidity ratio and intensively managing each project.

Project Risk Management

The Corporate Risk Management Team of Hyundai Engineering manages risks throughout a project cycle: con-

tracting, execution, completion, and after-sales service. When selecting a project, in particular, the company

takes preemtive measure through the preview process for managing risks. In the order winning stage which is a

basis of risk management, the company specifies the order winning risks into domestic, overseas, and invest-

ment businesses depending on the business charteristics.

Each system consists of six-stage processes - preliminary review (overseas projects), working-level meetings,

review of order placement, changes in the review of order placement, practical meetings for contract review

and contractual review. It uses lessons learned through cases based on the risk evaluation sheets. Such efforts

manifest that the company is doing the utmost to minimize order placement risks and manage them.

Efforts to Strengthen Project Risk Management

The project execution stage re-inspects risk registers selected in the order placement stage through meetings

on project execution planning prior to groundbreaking. The stage, then, comes up with additional risk factors,

and devises and continuously manages hedging measures against risks which might occur in the actual pro-

ject execution stage. Risks are preemptively and immediately responded to and managed through routine risk

monitoring. In particular, the monitoring takes place through on-site daily reporting, and weekly and monthly

regular reporting of major project risks*.

Moreover, the company is proceeding with the setup of an integrated risk management system in consideration

of the continuity of the order placement stage and the execution stage, and alignment with financial informa-

tion for efficient management of risks. The company is planning for the system opening in December 2016. The

company expects to achieve the minimization of project risks and contribute to managing complicated risks by

operating the integrated risk management system.

2013 2014 2015

6,838

152.9

14,382

164.9

8,072

167.9

■ Cash or cash equivalents■ Liquidity ratio

Liquidity Management Status(Unit: KRW 100 million, %)

Risk Management Workshop

* Regular reporting of key project risks: reporting of the analysis of the risk status for projects, using four risk factors (completion rate, rate of cost of revenue, account receivables, unbilled receivables)


22

Process of Risk Management Operations

Hyundai Engineering systemically manages risks which might occur in projects by dividing them into four stages -

bidding, contracting, execution and completion. The company is committed to efficiently managing risks

through regular reporting and close cooperation with related departments.

Specifics in Risk Management Operations

Content of operationAreas of operation Note

•�Review of the project budget adequacy upon signing a contract- Check-up of the adequacy of budget to be executed, changes in

the profit ratio and adequacy of the process/construction period (material requirement, budget, time, cash-flow planning, etc.)

•�Review of changes in the cost which might occur in a project and the pending agenda- Check-up of changes in the execution rate (expected cost) due

to increases in cost and the schedule impact- Check-up of customer claims (possible issues including L/D, EOT,

reserves, construction cancellation, V/O and subcontracting)

•Hand-over workshop•Business execution workshop•Project execution planning meeting• Site inspection, if necessary

- Reporting of the pending agenda and countering measures

Domestic projects (bidding/investment)

Overseas projects (bidding/investment)

•�Review and feedback of business content upon signing a contract- Check-up of points that are reflected, contracted and modified

based on the order review (contractual poison pills, profit ratio for construction, construc-tion period, business conditions, and financial burden, etc.)

•Working-level contractual review •Contractual review



•Review business risks when evaluating project orders- Business feasibility, financial conditions, earnings rate,

contractual terms and conditions, execution measures and construction period, etc.

- Review and reflection of lessons learned (comparison of L/L data of similar projects)

•Review and feedback of project content upon bidding- Check-up of points that are reflected and modified based on the

order review (profit ratio for construction, construction period, contractual poison pills, business conditions, and financial burden, etc.)

•Preliminary order review•Working-level meeting•Order review•�Review of changes in order

placement



• Check-up and review of the pending agenda on progress after completion of construction- Pending agenda including repair, customer claim and various

lawsuits and miscellaneous losses

•�Review of the corporate establishment and financial agenda for development/investment projects- Review of content including financial burden and equity sell-off

as a shareholder- Review of the pending agenda when issues occur including

financing-related payment guarantee

• Collaboration with relevant departments in finance/legal affairs, etc., reporting of the agenda and countermeasures

Domestic projects/Overseas projects (bidding/investment)

Comple-tion Stage

Execution Stage

Con-tracting Stage

Bidding Stage


23

02

SUSTAINABILITY

ISSUES


ISSUE 01 Value Management 26

ISSUE 02 HSE Management 34

ISSUE 03 Talent Management 42

ISSUE 04 Win-Win Management 48

ISSUE 05 Sharing Management 54

SUSTAINABILITY

ISSUES

02


Team Leader Seong, Ho Chul/ Korea Plant Industries Association

“ I wish that Hyundai Engineering could achieve qualitative growth by securing high value- added technology and competitiveness.”

The paradigm in the construction industry is shifting according to the domestic market saturation, and accelerating

trends of technological convergence, etc. A transition to high value-added is needed in the industries of construc-

tion and engineering, and this requires enhancing competitiveness by expanding the public-private partnership. In

particular, the independent power producer (IPP) projects and environment-related projects among Hyundai Engi-

neering’s plans for future growth engines have high potential in both the national and global perspectives. I believe

that Hyundai Engineering’s capacities for technology and business management have a competitive advantage in

the market where diversified models for financing and project execution are required.

Hyundai Engineering is seeking overseas market diversification, and it is high time to solidify its basis in the overseas

projects. The term, ‘basis’, covers both technological competency and profitmaking. Thus, the company should en-

hance its technical base to create high-added value throughout the planning, designing, and executing of projects,

and further its competence to explore profit-making projects. Also, I suggest that Hyundai Engineering focus on

fostering talents as the technological expertise is becoming more important for the strategic risk management and

selective winning of profitability-focused orders.

Voice of Stakeholders

The ‘New Normal’, which implies the low growth in economic conditions due to intensified low interest

rates and low oil prices, is still in progress. The Korean construction industry, in particular, is undergoing

a rapid paradigm shift: a decrease in the supply of construction materials due to the expansion of social

overhead capital (SOC), transition to low growth economy of developed countries, etc. Moreover, as de-

mands for eco-friendliness in construction technology and processes have increased, the quality improve-

ment through expansion of the value engineering (VE), the use of project management know-hows, and

the securing of high value-added technology has become more important.

Social Context

•Diversifying business portfolios

•�Promoting the future growth

engine projects

•�Developing eco-friendly/new

technologies

•Enhancing the project quality

Our Responses

•�Exploring new business in each

business area

•�Commercializing future growth

engine projects at the early stage

•�Sophisticating the project quality

management

•�Expanding quality improvement

programs for partners

Our Plans

Registrations of

Lessons Learned

10,552cases

Intellectual

Property Rights

636cases

(605 registered/31 applied)

Quality

Improvements

396cases2015

Performance

Value Management Boosting Value

26


Creating Future Growth Engines

Prospective Business Projects

Process Plant

Considering the growth trends in the global oil and gas indus-try and the market outlook, the company designated the future growth engine projects: ‘Gas to Liquid Plant’, ‘LNG Liquefaction Plant’ and ‘Coal Gasification Plant’. Accordingly, the company is making efforts to create a new market by intensifying internal competencies and expanding opportunities for engagement in projects.


Driven by its seasoned experiences and expertise in power plants, the company is seeking engagement in ‘IPP Projects’ in tandem with the trends and growth directions of the global power gener-ation market. The company is developing professional engineers and securing expertise by selecting the ‘Concentrated Solar Power Projects’ as a new and renewable energy project and the ‘Small Modular Reactor Projects’ using the next generation nu-clear power technology as future growth engines.

Building Works

The company has selected new future growth engines in the building and housing works, and focuses on developing technical competency and business models: ‘modular building project’, an eco-friendly construction method to install and assemble the modules, manufactured at plants, in the field; and ‘Financ-ing-linked Housing Projects’, a new finance-based housing pro-ject which reduces general real estate PF risks.

Infrastruc-ture & Envi-

ronment

The company continuously nurtures its project competency to advance into overseas markets for the ‘Water Projects’ includ-ing Africa and the Middle East, driven by abundant technologies and experiences in water treatment. The company is initiating the ‘Waste-to-Energy Projects’ as a future growth engine project using the biomass and abandoned vehicle resources.

Gas to Liquid Plant

Independent Power Plant (IPP)

Coal Gasification Plant LNG Liquefaction Plant

Concentrated Solar Power Small Modular Reactor

Water Project Waste-to-Energy

Modular Building Financing-linked Housing

Priority Projects(short-term performance)

Competency-building Projects(long-term core competency)

Prospective Business Projects

The construction industry is rapidly changing due to continued low oil

prices, sluggish global economic growth, and paradigm shifts of clients

and consumers. Against this backdrop, Hyundai Engineering is diversi-

fying its project portfolios by advancing into new projects and sophis-

ticating its existing projects in alignment with its mid- and long-term

development directions. To this end, we are creating future values by se-

lecting the ‘10 Prospective Business Projects’, establishing correspond-

ing strategies, and continuously implementing R&D activities.

In addition, the company annually sets specific execution plans based

on the long-term goals and roadmap. We are striving to strengthen our

execution capacity and secure core technology for the future growth

engine projects in accordance with the stages and strategies of each

project.

As a result of such efforts, we were ranked 7th in the 2016 Appraisal of

Execution Capacity and 21st in The Top 225 International Design Firms

by the ENR in the U.S. In the future, we plan to continuously replace the

existing projects for future growth engines with new projects by review-

ing their suitability in order to create a sustainable project environment,

thereby establishing a cyclical project structure.

Sustainable Cyclical Structure by Project Stage

Develop Technology

Initiate a Project

Plan Commercialization

Identify Opportunities New Project Exploration

Project Performance

Tracking

27


Strengthening Value Engineering (VE)

Perception of Value Engineering

Value Engineering (VE) can be defined as all activities for removing un-

necessary cost, including technological improvement, intensification of

creative development, enhancement in working habits and attitudes and

time saving.

Input of unnecessary costs might occur due to the duplication of func-

tionalities or inappropriateness of methodologies to execute necessary

functions. Therefore, once all the resources are leveraged usefully,

high-value output can be obtained. This, in turn, leads to customer sat-

isfaction and profit generation for a company and its employees.

Cost reduction and competitiveness buildup through VE have emerged

as breakthroughs against such crises as the recent economic slow-

down for the construction industry and fiercer competition. Against this

backdrop, Hyundai Engineering strives to establish a company-wide VE

mindset and drive the generation of business performance by sharing VE

information and establishing a system to utilize it.

Value Engineering System

Hyundai Engineering carries out VE activities throughout the entire pro-

ject process, ranging from design, construction and commissioning,

based on its diverse experiences with design and project execution in the

process plant, power & energy plant, building works, and Infrastructure

& Environment. The goal of VE activities is to enhance customer satis-

faction and secure business competitiveness through quality improve-

ment and cost reduction. The company rewards employees engaged in

excellent VE activities by selecting best practices in company-wide VE

and adopting a reward scheme. The objective is to explore various VE

enhancing ideas to dynamically respond to a project environment and

establish a creative VE mindset to be applied to projects.

The company is creating an environment that enables employees to

register and search VE cases anytime by opening the VE Platform - an

information space for VE to register and utilize VE cases anytime and

anywhere.

Publication of the VE Best Practices Handbook

VE Contest and Publication of the VE Best Practices Handbook

Hyundai Engineering selected and rewarded HEC VE best practices by organizing the VE

Contest on VE cases. Such cases are reflected in actual projects in order to facilitate VE and

raise awareness of employees about VE. A total of 12 VE best practices were selected in

each division: out of 210 cases registered for VE activities, 89 VE cases recommended by

each division were selected through the internal evaluation and recommendation of each

division, and were screened through a primary review (working-level employees) and sec-

ondary review (executives) based on such criteria as cost reduction, shortening of the con-

struction period, quality improvement and applicability. The rewards for VE best practices

consist of one grand prize, three top excellence prizes, eight excellence prizes and one prize

for a project that suggested the highest number of VEs. The awardees of the year - excel-

lent employees in VE activities - were offered prizes and rewards. Moreover, registered VE

cases were published in the ‘2015 Value Engineering Best Practices Handbook’ to provide

opportunities to share and utilize VE information internally. Hyundai Engineering expects

to continuously expand the selection and compensation of best practices to secure tech-

nological competency and raise cost competitiveness through in-house VE activities.

Case Study

Knowledge System for Value Engineering

Accumulation of VE know-how and continued improvement

Selecting and rewarding best practices in VEPublishing the VE Best Practices Handbook

Compiling/registering

improvement practices

VE utilizing system (VE Checklist)

Using best practices/

Proposing new ones

Operating the ‘VE Platform’, an information space for VE cases

Compiling/Registering the existing cases

VE Platform

28


Securing New Technologies

R&D System

Hyundai Engineering continues to carry out activities for R&D in alignment with core business areas and for acquiring of new technologies. The goal is to secure technological competency which can be applied to the entire project stage, ranging from project planning, designing and construction, and to enhance the engineering-based corporate competitiveness. R&D is a key element for activities for a company to boost its competi-tiveness and achieve new growth. Through R&D, customer satisfaction and service quality can be enhanced. Hyundai Engineering identifies the periodic internal technological demand especially at the Hyundai Engi-neering Technology Research Institute and the Planning Office. The R&D system also creates an environment for systematic R&D by exploring and selecting tasks for technological development. Selected tasks as such are researched through classification into internal tasks and national policy tasks driven by the specialized research work force at the Hyundai Engi-neering Technology Research Institute and business divisions. The pur-poses of research are technological enhancement in target areas, acquisi-tion of new technologies and alliance with advanced technologies.

R&D Performance

R&D tasks of Hyundai Engineering from 2014 to 2015 amounted to 21 cases centered on the Process Plant, Building Works and Infrastruc-ture & Environment. In 2015, the company participated in the ‘national modular project for proposing measures to secure economic efficiency of performance-based modularhousing (3rd year)’. The company is con-ducting four research tasks: virtual design of mid-rise modular apart-ments, development of resource-recycling PC products and Korean-style rust-proofing concrete development.

Development of New Technologies

Hyundai Engineering strives to enhance technological competency con-tinuously, aiming to create high value-added new growth projects and prioritizing customer satisfaction and service quality. To this end, the company has accumulated diverse project experiences and developed technologies in various fields.The company develops and possesses diverse new technologies which can not only be applied in an eco-friendly manner to the environment and building works sectors, but can also contribute to social develop-ment. Such technologies are crystalized through steady efforts for tech-nological development and commercialization. The Hyundai Engineering Technology Research Institute and the Planning Office take the lead in various activities to raise the reliability of newly developed technologies and pave the way for their commercialization. Such activities include supporting the procedure for acquiring and managing the certification from domestic certifiers - certifications for new environmental technol-ogy, new construction technology, new transportation technology and green technology - and technologies to be applied to project sites.

Ownership of IPRs

Hyundai Engineering holds many intellectual property rights (IPRs) in-cluding various industrial property rights (patent, utility model, trade-mark and design, etc.) in the entire business areas of the process plant, power & energy plant, building works, and Infrastructure & Environment. The company has established an invention scheme for job functions and a procedure to manage IPRs so that engineering-based in-house techno-logical improvement and performance of technological development, etc. can be linked to improvements in corporate technological competitiveness and also to corporate technological assets. Spearheaded by the Planning Office, the company provides routine support and continued management so that employees’ project experiences, technical know-how and creative ideas will lead to industrial property rights and new technologies.

HEC Technology Award

Hyundai Engineering organizes the In-house Technology Award to establish

a voluntary culture and environment for technologies in the company by

enhancing employees’ technological prowess and raising awareness about

system improvement. The award ceremony is held during the company’s an-

niversary event to reward employees who performed excellent activities that

year. The company selects technical tasks which have generated outstand-

ing research activities and performance in the following areas: technological

development, research papers published in the public sphere, technological

enhancement, utilization of new technologies and system improvement. The

top winning task in 2015 was the ‘Intelligent 3D Design Verification System’.

Cases of excellent activities including technological development, overseas

training and new technologies were covered in the HEC Technology Booklet,

which is shared to employees.

Publication of the HEC Technology Booklet

Prize Awarding in the HEC Technology Award

Case Study

Status of IPRs (as of 2015-end, unit: cases)

Total 605cases

Patents Utility Trademarks Design Programs

172

3

207

3

220Unit 2013 2014 2015

R&D cost KRW in millions 1,916 3,073 766

R&D cost compared to revenues % 0.07 0.06 0.01

R&D Performance (as of 2015-end)

29


Modular Technology

The recent construction industry is dynamically engaged in value engineering activities which can boost the quality and constructability by securing

a clear structure system, while maintaining cost competitiveness. Morevoer, industry-wide efforts for reducing environmental impacts by improving

eco-friendly construction technology is increasing. Due to this trend, the modular technology is more highly recognized for its eco-friendliness, expand-

ability, high quality, economic efficiency, safety, and promptness. The modular technology is a construction method where standardized modules are

made in a plant by 70-80% and assembled on site. These modules are standardized for shortening the construction period, moving the building, reusing

the modules and reducing the construction cost.

The modular construction technology developed by Hyundai Engineering is, unlike the existing modular technology, a high-performance seismic mod-

ular construction technology named as the ‘modular construction method for steel moment frames’. The existing modular technologies were only

capable of low-rise construction structures, but Hyundai Engineering’s new modular structure system can be applied to high-rise modular building con-

struction because it can enhance safety against earthquakes. Having been recognized for its differentiated excellence, Hyundai Engineering’s modular

technology was designated as a new construction technology (No.770)*.

* New Construction Technology No. 770: Modular Construction Method of Steel Moment Frame with Ceiling Beam Bracket Using High Strength Bolts and Connection Plates

Special Page. Creating Environmental Values through Modular Technology

Characteristics of the Modular Technology

Scale and Prospect of the Modular Market

The domestic market scale of the modular technology is gradually on the rise, and is expected to increase over the medium and long term. Its application

in schools, military camp barracks and offices steadily increased in the initial phase. Thereafter, the market volume continued to rise to KRW 15 billion

in 2005, KRW 41 billion in 2010 and KRW 100 billion in 2011. The Ministry of Land, Infrastructure and Transport announced that it would expand its R&D

support for the modular technology designated as a new promising technology for the future in 2014. Accordingly, the modular technology is expected

to make up KRW 1 trillion of the market by 2020. Hyundai Engineering plans to continuously strive to raise the technological competitiveness for advanc-

ing into domestic and global modular construction markets: dormitories, hotels, urban housing and temporary housing such as disaster relief housing.

Outlook of the Modular Construction Market

KRW 201.1 billion → KRW 942.3 billion

Outlook of the Scale of the Modular Construction Market (2015 → 2020)

(Unit: KRW billion)

20050

200

400

600

800

1,000

2010 2015 2018 2019 2020

15 41

200

560

720

940

Promptness Safety Eco-friendlinessEconomic Efficiency

Scalability High-quality

30


Project Quality Index (PQI)

The Project Quality Index (PQI) is an index for

comprehensively evaluating five items to establish

quality management for projects and autonomous

quality management activities, and grading the

quality level of projects as an outcome of quality

audits. In 2015, in particular, the company-wide

quality level increased thanks to the efforts to ini-

tially support on-site quality systems and providing

continued monitoring and feedback.

■Grade S ■Grade A ■Grade B ■Grade C ■Grade D

* Grade A ratio going up for the company-wide quality target (△ 7.8% compared to 2014), Grade B ratio going up (△ 2.4% compared to 2014)

93.6

2014(%)

38.5

55.1

6.4

96.0

46.3

47.5

3.8 2.5

2015(%)

97.0%

Target for 2016 (Grade B of PQI

or Higher)

Ratio of Grades for Project Quality Index (PQI) (in EPC, Unit: %)

Case Study

Quality Management System

Hyundai Engineering continues to conduct activities for quality improve-

ment to provide better products and services to customers. To this end,

the company established and practices quality measures for creating fu-

ture values for customers, securing EPCM (engineering - procurement

- construction - management) technique and quality competitiveness,

maximizing job efficiency through knowledge management, and facil-

itating systematic risk management. All the divisions and employees

upgrade the quality competitiveness by identifying and improving the

quality in each tier and stage in design, procurement and construction in

accordance with quality measures.

Quality Certifications

Hyundai Engineering implements its quality management system in ac-

cordance with ISO 90011) and KS Q ISO 90012). Since obtaining the ISO

9001 certification for the first time in 1994, the certification has been

reviewed each year in all engineering fields, including construction sites.

KEPIC3) applies the certification of the nuclear power quality system to

the nuclear power design sector after acquiring it in 2011. The certifica-

tion is to secure the reliability of energy & power facilities demanded by

KEPIC3).

1) ISO 9001: International standards for quality management systems2) KS Q ISO 9001: Korean Industrial Standards for quality management systems developed

based on ISO 90013) KEPIC: Korea Electric Power Industry Code, certification of Korea Electric Association

Operation of the Quality Management System

Hyundai Engineering systematically establishes goals based on quality

measures, and dynamically carries out quality planning, management,

assurance and improvement. The company operates the Project Qual-

ity Index (PQI), and provides optimal quality services based on periodic

quality audits and analyses of partners.

Strengthening Quality Management

Engineering

• Operating the in-house quality management system

•Conducting the Lessons Learned Workshop of teams/projects

•Operating the Project History Book

Procurement

• Conducting the trend analysis of NCR (Non-conformity Report) of

materials and providing feedback

• Monitoring vendors

• Leading procurement partners to conduct quality evaluations and

improve quality (11 companies in 2014, and 17 companies in 2015)

Construction

•�Conducting quality evaluations on projects and providing feedback

(60 in 2014, and 75 in 2015)

•311 types of formulated/revised construction standards

•�Conducting project site analyses of NCR (Non-conformity Report)

of materials and providing feedback (1,377 cases in 2015)

Track Records of Quality Management

Resource management

Securing resources

Human resources

Infrastructure

Work environment

Measurement, analysis and improvement

Customers

RequirementsOrder

Promotion

Communication

Management responsibilityManagement commitment/

Quality policy Establishment of objectives QMS planning Management reviewWork responsibility/ Communications

Quality management system (QMS)

Identification/ Management of processes QMS documentation

Document management

Record management

Customers

Satisfaction

Product realization

Customer-related processes

Purchasing

ConstructionPlanning Engineering or

developmentOutcome of project

performance

Analysis of data

Customer management

Improvement

Corrective action/ Preventive action

Internal audit

Monitoring and measurement

Control of nonconforming product

Operation Process of the Quality Management System

31


Quality Management Programs

Quality Management Review

Hyundai Engineering conducts an annual review and assessment of its

quality management system to derive improvement solutions while en-

suring the adequacy, sufficiency and effectiveness of its quality man-

agement system. The quality management review targeting all business

divisions and departments are developed into a comprehensive report,

based on the performances of each organization or business, and re-

ported to the CEO.

Quality Management in Engineering

Hyundai Engineering operates a project collaboration system (Pro-

ject-Space), which it developed to facilitate the standardization and

transparency of its engineering services. It efficiently manages the in-

terface among areas, teams, and partners through systematic design

review and verification of engineering outputs.

Quality Management in Procurement

Hyundai Engineering has introduced an advanced inspection technique

for equipment and materials and a special management system for

sub-standard or low quality equipment and materials to enhance project

performance. Quality data is accumulated using a Material and Procure-

ment System (MAPS). In so doing, the company enhances the efficiency

of inspection and the soundness of equipment and materials sharing the

data with related teams.

Quality Management in Construction

Hyundai Engineering pursues ‘Zero Defect Quality’ by training opera-

tors and conducting thorough quality inspections, while reinforcing its

quality risk management by setting up a quality management system

on site immediately upon the opening of a project site to secure quality

in advance. It also controls the quality of its construction work efficient-

ly using advanced IT systems such as Hyundai Construction & Quality

Management system (HCQM), Advanced Quality Management System

(AQMS) and Welding Inspection and Testing system (WIT).

Knowledge Management System (KMS)

Hyundai Engineering established and operates the Knowledge Management System (KMS) focused on information sharing and utilization for

generating business performance beyond information management-oriented knowledge management. The KMS enhances job productivity by

exploring and sharing individual and organizational knowledge, and generates corporate value by turning such knowledge into assets.

The Lessons Learned System within the KMS is a system that extensively collects and databases errors and cases for improvement which occurred

in EPC projects. The system was developed to easily discover clues upon executing similar projects or confronting problematic situations.

The Lessons Learned Workshop for each team/project is carried out regularly, thus minimizing the failure cost through systematic risk management

and prevention. Best practices among the Lessons Learned and project completions registered in the KMS are rewarded, and the booklets about

these best practices are shared to the employees.

Operational Status of the KMS Performance of Lessons Learned

10,552 casesNumber of

registered cases

589,622 casesNumber of cases for search and utilization

Composition of the KMS

e-Librany

Knowledge information

•Business knowledge•General knowledge• Engineering Terminol-

ogy Dictionary

Lessons Learned

•Case management •Case activities

Management standard

•Per job classification

Technical standard

•Per business division

Project transfer data

• Business type/ Data type

Project completion

Knowledge Manage-ment Category

Standard Manage-ment Category

Transfer Data Man-agement Category

VE Platform

Database on country information

Case Study

2013

2,221

2014

1,914

2015

2,195

(Unit: cases)

32


System for Customer Satisfaction Management

Hyundai Engineering enhances customer satisfaction by assigning the

highest values to the common fundamental requirements of ‘quality’

and ‘safety’ and systematically approaching them. The company oper-

ates customer satisfaction centers by gathering and managing diverse

VOCs into a single channel. Progress is continuously checked by iden-

tifying causes for customer complaints and designating managers in

charge until complaints are resolved, thus enhancing customer satisfac-

tion. The company also attempts to improve sustainability by creating

highly loyal customers while enhancing opportunities for re-orders and

additional orders based on the trust of the project vendors.

Customer Satisfaction Management Activities

Internal Customer Satisfaction Survey

In 2014, the company conducted the internal customer satisfaction survey

in order to study job satisfaction of its employees and establish strategies

for the customer satisfaction management. A total of 3,384 employees

responded (68.4%), and the satisfaction point reached 69.2 out of the

full score of 100 points. This is the highest level since the first employ-

ee satisfaction survey was conducted in 2008, which went up 2.5 points

compared to the previous year. Results showed that intensive efforts for

communication and the vendors setup of a flexible corporate culture and

reinforcement of the leadership of top management were needed in order

to improve employees’ satisfaction. As such, the company strives to es-

tablish a new corporate culture based on such efforts.

External Customer Satisfaction Survey

Since Hyundai Engineering’s area of business expanded due to its merg-

er with Hyundai AMCO in 2014, identifying customer needs systemati-

cally and objectively has gained a higher weight. As a consequence, the

company established objective evaluation standard modules, and con-

ducted an external customer satisfaction evaluation for 266 employees

of at home and abroad who have had transactional experiences with

Hyundai Engineering. The company discovers areas for improvement by

identifying superior and inferior areas in each business division, con-

ducting comparative evaluations with competitors, and gathering cus-

tomer feedback.

Strengthening Information Security Management on Design and Or-

der Placements

Hyundai Engineering acquired a certificate for the ‘2013 Version of ISO

27001’ from British Standards Institution (BSI) Group Korea in 2015. The

‘2013 Version of ISO 27001’ certification is the most authoritative in-

ternational standard certification in the area of information protection.

Only companies that are verified through stringent screening on 14 are-

as including the protection of the physical environment, operational se-

curity and access control, and 114 specific items are eligible to acquire it.

Hyundai Engineering plans to continuously improve its security scheme

so that security issues which gain social attention including the leakage

of personal information could be promptly and sufficiently reflected in

corporate policies driven by the acquisition of the certificate.

Expansion of Customer Satisfaction Management

Tenant Satisfaction Survey

Hyundai Engineering’s Building Works Division conducts customer

satisfaction surveys through the Happy Call survey to gather tenants’

complaints and suggestions for improvement. The company caters to

customer demands by dynamically reflecting the complaints of tenant

customers which might occur due to design and construction issues,

excluding simple petitions, out of tenant customers’ requests for im-

provement, in the design stage afterwards.

Acquisition of the Certification for International Information Protection

57.7

Process Plant

60.2


73.6

Building Works

81.5


External Customer Satisfaction Levels (Unit: points)

External Customer Satisfaction Survey Process

Plan Direction reviewDetermination of evaluation items

Data collectionDo

Identification of points for improvement

Set up of strategies for improving customer management

See

33


Social attention on companies’ safety, health and environmental issues is rising due to global environ-

mental pollution, industrial disasters and accidents, while related laws and regulations are intensified. In

addition, due to higher social attention on climate change responses, expanding the scope of managing

environmental pollutants is growing in importance. While heavy construction equipment used on con-

struction sites has a huge environmental impact due to the emission of energy and GHGs, waste manage-

ment on construction sites is a critical element. Preventing and managing accidents thoroughly on project

sites is the top priority to protect people’s lives.

Social Context

• Operating the HSE

management system

• Developing and operating

eco-friendly technologies

• Initiating eco-friendly projects

• Complying with international

standards

Our Responses

• Advancing the HSE management

system

• Realigning business units for HSE

• Creating a global HSE culture

•�Implementing a compensation

responsibility scheme for damage

due to environmental pollution

Our Plans

Converted

Accident Ratio

0.12%

(domestic)

Amount of

Energy Consumed

449,479GJ

Investment in

Energy Protection

KRW2,213million

HSE ManagementPreservation for All

2015 Performance

Team Leader Kim, Tae Kyung/ LRQA Korea


“ I hope that Hyundai Engineering will minimize environmental impacts during the course of a project including construction, operation and demolition, and perform prevention- oriented safety management activities.”

The construction industry, as one of Korea’s key economic drivers, is classified as an industry with a significant

environmental impact. The GHGs, fly ash, noise & vibration and waste which occur on construction sites must

be dynamically managed to implement eco-friendly management. Moreover, Hyundai Engineering needs to make

more aggressive investments in eco-friendly technologies than now, since domestic construction companies are

fiercely competing against one another with new eco-friendly technologies using wastewater and waste fuel as well

as waste materials as future growth engines.

A single safety accident directly impacts order placement for construction and insurance benefits of industrial ac-

cidents as well as casualties, thus requiring preventive safety management. In this sense, Hyundai Engineering’s

safety management system and activities to establish a safety culture are considered to be excellent. It would be

essential for such safety and health management activities to be expanded to not only Hyundai Engineering but also

the supply chain. Along with support for a safety management system for partners, training and education to foster

safety specialists (equipment, electricity and environmental measurement, etc.) must be strengthened.

34


Upgrading the HSE Management System

Measures for HSE Management

Corporate responsibilities and dynamic responses to the environment

have become essential for sustainability management. Hyundai Engi-

neering clearly recognizes that safety, health and environmental man-

agement is a core management element, striving to create eco-friend-

ly project sites where people and nature live in harmony. In particular,

the company set up the ‘mobile HSE system’ using portable devices

for each individual driven by IT, thus quantifying safety activities in real

time. By doing so, the company sophisticates prior safety management.

Moreover, the scope of business has been expanded to asset manage-

ment as well as construction sites, striving for post-construction main-

tenance safety management.

HSE Management Infrastructure

Hyundai Engineering obtained the ISO 14001 standards certification en-

acted by the International Standards Organization (ISO) for eco-friendly

management systems. It maintains eco-friendly systems that satisfy the

international standards through periodic follow-up reviews and re-cer-

tification reviews. The company adopted the 2015 version of the ISO

14001 which has been recently revised, to maintain the environmental

management system suited to international standards.

HSE/Quality Organization

The HSE Innovation & Quality Mangement Office is engaged in HSE ac-

tivities suited to each business division by forming an exclusive unit in

each division in order to strengthen HSE management. In particular, the

company expanded the business scope by launching an exclusive divi-

sion for asset management safety in May 2016.

Compliance with Domestic and International Environmental Laws

Hyundai Engineering complies with domestic and international environ-

mental laws, and reflects them in various environmental regulations.

First, specialists are invited every year to conduct training for environ-

mental managers on cases of environmental accidents and environmen-

tal issues related to construction. Moreover, violations of environmental

laws which might occur in the middle of executing projects are eliminated

through on-site environmental support and Q&A. The company satisfies

noise and vibration standards by using low-noise equipment and meth-

ods and appropriately installing noise prevention facilities. The objective

is to minimize the occurrence of noise and vibration-related complaints.

Plan Do Check Action

•Monitoring and measuring

•Incident investigation

•Complying with and evaluating requirements

•Internal evaluation, performance evaluation

Inspection

•Measures for correction and prevention

•Report on HSE management performance, executive review

Reviewing/Taking Action

•�Establishing the HSE policy

•�Understanding environmental issues & risk assessment

•�Understanding legal requirements

•�Comprehend stakeholders’ demands

•�Establishing goals & plans

Establishing Measures, Goals and Plans

•�Developing environmental technology

•�Organization: granting authority and obligation

•�Education and training: enhancement of awareness about environmental management

•�Communication: documentation and document management

•�Measures: operation management based on procedures and plans

•�Preparing for and responding to emergencies

Performance and Management

Continued improvement↓

Globalization of HSE Management

HSE Management Process

Type Key activities Results

The Environment Setup of the GHG inventory and management system Completion

SafetyDistributing the Life Saving Rules 11, a multi-lingual safety training video clip

Completion

HealthSending of public notices for employees’ health management 13 times

Health manager meetings Once

Common

Publication of a booklet for the risk evaluation model for work type

Completion

Public contest to choose a safety slogan 898 ideas submitted, 16 prize-winning ideas

Key Results of HSE Management

Mobile HSE System

Enhance participation

rate of supervi-sors

Strengthen promptness of all-time duty

Minimize portal-related

jobs

Enhance system usage

Mobile HSE System

35


Utilizing biogas from livestock manure for the first time as city gas

Spread of Environmental Management

Green PHC Pile

For the Green PHC pile, the utilization rate of fine furnace slag power was

raised from 15% to 40% compared to the existing PHC pile1). It is a tech-

nology where CO2 emissions are minimized and manufacturing costs are

lowered by using modified Type I cement, replacing the expensive Type

III cement2). The Green PHC pile is expected to reduce CO2 emissions by

77.2kg/m3 compared to the existing PHC pile, and lower CO2 emissions

of 8,152 tons based on the sales volume of 260,000 tons as the amount

of usage of fine furnace slag power, a by-product of steel mills increases.

As a consequence of such environmental performances, the company

acquired the Green Technology Certification (GT-15-00092) in 2015. The

Green PHC pile has been applied to apartment sites in Baekun-dong,

Gwangju and Sinbu-dong, Cheonan.

1) PHC pile: It refers to a high-strength pre-stressed pile as concrete pile manufacturing in a factory (compressive strength of over 80 MPa). It is also a pile that complements drawbacks of concrete which is weak in bending and tensile strength by adding com-pressive force to a pile or pre-stress.

2) Problems which might occur in the process of manufacturing an ultra-high strength PHC pile whose compressive strength is over 110 MPa are addressed by using a dedicated admixture.

Inorganic Insulating Material

An inorganic insulating material is an output of ‘resource-recycling PC

development [Stage 3]’ as one of research tasks of Hyundai Engineer-

ing. The existing inorganic insulating material has a disadvantage of be-

ing vulnerable to fire, but the inorganic insulating material developed

by Hyundai Engineering has a fire-proof property as a non-flammable

material. The method of manufacturing an inorganic insulating material

using animal-based lightweight foam (excellent heat insulation and wa-

terproofness as a closed foam) was patented in March 2016. Its technol-

ogy transfer is ongoing as of now.

Eco-friendly Technologies

Solar Power Generation

Hyundai Engineering is preparing to enter a market for concentrated so-

lar power generation as a part of an effort for a future growth engine

project. The company is initiating new solar power projects mostly in

Chile, South Africa, Australia and Algeria. While forging close relation-

ships with advanced companies with proprietary technologies, the com-

pany focuses on nurturing specialists internally. Moreover, the company

cooperates with the R&D Division of Hyundai E&C, a Group affiliate, and

the Korea Institute of Energy Research, a national policy research insti-

tute for developing a technology for the heliostat, a core equipment for

solar power generation.

Eco-friendly Energy Town Construction Project

The Eco-friendly Energy Town produces biogas through anaerobic digestion using organic waste including livestock manure. The gas is

supplied and sold to a nearby village, and the residues can be used as compost and liquid fertilizers. The Eco-friendly Energy Town in

Hongcheon-gun in Gangwon Province was established for the first time in Korea as an environmentally cyclical energy self-sufficient village

achieving economic profits and energy self-sufficiency. It is the current government’s first pilot project initiated as a part of its expansionary

policy for new energy industries.

Hyundai Engineering acquired an order for a biogas plant for organic waste including livestock manure of 100 tons/day from Hongchun-gun

in 2014 and completed construction at the end of 2015, which is in full operation now. Hyundai Engineering plans to dynamically advance

into overseas markets including Asia and Africa as well as the domestic market based on its successful experience with this project.

Case Study

Solar fieldSolar tower

Receiver

Cold storage

Hot storage

Steam generator

Steam turbine

Condenser

Burneroptional

Diagram of a Solar Power Generation Plant

A biogas plant for livestock manure

Facility for turning compost and liquid fertilizers into

resources

Biogas storage tankGas purification (Saving the heating cost of KRW

910,000 per household/year)

Supply and sales of city gas

Purification and heat value adjusting facility

Biogas(3,000m3/day)

Golf range, nearby farmland

Livestock manure (80m3/day)

Food waste (20m3/day)

Amount of anaerobic digestion (30m3/day)

Dehydrated residue

(20tons/day)

Compost and liquid fertilizers

(KRW 52 million/year)

36


Rust-Proof Concrete

The existing rust-proof technologies have no adequate quality standard and

management regulations on structure sections. Their disadvantages include

a need for multi-layered hybrid construction using membranes (coating,

sheet and panel), and increases in the construction cost and period. Hyundai

Engineering developed and applied the world’s first convergent rust-proof

concrete by improving such problems. Additional membrane construction

is unnecessary as rust-proof performance is secured at the concrete per se,

while it is possible to reduce the construction cost and period.

The rust-proof concrete technology of Hyundai Engineering secured the

chemical rust-proof function by using the copper hydroxide that restrains

the growth and straightness of plant roots. It reduced concrete cracks and

improved concrete strength by comfounding the synthetic macro fiber. It

can control fine cracks by compounding a closed admixture for cracking

consisting of a cement crystal structure.

The rust-proof concrete technology includes various eco-friendly ele-

ments: reducing CO2 by 60% which occurs upon producing cement; low-

ering the occurrence of chromium trioxide; reducing the occurrence of

construction waste by improving the durability of protective concrete; and

utilization of industrial byproducts. The rust-proof concrete technology is

undergoing a new technology inspection as of now. It has been applied to

Amco Town Floriche (2014) and Wirye Amco Town Centro El (2015) on a

pilot scale. It will be applied to a composite facility site in Seocho in 2016.

Greening of the artificial ground which used to be applied to rooftops of

buildings has been expanded nationwide after the national vision for green

growth was set in 2008. In particular, greening of the artificial ground on

the upper section of underground parking space has rapidly increased to

construct eco-friendly apartments. Here, the rust-proof technology is ap-

plied to prevent damages of structures from plant roots.

Hybrid Smart Cement Techniques

Hybrid Smart Cement (HSC) is cement composed of three materials that

is produced by mixing Portland cement with fine furnace slag power, a

by-product of steel mills and fly ash, a by-product of coal-burning pow-

er plants. HSC is environmentally friendly as it discharges 50% less car-

bon dioxide and 35% less hexavalent chrome than existing mass con-

crete. It also offers high stability as quality disparity is minimized among

concrete mixers as it is premixed. Further, it is extremely durable as it is

highly resistant against sulfuric acid and salt. It has been utilized at the

composite facility in Seocho, Hillstate Giheung, Hillstate Gwanggyo and

many other project sites.

Steam Supply Facility Installation Project

The Ulsan steam supply facility is a Waste-To-Energy (WTE) project to

produce steam by using waste heat generated after incinerating the Au-

tomotive Shredder Residue (ASR) and flammable municipal waste, and

supply and sell it to nearby clients for heat supply and demand. Hyundai

Engineering conducted the design, procurement and construction by

engaging in the private PE project through equity investment in 2014.

The construction project which is to turn flammable waste into ener-

gies in the scale of 220 tons a day will be completed by the second half

of 2016. The company will play its roles as an equity-holding company

of the SPC during the management period after completion. This will

enable the company to fulfill the goals of expanding its project portfo-

lio through entry into the Waste-To-Energy (WTE) market and imple-

menting the government’s low-carbon green-growth policy externally

beyond the Group. At the Group level, the company will establish the

resource-recycling structure in order to boost the vehicle waste recy-

cling rate of Hyundai Motor Group up to 95%.

Bird’s Eye View of the Ulsan Steam Supply Facility

Technical Concept Map for the Rust-proof Concrete Technology

Rust-proof admixture: chemical rust-proofing (inducing chemotropism of roots)01

Synthetic macro fiber: improving concrete strength, lowering cracks02

Closed admixture for cracking: improving the water tightness of concrete, closing micro cracks 03

Rust-proof admixture

Eco-friendly cement

Crack closure admixture

Macro-synthetic fibers

37


Eco-friendly Operation

Eco-friendly Construction Management

Hyundai Engineering supports project execution on a project site through

on-site support for environmental permits and approval of documents

before groundbreaking and reviews the legitimacy of waste treatment

companies. Moreover, the company prepares an environmental impact

assessment report on a project’s impact on the surrounding environment.

After a project opens, the company provides environmental support suit-

ed to each site and recommends the usage of eco-friendly materials. The

‘Construction Environment Guidebook’ is prepared as an environmental

management guidebook, and it is distributed to sites which is revised an-

nually. Based on such a procedure, the company conserves the ecosystem

and the environment for areas near a project site.

Waste Management and Recycling

Hyundai Engineering proprietarily developed its environmental manage-

ment system and uses it by aligning with the Allbaro system, which is the

a waste management system, of the Ministry of Environment. Within the

system, the waste treatment process of all sites nationwide is searched

and managed in real time to analyze the types and amount of occur-

rence by waste type, while information on delivery companies and the

unit price of treatment is shared. This has reduced the amount of waste

emissions (459,338 tons (2013) → 294,177 tons (2015)), and secured

transparency in corporate operations. Continued environmental training

takes place on the ATOM project site in Pakistan on waste segregation

so that different types of waste are not mixed by providing specific types

of wastes storage bins.

Waste Management Training (ATOM site in Pakistan)Management of Raw and Subsidiary Materials

Various raw materials are used to construct buildings on construction

sites of Hyundai Engineering, including steel reinforcement, ready-mixed

concrete, cement, sand and aggregate. The company continues to seek

measures to utilize alternative raw materials including formwork substi-

tutes and recycled aggregate to efficiently utilize resources. By doing so,

the company seeks to prevent environmental pollution and minimize the

material procurement cost.

Type Unit

Domestic Overseas

2014 2015 2014 2015

Waste concrete debris ton 156,029 147,770 267 4,254

Sludge (sludge generated at project sites) m3 810 1,119 - 31

Waste asphalt ton 27,044 56,817 50 956

Mixed wastes m3 42,657 39,527 27,475 37,669

Waste wood m3 13,774 11,738 2 38

Others ton 20,794 43,779 62 275

Total amount of waste generated ton 261,108 300,750 27,856 43,223

Recycled (Outsourced handling) ton 194,355 216,325 1,911 3,271

Recycled (Internal treatment) ton - - 11 136

Incineration ton 7,732 4,182 1,622 5,340

Buried ton 59,022 80,244 23,941 27,420

Amount of Waste Generated and Methods of Treatment

Type Unit

Domestic Overseas

2014 2015 2014 2015

Reinforcing steel bars ton 592,026 2,342,238 4,315 8,872

Ready-mixed concrete m3 422,425 1,106,246 41,330 90,397

Cement ton 14,793 23,632 8,648 7,509

Sand m3 46,855 124,282 12,423 13,832

Aggregates m3 151,425 593,702 178,083 132,243

Asphalt concrete ton 13,687 106,795 68,100 102,221

Timber ton - 70 78 105

Concrete ton - 29,360 24,445 207,051

Formworks m2 629,446 1,413,318 18,742 71,914

Smaller lump coals kg 145,630 321,505 - -

Others (concrete pile) m 229,112 301,613 20,368 2,982

Volume of Raw Materials Used

Type

Domestic Overseas

2014 2015 2014 2015

Process Plant 38 1 66

Building Works 778 1,450 - -

Infrastructure & Environment 102 626 4 33

Total Amount of Expenditure and Investment in Environmental Protection

(Unit: KRW million)

38


Management of Air Pollutants

The company strives to prevent the occurrence of dust since it might

occur and spread on particular projects sites, given the nature of the

construction industry. For project sites, the density of fly ash within sites

is periodically monitored and an anti-fly ash net is installed along with

the removal of topsoil in areas of fly ash and gravel packing.

Energy and GHG Management

Hyundai Engineering uses gasoline, diesel and electricity as major energy

sources to execute projects, and the key emission sources of GHGs are

to manage on-site equipment and power generators. The heat recov-

ery system and techniques are applied at construction sites to save the

amount of energy used and reduce GHG emissions. Various campaigns

are carried out to save electricity in the company building.

Water and Wastewater Management

Wastewater generated after using water in the course of construction

and commissioning on project sites is legitimately treated below the lo-

cal emission standards. Reverse Osmosis Treatment (ROT) facilities and

Waste Water Treatment (WWT) facilities are installed on the UKAN site in

Uzbekistan, self-purifying and discharging the wastewater amounting to

120~150 tons a day on the site. On the TACE site in Turkmenistan, the

water that is purified using WWT facilities and evaporation ponds is used

for sprinkling the prevention of fly dust. The company is striving to raise

the recycling rate by finding measures to additionally utilize non-potable

clear water.

Eco-friendly Communication

The company conducts diverse eco-friendly communication activities to

control environmental pollution and raise awareness of the importance

of environmental conservation. On the LSR site in Yeosu, employees

of Hyundai Engineering and its partners conduct monthly collections

of garbage and waste in the nearby 3km-long section. Meanwhile, the

composite facility site in Seocho-dong installed and operates a facility

to control the occurrence of fly ash. Hyundai Engineering’s excellence in

operation and management has been recognized, enabling the site to be

selected as a construction of excellence in 2015 by the head of Seocho

District Office.

Setup of the GHG Inventory System

The company started to measure and manage GHG emissions on all sites nationwide by completing the setup of the GHG inventory system in Sep-tember 2015. The company plans to reduce GHG emissions by analyzing data on overseas sites.

Creation of Environmental Value by Exploring a New Waste Treatment Market

The company organized the Master Plan Workshop for Waste

Improvement* in Bogota in Colombia in 2015. The company

plans to secure a gateway to dominate the environmental

market by exploring and initiating projects for environmental

cooperation and investment measures in Colombia. This will

be conducted through the master plan program, resolving

environmental problems in the country which would be in-

duced by rapid urbanization and suggesting adequate waste

treatment techniques suited to the region.

* It is initiated by the Ministry of Environment and Korea Environmental Industry & Technology Institute (KEITI) through the master plan pro-gram for environmental improvement in developing countries for Ko-rean companies to enter overseas environmental markets. Hyundai Engineering conducted its service for about 14 months by forming a consortium with Dohwa Engineering and E-Teco Asia.

Case Study

Type Unit

Domestic Overseas

2014 2015 2014 2015

Amount of direct energy consumed

GJ 63,785 47,619 20,374 121,626

Amount of indirect energy consumed

GJ 186,673 223,807 35,511 56,426

Total amount of energy used

GJ 250,458 271,427 55,885 178,052

Amount of direct emissions (Scope 1)

tCO2eq 4,230 2,801 1,411 8,455

Amount of indirect emissions (Scope 2)

tCO2eq 9,066 10,870 5,237 8,321

Total amount of GHG emissions

tCO2eq 13,296 13,671 6,648 16,776

Amount of Energy Used and GHG emissions

Type Unit

Domestic Overseas

2014 2015 2014 2015

Total amount of water used

L 34,025 101,492 113,772 184,199

Amount of Water Used

39


Enhancement of Safety and Health Management

Safety Inspection Activities

All the employees at the head office are mandated to implement safety

inspections on target sites when they are on a business trip. In writing a

business travel report, items on safety inspection must be filled in. Over

120 domestic and international on-site safety inspections a month have

been implemented. Results of safety inspections are used for regular

safety inspections.

Strengthening Fire Prevention Activities

Hyundai Engineering designated the 15th of each month as the Fire

Prevention Inspection Day with special training on inspections and fire

prevention for each site. Employees of sites including site managers and

managers of partners inspect offices, construction sections, equipment

and fire extinguishers. Special training on fire prevention is conducted

for workers.

Moreover, items on a checklist for inspection are thoroughly identified,

and inappropriate items are subjected for correction. The company pre-

vents fires on-site camps and temporary buildings by using inflammable

materials, installing fire preventive facilities and providing a guideline

which indicates the operation of anti-smoking areas, etc.

Imposition of Rights on Flagmen/Security Guards and Operation of

Call Centers for Safety

Although flagmen and security guards on sites play key roles for on-site

safety management, they have a low status on sites and are not given

the control right. To improve such problems, Hyundai Engineering, im-

posed on flagmen the right to summon construction supervisors, and

security guards to only allow vehicles of drivers who have completed

training before entering the workplace.

The company operates an integrated call center for workers of partners

to report and inquire on safety matters to immediately transfer them to

the companies and take action for them. The company also implements

a program to verify flagmen’s qualifications and self-driven training en-

gaging flagmen so that qualified flagmen could be dispatched to sites.

Video Clip on the Life Saving Rules

Construction supervisors

Drivers

Flagmen (Flaggers) Senior safety mangers

Identification of site situations

[Reporting to the integrated safety call center]

Linkage of the out system/the time out system

* Time-Out system: It refers to the temporary work suspension right to block the resumption of work after taking actions for pro-gression and situations of construction work violating safety rules. It cannot be exercised by safety managers now, and it is expected to be expanded in the second half of the year by devising specific measures.

Hot Line

Calling of construction supervisors

Upon non-implementation of construction managers

Non-implementation of drivers’ signal/control

Instruction on the completion of drivers’

safety training

Out System: a scheme to expel from sites

Time Out: suspension of construction for the

given work

Calling of safety managers

Hot Line

Process of Flagmen’s Exercise of the Calling Right

Evaluating Risks by Work Category

Hyundai Engineering prepared a risk assessment model by work catego-

ry to provide a proper risk assessment guideline. This helps successful

completion of projects by evaluating and reducing risks which might oc-

cur at the construction stage. It enables the managers and supervisors

and partners on site to take improvement measures by identifying risks

in the middle of construction. A booklet on the process plant, power &

energy plant and building works has been published, which is distributed

to each site, executive and top management, and is used as a material

for HSE training.

Safety Management of Project Sites

Strengthening Safety Awareness

Hyundai Engineering is raising employees’ awareness about safety

through an open competition to choose a safety slogan. ‘No Safety No

Tomorrow’ was the selected safety slogan, which is being now used for

various banners, PC background screen and documents, etc. Moreover,

a safety campaign and a video clip on the ‘Life Saving Rules’ were pre-

pared, and the video has been aired during a weekly morning meeting,

inducing employees’ interest and strengthening a safety awareness.

Safety and Health Management System

Hyundai Engineering continues to maintain the OHSAS 18001 and ISO

14001 certifications, striving to prevent accidents through diverse pro-

grams. As a result of such endeavors, the company was ranked No. 1 for

the lowest accident rate (0.12%) among the top 10 construction compa-

nies in executing constructions in Korea. The company plans to establish

the world-class HSE management system based on international stand-

ards by acquiring the ISO 45001 certification which is currently being

under development.

Pursuit of Zero Accidents

Hyundai Engineering is waging a zero-accident campaign at domestic

and international sites. By conducting the zero-accident campaign driv-

en by the company’s belief in respect for humans, Hyundai Engineering

strives to prevent industrial accidents autonomously through joint en-

gagement with its workers. Moreover, the company is rewarding sites

and employees for having achieved no accidents in order to boost em-

ployees’ morale and facilitate the zero-accident campaign.

Rewarded Sites for Having Achieved No Accidents in 2015

Type Site Content Institutes selected

TGEM in TurkmenistanAchieving the zero acci-dent target of five times

Petronas Carigali (Turk-menistan) Sdn. Bhd.

TORE in TurkmenistanAchieving the zero acci-dent target of ten times

Turkmenbashi Oil Com-plex of Oil Refinery

National University in Turkmenistan

Achieving the zero acci-dent target of five times

Ministry of Defense in Turkmenistan

Wirye Amco Town FloricheAchieving the zero acci-dent target of three times

Safety and Health Agency

Hillstate Seocheon

Achieving the zero accident target

Safety and Health Agency

Tera Tower in Munjeong Station

Nowon Premier’s Amco

Wirye Amco Town Centro El

Daegu Seocheon Amco Town The Solarnew

Ove

rsea

sD

om

estic

40


Employees’ Health Promotion

On-site Employees’ Safety and Health Management

The company manages the health of all the workers including employees

of partners for each site. Safety awareness is enhanced through induc-

tion training, regular training and special training, and workers’ health is

managed through mobile health check-ups.

On the TACE site in Turkmenistan, a 24/7 medical clinic is up and running

to assure employees’ safety and health. Salt tablets are provided during

a season of scorching heat, and the frequency and time of resting are

adjusted depending on the temperature. From April to June when there

is a high frequency of snake infestations, snake repellents are placed and

antidotes are made available. As such, the company is striving to ensure

workers’ health and safety.

Emergency Medical Aid Service at Overseas Project Sites

Hyundai Engineering ensures that adequate medical services are

promptly provided to its employees at overseas sites when they are di-

agnosed with a serious medical condition due to disease or injury. It pro-

vides an emergency medical support service for employees and those of

partners working in relatively high-risk areas with high accident or injury

risks comprising 24-hour phone-based medical consultation, location

and advance reservation of local medical service institutions. It also of-

fers a transfer service in key dangerous project areas with relatively high

occupational accident or injury rates such as Iraq, Pakistan and Algeria.

The ATOM site in Pakistan signed an MOU with a local medical insurer in

Pakistan. Employees in need of medical help or emergencies can receive

medical services in a hospital near their site.

ATOM Site in Pakistan Pursuing and Builds up the Safety First Principle

The company communicates with local employees and shares a safety culture with them based on the ‘safety first’ principle to spread the safety

awareness of local partners and workers and strengthen safety management.

Key Safety Management Activities

▶ Signing an MOU with a local Pakistani medical insurer, and promptly providing medical services in a nearby hospital for employees in need of medical help or emergencies

▶ Catering to needs of clients on safety in the chemical process including Pre Startup Safety Review (PSSR), General Safety Inspection and special awareness training

▶ Dynamically complying with Pakistani safety management laws

ARL Upgradation Project-2013

“Always safety first on the ATOM site!”At first, we had difficulties with the basic construction work for structures due to a lack of measures on the clay ground of the ATOM site. However, we suggested replac-ing it with granular soil, which led to economic efficiency and safety in the basic construction work. Yet, numerous challenges are confronted: sub-standard execution ca-pacity of local companies; conditions for equipment pro-curement; workers’ skills; and religious and geographical features. Nevertheless, we are overcoming them with uni-ty, endurance, a winning attitude and pride as members of Hyundai Engineering.

“Efforts to execute a safe project!”Hyundai Engineering requires all partners to comply with safety standards on sites. The Pakistani safety culture is not up to the level of Hyundai Engineering yet. That is why education/training on safe opera-tions is taking place on sites and through programs in accordance with a safety training plan for sites. As a consequence, the safety level of all sites on average is improving day by day.

Case Study

Manager Kim, Hak Bong | Civil works manager Mohammed Qasim | HSSE manager

Strengthening Safety Management for Overseas Sites

In some overseas sites, the following issues have emerged: inadequate

application of the safety management system due to the absence of

a local manual; inadequacy of the standard for the expense of safety

management cost; and safety managers’ low awareness about safety.

Accordingly, the company strengthened systematic safety management

and initiated the system setup. The company identified the current sta-

tus and problems for 12 specific items in six areas - organization, sys-

tem, training, safety management expense, partners and others - and

established measures for improvement.

Area Item

Organization

•�Establishing standards to dispatch overseas employees and safety officers per construction cost•Setting R&R for corporations/overseas employees/safety officers•Improving the reporting system for local safety officers

System•Operating the HSE portal•Preparing a local manual•Setting up medical support service

Training•�Improving the level of local safety officers and installing safety

training sites

Others •Providing on-site safety patrol vehicles

Safety Management

Expense

• Payment/Budgeting/Analysis, scope of standards of partners, specialized companies in safety facilities, standardization of safety items, etc.

Partners•�Evaluating partners and reflecting in safety-related special

contracts•Introducing the penalty system

41


Securing competent talents with seasoned experiences has become ever more important due to the

diversification and globalization of projects within the construction industry. Acquisition and reten-

tion of talents, and buildup of corporate competency to develop them are directly linked to enhance-

ment of corporate competitiveness. Spread of the work-life balance, fair performance appraisal and

compensation, and labor-management harmony through open communication are critical factors to

fundamentally support talent management by creating a sound corporate culture.

Social Context

• Providing competency

development training

• Supporting new employees to

settle in

• Striking a work-life balance

• Building a creative corporate

culture

Our Responses

• Strengthening global expert

training

• Expanding customized support

programs

• Facilitating family-friendly

programs

• Pursuing a new corporate culture

Our Plans

Training Hours

per Employee

56hours

Designated by

the Ministry of Employment

and Labor in 2015

One of the Top 100 Companies with

Best Performance in Job Creation

Return Rate after the Use

of Childcare Leave

83%

Talent Management Escalating Talent

2015 Performance

Team Leader Byeon, Woo Ryang/ Talent Development Team of Hyundai Engineering


“ Hyundai Engineering will be reborn as a flexible, yet strong player suited to its prestige as a global organization.”

In order to dominate competitive advantages in competitions which are getting fiercer, securing and developing

talents with global competency is critical. As such, Hyundai Engineering is focusing on job training and global com-

petency buildup training needed for Engineering Procurement Construction (EPC) projects. The company is striving

to enhance its corporate competitiveness by focusing on selecting and nurturing employees to be appointed to

overseas sites, that is, cornerstones for the company to advance into overseas market where its presence is being

scaled up.

After a merger with Hyundai AMCO in 2014, Hyundai Engineering is making continued efforts to find mutual sim-

ilarities, and exerting the synergies on a gradual basis. Competitiveness has improved through mutual comple-

mentation for different business areas. In the area of talent development, some of the achievements include the

systematization of job training and setup of a talent development system in job operations for plants. Hyundai

Engineering will be reborn as a flexible, yet strong player suited to its prestige as a global company through activities

to internalize the corporate culture by establishing a new corporate culture.

42


Talent Recruitment

Securing Excellent Talents

Hyundai Engineering strives to select new employees every year and nur-

ture excellent engineers. The company is making all-out efforts for the

sluggish construction industry to achieve sustainable growth through

talent management by reinforcing its core area of design competency.

The company’s recruitment criteria for selecting competent engineers

have been reinforced to steadily intensify their competency through the

transfer of design know-how. The company is making steady efforts to

secure competent seasoned workforce to seamlessly execute construc-

tion work and upgrade its design competency. By doing so, high quality

jobs are provided, and preferential recruitment is available for the social-

ly vulnerable including the disabled.

Acquiring Global Talents

Confronting fiercer competitions with global top players is an inevitable

part of leaping higher as a global engineering company providing com-

prehensive engineering solutions with the best technology. The reality

is that executing projects with the domestic workforce alone has many

obstacles.

Securing global talents equipped with cutting-edge technologies is essen-

tial at a time when the value chain is to be expanded up to the basic design

area. The domestic workforce can also be nurtured through business ex-

changes with the gaining of a global workforce. To this end, the company

is striving to acquire global core talents for business operation every year.

First, the company is strengthening points of contact with global talents

who could be potential recruitment candidates although they might not

be actively looking for jobs, while reinforcing the traditional talent acqui-

sition strategies which target a small number of the workforce which is

active in job searching.

Moreover, global social networks including Linked-In are utilized for the

company to implement strategies for channel diversification. The com-

pany is doing its best so that global talents may adapt to and intermingle

within the organization quickly.

Talent Development

Talent Development Strategies and Process

Talents of Hyundai Engineering are the subjects of creating a new value,

and establishing a corporate culture of innovation and challenges. The

company is developing specialists, reinforcing international competency

and conducting tailored training suited to individuals based on its tal-

ent development measure that the human capital equals a company. As

such, Hyundai Engineering is focused on talent development.

Strengthening Global Talent Competency

2014~2015

Systematic HRDEstablishing/Operating

HRD fundamentals

2016~2017

Strategic HRDStabilizing the HRD quality

2018~2020

Global HRDSophisticating the HRD to reach the top level

in the industry

HRD Targets

• Establishing a specialized job training system for each division

•�Developing training materials and curricula

Systematically strengthening specialized job competency

• Strengthening the leadership of PM/ site managers

• Intensifying the leadership of team leaders/executives

Reinforcing leadership competency

• Establishing Hyundai Engineering’s exclusive corporate culture

• Developing and executing programs to internalize the corporate culture

Creating an advanced corporate culture

• Establishing a system to develop workforce to execute overseas projects

• Setting up an environment to share experiential knowledge for executing overseas projects

Strengthening global competency

• Establishing a system to develop the core talents of Hyundai Engineering

Fostering core talents

• Establishing an online learning environment

• Improving the training system and strengthening HRD competency

Improving the training infrastructure

Key Directions for HRD

Hyundai Engineering, one of the Top 100 Companies with Best Performance in Job Creation

In March 2015, Hyundai Engineering became the only domestic major construction company to be nominated as

one of the ‘Top 100 Companies with Best Performance in Job Creation of 2015’. The company played a leading role

in introducing a job creation scheme by implementing the re-employment-based wage peak system for the first

time in the construction industry in 2014. It has significantly contributed to job creation through dynamic overseas

entry by becoming No. 1 in overseas order placements (2015) along with its dramatic external growth. Moreover,

it was designated as the Family-friendly Certified Corporation by the Ministry of Gender Equality and Family in

December 2014, and was selected as the ‘Best Companies to Work for’ by the Job Planet and Fortune in 2015.

Case Study

43


▶Training for Experienced Employees

It is critical for experienced employees to understand a new corporate

culture to adapt quickly to their job functions and work life. Hyundai En-

gineering supports early adaptation through training regarding the cor-

porate vision, culture and various systems in place. Moreover, the com-

pany runs the ‘Buddy’ program to target employees in similar job ranks

so that they could form personnel networking within the organization.

▶Training for Foreign Employees

Talents from different countries including France, Vietnam, India, the

Philippines and Russia work at Hyundai Engineering where various

programs are operated for foreign employees to exert their capability

through adaptation to the Korean culture and the company. Not only

are Korean language courses offered, but training on different cultures,

Korean cultural experiences and programs to network with Korean em-

ployees are also in operation.

▶Selected as the Best Place to Work

Hyundai Engineering was nominated as one the ‘Best Companies to

Work for’ by the Job Planet and Fortune Korea in 2015. The company re-

ceived the excellence award in the comprehensive sector in the industry

of conglomerates, and the top excellence award in the top management

sector in the industry of conglomerates. Hyundai Engineering is the only

unlisted construction company to have increased level in evaluation, and

in particular, the company had the highest employee satisfaction in 2015

despite of its merger in 2014.

Preparation of a Moving Toon for Training for Design

The Process Plant Division prepared and utilizes ‘a Moving Toon for Training for Design’

as a training material for employees to easily access. The moving toon for training spe-

cifically covers possible errors which might likely occur in the project execution stage and

improvement practices. Some of the topics are: ‘extension of the construction period

due to omission of design volumes’, and ‘on-site cases with problems due to delays

in design and procurement’. The moving toon for training has been highly acclaimed

because it can be applied to practical work by conveying the message easily and it raises

employees’ accessibility to materials. The Process Plant Division plans to boost training

effects by utilizing more diverse media materials including the moving toon and ensure

that it could be conducive to successful project execution.

Case Study

Classification 2013 2014 2015

Number of internal training courses opened

31 37 39

Number of hours of training completed per person

44 64 56

Training expenses per person (KRW) 1,401,447 550,000 553,300

Training Performances

Moving Toon for Training for Design

Development of Global Talents

▶Specialized Job Training

The company has strengthened its company-wide job training system

to reinforce the job expertise and management competency of manag-

ers/supervisors suited to a project amid the increases in EPC projects.

In-house instructors who have completed an instructor development

program transfer the job expertise and technical know-how needed for

job execution in projects. Training programs in line with job ranks and

functions are in operation so that competency for project execution and

employees’ Individual Development Plan (IDP) could be established. The

company plans to develop and operate a course to nurture key manag-

ers/supervisors.

▶Training for Employees Appointed Overseas and Vacationers

Many employees at Hyundai Engineering work on overseas project sites

due to the nature of its business operations. Thus, the company extends

help for employees appointed overseas to adapt to their site in an initial

phase through periodic training. Training takes place on the HR scheme,

systems and safety which must be recognized prior to being appointed

to sites. Amid the diversification of target countries, the company has

strengthened not only training on the understanding of other cultures

but also meetings for returnees from abroad. Periodic vacationer train-

ing for employees on overseas sites helps them communicate with the

headquarters and manage their stress.

Early Settlement of New Employees

▶Training for New Employees

The company conducts diverse levels of training for new employees to

adapt to their work life early, including the introductory training at the

Group and company levels and practical OJT sessions. EPC project-spe-

cialized competency training has been conducted since 2014 by adopting

a course for early upgrades of new employees’ performance skills. The

company also extends support for them to stably settle in their organ-

ization through not only such training but also the mentoring program

with senior employees and summer retreats.

44


Work-Life Balance

Family-Friendly Programs

Hyundai Engineering annually offers opportunities for employees and

their families can spend time together through overseas English camps

in summer and winter, mini debates camps, etc. The company also

builds a basis for the family-friendly management by organizing various

activities including ski camps and essay contests every year.

Childcare Support for Employees

The company runs a variety of childcare support programs for employ-

ees to exert their competency in a more comfortable environment with-

out much childcare burdens. To alleviate this, Hyundai Engineering and

a Group affiliate opened the Hyundai Dasom Children’s Home, an in-

house childcare center. Since 2015, the company has also been providing

desks designed for pregnant women in order to increase their conveni-

ence while working. The company also encourages employees to use the

childcare and maternity leaves. Employees on childcare leave do not ex-

perience any disadvantages in terms of employment, pay or promotion.

Benefits Package

Hyundai Engineering implements diverse welfare policies to guarantee a

higher quality of life for employees. The company sponsors comprehen-

sive health check-ups for employees and their families in order to pro-

mote their health. In 2015, the company spent KRW 1.03 billion to pro-

vide comprehensive health check-ups for 1,988 employees and 1,229

spouses (totaling 3,217). Moreover, the company offers other health

programs including metabolic syndrome check-ups and an anti-smok-

ing clinic aligned with the Medical Clinic of Jongno-gu District Office,

and a fitness measurement program from the Korea Sports Promotion

Foundation.

Spread of the Talent-oriented Corporate Culture

Hyundai Engineering’s Essay Contest and Picnic with Employees’ Families

Performance Appraisal and Remuneration

Hyundai Engineering complies with laws and regulations in areas where

each of its projects is executed, including the ‘Fair HR Guidelines’ of the

Ministry of Employment and Labor. The company focuses on fairness

and rationality in evaluations for performance assessment and remu-

neration, and enhancement efficiency in operating assessments. First,

evaluator training takes place for fair performance assessments to boost

their awareness about the importance of assessment. In 2015, two train-

ing sessions were offered, and the number of sessions will expand start-

ing in 2016.

For evaluators working in Korea or other countries, meanwhile, evalu-

ator training content is distributed, and their communication with em-

ployees is strengthened through performance management interviews.

The company plans to upgrade the fairness of assessments by strength-

ening the actual monitoring and assessment system and reflecting the

characteristics of each job function.

2013

20

129

2014

1315

23

2015

21 22

50

■ Number of persons on leave■ Number of persons returned■ Persons who work for 12 months after their return

Use of Childcare Leave (Unit: persons)

Support for the operation of intra-com-pany communities, bi-weekly Family Day (leaving work at 5pm), and recuperation center, and payment of summer holiday allowances

Support for leisure

Childcare leave, payment of childcare allowances (infant to middle school age children), offering of the desks designed for pregnant women, the Hyundai Dasom children’s home

Support for childbirth/ maternity protection

Awarding of scholarships for employees’ children, allowances based on qualification certificates, support for telephone English courses

Support for education

Maternity leave

Statutory welfare/benefits

Low-interest rate housing loans by raising a social welfare fund

Support for housing/security

Comprehensive health check-ups, group disability insurance

Support for medical/healthcare

Welfare cards, personal annuity, retirement pension system- Number of DB-type subscribers: 5,573- Number of DC-type subscribers: 147(KRW 157.3 billion in 2014/KRW 183.4 billion in 2015)

Welfare and benefits - selective

Operation of the company cafeteria, commuting bus, and gifts to selected employees on the corporate anniversary and national holidaysSelective gifting on employees’ anniversaries (birthday of parents, children’s college admission, Children’s Day, children studying for the college entrance exam, and health re-juvenating food), Parents’ Day for overseas workers and birthday gifts for spouses

Others

Key Welfare and Benefit Programs

45


Operation of the Labor-Management Council

Hyundai Engineering operates a labor-management council where all

employees belong - except the division head or higher officers - to

protect the rights and benefits of employees while pursuing the sound

development of the company. The council, which consists of an equal

number of representatives from labor and management, discusses mat-

ters related to enhancement of productivity, distribution of earnings,

human resources, and labor and welfare issues at both quarterly regular

meetings and ad hoc meetings.

The council gathers information concerning grievances, recommen-

dations and issues that may affect the employees, in addition to wage

negotiation, distribution of achievements, and welfare or benefits. Com-

piled opinions are fine-tuned at ad hoc informal meetings and finalized

at regular or ad hoc meetings where both labor and management are

equally represented, before being delivered to the employees. In par-

ticular, business disruptions are minimized by informing the employees

of important matters concerning management changes or reshuffles at

least 30 days in advance.

Adopting a Unique Communication Program with Foreign Employees

Designation as the Family-friendly Certified Corporation

The family-friendly certification system intends to enhance the

quality of life for workers and their families and raise corporate

competitiveness by creating a family-friendly corporate culture with

a work-life balance. To this end, various programs are in operation:

flexible working hours, support for childbirth, childcare and educa-

tion, support for dependents and support for workers.

Hyundai Engineering was designated as the Family-friendly Certi-

fied Corporation by the Ministry of Gender Equality and Family in

2014. This demonstrates that the company brings up not only the

happiness of employees’ families but also corporate competitive-

ness through family-friendly management.

Case Study

Strengthening Employees’ Communication

Intensifying Mutual Understanding and Establishing a Cooperative

Scheme

Hyundai Engineering expands exchanges among organizations and

strengthens communication among members for them to generate syn-

ergies through cooperation. As the first step, the company organized a

communication workshop in Vietnam for team leaders throughout the

company in the first half of 2016. This facilitated better communication

among team leaders in business divisions and supporting divisions who

have almost no chance to meet while working. Accordingly, face-to-face

contacts between organizations will expand to strengthen their collab-

oration.

Operation of the Grievances Committee

Hyundai Engineering runs the Grievances Committee which handles em-

ployees’ grievances by providing solutions or appropriate alternatives to

employee grievances by analyzing their causes. Employees could raise

objections to irrational systems or practices by regular/irregular, online/

offline communication system which the management fails to notice in

advance.

Opening of the Employee Counseling Center (ECC)

The 24/7 hotline and the Employee Conseling Centors (ECCs) are of-

fered to employees for difficulties and ethics related to the company. The

ECC directly collects the issues raised by the employees and responds to

them immediately.

Core Value & Engagement Survey (CVES)

Hyundai Engineering takes part in the Core Value & Engagement Sur-

vey targeting 27 affiliates of Hyundai Motor Group on a yearly basis.

Moreover, the core value programs of the next year are continuously

developed based on the response outcome. Examples of programs are:

Humanity Concert, discovery of best practices, preparation and sharing

of web toons and the Core Value Week Festival. The company dynami-

cally collects and reflects employees’ feedback on the program to con-

centrate on communication.

46


Special Page. Establishing a New Corporate Culture

Creating a System for a New Corporate Culture

Hyundai Engineering strives to become a great workplace

to work to fundamentally boost corporate competitiveness

through talents, and implement a people-centered corporate

culture where the company and employees develop themselves

in tandem with each other.

To this end, the company conducted a project to find directions

for a new corporate culture in order to create a flexible corpo-

rate culture and find the driving force in 2015.

Operation of the Corporate Culture Council

Hyundai Engineering runs the ‘Corporate Culture Council’ for

execution for tasks for change and their continuous manage-

ment, while systematically establishing a corporate culture.

Through the council, the company not only puts in place sys-

tems, programs and infrastructure which might impact the

corporate culture but also conducts improvement activities,

shares performance and is engaged in collaboration. The com-

pany continuously monitors tasks for change by measuring the

correlations among outcome including factors related to the

corporate culture such as internal communication and working

conditions, and employees’ satisfaction, and their impact.

New Corporate Culture System

VISION

Charter

Aims

Code of Conduct

Pioneer

Make bold attempts and

complete them fully.

Think about what is best

and make the best one.

Professional

Approach first and listen

carefully.

Humanist

We strive to make a workplace loved by all the employees by sharing the three directions of ‘Pioneer, Professional and

Humanist’ based on rationality and trust.

Global Premier Engineering Partner

Directions for Changing the Corporate Culture

Key issues

Direc-tions for change

•�Continuously upgrading the learning system for success/failure•�Suggesting clear criteria

for success and failure• Managing messages

hampering the challenging spirit

• Establishing the headquarters & on-site leadership model and strengthening related training, improving a leader selection process• Expanding face-to-face

contacts between leaders and employees

• Strengthening a system to support adaptation to one’s organization• Facilitating organizational

networking for friendship and a sense of belonging• Forming and spreading a

code for a united identity• Strengthening the competen-

cy to provide organizational support services

• Planning institutions and strengthening actionable change management • Improving HR system related

on-site working and a small group• Strengthening communi-

cation on the leader-driven vision and strategies

• Encouraging a work-life balance by considering job functions, the organization and a region for working• Expanding the scope of

program targets to employees’ families

•�Weakened and decreased challenging spirit

•� Lack of responsibility and sensibility

•�Needs for stronger on-site authorization

•Intensified individualism•Bureaucratization

•� Needs for systematization and consensus building

•� Needs for strengthening work-life balance

Executing Tasks for Changing the Corporate Culture

To pursue a new corporate culture, the company devised directions for change based on the three aims of ‘Pioneer, Professional and Humanist’, based

on which, 21 tasks for change were selected and are executed.

Upgrading of site-related

training

Empowermentof on-site

communica-tion

HEC Change

EmpowermentWork Smart

Programs for emotional support

Facilitating communica-tion among

divisions

Work &Life Balance

Establishing a training system for

personnel appointed to overseas sites

Organizing on-site seminars

at home and abroad

Holding a workshop to spread the

corporate culture during Team

Seminars

Improving regulations on

delegation decisions

Standardizing and simplifying documents

Operating a healing program for employees’

mindset (aligned with an outside

counseling center)

Facilitating face-to-face contacts in-

cluding a workshop for communication

among team leaders

Offering planned leaves and the

Family Day

Key Tasks for Change in 2016

47


A need for securing competitiveness through shared growth with partners is gradually increasing as the

corporate competitive landscape has recently expanded to competitions among corporate supply chains

including partners. Supply chain management that supports partners’ social responsibilities and imple-

menting fair trades beyond simple business relationships is gaining a greater importance. Growth through

the competency buildup of competitors, and risk management through partners’ economic, social and

environmental issue management have become more and more essential.

Social Context

• Establishing a system for shared

growth

• Putting in place an order for fair

trades

• Diversifying the support for

partners

• Systematizing communication

among partners

Our Responses

• Spreading a sustainable culture for

shared growth

•�Establishing a system for fair trade

monitoring

•�Expanding financial support programs

by securing the financial soundness of

partners

•�Adopting a scheme for listening to and

reflecting the complaints of partners

Our Plans

Designated by Korea

Commission for Corporate

Partnership in 2015

‘Excellent’ rating in

the Win-Win Index

Amount of

Funding

KRW 21.2 billion

Number of

Trainees in Partners

3,081people

Win-Win ManagementWinning Together

2015 Performance

President Kim, Seok Hee/ Bolim Construction Co., Ltd.


“ I expect that Hyundai Engineering’s activities for shared growth throughout the entire supply chain will be sustained.”

I believe that improving the competitiveness of partners can be directly linked to the competitiveness of Hyundai

Engineering since the corporate competitive landscape has been recently expanded to competency competitions

among corporate supply chains. In this sense, it seems that Hyundai Engineering is engaged in supporting activities

in consideration of SMEs’ conditions by dynamically gathering social demands for shared growth. Such activities

include strengthening the financial soundness of partners, maintaining technical competitiveness and training. The

company is keenly involved in communicating with partners, which is the basis for shared growth, along with train-

ing on 3D-CAD for plans to secure partners’ exclusive capabilities for plant projects.

I think that in order to expand the shared growth of Hyundai Engineering, its CSR for the supply chain must be

strengthened, targeting the entire supply chain covering not only primary partners but also secondary and tertiary

ones. The company must also remove elements of irrationality in transactions and strive for fair contract settlement.

As it is the case with any market, the construction industry is driven and developed by various stakeholders. I expect

that Hyundai Engineering could proactively communicate with various stakeholders including partners, and operate

diverse shared growth programs, thus exerting its leadership throughout the society in its efforts for shared growth.

48


Good2013

Excellent2014

Excellent2015

Win-Win Management Strategies

Hyundai Engineering is implementing a sustainable growth for the future

based on the greater mutual competitiveness with partners. The compa-

ny is engaged in many efforts including putting in place an order for fair

trades and supporting the growth of partners by establishing a system to

beef up its capabilities of taking action for shared growth.

Introduction of Four Major Guidelines for Fair Trades

Hyundai Engineering executes and monitors diverse measures to es-

tablish an order for rational and fair trades. First, it complies with the

‘Four Action Steps for Fair trades’ to bring up transparency and fairness

in selecting and managing partners, which are shared by all partners in

transactional relationships.

Moreover, the company adopted the standard subcontract agreement

for overseas construction work in 2015 and uses it, following the intro-

duction of the one for domestic construction work, for the sake of fair

contracting with partners.

Fair Selection and Evaluation of Partners

▶ Expanding the application of subcontractor-oriented selection/

evaluation to vendors

The company has expanded the application of subcontractor-oriented

selection/evaluation to vendors so that fair trade opportunities could be

provided to new companies, and transparent competitions among the

existing companies could be ensured. In so doing, the company can ex-

pect to secure partners’ continued growth opportunities and strengthen

its competitiveness for procurement.

▶ Expanding the criteria for selecting/evaluating companies to be

applied to overseas construction work

The company has expanded the criteria for selecting/evaluating con-

struction and vendors which have been confined to domestic construc-

tion work to be applied to overseas construction work. In addition, the

company has computerized the bidding process to ensure fair compe-

titions among domestic and overseas companies. As a consequence,

competent domestic companies could be facilitated to make overseas

advancements, raising their continued growth potentials. Hyundai En-

gineering, meanwhile, could establish a system for shared growth by

securing competitiveness in executing overseas construction work.

▶Improving measures for managing unregistered work types

The criteria for managing/operating partners which used to be confined

to registered work types have been expanded to unregistered ones in

small-scale transactions. In so doing, the company set the stage for

small partners to seek management stability through fair trade opportu-

nities and grow further as competent companies.

Operation of the Partner Council

The company runs the Partner Council to share its vision with partners

and solidify a system for shared growth. The council, which launched in

2013 with 50 companies, has been expanded to include 123 companies

in 2016. As such, the company is broadening the scope of companies

for transactions.

The company shares its corporate status and its key policies on procure-

ment, quality and safety, etc. through the council, and exchanges ideas

on directions for mutual development.

Implementation of Shared Growth

Acquisition of the ‘Excellent’ Rating in the 2015 Win-Win Index

The company has forged partnership-oriented trust by signing a voluntary agreement

with partners to implement fair trades and shared growth since 2012. As a result of

its efforts to beef up the win-win cooperative partnership, the company acquired the

‘excellent’ grade in both the Fair Trade Commission (FTC)’s evaluation of implemen-

tation of fair trade contracts, and the Korea Commission for Corporate Partnership’s

evaluation of the Win-Win Index. The company also took the helm in creating an

environment for shared growth in the construction sector. As such, it acquired the

highest rating for three consecutive years from 2014 to 2016 in the evaluation of mu-

tual cooperation among construction companies organized by the Ministry of Land,

Infrastructure and Transport.

Case Study

Performance in the Evaluation of the Win-Win Index

Strengthening Mutual Competitiveness

between Hyundai Engineering and Partners

Realizing a sustainable growth for the future

Putting in place an order for fair trades

Supporting the growth of

partners

Establishing a system for

shared growth

• Establishing a department exclusively for shared growth

• Devising and implementing yearly plans for shared growth

• Improving transactional relationships between large companies and partners

• Complying with obligations for large companies

• Supporting management stability for partners

• Supporting competency buildup for partners

49


Win-Win Management Programs

Fund Formation and Support

The company jointly formed a fund for low-interest loan extensions

worth KRW 42.4 billion in 2015 to ease the financial burden of partners.

The scale of the fund was revised upwards to KRW 50 billion in 2016. The

interest rate on loans could be additionally discounted by 1.2% for com-

panies recommended by Hyundai Engineering through a fair screening

process. Management funds are offered as interest rate-free loans in or-

der to boost the quality through partners’ stable execution of projects.

The company extended loans worth KRW 1.5 billion in 2015 to support

partners’ financial soundness. The loans were scaled up to KRW 6 billion

in 2016 as the company strives to help increasing partners’ manage-

ment value.

Improvement of Subcontracting Payment Terms

The company is continuously improving its subcontracting payment

terms to stabilize the management of partners in transactions. The pay-

ment period was shortened from 14 days on average to less than 13

days. Payment delays are prevented through the monitoring of the pay-

ment status. Moreover, Hyundai Engineering pays in cash for progress

payments of KRW 100 million or less, and pays 100% in cash by utilizing

secured loans of credit sales.

Expanding the Performance Sharing System

The company sponsors research costs for partners conducting joint

R&D, and distributes industrial property rights acquired through such

research. The company also runs a performance sharing scheme to

fairly distribute the performance generated through joint research ef-

forts. In 2015, in particular, a multilateral performance sharing scheme

was adopted to expand the scope of performance sharing to second-

ary partners, thus broadening the basis for win-win cooperation. The

company plans to diversify paths to explore tasks by aligning the Value

Engineering (VE) with the performance sharing scheme, and increase the

applicability of the performance so that its activities can be linked to the

scheme.

Hyundai Engineering’s 2016 Partner CEOs General Meeting and Seminar

First, establishing a system to comply with subcontracting payment terms to prevent violations of the Subcontracting Act, and thoroughly complying with regulations on HR sanctions against violating employees

Second, checking the status of subcontract payments to contracting companies on a monthly basis, and improving and expanding the criteria for direct loans to partners

Third, expanding technology sharing, VE activities and OJT to secure the technological competitiveness of partners, and supporting their overseas advancement

Hyundai Engineering is creating grounds for communication seeking

mutual development by organizing the annual Partner CEOs Gener-

al Meeting and Seminar. The Partner Council, launched in Septem-

ber 2013, shares ideas among Hyundai Engineering and partners,

and discusses ways for win-win cooperation and shared growth in a

casual atmosphere. Moreover, letters of appreciation are presented

to excellent partners selected based on the performance of win-win

cooperation during the previous year. The company expresses its

gratitude for their decision to take the same paths in Hyundai Engi-

neering’s journey for further development.

The 2016 Partner CEOs General Meeting and Seminar held at a re-

sort in Vietnam was attended by the top management of Hyundai

Engineering and partner CEOs, accompanying a discussion session

for finding ways for mutual cooperation to secure competitiveness

for each work type. The occasion served as a forum of mutual un-

derstanding, meanwhile, since sessions for everyone’s get-togeth-

er were included: programs for Vietnamese cultural experiences and

sports, and a gala dinner for all.

Organizing Hyundai Engineering’s Partner CEOs Seminars - Partners Taking the Same Paths

Key Point

Case Study

15

212

2015

5

190

2014

150

5

2013

■ Shared Growth Fund■ Direct loans

Performance of Financial Support Programs (Unit: KRW 100 million)

50


Training for Employees of Partners on 3D-CAD Techniques for Plants

Securing Competitiveness through Training Support

The company provides education and training with various curricula in

order to strengthen the job competency of employees. In 2015, not only

online courses on finance and accounting, etc. but also group training

was carried out on the Framework Act on the Construction Industry, the

Subcontracting Act, taxation and labor management. A prime example

of training support is for developing the ‘3D-Modeler’ which started in

2003. Plant designing in 3D-CAD beyond simple CAD drawing has be-

come an essential capability due to the exponential development of IT.

As such, the company is supporting partners to boost their capability to

utilize ‘3D-CAD’. Against this backdrop, there will be further collabora-

tion in future projects along with maximized job efficiency on both sides.

At the same time, the company supports partners that are struggling

to advance overseas to minimize risks which might occur in overseas

advancement by transferring its related know-how. The company also

contributes to creating the basis for the overseas entry of partners by

offering training sessions on overseas taxation, labor and safety, etc.

Sharing Best Practices and Conducting the ‘Training Day’ for Partners

■ Consignment training to specialized agency■ Training on overseas advancement

Training Support Programs (Unit: persons)

368

98 87

414

102

433

201520142013

Win-Win Management through Communication

Strengthening Communication with Partners

Hyundai Engineering runs diverse communication channels to listen to

and resolve the difficulties of partners in their corporate management

and trading. The company opened a channel for partners’ problems and

suggestions and a bulletin board for win-win cooperation in the e-pro-

curement system, thus improving their accessibility. The company also

paid visits to their sites to promote its win-win cooperation policies.

In addition, the company discovers points for improvement based on the

feedback gathered through such visits, and reflects them in directions

and planning for win-win policies.

Sharing Best Practices

Hyundai Engineering’s partners exchange information and know-how on

quality improvement and shares best practices in quality improvement

with one another. In 2015, the company organized training for 94 em-

ployees of 27 partners, covering presentations of best practices, analyses

of quality-related accident cases, quality-related policies of the Ministry

of Land, Infrastructure, and Transport, and countering measures.

In the presentation session on partners’ best practices for quality, in

particular, the improvement of reinforced concrete quality on 21 con-

struction sites nationwide was analyzed and shared, which was signif-

icantly helpful. At the ‘Quality Declaration Ceremony’, the company

reached a resolution on establishing a construction culture of quality

innovation, improvement in customer satisfaction and full compliance

with basic principles.

51


https://www.hyundai.co.kr/MediaCenter/News/Group-Broadcast/news-09-151008.hub#.V4hGULiLRhE

Fair Trades by Establishing a Fair Trade Order

Establishing the CP System

Hyundai Engineering strives to establish a fair and clean fair trade by

adopting the Compliance Program (CP).

Strengthening the CP Organization

The company revised the CP operating rules and operates its unit to

systematically implement CP activities. It also reports to the board of

directors CP plans and performance of the first and second half of a year.

The company declares its commitment for action on fair trades internally

and externally by posting a declaration covering CEO’s commitment for

fair trade and a corresponding pledge.

Appointment of Compliance Managers

The company runs a CP manager scheme for the effective operation of

CP. Systematic training is offered to all employees to raise their under-

standing of compliance with the Competition Law and also for them to

perceive its legitimacy. As such, the company is taking the lead in es-

tablishing fair trade practices. At the same time, the company runs the

CP Council, while appointing CP managers for each working-level team

and division.

ONE,

ONE,

ONE,

ONE,

We perceive that voluntary compliance with fair trade is a genuine corporate competitiveness and proactively practice it.

We play exemplary roles to create a fair competition environment in the industry, and prohibit unfair acts of any kind.

We strive to prevent violating acts against the Fair Competition Law and voluntarily impose sanctions on violations.

We strive with partners driven by partnership to establish clean trading practices.

Declaration of the Voluntary Compliance with Fair Trade

Hyundai Engineering internally and externally announces its commitment for voluntary compliance with fair trade by

posting a declaration covering the CEO’s commitment for fair trade and a corresponding pledge.

Case Study

Compliance Program

Reinforcement of the compli-ance mindset

Early preven-tion of legal violations

Incentives against legal

violations

Clear guidance on standards

for action

Suggesting standards for action for legal compliance

Preventing acts of legal violation

Internal and External Declaration of the CEO’s Commitment for Action

Establishing a fair and transparent corporate culture tops the agenda

for global companies worldwide beyond Korea. Therefore, the company

encourages all employees to establish a fair trade and the spirit of free

competition by internally and externally announcing the CEO’s commit-

ment for action.

CP Organization

Person responsible: Business Planning Team Leader

Person in charge: working-level CP employees

Working-level employees of divisions

(execution groups, offices)Besides CP managers

CEO

Working-Level Compliance Team Compliance Council

Head of Planning Office

Compliance Managers

52


Future Plans for CP Activities

Preventing Legal Violation Risks by Strengthening CP Activities and

Reviewing Fair Trade

The company plans to continuously initiate efforts to establish a fair

trade order. To this end, efforts will be made to internalize CP through

intensified training and prevent legal violations through stronger moni-

toring of fair trade. Moreover, compliance with fair trade will be reviewed

by improving risk management on labelling and advertisement and

strengthening reviews of the business combination and incorporation of

affiliates upon investing in other companies.

Strengthening the CP Governance

Hyundai Engineering launched and operates the CP Council under the

CEO in 2016, which monitors CP-related issues and status. Moreover,

the Risk Management Council for Housing Subscription was launched

and is operated pursuant to the Fair Labelling and Advertising Act. As

such, the company is doing the best to comply properly with the Com-

petition Law.

Facilitating the CP Operation

Hyundai Engineering enhances awareness about fair trades and ethics

by operating the CP.

Spread of the CP Culture

The company routinely shares laws and regulations, and cases with

corrected actions by operating the CP board on the website more sys-

tematically. In particular, every 5th of the month is designated as the

‘CP Day’, boosting employee’s compliance spirit through participatory

programs including a quiz on fair trade. Moreover, a handbook on CP is

prepared and distributed to employees, and employees are required to

sign a pledge on fair trade.

CP Operational Performance

2014-2015 2016

CP Training

Reinforce-ment of CP Governance

Spread of the CP Culture

•Offline training to prevent unfair collective practices•Cyber training on fair trade for new employees•�Training on the understanding of CP/Training on the Fair

Labelling and Advertising Act and the Subcontracting Act•�Training on the prevention of unfair intercompany trans-

actions• CEO and executive training on voluntary compliance with

fair trade

• Appointing compliance officers, and CP managers in each division

• Preparing and distributing a booklet on intercompany transactions and unfair collective practices

• Preparing and distributing a CP booklet• Designating and operating the CP Day

• CP monitoring in the first and second half of the year

• Number of trainees for the general training on fair trade for new employees in 2016: 149

• Number of trainees for training on the Fair Labelling and Adver-tising Act and Regulation of Standardized Contracts Act: 44

•Number of trainees for training on anti-bid rigging: 53• Number of trainees for the general training on fair trade for the

Planning Office: 44• Training on unfair intercompany transactions and negotiated

contracts: 137

• Launch and operation of the CP Council• Launch and operation of the Risk Management Council for

Housing Subscription Advertisement

• Operation of the CP Board• Number of CP booklets on labelling and advertisement prepared

and distributed: 200

• CP monitoring in the first and second half of the year • CP operating results in the second half of 2015, and reporting

the 2016 plans to the board of directions

CP

Monitoring

Compliance Program (CP) Training

53


Recent social contribution activities are initiated in the direction of generating economic and social values

in alignment with corporate projects, going beyond simple donation or volunteering. Companies can con-

tribute to their community through the implementation of strategic social contribution activities, and link

such activities to business performance in exerting its competencies. In particular, companies can create

sharing values to be alongside the community by providing technologies and competency most needed on

both domestic and overseas project sites.

Social Context

• Cooperative social contribution

activities among affiliates

• Business-aligned social

contribution activities

• Systematizing overseas social

contribution activities

Our Responses

• Dynamically participating in

the Group’s social contribution

activities

• Focusing on key and core activities

• Strengthening activities to

leverage corporate competency

• Concentrating on strategic hubs

Our Plans

Amount of Social

Contribution Expenses

KRW1.4billion

Hours of Social

Contribution Engagement

7,104 hours

Number of Employees

Participating in

Social Contribution

1,654people

Sharing ManagementReturning a Favor

2015 Performance

Secretary General Park, Young Jin/ Korea Disaster Relief Association


“ I hope that Hyundai Engineering will carry on its social contribution activities by leverag-ing its competency and know-how in the construction industry.”

The Korea Disaster Relief Association has run the Hope Bridge Program by forging a partnership with Hyundai En-

gineering since 2015. The program covers activities to inherit the Korean traditional sharing spirit (such as mutual

aid and collective laboring) instead of a general contribution. It is significant in that the program targets everyone

hit by a natural disaster as a Korean national. Besides the program, Hyundai Engineering is engaged in the Hope

House Project and the Gift House Campaign, etc. These campaigns provide victims with housing and the means of

self-sufficiency to recover from their struggles by fully utilizing Hyundai Engineering’s techniques for designing and

maintaining small houses, and its modular construction technique. I think the contribution level of such programs

is significantly high.

Meanwhile, I heard that Hyundai Engineering is strengthening its overseas social contribution activities beyond Ko-

rea amid the expansion of its overseas projects. Successfully executing overseas social contribution activities must

accompany efforts for regional development or the creation of a physical environment, and livelihood and emo-

tional support for the local community. I hope that the company will initiate social contribution activities in an area

specialized in the construction industry by fully leveraging its construction and design techniques, and its know-how

on materials and new techniques in providing shelters where it can fully exert its competency.

54


Social Contribution System

Social Contribution Strategies

Hyundai Engineering is practicing the happy act of sharing to make the

world a more beautiful place. Upon conducting social contribution ac-

tivities, they are systematically organized by category: domestic and

overseas representative programs, core activities, community activities

and activities jointly participated by Hyundai Motor Group. In so doing,

the company is raising its contribution level in addressing socio-cultural

issues while providing more pragmatic support to each stakeholder.

Social Contribution Organization

Driven by its Planning Office, Hyundai Engineering conducts various activi-

ties including establishing strategies for social contribution activities, devis-

ing and executing yearly business plans and raising and managing funds.

Moreover, employees’ social contribution activities are encouraged

through facilitators (FT) for social contribution in divisions/offices. The

Stepping-stone Volunteer Group is strengthening is ties with the com-

munity by prioritizing recipients’ needs.

Strategic Implementation of Social Contribution

Key Performance of Social Contribution

Type Unit 2013 2014 2015

Number of social contribution programs Number 26 21 27

Number of participants People 1,126 911 1,654

Number of volunteering hours per employee Hour 1.4 0.6 1.2

Cost of social contribution KRW 100 million 9 12 14

Vision

3 Major Principles

Voluntary participation

Sustainable sharing

Happy win-win survival

Project Areas

Community volunteering

Strategic activities at

domestic and overseas sites

Donation in groups and

NGOs

Happy Energy Contributor

The Social Contribution System of Hyundai Motor Group The Hyundai Engineering Social Contribution System

•� Developing strategic domestic and overseas

on-site activities

•� Exploring experiential volunteering models

•� Leveraging the system for the social contribution system

Objectives for Actions Directions for Actions

•� Systematizing site application driven by

representative activities

•� Expanding the scope of engagement in social contribution activities

•� Accumulating social contribution performance continuously

Key Goals

•� Realizing happiness through sharing globally

•� Establishing a great workplace and a great culture

•� Becoming an iconic company in social contribution

The Social Contribution Vision of the Group

Trustworthy Partnerfor Today & Tomorrow

Key Areas of Business for Social Contribution

Six Moves

Supporting the self-sufficiency of the socially

underprivileged and developing

talents

Engaging in social contribu-tion by utilizing the business

competency of affiliates

Enhancing convenience in mobility for the transportation vulnerable and

the socially underprivileged

Boosting transportation

safety and social safety

Engaging employees and customers in volunteering

Preserving the environment and

responding to climate change

Culture and Art

Developing future talents to drive the culture

Talent Development

Providing opportunities for cultural and art experiences

and appreciation

Cultural Sharing

Communication through lectures and performances

Communication of Culture

Social Contribution Slogan

55


•

Core Activities

Housing: Support for Disaster Relief Housing by Using the Modular Technology

The company developed the disaster relief housing by utilizing the mod-

ular technology. It newly launched the Hope House Project and the Gift

House Campaign in 2015 for housing support for displaced persons and

households hit by a disaster in partnership with Hope Bridge - Korea

Disaster Relief Association.

•Hope House Project: MOU signing in July 2015

•Gift House Campaign: constructing four houses in Eeumseong in the

North Chuncheong Province in December 2015

People with Disabilities: Rehabilitation Support for the Severely Disabled

The company dynamically supports economic self-sufficiency and job cre-

ation for the severely disabled. Starting with the support for production

facilities in the ‘Hope Cultivation Center’, a vocational rehabilitation facility

for the severely disabled in 2010, the company has secured a resting space

by remodeling old workshops, raising convenience in the working space in

2015. The company plans to be engaged in employee volunteering for pro-

duction support and product sales support and procurement so that the

Hope Cultivation Center could provide more jobs to the severely disabled.

Multi-culture: Support for Move-in for Public Rental Multi-Family Housing

The company carries on its diverse support so that multicultural families

could more stably settle in as important members of society. The com-

pany extended guarantee deposits for tenants to move in public rental

multi-family housing and also housing repair costs in order to provide

a stable housing environment to multicultural families in Ansan in 2014.

In 2015, a total of 25 multi-cultural households moved in thanks to the

company’s assistance to solve their housing struggles.

Other Activities

Cultural events on the company’s anniversary/Habitat for Humanity - Help

with Housing/Volunteering in the cemetery clean-up in Seoul National Cem-

etery/Volunteering in food distribution on weekends/Support for infants

and babies/Blood donation campaign/Donation of goods to the underpriv-

ileged (including PCs)

Division/Office Title of activities

Process Plant Division•Volunteering in the logistics center of the Beautiful Store

(a Korean nonprofit organization and charity shop)

Power & Energy Plant Division •Volunteering in the Cultural Properties Protector campaign

Building Works Division •Supporting the underprivileged in Jungnang-gu, Seoul

Infrastructure & Environmental Execution Group

•Volunteering in the Knitting Newborn Caps campaign

Finance & Accounting Division •Giving out rice bags to the underprivileged

General Administration & Management Division

•Support for Holt Town

Procurement Execution Group •Preparing and giving out kimchi to the underprivileged

Planning Office •Giving out bread to the underprivileged/Cultural support

for the underprivileged

Business & Marketing Office •Giving out briquettes to the underprivileged

HSE Innovation & Quality Management Office

•Giving out diapers to the underprivileged

Asset Management Office •Support for the Community Children’s Center in Jongno-gu

The biggest value in Hyundai Engineering’s social contribution is ‘self-sufficiency’. The goal is to set conditions for the under-privileged to autonomously stand up again and settle in the society as its sound members by serving as the ‘stepping-stone’ in their new life, going beyond the concept of supplying goods and relief activities.

The first stepping stone titled the ‘Stepping-stone House Pro-

ject’ took place in 2013. It covers diverse activities to help out

residents in rundown jjokbang (one-room shanty housing) town

to be self-sufficient. The company extended support to open the

1st ‘Stepping-stone House’ (housing support) and ‘Flower Blos-

soming (rehabilitation support)’, an art studio-like rehabilitation

workshop. Moreover, the company has carried out culture class

programs including photography and choir (emotional support), a

counseling center for the jjokbang town and remodeling of com-

munity facilities (facility support), and continued exchanges with

local residents (sharing activities). In 2016, the company plans to

carry on its continued interest in the underprivileged in housing by

steadily various sharing activities in partnership with various in-

stitutions in 2016: opening the 2nd ‘Stepping-stone House’, and

expansion of the Stepping-Stone Culture Class.

Stepping-stone House Project

•Supporting sub-letting at a low price in the jjokbang town

•Supporting guarantee depos-its for rental housing

•Support for the operation of community workshops

•Support for the operation of the Stepping-stone School

•Support for picnicking for local residents

•Remodeling of a counseling center at the jjokbang town

•Support for the construction of convenience facilities

Extending various support to serve as the ‘stepping-stone’ for a new life of residents in the jjokbang town by supporting their housing and rehabilitation in an integrated manner

Housing support Rehabilitation and emotional support Facility support

Specific Programs

Specific Programs

Specific Programs

Case Study

Community

Representative activities in each division/office are selected and con-

ducted to facilitate employees’ engagement.

56


Special Page. CSV Activities Utilizing the Competency of the Construction Industry

Winning the Porter Prize for Excellence in CSV

Hyundai Engineering is taking the lead in solving social problems by leveraging its specialized

technical competency. The company extends practical help by giving out its self-developed mod-

ular relief housing to displaced persons who have lost their housing due to an unexpected dis-

aster. Moreover, the company sponsors modular housing to households hit by a disaster in line

with a relief paradigm whose focus has shifted from disaster recovery to disaster prevention. Its

activities for Creating Shared Values (CSV) were highly acclaimed by winning a prize in the Shared

Growth Sector of the 2nd Porter Prize for Excellence in CSV in December 2015.

* A prize created by the Institute for Industrial Policy Studies (IPS) and Dong-A Ilbo in partnership with Michael Porter, a guru of management strategies and professor at Harvard Business School

Status of Households under the Gift House Campaign

Type Age Land ownership Extent of aging

Mrs. Han Low incomer 78 (female) Owned (by her son) High

Mr. Hong Basic livelihood security recipient as a visually impaired person 68 (male)

Not owned (owned by his wife’s brother)

High

Mr. Jeon Low incomer 60 (male) Not owned (free rental) High

Mrs. YeomBasic livelihood security recipient as a disabled person 77 (female)

Not owned (free rental) High

Gift House Campaign

The Gift House Campaign is aligned with Hyundai Motor Group’s Gift Car

Campaign. It sponsors modular housing to disaster-hit households with

housing instability, thus contributing to housing stability and disaster

prevention.

In 2015, the company sponsored four modular housing buildings to the

low income class including the elderly living alone on high lands being

prone to land disruption or loss in Eumseong in the North Chungcheong

Province. The company also raised a fund in ‘Gift House Campaign Season

1’ through Naver’s Happy Bean campaign. The amount reached about

KRW 5 million, which was used to donate essential household items to

target recipients, including washing machines, blankets and kitchenware.

The company plans to expand the targets to four-member families as

well as the elderly living alone by developing modular housing with

different areas. Moreover, the company will develop modular housing

where inconveniences of the existing housing are improved to wage the

Gift House Campaign Season 2.

Type Content Details

Dimension 1F (3,000(W) x 7,200(L) x 2,900(H)) Considering roadtransportation conditions

Area Room and kitchen (3.95m2), bathroom (2.18m2), entrance canopy (2.98m2) -

Features

One room-type layout (room/kitchen/bathroom), improvement in housing quality (interior design and storage space), im-provement in exterior quality (modern type)

•Ease in transportation and installation•Improvement in the quality of housing•Sophisticated exterior design

Features of the Hope House

Hope House Project

The company carries out the ‘Hope House’ project to provide the mod-

ular technology-based disaster relief housing for displaced persons who

have lost or cannot live in their living space due to a disaster. The relief

housing developed this time has been applied with Hyundai Engineer-

ing’s modular construction technology: a structure framework with

minimized modifications, improved heat insulation and expanded resi-

dential space. Its performance was dramatically improved compared to

the existing relief housing constructed in 2007.

Building No. 1 of the Modular Relief Housing was shipped into the Paju

Warehouse of the Korea Disaster Relief Association, and was even exhib-

ited at the 1st International Safety & Security Expo.

Support will be extended to 50 households for a maximum of two years

when a disaster hits. The company expects to extend help in providing

a safer and more pleasant housing environment until displaced persons

are resettled.

57


Donation of the New Hope School

The company has initiated the New Hope School project since 2010. To

this end, it provides learning opportunities and eases educational gaps

for children in areas with impoverished educational environment near

its overseas project sites. Starting with the construction of the 1st New

Hope School in Cambodia in 2010, the company has completed the do-

nation of the 4th one in 2015, constructing and donating a multi-pur-

pose room in BATO Elementary School in the Philippines. Children can

be taught in a better environment instead of the existing old classrooms

thanks to the construction of the multi-purpose room, which will also be

used as a science lab, etc. The company plans to expand its projects to

a vocational training school so that not only children but also adults as

school graduates could be economically self-sufficient.

Opening of the Welding Training Center

Hyundai Engineering is engaged in diverse educational programs for the

self-sufficiency of community. For instance, the company opened the

Welding Training Center to generate 400 trainees for four times a year in

Turkmenistan. The company also invested in the educational infrastruc-

ture by placing equipment in the center for 50 students to experiment

with at the same time.

It is expected that after the training, they will be recruited to its sites,

which will contribute to the local industrial development by stabilizing

the local employment market and technology transfer.

Expansion of Global Social Contribution

Region: Buhara, Kungrad, Akchalak, etc.Key facts: •Operating the training center •Sponsoring medical volunteering

and the Children’s Day

Uzbekistan

Region : Phnom PenhKey facts: •Establishing the New Hope School

• Forging one-on-one sisterhood between employees of Hyundai Engineering and Cambodian students

Cambodia

Region: Bato, Toledo CityKey facts: •Organizing a job fair •Donation of the newly constructed

multi-purpose room (New Hope School No. 4)

Philippines

Region: TurkanaKey facts: •Sponsoring a project to give out

drinking water to children in Kenya

Kenya

Region: Mongomo, etc.Key facts: •Supporting the demolition of a

closed school and city clean-up

Equatorial Guinea

Region: Turkmenbashi etc.Key facts: •Sponsoring a youth soccer team •Welding Trainng Center Open

Turkmenistan

Key facts: •Organizing an event to donate second-hand clothes and stationeries

•Developing the capabilities of the female workforce, providing scholarships and extending medical fees for the underprivileged

Pakistan

Region: Netrokona DurgapurKey facts: •Supporting operating cost for

elementary schools •Donating a middle school free of

charge (New Hope School No. 3)

Bangladesh

58


https://www.hyundai.co.kr/MediaCenter/News/Group-Broadcast/news-04-150721.hub#.V4h5j7iLRhE

Hyundai Engineering seeks to develop solutions to achieve and implement UN SDGs to seek new growth opportunities, thus discovering new

growth opportunities and initiating sustainable growth as the UN declared the Sustainable Development Goals (SDGs) to be attained by the

international community following the Millennium Development Goals (MDGs). The company joined the Korean Association for Supporting UN

SDGs (ASD) to endorse SDGs, planning to perform dynamic activities. In particular, the company set priorities for activities for response by re-

flecting its business features: formation of a sustainable city and housing, industrialization of infrastructure and enhancing innovation, response

to climate change and increases in jobs to trigger economic growth. The company will initiate related activities by considering the priorities in

devising corporate strategies.

Endorsement of the UN Sustainable Development Goals (UN SDGs)

Special Page. Participation in the Global Initiative

Hyundai Engineering officially subscribed to the Korean Association

for Supporting UN SDGs (ASD) for the first time in the domestic

construction and engineering industries. The ASD is an official UN

supporting body to ‘address various issues confronted by the man-

kind - food security, water and hygiene, energy, education, poverty

eradication and health, etc.’ In 2015, the company joined the ASD to

continuously support related activities. It also attends the quarterly

National Assembly forum to strengthen private-public communica-

tion, and contributes to the development of indicators for the UN

SDGs.

Subscribing to the ASD and Performing Related Activities

17 Agenda of the UN SDGs

The UN SDGs are the development agenda to be applied from this year

up to 2030 by the UN. It covers 17 goals and specific targets including

economic growth, job growth and sustainable industrialization.

UN Global Compact The Ten Principles

Hyundai Engineering complies with 10 prin-

ciples in 4 areas of human rights, labor, en-

vironment and anti-corruption by joining the

UN Global Compact.

Principles

Human Rights

1. Businesses should support and respect the protection of internationally proclaimed human rights; and

2. Make sure that they are not complicit in human rights abuses.

Labour Standards

3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

4. The elimination of all forms of forced and compulsory labour;

5. The effective abolition of child labour; and

6. The elimination of discrimination in respect of employment and occupation.

Environment

7. Businesses should support a precautionary approach to environmental challenges.

8. Undertake initiatives to promote greater environmental responsibility; and

9. Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption 10. Businesses should work against corruption in all its forms, including extortion and bribery.

UN SDGs Website

59


https://sustainabledevelopment.un.org/?menu=1300

03

SUSTAINABILITY

REVIEW


SUSTAINABILITY

REVIEW

03

Economic Performance 62

Social Performance 63

Environmental Performance 66

Stakeholder Engagement and 68 Materiality Testing

The 3rd Party Assurance Statement 70

GRI G4 Index 72

Key Awards & Membership in Associations 76


Economic Performance

Hyundai Engineering has shown a rapid growth for six consecutive years despite a challenging economic environment after reaching the ‘era of

trillion won in revenues’ in 2009. The revenues of 2015 stood at KRW 7.3485 trillion, up about 29% year on year along with the net income of

KRW 329.2 billion, which is 4.5% compared to the revenues.

The company recorded KRW 1,577.9 billion in revenues as of the first quarter of 2016, and its revenues are expected to reach KRW 7,200 billion.

Distribution of Economic Performance

The economic value created by Hyundai Engineering is shared with various stakeholders through tax payment, procurement and investment

in the community, etc.

Distribution of Economic Value (Unit: KRW 100 million, as of 2015-end)

Stakeholders Item 2013 2014 2015

Shareholders Dividends - 1,667 870

PartnersRaw material procurement cost 1,097 1,767 2,150

Amount for supporting shared growth 125 195 227.4

Employees Salaries and welfare benefits 3,289 5,772 6,942

Government/Media/Association Corporate tax 727 788 1,017

Community Donations and investment cost for social contribution 3.9 12 14

Consolidated Financial Statements Summary (Unit: KRW million)

Type 2013 2014 2015

Current assets 2,191,890 4,501,789 5,102,445

Noncurrent assets 266,324 1,266,574 1,309,902

Total assets 2,458,214 5,768,363 6,412,347

Current liabilities 1,433,584 2,729,812 3,039,573

Noncurrent liabilities 64,113 569,469 687,835

Total liabilities 1,497,697 3,299,281 3,727,408

Capital stock 20,215 37,977 37,977

Other paid in capital 2,228 1,287,494 1,287,494

Other components of equity 31,666 21,376 -5,685

Retained earnings 906,404 1,119,802 1,360,907

Non-controlling interest 5 2,433 4,246

Total equity 960,517 2,469,082 2,684,939

Total liabilities and equity 2,458,214 5,768,363 6,412,347

Income Statement Summary (Unit: KRW million)

Type 2013 2014 2015

Sales 2,623,569 5,689,177 7,348,520

Cost of sales -2,305,353 -5,095,774 -6,717,046

Gross profit 318,216 593,403 631,474

Selling and administrative expenses -52,709 -185,006 -188,484

Operating income 265,507 408,396 442,989

Other income 66,846 60,000 116,977

Other expenses -58,064 -99,874 -152,116

Finance income 26,143 41,896 39,458

Finance expenses -8,242 -17,427 -16,751

Share of profit of associates - 788 280

Profit before income tax 292,191 393,780 430,837

Income tax expense -72,734 -78,795 -101,654

Net income 219,457 314,985 329,183

62


Social Performance

Talent Management

The total number of domestic employees of Hyundai Engineering is 5,832 along with 5,890 overseas employees as of 2015-end, which are

steadily increasing after 2013. Overseas local employees, in particular, amount to 4,799. The company’s recruitment of local employees helps

economic revitalization, and it is providing training and medical support for them.

Type Unit 2013 2014 2015

Status of Employees

Total employees1)

Total employees persons - 10,905 11,722

Domestic persons 3,214 5,621 5,832

Overseas persons - 5,284 5,890

Employment typeRegular persons 2,134 3,617 4,053

Non-regular persons 1,080 2,004 1,779

Gender

Male persons 2,871 5,052 5,262

Regular persons - 3,353 3,783

Non-regular persons 　 - 1,699 1,479

Female persons 343 569 570

Regular persons - 264 270

Non-regular persons - 305 300

Age group

20s persons 820 921 880

30s persons 1,060 2,276 2,505

40s persons 693 1,449 1,552

50s and over persons 641 975 895

By regionEmployees dispatched overseas persons - 1,237 1,091

Locally recruited employees persons - 4,047 4,799

Executives Total employees persons 53 73 67

Changes in Workforce

New employment

Total employees persons 848 1,703 1,485

Male persons - 1,499 1,353

Female persons - 204 132

Retirees2)

Total employees persons 68 92 100

Male persons 64 84 89

Female persons 4 8 11

Retirement rate % 3.2 2.5 2.5

Status of Diversity in Workforce

Socially marginalized

Disabled persons 233) 35 45

Veterans persons - 10 11

Status of Employees Subjected to Performance Assessment

Gender ratioMale % 100 100 100

Female % 100 100 100

Ratio by employment

Regular % 100 100 100

Non-regular % 100 100 100

1) Data calculation: as of 2015-end2) - Including voluntary retirement, normal retirement, recommended resignation, voluntary resignation (personal reasons, childcare, school admission, or transfer to another

company), dismissal and transfer to an affiliate of the Group - Upon compiling data for voluntary retirees by distinguishing from others, voluntary resignation is regarded as voluntary retirement. - Based on regular positions3) The number of the socially underprivileged in 2013 is impossible to distinguish the sub-categories.

63


Shared Growth

Type Unit 2013 2014 2015

Financial Support

Shared Growth FundKRW 100 million

150 190 212

Direct loansKRW 100 million

5 5 15

Technical Support Joint R&D cases 3 3 4

Training Support

Consignment training to specialized agencies persons 368 414 433

Training on overseas advancement persons 91 87 102

In-house training for a specialized workforce persons - 6,545 9,100

Ethics Management

Type Unit 2013 2014 2015

Hours of training per employee hours 8 1 1

Total training cost KRW 10,000 1,517 350 690

Total number of trainees persons 2,222(online) 757(offline) 3,525(offline)

Social Contribution

Type Unit 2013 2014 2015

Number of social contribution programs Number 26 21 27

Number of participants persons 1,126 911 1,654

Number of volunteering hours per employee hours 1.4 0.6 1.2

Cost of social contributionKRW 100 million

9 12 14

Talent Management

Type Unit 2013 2014 2015

Status of Child-care Leave

Status of returning to work after childcare leave4)

Childcare leave users persons 20 23 50

Returnees to work after using childcare leave persons 12 15 22

Number of employees with over one year of continuous service period after returning from childcare leave

persons 9 13 21

Return rate % 60 65 44

Rate of continuous service of over 12 months % 75 87 96

Human RightsTraining on the prevention of sexual harassment

Hours of training hours - 1 1

Number of participants persons - 4,287 5,401

Labor-man-agement Relationships

Status of handling employees’ grievances

Number of employees’ grievances received cases 119 116 221

Number of days for response processing days 5.5 7.0 4.5

4) - Childcare leave users: based on the number of those who gave birth in that year - Return rate: (would-be returnees in that year - retirees on the scheduled return day in that year)/would-be returnees)×100 - returned less than one year ago)/returnees of the previous year)×100

64


Accident Rate (Unit: %)

Type 2013 2014 2015

Domestic Converted disaster rate 0.05 0.16 0.12

Overseas

Company-wide occupational accident rate 1.30 1.10 0.46

Lost time injury rate 0.07 0.05 0.04

Severity rate of injury 0.81 0.29 0.02

Status of Certification for Achieving the Zero-Accident Target (Unit: hours)

Type 2013 2014 2015

Process Plant

Turkmenistan TGEM - 3,000,000 5,000,000

Turkmenistan TORE - 5,000,000 12,000,000

Uzbekistan UGCC - 10,000,000 15,000,000

Saudi Arabia JPP 5,000,000 10,000,000 -

Daesan HDO LBO - 1,820,000 -

UAE UONE 10,000,000 15,000,000 -

Pakistan ATOM - 2,000,000 -

Thailand TLAB - 3,000,000 -

Oman MGP 10,000,000 - -

Algeria BMS - 2,000,000 -


Bangladesh BAPP - 2,000,000 3,000,000

Iraq RGP 3,000,000 - -

Kenya OKB1 - 2,000,000 -

Building WorksWirye Amco Town Floriche - 1,820,000 2,730,000

National University of Turkmenistan - 2,000,000 5,000,000

Number of the Injured by Type (domestically) (Unit: cases)

Type 2013 2014 2015

Overturn - 4 5

Crash 1 4 3

Fall - 2 2

Structure - 3 3

Collision - 3 1

Others - 4 -

Safety and Health

65


Environmental Performance

Type Unit

Domestic Overseas Total amount for domestic and overseas sitesProcess Plant Building Works


Process PlantPower & Energy

PlantBuilding Works


2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Reinforcing steel bars

ton - - 32,401 87,538 559,625 2,254,700 26 103 31 1,150 190 4,741 4,068 2,878 596,341 2,351,110

Ready-mixed concrete

m3 - - 393,556 1,007,742 28,869 98,504 - - - - 4,159 79,024 37,171 11,373 463,755 1,196,643

Cement ton - - 13,808 21,343 985 2,289 - - - - - - 8,648 7,509 23,441 31,141

Sand m3 - - 17 4,278 46,838 120,004 140 455 - - - - 12,283 13,377 59,278 138,114

Aggregates m3 - - 16,464 37,125 134,961 556,577 18 20 - - - 74,658 178,065 57,565 329,508 725,945

Asphalt concrete ton - - 13,546 27,659 141 79,136 - - - - - - 68,100 102,221 81,787 209,016

Timber ton - 70 - - - - 74 95 - - - - 4 10 78 175

Concrete ton - - - - - 29,360 14,876 9,403 - 6,439 9,566 181,756 3 9,453 24,445 236,411

Form (regard-less of type)

m2 - - 629,446 1,413,318 - - - - - 5,644 3,798 34,182 14,944 32,088 648,188 1,485,232

Smaller lump coals

kg - - 145,630 321,505 - - - - - - - - - - 145,630 321,505

Others (concrete pile)

m - - 225,557 291,330 3,555 10,283 - - - - 20,368 - - 2,982 249,480 304,595

Amount of Raw Materials Used (non-recycled)

Energy

Type

Domestic Overseas Total amount for domestic and overseas sitesHeadquarters Process Plant Building Works


Asset Management

Process PlantPower &

Energy PlantInfrastructure & Environment

2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Amount of direct energy used (Scope 1)

17,331 18,557 - 108 36,421 18,955 9,010 7,492 1,023 2,507 2,988 64,303 2,508 9,747 14,878 47,577 84,159 169,246

Amount of in-direct energy used(Scope 2)

55,143 60,487 - 463 102,273 143,142 28,961 19,031 296 684 28,041 39,084 3,647 11,600 3,823 5,742 222,184 280,233

Total amount of energy used

72,474 79,044 - 572 138,694 162,097 37,971 26,523 1,319 3,191 31,029 103,387 6,155 21,347 18,701 53,318 306,343 449,479

(Unit: GJ)

GHG

Type

Domestic Overseas Total amount for domestic and overseas sitesHeadquarters Process Plant Building Works


Asset Management



2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Amount of di-rect emissions (Scope 1)

937 1,004 - 5 2,648 1,162 583 459 61 171 202 4,466 175 679 1,034 3,310 5,641 11,256

Amount of indi-rect emissions (Scope 2)

2,642 2,938 - 22 5,683 6,952 691 924 51 33 4,135 5,764 538 1,711 564 847 14,303 19,191

Total amount of GHG emissions

3,579 3,942 - 28 8,331 8,113 1,274 1,384 112 204 4,338 10,230 712 2,389 1,598 4,157 19,944 30,447

(Unit: tCO2eq)

* Environmental data are compiled and reported based on each department with the occurrence of each item.** The amount of energy generated abroad and the amount of GHG emissions are calculated based on the domestic heat release amount and the emission factor (calculation is based on fixed combustion for overseas data because fixed/mobile combustion cannot be distinguished). *** For sites subject to compilation of data for 2014, calculation is based on operating sites as of 2015-end.

66


Amount of Waste Generated

Type




Energy PlantBuilding Works


2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Waste concrete debris - - 108,285 118,486 47,744 29,284 - - - - 217 4,124 50 130 156,296 152,024

Sludge (sludge generat-ed at project sites)

- - 720 1,039 89 80 - - - - - - - 31 810 1,150

Waste asphalt - - 25,699 22,268 1,345 34,550 - - - - 50 950 - 6 27,094 57,773

Mixed wastes - - 38,503 33,280 4,154 6,248 27,373 35,609 - 116 102 1,944 - - 70,132 77,196

Waste wood - - 3,868 6,780 9,906 4,958 - - - - 2 38 - - 13,776 11,776

Others - 7 19,853 40,402 942 3,370 - - 62 155 - - - 120 20,856 44,054

Total amount of waste generated

- 7 196,929 222,253 64,180 78,490 27,373 35,609 62 271 371 7,056 50 287 288,965 343,973

(Unit: ton)

Waste Treatment

Type





2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Recycled (Outsourced handling)

- - 137,732 147,533 56,623 68,792 1,872 3,120 - - 39 151 196,266 219,596

Recycled (Internal treatment)

- - - - - - - - - - 11 136 11 136

Incineration - 7 6,790 3,603 942 573 1,560 5,185 62 155 - - 9,354 9,522

Buried - - 52,407 71,119 6,615 9,125 23,941 27,304 - 116 - - 82,963 107,664

Waste recycling rate - - 69.9 66.4 88.2 87.6 6.8 8.8 - - 100 100 67.9 63.9

(Unit: ton)

Environmental Investment Cost

Type



Process PlantInfrastructure & Environment

2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Facility investment - 38 576 563 3 25 - - 3 19 582 645

Environmental cost - - 202 887 99 601 1 66 1 14 303 1,568

(Unit: KRW million)

Water

Type





2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Total amount of water used

- 386 16,315 76,674 17,710 24,432 64,968 94,067 10,200 18,973 38,604 71,159 147,797 285,691

(Unit: ton)

67


Stakeholder Engagement and Materiality Testing

Stakeholder Engagement and Materiality Testing

Hyundai Engineering conducts the materiality testing in consideration of the level of impact of each issue on stakeholder interests and sustain-

ability management. Stakeholders’ opinions are proactively gathered for the materiality testing.

Materiality Testing

Hyundai Engineering selects material issues for internal and external stakeholders through structured materiality testing methodologies - the

composition of an issue pool, key issue assessment, and core issue selection, etc. The material issues are then reflected and reported in the

Sustainability Report.

Research was conducted to identify issues which were mostly actively discussed on sustainability management during the reporting period.

▶ Media research: Issues covered by the media on Hyundai Engineering during the reporting period were studied, and issues that are highlight-

ed the most were selected.

▶ Analysis of international standards and benchmarking of global enterprises: sustainability management-related international organizations

including UNGC, GRI and UN SDGs·The company could identify key issues related to the construction industry in global initiatives. The

company studied the trends of sustainability management reporting of global enterprises that belong to the same industry with Hyundai

Engineering, and identified the reporting trends on sustainability management within the industry.

Step 1. Composition of an issue pool for reporting

The interest level of stakeholders on 34 sustainability management issues was evaluated through research. Major issues were selected through

the assessment on the magnitude of impact and possibilities of occurrence for each issue.

▶ Assessment of the level of impact for each issue: Employees in charge of report writing, and those in sustainability management-related

business units - Environmental Management Team and Win-Win Management Team, etc. - assessed the magnitude of impact for each issue.

▶ Assessment of the interest level of stakeholders: The company assessed the interest level of stakeholders in consideration of the frequency

of mentioning and the weight of reporting and coverage, etc. during the reporting period for each issue.

Step 2. Materiality assessment by issue

Stakeholders Communication channels Key expectations and requirements

Shareholders and Investors

General meeting of shareholders, publicly disclosed materials, analyst meetings

•Developing new national technologies and green technologies, strengthening technological competitiveness

•Improving profitability, dividend policies, sound corporate governance, business opportunities and risk management

Customers Customer satisfaction survey, operation of the customer center on the website

•Increasing customer satisfaction through preventive activities including quality inspection•Strengthening safety & health of customers, intensifying the protection of customers’

personal information

Partnerse-procurement/procurement management system, conducting meetings

•Practicing fair trade, strengthening the CP system, supporting to boost competitiveness of partners

Employees Junior Committee, Dialogue with the CEO (E-Mail To President within the in-house groupware)

•Raising employees’ satisfaction, striking a work-life balance •Intensifying communication among employees and departments, disclosing the performance

of ethics management activities

CommunitySocial contribution activities at the company level/engaged by all employeesPublication of the Sustainability Report

•Communicating with the community, conducting various social contribution and volunteering activities, implementing the environmental impact assessment in areas near sites

Government/Media/Association

Public hearings, materials for media coverage, engagement in surveys

•Legal and regulatory compliance, public-private cooperative partnerships•Transparent disclosure of corporate information

Stakeholder Engagement

Hyundai Engineering listens to the opinions of key stakeholders by comprehensively considering environmentally and socially critical issues

along with potential issues which might occur in initiating business. The company operates communication channels for each stakeholder,

and identifies its major expectations, which are appropriately reflected in our management activities.

68


A total of 10 aspects were selected by considering the correlations between the stakeholder impact, business and sustainability management,

which are covered with a priority in the report. Selected core aspects are highlighted on each page. Other aspects to be importantly handled by

the company were also considered.

Step 4. Results and reporting of the materiality testing results

IssuesCore

aspects

Reporting boundary

Material Aspects

Custom-ers

Employ-ees

Shareholders and Investors Partners

Com-munity

Govern-ment

1

Spreading a safety culture on sites and strengthening safe-ty management

HSE manage-

ment● ● ● ● ● ●

Industrial safety and

health

2Enhancement of customer satisfaction

Value manage-

ment● ●

Product and service

labeling

3

Development of global talents and competency buildup

Talent manage-

ment● ●

Training and education

4Shared growth with partners

Win-Win manage-

ment● ●

Evaluating human rights and labor of

partners

5Strategic activities for social contri-bution

Sharing manage-

ment● ● ● Community

6

Improving employees’ rights including striking a work-life balance

Talent manage-

ment●

Labor-man-agement

relationships

7Buildup of R&D competency

Value manage-

ment● ●

Management performance

8Buildup of competitiveness by securing future

Value manage-

ment●


9Efficient manage-ment of resources

HSE manage-

ment● ● ●

Raw materials

10Economic perfor-mance and value creation

Value manage-

ment● ● ● ● ● ●


Impact on business(Impact)

Stakeholder interest(Relevance)

Core topics(High)

Key topics (Medium)

As a result of the materiality testing, a total of 34 issues were selected from the economic, environmental and social sectors.

Step 3. Results of selecting issues through the materiality testing

Environment Economy Society

•�Economic performance and value creation

•�Overseas business diversification and global market expansion

•�Buildup of competitiveness by securing future growth engines

•�Sophistication of a company-wide risk management system

•�Buildup of R&D competency

•�Sound corporate governance

•�Sophistication of the environmental management strategy

•�Efficient management of resources

•�Response to Climate Change

•�Intensification of water management

•�Protection of biodiversity around project sites

•Minimization of the emission of hazardous air pollutants

•�Systematic waste management and increases in the recycling rate

•�Intensification of handling and managing hazardous chemicals

•�Development of eco-friendly products and technologies

•�Compliance with environmental laws and regulations

•Pursuit of a work-life balance

•Establishing a sound labor-management culture

•Fair and transparent performance assessment

•Development of global talents and competency buildup

•Respect for employees’ diversity and guarantee of equal opportunities

•Provision of a working environment suited to domestic labor standards (ILO)

•Enhancement of human rights protection for all the stakeholders in the business process

•Transparent ethics management

•Shared growth with partners

•Intensification of risk management in the supply chain (environment, safety and anti-corruption in the business process)

•Spread of the safety culture on sites and reinforcement of safety management

•Strategic activities for social contribution

•Establishing fair competitions and trade

•Intensification of compliance management

•Improvement in safety and health throughout the entire business initiation process

•Enhancement of customer satisfaction

•Stronger management of information security

•Intensified talent recruitment and management

Materiality Test Results

69


The 3rd Party Assurance Statement

2014-2015 Independent Assurance Statement to Hyundai Engineering

Introduction

We are commissioned to carry out the assurance engagement of the 2014-2015 Sustainability Report (the ‘Report’) of Hyundai

Engineering (the ‘Company’).

Scope of Assurance

As stated in the Report, the Company is responsible for all content within the Report in respect of the GRI Sustainability Reporting

Guidelines. It is the responsibility of the Company’s management to establish and maintain appropriate performance manage-

ment and internal control systems from which the reported sustainability information is derived. Our responsibility is to perform

a limited assurance engagement and to express a conclusion on the work performed.

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement, and consequently does

not enable us to obtain assurance on all significant matters that we may become aware of in a reasonable assurance engagement.

Accordingly, we do not express a reasonable assurance conclusion. This statement has been prepared solely for the Company in

accordance with the terms of our engagement. We do not accept or assume responsibility to anyone other than the Company for

our work, or for the conclusion we have reached in the assurance report.

Independence and procedures performed

Our performed the engagement in accordance with Deloitte’s independence policies, which cover all of the requirements of the

IFAC (International Federation of Accountants Code of Ethics). There were no events or prohibited services provided which could

impair that independence and objectivity in the provision of this engagement.

We conducted our engagement based on the International Standard on Assurance Engagements (ISAE) 3000 Assurance En-

gagements other than Audits or Reviews of Historical Financial information, issued by the International Auditing and Assurance

Standards Board, and also AA1000AS (Moderate level, Type 1). The standards require that we comply with applicable ethical

requirements, including independence requirements and that we plan and perform the engagement to obtain limited assurance

about whether the Report is free from material misstatement.

70


Conclusion

Based on the procedures performed, as described below, nothing has come to our attention to indicate that the Report is not

presented fairly, in all material respects, in accordance with the reporting criteria.

Inclusivity

The Company operates communication channels with key stakeholders and we are not aware of any key stakeholder that

has been excluded from dialogue in the Report.

Materiality

The Company conducts a materiality test in determining material issues and we are not aware of any material aspects

concerning its sustainability performance which have been excluded from the Report.

Responsibility

The Company applies reporting scope, boundary and temporal criteria. In terms of criteria mentioned above, we confirm

that the Report is suitable for stakeholders to assess sustainability performance.

Recommendation

Without prejudice to our conclusions presented above, we believe the following matters can be considered for improved sustain-

ability reporting. Oversea sites have problems which are irregular scope and difficulties in collecting data. We recommended to

manage consistent data in systematic management which retain reliability of data. In the long-term, the company provide data

in comparison of time-series by business unit and location that stakeholders can compare the company’s sustainability goals

and achievements. Also, the biannual published report has a limit that data discontinuity and cannot report in a timely manner.

Therefore, we recommended to publish sustainability report annually.

05 August 2016

Deloitte Anjin LLC

CEO Ham Jong-ho

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”),its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities.DTTL (also referred to as “Deloitte Global”) does not provide services to clients.Please see www.deloitte.com/kr/abou t for a more detailed description of DTTL and its member firms.

Member of Deloitte Touche Tohmatsu Limited

71


GRI G4 Index

General Standard Disclosures

Indicator Specific Standard Disclosures Page

Strategy and Analysis

G4-1Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent seniorposition) about the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability

6~7

Organizational Profile

G4-3 Report the name of the organization 10

G4-4 Report the primary brands, products, and services 10~11

G4-5 Report the location of the organization’s headquarters 10

G4-6Report the number of countries where the organization operates, and names of countries where either the organization hassignificant operations or that are specifically relevant to the sustainability topics covered in the report.

10~11

G4-7 Report the nature of ownership and legal form 16

G4-8 Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) 10~11

G4-9

Report the scale of the organization, including:- Total number of employees- Total number of operations- Net sales (for private sector organizations) or net revenues (for public sector organizations)- Total capitalization broken down in terms of debt and equity (for private sector organizations)- Quantity of products or services provided

10~11, 62~63

G4-10

A. Report the total number of employees by and gender.B. Report the total number of permanent employees by employment type and gender.C. Report the total workforce by employees and supervised workers and by gender.D. Report the total workforce by region and gender.E. Report whether a substantial portion of the organization’s work is performed by workers who are legally

recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors.

F. Report any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries)

63

G4-11 Report the percentage of total employees covered by collective bargaining agreements

Not applicable(Operation of the

Labor-Management Council)

G4-12 Describe the organization’s supply chain 48~49

G4-13

Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or itssupply chain, including:- Changes in the location of, or changes in, operations, including facility openings, closings, and expansions- Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations)- Changes in the location of partners, the structure of the supply chain, or in relationships with partners, including selection and termination

49

G4-14 Report whether and how the precautionary approach or principle is addressed by the organization 21~23

G4-15List externally developed economic, environmental and social charters, principles, or other initiatives to which theorganization subscribes or which it endorses

20, 59

G4-16

List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization:- Holds a position on the governance body- Participates in projects or committees- Provides substantive funding beyond routine membership dues- Views membership as strategic

76

G4-17A. List all entities included in the organization’s consolidated financial statements or equivalent documents.B. Report whether any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by the

report62

Identified Material Aspects and Boundaries

G4-18A. Explain the process for defining the report content and the Aspect BoundariesB. Explain how the organization has implemented the Reporting Principles for Defining Report Content

68~69

G4-19 List all the material Aspects identified in the process for defining report content 69

72


Indicator Specific Standard Disclosures Page

G4-20

For each material Aspect, report the Aspect Boundary within the organization, as follows:a. Report whether the Aspect is material within the organizationb. If the Aspect is not material for all entities within the organization (as described in G4-17), select one of the following two approaches and

report either:- The list of entities or groups of entities included in G4-17 for which the Aspect is not material or- The list of entities or groups of entities included in G4-17 for which the Aspects is material

c. Report any specific limitation regarding the Aspect Boundary within the organization

68~69

G4-21

For each material Aspect, report the Aspect Boundary outside the organization, as follows:- Report whether the Aspect is material outside of the organization- If the Aspect is material outside of the organization, identify the entities, groups of entities or elements for which the Aspect is material. In

addition, describe the geographical location where the Aspect is material for the entities identified- Report any specific limitation regarding the Aspect Boundary outside the organization

68~69

G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements 2

G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries. 2

Stakeholder Engagement

G4-24 Provide a list of stakeholder groups engaged by the organization 68

G4-25 Report the basis for identification and selection of stakeholders with whom to engage 68

G4-26Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and bystakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the reportpreparation process

68

G4-27Report key topics and concerns that have been raised through stakeholder engagement, and how the organization hasresponded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raisedeach of the key topics and concerns

14~15, 68

Report Profile

G4-28 Reporting period (such as fiscal or calendar year) for information provided 2

G4-29 Date of most recent previous report (if any) 2

G4-30 Reporting cycle (such as annual, biennial) 2

G4-31 Provide the contact point for questions regarding the report or its contents 2

G4-32

A. Report the ‘in accordance’ option the organization has chosen.B. Report the GRI Content Index for the chosen option (see tables below).C. Report the reference to the External Assurance Report, if the report has been externally assured. GRI recommends the use of external assurance

but it is not a requirement to be ‘in accordance’ with the Guidelines.

2, 70~75

G4-33

A. Report the organization’s policy and current practice with regard to seeking external assurance for the report.B. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided.C. Report the relationship between the organization and the assurance providers.D. Report whether the highest governance body or senior executives are involved in seeking assurance for the organization’s sustainability report.

70~71

Governance

G4-34Report the governance structure of the organization, including committees of the highest governance body. Identify anycommittees responsible for decision-making on economic, environmental and social impacts

16~17

Ethics and Integrity

G4-56 Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics 13, 18~19

G4-57Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related toorganizational integrity, such as helplines or advice lines.

18~19

G4-58Report the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and mattersrelated to organizational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines

19

73


Specific Standard Disclosures

MaterialAspects Indicator Specific Standard Disclosures Page

ExternalAssurance

Economic

EconomicPerformance

G4-EC1 Direct economic value generated and distributed 62 v

G4-EC2Financial implications and other risks and opportunities for the organization’s activities due to climate change

34, 39 v

G4-EC3 Coverage of the organization’s defined benefit plan obligations 45 v

G4-EC4 Financial assistance received from government 29 v

MarketPresence

G4-EC5Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation

229% v

G4-EC6Proportion of senior management hired from the local community at significant locations of operation

63 v

IndirectEconomicImpacts

G4-EC7 Development and impact of infrastructure investments and services supported 56~58 v

G4-EC8 Significant indirect economic impacts, including the extent of impacts 43, 56~58 v

Environmental

Materials G4-EN1 Materials used by weight or volume 66 v

EmissionsG4-EN15 Direct greenhouse gas (GHG) emissions (scope 1) 66 v

G4-EN16 Energy indirect greenhouse gas (GHG) emissions (scope 2) 66 v

Compliance G4-EN29Monetary value of significant fines and total number of non-monetary sanctions for non compli-ance with environmental laws and regulations

4 cases/Fines of KRW 4 million

v

Social

Labor Practice and Decent Work

Employment

G4-LA1Otalnumberandratesofnewemployeehiresandemployeeturnoverbyagegroup, genderandregion

63 v

G4-LA2Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation

45 v

G4-LA3 Return to work and retention rates after parental leave, by gender

64(Gender-specif-ic data are not

reported)

Labor/Management Relations

G4-LA4Minimum notice periods regarding operational changes, including whether these are specified in collective agreement

46 v

OccupationalHealth andSafety

G4-LA6Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender

65 v

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation 41 v

G4-LA8 Health and safety topics covered in formal agreements with trade unions None v

Training andEducation

G4-LA9 Average hours of training per year per employee by gender, and by employee category 44 v

G4-LA10Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

44 v

G4-LA11Percentage of employees receiving regular performance and career development reviews, by gender and by employee category

63 v

74


MaterialAspects Indicator Specific Standard Disclosures Page

ExternalAssurance

Human Rights

Assessment G4-HR9Total number and percentage of operations that have been subject to human rights reviews or impact assessments

100% v

PartnerHuman RightsAssessment

G4-HR10 Percentage of new partners that were screened using human rights criteria None v

G4-HR11Significant actual and potential negative human rights impacts in the supply chain and actions taken

No cases v

Society

LocalCommunities

G4-SO1Percentage of operations with implemented local community engagement, impact assessments, and development programs

100% v

G4-SO2Operations with significant actual and potential negative impacts on local communities

None v

AnticompetitiveBehavior

G4-SO7Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes

No cases v

Product Responsibility

Product and Service Labeling

G4-PR5 Results of surveys measuring customer satisfaction 33 v

Compliance G4-PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

None v

Construction and Real Estate

Emissions

CRE3 Greenhouse gas emissions intensity from buildings 39, 66 v

CRE4Greenhouse gas emissions intensity from new construction and redevelopment activity

39, 66 v

Land Degradation,Contaminationand Remediation

CRE5Land remediated and in need of remediation for the existing or intended land use,According to applicable legal designations

Not applicable v

OccupationalHealth and Safety

CRE6Percentage of the organization operating in verified compliance with an internationally recognized health and safety management system

35, 40~41 v

LocalCommunities

CRE7Number of persons voluntarily and involuntarily displaced and/or resettled by development, broken down by project

None v

Product andService Labeling

CRE8Type and number of sustainability certification, rating and labeling schemes for new construction, management, occupation and redevelopment

31, 35, 40 v

75


Prize name Date Awarded by

The Presidential Prize at the ‘18th Good Living Apartment Award’ Jul. 2014MBN, Maeil Business Newspaper, Ministry of Land, Infrastruc-ture and Transport

The Excellence Prize in Landscape & Ecosystem at the ‘2014 Environmental Award of Seoul Metropolitan Government’ (Mayoral Prize)

Aug. 2014 Seoul Metropolitan Government

The Excellence Prize in Landscape Policies at the ‘7th Korea Landscape Architecture Awards’

Oct. 2014 Korea Institute of Landscape Architecture

The Most Excellent Prize (Environmental Ministerial Prize) in Urban and Artificial Ground at the ‘14th Natural Environment Award’

Nov. 2014 Ministry of Environment

The Best CEO Award at the ‘General Meeting of Korea Engineering & Consulting Association’

Feb. 2015 Korea Engineering & Consulting Association

The Grand Prize in the Private Sector of Completed Buildings at the ‘2015 Korea Architecture Award’

Nov. 2015Ministry of Land, Infrastructure and Transport, Korea Institute of Registered Architects, Seoul Economic Daily

The Prize at the the Shared Growth Sector of the ‘2nd Porter Prize for Excellence in CSV’

Dec. 2015 Korea Institute for Industrial Economics & Trade, Dong-A Ilbo

Gold Prize at the ‘2015 Beijing Steel Structure Gold Award’ Mar. 2016BeijingSteel Structure Chapter of the Construction Metal Structure Association

Membership in Associations

Korea Electric Engineers Association Korea International Trade Association Transportation Investment Evaluation Association

Korea Association of Construction Engineering and Management

Korea Railway Signal Engineer Association Korea Industrial Technology Association

The Korean Railway Electricity Technology Association

Seoul Chamber of Commerce & Industry Korea Plant Industries Association

Korea Atomic Industrial Forum Korea electrical Contractors Association Korea Plant EPC Association

Korean Radioactive Waste Society Korea Association of Surveying & Mapping FED Union

Korea Institute of Registered ArchitectsThe Society of Air-conditioning andRefrigerating Engineers of Korea

Operating Committee of Korea Housing Association

Korea River Association Korea Construction Engineers AssociationThe Korea Society For Environmental Restoration And Revegetation Technology

Environmental Influence AssessmentAssociation

International Contractors Association of Korea Korean Association for Supporting the SDGs (ASD)

Korea Water and Wastewater Works Association Korea Fire Safety Association Korea Building Owners & Managers Association

KATIA Korea Information & Comm.Contractors Association Fair Competition Federation

Korea Facility Management Association Korea Facilities Maintenance Association The Korea Institute of Landscape Architecture

Korea Water Resources Association The Federation of Korean Industries Korea Housing Association

Korea Fire Facility Association Association of Workplace Police Officers Korea Personnel Improvement Association

Construction Association of Korea Korea Engineering & Consulting Association Korea Environment Construction Association

Awards & Prizes

Membership in Associations

76


This report has been published in Korean and English. You may download it from the Sustainability Management Section of Hyundai Engineering’s website. If you have any questions or suggestions, please contact:

•Team: Sustainability Management Representative, Business Plan-ning Team, Planning Office

•E-mail: [email protected]•Tel: +82-2-2134-1809•Website: www.hec.co.kr•Address: 75 Yulgok-ro, Jongno-gu, Seoul, Korea

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