Owner-Controlled Insurance Program and Construction Project Management for Taiwan High Speed Rail Project

Abstract

The Taiwan High Speed Rail project connects two major cities of Taiwan—Taipei and Kaohsiung. The US$15 billion project is Taiwan’s first build-operate-transfer (BOT) project and is also the world’ s largest BOT project. Taiwan’s government contracted with Taiwan High Speed Rail Corporation (THSRC) for the railway’s construction and operation. Upon the expiration of the concession period lasting 35 years, the system will be transferred to the Taiwanese government. This paper focuses on the civil works contracts for the project and discusses the procurement strategy, tender process, construction project management and the owner-controlled insurance program. The author finds that officials for the Taiwan High Speed Rail project placed too much emphasis on the issue of whether or not the government would need to spend public funds on the project to make a fair and prudent judgment in evaluating the tender. Although the railway system was built on schedule due to effective and sound construction management and insurance strategies, THSRC now faces an impossible financial challenge operating the railroad and a government takeover may be necessary to rescue the corporation.