A Transaction Cost Analysis of Governance Model Selection for National Heritage Restoration
Date Issued
2011
Date
2011
Author(s)
Chou, Chun-Sheng
Abstract
The architecture of Control Yuan, now a National Heritage, is a representative, well preserved governmental building build during Japanese colonial rule, and is still in use. Depending on damage condition, urgency and government budget limit, there are various ways carrying out National Heritage restoration. During this decade, three governance models for outsourcing restoration are deployed, which are Engineer-Procurement-Construction (EPC), Plan Construction Management (PCM) and Design-Bib-Build (DBB). The environmental factors shaped by Cultural Heritage Preservation Act and Government Procurement Act would determine which model be deployed in one case. Therefore, this project focuses on the causes of governance model selection. To fully understand how the costs involved in contracting process—planning, execution and supervision—affect selection on governance mechanism, this project follows the insights of transaction cost theory.
This project first confirms the asset specificity of heritage restoration and heritage itself, then sets out discussing the three governance models which consist of different participants and organizational arrangements, and analyzing the distinguishing features of transaction cost involved in each model. After confirming the governance structure of each model, their organizational instruments such as incentive intensity and administrative control, their performance attributes such as autonomous adaptation and cooperative adaptation, the project evaluates the transaction cost—information communication, coordination, execution and supervision—of each model. The analysis concludes that the contradictions between Cultural Heritage Preservation Act and Government Procurement Act define the practice of outsourcing model selection. To overcome these constraints, this project suggests a vertical integration model: incorporating artisans of heritage restoration—the professionals hold the core skills of maintaining and restoring heritages—into government organizations, and establishing a specialized department responsible for their training. Considering the market of heritage restoration, which is too small to reach economies of scale, and the idiosyncratic feature of National Heritage, the vertical integration model is most suited to maintain and restore heritages, for the transaction cost are lowest.
Subjects
National Heritage restoration
transaction cost theory
asset specificity
EPC (Engineer-Procurement-Construction)
PCM (Plan Construction Management)
DBB (Design-Bib-Build)
SDGs
Type
thesis
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