Managing Construction Risks of the Toll Road Project in Indonesia

Abstract

Constructing a toll road project required relatively high capital outlays and involving complicated activities. The typical of the project is classified as sensitive to risks and uncertainties. Proper risk management during construction lifecycle period may yield substantial certainties in reducing risk costs. The risk costs were calculated using stochastic analyses.  The results showed that there were 7 main activities which were considered as the riskiest ones, and in need to manage such as; construction of concrete structures, road pavement, ground works, interest during construction (IDC), escalation costs, base and sub-base course aggregate, and land acquisition activities.  This study identified that before conducting risk mitigation, there was 90% probability of the project costs would be at the range of IDR 23.06 Trillion to IDR 23.96 Trillion. After implementing risk mitigation, there was 90% probability the project cost would decrease at the range of IDR 21.53 Trillion to IDR 22.42 Trillion. Risk Management may reduce project risk costs systematically.