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Conceptual Design of Bridge Using Value Engineering Approach

Conference Paper · December 2012

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Perdana Miraj Mohammed Ali Berawi University of University of Indonesia

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The user has requested enhancement of the downloaded file. Conceptual Design of Sunda Strait Bridge Using Value Engineering Approach

Berawi, M.A1, Miraj, P2, Gunawan3 & Husin, A.E4

Abstract: The existence of Sunda Strait Bridge (SSB) will contributes to the infrastructure development and national economic growth, since the project connects two major islands in Indonesia. Being one of the initiatives of the government’s mega infrastructure projects listed in Master Plan for the Acceleration and Expansion of Indonesian Economic Development - MP3EI in 2011, Sunda Strait Bridge construction requires an optimum study in terms of planning, funding and technical aspects of the project development to enhance economic growth and regional development. This research is proposed to conduct a comprehensive study on the conceptual design of SSB to produce added value for SSB construction. Value engineering has been used as a methodology to provide added value and to enhance maximum result for project development in terms of improvement on quality, technology and innovation. Quantitative approach is conducted through online and offline questionnaire surveys to address the research objectives. Results and discussions from the questionnaire survey include internal and external risk identification that may affect project performance, identification of additional functions for innovation, estimation of the investment costs and finally key success factors of Public Private Partnership (PPP) scheme in Indonesia to finance infrastructure SSB project are presented.

Keywords: Additional Function, Innovations, PPP Scheme, Sunda Strait Bridge, Value Engineering

1. Introduction manpower with various expertise, material and energy (Sugiyarto, Oey-Gardiner & Triaswati, 2006) 4) Social Indonesia is a vast archipelago country, with large and dynamic acceptance. economy reflected by average economic growth reach 5% per Sunda Strait Bridge (SSB) construction requires maximum annum (BMI,2012) has various potential that can be developed. assessment in terms of technical implementation and financing In order to achieve the acceleration of economic development, aspects which have the potency to the continuity of economic the government of Indonesia through National Medium Term activity and the impact of the SSB construction itself to the Development Plan (RPJMN) 2010-2014 is targeting economic regional social development, it should be done by applying growth gradually from 5.5%-5.56% in 2010 to 7.0%-7.7% in Value Engineering (VE) method. VE is expected to enhance 2014, or at an average growth rate of 6.3%-6.8% in 5 years. optimum added value in the SSB project. VE method has been Sunda Strait Bridge is one of the mega projects offered by systematically tested to analyze the function of a system the Indonesian government that would spend of about ± US$ 25 (Berawi&Woodhead, 2005a; Berawi&Woodhead, 2005b) billion (Bappenas, 2011). SSB development will be one of the expected to result optimum outcome for a project quality (Abdul longest bridges in the world with 30 kilometers length and 60 Rahman&Berawi, 2002; Berawi, 2004), technology meters width which is expected to drive the regional economic (Berawi&Woodhead, 2005c; Berawi, et.all, 2008), efficiency growth of and islands in particular and national (Abdul-Rahman, Berawi, et.al, 2006; Woodhead&Berawi, 2008) economic growth in Indonesia in general (Bappenas, 2009). and innovation (Berawi&Woodhead, 2008; Berawi, 2009). The key success in SSB project realization lies in the project Furthermore, Sunda Strait Bridge development requires readiness preceded by feasibility study aiming to obtain benefits huge amount of costs, which will lead to the difficulty of and to create proper resource distribution.There are certain providing funding when the financial scheme is left entirely to things to be considered in evaluating feasibility study such as1) the government, therefore in order to create more feasible Sufficient financial resource for design and construction project, PPP scheme was offered which is expected to provide (Berawi,2004) 2) government approval, land use regulation, efficiency and effectiveness of project financing by applying a environmental impact and safety (Dikun 2005A) 3) resources, clear division of responsibilities. Value engineering in this research also involves the activity 1. Senior Lecturer, Civil Engineering Department, Faculty of of identifying and analyzing risks, to be an effective process to Engineering. University of Indonesia, Depok, control the project risk which are expected to assist decision Indonesia,16424; PH (+628)1218012207; Email: makers in the strategic way to reduce risk impact into the [email protected] project. 2. Researcher. Integrated Design & Technology (ID-Tech), Faculty of Engineering, University of Indonesia, Depok, 2.1 Function and Innovation Indonesia,16424; PH (+628)5715364334 Email: [email protected] In many countries, Value engineering implementation is a 3. Researcher. Integrated Design & Technology (ID-Tech), Faculty of Engineering, University of Indonesia, Depok, proven method to solve problems and further to increase their Indonesia,16424; PH (+628)5271475199; Email: competitiveness in the construction industry (Daddow and [email protected] Skitmore, 2003; Berawi,2004; Berawi and Woodhead,2008; 4. Researcher. Integrated Design & Technology (ID-Tech), Berawi,2008a, Berawi, 2009a, Berawi,2009b, Berawi,2009c). Faculty of Engineering, University of Indonesia, Depok, VE capability to increase construction industry competitiveness, Indonesia,16424; PH (+628)121031880; Email: cannot be separated from its benefit provided to construction [email protected] project, one of them is generate creative ideas and innovation ( Robinson,2008; Leung,2008; Berawi,2004; Berawi,2005a; Innovation in Sunda Strait Bridge (SSB) drives by seeking Berawi,2005b; Berawi and Woodhead,2008; Berawi,2004; any potential resource lies around Sunda Strait. There are natural Berawi,2009; Berawi,2009c; Berawi,2009d). The innovation has resource such as great wind, ocean wave caused by tidal current, been seen as idea generation in the creativity stage (Oetinger, potential tourism to be integrated at Sangiang and Prajurit 2004; Birdi; 2005), formalization processes (Bodewes, 2002) islands around Sunda Strait, efficient distribution of oil and gas and the successful application of concept in terms of output or as well as the development of internet network between Jawa product (Cumming, 1998). and Sumatra islands inspired to arise additional functions in The value of a ‘thing’ can be measured from how well the Sunda Strait Bridge. ‘thing’ performs its designated functions and achieves its Kinetic energy generated by wind power plants and also purpose. Since identifying functions enables us to propose tidal current could be used to produce electricity in order to alternative ways to perform those functions in the act of idea obtain optimum benefit to the islands and the country in general. generation, an ‘extended function’ will set a new context While Sunda Strait span could be used as an alternative to place (purpose and goal) of a system. It also leads to an improvement oil and gas transmission pipeline also fiber optic cables in order of products. The ability to consider alternative ways or processes to enhance information technology. The extended functions of that could perform the same set of tasks with added benefit SSB project are shown in table 1; stimulates inquiry and explores further the original ideas as shown in figure below (Woodhead & Berawi, 2008). Table 1: Potential Innovation in SSB project SSB Function SSB Purpose Real World Accelerate Processes A Connecting area Economic growth Outcomes Alt Processes Create new function by idea generation Causality Processes A New Function New Purpose Provide Produce Energy electricity, Reduce fossil fuel Transmit Oil and Reduce cost, Purpose Functions gas Create Transmit Data connectivity New Extended Intentionality - infrastructure Purpose Functions Develop Tourism Attract local and foreign tourists Conceptual It leads to the development of the Fast diagram as shown in Figure 3. Figure 2: Functional Thinking enables Innovation

Figure 3 Sunda Strait Bridge FAST Diagram 2.2 Risk Management infrastructure, research conducted by Collins (2005) found that the PPP scheme became popular in America and Europe due to Risk is an uncertain event or condition that, if it occurs, has an the fiscal crisis in the public sector so they need to locate other effect on at least one project objective. Objectives can include sources for funding and PPP was assured to improve financial scope, schedule, cost, and quality (PMBOK, 2008). So our efficiency from the private sector. objective of risk management is trying to reduce or compensate PPP infrastructure development in Indonesia has actually losses or damage from unwanted event at the same time also been done since the 1980's. Infrastructure sectors which initiated required to develop different mechanism and mitigation step cooperation between the government and private sectors are which are most appropriate with the situation and environment electricity and highways. So far, the implementation of PPPs until occur in the project. the period 2005-2009in infrastructure development still faces Considering the project life cycle of Sunda Strait Bridge many obstacles. From 91 infrastructure projects offered by the can be categorized into internal and external factors as shown in Government in Infrastructure Summit 2005 less of them were table 2. Internal factors can be divided into three categories, executed, and with the lack of realization from model project namely planning and design, construction also operational and IICE in 2006 create a mountain to climb. maintenance while the external factors can be divided into two categories namely political-environment and social-economic. There were things that suspected to be the obstacles for the realization of infrastructure acceleration through PPPs, to include: Table 2: Risk Factors Potentially Occur in SSB 1. Lack of PPP’s governance in infrastructure development Project 2. Limited human resources Risk Factors 3. Lack of optimization in project preparation Internal Factors External Factors In order to face the challenges in the provision of Planning and Construction Operational Political and Social and infrastructure through the PPP, government needs to follow up design and environment economic cross-sector reformation strategies that have ever been maintenance implemented before. Things needed to be done include: Design Imperfect Quality Policy Behavior Planning works changes changes Synchronize the legal and institutional framework that Incomplete Cost Equipement Embargo Community encourages the PPP; Reform sectoral policy, legal and scope design overruns quality exploitation institutional; Facilitate the project preparation and transaction. deteriorates Design Incompetent Lack of Natural Lack of Changes Subcon/supp equipment resource support for liers decreased public 3. METHODOLOGY interest Scope Project Lack of Cause Corruption, In order to achieve the research objectives, the research methods Changes delays communication pollution collusion, were conducted by using quantitative approaches through online nepotism and offline questionnaire surveys. Incomplete Incomplete Complex site Damage to National Online surveys were distributed through mailing lists related Specification surveys condition marine life economy instability to construction industry stakeholders such as Indonesian Society Incompetent Installation Lack of Economic of Construction Management, Indo Energy, Indonesian personnel failure navigational policy Contractors Assocation, while offline survey was distributed to aids changes 90 respondents from various fields such as investors, state-owned False Lack of IT Lack of IT Exchange enterprises, private companies, universities, and the Ministry of technical technology technology rate Local Government Agencies. assumtions fluctuation Construction Ship Personnel Period of . Technology Collisions safety recess Safety, Inaccurate High 4. RESULT AND DISCUSSION productivity cost inflation and skill of estimates Data processing was performed based on the results of the labors Labor Catastrophe Credit respondents’ answers on questionnaire surveys which have been disputes and availability created in such a way structured by the team so that it will be easy strikes to be understood and shortly filled. The results of the Catastrophe Material questionnaire itself consist of three parts, namely risk cost identification, identification of additional function for innovations changes and key success factors of the PPP scheme. Business partner decreased 4.1 Respondents Background

2.3 Public Private Partnership In this section, the questions asked were in the form of employment information, education level, position in the Yescombe (2007) defined Public Private Partnership (PPP) as a company's and their experience within the company as well. The long-term contract between the government and the private largest part of the respondent works in private company with a sector to carry out the planning, development, financing, and coefficient of 43% and the second largest part of respondents operation of public infrastructure by the private sector. works in government agency with a coefficient of 26%. Countries like Australia, America and Britain have Meanwhile, educational background of the major part of the developed the concept of Public Private Partnership (PPP) or respondents is under graduate with coefficient of 57% followed Private Finance Initiative (PFI) to support the development of by graduate with coefficient of 40%, while post graduate obtain 3% 4.3 Additional Function (Innovation) coefficient. Most of the respondents’ position in the company is largely Based on the respondents’ answers, the results show on each coming from architect/engineer with a coefficient of 40%, while additional function, what kind of benefits that respondents manager/associate manager is about 9% and general director expected and their escalation magnitude they deem worth as well. with a coefficient of 11%. With the data above, the Would there be any incompatible gap between benefit and cost, questionnaire has already been able to touch the middle level & therefore the iteration based on VE methodology is expected to be manager level positions. able to provide solutions which lead to the project creation which The working experience of the respondents in the is more competitive in quality, cost and time. The result can be companies is mostly in the range of 1-10 years with the seen in the following table. coefficient of 51% followed by working experience in the range of 11-20 years with the coefficient of 23% and working Table 5: Additional function Variables experience above 20 years reach 26%. Added Expected Benefit Function 4.2 Risk Identification on Sunda Strait Bridge Development 1 Tidal Power Generate Electricity Plants Risk in Sunda Srait Bridge is classified into two factors; internal New step in implementation factors include planning and design; construction; operational of renewable energy and maintenance, while external factors include political and Natural Resource efficiency environmental; social and economic. Based on the questionnaire Pollution - free surveys, we select factors above 50% and called as dominant factors, while the minor factors are not presented. Table 3 and 4 2 Wind power Generate electricity shows how the major risks has been identified from this plants research. Reducing dependence on The dominant factors in planning and design consist of traditional energy sources incorrect technical assumption, technical construction selection Pollution - free and incomplete design scope, furthermore in construction risk divided into catastrophe (earthquake,tsunami,etc) and project 3 Oil pipelines Streamlining the cost overrun meanwhile catastrophe (earthquake,tsunami,etc) is and gas distribution of oil and gas the dominant risk factor in operational and maintenance. distribution Moreover the dominant factors in political and environment integration consist of change in government policy and political Cost efficiency intervention while corruption, collusion and nepotism is the Ease of accessibility dominant factor in social and economic category. 4 Fiber optic Streamlining integration communication and Table 3: Risk Internal Variables information Risk Dominant Factors Cost efficiency Identification Ease of accessibility 1 Risk in Planning 1 Incorrect Technical and Design Assumption 5 Tourism Attract domestic and 2 Technology construction Development foreign tourists selection 3 Incomplete design scope Creating new jobs 2 Risk in 1 Catastrophe (Earthquake, Increase regional Economy construction Tsunami, etc) process 6 Development Fishery development 2 Project cost overruns along Sunda Strait 3 Risk in 1 Catastrophe (Earthquake, Power Plant operational and Tsunami, etc) maintenance Manufacture industry

Table 4: Risk External Variables With the addition of new functions that will give Risk Identification Dominant Factors impacts on increasing the cost of area development, 1 Political and 1 Change in government policy according to respondents; additional costs are allowed to environment risk rise ranging from 1 % up to 15% of SSB investment costs. 2 Political intervention As the pie chart below; 2 Social and Economic 1 Corruption, collusion and Risk nepotism From the above table, based on the data from respondents, 30-40% the key success factors of the PPP scheme are balanced risk- SSB sharing, clear and measurable Key performance indicator (KPI), investment warranty of return on investment, selection of the parties based on cost, 9% performance and skill, benchmarking and continuous performance monitoring and good communication and solid 15-30% 1-15% SSB cooperation between parties. SSB investment Meanwhile, those who will be responsible for the financial cost, 67% investment activities of the Sunda Strait Bridge project are illustrated in the cost, 24% respective table;

Table 7: Parties Responsible for Project Financing Activities Figure 4: New Added Function Diagram N Description Largest O Public Private PPP In addition to creating new function, VE is able to produce % the optimization for project in terms of quality, technology, Pre – FS 62% 12% 26% public innovation and cost efficiency. From the results, in the absence 1 public of additional functions in the SSB construction, the respondents 2 Feasibility Study 44% 18% 38% expect that VE would be able to optimize 1-15% of the total Planning and 27% 32% 41% PPP investment cost of SSB. As illustrated below; 3 Design Land Acquisition 70% 6% 24% public 30-40% 4 SSB 5 Construction investment 1-15% SSB a. Sunda Strait cost, 9% investment Bridge 15% 29% 56% PPP cost, 50% b. Sustainable 21% 29% 50% PPP Energy 15-30% c. Tourism 30% 38% 32% Private SSB d. Telecommun 21% 38% 41% PPP investment ication cost, 41% e. Industry 18% 32% 50% PPP district Figure 5: Without New Added Functions Diagram Operation and 6 Maintenance The respondents argue that additional functions are a. Sunda Strait PPP expected not greater than 15% of the total investment cost, on Bridge 21% 35% 44% the contrary if VE would be able to provide cost efficiency, b. Sustainable 21% 35% 44% PPP respondents expect to obtain up to 15% efficiency from Energy investment cost. c. Tourism 29% 42% 29% Private d. Telecommun 24% 35% 41% PPP 4.4 Key Success Factors In PPP Scheme ication e. Industrial 21% 44% 35% PPP Table 6: Key success Factors in PPP Scheme district Variables NO Key success Factor Responses From the above table, it showed the distribution of financial 1 Warranty of return on investment 21 sharing on PPP scheme based on the respondents opinion. The 2 Balanced risk-sharing 25 largest percentage for each stage in the whole life project cycle 3 Selection of the parties based on 20 indicated in last column (4). It also requires clear division of performance and skill responsibilities and risks allocation so in the end it leads to the 4 Good communication and solid 19 establishment of common goals to be achieved by using this PPP cooperation between parties scheme to improve the effectiveness and efficiency of the project, 5 Trust and equality between parties 18 6 Communication and strong 18 also the quality of products and services. Table 7 also shows the support of the decision makers portion between government and private varied in several 7 Clear and measurable Key 24 financial project life cycles stages. performance indicator (KPI) 8 Benchmarking and continuous 20 performance monitoring 5. CONCLUSION 9 Solving problems by negotiation 14 and mediation VE method has been systematically used to produce 10 Others 2 optimum outcomes for project. Value engineering application in Sunda Strait Bridge (SSB) mega project generates additional functions include tidal and wind power plants to produce energy, oil &gas integration as well as fiber optic integration to transmit DikunSuyono (2005a), Indonesia Infrastructure: Attracting Private fuel and data and develop tourism area to attract local and Investment and Maintaining the Conducive Environment, Asia foreign tourists. Moreover this study also identified major risk Infrastructure Congress, Bangkok, 7-9 December 2005 factor in the project, key success factors to implement PPP DikunSuyono (2005b), Indonesia Infrastructure Development, Bappenas, . scheme in project financing activities. Leung, Mei – Yung and Kong, Sylvia S.N., (2008), Identifying Key This research produces integration between new function Competencies of VM Facilitators Based on International Standards, discovered and existing Sunda Strait Bridge Conceptual Design Department of Building and Construction, City University of yet provide stakeholders a better understanding of risk and Hongkong, Hong Kong responsibilities sharing to create more value for the project. Oetinger, B (2004), “From idea to innovation; making creativity real”, Journal of Business Strategy, vol. 25, No. 5, pp. 35-41. Project Management Institute, A Guide to The Project Management Body ACKNOWLEDGEMENTS of Knowledge (PMBOK Guide), Third Edition, USA, 2004, p.40 Robinson, J.L., (2008), Value Added Strategies to Sustain A Successful The research was fully supported by a grant from National Value Improvement Program, Value World, volume 31, Number 3, Priority Research Grants Masterplan for Acceleration and Fall 2008, hal 19 – 25 Sugiyarto, G., M. Oey-Gardiner and N. Triaswati (2006), “Labour Expansion of Indonesia Economic Development (MP3EI). Markets in Indonesia: Key Challenges and Policy Issues”, in J. (Project No. 3710/H2.R12/HKP.05.00/2012) Felipe and R. Hasan (eds), Labor Markets in Asia - Issues and Perspectives, Macmillan. Yescombe, E.R. Public Private Partnership. Principles of Policy and REFERENCES Finance. Elsevier, 2007

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