Abstract:
Cost escalation may occur in the implementation of any construction projects caused by failure in the identification, analysis and mitigation of risks and their negative impacts. Two case studies concerning risk analysis in the development of water supply project and transportation project were presented to demonstrate the role of risk analysis can play in managing and reducing project risks. It is identified thay 9 risks were emerged in the implementation of the water supply project in Padang City, West Sumatra, and 5 risks were occurred in the construction phase of the bridge in Kelayang, Indragiri Hulu, Riau. This analysis quantifies the effects of identified risks on economic parameters. After risks analysis has been applied, the projects may appear more risky. This is because the identified negative risks have not been mitigated. Thus, the negative risks often outweigh the positive risks. The cumulative negative effects of the risks have suffered project contractor and project operator in terms of economic parameters (Net Present Vaue, NPV, Internal Rate of Return, IRR and Cash Pay Back Time, CBT). By the identification, analysis and mitigating various parameters of the risks using Caspar and @Risk for Project software package, there were probability to improve projects paramenters within these two projects by 50%-100% before and after risk mitigation procedure apllied.
