Vol 6, No 5 (2015) > Industrial Engineering >

Risk Impact Analysis on the Investment of Drinking Water Supply System Development using Project Risk Management

Akhmad Hidayatno, Armand Omar Moeis, Aziiz Sutrisno, Wulan Maulidiah

 

Abstract: The development of a water supply system requires a
high investment cost, and financial, environmental, and institutional aspects
need to be considered. As major projects involving many stakeholders, drinking
water supply projects become vulnerable to risks. A risk-based analysis is
required to reduce the likelihood of failure in both the operational and
financial aspects of such projects. This study describes the process of risk
management planning for a drinking water supply system construction project in
South Bali. The case study is based on the project risk management method with
the value at risk to calculate the impact of risks in project investment. The
purpose of this study is to obtain a financial risk model that maps potential
risk factors and calculates the financial impact of risks on the project. This
is used to create alternative strategies to reduce the impact of risks on
investment made during the development of the project. The analysis showed that
of the three priority risk factors, production capacity has the greatest
influence on the net present value of the project.  
Keywords: Drinking water supply system; Financial risk model; Project risk management; Risk; Value-at-risk

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