Forecasting demand on mega infrastructure projects: Increasing financial feasibility

Albert Eddy Husin, Mohammed Ali Berawi, Suyono Dikun, Tommy Ilyas, Abdur Rohim Boy Berawi

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)

Abstract

Indonesia is a country with large and dynamic economic activities reflected by an average economic growth reaching 6% per annum. Sunda Street Bridge (SSB) is one of the mega projects offered by the Indonesia government that would spend about US$ 25 billion. In line with the SSB main function as an efficient mean for transporting people and goods between two major islands in Indonesia, potential additional functions have been explored including installation of liquid and gas pipes, fiber optics, industrial area development and renewable energy utilization. This research establishes the approach to forecast demand in the case of conceptual design. The SSB is associated with innovations to determine the functions using value engineering methods. The approach involves forecasting demand with a System Dynamics simulation model that could provide a reliable estimate and generate scenarios to compare the financial feasibility of the project before and after the process involving innovation of project functions. Analysis involving demand forecasting with the System Dynamics Approach has confirmed that the Sunda Strait Bridge development with additional functions would increase the revenues of the overall project up to US$61.59 Million, in order to obtain an increased Internal Rate of Return (IRR) of the overall project up to 7.56% with a positive Net Present Value (NPV).

Original languageEnglish
Pages (from-to)73-83
Number of pages11
JournalInternational Journal of Technology
Volume6
Issue number1
DOIs
Publication statusPublished - 1 Jan 2015

Keywords

  • Demand forecast
  • Financial feasibility
  • Innovation
  • Mega infrastructure project
  • System dynamics

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