Utilizing uncertainty management to analyze the uncertainty of toll road land acquisition

Lukas Sihombing, Yusuf Latief, Ayomi Dita Rarasati, Andreas Wibowo

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

A significant construction activity, especially for developing toll roads, is land acquisition. Due to pending issues regarding land acquisition, many construction projects have not been finished as well as financiers have been unable to pay their outstanding debts. Land acquisition is a very complex issue, although the government has overcome this problem with a regulation that land costs are under the state budget. In the case of Indonesia, land costs are operated by the State Asset Management Institution (SAMI) under the Ministry of Finance. In fact, land funds from SAMI are very late and land cost estimation is always under the actual land price. Therefore, the government asks the toll road company to bail out the land cost, and then the government will pay it the next year. However, investment costs can far exceed the original costs because land acquisition problems are still complex, and that price can be multiplied up to 10 times higher. This paper aims to analyze the unpredictability of acquiring land for toll roads by applying uncertainty management with a crystal ball simulation. A system dynamics simulation in using program uncertainty of toll road land acquisition validates it. In the case of Indonesia, it shows that the land acquisition cost increase is 30.2%, and the IRR is 0.01. Meanwhile, if a land lease is used, the revenue from the land lease can be a grace period in 2041, an IRR of 0.015, and a difference of 0.5%.

Original languageEnglish
Pages (from-to)1221-1228
Number of pages8
JournalInternational Journal of Civil Engineering and Technology
Volume9
Issue number6
Publication statusPublished - 1 Jun 2018

Keywords

  • Land acquisition
  • Toll road
  • Uncertainty management

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