Budget Optimalization using ISO 31000 Risk Assessment Method

Abstract

Cost is always associated with complexity and risk. Project that has high complexity increases the associated risks along with the costs. The article takes case study of a state-owned energy company, XYZ that builds electricity transmission projects around Indonesia. Transmission project has high complexity since it involves various expertise of contractors and subcontractors. Using subcontractors in a transmission project is a common thing and it poses many risks associated with the chain of contractors and her subcontractors. Indonesia is surrounded with variety of topology such as forests, mountains, rural areas, and islands, has variety of risks associated with them. The article proposes the use of ISO 31000 risk assessment method to identify dan mitigate all possible risks along with further budgeting policy. Budgeting policy is needed to assist the project owner to assess the scope of work of each work-breakdown task within the chain of contractors/subcontractors. By learning all costs within each task, project owner can develop effective cost measures that can be applied in various project conditions.