Preliminary cost in industrial building at Sumatra, Kalimantan, and Papua

Abstract

Preliminary cost is a support cost that needs to be done so that the construction project can run well, but costs tend to experience an increase from the planned cost that has been determined to the final cost. Preliminary cost affects profits or losses of a construction project, therefore this study is essential so it can be known the reference for preliminary cost and cause of cost overruns, which items that give a high contribution to the preliminary cost, and the relationship between preliminary cost and profit at company XYZ. At Sumatra, Kalimantan, and Papua, the actual preliminaries cost occurs by 215%, 114%, and 188% from the planned cost, thus the cost overruns happened. The cause of this cost overruns can occur because of lack of skill of the estimator for estimating and planning about cost, duration, equipment and tools, miss implementation of method statement, lack of information about the project, incomplete design, and unaquired land. The component of the preliminary cost is vary based on its location. This analysis is necessary because it can show which items are influential and contribute a large proportion to the overall preliminary so that more attention is given to those items. The preliminary cost has a contradict relationship to profit, if the preliminary cost is increased, the profit will be decreased.