Project Risk Management in Hydropower Plant Projects: A Case Study from the State-Owned Electricity Company of Indonesia

Abstract

The development of hydro electric power plant is one of the efforts in utilizing water resources for people welfare by generating the energy for electricity purpose. Nowadays, the installed capacity of hydro electric power plants is 3,529 MW from the total installed capacity 24,846 MW from various power plants owned by PT PLN (Persero) and the hydro power potential 75,000 MW all over Indonesia.Hydro electric power plant has complex structures and involves large amounts of capital with a long-running construction period. This situation imposes uncertainty factors with considerably high risks. The construction phase is identified as a critical phase in hydropower projects where many unforeseen factors occur. Failure to manage project risks leads to significant problems for the client such as completion time delays and cost overruns. In order to prevent time delays and cost overruns in hydropower construction in PT PLN (Persero), the study on project risk management in the construction stage of hydropower plant projects had been conducted.The purpose of this study was to identify and measure the importance of construction risks and to determine the level of agreement or disagreement between the client, consultants, and contractors on the ranking of construction risk in hydropower projects. The author selected the respondents from the clients, consultants, and contractors’ personnel who had work experience in hydropower construction projects in PT PLN (Persero).