IMPROVING PROJECT EXECUTION BUDGET PERFORMANCE IN SOIL CLEAN UP PROJECT (A Study of Six Sigma in PT XYZ Environment Project)

• Main Author: Legawa, Patria
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/42920
• Institution: Institut Teknologi Bandung

Cost variation is a common phenomenon in project execution. Cost budgeting performance is very crucial for a project to see how the project is being executed. Cost variation can be caused by several factors and may not be the same for any project. Failing in achieving cost performance can result in overrun in the project cost so it is very important to know what the causes of cost variation for specific project to keep project within the budget tolerance and improve project budget execution performance. PT XYZ completed clean-up activities for total 18 locations in 2018. Budget performance evaluation was conducted to compare the actual cost spent with the budget planned. The average actual spent per site was 2.05 times higher than original budget plan and the actual work volume executed were indicated higher than estimated scopes in original plan. Only 4 of 18 location (22%) were executed within the budget spent tolerance per site. Six Sigma method, which known as DMAIC (Define, Measure, Analyze, Improve and Control), was used starting from exploring the business issue until the development of implementation plan. Project KPI related to budget performance was used as the maximum acceptable tolerance for project actual spent variation. Process map and Supplier-Input-Process-Output-Customer (SIPOC) were used for defining the soil clean-up project execution process in Environment Project. Using process capability check, it has indicated that current soil clean-up work process is not capable, and the process was off-center (Cpk<Cp). Five-Why’s analysis was conducted to determine the root causes for budget spent variation in clean-up project, the results are inadequate involvement of right people in early stage of construction, material take-off was not used in cost estimation, lack of knowledge on engineering standard for clean-up work activities, no specific guideline for cost estimation, and unclear information from field survey. The best solution alternatives were evaluated and selected using Analytical Hierarchy Process (AHP). Selection criteria used for alternative evaluation were easy to implement, direct impact, time and cost. It resulted the following solutions to improve the budget execution performance: prepare material take-off for work estimate, develop excavation and construction review team, construction drawing and survey checklist, and cost estimate guideline. With new soil clean-up work process map, the average actual budget spent performance per site was improved from 2.05 to 1.012 at four locations executed in period up to July 2019 with resulted in tangible benefit Rp. 1,684,845,946. To ensure the improvement made is sustained after it is handed over to process owner, plan consists of data collection and behavior action plans shall be implemented by project team in control phase.