MULTI CRITERIA DECISION MAKING FOR SELECTING COST REDUCTION PROJECT TO SUBSTITUTE THE COMPRESSION COST IN PLN MUARA KARANG

• Main Author: Ranudigdo, Rahmat
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57651
• Institution: Institut Teknologi Bandung

There is a potential decrease in the profit of PT. Perusahaan Gas Negara Tbk (PGN) after the company carried out government assignments to implement Ministerial Decrees No.89 and No.91. One of the root causes requires strategic decision making in the form of selecting a cost reduction project to replace the compressor costs that have been burdening PGN on gas sales at PLN Muara Karang. To overcome this problem, it is necessary to apply Multi-Criteria Decision Making (MCDM) in the selection of cost reduction projects so that business processes become more efficient in the future. The Analytic Hierarchy Process (AHP) approach was chosen in prioritizing projects by looking at the advantages of AHP compared to other MCDM methods. AHP is done by applying pairwise comparisons to give weight to the 10 selected sub-criteria. The comparison process requires input from 14 respondents from related divisions who are also the Decision-Making Unit (DMU) in the project prioritization process. The next process is followed by quantification of alternative parameters in 3 ways, namely pairwise comparisons, direct normalization of quantitative data, and classification followed by normalization. The last step is to calculate the priority index by multiplying each sub-criteria weight by the rating of each sub-criteria for each alternative. Considering the results of the calculations for the six alternatives, it is recommended that PGN conduct a negotiation process to carry out an LNG Swap (alternative #6) which if it fails to proceed with negotiations on the transfer of compressor costs from PGN to PLN (Alternative #5). These two alternatives are negotiation processes that provide the greatest benefits and do not require Capex. The two alternatives with the highest priority index, namely Negotiation for Swap LNG and Negotiation for the transfer of compressor costs from PGN to PLN are negotiations so there is a possibility of success and failure. Of course, the outcome of a negotiation process must have a certain time limit. if within that time limit the results of the negotiations are successful, then there is no need for a project that requires capex, but if the negotiation fails, then the project must be selected from one of the four remaining alternatives. The next alternative that has the third highest priority index is to Extend pipeline 3 km (alternative #1). Alternative #1 should also be started in parallel so that if negotiations fail, PGN still get benefit from lower operating costs.