INVESTMENT DECISION ANALYSIS OF HEAVY EQUIPMENT AT PT MANDROSA SUKSES

• Main Author: Santoso, Haris
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/79782
• Institution: Institut Teknologi Bandung

Excavator is one type of heavy equipment that greatly contributes and is considered as the most important heavy equipment in infrastructure projects. It enables a variety of tasks such as digging, trenching, excavating, and loading trucks. It also helps move, lift, and place materials, such as stone and drainage products. As an infrastructure contractor, PT Mandrosa Sukses uses excavators and is demanding more excavators to support its projects as there is an increase in road construction projects. The company currently rents several excavators from a third party. However, there is a gap between expectations and reality when it comes to the costs associated with excavator usage in the field. The company found that the cost of using excavators was too high because there is a difference between an excavator's expected and actual productivity and fuel consumption. This can happen because the rented excavator is often in a poor condition that requires frequent repairs and demands higher fuel consumption. One option for the company to minimize the gap between excavator expectations and performance in the field to reduce costs and generate more profits is to purchase a new excavator. The aim of this research is to determine and assess the feasibility of the excavator investment quantitatively from the financial aspect so that it can provide rational and prudent considerations when making the purchase decision. The parameters used to evaluate these investments are the Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PP), and Benefit Cost Ratio (BCR) methods. Based on the investment feasibility analysis and the company’s requirements, the excavator investment is feasible to implement at PT Mandrosa Sukses. The analysis generates an NPV of IDR 1,274,997,962, IRR of 41.71%, and Payback Period of 3.53 years. Based on the cost benefit analysis, the BCR of purchasing option is 1.21 and renting option is 1.02. The purchasing option has a slightly higher BCR value, therefore it can be concluded that purchasing an excavator is a better option than renting an excavator. Purchasing and owning an excavator gives the company better control over its equipment and operations. When the excavator is maintained well and operated by trained professionals, it will increase work efficiency and productivity, reduce costs, and ultimately increase profits for the company