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GlobalIlluminators
FULL PAPER PROCEEDING
Multidisciplinary Studies
Full Paper Proceeding ETAR-2014, Vol. 1, 500-512
IS BN: 978-969-9948-23-7
ETA R 2014
The Risk Identification On The Assets Of Green Management-Based Clean
Water Services And Their Management Plans And Strategies (A Study On
Clean Water Services In Jawa Barat)
Budi Supriatono Purnomo1 , Alfira Sofia2* ,R.NellyNur Apandi3
1
Indonesia University of Education, Indonesia. 2 School of Business and Management ITB, Indonesia. 3 Indonesia
University of Education, Indonesia.
Abstract
The aims of the study are to reveal weaknesses in the management of the Company assets, to identify danas sses
the risk probability and risk impact faced by the Co mpany as well as to design strategies and policies for riskbased asset management in Clean Water Serv ices (PPA B—Perusahaan Penyediaan Air Bersih ).
The qualitative research method with exp lorat ive and descriptive approaches are used to exp lore either new
literatures or to collect experts’ opinion on factors related to the study, as well as to formulate strategies to
resolve the identified problems. In this study, we used 27 cities/regencies as sources of secondary data, and also
face-to-face interviewed with correspondent from academics, planners, and practitioners. Content analysis used
in processing primary data, whereas descriptive statistical analysis used in processing secondary data.
The results of the study show that the weaknesses in company asset management are as fo llo ws: no long -term
planning in the management of Clean Water Co mpanies, the Full Cost Recovery concept has not been applied,
most of company assets are old assets, not all companies have asset management procedure, and the ownership
of company assets is unclear.Another result indicates a very low capacity of PPAB in providing clean water for
the public in their service areas. Customer satisfaction regarding complet ion rate of comp la ints shows that it is
quite able to meet the satisfaction level, in spite of a quite high of risk probability of dissatisfaction. Water loss
ratio indicates the insufficient of water loss management with very lo w probability. The level of effectiveness of
the customers accounts receivable collection indicates a great performance in managing their accounts
receivable, while the risk probability is 24.25%. The greatest loss impact occurs when the average rates set by
the company are lower than the actual production cost, which is a maximu m of Rp 25.55 billion. The result of
the emergent types of risk, proposed strategy to handle the assets comprises technical risks include safety, the
use of tangible assets, currency exchange at chemicals purchase, electricity prices, and water loss, while
administrative risks include market value and problematic receivables. Finally, it revealed that PPAB still need
to improve their management since many aspects are still in the low level of achievement, so the findings in this
study can be used as a reference.
© 2014 The Authors. Published by Global Illuminators. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/)
Peer-review under responsibility of the Scientific & Review committee of ETAR-2014.
Keywords : Asset Management, Risk Management, Green Management.
*All correspondence related to this article should be directed to , Alfira Sofia, School of Business and Management IT B, Indonesia.
Email: alfira.sofia@sbm-itb.ac.id
© 2014 The Authors. Published by Global Illuminators. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/)
Peer-review under responsibility of the Scientific & Review committee of ETAR-2014.
Alfira Sofia /ETAR-2014/Full Paper Proceeding Vol. 1, 500-512
Introduction
Water is one of human primary needs, so that clean and drinking water is the most
important thing in our life.Experts predicted that water crisis would occur in many countries.
This is possible because of the ineffectiveness of water supply system thetends not to be ecofriendly.In 2000 World Water Forum II in Den Haag it is said that the water crisis would
occur in 2025. It is also possible to happen in Indonesia if the government and the Drinking
Water Services could not wisely manage assets related to water supply system.
According to a study conducted by Slamet Susanto and Christina Ningsih, most Clean
Water Companies (PPAB) have either financial or non- financial problems.Non-financial
problems faced by PPAB nowadays include:the high level of unaccounted water produced,
unused production capacity, the inadequacy of clean water supply for the public both in
quantity and quality, conflicts of raw water that crosses two or more local governments, some
regional has not settled the raw water arrangement, and the deforestation in watershed areas.
While financial problems that haunt PPAB include:the operating/maintenance cost to
produce clean water per cubic meter is higher or equal to the selling price of water per cubic
meter, get twisted by quite big accounts payable and unable to pay debt in time, whereas
the collection rate of accounts receivable is relatively low.Due to those circumstances, based
on financial statement of the companies, many companies are already in state of bankruptcy.
Clean Water Services (PPAB—Perusahaan Penyediaan Air Bersih) used to be known
as Drinking Water Company (PDAM—Perusahaan Daerah Air Minum), but in the
development of PDAM in some regions has changed its status so that in some recent studies
it is more commonly referred to as Clean Water Services.In this study the acronym PDAM is
used because the secondary data use that.Following is the performance report of
PDAMsRegion II Jawa Barat:
Table 1. Financial Statement of PDAMsRegion II Jawa Barat Year 2011
FINANCIAL
RENTA
LIQUIDI
BILITY
TY
E
S
SERVICE
Y
O
CFFECTR
OLVAAREAS
EAR
PERA- ASH
IVENES
BILIT
OE
TING
RATI S
OF
Y
(
RATI
O
COLLE
%)
O
(%)
CT-ION
(%)
PDAM KOTA
2
(
1
4
9
2
CIREBON
011
2.5)
.0
84.0
1.3
77.9%
PDAM KOTA
2
1
0
4
9
3
BOGOR
010
6.3
.8
4.9
1.7
41.2%
PDAM
2
2
0
1
8
4
KAB.GARUT
011
.4
.9
9.7
8.2
83.4%
PDAM
KAB.
2
4
0
4
9
3
BANDUNG
011
.4
.9
0.7
8.8
62.0%
PDAM
KAB.
2
5
0
7
9
3
KARAWANG
010
.2
.9
5.5
6.5
70.1%
PDAM
KAB.
2
0
1
6
9
3
SUBANG
011
.4
.0
5.2
6.7
61.1%
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PDAM
BANDUNG
PDAM
BEKASI
KOTA
011
KAB.
011
2
4.8)
2
6.1
(
1
.0
1
5
8.7
0
.8
1
19.0
1
86.5
6
2.2%
9
2.9
2
40.9%
(
PDAM
KAB.
INDRAMAYU
010
PDAM
KAB.
MAJALENGKA
011
PDAM
KAB.
PURWAKARTA
011
PDAM
KAB.BOGOR
011
PDAM KOTA
BEKASI
011
PDAM KOTA
BANJAR
011
PDAM
KAB.
CIAMIS
011
PDAM
KAB.
TASIKMALAYA
011
PDAM
KAB.
CIANJUR
010
PDAM
KAB.
CIREBON
010
PDAM
KAB.
SUKABUMI
011
PDAM
KAB.
KUNINGAN
011
PDAM
KAB.
SUMEDANG
011
PDAM KOTA
SUKABUMI
011
Source:BPPSPAM, 2012
21258.
8)
2
.0
2
.5
2
2.5
2
.3
2
3.9)
2
.1
2
.9
2
0.4)
2
2.7)
2
.4
2
2.0)
2
.2
2
2.5
0
.8
5
2
2.3
1
.0
7
3
2.4
0
.9
1
0
2
4
9
2
0
(
4
1
(
2
1
1
1
1
(
8
1
9
1
0
3
9
7.8
1
6.1
1
.0
9
6.3
77.5
.9
9
6.2
1.8
.0
9
5.5
73.3
.0
9
7.2
4.1
.0
9
6.9
06.8
.0
8
9.1
98.6
.9
9
4
0
.9
9
1.0
.2
9
8.3
5
.0
7
9.4
1
95.1%
9.0
5
1
.2
25.5%
7.9
27
4
9
4
0
.9
(
7.5
33.0
9
8.6%
8
2
30.8
.8
8
6.7
1
184.9%
2
688.0%
1
882.6%
4
01.5%
6
78.3%
6
31.4%
1
79.2%
7
42.4%
2
37.4%
2
12.0%
1
01.1%
Based on the data above lots of service areas gain negative Return On Equity.This
indicates those areas keep gaining loss.Local governments that gain negative ROE include
PDAM Kota Cirebon, PDAM Kota Bandung, PDAM Kabupaten Indramayu, PDAM
Kabupaten Cianjur, PDAM Kabupaten Cirebon and PDAM Kabupaten Kuningan.While
according Tempo.Co February 17, 2012, the performance of most PDAMs is poor.Up to last
year, from 374 PDAMs in Indonesia, only 38 percent of them are in a good state.The rest,
122 PDAMs are below the average and the other 84 are poor.The chairperson of Badan
Pendukung Penyelenggaraan Sistem Penyediaan Air Minum (BPPSPAM) Kementerian
Pekerjaan Umum, Rachmat Karnadi, states that now the major problem of PDAM is that
most of them—205 PDAMs—are heavily indebted.Unfortunately, only 30 of them pay their
debt smoothly.While the rest—175 PDAM—have overdue debts up to Rp 4.6 trillion.
In accordance with the ability in fulfilling their obligations, the ability of most
PDAMs to collect the overdue receivables from the customers is still low.For example, from
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2007 to January 2011 the overdue receivables of PDAM Tomohon Sulawesi Utara is up to
Rp 595,235,700 (Tomohon Today).The overdue receivables of PDAM Serang is up to 7.9
billion rupiah.The overdue receivables of Perusahaan Daerah Air Minum (PDAM) Tirta
Cendana Timor Tengah Utara are up to Rp 600 million (POS-KUPANG.COM June 11,
2011), and Rp 3 billion of PDAM Kabupaten Berau.
The high cost of production and ratio of leakage causes great loss for most
PDAMs.For example, PDAM Tirta Mukti Kabupaten Cianjur suffer loss up to Rp 7 billion
for the past two years (source: KBR68H December 13, 2011).The same thing occurs to
PDAM Tirta Wening Kota Bandung which suffers loss up to 25 billion rupiah for 14 years
(source: BisnisJabar.com February 15, 2011), and of PDAM Bagasasi Bekasi up to 50 billion
rupiah (source: sentana online.com April 18, 2011).
The performance of PDAM that far from satisfaction reflects that the main-asset
management has not been maximixed.As with any drinking water company, the infrastructure
is a significant main asset.Therefore, it has to be ma naged well from its planning, funding,
purchasing, operation, maintenance to its termination.This process is called asset
management.
A company with a big investment like PDAM which has many assets certainly has to
face risks in every level of its operatio n.Apart due to high production cost and low selling
prices, this poor state of PDAMs in Indonesia are also caused by poor asset
management.Level of risk and risk probability of each owned asset will surely optimize the
asset management itself if they are well identified, measured, and managed.
Risk is defined as the chance or probability of disaster or loss to happen.According to
Hinsa Siahaan (2009: 22) risk management is a process with certain methods that an
organization use to consider the risks faced in every activity of the organization in achieving
the goals of the organization, or portfolio risks of the organization activities.As with any
companies, risk management has now become an important issue that have to be managed by
any companies, including PDAM..
Objectives Of The Study
(1) to reveal weaknesses in the management of the Company assets; (2) to identify
dan assses the risk probability and risk impact faced by the Company as well as (3) to design
strategies and policies for risk-based asset management in Clean Water Services (Perusahaan
Penyediaan Air Bersih).
Literature Review
Asset Management
Asset management was born as a system to better manage the assets primarily natural
resource assets.Britton, Connellan, Crofts (1989) in Dodi D. Siregar (2004: 517) state “define
good asset management in terms of measuring the value of properties (assets) in monetary
terms and employing the minimum amount of expenditure on its management”.British
Standard Institution Publicly Available Specifications (BS I PAS 55:2008) defines asset
management as follow:
Systematic and coordinated activities and practices through which an organization
optimally and sustainably manages its asset systems, their associated performance, risks and
expenditures over their life cycles for the purpose of achieving its organizational strategic
plan.
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Asset management is a set of procedures to identify budget for the asset, the asset
acquisition, asset storage, asset maintenance, asset record including how to terminate the
property and the calculation of asset accumulated depreciation.As stated by Susanto and
Ningsih (page 1,2)
In general, asset management is defined as the range of activities associated with
identifying what asset is needed, how to get it, how to support and maintain it, and how to
remove or renew it so that that asset effectively and efficiently can realize the
target/objective.While asset management is specifically defined as a series of disciplines,
methods, procedures and tools to optimize the business impact against cost, performance,
and risks exposure (related to the availability, efficiency, lifespan, and
regulatory/safety/environmental compliance) of the physical assets of the company.
The development of asset management is quite rapid. It is apparent from the change in
orientation from static, then evolved to dynamic, initiative, and strategic.Asset management
comprises five steps (Dodi D. Siregar, 2004: 518), which are connected and intergrated, as
follows:
1. Asset Inventory
2. Legal Auditing
3. Asset Assessment
4. Asset Optimization
5. Supervision and Control for Asset Management Information System
Risk Management
According to Fachmi Basyaib (2007: 9) risk management in the broad sense is the art
of decision- making in a world full of uncertainty.Moreover William T. Thornhill in Robert
Tampubolon (2004: 33) defines risk management as follow:
A management discipline whose goal is to protect asset and profit of an organization
by reducing the potential for loss before it happens, and financing through insurance or other
means over the possibility of large losses due to natural disasters, human negligence, or the
court's decision.
According to T. Sunaryo (2009: 12) risk management comprises three stages, which
are identifying ratio, measuring ratio, and managing ratio.One thing that has to be
emphasized is that risk management is not just to identify, measure, and provide backup but
its spirit should reflect the daily work.
Green Management
In evaluating commitment of a companyto natural environment,the shades of green
approach is applied.According to Rahayu Triastity, by using this approach the commitment of
the company with various level of activities can be discovered:This green approach of
Freeman is divided into four stages:
1. First, legal approach in which the company has to comply legal requirements.
2. Second, market approach in which the company has to provide eco-friendly product
in order to meet customers’ demand, not because a strong commitment from the
company management to the nature
3. Third, stakeholder approach in which the company has to cope with environmental
problems proposed by the stakeholder.
4. Fourth, activist approach in which the company has to be active to find ways to
preserve natural resources.
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Research Methodology
The study can be classified as Action Research, a branch of Applied Research, in
which the objective is to take further action to control program realization.Action research in
the study focuses on actions to cope with problems.This is in accoradance with the
obejectives of the study that intends to formulate a strategy for asset management in Clean
Water Services in Jawa Barat, especially to resolve practical problems in society.
Regarding types of research designs, Malhotra (in Husein Umar, 2002) states that
there are three types: explorative, descriptive and causative. This research can be classified as
exploratory and descriptive research which is used to explore either new literatures or to
collect experts’ opinions on factors related to the study, as well as to formulate strategies to
resolve the identified problems.Face-to- face interview and documentations of Performance
Reports of the Companies in Jawa Barat are used for data collection.Data analysis will then
be used for probelm solving, not for hypothesis testing.
Qualitative analysis chosen for the study is combined with exploratory research
design to dig as much fact as possible in order to answer identified research
questions.Descriptive statistics is the technique used to get a complete picture as a basis for
developing strategies which are the final goal of the study.
Regarding data resources, the study uses two primary data, which are direct data from
the original source and secondary data from Financial Statements of identified Clean Water
Services.Data collection techniques used in this study are as follows:
1. Interview (as a primary data), which is conducted directly with semi-open interview
technique.Intrument used by the authors is interview guidelines.Data are collected
in order to identify weaknesses in managing assets and risks faced by the company.
2. Documentary (as a secondary data) method is conducted to collect Performance
Reports of the identified Companies from BPPSPAM to measure risks probability
and impact on PDAMs in Jawa Barat.
Population of the study is clean water services owned by the governments of
cities/regencies in Jawa Barat.Samples of the study are as follows:
1. Interview with correspondent from academics (lecturers/consultants), planners (Ditjen
Cipta Karya Kementerian Pekerjaan Umum and BPPSPAM) and practitioners
(director/chairperson of water treatment division of clean water services).
2. Documentary uses saturated samples in form of performance reports of all clean water
services in Jawa Barat (22 companies).
This qualitative study uses Existential Phenomenology, a model to understand the
essence of one's experience by grouping existing issues and providing meaning for the issues
aligned with his view (Searcy and Mentzer, 2003).The analysis steps can be performed as
follows (Anis Chariri, 2009):
1. Data reduction
2. Understanding and testing
3. Interpreting
While the secondary data collected are subsequently processed using descriptive
statistics tool to calculate average, standard deviation, z-score, probability of a normal
distribution, and VaR (value at risk).The steps are as follows:
1. Risk Probability Measurement
Risks are measurable if we can discover their probability and impact towards the
company.The first measure is the value of risk probability.Standard score method (z-zcore) is
used to calculate the risk probability.
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2. Risk Impact Measurement
The most effective method to measure risk impact is VaR (Value at Risk).At this
moment VaR is considered standard method to calculate market risk.VaR is the greatest loss
that could occur in a certain period predicted for a given portfolio.The concept VaR is based
on statistical obeservation over historical data.In this study VaR is used to measure losses of a
probable worst outcome.
Data Analysis And Discussion
The Description of Weaknesses on Asset Management of the Company
Asset is the most important thing for the company, because it provides benefits for the
company. Therefore, it has to be managed well.Practically, the drinking water company
(PDAM) has not yet optimized asset management.Followings are 5 informants from different
professions whom the data are collected from:
Table 2.The Informants of the Study
Informan
Professions
Work Experience
ts
Informant
Academics
15 years
1
Informant
Practitioner
20 years
2
Informant
Practitioner
30 years
3
Informant
Practitioner
20 years
4
Informant
Practitioner
20 years
5
Long Term Planning Has Not Been Included in the management of Drinking Water
Company
Planning should be the most crucial in running a company.It can be either short or
long term.At the moment short-term planning of PDAM is realized in the form of annual
budgeting. However, the long-term planning has not been maximized.The long-term planning
are required in order to calculate water supply and to improve service capacity, because the
needs of drinking water is increasing year after year along with the growth of
population.However, up to now most PDAMs has not planned long-term needs of water
supply.The planning should not only be focused on the needs of water, but it has to be
synergized with asset management, because it will optimize the service to the public.
a. Full Cost Recovery Concept Has Not Been Applied
Budgeting made by PDAM has not applied full cost recovery concept. This concept
means that all costs are covered by revenue of the company.The costs include asset
maintenance.The purpose of this spending is to keep asset on a beneficial state.
b. Most of PDAM Asset Are Old Assets
Aside form maintenance cost, PDAM should renew its old assets so that asset
capitalization increases.Current field reports state that most of water installations are
inherited from the Dutch Colonial age—hundred years old. However, those assets are still
utilized without any renewals.
Asset management theory states that asset have a certain economic life. If the asset is
utilized more than its economic life, more costs are required to maintain it.Even it is possible
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that the cost of old asset replacement is cheaper than the cost of its maintenance.As stated by
informant 4, “Many assets are inherited from the Dutch, so if we want to have a good
investment, we have to replace them all.”
Asset investment is one way to overcome the performance problem of PDAM.By
investing through the latest technology the operating costs are expected to decrease while the
service quality to the public are expected to increase.This investment will need substantial
funding, so PDAM cannot only rely on Local Government fundings, but they need other
investors.However, this creates another dilemma.Based on UUD 45 everything that
influences the wealth of all citizens have to be controlled by the state.Water is one of its
examples.
c. Not All PDAMs Have Asset Management Procedure
An asset management system in a company comprises a series of procedures for
managing the assets.In achieving the goals, every organization should have a technical
procedure for the operation process.Most PDAMs have not yet had a more detailed technical
procedure for managing the assets, especially asset replacement procedure when it’s noted
that the assets can no longer function effectively.The diversity of assets owned by PDAM
surely has urged them to know technically the economic life of every asset in detail.
d. The Ownership of the PDAM Assets Is Unclear
Most of PDAM assets are local governments-owned assets or so called Barang Milik
Daerah.Barang Milik Daerah as one of the important elements in the framework of
governance and public services should be maintained properly, which in turn can realize the
local asset management by taking into account various principles. One of them is value
certainty that means the management of Barang Milik Daerah should be supported by the
accuracy of the amount and value of goods in order to optimize the utilization and transfer of
Barang Milik Daerah as well as the preparation of the Local Government balance sheet.The
unclear ownership of the assets of PDAM between the State Government and Local
Government becomes one factor in the weaknesses of asset management.As the result, the
maintenance costs for the assets has not been defined.
Risk Identification
In this research, the authors conduct an analysis towards secondary data—
Performance Reports of PDAMs in West Java obtained from BPPSPAM.Based on data
contained in those reports the authors identify the probability and impact of risks faced by
PDAMsin West Java.The result is that service coverage of PDAMsin West Java just reach an
average of 38.26%. This indicates that their ability to cover the needs of water for public in
their service area is still poor.The standard deviation of service coverage is quite high of
20.77%.It indicates various ability of each PDAM in covering the service in their area.In this
study the determined percentage of service coverage deemed to be beneficial is 75% (xscore).From the calculation of z-score above it is known that the risk probability of service
inadequacy of clean water services in Jawa Barat is still very high at 96.16%.
Customer dissatisfaction for PDAM in Jawa Barat regarding completion rate of
complaints is about 91.09%. This shows that PDAM is quite able to meet customer
satisfaction with a high rate of completion of complaints.However, the standard deviation of
completion rate of complaints is quite high. This indicates various ability of each PDAM in
completing their customers' complaints.This study defines that PDAM should be able to
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complete the complaints thoroughly (100%).From the calculation of z-score above it is
known that the risk probability of customer dissatisfaction is quite high of 67.41%.
Water loss ratio of PPAB in Jawa Barat is at 31.60%. This indicates the ins ufficient of
water loss management, and the probability of water loss is only 0.01%.However, the
standard deviation of water loss ratio is relatively low. This indicates that the ability of
PDAM in managing the loss of water is nearly the same.This study defines that PDAM
should be able to minimize water loss up to 0%.From the calculation of z-score above it is
known that the risk probability of water is 0.01%.
The level of effectiveness of the customers accounts receivable collection of PDAMs
in Jawa Barat is at 95.68%. This indicates a great performance of PPAB in managing their
accounts receivable.While the standard deviation of the effectiveness level of collection is
relatively low of 8.13%. This indicates the ability of each PDAM in completing their
customers' accounts receivable is fair.This study defines that PDAM should be able to
complete their accounts receivable completely (90%).From the calculation of z-score above it
is known that the ineffectiveness of the accounts receivable collection is 24.25%.
In this study risk probability and risk impact are identified from the secondary data—
perfomance reports of all clean water services in Jawa Barat of 22 companies.Required data
contained in those reports are very limited so that creates some difficulties for the authors in
conducting a complete identification.Followings are the summary of risk probability and risk
impact identification:
Table 3.The Summary of Risk Probability
Risk Sources
Probabili
ty
Risk Probability Of The Inadequacy Of Service
96,16%
Coverage
Risk Probability Of Customer Dissatisfaction
67,41%
Risk Probability Of Water Loss
0,01%
Risk Probability Of The Ineffectiveness Of Collections
24,25%
Table 4. The Summary of Risk Impact
Risk Sources
Impact
(Rupiah)
Average Rates Lower Than Actual Production
25,552,792,3
Cost
73
Production Capacity Lower Than Service
24,574,814,9
Capacity
85
Service Coverage Lower Than Potential
Service
397,967,148
Impacts listed in the above table shows the maximum value of the loss to be borne by
the company if the origin of risk occurs.And it can be seen that the greatest loss impact
occurs when the average rates set by the company is lower than the actual production cost,
which is a maximum of Rp 25.55 billionFollowing is the impact of production capacity lower
than service capacity of a maximum of Rp 24.6 billion.If the service coverage lower than the
actual potential service that can be covered by the company, it will cause a maximum loss of
Rp 398 million.
So it is not surprising that up to now the majority of PDAMs in Indonesia still suffer
losses every year. As a good example, the risk impact and the risk probability of PDAMs in
Jawa Barat are still high.
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Designing Strategies And Policies For Risk-Based Asset Management
Asset management is a process to generate maximum value for all stakeholders of the
company's management from the physical assets owned by the company, either for business
or public interest, by balancing the operational performance of the asset life cycle cost and
risk profile.Risk-based asset management emphasizes more on the process of managing vast
physical assets and it is associated with risks inherent in that process by involving the
application of risk management processes against the main assets of the company to identify
and manage the major causes of failure in achieving corporate goals.
The implementation of the risk management process can be performed on the entire
business activities of drinking water or more specifically on enterprise asset management
activities (each activity of lifecycle asset management).The purpose of the implementation of
the risk management process is not just to provide protection and continuity of important core
business activities and services that but also to fulfill legal obligation; safeguard the health of
the workers and public; protect the natural environment; operate and protect asset at low cost;
and to make contingency plans for emergency situations such as natural disasters.
Table 5.Asset Management Strategies based on Risk Type
RISKS
STRATEGIES
IMPLEMENTATION
Safety
-
Builda physical or emotional public communication and
relation
Security personnel
Seek for land transfer or land lease from the government
The Use of Fixed
-
Build cooperation with the private sector
The private sector builds intake installations, while PDAM
takes in charge in distributing the assets.
Exchange rate that
is used to buy chemicals
-
Seek for domestic subtitution
Conducthedging
Make long-term agreements with the suppliers
-
Seek for privilege from PLN
Build an independent electricity supply such as Microhydro
Power Plant or Solar System Plant
-
Promote persuasion and build relation with communities
where the distributing pipes are located.
Implement the CSR program
Use pipelines made of plastic fiber which is much thicker
than PVC/metal pipelines
Take into account the development of cluster system in
distribution process
Utilize information technology in meter reading by
calibrating the meter instrument so that the data will be
electronically sent to the administration division
Assets
Electricity rates
Water
loss
(unaccounted water)
-
ADMINISTRATION
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Set Selling Price
-
(Tariff)
Problematic
Receivables
-
Take into account the impelementation of a higher tariff that
could cover all costs and provide margin for PDAM
Set a tariff structure that provides a regular income for
PDAM
Allocatebudgeting in APBD for a compensation for Public
Service Obligation (PSO)
Seek for taxation policy that can reduce the operational cost
of PDAM in a form of VAT
Law enforcement in a form of customer installation
termination
Conduct lawsuit action against deadbeat customers by
cooperating with the Prosecutors as the State Attorney
Foreclose
Develop prepaid system in which a customer have to buy
some voucher to to get a certain amount of water from
PDAM
Conclusions and Recommendations
Conclusions
Based on the results of the study and the discussion above the authors draws
conclusions as follows:
1. Identified weaknesses in managing the assets of the companies are:(1) There is no
long-term planning in the management of Clean Water Companies, (2) The Full Cost
Recovery concept hasn’t been applied, (3) Most of PDAM assets are old assets, (4)
Not all PDAMs have asset management techniques, (5) The ownership of PDAM
assets is unclear.
2. The average of service coverage of PDAM in Jawa Barat is still low and the ability of
each PDAM in covering the service in their area is still varies.While the risk
probability of service inadequacy of clean water services in Jawa Barat is still very
high at 96.16%.
3. The standard deviation of completion rate of complaints is quite high. This indicates
various ability of each PDAM in completing their customers' complaints.While the
risk probability of customer dissatisfaction is quite high of 67.41%.
4. Water loss ratio of PDAM in Jawa Barat on the average is still poor, and the standard
deviation of water loss ratio is relatively low. This indicates that the ability of PDAM
in managing the loss of water is nearly the same.While the risk probability of water is
only 0.01%.
5. The effectiveness level of customer accounts receivable collection of PDAM in Jawa
Barat on the average is ata very good level and the ability of each PDAM in
completing their customers accounts receivable is fair enough.While the risk
probability of the ineffectiveness of the customers accounts receivable collection is
24.25%.
6. The greatest loss impact occurs when the average rates set by the company is lower
than the actual production cost, which is a maximum of Rp 25.55 billion.Following is
the impact of production capacity lower than service capacity of a maximum of Rp
24.6 billion.If the service coverage lower than the actual potential service that can be
covered by the company, it will cause a maximum loss of Rp 398 million.
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7. Strategy that should be applied in the handling of risk-based assets that have been
identified are described based on assets risk categorized into technical risks (that
occur at the intake structure, treatment plant and distribution network) and
administrative risks that consist of determining the selling price/tariff and problematic
receivables.
Limitations And Further Studies
Based on the processes and results of the study,followings are the limitations and
further studies:
1. The determination of risk sources and the measurement of the risks can not be
continued with profile risk mapping due to the difficulties faced by the authors in
pairing the probability with the impact of a risk source from secondary data
available.Moreover, quantitative method used by the authors cannot fully explore the
actual conditions.So in addition to using a quantitative analysis tool (which still can
be used to complement), it will be much better if a qualitative approach is used as the
main instrument.
2. Qualitative approach combined with the case study method could be the best solution,
because they could dig as deep as possible the risks in every area and then measure
more specifically the risks from every risk source available.It is very likely to occur
that the same risk source has different probability and impact towards different
service areas.
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