Risk and Uncertainty in the Medan-Binjai Toll Road Infrastructure Project, Indonesia Based on the Stochastic Analyzes

This paper demonstrates state of the arts stochastic risk analyzes in assisting decision-making processes in achieving the project objectives in terms of the estimating project costs under uncertainty. The objectives of this study were to; (i) analyze the feasibility of the Trans Sumatra toll road projects section of Medan-Binjai (25.46 km), Indonesia, and (ii) identify and quantify the toll road risk and uncertainty variables influencing the economic feasibility of the project using stochastic approach. This study identified that the risk variables in this study may include; Indonesia Certificate Bank (SBI), inflation, volume of traffic (vehicles), operation and maintenance (OM providing the government supports (GSs) as much as 40% of the total construction costs as well as land acquisition costs (Scenario 3). This scenario has resulted that there was 90% probability of the projected NPV would be positive at the range of Rp. 0.54 million to 1.894 million. The implementation of the stochastic risk analysis may assist the project managers comprehensively in developing decision-making processes in financing the toll road project.