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APPLYING STRATEGIC EXPENDITURE PLANNING TO ROAD
MANAGEMENT IN INDONESIA


William D. O. Paterson
The World Bank
1818 H Street, N.W.
Washington DC 20433 USA
Tel: 202 - 458 1344
Fax: 202 - 522 3100
Email: wpaterson@worldbank.org

Erwanto Wahyuwidayat
Directorate General of Regional Infrastructure
Ministry of Settlement and Regional Development
Jalan Pattimura No. 20
Kebayoran Baru - Jakarta Selatan 12110
INDONESIA
Tel/Fax: 62 - 21 - 725 4766
Email: erwanto@indosat.net.id / pdpb2@pu.go.id

Glen Stringer, N. D. Lea International Consultants,
Hang Tuah Raya 26, Jakarta Selatan, Indonesia.
Tel. +6221 723 5505. Fax. +6221 724 4991.
E-mail: ndlurms@ibm.net.


Abstract. The preparation of medium-term expenditure plans, for say a 5-year period, and
allocation of expenditures between road networks and expenditure programs, is a strategic
function that needs to be integrated with or compatible with the road management system
used for preparing annual programs. A Strategic Expenditure Planning Module (SEPM) has
been developed as an extension to the existing Integrated Road Management System (IRMS)
in Indonesia. The SEPM determines optimal allocations between all work programs of
preservation and development for roads and bridges, all road networks and all regions, over
multi-year periods. The allocations and the performance predictions, measured by selected
performance indicators, can be determined under various budget constraints and for different
regional areas. The allocations are derived from sets of alternative maintenance strategies
generated by the basic management systems in the IRMS – that is, for interurban roads,
district roads, urban roads, and bridges.

With the severe impact of the recent financial crisis in Indonesia having reduced the road
budgets by over 50%, the need to determine the most efficient use of the scarce local funds
and international finance, and the most equitable distribution across provinces of the country,
has been addressed using the SEPM. The paper describes the concept and development of
SEPM, the way it is being integrated in the national budget planning process, and the first
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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applications to the stringent financial conditions facing the country. Some of the initial
findings are presented, including the additional needs for road surveys and monitoring.


1. INTRODUCTION

In a vast archipelago comprising more than 17,000 islands, stretching more than 5,000 km
from west to east with a total land area of approximately 2 million km
2
, the management of
road assets carries a unique challenge for the Government of Indonesia (GOI). Although the
need for multi-modal transport is crucial because transport connectivity is difficult in such
geography, the road networks provide the majority of transport, e.g., 93% of passenger
transport and 41% of freight transport.

In a nation of more than 200 million population, which had experienced an economic growth
of over 7% for each of the 10 years preceding 1997, implementing sound road management
practice has met some very difficult challenges. During 1984 to 1994, the primary focus was
on the upgrading and betterment of the National and Provincial road networks. The sixth 5-
year development plan (Repelita VI) covering the period of 1994 to 1999, aimed to manage
the preservation of existing roads and to improve the roads upgraded in status, for a road
network comprising:

− National roads = 26,161 km
− Provincial roads = 38,683 km
− District roads = 214,387 km
− Municipal roads = 12,483 km
- Toll roads = 660 km
Total = 292,374 km

Under the pressure of the severe economic and political situation over the last two years,
GOI has needed to focus more on optimizing the limited available funds, while maintaining
essential services and keeping a sound strategic development plan for the coming years.
Furthermore, many central government functions are being decentralized, including the
management of arterial and collector roads to Provincial level, and of District and local roads
to local government level. The challenges are, firstly, not to allow the condition of the network
asset that has been created until now to deteriorate and, secondly, to maintain the networks
in stable condition through the current process of decentralization.

1.1 Objective

The formerly Directorate General of Highways has been using the Inter-urban Road
Management System (IRMS) for annual programming of maintenance and betterment works
on National and Provincial highways since 1987. The network has grown from around 42,000
km to 66,000 km during that period, mainly by changes in status. Similar road management
tools have been developed for other road networks, such as Urban Road, Local Road, Toll
Road, and Bridge but with different levels of system use and application – these are entitled
respectively as URMS, LRMS, TRMS, and BMS. All these systems are being integrated to
form the Indonesian Integrated Road Management System (IIRMS). The crucial issue of
strategic allocation of funds between these networks and particularly among the different
regions of the country was handled previously through a central economic planning process,
assisted by a formula based on population, area and network length. In order to base these
decisions on a more rigorous economic and developmental basis, a specific tool called
Strategic Expenditure Planning Module (SEPM) has been developed since 1998. This new
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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tool is enabling the Indonesian Road Authorities to perform a strategic (5 – 10 years horizon)
planning exercise on an interactive and iterative basis for the entire road assets, that is about
300,000 km of arterial to local roads and all related bridges.

The purpose of this paper is to describe the tool and demonstrate its power in assisting the
Indonesian Road Administration to plan and budget their road network in the most wise
manner. With this tool, the trade-offs between the costs and benefits of various funding
scenarios can be evaluated and demonstrated.

1.2 Approach and Structure of the Paper

The content is presented in three sections. First, the basic principles and concepts of the
SEPM are described. This includes explanation of the calculation of costs and benefits and
the method of budget optimisation. Second, the profile and performance of the road and
transport sector is introduced. Then the main focus demonstrates the application of SEPM
for planning road investment for medium term (5 - 10 years) within the Indonesian road
context. A special review and evaluation is given for the justification of financial year 2000
budget and its impacts on the road sector. Finally there are lessons learned from the
empirical evidence found in Indonesia during such planning and budgeting exercises.


2. OVERVIEW OF INDONESIAN INTEGRATED ROAD MANAGEMENT
SYSTEMS (IIRMS)

Road management programs include routine and periodic maintenance, betterment
(including widening and upgrading), new road development, strategic route planning and
improvement in network accessibility. In line with the goal of the Second Long Term
Development Plan (PJP II: 1994-2019), the current road development policy is focused on:

a) maximising utilisation of the existing road network through maintenance of the
network, and improvement of pavement structure and ride quality (excluding widening);

b) improving network accessibility through the development and maintenance of access
roads from food/services production areas to market distribution points and ports; and

c) strategic development by connecting future development projects to outlets by means
of:
i. maintenance of existing roads;
ii. improving or widening existing roads;
iii. construction or upgrading of ‘missing links’; and
iv. new roads (lowest priority).

2.1 Structure of the IIRMS

Over the last ten years, the former Ministry of Public Works developed a number of decision
support tools to assist with the management of the various road networks. These have
resulted in the development of a series of management systems as outlined below.
Recently, these have been integrated into a framework which allows all of the individual
subsystems both to be operated independently and also for their results to be integrated into
national planning. The Indonesian Integrated RMS is a comprehensive system, i.e. a system
which addresses all phases of the project cycle, starting from expenditure planning, through
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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programming, budgeting, design, implementation (construction), to monitoring and
evaluation. The management system for each set of road assets, i.e. inter-urban (arterial
and collector), local, urban and toll roads and the Bridge Management System (BMS) for
National and Provincial roads was incorporated within the framework of the overall Indonesian
Integrated Road Management System (IIRMS).

The first component of the IIRMS is the Inter-urban Road Management System (IRMS),
which was originally developed based on the concepts and models of the HDM III model
(Highway Design and Maintenance Standards model, series III) developed and released by
the World Bank in 1987. The IRMS simulates road condition and maintenance interventions
over time for three primary treatment classes, namely a base case for routine maintenance,
periodic maintenance (resurfacing), and betterment (strengthening or minor widening). For
each works case, it calculates the saving in total costs, consisting of agency (construction +
maintenance) costs and road user (vehicle operation and time value) costs over the life cycle
analysis period, between the works case and the base (“Do minimum”) case, discounted to a
net present value (NPV). IRMS chooses the optimum time to apply the optimum treatment, in
the year in which the incremental NPV (INPV) becomes negative – that is further delays in
treatment cause a decrease in benefits. However, it cannot apply a budget constraint.

The second component of the IIRMS is the notional “Local Road Management System”
(LRMS), which is becoming fully decentralized, i.e. the District Governments have full
authority to conduct the planning process for the road network within their jurisdiction. The
central Directorate for Highways has given the technical direction for conducting the planning
and programming process by providing the guidelines embodied in DGH decree no. 77/1990.
These cover survey and decision criteria for determining the portion of the network in
maintainable condition and preparing routine and periodic maintenance programs. However,
LRMS is not yet formulated into a full management system. Also, under decentralization the
adoption of the management process is optional for the local government.

The third component of the IIRMS is the Urban Road Management System (URMS) which is
now in the final stages of development and is being implemented in ten cities. The concepts
are similar to the IRMS, and the implementation is being made in a general framework of
urban infrastructure development and management.

The fourth component of the IIRMS is the Toll Road Management System (TRMS). Toll
roads are high standard expressways, built with a high standard of pavement structure and
geometry, with fully controlled access, managed by a state-owned enterprise, Jasa Marga.
The original TRMS, also similar to IRMS, was developed in 1992-94 and is being reviewed.

The last component of IIRMS is the Bridge Management System (BMS). The system was
developed for preparing the bridge maintenance and replacement program for the arterial and
collector road network, based on engineering justification and economic priority. It is planned
to extend the system to cover other road classes in the future.

These tools have been very useful for providing readily accessible information on the state of
road and bridge networks and for the preparation of preservation programs for annual and 5
year programs. Each of these systems determines the need for their own networks in
isolation from each other.

Those systems operate on the existing networks, thus they do not automate the process of
selecting and evaluating potential road development projects. The determination of potential
investments in transport corridors is implemented through special studies such as Java
Arterial Road Network Study, Eastern Indonesia Road Transport Priority Analysis, Capacity
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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Expansion Study, etc. The detailed economic and environmental feasibility data that these
studies provide, allow identification of potential road development (including toll roads), and
road widening projects. The costs and benefits of these potential investments in new or
development projects can therefore be compared with the returns from road preservation
programs in the various years, and can be made subject to the same financing criteria.

With independent management systems, parallel investments could be targeted at the same
locations, each counting on the same benefits. Taking a more strategic approach to
planning, makes it possible to better allocate and distribute funds across the networks and
regions more efficiently. With this initiative, the agency has the ability to optimize expenditure
for the entire sector under different budget scenarios. Outputs of these analyses include
expected benefits under each scenario and likely resultant effects on the network, as
measured by a number of performance indicators such as roughness and vehicle speed.

The relationship and integration among various road management tools which has then
formed the basis of the IIRMS and the associated Strategic Expenditure Planning Module
(SEPM) can be represented by Figure 1 as follows:

SEPM - STRATEGIC PLANNING TOOL
IRMS - Interurban Roads
KREEM - Kabupaten Roads
BMS - National + Provincial
Bridges
URMS - Urban Roads
Corridor Development
- Non Toll
- Toll
- Dualization
Studies :
Feasibility Studies :
- JARNS
- RIPS
- etc.
Budget Scenarios
- Optimized expenditure maximizing road sector
benefits
Annual Constrained
Programs
Development Programs
Preservation
Budgets


FIGURE 1. Conceptual Framework of IIRMS and SEPM

2.2 Strategic Expenditure Planning Module (SEPM)

The concepts for the Strategic analysis were developed and presented at the Fourth
Conference (Paterson et al., 1998). SEPM is basically an optimization tool which evaluates
alternative program allocations across all road assets for medium expenditure plans (5 - 10
years) under alternative budget constraints, and compares the physical and economic
impacts of the alternatives. It selects strategies for managing the physical characteristics of
the networks which maximize the economic benefit in terms of NPV/C (Net Present Value
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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over Cost) across programs and networks within whatever budgetary constraints are
imposed.

The inputs to SEPM are the life-cycle performance and cost-benefit streams that are output
from the various sub-systems cited above (IRMS, URMS, KRMS, and BMS), as shown in
Figure 2. It operates on groupings of road links having similar characteristics. Unlike a
homogeneous sublink which comprises contiguous sections of a real link, representative
links can contain sections from many links but possess similar characteristics. Each RMS
may use different criteria for determining homogeneity, for example from the IRMS the
elements of a representative link will have the same province and status and should have
traffic volume (AADT), Roughness, Width, and Surface Defects (SDI) in the same predefined
bands as other links in the rep-link group. These criteria are adjustable by the user and
additional criteria can be added. Typically however, they will not change from year to year,
nor from run to run.

























Figure 2: The logic of Strategic Expenditure Planning in SEPM, integrating strategy
inputs from asset management systems.

Each RMS creates strategy files which represent, for each representative link, alternate
treatment strategies over an 11 year period. Each strategy record, which may for example
represent a betterment project in year 3, contains the time streams of costs and benefits
which allow NPV to be calculated at any discount rate, the treatment to be performed in each
of the 11 years (routine maintenance is a treatment) and the agency cost in each of the 11
years. It will also predict the Key Performance Indicators (KPI) of pavement performance
and functional performance of the roads (e.g., roughness, speed, Volume/Capacity ratio, and
vehicle operating cost index) for each of the 11 years.

The primary function of SEPM is optimization among the alternative strategies and
Rep. Link
Matrix
Interurban
Roads
IRMS
Planning
Module
IRMS
Database
Strategies
Costs
NPVs
Rep. Link
Matrix
Local Roads
KRMS
Planning
Module
KRMS
Database
Strategies
Costs
NPVs
Rep. Link
Matrix
Urban Roads
URMS
Planning
Module
URMS
Database
Strategies
Costs
NPVs
Feasibility Studies
Capacity
Improvements
Network Expansion
SEPM
Budget
Scenarios
Medium Term
Investment
Programmes
Monitoring
Statistics
Key
Performance
Indicators
Rep. Bridge
Matrix
BMS
Planning
Module
BMS
Database
Strategies
Costs
NPVs

5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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representative links. The concepts are similar to the ‘strategic analysis’ function of HDM-4
which was recently released. The optimization seeks to find the combination of treatment
strategy for each 'representative' link that maximizes the NPV of all the representative links.
The search for best combination of treatment types, subject to constraint by the estimated
annual budgets over the planning period, then identifies the most economic set of treatments
for each road class for the available budget. Budget constraints can be applied to the total
roads budget, or by class of roads, by type of program (maintenance versus betterment or
new construction), or by region.

Benefit Calculation

There are two types of benefit taken into account in the SEPM analysis. The first is the
primary direct benefit comprising the net savings in road user costs and in life-cycle road
maintenance and construction costs. This is determined by the difference in total costs
(vehicle operating costs plus the sum of road agency costs for construction and
maintenance) calculated annually over a 30-yr life-cycle period and discounted to a present
value, between the selected strategy and a “do minimum” strategy. The cost streams are
generated by the individual road or bridge management systems, using the methodology
appropriate to those assets.

The second benefit is the indirect benefit represented in macro economic growth at regional
(provincial) level due to triggered economic activity as a result of road investment. This is
measured in terms of the different of economic output (GRDP/GDP) of do something and do
minimum scenario. The calculation of GRDP/GDP and the relationship (elasticty) of
economic output and road investment is performed using the Computable General
Equilibrium (CGE) Model. CGE is a generic macro economic model which is primarily based
on the equilibrium of supply and demand of various sector in the economic activity which has
relationship one to another under certain assumed elasticity and it is derived from the survey
of Statistical Bureau in the Input - Output Table. The more specific model of the CGE used
for this study is the INDORANI which is the derivative of ORANI - G. This prototype was
developed by Monash University (Australia) in cooperation with Gajah Mada (Indonesia)
University (Ref 1).

For operational use, this indirect benefit calculation can be incorporated in SEPM through the
use of a multiplier factor of the NPV from the direct benefit calculation case. Initial values
calculated for indirect benefit factors are depicted in Table 1 below. Initially it had been
expected that this approach would strengthen the benefits of investments in poorer areas.
Although it does strengthen the apparent returns of projects, this is a multiplier which affects
the priorities amongst beneficial projects but does not convert non-viable projects to feasible.
Also, its use would shift investments to high production areas and therefore have negative
impact on the poorer developing areas.

TABLE 1 Multiplier to Direct Benefit (Total Benefit/Direct Benefit)

REGION BENEFIT (NPV) FACTOR
Sumatera 3.11
Jawa/Bali 7.91
Kalimantan 7.13
Sulawesi 2.64
Eastern Islands 2.19

5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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Optimisation Method

The heart of SEPM is the optimisation procedure. The function of optimization is to determine
the combination of strategies (one for each representative road link or representative bridge)
that within a specified set of annual financial budgets will give the highest NPV. In order to
compare different strategies both within a section and with other sections in the network it is
necessary to use the long term costs and benefits that will result from each strategy. The
road condition after treatment, the deterioration of condition over time, and the impacts of
condition on road user costs are all predicted within the base RMS models. It is normal in an
RMS to use an analysis period of 20 years, but SEPM uses 30 years to improve the analysis
of heavy duty pavements. In such a time frame, it is necessary to define a second and
possibly more treatments within the analysis period (Ref 2).

The optimization process in SEPM is based on the efficiency frontier approach. The
efficiency frontier is the envelope of the highest NPV obtained at each budget or agency cost
level. The minimum case is the starting point for the efficiency frontier; and all incremental
NPVs and costs are referenced to this case. For each strategy the incremental NPV (INPV)
and Incremental Cost (IC) are computed relative to the minimum case, and the strategies are
ranked by the INPV/IC ratio. Successive strategies and representative links are evaluated
until the highest NPV at each level has been identified (Ref 2).

When dealing with multi-year programming and multiple treatments in each strategy, the
problem becomes more complex. An heuristic approach involving an iterative process gives
a sufficiently accurate solution and a simpler algorithm which enables faster computation.
The detailed description of the optimization algorithm is given in Ref. 2.


3. PROFILE OF THE TRANSPORT AND ROAD SECTORS

3.1 Transport Sector

Road transport currently plays a significant role in Indonesia for fulfilling the overall transport
demand. The 1990 statistic indicates that the share of road transport in domestic passenger
movement is 93%. For freight movement, sea transport is the dominant mode with a 56%
share, while road transport has a 41% share, and the rest (3%) is provided by rail transport.

3.2 Road Network

The road network included in the analysis comprises National, Provincial, Kabupaten
(District) and Kotamadya (urban) Roads. National and Provincial roads data are mainly
sourced from the 1998 IRMS survey data and some are obtained from a 1999 audit survey.
For Kotamadya roads, most of the data have been obtained by extrapolation from the existing
data in four (4) pilot cities of URMS. The complete network is depicted in figure 3.
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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FIGURE 3. Road Distribution by Status

3.3 Road Network Utilization and Mobility

The distribution of network, population and vehicle travel across regions and road networks is
shown in figure 4. There are small differences in the mobility of the population across
regions (vehicle travel per capita), the highest being in Sumatra and lowest in Java.
However, the utilization of the network (vehicle travel per km) ranges widely, with the Eastern
Islands carrying less than one-third the level of traffic on Java and about one-half that on
Sumatra.

0%
10%
20%
30%
40%
50%
60%
70%
Sumatera Java/Bali Kalimantan Sulawesi Eastern
Population
Road Length
Vehicle Travel


FIGURE 4. Regional Distribution of Population, Road Length and Vehicle Travel


Road Distribution by Status
-
50,000
100,000
150,000
200,000
250,000
300,000
L
e
n
g
t
h
(
K
m
)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Length (Km) 26,161 38,683 214,387 12,483 291,714
Percent 9.0% 13.3% 73.5% 4.3% 100.0%
National Provincial Kabupaten Kotamadya TOTAL
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TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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4. APPLICATION OF SEPM FOR MEDIUM-TERM ROAD EXPENDITURE
PLANNING

4.1 Budget Scenarios

A series of annual budgets covering the period 2000 – 2010 were applied. Expressed in
constant 1999 prices, the average of the annual budgets ranged from Rp 3 trillion to Rp 8.0
trillion. These were run with the indirect benefit factors set to unity and again with the factors
set as per Table 1. The scenario results are shown in Table 2.

TABLE 2: Program Benefits under Various Budget Scenarios (IDR trillion)

Scenario DF-3 DF-3.5 DF-4 DF-5 DF-5.5 DF-6 DF-7 DF-8
Benefit Factors all set to unity
NPV 215 242 261 285 290 293 297 300
IRR (%) 232 152 130 109 102 96 86 79
IIRR (%) 232 85 76 74 50 43 36 38
Benefit Factors set as per Table 1
NPV 1373 1558 1629 1737 1757 1772 1795 1809
IRR (%) 163 138 119 101 96 91 85 79
IIRR (%) 163 98 64 64 47 49 42 36

4.2. Cost and Benefits

Figure 5 shows that at low funding levels the NPV rises steeply with increasing budgets. At
higher budget levels, incremental increases give diminishing returns and it can be said that
the optimum constrained budget level is somewhere around Rp 8 trillion per year.

210
220
230
240
250
260
270
280
290
300
310
2.5 3. 5 4.5 5. 5 6.5 7.5 8.5
Annual Expenditure 2000 - 2010 (Rp trillion)
N
P
V

(
R
p

T
r
i
l
l
i
o
n
)
1300
1400
1500
1600
1700
1800
NPV
NPV(withFactors)


FIGURE 5. NPV @ 15% vs Annual Budget (without benefit factors)

4.3 Budget Allocation by Road Status

The changes in optimal allocation of road budget across road status as the total budget is
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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increased, are presented in Figure 6. At low budget levels, the increases are allocated
mainly to National roads which gain an increasing share of the total up to IDR 5 trillion. Above
IDR 5 trillion, the District roads gain an increasing share as the National road share
diminishes.

500
1,000
1,500
2,000
2,500
3,000
D2F-3 D2F-3.5 D2F-4 D2F-5 D2F-5.5 D2F-6 D2F-7 D2F-8
A
n
n
u
a
l

A
v
e
r
g
a
e

E
x
p
e
n
d
i
t
u
r
e

(
R
p

B
i
l
l
i
o
n
)
National
Provincial
Kabupaten
Kotamadya


FIGURE 6. Budget Allocation by Road Status (with benefit factors)

4.4. Budget Allocation By Region

The optimal allocations of funds by region are presented in figure 7 for the same range of
strategy data. This show there is very little shift in the relative allocations among regions or
among work programs as the budget level is raised.


5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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12
0%
20%
40%
60%
80%
100%
DF-3 DF-3.5 DF-4 DF-5 DF-5.5 DF-6 DF-7 DF-8
P
e
r
c
e
n
t
a
g
e

o
f

E
x
p
e
n
d
i
t
u
r
e

b
y

R
e
g
i
o
n
Suma
Sula
Kalim
Java/B
East


FIGURE 7. Budget Distribution by Region (without benefit factors)


TABLE 4. Budget Allocation by Region (Rp trillion per year)

Scenario Java/Bali Sumatera Kalimantan Sulawesi Eastern
Islands
D2F-3 1.624 0.594 0.283 0.263 0.230
D2F-3.5 1.932 0.718 0.305 0.295 0.238
D2F-4 2.302 0.782 0.333 0.315 0.243
D2F-5 2.714 1.190 0.403 0.381 0.288
D2F-5.5 2.828 1.431 0.426 0.460 0.320
D2F-6 2.923 1.587 0.468 0.500 0.355
D2F-7 3.403 1.808 0.557 0.603 0.450
D2F8 3.568 2.142 0.683 0.766 0.591


4.5. Recommended Work Program

The primary output is the recommended programs of both road and bridge works. This is
presented in Figure 8.

5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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13
-
0.500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
B
u
d
g
e
t

E
x
p
e
n
d
i
t
u
r
e

(
R
p

T
r
i
l
l
i
o
n
)
B-New
B-Rehab
B-Replace
B-Routine
R-Betterment
R-New
R-Periodic
R-Routine
B-New 0.008 0.008 0.011 0.024 0.024 0.025 0.038 0.050
B-Rehab 0.277 0.280 0.284 0.291 0.294 0.301 0.314 0.331
B-Replace 0.020 0.023 0.044 0.054 0.063 0.067 0.075 0.079
B-Routine 0.344 0.342 0.334 0.328 0.324 0.321 0.316 0.312
R-Betterment 1.036 1.461 1.834 2.145 2.380 2.697 2.889 3.466
R-New 0.031 0.031 0.037 0.530 0.650 0.671 1.017 1.138
R-Periodic 0.165 0.256 0.405 0.624 0.771 0.927 1.295 1.484
R-Routine 1.098 1.068 1.032 0.989 0.966 0.940 0.900 0.859
DF3 DF3.5 DF4 DF5 DF5.5 DF6 DF7 DF8

Note: B = bridge programs; R = road programs

FIGURE 8. Budget Distribution by Works Program (without indirect benefits)

4.6. Impacts of Budget Allocation on Road Sector Performance

The impacts of the various budget scenarios on the performance of the road assets is
illustrated for the condition of National roads in Figure 9. This shows that under a IDR 5
trillion annual budget, the incidence of good condition would rise, bad condition would be
eliminated and the portion in poor condition would remain essentially a uniform backlog of a
bout 3.5% of road length.

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
bad 13 0 0 0 0 0 0 0 0 0
poor 651 864 892 1003 1527 1420 1106 764 834 891
fair 14495 15917 14486 13982 12843 12779 11941 10330 8700 10067
good 11049 9427 10829 11222 11837 12008 13160 15113 16674 15250
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Figure 10: Road Condition Prediction for National Roads under IDR 5 trillion annual
budget scenario (without indirect benefits)
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

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14

The analyses show a number of important implications, as follows.

(a) The National road network is in comparatively good condition and under the severe
budget reductions planned for 2000-2003 can be held in this state with a lower level of
funding than has been allocated in the past. However, the condition would progressively
deteriorate and funding would need to be substantially increased from 2003 thereafter to
achieve sustainable operating conditions. Similar conditions prevail on the Provincial
network, although a larger proportion of that network requires upgrading because it includes
more recent additions and reclassification of local roads.

(b) Larger allocations of funding are required for district and urban roads which have
substantial lengths in fair and poor condition. A major change in this situation is only possible
once funding levels rise above IDR 5 trillion (USD 0.7 billion).

(c) At low levels of funding the analysis shows a balanced proportion of maintenance and
rehabilitation and a small program of betterment works. As funding availability rises, the
betterment program allocation rises faster in proportion to the other programs. Development
spending on new construction and capacity expansion (major widening) only becomes
affordable also at a national funding level of IDR 5 trillion.

(d) Regional allocations remain interestingly uniform as the funding availability rises. Given
the wide diversity in development conditions, from the high intensity of population and traffic
on Java to the sparse networks and population of the Eastern region, this finding was not
anticipated.

5. CONCLUSION

Further applications of the strategic expenditure planning will examine the allocations among
jurisdictions more closely as a means of understanding some of the road sector implications
of the political decentralization. The tool is also being used to define the scope of foreign
assistance, and the best ways to utilize international finance at least cost.

The introduction of SEPM has come at a time when the road sector has been forced to
address massive reductions in available budget due to the financial crisis of 1997-99, and at
the same time to find fair and equitable means for allocating funds between regions and local
jurisdictions which are being given increasing levels of autonomy. The power of the tool has
been recognized by the central planning and finance ministries, and the stringency of the
allocative process is placing an increasing demand on the reliability of the data supporting the
analyses and conclusions.

The concepts and principles of the SEPM tool make it universally applicable and are not
specific to the country. Further development of the tool will streamline its use and make it
available for use with other systems.

6. ACKNOWLEDGEMENTS

The developments have benefited from the inputs of many people. The system design,
programming and data processing were achieved by Christopher Bennett, Michael Riley and
Glen Stringer of N. D. Lea International consultants. The development was managed by Moh.
Irian, Head of General Planning and Ir. Hendrianto N, then Director of Planning. Major
stimulus and guidance on the national development issues and finance was given by Dr.
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).

ERW-C:\DOCUME~1\wb14650\LOCALS~1\Temp\Paterson.doc
17/05/01 - 9:32
15
Bambang Bintoro, Deputy for Infrastructure and Trade, Bappenas, and Mr. Christopher
Summers, Planning Advisor. The conceptual development and implementation has been
funded through the Second Highway Sector Investment Project, Loan 3712-IND from the
World Bank.


7. REFERENCES

1. N.D. Lea Int. Ltd. and Associates. Economic Impacts and Indirect Benefits of the
Road Sector Budget. IRMSs Project Report, Working Paper No. 4. Directorate General
of Regional Infrastructure: Jakarta, Indonesia, May 2000.

2. N.D. Lea Int. Ltd. and Associates SEPM Optimisation Procedure, IRMSs Project
Report. Directorate General of Regional Infrastructure: Jakarta, Indonesia, February 2000.

3. N.D. Lea Int. Ltd. and Associates. Application of SEPM to Medium Term Expenditure
Planning for the Roads Sub-sector, IRMSs Project Report. Directorate General of
Regional Infrastructure: Jakarta, Indonesia, 29th May 2000.

4. N.D. Lea Int. Ltd. and Associates. Strategic Expenditure Analysis for the Roads Sub-
sector 2000 - 2010 : Final Report, IRMSs Project Report. Directorate General of
Regional Infrastructure: Jakarta, Indonesia, April 2000.

5. N.D. Lea Int. Ltd. and Associates. SEPM User Manual, IRMSs Project Report.
Directorate General of Regional Infrastructure: Jakarta, Indonesia, 2000.

6. Paterson, W., Van der Ven, J., Koesno S., and Brown, H. P. Incorporating and
Prioritizing Development Expenditures in a Road Management System.
Proceedings, Fourth International Conference on Managing Pavements, Durban South
Africa. Vol. 4, pp. 1363-75. May 1998.
5th International Conference on Managing Pavements (2001)



































TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by indi vidual practitioners
in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research
community. The information in this paper was taken directl y from the submission of the author(s).