FEASIBILITY STUDY REPORT

Document Number
JAYAMUKTI MHPP
JYMT.52.1208

CHAPTER 8

ESTIMATED COST OF CONSTRUCTION

8.1 UNIT PRICE ANALYSIS

Calculation and analysis of unit price is the most advanced stage of construction cost
estimates, so the accuracy in analyzing to get the real price is reasonable and feasible. It
is a priority that should be encouraged.

Calculation parameter and unit price analysis on JAYAMUKTI MHPP projects, among
others:

 Location of quarry / source material is at a distance that is the closest to the planned
location of the construction work,
 Location of waste material / waste is selected at the nearby location and licensing
survey conducted by taking into account environmental factors,
 Implementation Method of the work is selected the common method implemented by
the counterparty in accordance with the level of machine availability, capability and
capacity tools, and usability tools,
 The labor used to use local workers at the project site with wages based on unit prices
prevailing in Garut,The labor used to use local workers at the project site with wages
based on unit prices in Garut district,
 Effective working hours in force in accordance with the Labour Law is eight (8) hours
of work per day,
 The unit price of material obtained from the unit price of materials and materials for
Fiscal Year 2015 are Sub Distric in Garut,
 Equipment expenses consist of the cost of depreciation, repairs, maintenance and
administrative costs and do not include the cost of operating tools, operator costs, the
cost of fuel, oil, lubricating oil, because this charge is one component in the analysis of

JAYAMUKTI MHPP Feasibility Study 1

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

unit prices of tools (price rental equipment per-hour).

In the unit price analysis, the components to be taken into account include:
a. Power components
Coefficient of power components for each of the unit price obtained from the
analysis of the needs of the power needed for each unit of work in accordance with
the production hours..

b. Component Materials and Materials

In calculating the coefficient of the material and the material to be used is based
upon the analysis of the work force combined with Spesification Engineering.
c. Equipment components
Calculating the coefficient equipment based on equipment used in units of time for
a unit of work.

8.2 ESTIMATED QUANTITIES OF WORK

The quantity of work obtained from the drawing plan / design has been tailored to the
specifications that accompany type of work, while the work is a unity that can not be
separated and are lump sum (Ls), then the quantity of jobs are only given a value of 1
(one). In the calculation of the estimated quantity of work, done carefully, thoroughly and
in detail, so the results of the calculation of the quantity of work can represent the quantity
of the actual work.

Calculation and estimation of the quantity of work will include various types of jobs, among
others, are as follows:

 Civil Works
a. General / Temporary Jobs
b. Weir and Intake Works
c. Sandtrap Works
d. Waterway Works
e. Headpond Works
f. Anchor Block and Saddle Block Works
g. Powerhouse:
 Civil Works

JAYAMUKTI MHPP Feasibility Study 2

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

 Architectural Works
 Water Supply Works and Waste Water System
 Ventilation Works/ Cooling System
 Internal lighting systems
 Fire Detection System
 Fire Hydrant System
h. Waster Systems
i. Access road
j. Completeness building Transformer
k. Complementary Works
 Civil works
 Exterior Lighting Systems
l. Guard house
m. Metal Works

 Electrical & Mechanical Works

a. Turbines and completeness
b. Generator and Excitation Systems
c. Transfomer
d. Switchgear
e. Equipment Control and Measurement Equipment
f. Spare Parts
g. Additions Works

Estimates of the quantity of work in accordance with the basic design contained in the
drawing plan, especially earth works (excavation and embankment)

8.3 DIRECT COST JAYAMUKTI MHPP

Direct costs estimated based on work items and the volume of work derived from the
basic design. These costs include labor costs, material costs and equipment costs, and
benefits (overhead) EPC Contractors.

The amount of the price of basic materials and materials to be used in the conduct of
construction always follow developments and economic conditions / rate of inflation, so
that the base price of a job usually fluctuating and even more inclined to increase.

JAYAMUKTI MHPP Feasibility Study 3

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

Because of this, the basic assumptions used in the estimates of the analysis of the costs
associated with construction cost estimates will refer to the real price on the market with
the following assumptions:

 Price assumption and price level is based on the price of labor, material prices, and
the price of the equipment obtained authorized agency at the time the study was
conducted, in June 2015. The unit price assumptions in accordance with each type of
work is expected to correspond to the price real in the market, so that the construction
will be more easily implemented without much change prices as a result of striking
differences in the unit price,
 For mechanical and electrical works as well as for civil works that contain imported
components, including spare parts and others, the share of foreign currencies used in
cost estimates are in US Dollars (US $) or Euros (€), however, the analysis will
converted into rupiah (Rp),
 With regard to the foregoing, the exchange rate used is indigo currency exchange rates
generally accepted in June 2015, namely:

1 US $ = Rp.13.500,-
 The calculation of the volume of work for type of work is based on design drawing at
the level of the Feasibility Study JAYAMUKTI MHPP which refers to the criteria design
that has been approved, so that the calculation of the volume of work is not very
detailed (estimate) and is common when compared with the results of the calculation at
a rate Detailed design.

Then is change of the base price at the time of the conduct of Construction, the analysis
calculation of unit price will be adjusted according to real price at the time of execution,
although the price mentioned above have been estimated in accordance with the level of
interest rates prevailing at the time of the analysis carried out by considering the trends
that occur in accordance with the incident.

Now in the previous description, the construction costs are direct costs of projects
covering a variety of jobs, among other civil works, electrical work and mechanical work.
The result of the calculation of the overall construction cost estimates are as follows:

JAYAMUKTI MHPP Feasibility Study 4

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

8.3.1 Direct costs of Civil Works

Estimated cost of civil works based on the unit price main job, plus the cost for the work
complements (minor) in anticipation of the possibility of jobs that are not included in the
calculation.

Unit price obtained from the analysis of the unit price on the basis of real price for each of
the components applicable in Garut and surrounding areas.

8.3.2 Direct Costs of Electrical and Mechanical Works

Estimated cost of Electrical and Mechanical work is based on the prices of basic
equipment of Electrical and Mechanical as well as other complementary equipment that
apply in real terms in the market and existing manufacturers in Indonesia. The main
component of the price for Electrical and mechanical equipment (turbines, Draftube,
generators, and transformers) obtained from the manufacturer to consider the offer price
of conformity with technical requirements at a reasonable price level (the comparison of
cost proposals manufacturer).

8.3.3 Recapitulation of Estimated Costs Civil Works, Metal, Electrical, and

Mechanical

Recapitulation of Costs Construction for Civil Works, Metal, Mechanical and Electrical
Project JAYAMUKTI MHPP include the cost of infrastructure development in the form of
Distribution and Transmission Main Medium Grid Voltage ± 20 kV along 2.5 kilometers.

8.4 INDIRECT COSTS

Indirect costs used for job preparation, technical services and price changes that can not
be ascertained beyond the direct costs, while the indirect costs consist of:

 Land Acquisition Costs,

 Cost Engineering and Administration,
 Operation and Maintenance Costs,
 Contingency
 Cost Feasibility Study

JAYAMUKTI MHPP Feasibility Study 5

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

8.4.1 Land Acquisition Costs

Land acquisition is a stage which is always a crucial issue in any implementation of a

project, because it is loaded with a variety of interests and social problems that should not
have happened if each party can understand the purpose of the implementation of the
project. In connection with this, to anticipate things that are not desirable, has been
carried out cross-checking land ownership relate to the area of land to be acquired and
the status of land ownership. Total land area acquired for the main building and facilities
at JAYAMUKTI MHPP, among others:

Land Status : Owned Land and village land

Owner : Villagers and village
Total Area : 4,35 ha

Land Type : annual farm and paddy field

Total Area of 4.35 ha which will be released with appropriate compensation systems
prevailing market prices for annual farm and paddy field by observing the taxable value
determined by the competent agency

8.4.2 Cost Engineering and Administration

The cost of technical services required for the project implementation is expected in the
proportion of direct construction costs to cover the costs of preparing a feasibility study,
detailed design and construction supervision and other unexpected purposes.
Administration and licensing costs are determined in accordance with the estimated cost
of the remuneration levels of professional consultants.

8.4.3 Operating Costs During Construction

for operational continuity of JAYAMUKTI MHPP during construction are the fees paid
during the procurement process until the construction activities take place. As for the post-
construction costs referred to the Operation and Maintenance Costs include:

 Cost of facility periodic maintenance implemented in accordance with the

specifications that will be required and allocated on a regular basis, personnel costs

JAYAMUKTI MHPP Feasibility Study 6

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

which include the cost of salaries, social security and so forth,

 Regular cost of office,
 Cost of services of the entire stock, lubricants, material, etc,
 Tax costs

The amount of the operation and maintenance costs are based on the calculation of the
hydropower operations with the consideration that the same turbine type of power
generation is relatively the same

8.4.4 Cost Uncertainty

Contingency fee / uncertainty intended to sufficient the cost of an unexpected condition

such as "Physical, Managerial and Currency Contingencies". Allocation of costs that can
be expected for projects JAYAMUKTI MHPP average is 2.5% of the cost component and
of Civil Works of 5% Electrical and Mechanical Works already include value added tax for
transaction components.

8.4.5 Estimated Energy Production

Based on Flow Duration Curve, River Flow Area Cisanggiri on the location of the planned
intake JAYAMUKTI MHPP, then to estimate the energy production can be power
JAYAMUKTI MHPP are as follows :

JAYAMUKTI MHPP Feasibility Study 7

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

Production graph
300,000

250,000
Energy (kWH)

200,000

150,000

100,000

50,000

(-)
105.85

135.05

164.25

208.05

237.25

266.45

295.65

324.85

354.05
3.65
18.25

47.45

76.65

120.45

149.65

178.85
193.45

222.65

251.85

281.05

310.25

339.45
32.85

62.05

91.25

Days

Figure 8- 1 Hydroelectric Energy Production Estimates chart JAYAMUKTI MHPP

8.4.6 Cost Power Estimate

The cost power estimate is based of direct costs and indirect costs as construction costs
invested to power and energy were calculated based on the index and energy index.

Index derived from the ratio of the total construction cost required for the generation and
optimum power generated. While the amount of energy index derived from the ratio of the
total construction cost required for the generation and optimum energy generated per
year.

Investment costs Index based on the calculation of the items existing components,
including the financial parameters such as interest on the loan, "Capital Recovery Factor
(CRF)" component costs of generation such as levy of surface water, operations and
maintenance costs as well as parameters related including production power efficiency as
follows :

A. INVESTMENT COST

JAYAMUKTI MHPP Feasibility Study 8

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

1 COMPONENT A - INVESTMENT COST (IDR. 000,-)

Description     100%
a. Preparation works / Construction facilities 1.860.761
b. Civil & metal works 30.821.965
c. Electrical equipments 20.655.000
d. Transmission & distribution 1.250.000
e. Engineering & overheads 9,5% 5.907.879
f. Land acquistiton 7.642.743
g. Tax (Ppn) 10% 3.389.046
    Direct cost ---> Rp 71.485.128
h. Interest During Construction (IDC) 5.879.423
Total Sum ---> Rp 77.364.550
  Unit investment cost ---> Rp 25.287.148

The results of the financial analysis that presents information about the feasibility of a
project using the financial parameters for investments such as IRR, B / C Ratio, Payback
Period, PV and NPV and so on which will be discussed in detail in Chapter 9.

TABLE OF CONTENTS

JAYAMUKTI MHPP Feasibility Study 9

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

Chapter 8................................................................................................................................
8.1 ANALYSIS UNIT PRICE...................................................................................
8.2 ESTIMATED QUANTITIES OF WORK............................................................
8.3 DIRECT COST JAYAMUKTI MHPP.................................................................
8.3.1 Direct costs of Civil Works.............................................................................
8.3.2 Direct Costs of Electrical and Mechanical Works...........................................
8.3.3 Recapitulation of Estimated Costs Civil Works, Metal, Electrical, and
Mechanical 5
8.4 INDIRECT COSTS...........................................................................................
8.4.1 Land Acquisition Costs...................................................................................
8.4.2 Cost Engineering and Administration.............................................................
8.4.3 Operating Costs During Construction.............................................................
8.4.4 Cost Uncertainty............................................................................................
8.4.5 Estimated Energy Production.........................................................................
8.4.6 Cost Power Estimate......................................................................................

LIST OF FIGURES

JAYAMUKTI MHPP Feasibility Study 10

 FEASIBILITY STUDY REPORT
Document Number
JAYAMUKTI MHPP
JYMT.52.1208

Figure 8- 1 Hydroelectric Energy Production Estimates chart JAYAMUKTI MHPP.............8

JAYAMUKTI MHPP Feasibility Study 11