Determining value of logistics costs in projects: empirical findings based-on executing several cement projects in Indonesia

Abstract

This research tries to shed light on precise values of logistics costs that so far undisclosed. The values are important for every project planners to evaluate, control and monitoring, and especially imperative for procurement activities. Tender, bidding, and defining the scope of contracts and value can be well organized without time-consuming. This research uses methodology previously developed by Subiyanto (2020a) and discussed only a few particular and directly related to the logistics. The model had been decomposed by utilizing path analysis and the data had been regressed to define variables as the most inflator for logistics. The findings are total logistics costs in Indonesia generally at around 14.6% to total costs of investment. It consists following of insurance cost 0.11%, costs for customs clearance 6.52%, foreign logistics costs 6.62%, domestic manufacture 0.47%, and domestic logistics costs 0.89%. This research is not discussing logistics costs relating to human resources, human travelling, and internal logistics conducted by vendors or contractors as the scope included counted within their procurement contract. These results are important as guidance for project planners, controllers, and other parties to prepare costs more precisely. Negotiating to the banks will be easier as the more precise amount of budgets had been estimated. Due to the important values that have been identified, there will help transparency and governance conducting the projects. Procurement processes involving societies are more objective and better. This is a novelty finding as previous researchers have not decided yet.

Investigating the logistics costs model: recent update in Indonesia

“…The most efficient and effective logistics become key to lowering total costs in the entire allocations because of the movement of goods for these trades. According to Subiyanto and Suyoto (2020a), the logistics method is stated as a method used to regulate the distribution of sources that provide products to their destination optimally. A good logistics method is achieved if an allocation of goods distribution can be obtained and subsequently minimizing total logistics costs.…”

“…Conversely, mismanagement will cause conflicts between factors and will cause project delays or uncontrolled costs. The importance of logistical to support project construction is because of the portion of material distributed reaching 60%-70% of the total project values generally (Subiyanto and Suyoto, 2020a).…”

“…Several researchers worldwide have worked hard to shed light on to determine variables building of logistics activities. Subiyanto and Suyoto (2020a) and Subiyanto (2020b) have modeled the logistics chains after several tests in several cement projects in Indonesia and resulted in factors affecting logistics in a project consisting of two big important factors which are as follows:…”

A failure innovation strategy of acquisition during excess capacity: financial approach based on case study at the state-owned cement holding PT Semen Indonesia (Persero) Tbk

“…The way to develop shadow performance could be by market approach, organizational change, procurement or project (Subiyanto and Suyoto 2020;Subiyanto 2020a), and many strategic steps that wrapped as corporate actions or as operational expenses.…”

Evaluation of Key Factors of Logistics Risks for Overseas EPC Projects

“…Large-scale construction projects often require joint completion by multiple companies, and the logistics of engineering construction is an important guarantee for companies to participate in international engineering projects. e data shows that for engineering projects, the total cost of transportation, customs clearance, and insurance designed in the logistics links accounts for about 14.6% of the total investment cost [8], and it does not include the logistics cost related to human resources, personnel travel, and internal logistics performed by suppliers or contractors.…”