Assignment before the class (Yogyakarta Bus Terminal)

Students ID number: 23RB919

Name: Mohammad Ali Salem Mauna

Write your opinion to the following questions.

1. Was this project a success? Was it a failure? In what ways can you say it was a
success or a failure?

Successes:
1. Infrastructure Improvement:
The construction of the Giwangan Bus Terminal resulted in a tangible improvement in
transportation infrastructure, providing a modern and efficient hub for intercity bus services.

2. Operational Profits:
The bus terminal generated operational profits for both PT Perwita Karya (PTPK) and the city,
indicating that the project was financially viable at the operational level, at least to some
extent.

3. Enhanced Passenger Experience:

The increased capacity and improved reliability of the terminal contributed to a positive
experience for bus passengers, aligning with the project's goals of providing better services.

Failures:
4. Weak efforts of the Government to fulfill its obligations in the contract.
The emergence of illegal terminals and the competition from the Jombor Terminal significantly
undermined the intended exclusivity of the Giwangan Terminal, leading to reduced traffic and
profitability.

5. Lack of comprehensive risk assessment and mitigation strategies.

The rapid expansion of low-cost airlines adversely affected the overall transportation industry,
including bus services, posing an external challenge that was difficult to anticipate and
mitigate.
The 2006 earthquake had a severe impact on terminal traffic, disrupting operations and
contributing to the financial strain on the project.

6. Commercial Center Viability Concerns:

Issues related to the planned commercial center, including the withdrawal of PT Matahari,
indicated financial risks and raised questions about the overall viability of the broader
development plan.

7. Financial Strain and Return of Concession:

The project faced financial strain, with revenue barely covering operating costs and debt
service. PTPK's decision to return the concession underscored the project's inability to meet
expectations.

8. Contractual Challenges:
The contractual obligation to eliminate illegal terminals proved challenging, and PTPK's
decision to return the concession indicated dissatisfaction with the city's ability to fulfill its
commitments.

9. Potential Reputational Damage:

The threat of legal action and the return of the concession raised concerns about potential
reputational damage to the city in terms of honoring contractual agreements and attracting
future private investment.

Overall Assessment:

The Giwangan Bus Terminal project had notable successes in terms of infrastructure
improvement, reduced illegal terminals, and initial operational profits. However, these
achievements were overshadowed by significant challenges, including market competition,
external economic factors, and the overall financial strain on the project. The decision by PTPK
to return the concession highlights the project's ultimate failure to meet expectations, both in
terms of financial viability and the fulfillment of contractual commitments. The lessons learned
from this project could inform future municipal infrastructure initiatives, emphasizing the
importance of comprehensive risk assessment and mitigation strategies.

2. What could have been done to make this project a success?

1) Comprehensive Feasibility Study:

Conduct an in-depth feasibility study to thoroughly assess market conditions, potential risks,
and the financial viability of the project. This study should include a robust analysis of
demand, competition, and potential challenges.
 2) Robust Tendering Process:
Implement a comprehensive and inclusive tendering process that considers not only
deliverables but also qualitative aspects, such as the experience and capabilities of potential
partners. Develop a clear understanding of the project's requirements and objectives.

3) Stakeholder Engagement and Public Awareness:

Engage with key stakeholders, including the local community, government agencies, and
potential investors, to build support and address concerns. Establish effective communication
channels to keep stakeholders informed and involved throughout the project.

4) Capacity Building and Training:

Invest in capacity-building programs and training for both PTPK and the city government. This
includes training in BOT project management, risk assessment, financial structuring, and legal
aspects to enhance institutional capacities.

5) Expert Consultation and Partnerships:

Seek guidance from external experts or consultants with experience in BOT projects. Establish
partnerships with entities that have a successful track record in similar projects to provide
mentorship and support.

6) Clear and Flexible Contracts:

Develop clear, comprehensive, and flexible contracts that address potential challenges, include
robust risk allocation mechanisms, and provide a framework for adjusting terms based on
changing circumstances.

7) Strategic Commercial Center Development:

Approach the development of the commercial center strategically. Hire experienced managers
with a track record in attracting anchor tenants and businesses. Ensure phased development
aligned with market demand and economic conditions.

8) Regular Project Reviews and Adaptation:

Implement a system for regular project reviews, including performance evaluations and
assessments of market dynamics. Be prepared to adapt the project plan based on ongoing
assessments and changing conditions.

9) Financial Modeling and Risk Mitigation:

Develop detailed financial models that account for various scenarios and potential risks.
Implement robust risk mitigation strategies to address financial challenges and fluctuations in
revenue.

10) Government Oversight Strengthening:

Strengthen the institutional capacity of the city government to oversee and regulate BOT
projects. This involves hiring professionals with expertise in public-private partnerships and
infrastructure development.

11) Flexibility in Project Planning:

Build flexibility into the project planning and execution to adapt to unforeseen circumstances.
Consider phased development to allow for adjustments based on changing market conditions.

12) Continuous Learning and Documentation:

Foster a culture of continuous learning within the project team. Document lessons learned
from both successes and challenges to inform future decision-making.

13) Seek support from Central Government:

Coordinate with Central Government regarding other national infrastructure projects to

maximize synergies and efficiencies. This could involve aligning transportation networks,
sharing resources, or integrating the project into broader regional development plans. Work
with the central government to establish policy risk mitigation instruments, such as risk
insurance or guarantees. These instruments can provide assurance to investors and lenders,
reducing the perceived risks associated with the project.

The key is to proactively address the identified weaknesses, build institutional capacities, and
implement strategies that enhance project resilience and sustainability.