i Improving Regional Sulawesi’s Downstream Oil & Gas Construction: Evaluating Risk Management in EPC Project FINAL PROJECT By Oktafianto Adhi Nugroho Student ID: 29323054 Institut Teknologi Bandung March 2025 ii ABSTRACT Improving Regional Sulawesi’s Downstream Oil & Gas Construction: Evaluating Risk Management in EPC Project By Oktafianto Adhi Nugroho 29323054 (Master of Business Administration Program) The oil & gas industry plays an important role in the world's energy security sector. Infrastructure projects related to this industry are not free from constraints, especially cost overruns and schedule delays. This study focuses on PT Lotus Trading, which is a subsidiary of PT Lotus Holding, specifically at PT Lotus Trading Regional Sulawesi. Understanding the challenges that exist in construction projects in the Downstream Oil & Gas Industry and how to mitigate them plays an important role in improving project performance and this is in line with the company's objectives. The structure used in this research begins with finding the root of the problem using the Current Reality Tree (CRT). From the method used, the main problems were identified, namely inadequate risk management, poor planning, and less than optimal project supervision in PT. Lotus Trading. From the problems found, this research seeks alternative solutions that are tested with the Non-Dimensional Scaling and Ordinal Ranking methods. The methods used help align solutions with key organizational needs, especially about the project management. In shaping strategy for PT Lotus Trading in producing a best practice risk management strategy, this research uses the customization of PMBOK and AACE frameworks that is in line with the company's objectives. In an era of rapid change, a strategy that is able to adapt quickly, ease of implementation, and alignment with business processes is needed. To validate and check the relevance of the risk management strategy to operational needs, a Focus Group Discussion (FGD) was conducted with 22 respondents consisting of experts and project stakeholders at PT Lotus Trading Regional Sulawesi. After validation, a comprehensive implementation plan was developed, including policy development, training, monitoring, and feedback mechanisms, to ensure project sustainability. By implementing a good and appropriate risk management strategy according to this research, it is expected that projects carried out at PT Lotus Trading Regional Sulawesi can run effectively and efficiently and contribute to company performance in general. Keywords: Project Risk; Risk Management; Down Stream Oil & Gas; Infrastructure Project; Tailoring PMBOK iii ABSTRAK Meningkatkan Konstruksi Hilir Minyak & Gas Regional Sulawesi: Evaluasi Manajemen Risiko dalam Proyek EPC By Oktafianto Adhi Nugroho 29323054 (Master of Business Administration Program) Industri minyak dan gas memegang peranan penting dalam sektor ketahanan energi dunia. Proyek-proyek infrastruktur yang berkaitan dengan industri ini tidak luput dari kendala, terutama pembengkakan biaya dan keterlambatan jadwal. Penelitian ini berfokus pada PT Lotus Trading yang merupakan anak perusahaan dari PT Lotus Holding, khususnya pada PT Lotus Trading Regional Sulawesi. Memahami tantangan yang ada pada proyek konstruksi di Industri Hilir Migas dan cara memitigasinya, memegang peranan penting dalam meningkatkan kinerja proyek dan hal ini sejalan dengan tujuan perusahaan. Struktur yang digunakan dalam penelitian ini diawali dengan mencari akar permasalahan dengan menggunakan Current Reality Tree (CRT). Dari metode yang digunakan, teridentifikasi masalah utama yaitu manajemen risiko yang kurang memadai, perencanaan front-end yang kurang baik, dan pengawasan proyek yang kurang optimal di PT. Lotus Trading. Dari permasalahan yang ditemukan, penelitian ini mengembangkan alternatif solusi yang diuji dengan metode Non-Dimensional Scaling dan Ordinal Ranking. Metode yang digunakan membantu menyelaraskan solusi dengan kebutuhan utama organisasi terutama tentang manajemen proyek. Dalam membentuk strategi bagi PT Lotus Trading dalam menghasilkan best practice strategi manajemen risiko, penelitian ini menggunakan kustomisasi kerangka kerja PMBOK dan AACE yang sesuai dengan tujuan perusahaan. Di era perubahan yang cepat, dibutuhkan strategi yang mampu beradaptasi dengan cepat, kemudahan implementasi, dan keselarasan dengan proses bisnis. Untuk memvalidasi dan mengecek relevansi strategi manajemen risiko dengan kebutuhan operasional, dilakukan Focus Group Discussion (FGD) dengan 22 responden yang terdiri dari para ahli dan pemangku kepentingan proyek di PT Lotus Trading Regional Sulawesi. Setelah dilakukan validasi, disusunlah rencana implementasi yang komprehensif, termasuk pengembangan kebijakan, pelatihan, pemantauan, dan mekanisme umpan balik, untuk memastikan keberlanjutan proyek. Dengan menerapkan strategi manajemen risiko yang baik dan tepat sesuai dengan penelitian ini, diharapkan proyek-proyek yang dijalankan di PT Lotus Trading Regional Sulawesi dapat berjalan secara efektif dan efisien serta memberikan kontribusi terhadap kinerja perusahaan secara umum. Kata kunci: Risiko Proyek; Pengelolaan Risiko; Minyak & Gas Hilir; Proyek Infrastruktur; Penyesuaian PMBOK iv Improving Regional Sulawesi’s Downstream Oil & Gas Construction: Evaluating Risk Management in EPC Project By OKTAFIANTO ADHI NUGROHO STUDENT ID: 29323054 (Master of Business Administration Program) Approved Date: 14 Januari 2025 Supervisor Akbar Adhi Utama, S.T, M.A.B., Ph.D NIP : 197706052014041001 v FINAL PROJECT GUIDANCE Unpublished master’s final projects are registered and accessible in the library of Bandung Institute of Technology, meet to the copyright regulations applicable within the institution. While public access is permitted, intellectual property rights remain with the author. Bibliographical references may be used under limited conditions, requiring proper citation and prior permission from the author. Summarizations and citations must align with scientific norms, acknowledging this final project as the source. This final project should be cited as: Nugroho, O.A. (2025): Improving Regional Sulawesi’s Downstream Oil & Gas Construction: Evaluating Risk Management in EPC Project. Master’s Final Project, Bandung Institute of Technology. Reproduction or publication of parts or whole of the final project must be under the consent of the Head of Graduate School, Bandung Institute of Technology. vi This project dedicated to N.R.L., M.R.N., and G.S.N. for their unwavering support, encouragement, and invaluable contributions throughout this journey. vii ACKNOWLEDGEMENTS First, I would like to express my deepest gratitude to my beloved wife, who has always provided endless support, understanding, and motivation at every step of my academic and professional journey. To my sons, who are my biggest reasons to keep growing and giving my best. Their presence and happiness they bring in the family is a positive energy that encourages me to complete every task. I would also like to express my appreciation to PT Lotus Trading, the company where I work, for the support, scholarship opportunities, and facilities that have been provided during my study process. I hope this study can bring positive influence and benefits to PT Lotus Trading. I would also like to express my deepest respect and gratitude to my supervisor, Akbar Adhi Utama, S.T, M.A.B., Ph.D for his guidance, knowledge, and direction throughout the research process and the preparation of this thesis. I really appreciate your advice, patience, and encouragement for me to complete this final project. Last but not least, I would like to thank the entire Sulawesi Reliability & Project Development Team and my beloved BLEMBA 34 batch who have provided assistance, input, and encouragement throughout the preparation of this thesis. Togetherness, adventure, support, motivation made this whole journey very memorable and enjoyable. viii TABLE OF CONTENTS ABSTRACT ................................................................................................................... ii ABSTRAK .................................................................................................................... iii FINAL PROJECT GUIDANCE .................................................................................... v ACKNOWLEDGEMENTS ......................................................................................... vii TABLE OF CONTENTS ............................................................................................ viii List of Figures ............................................................................................................... xi List of Tables ................................................................................................................ xii List of Appendix .......................................................................................................... xiii LIST OF ABBREVIATIONS ...................................................................................... xiv CHAPTER I INTRODUCTION .................................................................................... 1 1.1 Background .................................................................................................... 1 1.2 Company Profile ............................................................................................ 2 1.2.1 Vision, Mission, and Values ........................................................................... 2 1.2.2 Business Scope .............................................................................................. 5 1.2.3 PT Lotus Trading Overview ........................................................................... 7 1.2.3.1 Retail Fuel Marketing ............................................................................... 10 1.2.3.2 Industry & Marine Fuels ........................................................................... 10 1.2.3.3 Domestic Gas ............................................................................................. 11 1.2.3.4 Aviation ...................................................................................................... 11 1.2.3.4 Reliability and Project Development Sulawesi ......................................... 11 1.3 Business Issue .............................................................................................. 12 1.3.1 Project Identification ................................................................................ 14 1.3.1.1 Project Characteristic in Reliability & Project Development Sulawesi ... 14 1.3.1.2 Project Challenges in Reliability & Project Development Sulawesi ........ 16 1.4 Research Questions & Objectives ................................................................ 16 1.4.1 Research Questions ...................................................................................... 16 1.4.2 Research Objectives ..................................................................................... 16 1.5 Research Scope and Limitation & Brief Writing Structure ......................... 17 1.5.1 Research Scope and Limitation ................................................................... 17 1.5.2 Research Outline .......................................................................................... 17 CHAPTER II LITERATURE REVIEW ...................................................................... 20 2.1 Project in PT Lotus Trading................................................................................ 20 2.1.1 Project Description ...................................................................................... 20 ix 2.1.2 Project Characteristics ................................................................................. 21 2.1.3 Project Phase ................................................................................................ 22 2.1.4 Project Stakeholder Analysis ....................................................................... 23 2.1.5 Project Flow in Lotus Trading Regional Sulawesi ...................................... 25 2.2 Theoretical Foundation ....................................................................................... 26 2.2.1 International Project Management Standard ................................................ 28 2.2.1.1 Project Management Book of Knowledge (PMBOK) .............................. 29 2.2.1.2 Total Cost Management Framework (AACE) .......................................... 35 2.2.1.3 Company Standard .................................................................................... 40 2.3 Conceptual Framework ...................................................................................... 41 2.4 Data Collection ................................................................................................... 41 2.5 Analyse Data ....................................................................................................... 42 2.5.1 Multi Attribute Decision Making (MADM) ................................................ 42 2.5.1.1 Non-Compensatory Models ...................................................................... 42 2.5.1.2 Compensatory Models .............................................................................. 43 2.5.2 Selection of Decision Criteria ...................................................................... 44 2.5.2.1 Developing Sequence of Essential Activities ........................................... 44 2.5.2.2 Initial Screening of Alternatives ............................................................... 44 2.5.2.3 Defining Final Choice Among Alternatives .............................................. 44 2.5.2.4 Quantitative Strategic Planning Matrix ....................................................