Paper3Ref2.pdf

Heliyon 6 (2020) e04352

Contents lists available at ScienceDirect

Heliyon

journal homepage: www.cell.com/heliyon

Research article

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

Effnu Subiyanto a,*, Yohanes Totok Suyoto b

a Department of Postgraduate School, Faculty of Magister Management, Widya Mandala Surabaya Catholic University, Surabaya, Indonesiab Department of Management, Universitas Pembangunan Jaya, South Tangerang, Indonesia

A R T I C L E I N F O

Keywords:Projects managementLogistics costsCustoms clearance costsForeign logistics costsDomestic manufacture costsDomestic logistics costsInsurance costsEconomic developmentPricingLogisticsStrategic managementScale constructionBusiness

* Corresponding author.E-mail address: [email protected] (E. Subiyanto

https://doi.org/10.1016/j.heliyon.2020.e04352Received 5 May 2020; Received in revised form 32405-8440/© 2020 The Author(s). Published by Els

A B S T R A C T

This research tries to shed light on precise values of logistics costs that so far undisclosed. The values areimportant for every project planners to evaluate, control and monitoring, and especially imperative for pro-curement activities. Tender, bidding, and defining the scope of contracts and value can be well organized withouttime-consuming. This research uses methodology previously developed by Subiyanto (2020a) and discussed onlya few particular and directly related to the logistics. The model had been decomposed by utilizing path analysisand the data had been regressed to define variables as the most inflator for logistics. The findings are total logisticscosts in Indonesia generally at around 14.6% to total costs of investment. It consists following of insurance cost0.11%, costs for customs clearance 6.52%, foreign logistics costs 6.62%, domestic manufacture 0.47%, and do-mestic logistics costs 0.89%. This research is not discussing logistics costs relating to human resources, humantravelling, and internal logistics conducted by vendors or contractors as the scope included counted within theirprocurement contract. These results are important as guidance for project planners, controllers, and other partiesto prepare costs more precisely. Negotiating to the banks will be easier as the more precise amount of budgets hadbeen estimated. Due to the important values that have been identified, there will help transparency and gover-nance conducting the projects. Procurement processes involving societies are more objective and better. This is anovelty finding as previous researchers have not decided yet.

1. Introduction

Every project in Indonesia and generally in the world is practicallyeasy to be accomplished, finished, and completed. Starting projects havebeen marked by groundbreaking ceremony while closing projects wouldbe marked by the closing ceremony. The same couple of ceremonies butat different times with yearly span depend on the size of projects.

While project management has few tasks to make final payments, andgradually part of project teams have been transferred as part of opera-tions’ organization at the new plants; by at the time, the important re-cords, histories, achievements, performances, with its numbers are easilygone and evaporated. Physical documents or electronic data are carefullystored as required as part of the final report for final auditing, but eval-uating, assessing or making simply comparison against to previousfeasibility study is rarely done.

The most critical thing, while a different team has been assigned tocarry other projects –even the same type of project- the new team will

).

June 2020; Accepted 25 June 20evier Ltd. This is an open access

face hardly to refer results previous projects achieved as reference for thenew projects.

Again, the new team must hire new other consultants, hire severalpersonal experts, rent different tools, and make preparation as like a newteam with a new project. Everything has been reset as like a newest andbeginning from zero. The amateur-like behavior is totally unproductiveand professionalism is highly under questioning.

To disclose numbers; moreover, this case is correlating with contractprocurement that is generally not common, unusual, and even more,have been campaigning against the laws. Part of the officers states thatthe contract is hard to define precise numbers. The numbers will be liquiddepends on the market. While supply over the demand will suppress theprice, and in contrast, the price will be hike while the demand higherover than supply. This culture-type is retaining advanced information ofinvestment costs and particularly logistics costs that to be addressed inthis research.

Based on the situation, this paper had risen. The aim of this paper is todisclose several values associated with project costs particularly in the

20article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

terms of logistics activities. Unit costs for even the smallest logistics mustbe carefully identified to make a greater accurate level of results of thisresearch. Due to the findings obtained, these results are a novelty in lo-gistics, giving a contribution to the knowledge and can be a foundationfor further research future.

2. Literature review

Estimating precisely construction costs at the general physical pro-jects are always becoming a major tasks for every project planners.Ramos (2017) guided a practical in-depth look at the basics to predictconstruction cost, including how it fits into the construction process andwhat can cause costs to rise unexpectedly. For more detail, the majortypes of construction contracts have been presented, best practices, pit-falls for estimators, the use of historical data, and estimation software.

Many subjects have been presented by Ramos (2017) as such pro-posing nine basic phases in a building project tasks for example (1)determining commissioning team; (2) preparing a pre-design phase; (3)forming a design team; (4) designing the engineering; (5) start of biddingbased on the scope of work; (6) signing the contract; (7) constructionstages initiate with groundbreaking ceremony; (8) close-out; and (9)completion project.

According to Ramos (2017) from the all-9 basic principle, the mostmust be concerning is construction stages. Construction then associatingwith a lot in common with costs must be giving much higher attentiontherefore for these steps are being structured in several levels. First is theorder of magnitude estimate; second is the level of schematic designestimate; third is design development estimate; fourth is the constructiondocument estimate; and the last is bid estimate.

A little bit developed research had been conducted by Bridges (2019)that distributed costs for projects into 6 categories which are (1) direct vs.indirect costs; (2) fixed vs. variable costs; (3) period vs. product costs; (4)pre-operating vs. operating costs; (5) retrospective vs. prospective costs;and (6) opportunity cost vs. the cost of risk.

Marker (2017) joined to study the interestingly topic a bit deeper thanRamos (2017). The study explained an overview of cost estimating,started to disclose key components of a cost estimate. An update ofimportance using a work breakdown structure (WBS) is incorporatingthough the technique was not new. Several types of software as like theCritical Path Method (CPM) and the Program Evaluation and ReviewTechnique (PERT) are evaluated to enrich the study. At the level ofapplied, Marker (2017) is far better than earlier researchers as infor-mation technology (IT) had been inserted. The approach undertakes byMarker (2017) to replace modeling using Bayesian Networks approach tohelp reduce uncertainty project costs presented by Khodakarami andAbdi (2014) and the regression models (Williams, 2003). Furthermore,applying the technique to monitoring projects with control charts toimprove the traditional approach is also changed (Aliverdi et al., 2013).

Due to the development of costs in the project that as important asother departments, the procurement department then took bigger por-tions to contribute. Eriksson (2017) has investigated how procurementstrategies must be designed to facilitate exploration and exploitation inconstruction projects. The collaborative procurement is found in inte-grating teamwork between contractors and project accounting. Theprocurement department that can play strategic roles to combine ofincentive-based payment, bid evaluation based on multiple criteria andcollaborative tools and activities in partnering arrangements and clearlydefined scope of the contract (Cheng, 2014).

Even more; good procurement will help to minimize failures ofoverrun costs of projects that traditionally happen in generally countries(Shehu et al., 2014). The study of Shehu et al. (2014) is likely to respondto the urgent calling of Jorgensen et al. (2012) and Doloi (2011) thatprior warning to the need for other types of studies to determine costsprojects. However, the strict conditions must be applied that selectingvendors or contractors are based-on fairly evaluation (Rajeh et al., 2015).

2

Different views with Ramos (2017), Sanchez et al. (2017) measuresthe importance of organization in the project. The persons that operateorganizationally can help minimize uncertainty costs distribution butwith robust Information Systems (IS). Sanchez et al. (2017) proposes theCost and Time Project Management Success (CTPMS) that be able toidentify project size, duration, postponement, team size, and teamallocation.

However, to precisely determine costs estimation in the projects areremaining mysterious and so far halted by developing model, simulation,and approximately techniques. The earned value management (EVM)method employed from the interval gray numbers (IGNs) has been testedby Nadafi et al. (2019), and also by activity-based costing (ABC)approach (Fang and Ng, 2011). But, there are still questioning to defineproject costs or building costs as stated by Shehab and Farooq (2013),Alashwal and Chew (2017), and even at large projects (Jayaraman,2016).

In terms of logistics costs in the projects, not many researchers havestudied this particular theme. A Linear Programming (LP) has beenperformed by Choundhari and Tindwani (2017) at the recent a devel-oping model of logistics costs for projects that had been introduced bySubiyanto (2020a), b. Only a few others have interested to conductresearch associated with the cost of trucking (Kotsois and Folinas, 2020)and container transfer (Benghalia et al., 2014).

3. Methodology

This study elaborates on the methodology based on empirical cases inthe heaviest several cement projects in Indonesia. The path analysis typeis introduced and carried out to get a comprehensive mapping of costs, alldata then have been tested by the regression method to get results whichthe highest inflator among other variables that must be appropriatelyconcerned or prioritized.

To convince of the approach; several 8 cement projects were builtwithin period of 2010–2018 have been assessed to get detail resultsprecisely. Data collection had been taken at the whole project during thetime construction, be carefully checked and verified daily and sorted inquarterly. Costs associated and incurred to the interest of logistics havebeen grouped into the category of logistics costs, while costs associatedwith other interests have been accounted proportionally to other posts.

For data total costs of projects are being differently treated, like na-ture, due to it accumulated not quarterly separated, then for the case istaken by quarterly accumulated and key-in into the spreadsheet. Thistechnique is to avoid autocorrelation but at the same time keeping databetween variables free independently.

This research utilizing a model developed by Subiyanto (2020a), b asfollowing Figure 1. Subiyanto (2020a), b found the model as revisitingbased on literature studies and the model then had been tested byan-EVIEWS10.00 statistical tool to check robustness and weakness. Fromthe point, then it was concluded and decided the model can beadequately popularized to be applied at the general projects, particularlyin Indonesia.

Due this research is observing only to discuss associates with thedirect logistics costs incurred in every project; therefore, few variableswere chosen are (1) insurance; (2) customs clearance; (3) foreign logisticscosts; (4) domestic manufacture costs; and (5) domestic logistics costs. Tosort of variables considered in this study are of course expert judgementsneeded. The expert is the only way to decide each factor directly orindirectly associate with logistics.

To calculate logistics costs is by measuring real data taken from theprojects. Logistics costs every project has been measured, counted,compared against of the total project costs. The bigger logistics costs isshowing more inefficient and vice versa the smallest logistics costs isshowing better in organizing logistics costs at the projects.

Figure 1. Logistics Model Prior Developed. Source: accommodating from Subiyanto (2020a).

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

4. Results and discussions

4.1. Expert judgement defining relevance variables

To decomposing Figure 1 is by analyzing every tier that built themodel. It can be divided into three tiers for simplifying due to the totalinvestment as the dependent variable as a benchmark is not counted. Theguidance is following Figure 2. First-tier evaluates all independent vari-ables, second-tier assesses a-first intermediating variables, third-tierconsiders only a single intermediating domestic logistics costs, andfinally a dependent variable of total investment as a primary benchmarkof this study.

The tiers are leveling logistics stages identified at the projects. Vari-ables directly related to logistics such as at the portion of foreign logisticsis easily identified, but variables correlated came from domesticsmanufacture must be carefully justified. Domestics manufacturing costsin the case are logistics associated to perform delivery of goods for pro-jects, manufactured origin from the domestics. Movement costs from theoriginated place to the project site. In the case for example cost deliveryof concrete, rebar, plate-works from workshop to project site, bulkymaterials. This is particular to discuss delivery or logistics costs thatgenerally counted during logistics tenders.

Based-on Figures 1 and 2, the cost of insurance is internationalmandatory as one of conditional to reserve space in the vessel for de-livery. The amount is vary depending on the market price at the timecontract. The higher risks then the price insured will be also higher. Thegoods that are not placed in a container or secured other packages willalso be imposed on the higher tariff. The unusual unscheduled type ofvessels for example using tramper vessel or specific chartered vessels arealso being imposed of higher tariffs of insurance. It is therefore this in-surance variable is considering in this study. The expert judgement is alsodeciding the insurance costs are associated directly as one importantfactor in the logistics costs.

Besides insurance, costs that directly impacted the projects are costsfor customs clearance. This activity is mandatory while dealing withimport machinery and common in every country worldwide. The Statelevied a variety of costs in the form of a variety of taxes or others. In thisregard are costs of duty, value-added tax, income tax, and some of themare luxury goods tax. In Indonesia costs of duty are at least 5% to 10%,the value-added tax is 10%, income tax is 2.5% for particular condi-tionals met, and uncertainty of luxury goods tax to about at least 50% to500%. This research exempted the luxury goods tax as the costs are notapplicable for generally manufacture projects in Indonesia. In this case,

3

the mandatory costs of customs clearance are also taking consideration inthis research.

Further, the costs of logistics come from foreign logistics costs. Thisstage is delivery activities loading and unloading goods for projectsgenerally machinery from point of origin ports to the destination ports inthe country where the projects are carried on. The costs are service coststo pick-up machinery from certain places according to procurementcontract, loading to the hatch of vessels, sailing on the seas, unloading tothe destination ports, and to hand-over goods according agreed the termsbased on certain incoterms applied. It is therefore the variable of foreignlogistics costs is taking into consideration.

Besides, Subiyanto (2020a), b has decomposed all associates with thedelivery of domestic goods within total logistics costs in domesticmanufacture. All fabrications have been fitted into the ordinary type oftrucks commonly used in Indonesia and being counter-checked with datatraffic from the warehouse. The technique has been the same done totreat other variables such as rebar, ready-mix concrete, and bulk mate-rial. Total costs associated with domestic manufacture had been tabu-lated in the variable and therefore this variable is directly impacting thetotal investment.

Finally, as benchmark primarily studied in this research, the depen-dent variable of total investment is directly accommodated with a littlebit of different treatment. Data on total investment is accumulated basedon quarterly; therefore, if we can see tabulation the amount of numberswas increasing but in uncertain multiply. It depends on the amountdisbursed according to project progress and correlated with achievementquarterly.

The direct relevance variables of this research then could be definedas following and described by following Figure 3.

4.2. Results

Indonesia is a distinctive archipelago-type of country. Geographi-cally, at least 17,000 islands throughout at the country, majorly each ofislands separated by water or sea. Since the biggest percentage of totalpopulation approximately 272 million people (2019) domicile in JavaIsland, all disparities then occurred in our today's life. This is not sur-prising as to make an equal distribution in all islands are requiring pro-digious resources. The development model is applied by the currentgovernment is building project infrastructure as it mandatory required,not as wishing.

In terms of executing certain physical projects or cement projects,considering the uncertainty of hurdles or obstacles along the logisticsroutes; therefore, logistics design must be prior determined. Following

Figure 2. Expert Judgement per Tiers. Source: developed by Author (2020).

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

Figure 4 to display how to describe logistics routes to executing somecement projects in Java Island. The identical topology is also prevailingto other islands in Indonesia.

Figure 4 is an important step as this design route will be referenced todetermine the costs associated with logistics projects. From Figure 4, theinternational logistics route did not in detail explain as the routes arefixed and certain. But to detailing domestics’ routes are quandary ashundred lines available in Indonesia. Figure 4 explains, there is a do-mestic sea line from the international sea-port of 8 to the temporary jettyof 9, the nearest to the project site. This path will be serviced by barge-type or small landing ship tank (LST) type of vessel. Applying hydrau-lic and mechanical jacking as the most practicable instead of usingportable cranes that impossible available in a generally remote area.Multi axle-trailer is combining the useful unloading and carrying to theproject site.

Few road-type lines must be accommodating by various types oftrucks. A route services from certain container-type direct to the projectsite. A route to service bulky unidentified goods from the center city tothe project site, and a route to prepare heavy machines from jetty point tothe project site. Within the area of projects itself, there is a single route tocarrying concrete from the point of batching plants to the hundred pointsof constructions or civil foundation.

From Figures 4 and 5 then developed to help to understand designlogistics routes. Figure 5 explains project goods from foreign to be

Figure 3. Result of Expert Judgement to Describe Relevance Direct Variables tothe Total Investment. Source: developed by Author (2020).

4

transported by sea to certain Indonesia international seaports. In thissection offers two possibilities; goods in containers can be immediatelydelivered to the project site by regular container trailers, but heavy-liftequipment categories in terms of overweight or over-dimension mustbe treated to be transported by sea again to the temporary jetty as muchas possible at the nearest distance to the project site.

According to Subiyanto (2020a), b based on his experience to studylogistics’ route, every line, every route must be precisely drawn to getwhole pictures of maps. This is important to describe obstacles and toearly anticipate. Bridges of the road especially must be rigorouslychecked as the heaviest machines could be 220 tons each. The multiaxle-trailer type in the case is highly required without be possiblyreplaced with other types of regular vehicles.

The other obstacles are for example cables that crossing road, ban-ners, billboards, and the most to be early anticipated is the constructionof bridges along the roads to the project site. There are two possibilities tostrengthen bridges; first by upgrade or make-up construction withadditional mechanical supports, or second by using temporary fly-overbridges. The options are both costly, the difference is the first optionrequires longer construction days while the second option needs a fewdays as it requires to install and to dismantle.

The costs for uncertainty obstacles in this research have beenmeasured to include in the costs of the domestic manufacture section.

After data had been processed in the template, therefore the realportion of logistics costs at cement projects in Indonesia can be seen inthe following Table 1. Total logistics costs in Indonesia based on recentinfrastructure real disbursed costs accounted for about 14.60% of totalinvestment costs. The total costs resulted from costs of insurance 0.11%,costs of domestic manufacture 0.47%, costs of domestic logistics costs0.89%, costs of customs clearance 6.52%, and the highest costs of foreignlogistics costs accounted for 6.62%.

To help easy to make efficiency evaluation between projects based onTable 1 then Figure 6 presents to reveal which total logistics costs ofprojects above the average line in Indonesia and which projects per-formed below the line. Projects were carried above the line can be saidexpensive projects while the others will be said more economical pro-jects. There seem 6 projects above the average while the other two wereless than average. The line showing Total Indonesia is the average line inIndonesia.

Figure 4. Determining Logistics Route. Source: developed Author (2020).

Figure 5. Design Logistics Routes. Source: developed by Author (2020).

Table 1. Portion of logistics costs in projects.

Project Name Insurance DM DLC Customs FLC Total

Rembang 0.09% 0.49% 1.73% 5.25% 5.97% 13.53%

Indarung 0.15% 0.54% 0.49% 8.49% 8.66% 18.33%

P14 0.12% 0.60% 0.46% 8.02% 7.97% 17.17%

Tuban#2 0.16% 0.46% 0.39% 9.41% 9.03% 19.45%

Bayah 0.10% 0.37% 1.10% 6.52% 6.34% 14.44%

Banyumas 0.13% 0.45% 1.76% 8.35% 7.87% 18.55%

Maros 0.12% 0.80% 1.30% 7.39% 8.24% 17.85%

Train#1 0.16% 1.00% 0.93% 10.10% 10.37% 22.56%

TOTAL Indonesia 0.11% 0.47% 0.89% 6.52% 6.62% 14.60%

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

Easier understanding of graphs can be seen in Figure 7. The logisticsprojects found above the national average project Train#1 in KalimantanIsland, project Banyumas in Java Island, project P14 in Java Island,project Maros in Sulawesi Island, project Tuban#2 in Java Island, andproject Indarung in Sumatera Island. While cement projects found below

5

the line are project Bayah in Java Island, and project Rembang in JavaIsland.

These findings again proved that better infrastructure is having asubstantial contribution to decreasing the total costs of logistics. JavaIsland particularly has better and much more infrastructure both soft-

Figure 6. Efficiency comparison between cement projects 2010–2018.

Figure 7. Projects above the national average and below the line.

Table 2. Costs of Logistics based Islands in Indonesia.

Island Insurance DM DLC Customs FLC Total

Jawa 0.12% 0.48% 1.09% 7.51% 7.44% 16.63%

Sumatera 0.15% 0.54% 0.49% 8.49% 8.66% 18.33%

Sulawesi 0.12% 0.80% 1.30% 7.39% 8.24% 17.85%

Kalimantan 0.16% 1.00% 0.93% 10.10% 10.37% 22.56%

TOTAL Indonesia 0.11% 0.47% 0.89% 6.52% 6.62% 14.60%

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

infrastructure and physical infrastructures to perform all difficult-level oflogistics. International seaports in Java Island for example have two,while other islands have none, or at least one. Road infrastructure ismuch more available in Java Island than in other islands, logistics toolssuch as vessels, barges, trailers, portable cranes, even more, the multi-

6

axle trailers are also much more ready in terms of quality and quanti-ties. Java Island in general also does not require over than once in multi-modal or transshipment to reach final project site and therefore helpdecrease the total costs of logistics.

Table 3. Results of regression tests.

Projects Intercept Insurance Customs FLC DM DLC Adjusted-determinant (R2)

Rembang Not Not Not Significant Not Not 0.24713442

Indarung Significant Not Not Not Not Not -0.0862511

P14 Significant Not Not Not Significant Not 0.4008903

Tuban#2 Significant Not Not Not Significant Not 0.180002446

Bayah Not Significant Significant Not Not Not 0.516719073

Banyumas Significant Not Not Not Not Significant 0.5305315

Maros Significant Significant Significant Not Not Significant 0.7605823

Train#1 Not Not Not Significant Not Significant 0.7642904

TOTAL Indonesia Not Not Not Not Not Not 0.10583073

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

Figure 7 helps to find cement projects that its costs of logistics overthe average national-line and below the line. Project Rembang foundthe lowest costs than 7 others similar projects; even more, the logisticscost the project is below than amount average in Java Island accordingto Table 2. This is statistical evidence that building a cement plant inJava Island is much more benefitting from the perspective of logisticscosts.

4.3. Regression tests

Costs of logistics in projects based on empirical findings are small, thehighest is about 18.33% and the lowest is 16.63% of the total investmentcosts. It means the major portions of costs will come from other variablesthan the costs of logistics. The biggest costs within the range of 81.67% to83.37% must be allocated for procuring machinery, civil construction,fabrication, land clearing, concrete, services, and many more othersdirectly. Due to the reasons by performing regression tests would be nosignificant impact as the coefficient of adjusted-determination (R2)would be absolutely low. This is meaning, the model will be easilyinterfered with by other variables that outside undefined within themodel or unstable model.

However, based on Table 3, it delivers meaning that project Rembangmust take care of building better contract logistics costs in handling de-livery machinery from the import section. It is therefore variable offoreign logistics costs is predominantly significant.

Project Indarung on the other side as distinctive and specific asnone of the regression tests found significant. As the logistics routes inthis Sumatera Island, the western part of Indonesia, is more compli-cated due to demanding several seas multi-modal thus the costs oflogistics should be higher than other sides in Indonesia. But none ofthem significant (as the intercept is not counted) for surely requiresfurther research future. The authors advised for researchers to takepart in these findings deliberately.

For project P14 and Tuban#2, both located in Java Island to concernfor domestic manufacture. It implies a lot of domestic goods made andtherefore demanding accordingly attention. Remain in Java Island,project Bayah located in the most South-western Java Island is dealingwith insurance and customs. This project Bayah has a remote area thatrequires a customs officer at the designed place by its own costs.Therefore the matter of insurance and customs clearance predominantlybecomes attention.

Further project Banyumas is having a problem with its project site. Asthe project at southern Central Java with directly exposing to the IndianOcean which popular with high-risk delivery of high tide. To anticipate,therefore the project does more utilize roads and therefore costs of do-mestic logistics variable became significant.

The project of Maros has different scientific arguments. The projectsite is in Sulawesi Island which an international seaport Soekarno-Hattaexists. Customs clearance can be performed at the Island and therefore a

7

matter of insurance and customs clearance become significant. Besides asthe Island is outside Java Island in general limited in logistics infra-structure, it is not surprisingly higher attention to the variable of do-mestic logistics costs.

Finally, project Train#1 in Kalimantan Island with limited logisticsinfrastructure and unavailable international seaports. Normally, foreignlogistics costs became much more significant along with domestic lo-gistics costs.

However, as this paper mentioned earlier, the total logistics costsamount small number in all costs structure for any projects. Without anystatistical tested, every researcher will have immediately answer that theresults must be not significant and confirmed according to Table 3. Butthe important things, this paper has presented and found the empirical-results value that building logistics costs for certain projects. The find-ings are not limited for the cement projects but it can be popularized todeveloping in other types of projects.

4.4. Discussions

Cement projects are generally identical during preparation, execu-tion, and closing. During preparation, the teams are seeking much moreinformation in almost all aspects. Every information is treated valuable asthe information can be referred for further process, bidding, or evenmore, big tenders. The logistics costs play an important role as logistics isvery important to support project execution. Logistics is taking contri-bution during delivery project goods since the smallest to the biggest,from the base weight unit of a kilogram to the hundred tons.

Learning from several 8 cement projects within the period of2008–2018 in Indonesia are valuable experiences. Precise data of theprojects are gathered, being clustered, for evaluation, and as sources,information to be referred by interested people or others.

The paper can disclose total logistics costs for general projects inIndonesia and could be adopted by other projects. This paper knows howmuch costs to anticipate insurance, customs clearance, to prepare costsfor foreign logistics costs, to reserve costs for handling goods originatedfrom domestic manufactured, and to store adequate costs to performdomestics logistics activities. When the standard has been acknowledged,the smoother processes are going to be easy to be maintained. This is theprimary point the use of this paper.

5. Conclusion

In real project execution, determining costs to anticipate goods de-livery to and from the project site is generally done by a trial-and-errorapproach. Try at first then immediately applying amendments whenthe budgets are nearly achieved. These actions are totally false, as out-siders especially project owners will judge the project team notadequately professional. These are common in generally every projectexecution and the response is always repeating yearly.

E. Subiyanto, Y.T. Suyoto Heliyon 6 (2020) e04352

To sort all concerning logistics needed for every project, the first to beimportantly determined is predicting total goods required for the project.All members of the project team are highly requested to participate indetermining the goods needed within each responsibility based on eachprofessional experience. The team starts from the Safety Health Envi-ronment (SHE) department, HRD, Engineering, Construction, Procure-ment, and other organizations within the project, to the Securitydepartment.

Based on empirical findings at this research the total logistics costs inIndonesia are at about 14.6% of the total costs of investment. It consistsfollowing costs of insurance cost 0.11%, costs for customs clearance6.52%, foreign logistics costs 6.62%, domestic manufacture 0.47%, anddomestic logistics costs 0.89%.

The number findings are particularly important to perform procure-ment contracts, to negotiate with suppliers or vendors, preparing budgetsfor the projects, anticipating taxes, valuable for planners and or forproject owners, and also for auditors.

Due to the standards is not yet defined clearly to the date, thesefindings are not excessively said as providing novelty to the discourserelated to the nexus between costs designing in every project.

Declarations

Author contribution statement

E. Subiyanto and Y. T. Suyoto: Conceived and designed the experi-ments; Performed the experiments; Analyzed and interpreted the data;Contributed reagents, materials, analysis tools or data; Wrote the paper.

Funding statement

This research did not receive any specific grant from funding agenciesin the public, commercial, or not-for-profit sectors.

Competing interest statement

The authors declare no conflict of interest.

Additional information

Supplementary content related to this article has been planned inforthcoming published at International Journal of Applied Logistics(IJAL), ISSN: 1947–9573, 2020, volume 10, issue 2, article 3, titledAssessing Total Logistics Costs: Case Study during the Execution ofCement Projects in Indonesia by author (https://www.igi-global.com/journal/international-journal-applied-logistics/1151).

Acknowledgements

The authors are grateful to the Widya Mandala Surabaya CatholicUniversity (UKWM) for supporting our research. Thanks also to theanonymous reviewers that help improve this research.

8

References

Alashwal, A.M., Chew, M.Y., 2017. Simulation techniques for cost management andperformance in construction projects in Malaysia. Built. Environ. Proj. Asset. Manag.7 (5), 534–545.

Aliverdi, R., Naeni, L.M., Salehipour, A., 2013. Monitoring project duration and cost in aconstruction project by applying statistical quality control charts. Int. J. Proj. Manag.31 (3), 411–423.

Benghalia, A., Oudani, M., Boukachour, J., Boudebous, D., Alaoui, A.E., 2014.Optimization-simulation for maritime containers transfer. Int. J. Appl. Logist. 5 (2),50–61.

Bridges, J., 2019, December 4. ). Project Management. Retrieved from. https://www.projectmanager.com/. https://www.projectmanager.com/training/basics-project-cost-management.

Cheng, Y.M., 2014. An exploration into cost-influencing factors on construction projects.Int. J. Proj. Manag. 32 (5), 850–860.

Choundhari, S., Tindwani, A., 2017. Logistics optimisation in road construction project.Construct. Innovat. 17 (2), 158–179.

Doloi, H.K., 2011. Understanding stakeholders' perspective of cost estimation in projectmanagement. Int. J. Proj. Manag. 29 (5), 622–636.

Eriksson, P.E., 2017. Procurement strategies for enhancing exploration and exploitationin construction projects. J. Finan. Manag. Prop. Construct. 22 (2), 211–230.

Fang, Y., Ng, S.T., 2011. Applying activity-based costing approach for constructionlogistics cost analysis. Construct. Innovat. 11 (3), 259–281.

Jayaraman, R., 2016. Project cost control: a new method to plan and control costs in largeprojects. Bus. Process Manag. J. 22 (6), 1247–1268.

Jorgensen, M., Halkjelsvik, T., Kitchenham, B., 2012. How does project size affect costestimation error? Statistical artifacts and methodological challenges. Int. J. Proj.Manag. 30 (7), 839–849.

Khodakarami, V., Abdi, A., 2014. Project cost risk analysis: a Bayesian networks approachfor modeling dependencies between cost items. Int. J. Proj. Manag. 32 (7),1233–1245.

Kotsois, P., Folinas, D., 2020. Analysis and comparison of road freight transport cost in 20European countries. Int. J. Appl. Logist. 10 (1), 13–26.

Marker, A., 2017, March 27. ). Ultimate-Guide-Project-Cost-Estimating. Retrieved from.https://www.smartsheet.com/. https://www.smartsheet.com/ultimate-guide-project-cost-estimating.

Nadafi, S., Moosavirad, S.H., Ariafar, S., 2019. Predicting the project time and costsusing EVM based on gray numbers. Eng. Construct. Architect. Manag. 26 (9),2107–2119.

Rajeh, M., Tookey, J.E., Rotimi, J.O., 2015. Estimating transaction costs in the NewZealand construction procurement: a structural equation modelling methodology.Eng. Construct. Architect. Manag. 22 (2), 242–267.

Ramos, D., 2017, May 26. Construction-Cost-Estimating. Retrieved from. https://www.smartsheet.com/. https://www.smartsheet.com/construction-cost-estimating.

Sanchez, O.P., Terlizzi, M.A., Moraes, H.R., 2017. Cost and time project managementsuccess factors for information systems development projects. Int. J. Proj. Manag. 35(8), 1608–1626.

Shehab, T., Farooq, M., 2013. Understanding project costs and building costs. Eng.Construct. Architect. Manag. 20 (2), 118–126.

Shehu, Z., Endut, I.R., Akintoyr, A., Holt, G.D., 2014. Cost overrun in the Malaysianconstruction industry projects: a deeper insight. Int. J. Proj. Manag. 32 (8),1471–1480.

Subiyanto, E., 2020a. Assessing total logistics costs: case study during the execution ofcement projects in Indonesia. Int. J. Appl. Logist. 10 (2) accepted.

Subiyanto, E., 2020b. Developing model of logistics costs in Indonesia’s cement projects:a literature and empirical study approach. J. Econ. Bus. 3 (2), 697–718.

Williams, T.P., 2003. Predicting final cost for competitively bid construction projectsusing regression models. Int. J. Proj. Manag. 21 (8), 593–599.