WB report on graft

I am responding to The Jakarta Post article Govt doubts WB report on graft of Aug. 20.

Having been in Indonesia for going on six years, and having worked on a variety of projects, I will state that my experiences would support closer to the 30 percent figure put forth by Dr. Jeffrey A. Winters from Northwestern University as being the "most likely" amount of direct and/or indirect losses due to "graft and corruption", rather than the 20 percent quoted in the Asian Wall Street Journal.

However, not to dwell on the past but to move forward, there is a management tool that would contribute significantly to eliminating the waste and inefficiency associated with corruption, collusion and nepotism (KKN) in the execution of projects within Indonesia. Or at least if it does not eliminate it, will certainly help to isolate it and identify who is responsible (accountability and transparency).

The concepts I speak of are called "Earned Value" (Also known as Cost/Schedule Control Systems Criteria (C/SCSC) or Activity Based Costing/Management (ABC/M)). The concept of Earned Value measures "what the project physically got for the amount of money spent." Earned Value is measured in addition to the standard tracking of Actual Costs vs. Budgets. The addition of the third dimension is essential to managing projects effectively.

The basic concept is endorsed as being a "best practice" by virtually all professional organizations that represent the profession of Project Management. This includes organizations such as the U.S.-based Project Management Institute, the Association for the Advancement of Cost Engineers International, the Australian Institute of Project Managers and the European- based International Project Management Association.

The U.S. government has been using the concept of Earned Value under the name Cost/Schedule Control Systems Criteria, C/SCSC for short, since 1997. It is also known within the management accounting profession as Activity Based Costing (ABC). While developed originally for the construction Industry and U.S. Government Department of Defense contractors, the concept lends itself equally well for adaptation to almost ANY project.

These concepts are not foreign to Indonesia. They are taught as part of most, if not all, Construction Management programs at Bandung Institute of Technology, University of Indonesia and Tarumanegara University, and are featured prominently in the Indonesian textbook Manajemen Proyek (Project Management), by Imam Soeharto. There is no shortage of technical expertise in this field, as several Indonesian and expatriate companies operating within Indonesia have formal training and experience in using this system, and some companies (both Indonesian and multinationals) have formalized it as part of their billings/accounts payable procedures.

To summarize, I am calling on the government of Indonesia to formally recognize, endorse and implement the use of "Earned Value" as the basis for executing all projects. Use of this proven and internationally accepted "best practice" will contribute to a significant reduction in "graft" and other illegal or unethical practices by formalizing accountability, transparency and auditability in the flow of funds for projects. It will also contribute to better and more efficient management of our projects.

PAUL D. GIAMMALVO

Director- APM Project

Management Center for

Excellence Jakarta