WB report on graft

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