FINANCIAL FEASIBILITY OF THE SUNDA STRAIT BRIDGE CONCEPTUAL DESIGN USING THE VALUE ENGINEERING METHOD

Sunda Strait Bridge (SSB) is a mega-infrastructure project offered by the Indonesian government, expected to contribute to national economic growth by bridging economic connectivity between two major islands in Indonesia. At first, SSB construction was offered as a US$10 billion project in 2010. Then in 2011 it was revised into a US$25 billion project with additional scope of work, i.e., industrial area development along the site. Yet it was still unattractive to private investors due to a lack of technical and financial feasibility. Thus, the Value Engineering (VE) approach was used to increase and improve the project’s feasibility by generating innovative ideas. Innovation through additional functions for SSB development is comprised of: 1) development of renewable energy-based power plant by using tidal and wind power; 2) integration of oil and gas pipelines; (3) fiber-optic pipelines; 4) tourism development in Sangiang Island accessed by either road bridge or hanging train; and 5) development of industrial area. The life-cycle cost analysis by IRR and NPV approaches confirmed that SSB development with additional functions increased the internal rate of return of the overall project up to 7.26% and had a positive NPV.