W9.0_FB_Early Warning for the Increasing Industrial Fuel (HSD) Price

Problem Definition

Since the increasing Industrial Fuel Price especially for High Speed Diesel (HSD) fuel type that currently we used in our project site, we need to identify when the incremental will hit the amount of budget that we have planned before.

Identify the Feasible Alternative

• There is only one alternatve that we have right now, we must buy the fuel from Pertamina and the transportation is handled by distribution vendor that we have, which is the vendor is PT. Elnusa.

Development of the Outcome for Alternative

Based on the current and historical industrial fuel price from PT. Pertamina (Persero) for Region II (see Table 1) we can put the trendline charts from this data.

Figure 1. HSD Price and Trendline Charts

Table 1. Historical Industrial HSD Price from PT. Pertamina (Persero)

Selection Criteria

Refer to Figure 1 above, we shall categorize the trendline charts with Best Case, Worst Case and Most Likely Case then we can calculate the Mean to get the Forecasted HSD Price.

Table 2. Forecasted HSD Price

Analysis and Comparison of the Alternative

In the Table 3 below we can see the fuel consumption with forecasted HSD price will exceed the budget plan in May 2020.

Table 3. Forecasted HSD Price vs Budget Plan Comparison

Selection of the Preferred Alternative

Based on the Table 3 above, we can still use the USD 0.8/Litre as a budget and keep monitor the consumption of fuel.

Performance Monitoring and the Post Evaluation Result

The Action Plan that we prepare are as follow:

1. Manage and Monitor the fuel consumption from Light Vehicles, Heavy Equipments, Pumps and Generator Sets.
2. Maintain the equipment to prevent the fuel consumption rate become high than normal consumption rate.
3. Ask for additional Budget from Contingency Cost if required.
4. Search for the other distribution vendor that can give the cheapest price.

References:

1. Sullivan, William G., Wicks, Elin M., Koeling, C. Patrick. Engineering Economy 16^th Edition, Retrieved from: Chapter 1 Introduction to Engineering Economy.
2. Info Harga BBM. Economical Prices for Industrial Fuel and MFO from PT. Pertamina (Persero), Retrieved from http://www.infohargabbm.com/search?updated-max=2016-03-01T00:42:00-08:00&max-results=7&start=41&by-date=false
3. Statistics How To. Coefficient of Determination, Retrieved from: http://www.statisticshowto.com/what-is-a-coefficient-of-determination/