Causes of Delay in EPC Projects: The Case of Indonesia

Abstract

The construction industry is a significant part of the economy in developing countries. During Indonesia's 2010-2020 period, many large-scale EPC projects were launched to build new plants and infrastructure facilities. However, most of these projects experienced delays. This research aims to identify the causes of delays in EPC projects in Indonesia. It also investigates whether specific characteristics of EPC projects within the fertilizer industry in Indonesia, particularly those associated with state-owned companies, contribute to these delays. Data was collected through questionnaires with samples from company construction experts involved in EPC projects consisting of 41 owners, 14 contractors, and 12 consultants. The Relative Importance Index (RII) was subsequently computed, revealing the top ten delay causes for EPC projects in Indonesia based on the highest RII values consisting of delays in procuring equipment/materials, contractor difficulties in funding the project, ineffective project planning and scheduling, the winner of the tender is the lowest bidder, rework due to errors during construction, poor communication and coordination between parties involved in the project, delays in the work of design, disputes in understanding the EPC contract and project specification, unrealistic the duration of the project and delays in the owner's decision. Comparison of delay factors with other developing countries in Asia and Africa shows similarities. Notably, among these categories, contractor-related factors demonstrated the highest RII values. Spearman’s rank correlation coefficient shows that all respondents highly agreed with the individual ranking of delay factors.