Strategic Irrigation Modernization And Urgent Rehabilitation Project In Indonesia

Project Details

Discuss about the Risk analysis and Mitigation Project.

The case study identified in this report is Strategic Irrigation Modernization and Urgent Rehabilitation Project which is based in country, Republic of Indonesia. The project is related to water/irrigation sector. The borrower of this project is Ministry of Finance, Republic of Indonesia and the implementation agencies are Ministry of Public Works, Directorate General of Water Resources. The Strategic Irrigation Modernization and Urgent Rehabilitation Project is proposed to manage the irrigation sector to provide benefits to large section of people in Indonesia where irrigation is the major source of their employment (Bank 2018). The objective of this project is to improve and enhance infrastructure for irrigation and strengthening management of the infrastructure schemes in areas selected. The objective of this project is intended to be achieved by modernization, revitalization and rehabilitation of irrigation systems and water resources. The other ways of achieving are: through improved management, operation and maintenance of the systems.

The project is proposed to provide a platform for modernization and rehabilitation of systems in irrigation sector in larger parts of Indonesia through increasing and improved service levels, participatory development, sustainable management and upgrade of infrastructure. Directorate General of Water Resources (DGWR) has five pillars for modernization of irrigation sector, and these five pillars are base for designing and developing this project. World Bank will co-finance this project where World Bank will be lead financer. This five pillars are proposed for the base of this project due to the efforts that Government wants for the irrigation sector that is mitigating issues related to infrastructure, information, technical and information. The five pillars that this project will consider are infrastructure rehabilitation and upgrade, management system improvement, water security improvement and availability, human resources strengthening and institutions strengthening.

The project is briefly described in terms of the areas where the improvement will be focused and they are given as follows. The project is proposed to support rehabilitation of irrigated command area which is about 100,000 hectares to overcome deterioration, which is ongoing, of irritation schemes. This is favor of pillar water availability and infrastructure of irrigation. There are 14 identified schemes across eight river territories in eighth provinces. The focus is initially on chosen areas within Jatiluhur Irrigation Scheme having 240,000 hectares in West Java. In this areas, the premium system for irrigation with advanced technologies will be introduced to support issues of water security. The other improvement is to collect data such as hydrological, hydraulic and meteorological system network. The improvement are related with the area of asset management systems, decision support systems, allocation, distribution of water and delivery of water. The establishment and managing of Water Users Associations, Irrigation Commissions (KOMIR), legal frameworks and knowledge management center for irrigation.

Project Objectives

The overall budget of this project is US$ 578 million where financing sources has following amount of budget to invest.        

Financing sources	Budget
Ministry of Finance, Republic of Indonesia	US$ 78.00
Asian Infrastructure Investment Bank	US$ 250.00
World Bank	US$ 250.00
Total budget	US$ 578.00

The time period given for project is November, 2017 to November 2022.

The size of this project is on a large scale as it is proposed by Republic of Indonesia. The project is for selected areas and the size of the area is 1.4 million hectares. The aim of this project is to modernize the irrigation sector in chosen areas. The objectives of this project is to improve services of irrigation and strengthen management of irrigation schemes in chosen areas through modernization and rehabilitation.

The project is proposed due to the following reasons and benefits. The agriculture is the major source for employment in Indonesia and the agricultural sectors are driven by irrigated agriculture for producing food. However, there have been stagnation of agriculture and most importantly irrigation facilities due to degrading infrastructure, lack of ideas for innovation and uptake of low levels of advanced technology. Jatiluhur Irrigation System in West Java has been focused to prioritize for modernization of the systems by the Government. This is the reason due to which this strategic modernization and reorientation has been proposed. The benefits are improved security and availability of water for agricultural sector, enhancing land, human resources and water productivity. The other benefits are management of sustainable irrigation, livelihoods of farmers and mitigating risks related with climate and cost volatility.

The expected difficulties or drawbacks related to this project are as follows.

• Challenges related to water supply, water competition and environmental protection.
• Failure of technologies and systems
• Break in flow and pressure of water
• Legal and regulatory frameworks violation
• Lack of corporation between people and Government proposals
• People involved in the modernization and rehabilitation process of irrigation system, lack knowledge and expertise.

External key stakeholders

• Asian Infrastructure Investment Bank
• World Bank
• Ministry of Finance
• Directorate General of Water Resources

Internal key stakeholders

• Farmers
• People related to agricultural sector
• Engineers

The previous section provided the project description and project information which will be used in this section to identify the potential risks in the given project and determining how it should be weighted (Muriana and Vizzini 2017). The qualitative measures and quantitative measures are given in this project to determine the potential risks.

Risk Factor	Qualitative Risk Ranking Guidelines
Low	Medium	High
Technology			Technology used are new and advanced. Principal testing is required for extensive proof of the technologies. Failure of technology can occur in future.
Interfaces		Major impact from labors and contractors
Safety and security			Large project and hence several hazards where there is risk of environmental deterioration and livelihood risks
Stakeholder involvement and political visibility		Information sharing and outreach of communication is required. Stakeholders are neutral however interested in project updates as it progress
Project Funding			Duration is more than three years and hence conceptual levels estimation is required
Schedule		Few schedule constraints are there that exist that affect the completion date. Assumptions have been made and validated. Extensive resources are required during project progress either through outside or from inside.
Characteristics of Site		14 areas where the irrigation scheme will be applied and hence major infrastructure is required. Government property and proposal hence accessible.
Labor required	High skill is required and readily available. Gradual build-up is required.
Requirements of quality			High quality requirement due to large project.
Key participants required			More than 3
Capabilities of contractor	Proven project track record and availability of resources immediately.
Legal and regulatory framework	Minimum permit requirement as because proposed by Government of Indonesia and no issues of compliance
Complexity and Magnitude of Contamination	No potential for any contamination through any radiological and chemical hazards and performance record of industrial safety program.

 

The quantitative measure for this project is evaluated and given through below diagram to describe the risk assessment analysis of this project.

Components	Sub components	Estimated cost	Risks related to project
Institutional strengthening and rehabilitation urgency	Water availability enhancement	US$ 0.5 Million	The risks are related to water scarcity, technology failure, budgeting issue.
National Irrigation system	US$ 199.0 Million
Modernization of Irrigation management	US$16.4 Million
Irrigation Management Institutions	US$1.2 Million
Human resources development	US$5.4 Million
Jatiluhur Irrigation Management Modernization	Water availability enhancement	US$0.5 Million	The risks related to size and complexity of the project. The other risks are insufficient labors and unskilled contractors.
Planning, designing and implementation	US$311.2 Million
Modernization of Irrigation schemes	US$17.3 Million
Irrigation Management Institutions	US$2.8 Million
Human resource development	US$4.0 Million
Project Management		US$20.0 Million	The risks are related to financial costs, safeguarding of property and monitoring and evaluation.

 

	Consequences
Acceptable	Tolerable	Undesirable	Intolerable
Likelihood	Improbable	Characteristics of Site	Capabilities of contractors	Required participants	Quality requirements
Possible	Legal and regulatory framework	Requirement of Labor	Contamination possibility	Technology failure
Probable	Project funding	Stakeholders neutrality towards project	Unskilled Labors and contractors	Safety and security issues

These risk assessment analysis shows that there are risks related to this project as analyzed through qualitative measures and quantitative measures to identify potential risks of this project. The financial measures are also the constraints for this project which poses challenges and hence it needs to be solved through various strategies. The major risks are scarcity of water in selected areas which will pose major issues. This will affect the modernization of irrigation schemes and infrastructure (Kaiser, El Arbi and Ahlemann 2015). The other risks are lack of unskilled labors and contractors, stakeholders are not interested in the project and there are people opposing the rehabilitation and modernization of irrigation schemes. The risks of environmental risks and livelihoods risks are also the issues which will bother the project implementation.

Areas of Improvement

The information collected and analyzed in the previous two parts shows the risks that are related with this project and hence they need to be taken into account to minimize the risks. The mitigation plan for this project is given as follows.

Risk	Description	Impact	Probability	Mitigation
Safety and security	The safety and security is the major part for this project as it will develop on large scale and implementation can cause several hazards. This will cause major security and safety related to this project. The project is made on large scale and hence it will provide multiple hazards. The safety of labors and contractors poses issues where they can be injured.	High	High	The safety and security issue can be handled with proper care of developing the project where proper announcement of the project to the people and developers. Safety for the labors and contractors.
Unskilled labors and contractors	The risks of u skilled labors will pose major threat in development of this project as because it is developing and implementing on large scale hence, there are high possibility of this project becoming weak and unstructured.	High	Moderate	The labors and contractors should be skilled and experienced in their work for smooth and effective development of this project.
Water scarcity issue	The water scarcity is a big problem for this project as it will pose major difficulty in development and implementation of project where irrigation infrastructure and irrigation schemes are there. This project relies on water availability and security. Hence scarcity of water will pose issue in modernization and rehabilitation of project.	High	High	The water scarcity is a problem. However, it can be solved through prior management of water pipes and water tankers for project development and implementation. The water must be reserved for this project in ample amount before the development of this project. Hence, this will help to effectively and efficiently develop the project without any hindrance.
Quality requirements	The quality requirement for this project is a risk if it is not of high quality as it is the most important component in development and implementation of this project. The quality of requirement for this project must be very high and also adaptable to the project.	High	High	The high quality resources should be used so that there is no possibility of any type of hindrance in developing this project.
Legal and regulatory frameworks	There are also issues which can arise during or after this project are legal and regulatory frameworks. This issues is low as Government is proposing and presenting the development and implementation of this project. The legal and regulatory frameworks will not pose much hindrance as all the resources and requirements are possessed by the Indonesian Government.	Moderate	High	The legal and regulatory frameworks are not so much an issues due to Government involvement but it should be handled properly by regular update to the developers and people.
Project funding	The project funding can be an issue if the budget goes high during the project but it is not the major constraint in this project as there are appropriate stakeholders and the funding is high. The project is on large scale and hence it will not affect the budget of the project during the development of the project.	Low	High	The project funding is not an issues due to the budget sponsored by the stakeholders are appropriate and it is on a large scale and hence this will not pose any issue.
Contamination possibility	The contamination due to this project can affect the livelihood of people or the environment as there are some resources used which can contaminate the environment. However, it is moderate at the development of project level.	Moderate	Moderate	The possibility of contamination can be minimized by using high quality resources and material as the project development is on large scale and hence there is a need to use high quality resources. The surroundings of the project development should be properly covered and people should be alerted of the project development.
Technology failure	The technology failure is the most important issues which need to be focused as this can happen without any knowledge of the developers.	High	High	The technology failure poses risks if they are new and advanced. Hence, the technologies should be well tested before adopting the technologies for the project development. The technologies should be properly chosen as per the requirement of project development and implementation.
Stakeholders involvement	The stakeholder’s involvement can be an issue if they show improper interest in the development of this project.	Moderate	High	The stakeholders should be updated about the project planning, designing, execution and outcome of this project. This will help to ensure a strong bond where they will be allowed to acknowledge the project development and implementation effectively and efficiently.

 

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