Full Report - Feasibility Study KSCS K-Exim

Chapter 6. Project execution plan The applied unit price for civil and architectural construction works is in local currency. Installation unit price by work classification is applied as shown in <Table 6.6> by either taking into account inflation to the already applied unit price or estimating new costs. <Table 6.6> Surveyed unit price by civil and architectural activity Surveyed unit price Applied unit price Activity Specification Unit IDR IDR USD Notes 2015 2016/2017 Civil Bed Earth and m3 48,886 51,989 53,018 3.9 works excavation sand m3 40,783 60,376 61,572 m3 13,040 16,767 17,099 4.6 Backfill Manned 1.3 Machine m3 392,515 416,894 425,147 Pipe Local foundation Sand 31.5 Mounding Earth and m3 63,995 70,019 71,405 5.3 sand 516,757 526,988 39.0 1,215,602 1,239,667 91.8 Aggregate m3 364,303 1,309,669 1,335,597 98.9 956,716 Reinforced K275, 20mm m3 18,190,423 18,550,539 1,374.1 454,572 463,571 34.3 concrete K225, 40mm m3 1,127,639 47,062 47,994 3.6 placing 65,460 66,756 4.9 Reinforcing bar Ton 17,040,876 Local assembling m3 327,102 Structure Mould Inner Cement m3 37,566 waterproof mortar Outer Asphalt m3 61,534 waterproof Pavement Asphalt m3 35,159 38,643 39,408 2.9 breaking m3 558,558 576,065 587,469 Local Packing Asphalt 43.5 pavement D2,000mm, 9m unit - - 264,886,704 19,621.0 Foreign D2,000mm, 6m unit - - 181,906,907 13,474.6 Foreign D1,800mm, 9m unit - - 218,990,397 16,221.5 Foreign Steel pipe D1,800mm, 6m unit - - 150,725,491 11,164.9 Foreign D1,350mm m - - 15,371,829 1,138.7 Foreign Pipeline D600mm m - 4,824,600 5,048,256 Local D350mm m - - 2,800,000 373.9 Local 207.4 D2,000mm No. - - 1,138,287,85 Foreign 5 84,317.6 D2,000mm No. - - Local Butterfly valve D2,000mm No. - - 975,550,665 72,263.0 Local - - 619,539,870 45,891.8 D2,000mm No. - - 134,935,995 9,995.3 388 528 4,408.3 D2,000mm No. 1,036,952 1,099,700 59,511,435 539 0.1 Marking tape m 83.1 1,121,471 Subsidiary Fence H1.1xW2.0 span NDT No. 495,990 36.7 Foreign Note) 1. The surveyed unit price is calculated based on the previous and related projects and the applied unit price is newly calculated by considering inflation. 2. Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR 6-7

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia The construction cost is calculated on a basis of the quantity produced roughly. As for the indirect cost that cannot be computed in quantity such as incidental expenses, a fixed 20 percent of the direct construction cost is applied. Incidental expenses include administration cost (wages and fringe benefits for employees at the field office and headquarters), safety and quality control cost, construction insurance fees, and business profits. <Table 6.7> shows the estimated construction cost for the first phase under the condition that steel pipes produced in Korea are used and the construction of the branch pipeline is not included. <Table 6.7> Direct construction cost calculation (phase 1) Classification Phase 1 Notes In IDR In USD Total construction cost 2,734,870,767,498 202,583,020 21,591,509,158 1,599,371 Temporary works 372,098,898,121 27,562,881 90,823,707,990 6,727,682 Subtotal 79,704,058,889 5,904,004 88,859,841,242 6,582,210 Booster Civil 112,711,290,000 8,348,984 pumping Architectural station Mechanical 2,341,180,360,219 173,420,767 1,556,194,300,176 115,273,652 Electrical/metering 57,606,879 777,692,860,043 Main Subtotal 7,293,200,000 540,237 conveyance Material (steel pipe) pipeline Civil Electrical/metering 6.2.2 Commissioning cost The commissioning cost includes educational training cost for personnel as well as a comprehensive commissioning test of the booster pumping station and the conveyance pipelines after completion of construction. The commissioning test for this project is planned for three months (phase 1). The commissioning cost is composed of labor cost, direct expenses such as electricity cost, travel expenditures, other expenses, and training cost. Labor cost is estimated on the condition of sending experts during a three-month period of the commissioning test (phase 1). The commissioning test period is shown as in <Figure 6.2>. <Figure 6.2> Commissioning test period (phase 1) Phase Test/commissioning test item Month Month Month Month Month 12345 Booster Individual test pumping station Comprehensive Phase 1 (commissioning) test Conveyance By section pipelines (water flow test) Comprehensive 6-8

Chapter 6. Project execution plan The estimated commission and training cost for the first phase is shown in <Table 6.8>. <Table 6.8> Commissioning and training cost calculation (phase 1) Phase 1 (3 month) Classification Foreign currency Local currency Total Unit : IDR (USD) Labor cost 3,369,726,360 1,104,000,000 4,473,726,360 (249,609) (81,778) (331,387) Direct expenses (electricity) 121,500,000 7,546,135,500 7,667,635,500 (9,000) (558,973) (567,973) Living expenses 1,154,250,000 243,000,000 1,397,250,000 (rent/office) (85,000) (18,000) (103,500) Travel expenses 132,300,000 - 132,300,000 (flight ticket) (9,800) (-) (9,800) 253,800,000 Training cost - 253,800,000 (invitational training (18,000) (-) (18,000) session) Total 4,777,776,360 9,146,935,500 13,924,711,860 (353,909) (677,551) (1,031,460) 6.2.3 Consulting service Design and supervision costs are reckoned based on the man month (m/m) calculated by the manpower input plan of each phase and the corresponding costs including labor cost, field investigation cost, office operating expenses, living expenses, and travel expenses. The same m/m is planned for foreign and local engineers. In the equally planned manpower input, foreign engineers will be able to perform their tasks in design, bidding preparation, and supervision and respond to local engineers on a one-to-one basis to facilitate close cooperation and technology transfer. Labor costs and expenses are reckoned based on the required manpower, which is computed by the field of tasks (design, bidding preparation, supervision), grade, and place of work (headquarters and site). Field investigation includes survey and soil investigation. The site survey for the pumping station is to be conducted on an area of 20,000m2, considering potential impacts on the neighborhood of the 14,500m2 site area). The route surveys for water pipelines include centerline, plane, longitudinal/crossing surveys. The centerline survey is to be conducted on 15m to the left and right of the center. Information about the underground obstacles (electricity, telecommunication network, gas, or water pipelines) will be obtained from relevant agencies and be marked on a survey map so as to prevent an accident from occurring in the future. 6-9

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Contract insurance, office rental and operating expenses, living and travel expenses of foreign engineers are included in expenses. However, office rental and operating expenses in the supervision stage are excluded from the consulting fees estimation, on the condition that the constructor bears such cost. The estimated consulting fees are as shown in <Table 6.9>. <Table 6.9> Consulting fees estimation (phase 1) Classification Foreign currency Local currency Total Unit: IDR (USD) Total 157,179,150,000 45,065,325,121 202,244,475,121 (1) Labor cost (11,642,900) (3,338,172) (14,981,072) 121,111,200,000 39,780,950,121 160,892,150,121 (8,971,200) (2,946,737) (11,917,937) (2) Out-of-Pocket 36,067,950,000 - 36,067,950,000 expenses (2,671,700) (-) (2,671,700) (3) Survey cost - 3,084,375,000 3,084,375,000 (-) (228,472) (228,472) (4) Soil investigation cost - 2,200,000 2,200,000 (-) (162,963) (162,963) 1. Design and bidding 77,215,140,000 17,302,301,506 94,517,441,506 preparation (5,719,640) (1,281,652) (7,001,292) (1) Labor cost 61,325,100,000 12,017,926,506 73,743,026,506 (2) Out-of-Pocket (4,542,600) (890,217) (5,432,817) expenses 15,890,040,000 15,890,040,000 - (3) Survey cost (1,177,040) (-) (1,177,040) 3,084,375,000 (4) Soil investigation - 3,084,375,000 cost (-) (228,472) (228,472) 2,200,000,000 - 2,200,000,000 (-) (162,963) (162,963) 2. Construction 79,964,010,000 27,763,023,615 107,727,033,615 supervision (5,923,260) (2,056,520) (7,979,080) (1) Labor cost 59,786,100,000 27,763,023,615 87,549,123,615 (4,428,600) (2,056,520) (6,485,120) (2) Out-of-Pocket 20,177,910,000 - 20,177,910,000 expenses (1,494,660) (-) (1,494,660) Note) Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR 6-10

Chapter 6. Project execution plan (1) Working design and bidding preparation The input manpower(M/M) required for working design and bidding preparation, the input manpower (M/M) is calculated based on the estimated consulting fees, and then an appropriate man-months is assigned according to each field of the project. The unit labor cost for Korean consultant is applied in accordance to Standards for Unit Wages in Engineering Projects (2018) announced by Korea Engineering and Consulting Association whereas the unit labor cost for locals is cited from (https://www.payscale.com/research/ID/Job=Civil_Engineer/Salary), the local labor cost data posted on PayScale (https://www.payscale.com), the American website providing information on labor cost, welfare expenses, wages around the world. On the condition of technical transfer, except for the project manager, the same number of labor input in foreign currency and local currency is planned. PayScale is American web-site that provides information on wages or salary, benefits, and compensation of employees. The cited labor information is included as an annex to this report. A fifteen month-period is planned for working design and bidding preparation in the first phase (that is, 9 months for design and 9 months for bidding preparation, with 3 months overlapped). Of the total labor input, 279MM is in foreign currency (Korean) and 195MM is in local currency (Indonesian). The manpower input plan is shown as in <Table 6.10>. The manpower input plan in foreign currency (Korean engineers) for the design and bidding preparation stage is as shown in <Figure 6.3>. The pipeline design sector will be based on civil engineering and will be operated by three teams: ① designs for pipeline routes and laying, ② designs for railways, roads, river crossings, and various structures for instruments and valve chambers, and ③ designs for site cleaning and maintenance roads. Mechanical design sector will be operated by two teams: ① design for equipment and pipelines in pump stations, and various valves on pipelines such as block valves, air valves and drain valves, and ② design for quality of materials, coatings, transportation to sites, NDT test for steel pipes of pipelines. Electrical and instrumental & control design sector will be operated by two teams: ① designs for electric power inlet and distribution and various monitoring and control system for pumping station, and ② design for cathodic protection system of pipelines. The manpower input plan in local currency (Indonesian engineers) for the design and bidding preparation stage as shown in <Figure 6.4>. 6-11

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 6.10> Manpower input for design and bidding preparation (phase 1) Foreign currency (Korean) Local currency (Indonesian) Position Manpower MM MM input N/P N/P Home Field Total Home Field Total Team leader 1 15 15 1. Project management - -- -- 2. Contract management / Senior 1 - 15 15 1 - 15 15 bidding preparation Junior 3. Water supply Senior 1 - 15 15 Junior 4. Pipeline Senior 3 - 30. 30 3 - 30 30 Junior - 27 27 3 27 27 3 5. Hydraulic Senior 16 39 Junior 6. Soil/foundation Senior 16 39 Junior -- - - -- -- 7. Civil / Structure Senior 1 12 12 1 - 9 9 Junior 19 9 1 - 99 8. Topographic Survey Senior - - - - 1 - 66 Junior -- - - -- -- 9. Mechanical Senior 2 21 21 1 - 9 9 Junior 4 30 30 1 - 9 9 10. Electrical / Senior 2 21 21 1 - 9 9 Instrument & Control Junior 4 30 30 1 - 9 9 11. Architecture Senior 1 12 12 1 - 12 12 Junior 19 9 2 - 18 18 12. Socio / environment Senior 1 - 12 12 Junior - - - - - - -- 13. Economy/Finance Senior 1 - 66 Junior - - - - - - -- 14. Interpretation Senior -- - - -- -- Junior 1 - 15 15 - - - - 15. Office assistance Senior -- - - -- -- Junior 1 - 15 15 Total 28 117 162 279 20 - 195 195 Note) N/P = Numbers of Persons 6-12

Chapter 6. Project execution plan <Figure 6.3> M/M input plan in foreign currency for the design and bidding preparation stage. Place Working design Bidding preparation No. Position rating of N/P M/M work 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1. Project Team Home 1 - management leader Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 Contract Home - 2. management / Senior Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 bidding preparation 3. Water Supply Senior Home 1 - Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 Home 3 - Senior 4. Pipeline 111 30 Field 3 3 3 3 3 3 3 3 3 Home 3 3 3 3 3 3 3 3 3 27 Junior 3 Field 5. . Hydraulic Senior Home 1 1 1 111 6 1 Field 111 3 6. Soil/foundation Senior Home 1 1 1 111 6 1 Field 111 3 Home 1 - Senior 7. Civil / Structure 111 12 Field 1 1 1 1 1 1 1 1 1 Home 1 1 1 1 1 1 1 1 1 9 Junior 1 Field - 8. Topographic Home - Survey Senior - Field - Home 2 - Senior 9. Mechanical 111 21 Field 2 2 2 2 2 2 2 2 2 Home 3 3 3 3 3 3 4 4 4 30 Junior 4 Field Electrical Home 111 2 21 10. Instrument / Senior Field 2 2 2 2 2 2 2 2 2 & 30 Control 4 Home 3 3 3 3 3 3 4 4 4 Junior Field Home 111 1 12 Senior 11. Architecture 9 Field 1 1 1 1 1 1 1 1 1 1 Home 1 1 1 1 1 1 1 1 1 Junior Field 12. Socio / Senior Home - environment Field - - Home - 13. Economy/Finance Senior - Field - 14. Interpretation Junior Home 1 - Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 6-13

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 6.4> M/M input plan in local currency for the design and bidding preparation No. Position rating Place of Working design Bidding preparation N/P M/M work 34567 10 11 12 13 14 15 1 2 8 9 Contract Home - 2. management / Senior 1 bidding Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 preparation 3. Water Senior Home - Supply Field 1 - Senior Home 3 - Junior Field 3 3 3 3 3 3 3 3 3 4. Pipeline 111 30 Home - Field 3 3 3 3 3 3 3 3 3 3 27 5. . Hydraulic Senior Home - Field - - 6. Soil / Senior Home - foundation Field - - Senior Home - Field 1 1 1 1 1 1 1 1 1 1 7. Civil / 9 Structure Home - Field 1 1 1 1 1 1 1 1 1 Junior 9 8. Topographic Senior Home - Survey Field 1 1 1 1 1 1 1 6 Senior Home - 9. Mechanical Field 1 1 1 1 1 1 1 1 1 1 Junior 9 Home - Field 1 1 1 1 1 1 1 1 1 1 9 Electrical / Senior Home - Field 1 1 1 1 1 1 1 1 1 1 10. Instrument & 9 Control Junior Home - Field 1 1 1 1 1 1 1 1 1 1 9 Senior Home 1 - Junior Field 1 1 1 1 1 1 1 1 1 11. Architecture 111 12 Home - Field 2 2 2 2 2 2 2 2 2 2 18 12. Socio / Senior Home 1 - Field 1 1 1 1 1 1 1 1 1 environment 111 12 13. Economy / Senior Home 111111 - Finance Field 1 6 14 Interpretation Junior Home - Field - - 15. Office 지원 Home 1 - assistance Field 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 6-14

Chapter 6. Project execution plan (2) Construction supervision The construction supervision period which includes commissioning period is planned to be 36 months for the first phase. The manpower input plan is calculated based on the calculated consulting fees and then an appropriate number of consultants are assigned according to each field for the project. For the 36-month period of the construction supervision, which includes the construction and commissioning for the first phase, the total labor input plan is shown as in <Table 6.11>, with 242MM in foreign currency (Korean) and 396MM in local currency (Indonesian). <Table 6.11> Manpower input for construction supervision (phase 1) Foreign currency (Korean) Local currency (Indonesian) Manpower No. of MM No. of MM person Home Field person Home Field Total Total 1. Team Leader 1 - 36 36 2.Contract manager 1 - 36 36 1 36 36 3. Civil engineer 1 - 36 36 1 36 36 4. Pipeline engineer 2 - 56 56 5 180 180 1 - 36 36 1 18 18 5. Mechanical engineer 1 - 36 36 1 18 18 6. Electrical/ 1 -66 1 24 24 instrumentation & Control engineer 7. Architect 8. Interpreter - --- - -- 9. Office assistant - --- 1 36 36 Total 8 - 242 242 11 396 396 6-15

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia The manpower input plan in foreign currency (Korean engineers) for the construction supervision stage is as shown in <Figure 6.5>. <Figure 6.5> M/M input plan in foreign currency for the construction supervision Place Year 1 Year 2 Year 3 No. Position of N/P M/M work 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 1. Team Home 1 - Leader Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 2. Contract Home 1 - manager Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 3. Civil Home 1 - engineer Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 4. Pipeline Home 2 - engineer Field 4 4 4 4 4 4 4 4 4 4 2 2 2 2 2 2 2 2 56 5. Mechanical Home 1 - engineer Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 Electrical Home - 6. and I&C Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 36 engineer 7. Architect Home 2 2 2 - Field 1 6 Note) I&C = Instrumentation and Control The manpower input plan in local currency (Indonesian engineers) for the construction supervision stage as shown in <Figure 6.6>. <Figure 6.6> M/M input plan in local currency for the construction supervision Place Year 1 Year 2 Year 3 No. Position of N/P M/M work 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 2. Contract Home - manager 1 36 - Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 - 3. Civil Home 180 engineer 1 - 36 Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 - 4. Pipeline Home 36 engineer 5 - Field 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 36 5. Mechanical Home 1 - - engineer Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 36 Electrical Home 6. and I&C 1 engineer Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 7. Architect Home 1 Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Home - 8 Interpreter Field 9. Office Home assistant 1 Field 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 6-16

Chapter 6. Project execution plan 6.2.4 Contingency cost Since standards for EDPF (Economic Development Promotion Fund) contingency estimation are not yet established, our contingency cost is calculated in accordance with the EDCF (Economic Development Cooperation Fund) standards. The cost is made up of physical and price contingency cost items. (1) Physical contingency cost To prepare for quantity adjustment that may arise from design change during the project period, five percent of the direct project (direct construction cost + consulting fee) cost is applied to both foreign and local currency. (2) Price contingency cost The price contingency in foreign currency is estimated by expected inflation rate during the project period. The price contingency cost in local currency is estimated by adding the half of foreign exchange fluctuation rate to the expected inflation rate to. In the case of the first phase project, the project period is estimated at 51 months in total, which includes 15 months for working design/bidding preparation and 36 months for construction (3 months for commissioning test included.) Expected inflation rates during the project period are as shown in <Table 6.12>. <Table 6.12> Average inflation rates during the project period Classification Year 1 Year 2 Year 3 Year 4 Average - (2019) (2020) (2021) (2022) (2023) Korea 1.78% 2.00% 2.00% 2.00% 2.00% 1.99% Indonesia 3.85% 3.85% 3.36% 3.01% 2.99% 3.33% Source: IMF (World Economic Outlook Database, April 2018) Price contingency cost in local currency needs to take into account fluctuations in foreign exchange rates. Since standards for EDPF price contingency estimation are not yet established, this time, in accordance with standards for EDCF price contingency estimation, 2.10 percent, a half of the average exchange rate of Korea Won against US Dollar over the past three years, is applied to price contingency in local currency. The foreign exchange fluctuation rates over the past three years are as shown in <Table 6.13>. 6-17

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 6.13> Foreign exchange fluctuation rates Classification 2014 2015 2016 2017 Average Exchange rate (KRW/USD) 1,053.12 1,132.52 1,160.41 1,130.48 1,119.13 Exchange rate difference (KRW) - 79.40 27.89 29.93 Fluctuation rate (%) - 7.54% 2.46% 2.58% 4.19% Source: ESOS (Economic Statistics of The Bank of Korea (https://ecos.bok.or.kr/) • Foreign currency (Korea) price contingency rate: 1.99% (inflation rate) • Local currency (Indonesia) price contingency rate: 5.43% (Indonesian inflation rate 3.33% + 2.10% a half of the applied foreign exchange fluctuation rate) The total contingency costs for the first phase are estimated in <Table 6.14>. <Table 6.14> Total contingency cost (phase 1) Classification Phase Foreign Local currency Total currency IDR IDR IDR (USD) (USD) (USD) Contingency Phase 1 150,267,663,000 88,978,594,500 239,246,257,500 cost (A+B) (11,130,938) (6,951,007) (17,721,945) Physical Phase 1 105,979,036,500 41,572,953,000 147,551,989,500 contingency (7,850,299) (3,079,478) (10,929,777) (A) Price Phase 1 44,288,626,500 47,405,641,500 91,694,268,000 contingency (3,280,639) (3,511,529) (6,792,168) (B) Note) 1. Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR 6-18

Chapter 6. Project execution plan 6.3 Indirect Cost Indirect cost is reckoned by referring to indirect costs applied to the EDCF project and the Indonesian tax system, and an appropriate amount for the implementation of an EDPF project is calculated according to the standards determined as shown in <Table 6.15>. <Table 6.15> Standard for indirect cost estimation Classification Indirect cost estimation standard Applied standards Reference Project 2% (of construction cost + design Referred to the application case in management cost cost + contingency cost) EDCF VAT (local 10% (of direct project cost in local Indonesian tax system currency) currency) VAT (foreign 10% (of direct project cost in Indonesian tax system currency) foreign currency) Import Tax 25% (of direct project cost in Referred to the application case in foreign currency) EDCF (1) Project management cost Project management cost is required expenses for the project execution agency of the recipient country to implement this project smoothly. This cost reflects two percent of the direct project cost. (2) Land compensation and resettlement cost This project aims to construct a water conveyance system, which takes raw water from the Karian dam and supplies it to five water treatment plants including Serpong WTP. The planned system consists of the booster pumping station, the 47.93km-long main conveyance pipelines, and the 19.31km-long branch conveyance pipelines. In the first phase, the booster pumping station and the one main conveyance pipelines are to be constructed. In the second phase, the other main conveyance pipelines and branch pipelines are to be constructed. The land area of 14,383m2 required for the booster pumping station is government-owned property, which costs no land compensation and resettlement expenses. But compensation is needed for the land area covering the access road. The compensation for land where conveyance pipelines are buried and maintenance roads are installed will be made along the routes. The compensation for the land with the occupation width of 30m along the main conveyance route, which stretches from the booster pumping station to the Serpong water treatment plant, will be made in the first phase project. 6-19

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 6.16> Land compensation expenses estimation (main pipeline) Contents Object Unit Quantity Currency Compensation Compensation Paddy m2 331,892 price per unit cost in IDR (NJOP Max for in KRW 45,443,626,800 land) 1) 3,635,490,144 136,923 10,954 in USD 10.14 3,366,195 Land Land m2 415,910 in IDR 221,329 92,053,097,900 in KRW 17,706 7,364,247,832 in USD 16.39 6,818,748 Farm m2 456,454 in IDR 179,005 81,707,765,600 in KRW 14,320 6,536,621,248 in USD 13.26 6,052,427 Building in IDR 1,020,567 55,267,759,900 and m2 54,154 in KRW 81,645 4,421,420,792 75.60 Houses in USD 4,093,908 in IDR - - Woods Nos. N/A in KRW - - in USD - - Crops in IDR 88,475 2,197,454,383 m2 24,837 in KRW 7,078 175,796,351 in USD 6.55 162,774 in IDR 2,205,674 311,000,000 Cemetery Nos. 141 in KRW 176,454 24,880,000 in USD 163.38 23,037 Public School m2 in IDR 2,589,588 1,069,500,000 facilities 413 in KRW 207,167 85,560,000 191.82 79,222 in USD Temple m2 in IDR 985,366 767,600,000 779 in KRW 78,829 61,408,000 in USD 72.99 56,859 in IDR 278,817,804,583 Total in KRW 22,305,424,367 in USD 20,653,171 Note 1) Selling Value of Tax Object (NJOP) is applied in the estimation of the land compensation amount. The NJOP refers to the officially assessed land price. In contrast, Surveyed Market Prices and Prices Based on Information from the village head are exposed to tax issues related to the transfer of rights under the relevant Indonesian law and tend to have a large fluctuation in prices. Therefore, among the three criteria proposed in the LARAP, the most stable price base, NJOP is chosen to estimate the land compensation amount. 6-20

Chapter 6. Project execution plan On the other hand, the compensation for the land of occupation and use for the branch pipelines will be made in the second phase project. This includes the 6m-wide land to the Rangkas Bitung WTP, the 4m-wide land to the Maja WTP, the 13m-wide land to the Solear WTP, and the 6m-wide land to the Parung Panjang WTP. There will be resettlement compensation for areas passing through residential sections, crops compensation for areas passing through farmlands, and sales compensation for nearby shops. Such compensation will be carried out under LARAP (Land Acquisition and Resettlement Action Plan) pursuant to the relevant laws and regulations in Indonesia. And the cost of compensation will be funded by the Indonesian government. According to LARAP, the compensation price per unit is calculated under the three different price standards – 1) tax object selling value or appraised value of land 2) price agreed by a village representative, and 3) market price obtained through an actual market survey. Then, the compensation for the booster pumping station and the main conveyance pipelines is planned in the first phase project whereas the compensation for the branch conveyance pipelines is planned in the second phase project. The land compensation and resettlement costs calculated based on a tax object selling value or an appraised value of land are shown as in <Table 6.16>. (3) Loan service charge Loan service charge will be determined after consultations. It is not reflected in this project cost estimation. 6-21

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 6.4 Total project cost The total project cost for the first phase, including all the calculated costs for direct construction, commissioning, working design/bidding preparation, construction supervision, and indirect expenses, is shown in <Table 6.17>. <Table 6.17> Total project cost (phase 1) [Unit: thousand IDR (converted into USD)] Classification Foreign EDPF Total Recipient Total currency Local country currency GOI1) 1. Construction cost 1,957,623,815 777,246,953 2,734,870,770 2,734,870,770 (145,009,171) (57,573,848) (202,583,020) (202,583,020) a. Temporary work - 21,591,509 21,591,509 21,591,509 b. Booster pumping (-) (1,599,371) (1,599,371) (1,599,371) station 219,009,137 372,098,898 372,098,898 153,089,757 (16,222,899) (27,562,881) (27,562,881) c. Main conveyance (11,339,982) 536,646,307 2,341,180,360 2,341,180,360 pipeline (39,751,578) (173,420,767) (173,420,767) 1,804,534,054 13,924,710 13,924,710 2. Commissioning (133,669,189) 9,146,939 (1,031,460) (1,031,460) (677,551) 3.Consulting fee 4,777,772 45,065,325 202,244,475 202,244,072 (353,909) (3,338,172) (14,981,072) (14,981,072) a.Design/bidding 17,302,302 preparation 157,179,150 (1,281,652) 94,517,442 94,517,442 (11,642,900) 27,763,024 (7,001,292) (7,001,292) b. Construction (2,056,520) supervision 77,215,140 831,459,216 107,727,034 107,727,034 (5,719,640) (61,589,572) (7,979,780) (7,979,780) 4. Total direct cost 88,978,608 (1+2+3) 79,964,010 (6,591,008) 2,951,039,952 2,951,039,952 (5,923,260) 41,572,967 (218,595,552) (218,595,552) 5. Contingency (3,079,479) 2,119,580,736 47,405,642 239,246,271 239,246,271 a. Physical contingency (157,005,980) (3,511,529) (17,721,946) (17,721,946) (5% of 4) 147,552,003 147,552,003 150,267,763 920,437,814 (10,929,778) (10,929,778) b. Price contingency (11,130,938) (68,180,580) 91,694,268 91,694,268 105,979,037 (6,792,168) (6,792,168) (7,850,299) 824,999,175 - (61,111,050) 44,288,627 (-) 83,145,920 (3,280,639) - (6,158,957) (-) 211,958,073 6. Taxes and duties - 824,999,175 (15,700,598) (-) (61,111,050) 529,895,183 a. VAT for L.C(10%) - (39,251,495) (-) 83,145,920 59,020,826 b. VAT for F.C(10%) - (6,158,957) (4,371,913) (-) 211,958,073 278,817,805 c. Import duties (25%) - (15,700,598) (20,653,171) (-) 529,895,183 7. Project management (39,251,495) 4,353,124,028 cost (2% of 4) 3,190,286,223 59,020,826 (322,453632) (236,317,498) (4,371,913) 8. Land acquisition cost 278,817,805 (20,653,171) 9. Loan service charge (TBD) 1,162,837,805 (86,136,134) 10. Total project cost 2,269,848,399 (4+5+6+7+8+9) (168,136,918) Note 1) GOI: Government of Indonesia 6-22

Chapter 6. Project execution plan 6.5 Financing plan The project cost for the first phase is estimated at 4,353,124 million IDR (322,453,632USD). Of which, 3,190,286 million IDR (236,317,498USD) comes from EDPF and 1,162,837 million IDR (86,136,134USD) comes from the Indonesian government. The financing plan for the first phase is shown as in <Table 6.18>. <Table 6.18> Financing plan (phase 1) Unit: thousand IDR (converted into USD) EDPF Recipient GOI Item Currency Foreign Local currency Subtotal Total Amount currency 1,162,837 million 3,190,286 4,353,124 IDR 2,269,848 920,438 (USD) (168,136,919) (68,180,580) (236,317,498) (86,136,134) (322,453,632) Composition EDPF 71.15% 28.85% 100% Total 52.14% 21.14% 73.29% 26.71% 100% Note) Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR It is expected to take a total of 51 months to implement the first phase project, which includes 15 months for working design/bidding preparation and 36 months for construction and commissioning. In the fifth year, water flowing test and comprehensive commission only will be conducted for three months. The annual financing plan is shown as in <Table 6.19>. <Table 6.19> Annual financing plan (phase 1) Unit: thousand IDR (converted into USD) Item Unit Total Year 1 Year 2 Year 3 Year 4 Year 5 Million IDR 3,190,286 96,654 943,065 1,206,675 921,780 22,110 EDPF (USD) (236,317,498) (7,159,594) (69,856,667) (89,383,352) (62,280,069) (1,637,815) GOI Composition 100% 3.03% 29.56% 37.82% 28.89% 0.69% (%) 306,399 258,385 337,521 256,021 4,551 Million IDR 1,162,837 (22,696,229) (19,139,628) (25,001,569) (18,964,535) (334,174) (USD) (86,136,134) 26.35% 22.22% 29.03% 22.02% 0.39% 403,053 1,201,450 1,544,196 1,177,802 26,622 Composition 100% (%) Million IDR 4,353,124 Total (USD) (322,453,632) (29,855,823) (88,996,295) (114,384,921) (87,244,604) (1,971,989) Composition 100% 9.26% 27.60% 35.47% 27.06% 0.61% (%) Note) Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR 6-23

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia The detailed annual investment plan for the first phase is shown as in <Table 6.20>. <Table 6.20> Annual investment plan (phase 1) Unit: thousand IDR (converted into USD) Classification Total Project period (51 months) Year 1 Year 2 Year 3 Year 4 Year 5 1. Construction cost 2,734,870,780 - 835,575,287 1,085,311,703 813,983,778 - (202,583,020) (-) (61,894,466) (80,393,460) (60,295,095) (-) a. Temporary work b. Booster 21,591,522 - 21,591,509 - - - (1,599,372) (-) (1,599,371) (-) (-) (-) pumping station 372,098,898 - 111,629,664 148,839,566 111,629,669 - (27,562,881) (-) (8,268,864) (11,025,153) (8,268,864) (-) c. Main 2,341,180,360 - 702,354,108 936,472,144 702,354,108 - conveyance (173,420,767) (-) (52,026,230) (69,368,307) (52,026,230) (-) pipeline 13,924,710 - - - - 13,924,710 2. Commissioning (1,031,460) (-) (-) (-) (-) (1,031,460) 3.Consulting fee 202,244,475 85,065,697 36,383,503 37,704,462 37,704,462 5,386,352 (14,981,072) (6,301,163) (2,695,074) (2,792,923) (2,792,923) (398,989) a. Design/bidding preparation 94,517,442 85,065,697 9,451,744 - - - (7,001,292) (6,301,163) (700,129) (-) (-) (-) b. Construction supervision 107,727,034 - 26,931,758 37,704,462 37,704,462 5,386,252 (7,979,780) (-) (1,994,945) (2,792,923) (2,792,923) (398,989) 4. Total direct cost (1+2+3) 2,951,039,965 85,065,697 871,958,789 1,123,516,165 851,688,239 19,311,062 (218,595,553) (6,301,163) (64,589,540) (83,186,383) (63,088,018) (1,430,449) 5. Contingency 239,246,258 11,588,824 71,106,220 83,659,087 70,092,694 2,799,432 a. Physical (17,221,945) (858,431) (5,267,127) (6,196,969) (5,192,051) (207,365) contingency (5% of 4) 147,551,990 4,253,283 43,597,940 56,150,807 42,584,414 965,547 (10,929,777) (315,058) (3,229,477) (4,159,319) (3,154,401) (71,522) b. Price contingency 91,694,268 7,335,541 27,508,280 27,508,280 27,508,280 1,833,885 (6,792,168) (543,373) (2,037,650) (2,037,650) (2,037,650) (135,843) 6. Taxes and duties 824,999,179 25,879,976 240,945,794 315,060,849 238,987,461 4,125,099 a. VAT for (61,111,050) (1,917,035) (17,847,837) (23,337,841) (17,702,775) (305,563) L.C(10%) 83,145,922 1,557,207 25,695,913 31,197,924 23,641,369 1,053,509 b. VAT for (6,158,957) (115,349) (1,903,401) (2,310,957) (1,751,213) (78,038) F.C(10%) 211,958,074 6,949,363 61,499,966 81,103,693 61,527,455 877,597 c. Import duties (15,700,598) (514,768) (4,555,553) (6,007,681) (4,557,589) (65,007) (25%) 529,895,184 17,373,407 173,751,915 202,759,232 153,818,637 2,193,993 (39,251,495) (1,286,919) (11,388,883) (15,019,202) (11,393,973) (162,518) 7. Project 59,020,799 1,701,311 17,439,179 22,460,328 17,033,760 386,222 management cost (4,371,911) (126,023) (1,291,791) (1,663,728) (1,261,760) (28,609) (2% of 4) 278,817,805 278,817,805 - - - - 8. Land acquisition (20,653,171) (-) cost (20,653,171) (-) (-) (-) - - (-) 9. Loan service (-) ---- charge (TBD) (-) (-) (-) (-) 26,621,815 4,353,124,005 (1,971,986) 10. Total project (322,453,630) 403,053,613 1,201,449,982 1,544,196,429 1,177,802,154 cost (4+5+6 (29,855,823) (88,996,295) (114,384,921) (87,244,604) +7+8+9) Note) 1. Applied exchange rate 1 USD = 13,500 IDR, 1 USD = 1,080 KRW, 1 KRW = 12.5 IDR 6-24

Chapter 6. Project execution plan 6.6 Separation of foreign and local currency 6.6.1 Separation of foreign and local currency in project cost estimation In this project, some materials and labor will be sourced from Indonesia. There may be other equipment/materials or consulting service which need to be sourced from Korea if they fail to meet the quality levels required by the Indonesian project execution agency. In this regard, cost items are separately denominated in foreign and local currency as shown in <Table 6.21>. <Table 6.21> Items in foreign and local currency for project cost estimation Classification Foreign currency Local currency Remarks ∙ Machine equipment ∙ temporary work - Booster pump ∙ reinforcing bar, concrete - Valves (block valve, check valve, ∙ aggregate (sand, pebble), cement, etc.) etc. - Water hammer protection device ∙ mold, floor post, scaffolding, etc. Booster ∙ architectural materials pumping station ∙ Electrical, instrumentation and ∙ paving materials (asphalt) control equipment ∙ construction work classification - Integrated operation and - civil, basic, structure work monitoring control system - pipe installation and connection - image surveillance and control - paving, subsidiary work device - landscaping, fencing - CCTV equipment - metering instruments ∙ Pipe materials (steel pipes more ∙ Pipe materials (steel pipe less than than 1,200mm in diameter) 1,200mm in diameter) ∙ Valves (block valve, air valve, ∙ Reinforcing bar, concrete, Conveyance drain valve) aggregate pipeline ∙ corrosion prevention ∙ paving materials (asphalt) ∙ metering instruments (flowmeter) ∙ Construction work classification ∙ welding - Civil, basic, structure work ∙ nondestructive test of weld zone - Pipe construction - Packing, subsidiary work ∙ Design and supervision cost ∙ Design and supervision cost ∙ Physical and price contingency ∙ Physical and price contingency cost cost Others ∙ Loan service charge ∙ Taxes and duties ∙ Commissioning and training cost ∙ Land acquisition and resettlement compensation ∙ Project management cost ∙ Commissioning and training cost 6-25

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Cost items (phase 1) in foreign and local currency from the direct construction cost estimated based on the above criteria are shown in <Table 6.22>. <Table 6.22> Direct construction cost items in foreign and local currency (phase 1) Unit: million IDR (converted into USD) Items Total Foreign currency Local currency (Korea) (Indonesia) Construction cost 2,734,870 1,957,623 777,247 (202,583,020) (145,009,171) (57,573,848) 1. Temporary work 21,592 - 21,592 (1,599,371) (-) (1,599,371) 2. Booster pumping station 372,099 153,090 219,009 (27,562,881) (11,339,982) (16,222,899) 2.1 Civil works 90,824 - 90,824 (6,727,682) (-) (6,727,682) 2.2 Architectural works 79,704 - 79,704 (5,904,004) (-) (5,904,004) 2.3 Mechanical works 88,860 84,999 3,861 (6,582,210) (6,296,210) (286,000) 2.4 Electricity/measurement works 112,711 68,091 44,620 (8,348,984) (5,043,772) (3,305,212) 3. Main conveyance pipeline 2,341,180 1,804,534 536,646 (173,420,767) (133,669,189) (39,751,578) 3.1 Materials (steel pipe) 1,556,194 1,490,403 65,790 (115,273,652) (110,400,285) (4,873,366) 3.2 Civil works 777,693 308,885 468,808 (57,606,879) (22,880,378) (34,726,501) 3.3 Electricity/measurement works 7,293 5,245 2,048 (540,237) (388,526) (151,711) 6-26

Chapter 6. Project execution plan 6.6.2 Items for foreign production (produced in foreign countries) It is our plan that an international company undertakes the main task of the consulting service that requires advanced technology and expertise whereas local partners in Indonesia conduct a site investigation/soil survey and support consulting activities. With regard to construction, aggregate, fuels, and labor will be sourced locally. Machines and metering/control equipment which require some degree of high quality will be supplied by an advanced country. Materials to be used for direct construction are classified into foreign and local currency according to the following criteria shown in <Table 6.23>. <Table 6.23> Criteria for separation of foreign and local (Indonesian) materials Classification Criteria Booster Foreign ·main equipment/materials and their installation in mechanical/ pumping Local electrical work station ·integrated operation control system · materials in civil and architectural work, construction work · electricity lead-in equipment, grounding, lighting installation Conveyance Foreign · steel pipe welding joint/ corrosion prevention pipelines Local · nondestructive test · materials in civil and construction work · pipe installation, water flow test, electrical installation Items produced in foreign country are shown as in <Table 6.24>. <Table 6.24> Items produced in foreign country Material Quantity Use Remarks Pump 1 unit Booster 1 unit pumping Valve station 1 unit Integrated operation control and Conveyance If steel pipes and steel pipe management system 1 unit pipeline welding joints produced 1 unit locally are deemed to assure Steel pipe (more than D1,200mm) 1 unit good quality during the Steel pipe welding joint 1 unit course of working design, we Anti-corrosion facility may consider using them. Nondestructive test 1 unit Flowmeter, level meter (intake tower) 6-27

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 6.7 Procurement plan 6.7.1 Procurement method (1) Procurement principles 1) Compliance with economic feasibility, efficiency, and fairness In purchasing consulting service, materials or construction under the EDCF project, the borrower (project execution agency) must pursue the principles of economic feasibility, efficiency, and fairness. Likewise, with regard to the EDPF project, all procurement must follow the said principles. 2) Eligible source country In principle, the Economic Development Promotion Facility is an untied loan, which does not put restrictions on its eligible source country. Since the untied loan does not put any limitation on eligible source country, it is necessary to select internationally competent and qualified consultants and contractors to secure the highest possible level of quality. In particular, the importance of having qualified consultants cannot be overemphasized since they are the ones who play an important role in design, selection and examination of materials, and supervision of the construction. 3) Borrower’s accountability for procurement The borrower (project execution agency) shall hold accountable for procurement. The Korean Eximbank, as the lender, shall examine if the whole process of procurement is performed in compliance with the procedures specified in the loan agreement. 6.7.2 Procurement plan Procurement in this project includes the selection of consultants and procurement of construction (main project). To secure the performance of facilities and quality assurance, the whole consulting process from working design/bidding preparation to construction supervision needs to be implemented with consistency. Therefore, the selection of consultants needs to be made in one package. When it comes to the main project (construction), it is desired that its procurement is made in one package to establish a clear responsibility. However, the procurement split into packages makes contract management difficult. As small-sized constructors are given an opportunity to participate in the project, it is not easy to control overall quality and investigate who is to be held accountable if a defect is found. For all these reasons, dividing the procurement of the main project (construction) into multi-packages is not recommended in this project. The procurement plan for the first phase is shown as in <Table 6.25>. 6-28

Chapter 6. Project execution plan <Table 6.25> Procurement plan (phase 1) Phase Package Range of procurement Procurement method Selection of Single ∙ Working design consultants package : Booster pumping station, main International LCB conveyance pipeline phase 1 ∙ Bidding and contracting preparation to select a contractor ∙ Construction supervision Phase 1 Single ∙ Supply of construction materials and ICB package equipment Main project : Booster pumping station, main (construction) conveyance pipeline phase 1 ∙ Construction and installation of materials and equipment : Booster pumping station, main conveyance pipeline phase 1 ∙ Commissioning and quality assurance For a project funded by EDCF, the project execution agency is required to obtain an approval from Korea Eximbank throughout the whole bidding process. It is deemed reasonable that a project funded by EDPF follows the equivalent guidelines. The procurement of the EDCF project goes through the following steps. ① to prepare bidding documents The project execution agency prepares bidding documents and requests approval from Korea Eximbank. Bidding documents must contain all the information needed for participants in a bid, in particular, a contract method must be specified. The documents are comprised of a bid invitation, bidders, a bidding method, a contract method, contract terms and conditions, designs, specifications, quantity, and assurance method. This is when selected consultants will support such bidding preparation. The documents should be written in English. If they are written in the language of a recipient country, an English version for the all documents must be submitted. It must specify that the bidding document translated into English prevails. ② to announce a notice of tender The project execution agency announces a notice of tender for prequalification or bidding participation by putting a notice in more than one daily newspaper (English daily newspaper, if possible) published nationwide (in the borrower.) Then, a copy of a notice of tender needs to be sent to Korea Eximbank, which will be posted on the bulletin board of the Eximbank. 6-29

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia ③ to receive and open bid proposals The project execution agency receives price proposals and technical proposals submitted by bidding participants, and send the list of participants and bidders to Korea Eximbank upon opening the submitted documents. ④ to evaluate bid proposals Any information regarding the evaluation and selection of the successful bidder must not be leaked nor obtained. For the purpose of evaluation, it is okay to ask bidders to give an explanation about their proposals. The project execution agency carries out a bidding process in accordance with reasonable evaluation criteria and submits bid evaluation report and successful bidder selection proposal to Korea Eximbank to request its approval. Then the Eximbank examines if the evaluation report conforms with criteria and gives an approval. The preparation period may vary depending on the scale and characteristic of a project. Mostly, starting from the date of bidding invitation, no less than 45 days are given for preparation of bidding documents. As for a large-scale project, no less than 90 days are given. ⑤ to select the successful bidder and notify bidding evaluation results Korea Eximbank approves the bidding results if the bidding process is confirmed to have carried out in accordance with principles and conditions set forth in the loan agreement and the original invitation for bids, not to mention of the adequacy of criteria. The project execution agency notifies both the winner and loser of the bidding results and gives an answer to the loser if asked for an explanation about the result. 6-30

Chapter 6. Project execution plan 6.8 Project implementation period Given the project scale, it is expected to take at least four years to implement the first phase project. In order to construct and operate the Serpong water treatment plant designed to provide a stable supply of clean and safe water once the Karian dam begins to be filled with water, it is inevitably urgent to construct the conveyance system. To expedite the project implementation, it would be better to work on working design immediately after the loan agreement is signed. To this end, it is advisable to select consultants during the course of negotiation for the loan agreement, which will contribute to an efficient implementation of the project. As for the first phase, it is expected to take 15 months to develop a working design, including supporting activities for bidding application and selection of a constructor. It is expected to take 36 months for construction including commissioning test. So, the total project implementation period is planned to be 51 months. But the selection of consultants needs to be finished by the first year of project implementation before beginning design works. Therefore, the period of working design is planned for 9 months in the first phase. To shorten the period of selection of constructors, we plan to prepare bidding documents in the 7th month of working design, and to give bidding announcement, invite a shortlist, and conduct the tendering process in the 10th month so that a constructor is finalized by the 15th month. Construction is planned to begin in the second year of the first phase and the entire construction for a booster pumping station and conveyance system is expected to be carried out over the 33-month period. In the final three months, commissioning test of the built facilities is to be conducted before commercial operation. Educational training for operators is to be performed. <Figure 6.7> shows the project schedule for the first phase, with consideration for the construction period of the Karian dam and the Serpong water treatment plant. The year in parentheses means an expected year of completion when the construction schedule of the Karian dam (to be completed by the end of 2019) is taken into account. 6-31

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 6.7> Project implementation schedule (Phase 1) Before- Year 1 Year 2 Year 3 Year 4 hand Classification -6 -3 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 Construction for Karian dam 1. Selection of consultants 2. Working design 3. Selection of constructors 4. Construction EDPF 1) Booster PS 2) Main CS KSCS 5. Commissioning and training 6. Construction supervision 1. AMDAL approval 2. LARAP approval 3. LARAP GOI negotiation 4. LARAP compensation 5. Permission consultation 6. Permission Construction for Serpong WTP Note) 1. AMDAL approval refers to obtaining an approval from the Governor of Banten province to validify an AMDAL 2. LARAP approval refers to the formal receipt of a Location statement for land acquisition and resettlement compensation by the Governor of Banten province 3. LARAP negotiation means that negotiations on land acquisition and compensation are made by the Governor of Banten province and land owners, and the evaluation of the results are completed. 4. LARAP compensation refers to making the compensation for the land whose compensation negotiation is finished and wrap up the land acquisition to begin construction. 5. Permission refers to all activities related to obtaining an approval or permission required for construction (power lead-in, railroad or road crossing, and river occupation) from the competent authorities. 6-32

Chapter 6. Project execution plan 6.9 Risk factor analysis and management Risk refers to the probability of occurrence of an unpredictable event which may hinder project implementation or cause damage owing to uncertainties in the future. Risk management is a course of action to remove these uncertainties, by managing and maintaining risks below the permissible levels in implementing the project. In contrast, crisis refers to an aftermath of an event that has shown signs of occurrence, become realized, or actually occurred. Crisis management is the whole process ranging from detecting signs of crisis to dealing with response and recovery. In the case of occurrence of a risk factor or crisis, it is necessary to preemptively manage risk factors that are likely to occur and minimize the negative influence on the implementation of the project through an effective risk management system. Expected risk factors in the implementation of the Karian – Serpong Conveyance System construction project are as follows: ① Timely construction of the intake tower and conveyance tunnel The intake tower connecting the conveyance pipeline is to be installed inside the Karian dam and the conveyance tunnel is to be connected to the dam. Upon completion of the construction, the Karian dam will begin to be filled with water. This means the construction of the intake tower and the conveyance tunnel needs to be completed before the dam is filled with water. For a timely construction of these facilities, their whole construction processes need to be closely monitored and managed. Otherwise, there will be a considerable time and financial loss. ② Construction of the Serpong water treatment plant The Serpong water treatment plant is currently being constructed under the public-private partnership (PPP). In order for the Serpong WTP to begin normal operations and to supply water to its service area, the conveyance pipeline must be connected to the WTP. If the construction of the WTP is not completed by the time the conveyance construction is finished, or the other way around (if the conveyance construction is not finished by the time the construction of the WPT is completed), whichever facility completed first will be wasting time and money until the other facility is fully prepared. Therefore, their connected processes need to be closely monitored so that both facilities are completed at the same time. ③ Construction of the branch line WTPs The Karian – Serpong Conveyance System project includes the construction of four branch pipelines. At the end of the branch pipeline will be four water treatment plants – Rangkas Bitung, Maja, Solear, and Parung Panjang WTPs, but neither a specific construction plan nor its financing scheme has been established. If the construction of the four WTPs is delayed, the branch pipeline to be constructed in this project will be no use until those WTPs are 6-33

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia constructed, and only incur losses with its depreciation. Therefore, a close examination and management of the construction process is required to meet timelines for the construction of the branch line and the four WTPs. ① AMDAL approval and land acquisition A delay in the approval of an environmental impact assessment (AMDAL) or land acquisition may impede the construction work. Consequently, the operation of the water treatment plant whose process is closely linked to the main construction, will also be behind schedule. It is necessary to pay close attention not to cause any delay in the AMDAL approval and land acquisition procedures. Technical, social, economic, and environmental risk factors arising from the implementation of this project and their countermeasures are shown in <Table 6.26>. <Table 6.26> Risk factor analysis and countermeasures Classification Risk factor Countermeasures Technical ∙ Unskilled local workers may ∙ Hold a technical training session once a Social decrease the quality of construction week to enhance technical skills of local ∙ Locally produced materials may be workers poor in quality ∙ Conduct a thorough inspection when ∙ Safety accident may occur during materials are supplied construction ∙ Hold a safety education session every ∙ Potential strikes or difference in morning before construction work begins opinion between Korean and local ∙ Closely cooperate with the project execution agency to resolve civil partners grievances ∙ Soft ground may cause differential ∙ Choose the right method of foundation settlement construction through an exhaustive soil survey ∙ Construction may be delayed by civil ∙ Ensure civil complaints do not occur by complaints or grievances analyzing what to cause complaints; ∙ Inadequate legal system or difficulty promote construction project to local of fully understanding local laws and residents regulations ∙ Translate laws and regulations in ∙ Permission/approval may be delayed Indonesian into English; review the or failed translated version with local partners ∙ Difference in language and culture ∙ Have the project execution agency handle permission/approval ∙ Try to understand local culture and language 6-34

Chapter 6. Project execution plan Classification Risk factor Countermeasures Economic ∙ Increase in construction cost ∙ Examine in advance by conducting a ∙ Unexpected delay of construction thorough process and construction period caused by prolonged rainy management season ∙ Leave enough time for timeline and seek ∙ Fluctuations in foreign exchange and ways to shorten the construction period interest rates ∙ Efficiently adjust the timing of material ∙ Land compensation may be delayed procurement ∙ Establish a favorable relationship with local residents through advance promotion Environmental ∙ Civil complaints during/after ∙ Install temporary protection net and construction vehicle wash facility ∙ Insufficient infrastructure needed for ∙ Conduct monitoring on a regular basis construction after construction ∙ Natural disaster or bad weather ∙ Prepare prior notice and checklist for comprehensive risk area management 6-35

Chapter 7. Project execution agency and implementation system Chapter 7. PROJECT EXECUTION AGENCY AND IMPLEMENTATION SYSTEM 7.1 Project execution agency 7.1.1 Organization Indonesia’s Ministry of Public Works and Housing, which is called PU for short, is a project execution agency of this project. This project is comprised of three construction fields – the Karian dam, the conveyance system, and PPP project planned for water treatment plants and transmission pipelines. The ministry’s organizational chart is as shown in <Figure 7.1>. <Figure 7.1> Organizational chart of Ministry of Public Works and Housing (PU) Ministry of Public Works and Housing (PU) Secretariat General Inspectorate General Directorate General of Water Resources Directorate General of Highways Directorate General of Human Settlements Directorate General of Housing Provision Directorate General of Construction Directorate General of Housing Financing Regional Infrastructure Development Board Agency for Research and Development Agency for Human Resource Development Agency for Toll Road Regulatory Agency for Improving the Implementation of Water Supply System 7-1

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Under the PU, there is a department called Directorate General of Water Resources, or SDA, which is in charge of water resource development and management in the country. There is also a department called Directorate General of Human Settlements tasked with water supply and water works management. In this project, SDA takes charge of the construction of the Karian dam and conveyance system whereas DGHS takes charge of the construction of water treatment plants and transmission pipelines. The organizational chart of SDA is shown as in <Figure 7.2>. <Figure 7.2> Organizational chart of Directorate General of Water Resources (SDA) Directorate General of Water Resources (SDA) Secretariat of Directorate General of Water Resources Directorate of Natural Resources Management Directorate of Water Resources Network Development Directorate of Irrigation & Swamp Directorate of River & Beach Directorate of Operations & Maintenance Central Dam Ground Water and Raw Water Center (PUSATAB) Source: http://sda.pu.go.id/pages/struktur Under the SDA is an affiliated agency called the Ground Water and Raw Water Center, or PUSATAB, specifically in charge of this project for the construction of the conveyance system. The PUSATAB coordinates and facilitates communication among the parties interested in the development of the groundwater and raw water, takes care of quality management, promotes and manages programs, and supervises compliance with regulations, standards, and procedures for technical assistance with regard to the supply of raw water and use of groundwater. For reference, there is a water supply division tasked with water supply affairs under the SDA. The division is in charge of making policies and regulations related to water supply system as well as monitoring and supervision. The organization of PUSATAB is established in accordance with the Regulation No. 15 / RPT / M / 2015 (Permen PU No.15 / 2015) as shown in <Figure 7.3>. 7-2

Chapter 7. Project execution agency and implementation system <Figure 7.3> Organizational chart of PUSATAB Center of Ground Water and Raw Water (PUSATAB) Planning & Administration Division Planning Sub-Division Technical Guidance Sub-Division Administration Sub-Division Division of Ground Water & Raw Water for West Region Sub-Division of Ground Water & Raw Water for West Region I Sub-Division of Ground Water & Raw Water for West Region II Division of Ground Water & Raw Water for East Region Sub-Division of Ground Water & Raw Water for East Region I Sub-Division of Ground Water & Raw Water for East Region II Division of Ground water & Raw Water Conservation Sub-Division of Ground water & Raw Water Conservation for West Region Sub-Division of Ground water & Raw Water Conservation for East Region Source: http://sda.pu.go.id/pages/struktur Besides the PUSATAB, which takes charge of policy planning and making under the Ministry of Public Works and housing (PU), there are a number of provincial organizations called Balai taking care of actual execution and operation. In connection with the construction of the Karian dam and conveyance system, there is BBWS C3 (Balai Besar Wilayah Sungai Cidanau, Ciujung, Cidurian), a provincial agency corresponding to the central PUSATAB. The BBWS C3, located in Banten province and Serang city, oversees three rivers – Cidanau, Ciujung, and Cidurian – in the region and is primarily in charge of planning, building, operating, maintaining, repairing, and flooding prevention of all water 7-3

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia resource-related facilities (including river, beach, dam, lake, pond, and so on.) The organization of BBWS CS is established in accordance with the Regulation No. 20 / PRT / M / 2016 (Permen PU No.16 / 2016). Its organizational chart and personnel are shown in <Figure 7.4>. <Figure 7.4> Organizational chart of BBWS C3 Balai Center Head of Section TU Tris Raditian, ST. MM Gatut Bayuadji, S.Si., MT Personnel Personnel Personnel Hani Luwi, SE Hj. Ade Nuraeni, S.Sos Suyadi, S.Sos, M.Si. Head of Planning Division Head of Implementation Division Head of O&M Division Mohammad Firman,ST.,MT Ir. Edi Jordan, M.Si Paino, ATP, MT Head of Planning Section Head of PJSA Section Head of O&M Section Suherlan, ST, M.MT Ismaludin, ST, MT Teguh Mulia Aribawa, ST Personnel Personnel Personnel Santi Martini, ST.,MMT Epi Apipi, ST.,MM Mulyadi, STP.,MPSDA Functional Groups 7.1.2 Project implementation experiences The two project execution agencies, PUSATAB and BBWS C3, have a well-established division of jobs. The PUSATAB is assigned to perform tasks related to high-level planning whereas the BBWS C3 is in charge of on-site affairs. They have accumulated experiences in implementing multiple projects, and as of 2018, they are implementing the Karian dam construction project funded by Korea Eximbank’s EDCF. The project is to be completed by 2019. The projects completed or currently underway include the Karian dam, Sindang Heula dam, Cidanau dam, and Pasir Kop dam, and their project overviews and location maps are shown in <Table 7.1> and <Figure 7.10>. The project overview, ground plan, and basin map of the Karian dam construction are shown in <Figure 7.5>, <Figure 7.6>, and <Figure 7.7>, respectively. (Source : http://sda.pu.go.id/bbwsc3/) 7-4

Chapter 7. Project execution agency and implementation system <Figure 7.5> Karian dam project overview Overview ∙ Location : Banten province ∙ Project execution agency : PUSATAB / BBWS C3 ∙ Supervisor : Korea Rural Community Corporation - PT.INDRA - KARARYA – PT.WIRATMAN – PT.METTANA ∙ Constructor : Daelim Engineering and Construction– PT.WIJAYA KARYA – PT.WASKITA KARYA ∙ Fund : EDCF Loan-INA 19 ∙ Project period : 2015 – 2019 ∙ Construction cost : USD 82million ∙ Construction period : 731 days <Figure 7.6> Ground plan of Karian dam project 7-5

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 7.7> Map of watershed of the Karian dam 7-6

Chapter 7. Project execution agency and implementation system There is another project that the PUSATAB and BBWS C3 are currently implementing. It is a construction project of the Sindang Heula dam, and the overview and location map are shown in <Figure 7.8> and <Figure 7.9>. <Figure 7.8> Overview of the Sindang Heula dam project Overview ∙ Location : Banten province ∙ Project purpose : to supply 0.80m3/sec of raw water to Serang city and to prevent inundation ∙ Service area : Serang regency and city ∙ Project execution agency : PUSATAB / BBWS C3 ∙ Supervisor : PT.TRI TUNGGAL PRATYAKSA ∙ Constructor : PP-HUTAMA ∙ Project period : 2015 – 2018 <Figure 7.9> Location map of the Sindang Heula dam 7-7

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia One of the major projects being implemented by the Indonesian project execution agency is the construction of multipurpose dams that will serve the functions of power generation, flood prevention, and supply of agricultural and domestic water. This is particularly the case for the Karian dam. The Karian dam is currently under construction to be used as the water intake source and to provide water for agriculture, domestic, and power generation. The list of water resources management public infrastructure projects which are similar to this project in size and implemented by the project execution agency is shown in <Table 7.1> and <Figure 7.10>. These projects are mostly about the construction of large-scale dams and supply of domestic and agricultural water. The agency’s experience in implementing and managing such projects will help greatly the project execution agency to effectively manage this KSCS project for domestic water supply. <Table 7.1> Multipurpose dams’ electricity supply plan No. Dam Reservoir Watershed Water supply Electricity area (m3/sec) (MW) capacity (ha) (million m3) 1 Cidanau 29.60 3,051.00 4.00 N.A 2 Sindang Heula 9.20 105.07 4.60 0.4 3 Karian 207.40 1,900.00 14.60 0.8 4 Pasir Kopo 130.80 850.00 7.00 10.0 <Figure 7.10> Location map of PEA dam projects 7-8

Chapter 7. Project execution agency and implementation system <Figure 7.11> shows how water is to be supplied by each conveyance system and their planned amount of water to be distributed. The KSCS project is marked with a red line and has the total distribution amount of water at 12.4CMS. Other projects are marked with a blue line. <Figure 7.11> Domestic water supply plan by PEA project Source) BBWS 3C: http://sda.pu.go.id/bbwsc3/ In addition to the implementation of four multipurpose dam projects listed above within three basins, the BBWS C3 carries out flood prevention programs, sets up an automatic measurement of water quality, and watches criminal acts (such as polluting water resources). Considering their sufficient experience in various projects and activities, both PUSATAB and BBWS C3 are considered an experienced and capable project execution agency for this project. Particularly, they are currently working on the Karian dam project funded by EDCF, which will help this project to be implemented much easier and smoother. 7-9

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 7.2 Project implementation system 7.2.1 Project implementation capability The project execution agency (PEA) is now performing tasks similar to those of this project (Karian – Serpong Conveyance system). Main jobs that the PUSATAB needs to do for the successful implementation of this project include coordination with related institutions in Indonesia, loan agreement with Korea Eximbank/performance report, employment of consultants for design/supervision, bidding process to select a contractor for construction and material and payment management. The PUSATAB has a planning and administration department (planning subdivision and technical subdivision), which is capable of performing the aforementioned tasks. The BBWS C3 also has an organization for planning, implementation, and administration/management. The two organizations are deemed to have enough capability to implement and manage this project. Given that this project is closely connected to the construction of the Karian dam, intake tower, and conveyance tunnel, it is fair to say that the BBWS C3, which is now taking charge of management and supervision of the construction site, should manage and supervise the site. Selecting the very able consultants for design/supervision is critical to the overall quality of the project, therefore, it is natural that the PUSATAB should directly conduct the selection process. 7.2.2 Employment of international consultants and project scale In general, EDPF funded cooperation projects require complicated management methods. Particularly in this project, large-scale booster pumping facilities and large-diameter conveyance pipelines require highly complex engineering techniques. Therefore, having the very competent consultants is essential to the effective execution of the fund as well as the efficient preparation, design, construction, and operation of the project. With regard to the employment of consultants, their terms of reference, and the estimated consulting cost, the PUSATAB and BBWS C3 (PEA) will need to have a consultation and agreement with Korea Eximbank. (1) Selection and work scope of consultants The project execution agency (PUSATAB and BBWS C3) should select consultants in accordance with the terms and procedure agreed upon with and obtain approval from Korea Eximbank. Consulting service is classified into five work scopes. To keep the quality and consistency of work, it is recommended to select the competent consultants who have conducted the feasibility study. 1) Working design • Field survey: water quality, geology, inquiry surveying • To review and analyze the hydraulic stability of the conveyance pipeline 7-10

Chapter 7. Project execution agency and implementation system • To establish criteria for conveyance and coating materials; and to set up an anti- corrosion plan • To establish procedures for tests and inspections to verify performance and assure quality • To design booster pumping facilities for effective operation/maintenance • To calculate the project cost and estimate the construction period • Economic and financial analysis • Environmental and social impact assessment • Other design work related to the project 2) Bidding evaluation and contracting preparation for the selection of a constructor • To prepare bidding guidelines • To give an explanation on bidders; and to answer questions during bidding • To evaluate prequalification results and bidding proposals • To assist contract negotiations with a preferred bidder • To prepare a constructor’s contract documents • Other bidding evaluation and contracting related tasks 3) Construction supervision • Construction preparation: to examine a contractor’s preparedness such as a construction organization and plan • Construction supervision: process management, quality and safety control, technical review • Quality assurance and confirmation of completion: to run commissioning and check performance • Other tasks necessary for the effective management of construction 4) Technical and maintenance-related service after completion of construction 5) Other service necessary to the project (2) Necessity of working design There exists a 2006 report on the feasibility study and basic design of the Karian – Serpong conveyance system route conducted by the Korea Rural Community Corporation (KRC) under the Korea International Cooperation Agency (KOICA) fund. But the report needs to be enhanced to be used as a report for construction or bidding guidelines as it has many design errors, poor documents, and outdated information. 1) Raw water allocation for the second phase was not considered There needs an additional raw water allocation plan upon completion of the Pasir Kopo dam. 7-11

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia In other words, if the raw water allocation for the second phase is not considered, a completely new system will have to be installed after the Pasir Kopo dam is completed, which makes the operation of the system complicated and difficult to control. 2) A single hydraulic system is needed for operation/maintenance In the existing design concept, a separated two hydraulic system is planned, one for the high head pump and the other for the low head pump. This means the entire conveyance system needs to stop in case of an emergency such as leakage accident occurring in either of the two pipelines. It also makes it difficult for the system to cut off the water supply for a regular checkup of the pipeline. Therefore, in this feasibility study, two pipelines are installed and connected together so that the operator can do the repair work in case of an emergency or check the system without cutting off the water supply. Considering that a stable water supply is directly related to the quality of people’s life, avoiding the cutoff is an important matter. 3) Selection of the booster pump The booster pump plays a key role in the conveyance system; therefore, its types and specifications need to be specified in an enhanced design drawing. In addition, it does not only lack the basic design of the pump but also protection measures against water hammer phenomenon which may occur in case of a power outage. Plans for a combined operation, compatibility, and operation depending on the water level at a dam were also left out. Such a poorly developed design of the pump facility could cause damage to the whole system at a time. 4) Building plan of the booster pumping station Considering the final phase of this project, it is necessary to secure enough installation space for pumps in building the booster pumping station. Unfortunately, the specifications and the number of pumps to be installed in the final phase were not factored in the existing architectural design, so there is not enough space for pumps to be installed. It is worth noticing that all facilities including pump facilities, power/control equipment, and water hammer protection devices operate together in a combined manner within the same room, instead of operating independently. Just developing an extra pumping station later cannot be the solution. Therefore, a new building design that allows the entire pump system to be installed in the single room needs to be developed. 5) Hydraulic stability of the conveyance system Among many hydraulic phenomena, water hammer is undoubtedly the most dangerous event that we encounter in operating the pipeline. Water hammer brings about grave damage to the conveyance system due to the excessive pressure caused by the abrupt stop of the pump. 7-12

Chapter 7. Project execution agency and implementation system Damages include broken pumps or valves, crushed pipes, or water column separation due to negative pressure. However, no protection devices are planned against water hammer in the existing design drawing. 6) Power lead-in In order for the booster pumping station to properly function, a high capacity, high voltage power needs to be supplied stably. This requires a close cooperation and consultation with the PLN according to the state of power demand and supply and related regulations. If construction begins without an appropriate power plan and the facility fails to secure incoming power on account of local power supply situation, there will be no way of operating the booster pumping station. With a close coordination with the PLN, a new and feasible detailed design should be developed. 7) Quality assurance of the conveyance pipeline Water supply facilities are closely related to the quality of people’s lives in the service area. Once the water supply system is introduced, there should be no suspension of operation. Even if a leakage accident occurs, the system needs to be repaired and normalized without cutting off the water supply. It is required for the design life of the conveyance pipeline to be 50 years and longer, but in reality, there is no way of checking the quality of the pipeline except for the construction stage because the pipelines are buried underground. In other words, it is impossible to check the quality of pipelines after installation. Hence, it is necessary to design nondestructive tests to test the quality and thickness of the steel pipe, coating for anti-corrosion, weld zone of the joints, in addition to the cathodic protection method. All of these were not planned in the previous design drawing. 8) Valves for operation and maintenance The booster pumps need to be operated according to change in demand in the water treatment plant and water levels of the Karian dam. Theoretically, pumps respond to changing demand depending on the opening rate of the inlet valve controlled by each water treatment plant. However, in the existing design, valves in the pipeline were electrically installed to control the flow rate. Since it does not directly respond to water demand, it could cause confusion in allocating raw water. The idea of using valves to control the operation of the pump in the existing design was not appropriate, so it is required to rectify the design concept. 9) Design drawing A design drawing should be made in detail enough to be put into construction. The existing design drawing does not only have the aforementioned errors but lacks detailed description. It would be much better if we create a new design drawing in accordance with a revised plan 7-13

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia than compensating the existing drawing. 10) Specifications Specifications are an integral part of the contract. Being attached to the contract, specifications specify all technical requirements by the ordering organization, which are not described in the contract; construction site standards and procedures affecting the overall performance of the conveyance system including quality standards for materials and construction, and joint welding of steel pipes; nondestructive tests and other test technique to check the quality of weld zone; and acceptance criteria. Without specifications, there is no evidence that guarantees the quality of the construction project. Specifications were not found in the existing design. 11) Bill of Quantities (BOQ) The bill of quantities is a detailed list of the materials and manpower required for each work classification in the construction. It should be written in the working design stage so that it can make the basic foundation for the calculation of the construction cost. In a bid, a BOQ without quotation is given to a bid applicant, who then fill out and submit the document. Therefore, a BOQ is a basic document that we go upon to compute the completed amount in the construction stage; to change a design, and to calculate the completion of construction. The BOQ was not found in the existing design. 12) Conclusion As described above, the existing design has many errors and omissions and fails to specify quality standards, which is deemed almost impossible to be used for bidding or construction. Therefore, it is an inevitable conclusion that we draw a new working design in order to stabilize the overall hydraulic and establish quality standards for each process. (3) Selection and evaluation of consultants Based on the qualification of the company in charge of the project and the capability and project management experiences of the consultant presented in the proposal, consultants should be selected and evaluated according to the following criteria. ① General experience and performance of the concerned consultant in the field of waterworks project. ② Validity of the project management and planning for the waterworks project ③ Work experience of the concerned consultant in the field of waterworks projects. The relative importance of these three criteria can vary by consulting type. However, in evaluating a proposal, the most importance should be placed on whether the concerned consultant is competent in project planning and management rather than the reputation of the company. The consultant who will be tasked with the project management needs to be 7-14

Chapter 7. Project execution agency and implementation system assessed based on the following criteria. ① general qualifications (technical qualification certificates, educational background, work experience) ② suitability for the job (work experience in project implementation and management) ③ work experience in oversees project and language proficiency (English) (4) Necessity of employment of international consultants To assure performance and quality of the accomplishment, project execution agencies (PUSATAB and BBWS C3) need to implement this project in accordance with the terms and procedures agreed with the Export-Import Bank of Korea and, on key issues, receive an approval from the Bank. These works require a high level of expertise and experience that meet the requirements by the Bank. 1) To maximize the benefits of a financing program (loan agreement) To maximize the benefits of its financing program, the Export-Import Bank of Korea (KEXIM) wants to build a water conveyance system whose quality and performance are assured; whose durability is secured for 50 years of the design life; whose operation is maintained in an organized manner; and whose service is not interrupted under any circumstances. All of these requirements will be satisfied only when the whole process is designed in a systematic manner; when key issues are perfectly examined; when a flawless working design is prepared; and when a thorough construction supervision is carried out by checking if every task of the work classification complies with the process; by testing the quality of materials; and by inspecting and testing the construction. 2) To meet the international level quality standards International level quality standards are specified in the Korean Industrial Standards (KS) and Korean WaterWorks Association (KWWA) standards. For example, asphalt enamel currently used as an outer coating material for steel pipes in Indonesia is not allowed in Korea. So, materials that satisfy Korean standards will also assure the international level quality. As such, internationally accepted quality standards will be reflected in all the drawings of the working design and specifications and will be applied in the construction stage to test and inspect processes and performance. 3) To introduce an advanced quality management method Korea is a country that has achieved its modernization in a short period of time, and during which, the multi-regional waterworks supply system was constructed. This has enabled Korean consultants to have hands-on experience in performing a construction supervision as well as designing with the latest techniques. If their expertise and experience are applied to 7-15

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia the Indonesian water supply system, which contributes to the optimized system, maximum performance, and quality assurance, the Karian – Serpong conveyance system project will become one of the best waterworks systems. 4) To transfer technology in water supply system It is possible to learn theory and technology on construction and operation of water supply systems from textbooks, but it is not easy to learn dozens of practical cases that we encounter in the construction field. If international consultants have a one-on-one meeting with Indonesian consultants and perform tasks, Indonesian engineers will have a great opportunity to be engaged in on-the-job training throughout the entire process of designing, construction, and commissioning. It would be the best way of transferring and learning technology. 5) To facilitate smooth communication between project execution agencies and the KEXIM On detailed matters, there may be some differences in opinion between the project execution agency (PUSATAB, BBWS C3) and the KEXIM, if not on key issues. In practice, it will be difficult to have a meeting to iron out different views on minor issues every time they come up. Particularly on technical matters, Korean consultants will play the role of an interlocutor in helping to facilitate communication, to narrow down the differences, and to reach a rational settlement. 6) Conclusion All things considered, employing international consultants will lay the foundation for a successful implementation of this project and serve as a means of securing performance and quality. This will also provide an invaluable opportunity for the Indonesian project execution agencies where they learn on advanced water supply technology directly from international engineers. (5) Consultant selection process Since the Karian – Serpong Conveyance System construction project is funded by the EDPF, it is necessary to hire consultants in charge of managing the entire project after signing the loan agreement. The selection process will be similar to that of an EDCF funded project, which is recommended as follows: 1) To draft the terms of reference The terms of reference refers to a document specifying tasks of the consultant including the overview, background, purpose, and scope of the project and the purpose, scope, schedule, content, and responsibility and accountability of the consultants. In principle, the document is written by the project execution agency, but the KEXIM can provide assistance, if necessary. 7-16

Chapter 7. Project execution agency and implementation system 2) To prepare the short list Before beginning a bidding process, the project execution agency prepares a short list, consisting of three to five qualified candidates. In general, the agency publicly accepts bid applications or an expression of interest (EOI). Or it refers to a long list recommended by the KEXIM, receives EOIs from the long list, evaluates them, and then selects the short list. 3) To review the short list, invitation to bid, and terms of reference Before sending an invitation to bid (ITB) to the short list, the project execution agency (PUSATAB, BBWS C3) should submit the short list, ITBs, and terms of reference to the KEXIM for review. 4) To send the invitation to bid The invitation to bid (ITB) is sent to candidates along with a request for proposal (RFP). The ITB sets forth the following: matters specified in the terms of reference need to be included in the consulting contract and consultants are selected pursuant to the KEXIM’s regulations on employment of consultants. In the RFP are general and special guidelines, evaluation criteria, a bid proposal form, methodology guidelines, work schedule and staffing schedule form, and anti-corruption and anti-malpractice declaration which is to be signed and observed by the bidder. The deadline for submitting RFP is 45 to 60 days after the invitation was sent. 5) To submit the evaluation results of proposals and obtain approval The project execution agency evaluates received proposals in accordance with the criteria specified in the RFP, and prepares the evaluation report and summary. The agency should submit these documents to the KEXIM before negotiating a contract with the preferred bidder who earned the highest scores in RFP, and should obtain approval from the bank, if necessary. 6) To negotiate contract conditions The project execution agency begins negotiating contract conditions with the first preferred bidder. If the negotiations broke down, negotiate with the second bidder. 7) To submit a copy of the contract and obtain approval Following the successful conclusion of a contract with the consultant, the project execution agency should submit the contract draft to the KEXIM for review and should obtain approval from the bank, if necessary. Once the review or approval is completed, it closes the consulting contract. (6) Project size The overview and facility size of the Karian – Serpong conveyance system construction 7-17

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia project are as follows: 1) Project overview • intake amount: 14.6㎥/sec • target year: 2031 • service area: Banten province, West Java, part of West Jakarta • water supply branch: one Serpong WTP main line, four Rangkas Bitung, Maja, Solear, Parung Panjang WTP branch line 2) Facility size The conveyance pipeline and the pumping station in this project are planned by the target year of each phase. (phase 1 by 2021 and phase 2 by 2031) <Table 7.2> Project scope Phase Target Work classification Main facility Phase 1 year 2021 ① Civil works ∙ Conveyance pipeline main line D2,000mm, Phase 2 L=47.9km 2031 ② Architectural works ∙ Booster pumping station 1 unit ③ Mechanical works ∙ Booster pump 1.0m3/sec. unit x 7 units ∙ Regulating pump 0.5m3/sec. unit x 2 units ④ Electrical works ∙ Power lead-in facility 1 unit ∙ Substation equipment 1 unit ⑤ Instrumentation and ∙ Integrated monitoring control system 1 unit control works ∙ Flow metering instrument 1 unit ① Conveyance 47.9km in total pipeline main line ∙ D2,000mm, L=36.0km ∙ D1,800mm, L=11.9km ② Conveyance 19.31km in total pipeline branch line ∙ D1,350mm, L=4.75km (Solear branch) ∙ D600mm, L=8.56km (Rangkas Bitung branch) ③ Mechanical works ∙ D600mm, L=4.80km (Parung Panjang branch) ∙ D350mm, L=1.20km (Maja branch) ④ Electrical works ∙ Booster pump 1.0m3/sec. unit x 6 units ⑤ Instrumentation and ∙ Regulating pump 0.5m3/sec. unit x 2 units ∙ Rangkas Bitung system pump 0.40m3/sec. unit x control works 2units ∙ Substation equipment 1 unit ∙ Flow metering instrument 1 unit 7-18

Chapter 7. Project execution agency and implementation system 7.3 Preparation of project implementation 7.3.1 Preparation of project implementation The records of the feasibility studies and plans that have been implemented for the Karian – Serpong conveyance system construction project are shown in <Table 7.3>. <Table 7.3> Records of studies and plans for the KSCS project Year Study content Conducted 1985 by 1994 1995 ∙ Feasibility study on the construction of the Karian dam JICA ⇒ Main subject: to use be used for agricultural water in Banten 2006 2008 province 2011 ∙ Jabotabek water resources management plan (JWRMS) WB 2015 ⇒ Karian dam water resources: to be used in West Jabotabek ∙ Ciujung-Cidurian integrated water resources management plan (C- JICA C IWRMS) ⇒ Main subject: development plan of four dams (including the Karian dam) ∙ Feasibility study and working design of the Karian dam KOICA construction ⇒ Feasibility study and working design on the Karian dam and KSCS 1 conveyance pipeline route ∙ Feasibility study on the validity of water supply using PPP fund K-EXIM ⇒ Water supply plan for the service area by using PPP fund ∙ Feasibility study and basic scheme of the Karian – Serpong KOICA conveyance system ⇒ Water supply plan and financing investment plan after the construction of the Karian dam ∙ Basic design and PPP basic scheme for Karian – Serpong K-EXIM conveyance system ⇒ Water supply plan and financing investment plan after the construction of the Karian dam As listed above, there have been several rounds of projects on the Karian dam and water supply system construction, and depending on the purpose of a study, the conveyance route and the construction plan of the water treatment plant have been changed over the course of years. <Table 7.4> shows the list of inside reports obtained from the SDA as of 2018. 7-19

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 7.4> Current state of the KSCS project implementation Year Study content Conducted by 2004~2006 ∙ Conducted a feasibility study and working design for the Karian dam KOICA 2008 construction K-EXIM ∙ Conducted a feasibility study for the water supply system funded by PPP 2009 ∙ Conducted an AMDAL on the Karian – Serpong conveyance system BBWS C3 2011 ∙ Conducted a feasibility study and basic scheme for the Karian -Serpong KOICA 2012 conveyance system BBWS C3 2012 BBWS C3 2015 ∙ Conducted an AMDCAL on the Karian – Serpong conveyance system KEXIM ⇒ to change the conveyance pipeline route ∙ Conducted a LARAP on the Karian-Serpong Conveyance system (KSCS) ∙ Master plan and PPP basic scheme for the Karian–Serpong conveyance system 2015 ∙ Signed a contract of the Karian dam construction: June 17, 2015 - 2017 ∙ Confirmed the water supply plan and route of the Karian– Serpong BBWS C3 2017 conveyance system BBWS C3 2018 BBWS C3 ∙ Conducted (reviewed) a LARAP on the Karian – Serpong conveyance system ∙ Conducted a LARAP on the Karian – Serpong conveyance system ⇒ second phase, Lebak Regency (1) Current state of AMDAL (Environmental Impact Assessment) As shown in <Table 7.4> above, the BBWS C3, one of the project execution agencies, conducted its first environmental impact assessment or AMDAL on the main conveyance pipeline back in 2009, and again in 2012 on the changed and extended route of the conveyance pipeline. The current state of the environmental impact assessments is shown in <Table 7.5>. Year <Table 7.5> AMDAL (2009) AMDAL Length and content (2012) AMDAL ∙ L = 36.5km ∙ Route: Lebak Regency to Parung Panjang WTP ∙ Interference region: Parung Panjang, Bogor, West Java region ∙ L=27.3km (changed through technical review) ∙ Route extension L=11.9km ∙ Route change L=15.4km ∙ Reason for change: to exclude interference region of West Java 7-20

Chapter 7. Project execution agency and implementation system To construct the Karian – Serpong conveyance system, a written permission should be obtained from the Governor of the Banten province, the construction area. The environment impact assessment (AMDAL) is included in this permission. The valid period of the AMDAL in Indonesia is 3 years, and the current state of the AMDAL conducted by the BBWS C3 is described as in <Figure 7.12>. <Figure 7.12> How the two rounds of AMDAL were conducted The two AMDALs is currently expired and not conforming with the Indonesian laws revised in 2012, which calls for the preparation of a new AMDAL needs. <Figure 7.13> Current state of AMDALs on changed routes (2009~2012) 7-21