Integration of Cost of Quality and Risk Analysis to Reduce Failure Costs in the KIIC Margakarya 150 KV Substation Civil Engineering Project

Abstract

Quality failures in construction projects increase costs through failure costs, which are primarily driven by project implementation risks. Quality cost management and risk management are often conducted separately, resulting in limited integration for decision-making, particularly in civil construction projects within the electricity sector. This study aimed to identify risks contributing to failure costs, determine priority risks based on Risk Exposure and Expected Monetary Value (EMV), identify appropriate risk response strategies, and evaluate the effect of integrating risk mitigation into Cost of Quality (CoQ) management on reducing potential failure costs. This research employed a case study approach focusing on the civil works of the 150 kV KIIC Margakarya Substation Project. Data were obtained from project documents, quality reports, quality cost records, and expert judgments from eight experts. The analysis included CoQ classification using the prevention–appraisal–failure model, risk event identification based on the Risk Breakdown Structure (RBS), Risk Exposure assessment, EMV calculation, evaluation of mitigation effectiveness and costs, and calculation of residual EMV and projected post-mitigation CoQ. The total actual CoQ was IDR 259,861,400. Thirteen risk events were identified, with five priority risks categorized as high and very high, representing a total EMV of IDR 342,500,000. The selected mitigation strategies reduced the residual EMV to IDR 117,910,000, representing a 65.57% reduction. By integrating mitigation costs of IDR 72,000,000, the projected CoQ was reduced from IDR 602,361,400 to IDR 449,771,400, resulting in potential savings of IDR 152,590,000 (25.33%) and a benefit-to-cost ratio of 3.12.