Risk mitigation in supply chain disruption during pandemic Covid 19 : evidence from EPC construction energy in Indonesia

Abstract

The COVID 19 pandemic, which emerged in early 2019 and persists into 2022, stands as one of the most significant global calamities in recent memory. Beyond the staggering toll of fatalities and hospitalizations, it has unleashed widespread economic repercussions, disrupting businesses on a global scale and inflicting profound hardships. Its reach extends across various sectors, including manufacturing, hospitality, finance, food and beverage, and construction in Indonesia. Numerous projects in the country have encountered delays and budget overruns as a result of the pandemic. Construction sites abruptly ceased operations, and productivity levels stagnated. This study explores the initial experiences of managing the COVID 19 crisis and its impact on the construction industry. This study examined the impact of the COVID 19 pandemic on EPC construction companies in Indonesia, focusing on the achievement of targets as reported by nine respondents from SCM Departments, including SCM managers and Logistics managers, in nine major international EPC companies operating in oil, gas, power, petrochemical, and related sectors with ongoing projects in Indonesia. The respondents provided insights based on their experiences dealing with the pandemic disruptions, including the overall and adverse effects observed, new opportunities identified, and risk management efforts undertaken. Reported adverse effects included significant project delays, challenges in securing materials promptly, decreased productivity rates, additional logistics expenses, material cost escalations, shifts in transportation methods from sea freight to air freight to meet construction deadlines, among others. There have been several impacts on Supply Chain disruption, encompassing material movement and delivery flow delays, disruptions in financial flows with payment term disturbances on both seller and buyer ends, and disruptions in information flow across various aspects including human resources, material stock information, quotations, inspections, HSE, and scheduling. Risk management measures have been significantly bolstered, including efforts to enhance safety protocols like enforcing the use of medical face masks among employees, conducting body temperature checks to ensure temperatures below 37 degrees Celsius, implementing social distancing protocols, staggering construction operations, providing COVID 19 related training, administering frequent antigen/PCR tests, and other precautions.