ANALYSIS on ECONOMIC PROPER STUDY Of EMBUNG KEDUNG POH in

DISTRICT Of GUNUNGKIDUL, SPECIAL REGION Of YOGYAKARTA

B. Tresno Sumbodo, Sardi, Yavida Nurin

Janabadra University
Yogyakarta, Indonesia
sardi@janabadra.ac.id

Abstract
Most livelihood people in sub-District of Nglipar, District of Gunungkidul, generally work as farmers
that depend their irrigation on the rain. In case of irrigation problems, the local government of Gunung Kidul
build up a body called Embung Kedung Poh for providing water supply.preventing irrigation problems. The
costs covered : (a). Operating costs, (b). Legal Consulting cost, (c). Any admisson, and (d). contingency . This
study implemented economic analysis approach in examining all alternative solutions worthy. The surveys are
emphasized on both cost and benefit aspects. The costs covered constructing costs, operating costs, maintaining
costs on the pool and its supporting equipment. This used tools which are properly applied on economic field,
those are NPV (Nett Present Value), BCR (Benefit Cost Ratio), and IRR (Internal Rate of Return). The result
indicated that by investing as much as Rp. 3.200.000.000 at Bank of Indonesia interest rate up to 12% obtained
NPV rate up to Rp 398.16.008.00 BCR rate up to 1.107 (more than 1) and IRR rate up to 13.62%. Therefore,
the project of Embung Kedung Poh in district of Gunungkidul, special region of Yogyakarta is eligible to
execute.

I. INTRODUCTION
Water is overwhelming substance on the earth, the essential component for all creatures and also as a
main source in forming the earth surface constantly. Also, water is as the determiner factor for climatology
around the earth in case of human living needs.
Due to its limited supply of water, it needs to preserve the supply and to optimize its utility. One of
the utility is irrigation needs. Not only by the population is increasing year by year but also it found that the
necessity for food is increasing simoultaneously. To provide necessity for food, it needs water irrigtion [1].
Generally people who live in subdistrict of Nglipar, district of Gunungkidul earn theirself as farmers
that 100% depend their irrigation water supply on the rain in purpose for watering their rice fields. Several
times, they experience crop failure because of the lack of rain intensity. It brings up problems to the farmers
around the area specifically as well as the district generally. The government has already taken some actions
in form of some reservoirs as Javanese people called embung to supply water stock since the farmers have
been depending their fields solely on the water irrigation.
The Embung is obviously needed to build in order to accommodate overwhelming water from the rain
during the season. Both its dimension and its accommodation capacity not only contribute to volume of water
currency during dry season but also to reduce the volume of the flood through high intensity, field and water
conservation, during raining season. In order to obtain sufficient accommodation capacity, its construction is
not only by building higher dam (>10 m) but also possibly building serial body on valleys or basins based on
its topography condition [2].
It is not excessively big and large to plan the body, so it causes no direct impact around the area.
Points needs to consider are types of vegetation on the Kapecong valley are obviously sunk under the water,
releasing some areas around the body, by the contractors, from the possibly damage [3].
The project costs of the Embung Kedung Poh, covered : (a).operating costs, (b). Legal consulting cost,
(c). Any admission, and (d). contingency.

II. METHOD
This study implemented economic analysis to obtain economic prosperiousity of all alternated
solutions. Economic aspect perception is analysis process on profit and cost. These costs covers constructing,
operational, and maintaining costs. Then, this aspect applies tools for economical utility, such as NPV (Nett
Present Value), BCR (Benefit Cost Ratio), and IRR (Internal Rate of Return) [4,5,6,7].
The water resources developing study customizes this analysis on master plan, reconnaissance,
appraisal, feasibility study project completion report and evaluating the progress or the failure of the projects
due to the finance of bank or other financial agents. If the project is considered to be eligible during fesibility
study process then it proceeds to design details and project implementation [8].

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 This analysis observes a project from all economical perceptions. Some substances that this analysis
observes as followed [9] :
1. the price indicator is shadow price.
2. tax payment is excluded of project profit.
3. the amount of subsidy should be included into input goods market price.
The technique of this analysis on the project’s length of time should focus on how planners consider
on the best choice of some alternatives of selected planning result. These Alternatives possibly in form of cost
comparison of some recommended choices. This analysis is possibly extended to its worthy principle of the
project.
NPV is a difference between Cost and Benefit on present cost rate condition, also as an indicator to
indicate the progress of the project profit economically and financially according to kinds of bank interest rate
Steps to take a calculation compared to EIRR steps. In general, the formula of Present Value (PV) is:
[10,11]
𝐹
𝑃𝑉 = (1+𝑖)𝑛 ......................................................................................................................... (1)

determined:
PV = Present Value
F = year x (cardinal) variable
I = interest rate
n = first,second,third year (ordinal)....so on

in project evaluation, NPV variable on current loan interest rate with obligated rate > 0. if NPV = 0
means the proyek returns exactly on early investment value. if NPV < 0 means the project should be delayed
economically and financially to build.
Things to consider and to compare for the construction of the dam are Present Value (PV) from each
Cash Out Flow with determined discount rate (I) .
Benefit Cost Ratio is comparison between PV of Cash in Flow as benefit and PV of Cash Out Flow
(total investment costs of maintenance) as cost and counted as determined discount rate (i) .
BCR calculation is concepted as this formula below : [10,11]

n
Bt
 (1  I )
t 1
t
BCR  n
............................................................................................................. (2)
Ct

t  1 (1  I )
t

determined :
I = dicount rate
t = year index
if BCR > 1 means profit is obtained. Meanwhile if BCR < 1 means the project should be delayed.
IRR is discount rate variable which I causes NPV = 0. This investment perception includes 2 kinds
of IRR , they are EIRR and FIRR.
a) EIRR = Economic Internal Rate of Return. It is IRR variable on economic analysis with its means (cost
and benefits) as known on BCR method above.
b) FIRR = Financial Internal Rate of Return it is IRR variable on Financial Analysis with subtances matched
to BCR method.
Calculation on IRR includes Cash Out Flow and Cash In Flow per year. Trial and Erorr of IRR should
be done by computer’s help as followed below :
a. Take discount rate variable I which assumed closed to IRR variable, then calculate NPV variable per year
then accummulate NPV variables.
b. I variable should be modified as accurate as possible to take down cummulative NPV variables equalizes
to zero at the end of the project. Convergency Approach is possible to apply with condition one of the two
assumed Is contains cummulative NPV variables which is close to zero. IRR variable Approach obtained
according to this formula below : [10,11]

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 NPV
IRR  I ' (I " I ' )
NPV ' NPV ' .......................................................................................... (2)
determined :
I’ = first trial
II” = second trial
NPV’ = first cummulative NPV variable
NPV” = second cummulative NPV variable

Analysis of Sensitivity is implemented to figure out the sensitivity of this analysis result by
considering some probabilities of changing occurance in both cost calculation bases and project worthy, there
are four things need to consider in analyzing the sensitivity level of a project, [12] those are :
a. Cost Overrun detected.
b. There is a change in price comparation toward price level in general, for example decreasing price on
agricultural products.
c. Delayed time for the project execution.
d. Result deviation.
Therefore, this analysis is observed by any kind of conditions as followed [9]: (1) Normal Condition
( Stable Worth and Fixed Cost ); (2) Cost Condition increased up to 10% Stable Worth; (3) Cost Condition
increased up to 10% worth decreased up to 10% and (4) Cost Condition decreased up to 10% Worth increased
up to 10%.
The location of the analysis activity is areas around the subdistrict of Nglipar and vicinity, district of
Gunungkidul, Special Region of Yogyakarta.
Technical Quatitative datas are processed according to the determined formula as theory study of the
, research and technical analysis approach. The following result of this quantitative analysis and also all other
datas should be served as structured information compilation that possibly contributes to both conclusion and
recommendation. This analysis interpretation and data should be done descriptively and analytically.

III. RESULT AND DISCUSSION

The Project proper analysis is done based on the calculation of the project costs by applying NPV,
B/C Ratio and IRR variables, with current interest rate up to 12 %.
a. Planning on Budget of Project Costs
Based on early investment result, the amount of project costs is calculated in detail as followed:
1. Land Releasing Cost
It counts on dry field and its vegetation estimated value. Concerning on the land of Embung
Kedung Poh covers more or less 5.000 m, cost Rp.200.000.000,- released land and trees price
included
2. Constructing cost
Planning etc cost Rp 3.000.000.000,- all included
3. Operating and maintaining cost
It costs Rp. 60.000.000,- , 2% of constructing cost
b. Calculation On Worth
1. Fruit Garden Irrigation.
If assumed that needed cost for land cultivation, fertilization, prevention for pest and harvest is
up to 25% of harvesting value and productitvity crop is up to 3 tons per hectare cost Rp. 10.000.00
per kilograms, for once planting period:
Revenue of fruit gardening culture : (1.0 – 0.25) x (3 x 10.000 x 1000) = Rp 22.500.000.00 per
year per hectare.
Interplanting Palawija (beans, vegetables, etc) is predicted to produce 2 tons per hectares, sale
for Rp. 5.000,- per kilograms. While maintaining to harvesting costs are up to 35% of the
production. If assumed twice harvesting per year.
Revenue of palawija interplanting is : 2 x 2 x 1000 x 0.65 x Rp. 5000.00 = Rp. 13.000.000,-
for 5 Has land, so income for farmer is : 10 x Rp. (22.500.000.00 + 13.000.000.00) = Rp.
355.000.000.00. per year
2. Fishery

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 If assumed the volume of pool up to 1 m3, there were 10 fishes that made nett profit up to
Rp.30.000.00 harvesting per 8 months. If assumed the volume of embung up to 3.740 m3s, it
made profit up to: Rp. 112.200.000.00
3. Water Tour
If assumed the amount of visitor up to 10 persons/each day , parking tariff up to Rp.2.000.00.
Thus, the revenue up to Rp. 7.200.00.00 / per year

Tabel 7.1. Cost Components

No Cost and Worth Rate Note
Cost (Rp)
1 Constructing etc. 3.200.000.000
2 Operating and maintaining 60.000.000 ±2% of constructing cost

Worth
1 Agriculture 355.000.000
2 Fishery 112.200.000
3 Water Tour 7.200.000
Total revenue/year 474.400.000

Based on the formula above, Here are NPV, BCR, dan IRR final results as shown table 7.2. below:

Tabel 7.2. Perhitungan Analisis Kelayakan Ekonomi Embung Kedung Poh

No Discount Rate (i) NPV BCR EIRR
(IDR) (%)
1 8% 1.834.573.580 1.467
2 10% 1.019.098.513 1.267
3 12% 398.169.008 1.107 13.62
4 14% (83.367.534) 0.977
5 16% (463.340.090) 0.871

This analysis covers up NPV, BCR, EIRR calculation. Based on assumption 13] as followed:
• Discount rate up to 12%.
• Length time of the project up to 25 years.
• Length time of constructing up to 1 year.
• Optimum Land Developing estimated after 10 years, benefit increases during the term of the time in
linea.
• 1 US$ = Rp 10.000.00
• Bank Interest Rate up to 12.00%.
Based on that assumption, a cashflow should be made as shown on table 7.2. Here are obtained results below:
 NPV = Rp 398.169.008.00
 BCR = 1.107
 IRR = 13.62%
NPV variable determines the execution of the project whether fixed or unfixed. If NPV > 0 means a
project is fixed economically. According to Net Present Value (NPV) analysis with bank interest rate up to
12% resulted Rp 398.169.008.00 Based on NPV value calculation amounted Rp 398.169.008.00 then the
planning of Embung Kedung Poh Project stated fixed economically.
Benefit Cost Ratio is comparation between Present Worth Benefit divided to Present Worth Cost. The
B/C-R result of a project stated fixed economically b, if B/C-R value is more than 1 (one). This method is
implemented to evaluate the proper project of Lawang Batu Throughfare by comparing total worth against
total discounted cost to main year using interest discount rate during planned years.
by Benefit Cost Ratio (BCR) analysis, Present Worth (PW) method referred to current bank interest
to 12%, benefit cost ratio rate up to 1.107 means that the project of is fixed economically, due to its value
more than 1 (one).
Internal Rate of Return (EIRR) is based on discount rate determination, which all future profits
recently valued to certain discount rate is same with present value capital cost of total cost. According to EIRR
value calculation is by examining some interest rates. In purpose of EIRR, this calculation requires rate with
smallest positive NPV and rate with smallest negative NPV.

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 By applying Present Worth (PW) method, determined interest rate i1.=.12% , NPV1 = Rp 398.169.008
and interest rate i2.=.14% , NPV2 = -83.367.534. Based on the calculation, obtained EIRR up to 13.62%
considering EIRR value is bigger than market return interest rate up to 12 %, thus economically this project is
eligible to execute. The result is matched to the study on planning of Keureuto Dam project [4], Balangan Dam
[5], Cawang Kidau irrigation channals [6], Dian Regency Apartment [7], Lawang-BatuThroughfare [12], and
Longstorage project in District of Sidoharjo [13].
Next, applying sensitivity analysis in order to determine its economical condition if both price and
benefit are changed. This analysis is done against its changes up to 10%. Here is the result as shown below:
• Cost increased up to 10% but benefit stable:
NPV = Rp. 346.071.967 (positive)
BCR = 1.092
IRR = 13.41%
The purpose of this analysis is to determine its economic conditional if it both price and benefit are changed.
This analysis is done against its changes up to 10%. Here is the result as shown below:
• Cost stable but Benefit decreased up to 10%:
NPV = Rp.13.744.934 (negative)
BCR = 0.996
IRR = 11.94%
The purpose of this analysis is to determine its economic conditional if both price and benefit are changed.
This analysis is done against its changes up to 10%. Here is the result as shown below:
• Cost increased up to 10% but Benefit decreased up to 10%:
NPV = Rp 65.841.976 (negative)
BCR = 0.983
IRR = 11.73%

IV. CONCLUSION
The conclusion of this analysis implies that investment costs obtained amounted Rp. 3.200.000.000. Based on
Bank of Indonesia rate up to 12% obtained NPV value amounted Rp 398.169.008 An investment project is
eligible if NPV contains positive value (+) or bigger than zero, Benefit Cost Ratio (BCR) value is more than
1.0 and IRR Value of Project is more than interest rate conditional. Through this research obtained NPV
contains positive value and comparation between BCR up to 1.107 (more than one) to IRR value up to 13.62%
which this result is more than 12%. Therefore, the project of Embung Kedung Poh in District of Gunungkidul,
Special Region of Yogyakarta is eligible to execute.

UNKNOWLEDGEMENT
Our big thanks to Seia Cons who has already provided us with some facilities on the project of
Embung Kedung Poh in subDistrict of Nglipar, District of Gunungkidul, Special Region of Yogyakarta from
the beginning to the end of this study.

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