Toward Credible Capital Expenditure Estimation: Benchmarking to Risk-Based Integrated Cost and Schedule Estimation Approach

Cost overruns and schedule delays are persistent challenges in Indonesia’s downstream oil and gas projects, largely resulting from inaccurate capital expenditure (CAPEX) estimates that undermine budget reliability and investment credibility. This research aims to enhance estimation accuracy by developing a Risk-Based Integrated Cost and Schedule Estimation Model designed to strengthen the credibility of CAPEX projections during the investment proposal phase. The study applies a mixed-method approach, combining benchmarking against four international best practices—Project Management Institute (PMI), Association for the Advancement of Cost Engineering (AACE), National Aeronautics and Space Administration (NASA), and Government Accountability Office (GAO)—with qualitative validation through expert interviews and quantitative validation using Monte Carlo simulation on a test case project. The findings indicate that the existing estimation process achieves only 64% accuracy for cost and 52% for schedule performance compared to the proposed integrated model. Validation results demonstrate that the new model improves estimation accuracy within the AACE Class 3 range (–10% to –20% on the low side and +10% to +30% on the high side), with test case outcomes of +15% for cost variance and +0.6% for schedule variance. These results confirm the model’s effectiveness in enhancing project budget credibility and supporting more reliable investment decision-making. Overall, the Risk-Based Integrated Cost and Schedule Estimation Model provides a structured framework for integrating risk assessment with cost and schedule planning, facilitating the adoption of international best practices in Indonesia’s downstream oil and gas sector.