Ujang Subagja et al., International Journal of Emerging Trends in Engineering Research, 11(11), November 2023, 350 – 356 350 ABSTRACT Cost is always associated with complexity and risk. Project that has high complexity increases the associated risks along with the costs. The article takes case study of a state-owned energy company, XYZ that builds electricity transmission projects around Indonesia. Transmission project has high complexity since it involves various expertise of contractors and subcontractors. Using subcontractors in a transmission project is a common thing and it poses many risks associated with the chain of contractors and her subcontractors. Indonesia is surrounded with variety of topology such as forests, mountains, rural areas, and islands, has variety of risks associated with them. The article proposes the use of ISO 31000 risk assessment method to identify dan mitigate all possible risks along with further budgeting policy. Budgeting policy is needed to assist the project owner to assess the scope of work of each work-breakdown task within the chain of contractors/subcontractors. By learning all costs within each task, project owner can develop effective cost measures that can be applied in various project conditions. Key words: Project Risk and Budget Management, Electricity transmission system project, Chain of Contractors/ Subcontractors, ISO 31000 risk assessment method, Budgeting policy. 1. INTRODUCTION Budget optimalisation is a mandatory program that every project owner plans and executes. Although it sounds trivial, the budget optimalisation process is not easy, especially dealing with the high-risk projects. The article takes case study of a state-owned energy company, XYZ, that builds electricity transmission system around Indonesia area and involves variety expertise of contractors along with its subcontractors. Transmission projects have high complexity and associated risks with them, so those risks need to be shared amongst contractors and subcontractors. One of the common risks of transmission projects relates to budget plans and execution. The common risk within budgeting relates to poor planning, lack of project framework, longer duration of the project, poor quality of work, miscommunication amongst contractors and so on. The risks increase along with the use of chain contractor(s) and subcontractors. The use of chain of contractor and subcontractors is unavoidable thing for transmission construction project since it has many objectives need to be accomplished such as: limited budgets and duration of project, high complexity of transmission system construction, and availability of qualified contractors/subcontractors on the sites during specific time. Project owner needs to ensure the use of budget to cover all potential risks associated with the project. In 2021, XYZ’s annual report shows that the achievement rate of entire project has reached 79.74%, with more improvements compared to previous years. Although it shows some improvements, XYZ’s management has paid special attention to the use of budgets that exceed expectations. The article examines the use of the ISO 31000 risk assessment method to assist budget management, to identify and propose budget preventive measures to assist project owners to lower project risks. XYZ corporate policy has required all project owners to pay special attention to category risks: high, very high and extreme. Based on ISO 31000 method, all project owners should develop budget preventive and mitigation plan along with risks preventive measures. 2. THEORETICAL FRAMEWORK 2.1. Project Risk. A project is always associated with uncertainty. The more uncertainty of a project, the more risks associated with the project. Project management assumes a high degree of certainty and levels of complexity sufficiently low that can be buffered by adding time to schedules and money to budgets and keep projects economically viable [1]. Wideman defines several definitions of a risk as: [2] 1. Unrecognized, unmanaged, or ignored (by default). 2. Recognized but no action taken (absorbed as a matter of policy). 3. Avoided (by taking appropriate steps). 4. Reduced (by an alternative approach). 5. Shared (with others, eg. By joint venture). Budget Optimalization using ISO 31000 Risk Assessment Method Ujang Subagja 1 , Gunawan Wang 2 1 PT PLN (Persero) Pusdiklat UPDL Jakarta, Indonesia, e-mail: ujang.subagja@pln.co.id. 2 Information System Management Department, BINUS Graduate Program, Master of Information System Management, Bina Nusantara University, Jakarta 11480. E-mail: gwang@binus.edu. Received Date: October 1, 2023 Accepted Date: October 25, 2023 Published Date : November 07, 2023 ISSN 2347 - 3983 Volume 11. No.11, November 2023 International Journal of Emerging Trends in Engineering Research Available Online at http://www.warse.org/IJETER/static/pdf/file/ijeter0511112023.pdf https://doi.org/10.30534/ijeter/2023/0511112023