Impact of Project Delays on Financial Losses on the Green Economy
Dewi Nusraningrum
a
and Agus Jerry Suarjana Putra
b
Magiste donesia
Keywords: Construction License, Project Delays, Financial Loss, Facility Construction, Fishbone Diagram.
Abstract: The facility construction and land leasing projects often face various challenges that can cause delays,
ultimately significantly impacting costs and financial losses. The study analyses the impact of project delays
resulting in green economic losses that exceed the total initial investment cost. With a total investment of IDR
6,188,481,522, this project suffered significant losses, reaching IDR 8,095,928,364 due to various factors,
including operational disruptions due to non-fulfilment of licensing documents, additional licensing items,
and extension of work time. The method used is qualitative risk analysis. These findings emphasize the
importance of effective project management, especially permit fulfilment and schedule planning, to minimize
financial risks and ensure smooth project operations. This research provides important insights for project
managers facing similar future challenges.
1 INTRODUCTION
The project under study involves the construction of
facilities and land leases for 10 years, with a total
investment cost of IDR 6,188,481,522 in a subsidiary
of PT. Astra. However, this project experienced
several delays that caused various financial losses,
which amounted to Rp 8,095,928,364. This
construction project allocates IDR 4,799,592,633 for
the construction of facilities that are expected to
support project operations. In addition, there is a cost
of Rp 1,388,888,889 that has been allocated for land
lease for 10 years, which is an important part of the
project's operational sustainability. Delays in the
processing of licensing documents have caused the
assumption of operational losses for one year, with a
total loss of Rp 7,775,130,384 include official trips,
additional permits cost, overtime, and land. Overall,
the losses caused by the delay of this project far
exceeded the initial investment cost, with a total loss
of Rp 8,095,928,364. These losses illustrate the
importance of more effective project management,
especially in terms of fulfilling the right licensing and
scheduling documents so that the project can run as
planned and minimize potential losses (Egwim et al.,
2023; Elhusseiny et al., 2021; Fashina et al., 2021).
Project delays in the green economy can lead to
increased operational costs and significant financial
a
https://orcid.org/0000-0003-4386-2877
b
https://orcid.org/0009-0001-7747-6416
losses due to delays in the implementation of green
technologies and reduced economic benefits of
energy efficiency. Additional costs for licensing, rent,
and official travel as well as losses from suboptimal
use of resources will exacerbate the financial impact.
Therefore, effective time management in green
economy projects is essential to minimize additional
costs and ensure environmental and economic
benefits are achieved (Monteiro et al., 2020;
Montenegro et al., 2021; UNEP, 2010).
The objectives of this study are to identify the
causes of project delays by researching and
identifying the main factors that cause delays in
facility construction and land lease projects,
especially those related to the fulfilment of licensing
documents. The analysis method used is a fishbone
diagram so that it can be more in-depth and structured
in analysing the delay in licensing development
projects and their impact on costs and financial losses
(Gartlehner et al., 2017).
2 LITERATURE REVIEW
The theories that support this study include; Project
management includes the concept of planning,
organizing, controlling, and supervising a project to
Nusraningrum, D. and Putra, A. J. S.
Impact of Project Delays on Financial Losses on the Green Economy.
DOI: 10.5220/0013092200003956
Paper published under CC license (CC BY-NC-ND 4.0)
In Proceedings of the 7th International Conference on Finance, Economics, Management and IT Business (FEMIB 2025), pages 141-145
ISBN: 978-989-758-748-1; ISSN: 2184-5891
Proceedings Copyright © 2025 by SCITEPRESS – Science and Technology Publications, Lda.
141

achieve the goals that have been set (Divi & Kumar.P,
2017; Kumar et al., 2023). A focus on time, cost, and
quality management is often key in identifying and
reducing the risk of project delays (Moradi et al.,
2020). Risk management is used to identify, analyse,
and respond to risks that may occur during the
implementation of a project (Alsaadi &
Norhayatizakuan, 2021; Lin & Chen, 2021). This
approach helps in understanding how uncertainty in the
fulfilment of licensing documents and other external
factors can lead to delays and financial losses (Shibani
et al., 2022). Cost control is concerned with controlling
costs in a project to ensure that project costs remain
within the planned budget (Beste & Klakegg, 2022).
For project delay research, this theory helps in
analysing how changes in timing and licensing
requirements can affect budgets and cause cost
overruns (Nusraningrum & Priyono, 2018). Decision
theory is applied in decision-making processes
related to project management, especially in
situations of uncertainty and risk (Alsaadi &
Norhayatizakuan, 2021; Lin & Chen, 2021;
Sarmiento et al., 2017; Shibani et al., 2022). This
concept supports the analysis of how decisions related
to regulatory adjustments or permit fulfillment can
affect project sustainability and overall costs.
Whereas organizational behavior describes how
the behavior of individuals and groups within an
organization can affect project performance
(Colquitt, 2023). Managerial skills, team
coordination, and effective communication are
important elements that can impact project delays and
cost additions (Aung et al., 2023). Finally,
contingency understanding emphasizes the
importance of flexibility and adaptability in project
management (Demirkesen & Ozorhon, 2017; Herrera
et al., 2020; Kumar et al., 2023; Lalmi et al., 2021;
Nusraningrum et al., 2020; Wang & Chen, 2023).
This relates to how the project must adapt to changing
conditions, such as regulations or resource
constraints, to minimize the negative impact on costs
and schedules. By integrating these various theories,
research can offer more comprehensive insights into
the factors that contribute to project delays and how
their impacts can be managed or reduced.
3 METHODS
The design of this research is qualitative, the object
of research is one of the Branch Building
Construction projects of PT. Astra which is carried
out by a subsidiary located in Palembang experienced
delays in the processing of building permits. Data
analysis using the fishbone method is used for cause-
and-effect analysis (Gartlehner et al., 2017). Fishbone
diagrams help identify various causes that may result
in delays in exploring factors such as management,
resources, processes, and externalities. This method
allows a systematic approach to analysing complex
problems by grouping potential causes into
categories, such as man, methods, machines, and
materials. The category groupings used in this cause-
and-effect diagram were obtained from observations
carried out on the project under study. By
understanding the underlying causes of delays, more
effective solutions can be developed to reduce the
financial impact of delays by identifying areas that
need improvement.
4 RESULT AND ANALYSIS
Data on the cost of work, and investment cases
studied can be seen in the following table 1.
Table 1: Data on costs and investments in delays in
obtaining building permits.
Description Value (IDR) Note
Construction and
facility costs
4.799.592.633
Land Lease 1.388.888.889 10 years rent
Total 6.188.481.522
Table 1 expresses the total cost of the project, which
includes cost of construction and facilities.
Table 2. Losses delays of building permits processing.
Description Value (IDR) Information
Operational 7.775.130.384
Assumption of loss of 1 year,
if the location is closed due
to non-fulfillment of
licensing documents
Official
Trips
16.000.000
Total Calculation of Official
Trips Outside the Agenda
Addition of
Licensing
Items
155.000.000
There is an addition of
permit management items
due to regulatory adjustments
and because the building has
b
een erected firs
t
Working
time
10.909.091
Calculation of cost
assumptions due to
additional time spent in
management for 1 yea
r
Land Rental
Cost
138.888.889
Assumption of loss of 1 year,
if the location cannot be
maximize
d
Total 8.095.928.364
FEMIB 2025 - 7th International Conference on Finance, Economics, Management and IT Business
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Table 2 outlines the various costs related to the
project studied, namely operational losses, official
trips, additional fees for permit management,
overtime, and land rental.
Figure 1: Project Delay Fish Bone Diagram.
Figure 1 identifies the various factors that cause
project delays in the processing of building permits.
1. Man. The person in charge did not conduct
enough research regarding the item being
managed. In addition, there is a lack of
experience in managing permits, which
hinders the efficient completion of permits.
Differences in regulations and environments
in each region lead to difficulties in the
standards and procedures to be followed,
which contributes to delays.
2. Method. The requirements collection
methods that are being implemented are not
optimal, which leads to the necessary
information not being collected effectively.
The implementation of monitoring and
communication is ineffective. Monitoring
communication performance based on
information from consultants shared via
phone, WhatsApp, or email is also inadequate.
3. Machine. The communication process uses
media such as telephone, email, chat, and
online meetings. However, there are
challenges in getting information from
consultants when they are not online, which
slows down the process. The process of
collecting information from consultants does
not run optimally when communication occurs
offline, resulting in delays in decision-making.
4. Material. The implementation of
requirements collection is ineffective,
especially because requirements collection is
based on input from consultants and users on
site. In addition, the implementation of the
schedule is less effective, which contributes to
project delays.
Project delays usually require additional working
time for the workforce, whether in the form of
overtime or extending the term of the worker's
contract. This will increase the overall cost of labor
(Beste & Klakegg, 2022; Nusraningrum & Priyono,
2018; Sepasgozar et al., 2019). Delays in the project
schedule can cause rental equipment to be maintained
longer, or materials that have already been purchased
may need to be stored longer, incurring storage costs
and possible material damage. In some cases, delays
may require reapplying for permits or adjusting
existing permits, which will add to administrative
costs (Beste & Klakegg, 2022). However, changes in
regulations during the delay period may require
changes or renewals of permits, which adds to the
cost. If the delay violates the agreed licensing
deadline or has an impact on the fulfilment of certain
legal obligations, this may result in additional fines or
penalties to be paid. Project delays in the green
economy often led to spikes in additional costs, such
as for licensing and operations, as well as reducing
the economic benefits of implemented green
technologies. Efficiency in project time management
is key to reducing financial losses and ensuring that
investments in green solutions can provide optimal
returns (Al-Hamrani et al., 2021).
Delays can also lead to a loss of business
opportunities or potential revenue generated from the
use of completed projects. For example, a commercial
building that is overly completed cannot be leased or
used as planned, which reduces the revenue potential.
In the case of long delays, the price of materials and
other costs may increase over time, adding to the
greater financial burden than budgeted. All of the
above elements will contribute to an increase in the
total cost of the project, which can over budget (Beste
& Klakegg, 2022; Nusraningrum & Priyono, 2018).
This can affect the overall profitability of the project.
Delays that lead to increased costs can also damage
investor or other stakeholder confidence, which can
lead to long-term financial losses such as withdrawal
of investments or difficulty obtaining funding for
future projects. Thus, the delays in licensing
identified through fishbone diagrams are not only a
matter of time but also have a significant financial
impact on the total cost of the project, as well as
potentially causing long-term losses (Egwim et al.,
2023; Elhusseiny et al., 2021).
To evaluate the effectiveness of project
management in anticipating and dealing with delays,
it is necessary to conduct a comprehensive analysis of
project performance through key indicators such as
completion time compared to the planned schedule,
comparison of actual costs with the initial budget, and
Impact of Project Delays on Financial Losses on the Green Economy
143

the level of compliance with the risk planning that has
been set (Divi & Kumar.P, 2017; Moradi et al.,
2020). The use of methods such as variance analysis
can help identify deviations from the plan, while
project audits and post-project reviews can provide
in-depth insights into areas that need improvement,
particularly in risk management and cost control
(Guinness & Heathcote, 2022; Nusraningrum &
Priyono, 2018; Sarmiento et al., 2017). Project
scheduling should be more flexible and scenario-
based, with time buffers to anticipate possible delays
and periodically revise schedules based on actual
progress (Egwim et al., 2023; Fashina et al., 2021;
Sepasgozar et al., 2019). To address the risks in this
project, contingency planning involves ensuring
completeness and compliance with licensing
documents by allocating additional budgets and
establishing proactive communication with
authorities to avoid delays. To mitigate losses from
land leases, negotiate flexible contracts monitor land
use regularly, and prepare a reserve fund to cover
losses if the location is not fully used.
5 CONCLUSIONS
The factors that cause project delays in processing
building permits are weaknesses in human resource
management, data collection, communication
methods, use of tools and materials. Project delays in
the green economy can significantly increase
operational costs and financial losses, so efficient
time management is essential to minimize negative
impacts and maximize environmental and economic
benefits. Implications in the processing of building
permits is improving the skills and competencies of
the project management team. The adoption of more
advanced technologies for data collection and
analysis, such as cloud-based project management
systems or specialized software for permit
management. Re-evaluate the use of tools and
materials to ensure efficiency and reduce waste.
Corrective action should be focused on identifying
the specific causes of delays in each of the areas.
Further research on the role of human resource
management, communication, and the use of
technology in the efficiency of construction projects
will opens up opportunities for the development of
more effective and sustainable project management
models.
The limitation of this research focuses on internal
factors such as human resource management, data
collection methods, and the use of tools and materials
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