W2_APE_Funeral Cost in Jakarta


  1. Problem Definition

We are not living forever in this world, this is true fact. Based on available survey data[1] for Indonesian, the lifetime age is around 65 years in average. For Jakarta, recently the availability of funeral land will be a constraint and the cost for having funeral is expensive. Like or not, we have to consider it in family plan otherwise we end up with problems.

  Figure 1

Figure 1 Cemetery Complex

   2.   Identify the Feasible Alternative

There are two ways getting funeral today, either in common land buried method for area approximately 2 m2 or crematorium method. For family financial plan, I will try to compare in annual cost (A) based on present value (P) of basic funeral for a person having 35 years old now (year 2013) until 65 years ending time or year 2043 as simulation.

  1. Development of the Outcome for Alternative

Two parameters required for the calculation and they come from projection method using regression tool in excel program. They are inflation rate and interest rate from historical data[2], [3], [4] & [5] present in Table 1 below:

  Table 1

Table 1 Historical Bank Credit and Inflation Rate

The projection of these rates present in the following figures:

Figure 2 

Figure 2 Trend Line for Interest Rate with R^2 = 92%

 Figure 3

 Figure 3 Trend Line for Inflation Rate with R^2 = 47%

One note for Figure 3 since 47% is the best result coming from regression model which lead to maximum value of 4.45% within projection time taken as interest rate (while the interest give the projection value of 8.86%). Total rounded rate (i) comes from inflation and interest rate addition value is 14%. The basic cost of funeral methods as present value (P) taken in this calculation are five million IDR for land funeral method[6] and eight million IDR for crematorium method[7] per person without any maintenance cost.

The calculations based on references formula[8] & [9] present hereinafter:

 Figure 4 Figure 4 Funerals Annual Cost Projection

  1. Selection Criteria

The target of simulation is selecting an acceptable funeral cost in order to see if this cost fit with available family contingency plan.

  1. Analysis and Comparison of the Alternative

Average cost of both funeral methods is one million IDR per year. It shows that for having “dead” in Jakarta nowadays is not cheap considering 30 years projection time. For middle to minimum employee salary range this cost is not even in their daily planning. Probably the vertical land funeral method can be used as possible solution if really in the end there is no more option left.     

  1. Selection of the Preferred Alternative

The calculation shows that land funeral method has the lower annual cost compare to other method, and this could fit inside family planning.  

  1. Performance Monitoring and the Post Evaluation of Result

Inflation rate is the only parameter that required attention. It is important to check if assumption inflation rate taken into calculation still fit with actual condition during saving time period.

References

[1]sosbud.kompasiana.com. (2011). Umur Kita Ternyata Pendek. Retrieved from http://sosbud.kompasiana.com/2011/04/11/umur-kita-ternyata-pendek-53612.html

 [2]inflation.eu. (2013). Historic Inflation Rate Indonesia. Retrieved from http://www.inflation.eu/inflation-rates/indonesia/historic-inflation/cpi-inflation-indonesia.aspx.

 [3]elib.unikom.ac.id. (2012). Analisa Perbankan. Retrieved from http;//elib.unikom.ac.id/download.php?id=141958.

 [4]skalanews.com. (2011). Suku Bunga Kredit BNI Turun 0.5 Persen. Retrieved from http://skalanews.com/news/detail/101399/5/suku-bunga-kredit-bni-turun-0-5-persen.html.

 [5]Bank Indonesia. (2012). Suku Bunga Dasar Kredit. Retrieved from http://www.bi.go.id/web/id/Perbankan/Suku+Bunga+Dasar+Kredit/.

 [6]sellamarelly.wordpress.com. (2012). Ketika Biaya Kematian Diperhitungkan. Retrieved from http://sellamarelly.wordpress.com/2012/04/09/dilema-biaya-kematian/.

 [7]oasislestari.com. (2013). Pelayanan Kremasi Oasis Lestari. Retrieved from http://www.oasislestari.com/crematorium.php.

 [8]Kodoatie, Robert J. (1997). Analisis Ekonomi Teknik. Yogyakarta, Indonesia: Andi Offset.

 [9]Sullivan, William G., Wicks, Elin M., & C.Patrick, Koelling. (2012), Engineering Economy (15th Edition. New Jersey, United States: Prentice Hall.

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3 Comments

Filed under Arif P, Week 02

3 responses to “W2_APE_Funeral Cost in Jakarta

  1. Hi Pak Arif, Sorry, but as I cannot read the entire paper, I am not able to accept it for this week……. If you send me a copy of the word file, I can comment on it Friday and at least get it accepted to count for this week’s Earned Value….

    At least you have picked a VERY interesting topic and I am keen to see what you have done with it!!!

    BR, Dr. PDG, Shanghai, China

  2. arifpermana

    Dear DR Paul   Thank you for your kind attention. Please find the word file for your review   Regards, Arif Permana 

    ________________________________ From: Dr. Paul D. Giammalvo To: Simatupang AACE 2014 Cc: “simatupangaace2014@yahoogroups.com” ; “yanis@ptmc-apmx.com” Sent: Thursday, 5 September 2013 8:48 PM Subject: [simatupangaace2014] Re: [New post] W2_APE_Funeral Cost in Jakarta

      Hi Pak Arif, Sorry, but as I cannot read the entire paper, I am not able to accept it for this week…….  If you send me a copy of the word file, I can comment on it Friday and at least get it accepted to count for this week’s Earned Value….

    At least you have picked a VERY interesting topic and I am keen to see what you have done with it!!!

    BR, Dr. PDG, Shanghai, China

  3. AWESOME case study, Pak Arif!!! I LOVE it!!!

    Great case study and you not only followed our step by step approach perfectly, but also did a really professional job on your citations!!!

    Wow!!! Keep up the great work!!

    BR, Dr. PDG, Shanghai….

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