for Oil Storage Tanks:
A Gold Price Index Approach
FEATURED PAPER
By Kamal Fu’ad
Jakarta, Indonesia
ABSTRACT
This paper aims to identify the most reliable approach for forecasting oil storage tank maintenance project costs under economic uncertainty and to evaluate how such forecasts support planning, budgeting, procurement, and cost control in projectized operations. The research addresses three questions: which economic adjustment method provides the most reliable forecast, how economic volatility can be incorporated into maintenance cost estimates, and how improved estimation supports project and program management decisions. A combined methodology is applied, integrating non-compensatory and compensatory decision-making models with probabilistic analysis across multiple confidence levels. The findings demonstrate that the Gold Price Index is the most consistent and reliable escalation factor across both decision frameworks. Furthermore, the P75 confidence level is identified as the most defensible balance between cost efficiency and risk protection. The study concludes that integrating structured decision models with probabilistic methods improves forecasting reliability, supports more defensible Owner’s Estimates, strengthens contractor evaluation, and enhances cost control during project execution.
Keywords: Cost Estimation, Gold Price, Maintenance Projects, Projectized Operations, Storage Tanks.
INTRODUCTION
- National Oil Company Tank Storage Management
Indonesia’s oil and gas operates within one of the most geographically complex supply chains in the world. In line with that concern, the Global Gas Security Review states that “storage tanks function as critical buffering assets across the national energy system.”[1]
Figure 1. Oil Supply Chain in Indonesia [2]
Oil consumption in Indonesia remains consistently high, where Gasoline and Gasoil dominate the consumption profile. Indonesian Government states that “Under such conditions, storage tanks are not passive assets but essential operational components that ensure continuity between supply and demand across regions”.[3]
Figure 2. Indonesia’s Oil Consumption by 2000 – 2023[4]
The American Petroleum Institute emphasizes that “storage tanks must be properly maintained to ensure safe and reliable operation throughout their service life, particularly through periodic inspection and integrity management practices.”[5] When asset integrity declines, the consequences extend beyond individual facilities and may disrupt broader supply chain performance.[6]
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Author’s note: This paper was originally prepared during a 6-month long Graduate-Level Competency Development/Capacity Building Program developed by PT Mitrata Citragraha and led by Dr. Paul D. Giammalvo to prepare candidates for AACE CCP or other Certifications. https://build-project-management-competency.com/our-faqs/.
How to cite this paper: Fu’ad, K. (2026). Toward more reliable maintenance cost estimates for oil storage tanks: A gold price index approach.; PM World Journal, Vol. XV, Issue VI, June. Available online at https://pmworldjournal.com/wp-content/uploads/2026/06/pmwj165-Jun2026-Fuad-More-Reliable-Oil-Storage-Tank-Maintenance-Cost-Estimates.pdf
About the Author
Kamal Fu’ad
Jakarta, Indonesia
Kamal Fu’ad is an engineer with over ten years of professional experience in the oil and gas sector. Currently, he works as a project inspector at the national oil company of Indonesia. Several projects have been completed in various downstream oil and gas projects, including fuel terminal, LPG terminal, and related infrastructure, with a focus on asset integrity management. He holds a bachelor’s degree in physics engineering from Sepuluh Nopember Institute of Technology. He is attending a distance learning mentoring course, under the tutorage of Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS, GPM-m, Senior Technical Advisor at PT Mitratata Citragraha to attain Certified Cost Professional (CCP) certification from AACE International.
Kamal lives in Jakarta, Indonesia, and can be contacted at: kamaldanfuad@gmail.com
[1] Global Gas Security Review. https://www.iea.org/reports/global-gas-security-review-2023
[2] By Author
[3] Ministry of Energy and Mineral Resources. (2021). Regulation of the Minister of Energy and Mineral Resources No. 32 of 2021 on Technical Inspection and Safety of Oil and Gas Installations.
[4] Oil final consumption by product, Indonesia 2000-2023. (2024). Indonesia – Countries & Regions – IEA. IEA. https://www.iea.org/countries/indonesia/oil
[5] American Petroleum Institute. (2014). Tank inspection, repair, alteration, and reconstruction (API Standard 653, 5th ed.). American Petroleum Institute.
[6] GFMAM. (2016). The value of asset management to an organization. Global Forum on Maintenance and Asset Management.
