The quality and availability of Indonesia's infrastructure assets has always been the subject of interesting debate. In the past the policy regarding the management of national networks of roads and highways has been centrally programmed and managed by the Directorate General Bina Marga - Ministry of Public Works. Under this policy, road infrastructure is programmed and financed by the central government, where as the implementation of construction and rehabilitation or maintenance of roads and highway are delegated to local authorities. In exercising its authority, for decades the government of Indonesia has relied on traditional design-bid-build approach for delivery of road and highway construction and maintenance projects. Under this approach, program development and engineering were typically done by the central agency (DG-BM) whereas the biding and construction process will be carried out by the local authorities at provincial level. Due to limited financial as well management and technical capacity, the central government cannot keep up with th ever increasing road infrastructure demand. In 1999 the government established Law no 22 on Local Autonomy and Law no 23 on Financing Balance between Central and Local Government. Under these laws, local governments have more control over planning, budgeting and execution of construction works, including road infrastructure projects.
This paper discusses result of preliminary study on alternative delivery method for road projects in Indonesia. The study attempts to identify the potential application of design-build delivery method, as well as performance based contract to the current management structure of national road and highway networks. In particular, this study aims at investigating the impact of employing design-build project delivery method on the structure of organization as well as decentralization mechanism at both central and local authorities.