LEGAL GOVERNANCE OF ABANDONED CONTRUCTION-IN-PROGRESS PUBLIC ASSETS

Abstract

Construction in Progress (Konstruksi Dalam Pengerjaan/KDP) is a significant issue in regional asset governance. From the perspective of governmental accounting, KDP should not be understood as a failed asset, but rather as a temporary status assigned to fixed assets that are still under construction or acquisition and are not yet ready for use. Legal and administrative issues arise when construction work remains unfinished, the contractor fails to perform its contractual obligations, or the contract is terminated, while the building or facility is urgently needed for public services and local government administration. In such circumstances, local governments face a dilemma: on the one hand, they cannot immediately reclassify KDP as fixed assets; on the other hand, they must not allow public assets to remain abandoned and unproductive.

This article examines the legal position of KDP, contractual issues in government construction projects, and legal strategies that may be pursued by local governments to safeguard public assets still recorded as KDP. The author argues that the resolution of problematic KDP must clearly distinguish between accounting issues, asset management issues, and contractual issues. Local governments should not use KDP status as a reason for inaction, but they must also avoid violating asset governance principles by changing asset status without a proper legal and administrative basis. The appropriate approach includes conducting an object audit, securing the asset administratively, physically, and legally, determining the contractual status, pursuing contractor liability where necessary, and reclassifying the asset only after the construction has been completed and is ready for use.