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This weekend while playing with my daughter, I am turning my computer goggling on the anything could be use for my 2,500 paper topic. I am goggling for any “hint” which I think could give me direction, a direction to observe EVM project management observed from Sya’riah law.

The most hint I found mostly talking on sya’riah financing laws. So I think I want to share this article with you, but please see this from professional perspective with the spirit to find the value for our benefit.

The first question is “Why Sya’riah”?

The flow of funds from Middle Eastern countries shows no signs of receding, and much of this money is invested in compliance with Sya’riah law, which forbids the paying of interest and restricts the range of activities that can be invested in. The flow of funds from Muslim countries is estimated to be somewhere in the region of $300 – $400 billion annually, growing at a rate of some 15% annually. With the oil price currently at about $70 a barrel, this global flow of funds seems set to continue (1)

Along with that, there where a number Sya’riah instrument growth in the financing sector. The strong different between conventional financing that Sya’riah not allow interest, usury.

One the most well-know syariah financial instrument is Sukuk. Base on definition of Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Sukuk is “Certificates of equal value representing after closing subscription, receipt of the value of the certificates and putting it to use as planned, common title to shares and rights in tangible assets, usufructs and services, or equity of a given project or equity of a special investment activity” (2)

The are a several type of Sukuk, they are:
Mudharabah Sukuk,
Istisna’ Sukuk,
Musyakarah Sukuk (Joint venture), etc.

I will not go for long discussion those type of Sukuk, but the point raise up here is most those financial instrument become more popular to financing project within China, England, Europe, and US by middle eastern funding.

Below picture is an example of scheme of Sukuk Istisna’ on financing project at Pertamina(3).
I think I can start narrowing the topic for my 2,500 paper start from “ the blue arrow” in the picture.
Citation (3)

If you see “blue arrow” in the picture, there is an area to research in Sya’riah investment, especially in project management, EPC contractor.
I have a thought, in the future there will be a requirement in how managing project EPC contractor within in Sya’riah financing environment, ... or probably will be a demand for “ Syariah compliance project management”... and I still have a “thought” EVM is the one which could comply with it. Why...? I have 2 reasons.
The first, Sya’riah is prohibiting usury, interest. EV defined as what you physically got for what you actually spent, the value of the work accomplished (4).
If Owner applying EV, the contractor will get the payment soon after the physical they got. This approach could prevent/avoid contractor to put interest in their tender proposal; because they don’t have to taking a risk of loosing their money value. IMHO, So it is mean EV align with Sya’riah spirit ,..no interest.

The second, EV, by using same definition as above (4) In Sya’riah we prohibit to delay payment salary of our worker/servant/or our contractor. As per been told by propeth Muhammad,” "Give payment of your worker/slave/servant before their sweat getting dry off, and old them the value (payment) while they are working,”(story from Baihaqi)(5)

B/R, Farid Maloni

Citation list from:
(1), Current trends in Shariah property investment, Rics Reaserch,www.rics.org, oct 2006
(2) http://www.financeinislam.com/article/8/1/546
(3). Sukuk Al Istisna’a Scheme for Balongan Project- Case Study,Pertamina, September, 2006. www.alhudacibe.com/.../Sukuk/Sukuk%20al%20Istisna%20Case%20Study.pdf
(4)Max Wideman Dictionary, p.211 (Indonesia language version, Generasi Info Media.
(5) http://www.rahima.or.id/index.php?option=com_content&view=article&id=421%3Aal-arham-edisi-14-a-hak-hak-pekerja-rumah-tangga-dalam-islam&catid=19%3Aal-arham&Itemid=151&lang=en