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WORK BREAKDOWN STRUCTURE
Broad Contents
Introduction
Characteristics of various levels of Work Breakdown Structure
(WBS)
Characteristics of Work Package
Guidelines for Work Breakdown Structure (WBS) by Contractor
Criteria for Developing Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS) Decomposition Problems
Uses of Work Breakdown Structure (WBS)
22.1 Introduction:
In order to successfully accomplish both contract and corporate
objectives, a plan is required
that defines all effort to be expended, assigns responsibility
to a specially identified
organizational element, and establishes schedules and budgets
for the accomplishment of the
work. The preparation of this plan is the responsibility of the
program manager, who is assisted
by the program team assigned in accordance with program
management system directives. The
detailed planning is also established in accordance with company
budgeting policy before
contractual efforts are initiated.
Keeping this in view, in planning a project, the project manager
must structure the work into
small elements that are:
- Manageable, in
that specific authority and responsibility can be assigned
- Independent, or
with minimum interfacing with and dependence on other ongoing elements
- Integratable so
that the total package can be seen
- Measurable in
terms of progress
After project requirements definition, the first major step in
the planning process is the
development of the Work Breakdown Structure (WBS). A Work
Breakdown Structure (WBS)
is a product-oriented family tree subdivision of the hardware,
services, and data required to
produce the end product. The Work Breakdown Structure (WBS) is
structured in accordance
with the way the work will be performed and reflects the way in
which project costs and data
will be summarized and eventually reported. Preparation of the
Work Breakdown Structure
(WBS) also considers other areas that require structured data,
such as scheduling, configuration
management, contract funding, and technical performance
parameters. It is the single most
important element because it provides a common framework from
which:
- Total program
can be described as a summation of subdivided elements
- Planning can be
performed
- Costs and
budgets can be established
- Time, cost, and
performance can be tracked
- Objectives can
be linked to company resources in a logical manner
- Schedules and
status-reporting procedures can be established
- Network
construction and control planning can be initiated
- Responsibility
assignments for each element can be established
Note that the Work Breakdown Structure (WBS) acts as a vehicle
for breaking the work down
into smaller elements, thus providing a greater probability that
every major and minor activity
will be accounted for.
Although a variety of Work Breakdown Structure (WBS) exist, the
most common is the sixlevel
indented structure shown as Figure 22.1 below:
Six-Level Indented Structure
As the figure shows, Level 1 is the total program and is
composed of a set of projects. The
summation of the activities and costs associated with each
project must equal the total program.
Each project, however, can be broken down into tasks, where the
summation of all tasks equals
the summation of all projects, which, in turn, comprises the
total program. The reason for this
subdivision of effort is simply ease of control. Program
management therefore, becomes
synonymous with the integration of activities, and the project
manager acts as the integrator,
using the work breakdown structure as the common framework.
It is important that careful consideration must be given to the
design and development of the
Work Breakdown Structure (WBS). It can be used to provide the
basis for the following:
Work Breakdown Structure (WBS) for Objective Control and Evaluation
- Responsibility
matrix
- Network
scheduling
- Costing
- Risk analysis
- Organizational
structure
- Coordination of
objectives
- Control
(including contract administration)
22.2 Characteristics of Various Levels of the Work Breakdown
Structure (WBS):
As depicted in Figure 22.1 (above), the upper three levels of
the Work Breakdown Structure
(WBS) are normally specified by the customer (if part of a
Request for Proposal (RFP)/Request
for Quotation (RFQ) (i.e. RFP/RFQ) as the summary levels for
reporting purposes. The lower
levels are generated by the contractor for in-house control.
Each level serves a vital purpose:
Level 1 is generally used for the authorization and release of
all work, budgets are prepared at
level 2, and schedules are prepared at level 3. Certain
characteristics can now be generalized for
these levels:
• Firstly, The
top three levels of the Work Breakdown Structure (WBS) reflect integrated
efforts and should not be related to one specific department.
Effort required by departments
or sections should be defined in subtasks and work packages.
• The summation
of all elements in one level must be the sum of all work in the next lower
level.
• Each element of
work should be assigned to one and only one level of effort. For example,
the construction of the foundation of a house should be included
in one project (or task), not
extended over two or three. (At level 5, the work packages
should be identifiable and
homogeneous.)
• The level at
which the project is managed is generally called the work package level.
Actually, the work package can exist at any level below level
one.
• The Work
Breakdown Structure (WBS) must be accompanied by a description of the scope
of effort required, or else only those individuals who issue the
Work Breakdown Structure
(WBS) will have a complete understanding of what work has to be
accomplished. It is
common practice to reproduce the customer's statement of work as
the description for the
Work Breakdown Structure (WBS).
• It is often the
best policy for the project manager, regardless of his technical expertise, to
allow all of the line managers to assess the risks in the Work
Breakdown Structure (WBS).
After all, the line managers are usually the recognized experts
in the organization.
It is normally the duty of the project managers to manage at the
top three levels of the Work
Breakdown Structure (WBS) and they prefer to provide status
reports to management at these
levels also. Some companies are trying to standardize reporting
to management by requiring the
top three levels of the Work Breakdown Structure (WBS) to be the
same for every project, the
only differences being in levels 4–6. For companies with a great
deal of similarity among
projects, this approach has merit. For most companies, however,
the differences between
projects make it almost impossible to standardize the top levels
of the Work Breakdown
Structure (WBS).
As shown in the Figure 22.1 (above), the work package is the
critical level for managing a
Work Breakdown Structure (WBS). However, it is possible that the
actual management of the
work packages are supervised and performed by the line managers
with status reporting
provided to the project manager at higher levels of the Work
Breakdown Structure (WBS).
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To explain them further, work packages are natural subdivisions
of cost accounts and constitute
the basic building blocks used by the contractor in planning,
controlling, and measuring contract
performance. A work package is simply a low-level task or job
assignment. It describes the
work to be accomplished by a specific performing organization or
a group of cost centers and
serves as a vehicle for monitoring and reporting progress of
work. Documents that authorize
and assign work to a performing organization are designated by
various names throughout
industry.
Here, it is important to know what a work package is.
"Work package" is the generic term used
in the criteria to identify discrete tasks that have definable
end results. Ideal work
packages are
80 hours and less than 2–4 weeks. However, this may not be
possible on large projects.
It is not necessary that work package documentation contain
complete, stand-alone descriptions.
Supplemental documentation may augment the work package
descriptions. However, the work
package descriptions must permit cost account managers and work
package supervisors to
understand and clearly distinguish one work package effort from
another. In the review of work
package documentation, it may be necessary to obtain
explanations from personnel routinely
involved in the work, rather than requiring the work package
descriptions to be completely selfexplanatory.
The cost account intersection
The desirability of having short-term work packages is a key
feature from the standpoint of
evaluation accomplishment. This requirement is not intended to
force arbitrary cutoff points
simply to have short-term work packages. Work packages should be
natural subdivisions of
effort planned according to the way the work will be done.
However, when work packages are
relatively short, little or no assessment of work-in-process is
required and the evaluation of
status is possible mainly on the basis of work package
completions. The longer the work
packages, the more difficult and subjective the work-in-process
assessment becomes unless the
packages are subdivided by objective indicators such as discrete
milestones with pre-assigned
budget values or completion percentages.
Keeping this in view, in setting up the Work Breakdown Structure
(WBS), tasks should:
- Have clearly
defined start and end dates
- Be usable as a
communications tool in which results can be compared with expectations
- Be estimated on
"total" time duration, not when the task must start or end
- Be structured
so that a minimum of project office control and documentation (that is, forms) is necessary
22.3 Characteristics of Work Package:
In case of large projects, planning will be time phased at the
work package level of the Work
Breakdown Structure (WBS). The work package has the following
characteristics:
- Represents
units of work at the level where the work is performed
- Clearly
distinguishes one work package from all others assigned to a single functional group
- Contains
clearly defined start and end dates that are representative of physical accomplishment
- Specifies a
budget in terms of dollars, man-hours, or other measurable units
- Limits the work
to be performed to relatively short periods of time to minimize the work-in
- process effort
The following table (table 22.1) shows a simple Work Breakdown
Structure (WBS) with the
associated numbering system following the work breakdown. The
first number represents the
total program (in this case, it is represented by 01), the
second number represents the project,
and the third number identifies the task. Therefore, number
01-03-00 represents project 3 of
program 01, whereas 01-03-02 represents task 2 of project 3.
This type of numbering system is
not standard; each company may have its own system, depending on
how costs are to be
controlled.
Work Breakdown Structure (WBS) for New Plant Construction and Start-Up
By now we can say that the preparation of the work breakdown
structure is not easy. The Work
Breakdown Structure (WBS) is a communications tool, providing
detailed information to
different levels of management. If it does not contain enough
levels, then the integration of
activities may prove difficult. If too many levels exist, then
unproductive time will be made to
have the same number of levels for all projects, tasks, and so
on.
It is vital that each major work element should be considered by
itself. Remember, the Work
Breakdown Structure (WBS) establishes the number of required
networks for cost control.
In case of many programs, the customer establishes the Work
Breakdown Structure (WBS).
22.4 Guidelines for WBS by Contractor:
To explain this, we take the example of a contractor who is
required to develop a Work Breakdown
Structure (WBS). He must consider certain guidelines. A partial
list is as follows:
- Complexity and
technical requirements of the program (i.e., the statement of work)
- Program cost
- Time span of
the program
- Contractor's
resource requirements
- Contractor's
and customer's internal structure for management control and reporting
- Number of
subcontracts
Remember that applying these guidelines serves only to identify
the complexity of the program.
These data must then be subdivided and released, together with
detailed information, to the different
levels of the organization. The Work Breakdown Structure (WBS)
should follow specified criteria
because, although the program office performs preparation of the
Work Breakdown Structure
(WBS), the actual work is performed by the doers, not the
planners. Both the doers and the planners
must be in agreement as to what is expected.
22.5 Criteria for Developing Work Breakdown Structure (WBS):
Following is a sample listing of criteria for developing a Work
Breakdown Structure (WBS):
• The Work
Breakdown Structure (WBS) and work description should be easy to understand.
• All schedules
should follow the Work Breakdown Structure (WBS).
• No attempt
should be made to subdivide work arbitrarily to the lowest possible level. The
lowest level of work should not end up having a ridiculous cost
in comparison to other
efforts.
• Since scope of
effort can change during a program, every effort should be made to maintain
flexibility in the Work Breakdown Structure (WBS).
• The Work
Breakdown Structure (WBS) can act as a list of discrete and tangible milestones
so that everyone will know when the milestones were achieved.
• Level of the
Work Breakdown Structure (WBS) can reflect the "trust" you have in certain
line groups.
• Work Breakdown
Structure (WBS) can be used to segregate recurring from nonrecurring
costs.
• Most Work
Breakdown Structure (WBS) elements (at the lowest control level) range from
0.5 to 2.5 percent of the total project budget.
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22.6 Work Breakdown Structure (WBS) Decomposition Problems:
Misconceptions prevail with almost every thing. There is a
common misconception that the
Work Breakdown Structure (WBS) decomposition is an easy task to
perform. In the
development of the Work Breakdown Structure (WBS), the top three
levels or management
levels are usually roll-up levels.
Preparing templates at these levels is becoming common practice.
However, at levels 4–6 of the
Work Breakdown Structure (WBS), templates may not be
appropriate. There are the following
reasons for this:
• Firstly,
breaking the work down to extremely small and detailed work packages may require
the creation of hundreds or even thousands of cost accounts and
charge numbers. This could
increase the management, control, and reporting costs of these
small packages to a point
where the costs exceed the benefits. Although a typical work
package may be 200–300
hours and approximately two weeks in duration, consider the
impact on a large project,
which may have more than one million direct labor hours.
• Breaking the
work down to small work packages can provide accurate cost control if, and
only if, the line managers can determine the costs at this level
of detail. Line managers must
be given the right to tell project managers that costs
cannot
be determined at the requested
level of detail.
• The Work
Breakdown Structure (WBS) is the basis for scheduling techniques such as the
Arrow Diagramming Method and the Precedence Diagramming Method.
At low levels of
the Work Breakdown Structure (WBS), the interdependencies
between activities can
become so complex that meaningful networks cannot be
constructed.
To cater to the above-mentioned problems, one solution is to
create "hammock" activities,
which encompass several activities where exact cost
identification cannot or may not be
accurately determined. Some projects identify a "hammock"
activity called management support
(or project office), which includes overall project management,
data items, management
reserve, and possibly procurement. The advantage of this type of
hammock activity is that the
charge numbers are under the
direct
control of the project manager.
In addition to this, there is a common misconception that the
typical dimensions of a work
package are approximately 80 hours and less than two weeks to a
month. Although this may be
true on small projects, this would necessitate millions of work
packages on large jobs and this
may be impractical, even if line managers could control work
packages of this size.
Cost analysis down to the fifth level is advantageous, from a
cost control point of view.
However, it should be noted that the cost required to prepare
cost analysis data to each lower
level might increase exponentially, especially if the customer
requires data to be presented in a
specified format that is not part of the company's standard
operating procedures. The level-5
work packages are normally for in-house control only. Some
companies bill customers
separately for each level of cost reporting below level 3.
Another aspect is that the Work Breakdown Structure (WBS) can be
subdivided into sub
objectives with finer divisions of effort as we go lower into
the Work Breakdown Structure
(WBS). By defining sub objectives, we add greater understanding
and, it is hoped, clarity of
action for those individuals who will be required to complete
the objectives. Whenever work is
structured, understood, easily identifiable, and within the
capabilities of the individuals, there
will almost always exist a high degree of confidence that the
objective can be reached.
Also, the Work Breakdown Structure (WBS) can be used to
structure work for reaching such
objectives as lowering cost, reducing absenteeism, improving
morale, and lowering scrap
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factors. The lowest subdivision now becomes an end-item or
sub-objective, not necessarily a
work package as described here.
Since we are describing project management, therefore, for the
remainder of the text we will
consider the lowest level as the work package.
22.7 Uses of Work Breakdown Structure (WBS):
It is important to remember that once the Work Breakdown
Structure (WBS) is established and the
program is "kicked off," it becomes a very costly procedure to
either add or delete activities, or
change levels of reporting because of cost control. Many
companies do not give careful forethought
to the importance of a properly developed Work Breakdown
Structure (WBS), and ultimately they
risk cost control problems downstream. One important use of the
Work Breakdown Structure
(WBS) is that it serves as a cost control standard for any
future activities that may follow on or may
just be similar. One common mistake made by management is the
combining of direct support
activities with administrative activities. For example, the
department manager for manufacturing
engineering may be required to provide administrative support
(possibly by attending team
meetings) throughout the duration of the program. If the
administrative support is spread out over
each of the projects, a false picture is obtained as to the
actual hours needed to accomplish each
project in the program. If one of the projects should be
canceled, then the support man-hours for the
total program would be reduced when, in fact, the administrative
and support functions may be
constant, regardless of the number of projects and tasks.
It is quite often that the Work Breakdown Structure (WBS)
accompanying customer Request for
Proposals (RFPs), contains much more scope of effort as
specified by the statement of work than the
existing funding will support. This is done intentionally by the
customer in hopes that a contractor
may be willing to ''buy in." If the contractor's price exceeds
the customer's funding limitations, then
eliminating activities from the Work Breakdown Structure (WBS)
must reduce the scope of effort.
By developing a separate project for administrative and indirect
support activities, the customer can
easily modify his costs by eliminating the direct support
activities of the canceled effort.
Lastly, we should also discuss the usefulness and applicability
of the Work Breakdown Structure
(WBS) system. Many companies and industries have been successful
in managing programs without
the use of work breakdown structures, especially on
repetitive-type programs. |