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Project Management

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Project Management ­MGMT627
Broad Contents
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)
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.
Project Management ­MGMT627
Although a variety of Work Breakdown Structure (WBS) exist, the most common is the six-
level indented structure shown as Figure 22.1 below:
Figure 22.1: 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:
Figure 22.2: Work Breakdown Structure (WBS) for Objective Control and Evaluation
Project Management ­MGMT627
Responsibility matrix
Network scheduling
Risk analysis
Organizational structure
Coordination of objectives
Control (including contract administration)
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
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
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 4­6. 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).
Project Management ­MGMT627
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
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 2­4 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 self-
Figure 22.3: 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
Project Management ­MGMT627
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
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
Contains clearly defined start and end dates that are representative of physical
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
Table 22.1: Work Breakdown Structure (WBS) for New Plant Construction and Start-Up
Project Management ­MGMT627
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).
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.
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
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
Most Work Breakdown Structure (WBS) elements (at the lowest control level) range from
0.5 to 2.5 percent of the total project budget.
Project Management ­MGMT627
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 4­6 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 200­300
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
Project Management ­MGMT627
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.
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.
Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning