There is a common misconception that WBS decomposition is an easy task to perform. In the development of the 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 WBS, templates may not be appropriate. There are reasons for this.
• 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 is the basis for scheduling techniques such as the Arrow Diagramming Method and the Precedence Diagramming Method. At low levels of the WBS, the interdependencies between activities can become so complex that meaningful networks cannot be constructed.
One solution to the above problems 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.
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.
From a cost control point of view, cost analysis down to the fifth level is advantageous. However, it should be noted that the cost required to prepare cost analysis data to each lower level may 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.
The WBS can be subdivided into subobjectives with finer divisions of effort as we go lower into the WBS. By defining subobjectives, 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.
Work breakdown structures can be used to structure work for reaching such objectives as lowering cost, reducing absenteeism, improving morale, and lowering scrap factors. The lowest subdivision now becomes an end-item or subobjective, not necessarily a work package as described here. However, since we are describing project management, for the remainder of the text we will consider the lowest level as the work package.
Once the 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 WBS, and ultimately they risk cost control problems downstream. One important use of the 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.
Quite often work breakdown structures accompanying customer RFPs contain 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 the scope of effort must be reduced by eliminating activities from the WBS. 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.
Before we go on, there should be a brief discussion of the usefulness and applicability of the WBS system. Many companies and industries have been successful in managing programs without the use of work breakdown structures, especially on repetitive-type programs. As was the case with the SOW, there are also preparation guides for the WBS5:
• Develop the WBS structure by subdividing the total effort into discrete and logical subelements. Usually a program subdivides into projects, major systems, major subsystems, and various lower levels until a manageable-size element level is reached. Wide variations may occur, depending upon the type of effort (e.g., major systems development, support services, etc.). Include more than one cost center and more than one contractor if this reflects the actual situation.
• Check the proposed WBS and the contemplated efforts for completeness, compatibility, and continuity.
• Determine that the WBS satisfies both functional (engineering/manufacturing/test) and program/project (hardware, services, etc.) requirements, including recurring and nonrecurring costs.
• Check to determine if the WBS provides for logical subdivision of all project work.
• Establish assignment of responsibilities for all identified effort to specific organizations.
• Check the proposed WBS against the reporting requirements of the organizations involved.
There are also checklists that can be used in the preparation of the WBS6:
• Develop a preliminary WBS to not lower than the top three levels for solicitation purposes (or lower if deemed necessary for some special reason).
• Assure that the contractor is required to extend the preliminary WBS in response to the solicitation, to identify and structure all contractor work to be compatible with his organization and management system.
• Following negotiations, the CWBS included in the contract should not normally extend lower than the third level.
• Assure that the negotiated CWBS structure is compatible with reporting requirements.
• Assure that the negotiated CWBS is compatible with the contractor's organization and management system.
5. Source: Handbook for Preparation of Work Breakdown Structures, NHB5610.1, National Aeronautics and Space Administration, February 1975.
• Review the CWBS elements to ensure correlation with:
• The specification tree
• Contract line items
• End-items of the contract
• Data items required
• Work statement tasks
• Configuration management requirements
• Define CWBS elements down to the level where such definitions are meaningful and necessary for management purposes (WBS dictionary).
• Specify reporting requirements for selected CWBS elements if variations from standard reporting requirements are desired.
• Assure that the CWBS covers measurable effort, level of effort, apportioned effort, and subcontracts, if applicable.
• Assure that the total costs at a particular level will equal the sum of the costs of the constituent elements at the next lower level.
On simple projects, the WBS can be constructed as a "tree diagram" (see Figure 11-4) or according to the logic flow. In Figure 11-4, the tree diagram can follow the work or even the organizational structure of the company (i.e., division, department, section, unit). The second method is to create a logic flow (see Figure 12-21) and cluster certain elements to represent tasks and projects. In the tree method, lower-level functional units may be assigned to one, and only one, work element, whereas in the logic flow method the lower-level functional units may serve several WBS elements.
Was this article helpful?
What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.