Work Breakdown Structure-Project Managment-Handouts, Lecture notes of Project Management

Download Work Breakdown Structure-Project Managment-Handouts and more Lecture notes Project Management in PDF only on Docsity! Project Management –MGMT627 VU © Copyright Virtual University of Pakistan 151 LESSON 22 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. docsity.com Project Management –MGMT627 VU © Copyright Virtual University of Pakistan 152 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 docsity.com Project Management –MGMT627 VU © Copyright Virtual University of Pakistan 155 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. Table 22.1: Work Breakdown Structure (WBS) for New Plant Construction and Start-Up docsity.com Project Management –MGMT627 VU © Copyright Virtual University of Pakistan 156 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. docsity.com Project Management –MGMT627 VU © Copyright Virtual University of Pakistan 157 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 docsity.com