Guest Post by John Ayers (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
There are numerous papers and documents on the internet regarding a Work Breakdown Structure (WBS). The question is how do you create one for a new project. This paper explains how.
Initial project planning is accomplished during the proposal phase. The request for proposal (RFP), statement of work (SOW), specification, terms and conditions and other information and instructions are the starting point for planning. The WBS is the central document for planning. It breaks down the scope of work into manageable WBS elements.
The key WBS elements are the control accounts (CA’s) and work packages (WP’s). The CA level is where costs and schedules are controlled for subordinate WP’s and reported to the customer. The WP is where the task is defined and work accomplished. WPs can only have one cost type. For example, labor, and material. The reason being each type has a different overhead markup which would be misleading if in the same WP.
The WBS includes major subcontractors, material procurement, and project management tasks. Once the WBS is complete, the schedule and staffing plans can be generated. At this point, the WBS, schedule and other project documents are preliminary and included into the proposal. These documents are finalized upon contract award. After contract award, the Project Manager authorizes work to commence as well as initial budgets.
The WBS is structured to reflect the contract deliverables but also must consider how costs will be collected. For example, if two company divisions are involved in the project, they will want their own WBS element to track and monitor their performance separately.
A concept is needed before a WBS can be generated. As an example, let’s say the RFP SOW requires development of a new gas generator turbine system. Figure 1 shows the concept for a gas turbine generator system.
Figure 2 shows the WBS for the Gas Turbine Generator System. The WBS was created based on the concept. Level 1 is the system. Level 2 (CA level) lists the major subassemblies of the system. Level 3 is the work package level. Level 4 is the activities level.
The compressor/turbine will be used as an example in this paper. Design and Build WPs are highlighted. Typically, a Test WP would be included but is not shown for simplicity. As shown, the Design WP has four activities. The Build WP has seven activities. The integrated master schedule (IMS) is based on WPs and activities. The accuracy and completeness of the IMS is dependent on the quality and thoroughness of the WBS. That is why the WBS is the central document for the project.
A WBS dictionary defines each WP. It is essential to achieve good project performance. The reason being, it includes the following information that documents the traceability from the proposal to the contract. It also defines the scope in detail for everyone on the project team to see to ensure there is good communications between each team member.
A WBS dictionary WP definition includes the following items:
- Proposal WP number
- BOE reference
- The proposal SOW paragraph
- WP charge number
- WPM name
- WP name
- WP task description to include:
- Task input
- Task definition
- EV technique
- Task output
Table 1 shows an example of a WBS dictionary for the Design WP. The proposal WBS number, proposal basis of estimate (BOE) number, proposal SOW paragraph number is shown in the template. The BOE is the cost estimating document for each WP but is out of scope of this paper. This information ties the WP dictionary back to the proposal to ensure they are consistent. The WP charge number is shown along with the title, WP manager, and WP definition. The task description includes everything needed to understand what is needed to start and end the task as well as a concise task description. It includes the earned value (EV) technique for the WP but is out of scope of this paper.
If you cannot write a brief and concise WP description definition, then you do not know what the WP entails. It forces you to understand what the scope of the WP is.
The WBS is the most important project document because other project documents like the IMS feed off it. The WBS starting point is the concept based on the deliverables as defined in the RFP SOW. When the WBS is being generated it must consider how costs will be collected.
A WBS dictionary is key to success because it defines the WP tasks which are accessible to all team members. As a result, the risk of poor communications amongst team members and the Project Manager is minimized due to the transparency.
Currently John is an author, writer and consultant. He authored a book entitled Project Risk Management. It went on sale on Amazon in August 2019. He authored a second book titled How to Get a Project Management Job: Future of Work. It is on sale on Amazon. The first book is a text book that includes all of the technical information you will need to become a Project Manager. The second book shows you how to get a Project Manager job. Between the two, you have the secret sauce to succeed. There are links to both books on his website.
He has presented numerous Webinars on project risk management to PMI. He writes columns on project risk management for CERM (certified enterprise risk management). John also writes blogs for APM (association for project management) in the UK. He has conducted a podcast on project risk management. John has published numerous papers on project risk management and project management on LinkedIn.
John earned a BS in Mechanical Engineering and MS in Engineering Management from Northeastern University. He has extensive experience with commercial and DOD companies. He is a member of PMI (Project Management Institute). John has managed numerous large high technical development programs worth in excessive of $100M. He has extensive subcontract management experience domestically and foreign. John has held a number of positions over his career including: Director of Programs; Director of Operations; Program Manager; Project Engineer; Engineering Manager; and Design Engineer. He has experience with: design; manufacturing; test; integration; subcontract management; contracts; project management; risk management; and quality control. John is a certified six sigma specialist and certified to level 2 EVM (earned value management). Go to his website to find links to his books on Amazon as well as numerous papers he has written. https://projectriskmanagement.info/