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Planning Aace International: Total Project Cost and Wbs Relationship

The document discusses the relationship between the work breakdown structure (WBS) and the cost breakdown structure (CBS) for project planning and budgeting. The WBS partitions total time effort into work packages while the CBS partitions total project costs into cost elements. The CBS catalogs all expected cost elements, the sum of which equals the total project budget. Ideally, the WBS exists within the CBS so that costs can be assigned to specific work activities. However, some costs like overhead may only appear in the CBS and not the WBS. Where costs and work activities coincide, a control account is created to track budget versus actual costs. Quality planning aims to achieve project objectives on time and within budget without disruption.

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Sucher Eolas
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169 views1 page

Planning Aace International: Total Project Cost and Wbs Relationship

The document discusses the relationship between the work breakdown structure (WBS) and the cost breakdown structure (CBS) for project planning and budgeting. The WBS partitions total time effort into work packages while the CBS partitions total project costs into cost elements. The CBS catalogs all expected cost elements, the sum of which equals the total project budget. Ideally, the WBS exists within the CBS so that costs can be assigned to specific work activities. However, some costs like overhead may only appear in the CBS and not the WBS. Where costs and work activities coincide, a control account is created to track budget versus actual costs. Quality planning aims to achieve project objectives on time and within budget without disruption.

Uploaded by

Sucher Eolas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PLANNING AACE INTERNATIONAL

TOTAL PROJECT COST AND WBS RELATIONSHIP

DIRECTS

INDIRECTS Labor Material Equipment


PHASES (1)

Conceptual $ $
$ WH $
Engineering

Detailed $ WH $ $ $
Engineering

Procurement $ WH $ $ $

Construction $ WH $ $ $

Startup $ WH $ $ $

Other (2)

Legend: The cost breakdown structure (CBS) is composed of all elements in the matrix for which dollars ($) are budgeted.
The total dollar value of all of these elements equals the project budget.
The work breakdown structure (WBS) is composed of those direct labor elements in the matrix for which work-
hours (WH) are budgeted and lend themselves to work progress measurement.

Footnotes: 1. Supervision above first level, staff, facilities, supplies, and services, etc.
2. Home office overhead, contingency reserve, profit, etc.

Figure 12.2—The Relationship Between WBS and CBS

Cost Planning and installed equipment, and expendable supplies. Some


Just as total time effort was partitioned, total cost must be combination of these are involved in each control account
partitioned as well. This may be done using a cost break- that appears on the integration of the WBS/CBS. The deci-
down structure (similar to the WBS mentioned earlier), sion as to the resources to be applied is primarily based on
which is merely a catalog of all cost elements expected to be experience and judgment, although specific undertakings
incurred, the sum of which equals the budget for the endeavor. may require other input as well. Every resource requirement
Ideally, this segmentation will parallel the time breakdown; in must be accounted for in the cost breakdown so that esti-
fact, the objective is to have the time breakdown exist within mates of costs for individual control accounts, as well as total
the cost breakdown. This, however, may not be possible since estimated costs, can be generated. Identifying resource
not all costs are directly related to a specific activity; i.e., they requirements is only a first step in the resource planning
may be overhead costs or general and administrative costs, process, since the resources also must be available in the
which will appear in the cost breakdown but not in the work quantities needed at the proper time. Thus, supporting
breakdown. Where costs and actions do coincide, a control resource plans will exist behind the total resource plan. In
account is created. The basics of determining costs of individ- most instances, certain resources will be identified as critical
ual accounts and the subject of budgeting are discussed in other to project success, and their management will be given par-
chapters. Figure 12.2 shows the relationship between a WBS ticular attention.
and a cost breakdown structure (CBS) for an engineering/pro-
curement/construction project. Quality Planning
The overall objective of planning is to achieve a high-quality
Resource Planning result on time and within budget. Quality objectives are met
Resources involved in an undertaking generally include per- if this is done without undue confusion or disruption. This
sonnel, support equipment and tools, permanent materials requires developing a quality plan that consists of the under-

12.4

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