83R-

13

ORGANIZATI
ONALBREAKDOWN
STRUCTUREANDRESPONSIBI
LI
TY
ASSIGNMENTMATRIX
 AACE® International Recommended Practice No. 83R-13

ORGANIZATIONAL BREAKDOWN STRUCTURE AND

RESPONSIBILITY ASSIGNMENT MATRIX
TCM Framework: 7.1 – Project Scope and Execution Strategy Development
8.1 – Project Control Plan Implementation
11.2 – People and Performance Management

Rev. May 1, 2014

Note: As AACE International Recommended Practices evolve over time, please refer to web.aacei.org for the latest
revisions.

Any terms found in AACE Recommended Practice 10S-90, Cost Engineering Terminology, supersede terms defined in
other AACE work products, including but not limited to, other recommended practices, the Total Cost Management
Framework, and Skills & Knowledge of Cost Engineering.

Contributors:
Disclaimer: The content provided by the contributors to this recommended practice is their own and does not necessarily
reflect that of their employers, unless otherwise stated.

Marlene M. Hyde, CCP EVP (Primary Contributor) Kimberly A. Hunter, EVP

Robert Loop, EVP PSP (Technical Advisor) Dan Melamed, CCP EVP
James Dozier, EVP

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This document is copyrighted by AACE International and may not be reproduced without permission. Organizations may obtain permission
to reproduce a limited number of copies by entering into a license agreement. For information please contact [email protected]
AACE® International Recommended Practice No. 83R-13
ORGANIZATIONAL BREAKDOWN STRUCTURE AND
RESPONSIBILITY ASSIGNMENT MATRIX
TCM Framework: 7.1 – Project Scope and Execution Strategy Development
8.1 – Project Control Plan Implementation
11.2 – People and Performance Management

May 1, 2014

TABLE OF CONTENTS

Table of Contents ..........................................................................................................................................................1

Introduction ...................................................................................................................................................................1
Recommended Practice .................................................................................................................................................1
Terminology within the RP ........................................................................................................................................1
Organization Breakdown Structure (OBS) Types .......................................................................................................2
Responsibility Assignment Matrix (RAM) ..................................................................................................................3
Security Issues ...........................................................................................................................................................6
References .....................................................................................................................................................................6
Contributors...................................................................................................................................................................7

INTRODUCTION

This recommended practice (RP) describes the purpose, management, and control of an organizational breakdown
structure (OBS) and responsibility assignment matrix (RAM).

This RP provides guidance regarding the use of an OBS and RAM on projects. This RP defines the purposes of and
typical examples for the OBS and RAM.

The intent of the RP is to document what most practitioners would consider to be good practices that can be relied
on and that they would recommend be considered for use where applicable. The intended audience is total cost
management professionals who are developing an OBS and RAM.

This RP is aligned with the Total Cost Management Framework, as well as the American National Standards
Institute (ANSI) Electronics Industries Alliance (EIA) - 748 Earned Value Management Systems (EVMS) guidelines.
(Guidelines 2, 3, 5, and 9.)

RECOMMENDED PRACTICE

Terminology within the RP

ORGANIZATION BREAKDOWN STRUCTURE (OBS) – A hierarchical relationship of the organization, including

subcontractors, responsible for managing a designated scope of work within the work breakdown structure (WBS).

RESPONSIBILITY ASSIGNMENT MATRIX (RAM) – Depicts the intersection of the WBS and the OBS. The OBS relates
the work breakdown structure (WBS) element to the organization and the named individual who is responsible for
the assigned scope of a control account.

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The OBS describes the organizational structure and how the organizations relate to each other. It is established as
part of the initial project planning and is necessary for the successful integration of a project’s scope, schedule, and
budget. The OBS identifies all the project’s key managers and may include the contractor’s project team and
subcontractors. The OBS is related to the WBS to ensure that all personnel are identified that are responsible to
plan, manage and control the project.

Organization Breakdown Structure (OBS) Types

Companies have different organizational structures and the OBS for a given project can be designed to
accommodate any of the following structures. For instance:
• Functional organization: This structure is quite common. Individuals are assigned to work according to a
function such as engineering design or information services. Individuals within these groups can be
assigned to support different projects but they remain part of the functional organization.

• Client-based organization: A common example of this type of organization is where an engineering

company is organized to handle projects based on different types of clients: transportation, water,
energy, and government for example. Organizations may also be structured along geographic lines, such
as North America, Latin America, Middle East and North Africa (MENA), etc. however, the OBS structure
must hierarchically decompose down to the control account level to allow for identification of a
responsible party for WBS for EVM purposes.

• Dedicated project/program organization: A project or program manager is assigned to a large project or

program and is given a budget, scope, and schedule. The manager hires and manages the human
resources required for the project or program.

• Matrix organization: In this type of an organization, the project team member remains a member of their
functional organization, but is assigned to a specific project, and is given assignments by the project
manager rather than by the functional manager. Control account managers (CAMs) on a project can also
fulfill a role as functional managers.

The OBS is a hierarchical breakdown of the project organization. The organization is established for the identified
units of work. The OBS defines who manages the resources while the WBS is product-oriented. At a high level, the
OBS gives a broad snapshot of the types of resources that are required.

An organizational breakdown structure can be as simple or complex as the project requires to adequately define
the organization. Below are two examples of an OBS for a design project, with one being horizontal and the other
vertical. The OBS identifies the roles and the person associated with each role.

Utilities
P. Griggs
Civil Dept.
P. Kelly
Earthwork
Project Manager S. Jones
R. Lowe
Structural Dept. Concrete
T. Kelly J. Smith
Figure 1 – Project or Matrix Organization

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Design Manager
J. Fisher

Arch. Design Mech. Design Elec. Design

R. Webb S. Detrick J. Fox
Figure 2 – Functional Organization

Other projects may be more complex and may span across several sites and groups. An example of the
OBS/organization chart for a complex project is as follows:

Company

Site 1 Site 2 Site X

Group 1 Group 2

Sub-Group 1 Sub-Group 2 User 2 User 3

User 1 Business Unit

Team

Figure 3 – Example of a Complex OBS

Responsibility Assignment Matrix (RAM)

The RAM is used to define the framework for assigning work responsibilities. The OBS defines the organizational
elements to which the WBS will be assigned but it is not the framework for assigning work. Previous examples
have shown the higher level OBS assignments. At the lower levels of the OBS, the intersection with the WBS
designates control accounts, and is used for work management and cost collection as shown in the figure below.

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Work Breakdown Structure Project

Warehouse Storage Loading

Building Racks Equipment

Site Work Foundations Structure HVAC

Organization Breakdown Structure

Spread
Gradewalls
Footers
Construction

Work
Civil

Package
Construction

CONTROL ACCOUNT

Scope Development Work Package: scope description

Procurement
Contractor
EPC

Scope Development/Procurement Planning Responsibility: contractor, discipline, lead person, etc.

Project Team

Cost Estimating and Budgeting Budget: costs

Resource Planning Resources: labor hours, material quantities, etc.

Engineering

Schedule Planning and Development Schedule: network activities

Owner

Figure 4 – (TCM Figure 8.1-1) Intersection of the OBS with the WBS

The RAM identifies the person who is responsible for the work, regardless of who actually performs the work. The
RAM displays the lowest level where the WBS and the OBS intersect. The integration of the WBS and OBS identifies
specific responsibility for project tasks. In the example below, an “X” appears at the intersection of the WBS task
and the OBS manager who is responsible for that task. This defines the specific department that is responsible for
the work.

Responsibility Assignment Matrix Software Hardware and Tooling

Design Test Integrate Design Test Integrate Manuf.
Company Department Manager 1.1 1.2 1.3 2.1 2.2 2.3 2.4
ACME Software Finch X
LAUNCH Hardware Ortega X
CORP. Testing Haggerty X X
Integration Johnson X X
Production Simon X
Figure 5 – Example of a RAM

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A RAM may be further defined and developed into a type of chart called a RACI Chart, which indicates the
individuals on a team who are responsible (R), accountable (A), consulted (C), and informed (I) regarding identified
project deliverables. An example is shown in Figure 6. Note that only the “R” designation in the chart below
represents the CAM who is responsible for the work.

JOB TITLES: Prog.Mgr Proj.Mgr Proj.Ctrl Engineer ES&H Architect

WBS ELEMENTS Ken S. John P. Julie O. David J. Cathy J. Subcontr.
1.0 Program Mgmt
1.1 Strategic Planning R C I
1.2 Project staffing A R I
1.3 Reports & analysis I A R C
2.0 Conceptual Design A C R
2.1 Design criteria A R C C I
2.2 Budget & schedule A R
2.3 Design mgmt. R C I
2.4 Technical input A R I C
2.5 Develop design A I C I R
Figure 6 – RACI Chart to Show Type of Responsibility
Legend: R (Responsible); A (Accountable); C (Consulted); and I (Informed).

Costs may also be included in the RAM. This is often found in EVM systems and is called a monetized RAM. This
document identifies the budget for which each control account manager is responsible. This document is used by
project managers (PM) and CAMs to further define the scope of the CAM’s responsibilities.

If the monetary amount is considered too large for an individual CAM to manage, additional CAMs may be
assigned to cover that scope. Alternatively, if the monetary amount is considered too small, scope items may be
consolidated under existing CAMs. The goal is to balance the work scope and budget with the abilities of the CAMs.

The design of both the OBS and RAM should allow for the implementation of earned value systems on projects or
programs. Figure 7 is an example of a monetized RAM:

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Control
Control Account
WBS Account Control Account Name Org Budget
Manager
Number
1.2.1 1.2.1 Program Management James Cash 1010 1,837,384
1.2.2.1 1.2.2.1 Initial System Design Jay Freidman 1070 2,138,500
1.2.2.2 1.2.2.2 Systems Design Support John Stone 1070 2,517,996
1.3.1 1.3.1 Acceptance Test Planning Dan Sanchez 107I 1,400,297
1.3.2 1.3.2 Environmental Tests Mitzi Oishi 107I 474,987
1.3.3 1.3.3 Mock-ups Mitzi Oishi 107I 410,087
1.3.4 1.3.4 Test & Evaluation Support Mitzi Oishi 107I 348,944
1.4.1 1.4.1.1 Training Services Mary Cohen 103A 1,586,991
1.4.3 1.4.3 Facilities Steve Lewis 103A 1,364,819
1.5.1 1.5.1 Engineering / Technical Pubs Randy Ayoub 102A 577,021
1.5.2 1.5.2 Management Data Randy Ayoub 102A 269,291

Total - Distributed Budget 12,926,317

Management Reserve Marsha Johnson 1010 1,342,685

Total - Contract Budget Base 14,269,002

Figure 7 – Monetized RAM

Security Issues

An issue may arise from the use of the OBS in cost and scheduling software to designate security access privileges.
Such software typically allows anyone represented by an OBS designation superior to another OBS to access their
project records. The OBS structure should consider allowable security clearances when making the OBS
assignments. A superior OBS position should have equal or greater security clearance than all subordinate OBS
positions.

REFERENCES

1. AACE International Recommended Practice No. 10S-90 “Cost Engineering Terminology”, AACE International,
Morgantown, WV, 2007
2. H. L. Stephenson, Ed., Total Cost Management Framework: An Integrated Approach to Portfolio, Program and
Project Management, 2nd ed., Morgantown, WV: AACE International, Latest revision.
3. NDIA PMSC Earned Value Management Systems Intent Guide August 2012 Edition, National Defense Industrial
Association.
4. “Earned Value Project Management”, Quentin W. Fleming a Joel M. Koppelman, Project Management
Institute 1996.
5. Practice Standard for Earned Value Management 2nd Edition, 2011, Project Management Institute.
6. AACE International, Recommended Practice 75R-13, Schedule and Cost Reserves within the Framework of ANSI
EIA-748, AACE International, Morgantown, WV. (latest revision)
7. AACE International, Recommended Practice 38R-06, Documenting the Schedule Basis, AACE International,
Morgantown, WV. (latest revision)

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CONTRIBUTORS

Disclaimer: The content provided by the contributors to this recommended practice is their own and does not
necessarily reflect that of their employers, unless otherwise stated.

Marlene M. Hyde, CCP EVP (Primary Contributor)

Robert Loop, EVP PSP (Technical Advisor)
James Dozier, EVP
Kimberly A. Hunter, EVP
Dan Melamed, CCP EVP

Copyright © AACE® International AACE® International Recommended Practices

Single user license only. Copying and networking prohibited.