Work Breakdown Structures for Projects, Programs, and Enterprises

WORK BREAKDOWN STRUCTURES FOR PROJECTS, PROGRAMS, AND ENTERPRISES

WORK BREAKDOWN STRUCTURES FOR PROJECTS, PROGRAMS, AND ENTERPRISES

Gregory T. Haugan, PMP

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Copyright © 2008 by Management Concepts, Inc.

All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by an information storage and retrieval system, without permission in writing from the publisher, except for brief quotations in review articles.

Printed in the United States of America

Library of Congress Cataloging-in-Publication Data

Haugan, Gregory T., 1931–

Work breakdown structures for projects, programs, and enterprises / Gregory T. Haugan.

        p. cm.

Revised edition of: Effective work breakdown structures / Gregory T. Haugan. Published in 2002.

ISBN 978-1-56726-228-5

1. Project management. 2. Work breakdown structure. I. Haugan, Gregory T., 1931–Effective work breakdown structures. II. Title.

HD69.P75H377 2008

658.4’04—dc22

2008018484

10          9          8          7          6          5          4          3          2          1

About the Author

Gregory T. Haugan, Ph.D., PMP, has been a vice president with GLH Incorporated for the past 20 years, specializing in project management consulting and training. He has more than 40 years experience as a consultant and as a government and private-sector official in the planning, scheduling, management, and operation of projects of all sizes, as well as in the development and implementation of project management systems.

Dr. Haugan is an expert in the application and implementation of project management systems. He participated in the early development of the work breakdown structure (WBS) and C/SCS (earned value) concepts with the U.S. Department of Defense and in the initial development of PERT cost software. He was the Martin Marietta representative on the Joint Army-Navy-NASA Committee developing the initial C/SCS concepts. He is particularly knowledgeable about scope management, cost management, and schedule management and about setting up new projects and preparing proposals. He continues to perform hands-on work as a consultant in these areas, and most of the examples in this book are from his projects.

Dr. Haugan has developed WBSs as a government employee and has specified their use on contracts. He has also developed WBSs as a government contractor in response to contract requirements, and he regards WBSs as fundamental building blocks in project management.

He has written four books published by Management Concepts: Effective Work Breakdown Structures (2002), Project Planning and Scheduling (2002), The Work Breakdown Structure in Government Contracting (2003), and Project Management Fundamentals (2006). Effective Work Breakdown Structures and Project Planning and Scheduling were translated into Japanese and Chinese in 2005.

Dr. Haugan received his Ph.D. in business administration from the American University, his MBA from St. Louis University, and his B.S. in mechanical engineering/aeronautical engineering from the Illinois Institute of Technology.

To my wife Susan, whose love and support made this book possible.

Contents

Preface

Acknowledgments

PART I WBS Fundamentals

Chapter 1 Introduction to the Work Breakdown Structure

Project Management Terms and Definitions

The Project Problem and Solution

The WBS in the Project Management Process

Background of the WBS Concept

Early U.S. Government Activities

Recent U.S. Government Activities

The Project Management Institute and the PMBOK® Guide

The WBS in the Government Sector versus the WBS in the Private Sector

Chapter 2 Work Breakdown Structure Fundamentals

The 100 Percent Rule

Anatomy of a WBS

Product Breakdown Elements

Service Breakdown Elements

Results Breakdown Elements—Generic Projects

Results Breakdown Elements—Information Technology Projects

Cross-Cutting Elements

Project Management Element

WBS Element Descriptions

WBS Dictionary

Control Account: EVMS

Work Packages

Appropriate Level of Detail

Use of the WBS to Develop Activities

The WBS and Activities

Activity Definition

Inputs versus Outputs—Resources versus Deliverables

Input versus Output Elements

Deliverables versus Intermediate Outputs

Numbering the WBS

Alternate Structure Concepts

Other Categorizations

Chapter 3 WBS Software and the WBS in Software

Software to Help Develop the WBS

WBS Chart Pro

Visio WBS Modeler

WBS Director

Software Using the WBS

Project Management Software

Cost-Estimating Software

Chapter 4 WBS Principles, Steps, and Checklist

WBS Principles

Product Projects

Service Projects

Results Projects—Generic or Information Technology

Common Principles

Steps in Developing a Project WBS

Checklist

PART II WBS Applications

Chapter 5 Project Management Methodology and Operations

Generic Methodology

Scope Management

Project Charter

Statement of Work

Time Management

Cost Management

Bottom-Up Cost Estimation

Collection of Historical Data

Chart of Accounts Linkages

Earned Value Management System Implementation

Budgeting and Work Authorizations

Communications

Procurement Management

Quality and Technical Performance Management

Human Resource Management

Team Building

Integrated Product Teams

Risk Management

Project Integration Management

Project Plan

Configuration Management

Systems Engineering

Chapter 6 Life Cycle Planning: Programs and Phases

Life Cycle Concepts

Generic Life Cycle

Generic Consumer Product Life Cycle

U.S. Department of Defense Life Cycle for Acquisition of Major Products

Typical Construction Project Life Cycle

Museum Program Life Cycle

Information Technology Program Life Cycle

U.S. Government Office of Management and Budget Life Cycle Planning

Life Cycle WBS Concepts

Phases within Projects

Chapter 7 Portfolio Management and a Standard WBS

Introduction

WBS Roles

Planning a Portfolio Management System

Establishing an Enterprise Standard WBS

Category A—Enterprise-Level WBS Standard

Category B—Family of Standard WBSs or Templates

Category C—Life Cycle Framework

Category D—Standard for WBS Development

Category E—No Existing Standard

Concept for a Standard Enterprise WBS

Outsourcing—WBS Requirements Placed on Contractors

Chapter 8 Government Performance Management and the WBS

Government Performance Management Policy: History and Status

Background of Government Performance Management

Government Policies for Performance Management

Industry Activities

Professional Association Activities

Program/Project Structure Requirements

Chapter 9 The WBS in Construction Management

Construction Classification Systems

Background

Construction Specifications Institute, CSI MasterFormat™

OmniClass™ Construction Classification System

Relation to a Project WBS

Highway Construction—Caltrans

Caltrans WBS Development

Purpose of the Caltrans Standard and Guide

Standard Template—Levels of the WBS

What Would a Generic, Universal Construction WBS Template Look Like?

Use of a WBS Template—A Case Study

GSA Enterprise WBS

WBS Elements

Application to an Existing Program—A Third Case Study

CSI MasterFormat™ 2004 Structure

PART III WBS Examples and Descriptions

Chapter 10 WBS Examples and Descriptions

1. Implementation of Enterprise Resource Planning—Version 1

2. Implementation of Enterprise Resource Planning—Version 2

3. Book-Writing Project

4. Dinner Party Project

5. Museum Project—Project Definition Phase

6. WBS for a Planning Phase

7. WBS for a Major Department of Energy Program

8. Information Technology Program

Project Initiation Stage

Design Stage

Implementation Stage

Closeout Stage

9. NASA Standard Base Maintenance Service Contract

10. Sewage Treatment Plant

11. The Rural Meat Company, ERP Implementation—Class Project

WBS Approach

12. Roaming To Win Project at National Wireless, Inc.—Class Project

WBS Analysis

Appendix A FAA Standard Work Breakdown Structure

Appendix B CSI Division List—1995 Version

Appendix C The OmniClass™ Development Committee

Appendix D OmniClass™ Tables Edition 1.0

Appendix E OmniClass™ 2004 and 1995 Divisions

Appendix F Sample Page OmniClass™ Table 22

Appendix G Caltrans WBS

Appendix H The International Infrastructure Project Work Breakdown Structure (WBS)

Bibliography

Index

Preface

The basic concept and use of the work breakdown structure (WBS) are fundamental in project management. When Effective Work Breakdown Structures was published in 2002 as part of the Project Management Essential Library series, that book received wide acclaim for its clear and logical explanation of the WBS concept and the seminal role of the WBS in project management. The 100 percent rule, as first postulated and explained in the 2002 book, has been widely adopted by project management practitioners and is now included as a key component of the latest revision of the Project Management Institute’s (PMI®) Practice Standard for Work Breakdown Structures.¹

The original book was followed by a related book in 2003, The Work Breakdown Structure in Government Contracting, which expanded upon the material presented in the first book with additional chapters focusing on the unique aspects of government contracting and government organizations.

This book, Work Breakdown Structures for Projects, Programs, and Enterprises, clarifies some of the advanced WBS concepts and addresses the unique concerns of the private sector. The book offers numerous examples, and it takes into account the latest materials published on the WBS by PMI and the U.S. Department of Defense.

Work Breakdown Structures for Projects, Programs, and Enterprises Work Breakdown Structures for Projects, Programs, and Enterprises contains three parts: Part I explains basic principles and concepts; Part II focuses on applications of WBS concepts; and Part III provides specific examples of WBSs along with related comments.

Key new material in this book appears in the following chapters:

Chapter 3: WBS Software and the WBS in Software—Describes the use of software to develop a WBS and the use of the WBS in project management software.

Chapter 7: Portfolio Management and a Standard WBS—Describes portfolio management, including the establishment of an enterprise standard WBS.

Chapter 9: The WBS in Construction Management—Describes the use of the WBS in construction management, including the use of the CSI MasterFormat™² and the OmniClass™³ classification systems and the development of a universal construction WBS template.

Chapter 5 includes enhanced sections about the use of the WBS in risk management, and Chapter 6 expands on life cycle management. New appendixes offer sample CSI MasterFormat™ and OmniClass™ breakdowns and additional WBSs used in the construction industry.

Gregory T. Haugan

Heathsville, Virginia

NOTES

1. Project Management Institute, Practice Standard for Work Breakdown Structures, 2nd ed. (Newtown Square, PA: Project Management Institute, 2006).

2. The Construction Specifications Institute, MasterFormat™ 2004 Edition. Online at http://www.csinet.org (accessed February 2008).

3. OCCS Development Committee Secretariat, OmniClass™—A Strategy 3. for Classifying the Built Environment, OCCS Development Committee. Online at http://www.omniclass.org/index.asp (accessed February 2008).

Acknowledgments

I’d like to acknowledge several people who helped me write this book by providing new material and advice: Paul Hewitt, Arnold Hill, Stanley Kirkwood, Jim Boughey, Jim Spiller, Stewart Meny, and Kris Athey. And as in my other books, thanks goes to my long-time friend, Ginger Levin, for her assistance and advice, and to Myra Strauss, Editorial Director at Management Concepts.

PART I

WBS Fundamentals

This book is divided into three parts. The first focuses on basic principles and concepts, the second focuses on applications of these WBS concepts, and the third focuses on specific examples.

Part I covers the fundamentals and principles of the WBS and other related material and ends with a summary of recommended steps in developing a WBS and a checklist. Part I includes the following chapters:

Chapter 1: Introduction to the Work Breakdown Structure

Chapter 2: Work Breakdown Structure Fundamentals

Chapter 3: WBS Software and the WBS in Software

Chapter 4: WBS Principles, Steps, and Checklist

CHAPTER 1

Introduction to the Work Breakdown Structure

This chapter provides basic information about the work breakdown structure (WBS), including the background of the concept and its place and role in the project management process. Specifically, the chapter first discusses project management terms and definitions and explains why—on a very basic level—a work breakdown is needed. The chapter next illustrates where the WBS fits in the overall project management process and gives a history of the evolution of the WBS concept. Finally, the chapter briefly describes the role of the WBS in the private and public sectors.

PROJECT MANAGEMENT TERMS AND DEFINITIONS

Project management as a field of study has a set of acknowledged terms and definitions. The following segment presents key project management terms used frequently in this book. Although these terms are in common usage in the project management field, they are presented for reference and establish a terminology baseline.

KEY PROJECT MANAGEMENT TERMS

Activity: A defined unit of work performed during the course of a project that is described using a verb. An activity normally has a work description and an expected duration, an expected cost, and expected resource requirements. Activities and tasks are terms that are often used interchangeably.

Control account (CA): Formerly known as a cost account in earned value management systems, the control account identifies a specific WBS work element at the intersection of the WBS and the organizational breakdown structure (OBS), where functional responsibility for the work in a work package is assigned and actual direct labor, material, and other direct cost data can be collected.

Cross-cutting element: A WBS element that relates to work performed in other branches of the WBS. For example, the work performed in project management relates to other work in the project yet has its own unique identity.

Deliverable: Any tangible, verifiable product, service, or result that must be produced to complete a project or part of a project. The term is often used narrowly to refer to hardware or equipment, a facility, software, data, or other items that are subject to approval by the project sponsor or customer.

End items: A general term that represents the hardware, services, equipment, facilities, data, and so on that are deliverable to the customer or that constitute a commitment on the part of the project manager to the customer.

Organizational breakdown structure (OBS): A graphic representation of the work of a project in terms of organizational units.

Portfolio: A collection of related projects or programs and other work that groups projects or programs together in order to support effective management of the total work effort in a way that meets strategic business or organizational objectives.

Program: A long-term undertaking consisting of a group of related projects that are managed in a harmonized way. Programs often include an element of ongoing work or work related to the program deliverables.

Project: A temporary endeavor undertaken to create a unique product, service, or result.

Project element: A component of the work to be performed in a project derived from the logical decomposition of the total work (top down) or synthesis of a logical grouping of required activities or work elements (bottom up).

Responsibility assignment matrix (RAM): A graphic structure that correlates the work required by a WBS element to the organizational division that is responsible for the assigned task. A RAM is created by intersecting the WBS with the OBS. The control account is established at the intersection.

Risk breakdown structure (RBS): A hierarchical arrangement of the actual risks that have been identified in a project, or a hierarchical framework presenting possible sources of risk, either generic or project-specific.

Subproject: A logical major component of a project. A subproject is usually a WBS element that can be managed as a semi-independent element of the project and is the responsibility of one person or organization.

Task: A generic term for the defined unit of effort on a project; often used interchangeably with activity, but could be a further breakdown of an activity. A task, like an activity, has an action component and is defined using a verb.

Work breakdown structure (WBS): A product-oriented family tree or grouping of project elements that organizes and defines the total work scope of the project. Each descending level represents an increasingly detailed definition of the project work.

WBS dictionary: A document that describes in brief narrative format what work is performed in each WBS element.

WBS element: An entry in the WBS that can be at any level and is described by a noun or a noun and an adjective.

WBS level: The relative rank of a WBS element in a WBS hierarchy. Customarily the top rank, the total project, is level 1.

Work element: Same as WBS element.

Work package: The lowest-level element in each branch of the WBS. A work package provides a logical basis for defining activities or assigning responsibility to a specific person or organization. Also, the work required to complete a specific job or process such as a report, a design, a documentation requirement or portion thereof, a piece of hardware, or a service.¹

Selected terms are illustrated in Figure 1-1.

FIGURE 1-1 Generic Work Breakdown Structure to Level 3

THE PROJECT PROBLEM AND SOLUTION

Starting a new project is like starting to write a book—you have an idea of what you want to do but are not sure how to start. Many writers, like many project planners and managers, find that outlining is frequently the most effective way to start writing.²

An outline is both a method for organizing material as well as a plan for the book itself. But when you start outlining a book, especially a book based on research, you realize there are many ways to do it. In general, you need to plan your research or data gathering; decide what goes in each chapter, including appendices; and take into account drafting chapters, getting reviews, and the other steps involved in reviewing proofs and publishing the document. A sample outline for a book is included in the form of a WBS in Chapter 10.

A frequently used analogy for any large project is the old question, How do you eat an elephant? The answer is, One bite at a time. So the first step in preparing an outline or planning a project is to start defining and categorizing the bites (activities). The bites are important because they are where the useful work is accomplished. For a project, brainstorming can help define the bites from the bottom up, or a process of decomposition can be used, starting from the top, that subdivides the elephant into major sections working downward, as shown in Figure 1-2. In either approach, the objective is to develop a structure of the work that needs to be done for your project. This structure is the topic of this book.

FIGURE 1-2 Elephant Breakdown Structure—Top Level

The parts of the elephant can clearly be broken down (or subdivided) further. For example, the head is made up of a face, ears, tusks, and trunk; the four legs could be individually identified; other body parts could also be identified, as could the tail and tuft. A WBS for a project follows the concept just shown. The WBS is an outline of the work; it is not the work itself. The work itself is the sum of the many activities that make up the project.

A WBS may be started either as an informal list of activities or in a very structured way, depending on the project and the constraints, and can end wherever the planner wants it to end. The goal is to have a useful framework that helps define and organize the work.

In developing an outline for a book, some things happen almost automatically, growing out of the discipline of the process. The first is that you limit the contents of the book. Preparing an outline forces you to define the topics, sections, chapters, and parts of the book. The same thing happens when you develop a WBS of the project. You consider assumptions and constraints often without focusing on them directly.

When you complete the outline of a book, you have also defined the scope of the book, especially when the outline is annotated. The same thing happens in a project. An annotated WBS becomes an initial scope description. This is logical and elementary: If the outline (WBS) addresses all the work, then all the items described in the outline delineate all the work or the scope of the project.

Developing the WBS is a four-step process:

Step 1. Specify the project objectives, focusing on the products, services, or results that are to be provided to the customer.

Step 2. Identify specifically the products, services, or results (deliverables or end items) to be provided to the customer to meet the project objectives.

Step 3. Identify other work that needs to be performed in the project, to make sure that 100 percent of the work is covered; identify work that (a) either cuts across deliverables or is common to the deliverables (cross-cutting elements), (b) represents intermediate outputs, or (c) complements the deliverables.

Step 4. Subdivide each of the work elements identified in the previous steps into successive logical subcategories until the complexity and dollar value of the elements become manageable units (work packages) for planning and control purposes.

A typical WBS is shown in Figure 1-3.

FIGURE 1-3 Typical WBS: Elephant Gourmet Project