ConstructionPro Week, Volume: Construction Advisor Today - Issue: 89 - 01/07/2011

Our Project Has A Great WBS!

I recently heard, "Our project has a great WBS [work breakdown structure]! What could be wrong when the project has taken the time needed to do a comprehensive WBS?" Then, in the next moment, I heard something that I could not believe: "Yes, we have it already loaded into Primavera P6, and there are 50,000 elements at level 5 [the control account level]. We also have had matching cost codes issued from Finance and Accounting to match these WBS control accounts."

I was recently asked to help a project controls department move from a detailed project estimate, which totaled nearly $4.2 billion, into the project's kickoff and engineering/discovery phase. The contractor that had been there for more than a year and had generated the project proposal estimate was also tasked with developing the WBS. In their eyes, the WBS was nothing more than a fancy cost-coding system.

 

In 1996, Joel Koppelman of Oracle Primavera wrote in his book Earned Value Project Management that "the WBS provides an opportunity for all key functions on a project to view the project in the same manner, to speak a common project language for the first time." 

 

In a column that I wrote last year, I discussed the use of the Organization Breakdown Structure (OBS) interfaced with the WBS and gave a detailed example of the Responsibility Assignment Matrix (RAM). This RAM helps define single-point responsibilities and interfaces within the project. But, the WBS developed by this project's project controls team did not allow for a RAM because they never developed an OBS. Like many others who grew up with Primavera P3, they determined that some sort of Activity Coding would be used to show responsibility. This reliance on how we did it for such a long time has led to many more problems.

 

The WBS is defined as "a deliverable-oriented grouping of project elements, which organizes and defines the structure of the entire project. Each descending level represents an increasingly detailed definition of a project component," according to Earned Value Project Management, by Koppelman and his co-author, Quentin Fleming (1996). 

 

Furthermore, in a book entitled Effective Work Breakdown Structures, Gregory Haugan details "the 100 percent rule." "The 100 percent rule is the most important criterion in developing a WBS and in evaluating the decomposition logic. It is as follows: The next level decomposition of a WBS element (child level) must represent 100 percent of the work applicable to the next higher (parent) element."
In this case, it is important for the project controls team to use the WBS as it is meant to be used because the WBS design should provide the foundation for the estimate baseline, scope and change-management control, as well as the structure for Earned Value Reporting. Also, if the project is to take advantage of enterprise resource planning, it should have a common platform throughout the enterprise.

 

I have a good friend who is a very accomplished planning and project control consultant. He grudgingly will use P6 but much prefers P3 with its coded Activity IDs and Activity Code fields. We both recognize that P3's life is coming to an end. I contend that P3's end is not a bad thing but that P6 is a much better tool to use for today's project management. Because WBS is much more prominent, P6 is so much more valuable for enterprise project management.  

 

Given this conclusion, what could be wrong with this project's WBS? Let's take a look.
The Oracle Primavera P6 WBS was decomposed with the first level of the WBS having the following elements:

1. Building/Area
2. Systems
3. Project Management
4. Programs
5. Indirects
6. Permanent Plant Staffing LOE
7. Corporate Support
8. Life Cycle Ops
9. Site Master Plan/Facilities.

Yes, this remains unchanged, and because it is so confusing to those working the project, one or two project controls people are solely devoted to answering the questions of "Where is my budget?", "How much and when?", and "What do I charge to if I am doing this?"
And the nutshell version of the results is as follows:

  • Project team members working on a common deliverables charge to two or more WBS elements. 
  • Like work elements such, as Fixtures, Furniture and Equipment (FFE), are charging to 192 different WBS elements. A total budget for the FFE control account cannot be obtained with the WBS structure.
  • There are 50,000-plus WBS elements in the WBS (more than half a ream of paper is needed to print out the WBS), but there are only approximately 8,200 budgeted elements within the project estimates. Sometimes an activity at level 6 must tie to a budget estimate at level 3.
  • Because the owner of the WBS — or Responsible Manager as Oracle Primavera P6 calls the assigned OBS level — has not been used, a Global Activity Code is used instead. Because the project's WBS does not directly tie to the WBS owner, Oracle Primavera user permissions cannot be used to allow all participants to use one integrated project. The project had to be broken into nine different projects with each having all of the WBS elements in it. Then, each of the major project participants could work in their own project under a protected access mode.
  • Another master project was created, and the project controls team had to provide relationships to "Budget LOE Activities" from start and finish milestones placed in each of the other projects maintained by the project owners. These resulted in 17,000-plus new milestones in each participant's individual project.
  • Level 3 detailed activities from each of the project participants now must create relationships to the start and end milestones in their appropriate WBSs. This potentially can add more than 100,000 new relationships to the project when viewed with the others and the master project.
  • Lastly, the chances for making a mistake in these new activities and their resultant relationships present a potential for critical-path-method calculation errors and a falsely identified critical path.

 

In summary, a WBS that does not decompose the project into identifiable deliverables, abiding by the 100 percent rule and forming a RAM with the joining of the OBS in a responsible manager, may look like a time saver and be just what the Finance and Accounting department wants. But in taking a deeper look, this can cause a great deal of extra work for the life of the project. My guess is that this project is off and running, but the normal expected monitoring, control and reporting will be plagued with problems.

 

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