Introduction

In Cost Management, the WBS is the key reporting structure. The hierarcic structure provides the possibilty to identify cost issues at both a high level, while being able to drill down into more details.

The WBS follows the 100% rule, meaning that the structure must show the entire project scope, e.g. design, engineering, construction, management services.

Example of a WBS:

Work Package = Lowest level of the WBS

A work package is defined at the lowest level of the WBS where cost and duration can be estimated and managed.

Cost estimates, acitvities, project assignments, contract items can all be tied to the WBS, at the lowest level of the WBS In other words against the work package. Identifying what is the lowest level, work packages, is therefore crucial when defining the project's WBS. 

Omega's cost management solution has been used on both smaller projects (less than one million Euro), and projects with two-digits billions Euro investment. 

Depending on the level of detail the project owner will manage the project, the WBS can be deep, and consists of hundreds of work packages, or it can be just a couple of levels and a few work packages.

To identify if you have found the right level for the work packages, asks these control questions:

• Is it possible to aggregate the cost estimate to this level?
• Is it possilbe to time phase cost at this level?
• Is it possible to report actual cost at this level?
• Is it possible to report actual progress at this level?
• It is possible to report contractual commitments at this level?

When you have found the lowest level that you can answer "Yes" to all of these questions, you have most likely found the right level. But of course, make sure it is practical. 

Note: There are separate registers for "Estimates" (for further cost estimate breakdown), "Activities" (duration and progress) and "Contract Cost Items"  (commitments). These are independent of each other, and can contain several records for each WBS element / work package. So, in other words, at the work package level you integrate the cost and scheduling information, as well as contract cost information.  

The lowest level of the WBS is the level where cost, progress and schedule information is managed. That means that both the scheduling system (e.g. PrimaVera, MS Project), the accounting / ERP system (e.g. SAP) should be aligned at this level. In other words, accounting transactions and schedule activities, should be coded with a WBS code at the lowest level. Estimate items and contracts cost items in Omega 365 are also codes with WBS code at the lowest level.

Other best practices for a well-defined WBS.

• Each component should be well-defined and represent a distinct piece of work
• Ensure that the WBS maintains a clear and logical hierarchy, with each level representing a cohesive group of related activities. This promotes clarity, ease of understanding, and effective project management.
• Keep it manageable: Strike a balance between having enough detail to effectively manage the project and avoiding excessive decomposition that may lead to confusion or micromanagement.
• Validate with stakeholders: Share the WBS with relevant stakeholders, such as the project sponsor or client, and gather feedback to ensure alignment with expectations and requirements. This validation step helps identify any missed components or areas that need further refinement.
• Update as the project evolves: The WBS is not set in stone and should be flexible to accommodate changes throughout the project lifecycle. As new information becomes available or scope adjustments are made, update the WBS accordingly to reflect the most accurate representation of the project's work breakdown.

How to setup the WBS in Omega 365

You can read more about how to setup the WBS in the user guide: Setting up the WBS

In this video we give an introduction for how to setup the WBS in Omega 365.