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Construction Project Planning: A Methodology for Effectively Managing Cost and Scheduling

Using the Work Breakdown Structure - or WBS - will help to safeguard construction's bottom line.

Winter 2012
In any construction project, completion within budget is a - if not the - top priority. Yet the road to occupancy of a large project can be highly complex and at times even rocky. Therefore, construction teams look for tools that will best help communicate and form linkages among the myriad aspects of the job, identifying critical points throughout the process that might endanger the end goal. One of the most effective tools is the use of the Work Breakdown Structure (WBS), a standardized system that visually divides the scope of work into manageable chunks. The approach is a sort of Dewey Decimal System that categorizes building elements from initial site work through the entire construction process down to the final details of installation.

WBS gives project teams both a deeper understanding of the overall work required and a way to spotlight problems before they become too costly. It links estimates, budgets, schedules, and cost control through a common language. When executed properly and consistently across several projects, WBS generates historical data that can ultimately benefit owners by providing their projects' teams with valuable price comparisons and future predictions. The construction process is improved in these three key areas - communication, linkages, and cost comparisons - making WBS a worthwhile component in the planning of any major construction project, so that it meets the ultimate goal of delivery within budget.

Communicating with a Common Language
The notion of WBS and its inherent language is common to engineering and construction teams. Project managers can apply WBS to many types of projects, but there are primarily two: facility construction projects and process-based projects. Standardized into 16 divisions by the Construction Specifications Institute (CSI), the CSI format is a good start for facility construction projects and through which the WBS language can be easily understood. Alternatively, ASTM International offers UNIFORMAT, where project functions are organized according to the major components common to most facilities. Both formats provide subcontractors with extensive detail, down to purchasing every nut, bolt, and screw.

Although it is more challenging for a project manager to apply a WBS to process-based projects, because each type of industry has its way of describing functions and making calculations, it can be achieved with effort. For instance, when focus is placed on the higher levels of the WBS divisions, including construction cost and schedule sequence, the organization of deliverables and sub-deliverables allows cost accounts to be defined within the organizational structure. Also, budget allocations and scheduling can then be more easily made and communicated.

When a WBS is done properly, useful data can be quickly extracted, such as construction and installation cost summaries for life cycle cost analysis. When it includes sufficient detail, tracking and cost control of subcontractors through a schedule of values can also be achieved.

For example, consider the processing plant owner who was attempting to derive the depreciation cost of processing equipment from a highly detailed, 400-line report of equipment estimates. The project manager, who had the same information in a WBS, was able to easily generate a tailored report to help calculate the equipment's depreciation value for the owner's tax accountant.

Linking Cost and Schedule

One of the purposes of a WBS is to track construction costs. Through the flexibility of its common language and by way of encoded line items, data can be assembled and exported into a variety of essential reports.

Connecting all estimates and budgets to schedule for maximum cost control is the most important function of a WBS, which allows project managers to view smaller, manageable cost packages, making it easier to control the budget overall. While the owner may have a single bottom line number in mind, the project team internally uses costs at various levels to check for any problems that may arise.

By looking at the code of accounts within the WBS, cost deviations can be found for major construction functions, such as with steel and concrete purchases. By organizing each function into small, clearly defined parts, a WBS makes it easier to resolve cost deviations without analyzing from the bottom line up. Deviations of quality can also be detected and quickly addressed based on the smaller packages that a WBS provides.

Controlling "scope creep" and its cost implications is another effective function of a WBS. If an owner starts out with a small front-end design job and later incorporates phased funding for the project, problems can arise. For example, if a WBS doesn't reflect which funds were allocated for which element of the project, expense tracking is difficult to determine accurately, nor can project evolution be tracked. With an accurate WBS, the owner can see the exact cost allocated to a specific element during each funding phase.

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