The Work Breakdown Structure IT Acquisition Template 5
Nature of This Template This template does not provide a standard form to be filled in. Instead, it provides guidance for the use of a standard approach for preparing work breakdown structures. A work breakdown structure (WBS) depicts the full scope of the project, including its phases and tasks. Since the great majority of projects are unique, there is no one-size-fits-all WBS that can be used. However, the same general approach can be used to prepare a WBS for any project. The material below describes how to create a WBS and how to follow established standards for labeling its various parts. A WBS is prepared for the two or three best alternative solutions. They will depict the scope and expected cost of each alternative. A WBS breaks the work down into task or work packages (we will refer to them as tasks). These tasks must be analyzed to determine the resources that will be required to successfully perform them. In preparing a WBS, it is very important to obtain good estimates of labor hours, labor costs, and the cost of other resources for the tasks in each phase. This makes it possible to make an informed estimate of the probable cost of a proposed solution. The cost information also serves as inputs into the Template 7 economic analysis software. The economic analysis enables the IPT to compare the two or three best alternative solutions from a financial standpoint. The initial WBSes–in this case, one for each of the final alternative solutions–will be subject to detailed Assessment and critique by the integrated project team (IPT) members, with representatives from the business and technical areas affected by the project. The team will examine such things as:
• Accuracy of the WBS in depicting the solution • Suitability and logic of the work breakdown • Duplicate or overlapping tasks • Omission of a needed task • Unavailability of a critical resource • Misuse of resources likely to cause conflicts and other problems • Task costs and total solution cost
This detailed examination generally results in revisions and improvements in the WBSes until each is believed to accurately and effectively encompass the complete project and its tasks and the resources required. Although this examination will identify risks and a WBS may be modified because of this, each WBS will be subjected to a formal risk analysis (Template 6). A financial comparison will then be performed using the economic analysis worksheets provided in Template 7. The results of the economic analysis serve as inputs to a “comparative analysis” (Template 8) to determine which of the final alternatives is the best solution to the problem. It is the WBS for the best solution, along with its supporting documentation, that becomes a major source of information for the preparation of the Gantt chart, which is a detailed project schedule that shows staffing and other resource usage over the life of the project.
There is a standard method of numerically coding the WBS boxes (phases, tasks, etc.) and these are the same codes that will be used to identify the phases and other parts of the WBS in the Gantt chart (project schedule) prepared with Microsoft Project. Microsoft Project actually assigns the WBS numeric codes in the Gantt chart when the WBS information is entered properly (how to do this is explained in instructions provided by Microsoft Corp.). Having the same codes in the WBS and the Gantt chart enable ongoing coordination between the phases and tasks shown in the project management software and the phases and tasks shown in the related WBS. A change in one requires a change in the other. Creating a Work Breakdown Structure (WBS) A WBS is prepared for the two or three best candidate solutions to the problem. The process of preparing the WBS forces the integrated project team (IPT) to take a close look at each alternative solution because it must define all of the tasks required for its implementation and estimate the labor and resources costs of each task. As the WBS is being prepared, it will reveal risks that need to be avoided or otherwise mitigated. For example, it may be found that the project costs more than would be acceptable to management, that it requires skill that likely to be unavailable, that it assumes data from other are complete and accurate when they are neither, that certain tasks overlap, and so on. If the alternative solution is to proceed to the next step, the risks identified need to be avoided, transferred, worked around, mitigated through various strategies, and in some cases simply accepted because they will have a low impact if they occur. This information developed in preparing the WBSes make it possible to later compare and evaluate (in Template 8) the relative costs, benefits, and risks associated with each alternative solution. A WBS takes the form of a tree structure, as shown in the graphic below, Figure 5.1. Notice that the alternative solution to which the WBS applies is stated above the WBS. At the very top of the WBS structure is the name of the project (or possible project), over the box labeled “1.0.” The objective now is to break the project down into smaller and smaller parts until the parts are equivalent to work packages or tasks that can be assigned to individuals or teams. The WBS development process identifies work packages/tasks that can be performed independent of other work packages/tasks. Usually, the WBS included by the buyer in the request for proposal is limited to only the top three levels. The contractor usually further breaks down the WBS to lower levels for project management purposes. In Figure 5.1, we see a relatively simple WBS. The first breakdown of the project is into three phases, which are given names as well as identified with the WBS numerical codes of 1.1, 1.2, and 1.3. Then each of these phases is broken down to the next lower level. For phase 1.1, a further breakdown is necessary before the work is at a task level. For phases 1.2 and 1.3, the next breakdown is at the task level. This process of breaking down the work until it is at a manageable task level is called “decomposition.” In a large project, the tree structure can be rather complex. A WBS for a small project, however, would be more along the lines of the example shown in Figure 5.1. Note that the tasks are listed under each phase, with a milestone indicating the end of each phase. It is an established standard that each task name begins with an action verb.
Design Input Screens Design Input Processing
Design Matrix Update Design Analysis Options Design Reporting Options Milestone
Conduct System Test Conduct Integration Test Conduct Training Transition to Operations Milestone
Program Input System Program Matrix Update Program Analysis Options Program Reporting Options Milestone
WBS for Alternative #2: Customize Off-the-Shelf Financial Analysis Software System
1.0 Modernize Financial
Analysis System Labor Hours: 440 Cost: $31700
Other Resources Cost: $5000
1.1 1.2 1.3 Design Phase Programming Phase Testing & Transition Phase
Labor Hours: 140 Cost: $9800 Labor Hours: 120 Cost: $8400 Labor Hours: 180 Cost: $13500
Other Resources Cost: $500 Other Resources Cost: $3000 Other Resources Cost: $1500
1.1.1 1.1.2 Design Part 1 Design Part 2
Labor Hours: 60 Cost: $4800 Labor Hours: 80 Cost: $5000
Other Resources Cost: $250 Other Resources Cost: $250
What Is Excluded from the WBS for the RFP? It is possible to create a WBS that includes both the pre-solicitation planning activities as well as the implementation project that will be conducted with the aid of an IT services contractor. The pre- solicitation activities are generally funded differently from the post-solicitation project to be conducted with the IT services contractor. The post solicitation project must generally be approved via a business case or acquisition strategy document submitted to an executive committee. The cost justified in the business case/acquisition strategy document will be based on the cost of a WBS developed for post solicitation project. Accordingly, the WBS described below is limited to the project that will be conducted with the aid of an IT services contractor. This WBS will be included in the request for proposals that will be issued to IT services contractors. The WBS developed for the proposed project focuses on activities that will take place within the project rather than other activities that may be related to the project. Here are examples of activities that are normally excluded from this WBS:
• The preliminary study of the problem that led to the project • Development of the request for proposal • Activities related to selecting the contractor • Activities related to monitoring the contractor’s performance
Excluding these activities from the WBS does not mean their costs are ignored. Rather, they will be accounted for in other budgets. For example, the cost of the preliminary study and the cost of developing the RFP may come from the budget of the department(s) sponsoring the RFP. The cost of the contract officer who will be a monitor of the project will probably be charged to the overhead of the buyer organization. These types of activities and costs are managed and controlled elsewhere and not from within the project. Accordingly, they are not included in the WBS. Of course, the buyer organization’s chief financial officer will include all of these costs when calculating the total cost of solving the problem. The financial focus of the WBS, though, is the cost of the implementation project. The WBS prepared by the buyer organization may be agreed to without change by the selected contractor or agreed to only after negotiated changes in the WBS have been made. The contractor may provide valuable recommendations for improving the project that it is agreed should be in the WBS and the contract. The agreed-upon WBS is called the contract WBS. Costing WBS Tasks The WBS is costed at the task level and then summed for each phase and the complete project. Each task of the WBS requires resources to accomplish it. Each task is analyzed to determine how many labor hours will be required to complete the work, the cost of those specific hours, and any other resource costs associated with performing the task. Once the labor hours, their cost, and the cost of the other resources required to perform each task are estimated, the cost figures summed for the phases and the entire project and then entered into the WBS diagram as shown in the Figure 5.1 graphic above. As indicated, the costs at the task/work package level are rolled up into the phases and then up to the project as a whole. In Figure 5.1, only the rolled-up figures are shown. The total number of labor hours
and their cost and the cost of other resources are shown in the top box of the WBS. Of course, there must be separate documentation of the basis for the cost figures. The costs need to include both “direct” and “indirect” costs. For example, there is usually an “overhead rate” that applies to the contractor’s direct charges for labor. There are various ways of recording the supporting information for WBS costs. There can be separate online files. In addition, the project management software will maintain detailed cost figures, though it will not indicate how those figures were estimated. Organizations vary regarding the amount of cost information they place in a WBS graphic. Sometimes no cost is shown in the WBS graphic and all of the cost information is contained in an accompanying document. This means a second document must be referred to for any cost information. In other cases, just summary cost figures are provided, as in our example. The summary figures are often enough for some executives, though they are free to access and review the detailed cost information. An important point: The tasks shown in the WBS are intended to be all of the tasks necessary to conduct the project. If all of the tasks are not identified and all of their resource requirements not determined, the project will face problems of inadequate resources, incorrect schedule, and jeopardized objectives. A task appearing in the WBS may be broken down later during the project into several “subtasks” without any impact on the contract for the project. However, any “subtask” that cannot be traced to a task appearing in the WBS is out of scope and must not be performed without an official modification of the WBS and probably of the related contract for the project. Of course, many projects operate in dynamic environments, which means that after a project is underway and new information is obtained, there may be a need to make changes in tasks, resources, and the schedule. Such changes are not due to poor initial planning but to a need to adjust the project to take advantage of better information or changing requirements in a dynamic environment. The WBS facilitates efficient planning of resource allocation, assignment of responsibilities, performance measurement, and project control. The WBS example above is organized around phases of the project and their deliverables. Here is another example of how a WBS was created for a project. It is organized around deliverables and could provide you with some good insight if you have never developed a WBS before. Appearance of the WBS You Prepare A WBS that appears in a Request For Proposal (RFP) will exclude labor hours and cost information because competing contractors will provide such information in support of their response to the RFP. Some websites depict a WBS of the type that might be in an RFP—that is, without labor hours or cost information. The WBSes you are asked to prepared will resemble the one in Figure 5.1, which includes labor hours, labor costs, and the cost of other resources. (Note: If you are doing a college or university student project, the WBS that you prepare should generally resemble the one in the Figure 5.1 above, with labor hours, labor costs, and other resource costs entered as illustrated in the figure.)
Preparation of a WBS for Each Final Alternative Solution If the final best two (or more) proposed solutions are to be compared, it is necessary to generate the information that makes it possible to compare them. Creating a WBS for the best two or three alternative solutions produces information that will help to compare them from a cost standpoint. If you wish to look ahead, Sheet 3 of the Economic Analysis Worksheet for Template 7 contains an example of how a WBS was used to generate data used in the Economic Analysis Worksheet. Cautionary Note About Microsoft Project and the WBS If the entries are made in Microsoft Project to create a Gantt chart (project schedule), that data can be used by Microsoft Project to generate a WBS. However, never use this backward approach. It is considered a poor and risky management practice to prepare a WBS from a Gantt chart (without first preparing the WBS). Moreover, Microsoft Project does not prepare a WBS in the graphical form shown above in Figure 5.1. The best practice approach is to first prepare the WBS, which provides data that helps you prepare a Gantt Chart. DRAWING YOUR WBS An attempt is being made to identify a low cost or no cost WBS preparation tool for students who use this website. A notice will appear here if and when such an arrangement is made. In the meantime, students can consider these alternative tools for preparing a WBS: 1. Use WBS-preparation software if you have access to it. Paste the result in a Word file for submission
to your instructor, which will ensure that your instructor will be able to read the file.
2. Some students have used a trial copy of SmartDraw to create WBSes. I suspect that this software can have many other uses in most organizations. Since I do not have this software, my students who use this will need to paste the result in a Word file so I can read it.
3. Use PowerPoint to create and submit your WBS. Even if the WBS type looks small in a PowerPoint
slide, your instructor can enlarge the text on his/her computer so the text can be read. Here is an example of a Visio WBS drawn using the 2007 version of Visio:
In any submission, each WBS must be properly labeled with its alternative solution name and number.
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IT Acquisition Template Work Breakdown Structure 5
The Characteristics of This Template This template does not include a typical form to fill out. Instead, it advises on how to prepare job breakdown structures using a consistent approach. A work breakdown structure (WBS) represents the entire scope of the project, including all phases and tasks. Because the vast majority of projects are unique, there is no such thing as a one-size-fits-all work breakdown structure. However, the same general approach may be used to create a work breakdown structure (WBS) for any project. The following material explains how to design a work breakdown structure (WBS) and how to name its various elements in accordance with recognized standards. A work breakdown structure (WBS) is created for the two or three best alternative alternatives. They will show the
