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Work Breakdown Structure A hierarchical system which sub-divides larger elements of the project into smaller elements called “work packages”. C OST C ONTROL Project cost control begins with the preparation of the cost estimate and the construction budget.

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work breakdown structure
Work Breakdown Structure
  • A hierarchical system which sub-divides larger elements of the project into smaller elements called “work packages”.
c ost c ontrol
COST CONTROL
  • Project cost control begins with the preparation of the cost estimate and the construction budget.
  • The information that is generated for estimating purposes can be in terms of productivity rates, unit costs, or both.
  • Small contractors frequently work in terms of unit costs while large contractors base their estimating on productivity rates
w ork b reakdown s tructure
WORK BREAKDOWN STRUCTURE
  • Work Breakdown Structure (WBS) requires the project to be divided and subdivided into smaller parts
  • The smallest unit of the WBS is the work package, which called a contract package if the work is contracted out.
w ork b reakdown s tructure cont
WORK BREAKDOWN STRUCTURE (cont.)
  • It is necessary that the scope of the work for each work package be described in relation to the work to be done in the other work packages.
  • Work packages should be defined in terms of design, construction methods, and completion requirements, with associated performance dates
w ork b reakdown s tructure5
WORK BREAKDOWN STRUCTURE

Project must be structure into small elements that are:

1. Manageable

  • Specific authority and responsibility can be assigned.

2. Independent

  • With minimum interfacing or dependence on other elements.

3. Measurable

  • In terms of progress.
characteristics of work package
Characteristics of Work Package

1. Represents units of work at the level where the work is performed.

2. Clearly distinguish one work package from all others.

3. Contains clearly defined start and end dates that are representative of physical accomplishment.

4. Specifies a budget in terms of dollars, man-hour or other measurable units.

5. Limits the work to be performed to relatively short periods of time to minimize the work in progress.

the project cost system
The Project Cost System

Objectives of Establishing Project Cost System.

1. Keep the construction costs of the project within the established budget,

2. Develop labor and equipment productivity information for estimating the cost of future work

cost code
Cost Code

Project

Number

Area

Code

Work Type Code

Distribution

Code

  • Cost Code for stripping concrete formwork for bridge deck (Labor).

9708B 05 03157.20 3

project number
Project Number

9708B05 03157.20 3

  • Eighth project in 1997 (Bridge)
area code
Area Code

9708B0503157.20 3

  • Geographic location

OR

  • Associate Field Cost to Specific supervisor or Management
work type code
Work Type Code

9708B 0503157.203

03 Concrete

0315 Concrete Formwork

03157 Wood Concrete Formwork

03157.20 Wood Concrete Formwork for Deck

03157.30 Wood Concrete Formwork for Abutment

distribution code
Distribution Code

9708B 05 03157.203

1. Total

2. Material

3. Labor

4. Equipment

5. Sub-Contract

c ost c odes
COST CODES
  • Each account of a contractor's accounting system is assigned its own code designation as a means of identification and classification.
  • The most widely used cost codes are

CSI (Construction Specifications Institute) and UCI (Uniform Construction Index).

cost code and cost control
Cost Code and Cost Control
  • All items of expense are charged to the project where they are incurred.
  • "General" or "miscellaneous" cost accounts should not be used, is poor practice, and should be avoided.
  • The cost code is to serve its basic purpose, it must be understood and used consistently by all company personnel.
c ost a ccounting r eports
COST ACCOUNTINGREPORTS
  • Labor and equipment summary cost reports must be prepared often enough so that excessive costs can be detected while there is time to do something about them.
  • Cost report intervals are a function of the project size, nature of the work, and the type of contract involved.
  • There must be a balance between the cost of generating the reports and the value of the management information received
c ost a ccounting r eports cont
COST ACCOUNTINGREPORTS (cont.)
  • Cost reports are frequently prepared daily on complex projects involving multiple shifts
  • Most contractors match their cost control system to their payroll periods and to their time-monitoring system.
l abor and e quipment c osts
LABORAND EQUIPMENT COSTS
  • The job costs associated with materials, subcontracts, and non-labor items of project overhead are of a reasonably fixed nature.
  • Labor and equipment costs have considerable uncertainty and fluctuate substantially during the construction period.
l abor and e quipment c osts cont
LABORAND EQUIPMENT COSTS (cont.)
  • Contractor can control labor and equipment to some extent, and require constant management attention
  • Detailed cost accounting methods must be used with labor and equipment expenses if effective management control over them is to be obtained.