Work Breakdown Structure

A hierarchical system which sub-divides

larger elements of the project into smaller

elements called work packages.

Awad S. Hanna

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
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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.

Awad S. Hanna

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

Awad S. Hanna

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.

Awad S. Hanna

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.
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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
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Cost Code
Project Number Area Code Work Type Code Distribution Code

9708B 05 03157.20 3
Cost Code for stripping concrete formwork for bridge deck (Labor).

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Project Number

9708B 05 03157.20 3
Eighth project in 1997 (Bridge)

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Area Code

9708B 05 03157.20 3
Geographic location OR Associate Field Cost to Specific supervisor or Management

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Work Type Code 9708B 05 03157.20 3

03 0315 Concrete Concrete Formwork

03157
03157.20 03157.30

Wood Concrete Formwork

Wood Concrete Formwork for Deck Wood Concrete Formwork for Abutment

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Distribution Code

9708B 05 03157.20 3
1. Total 2. Material

3. Labor
4. Equipment

5. Sub-Contract
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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).

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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.
Awad S. Hanna

COST ACCOUNTING REPORTS

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
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COST ACCOUNTING REPORTS (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.

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LABOR AND 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.

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LABOR AND 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.

Awad S. Hanna