Work Breakdown Structure
A hierarchical system which sub-divides
larger elements of the project into smaller
elements called “work packages”.
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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.
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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
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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.
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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
Concrete
0315
Concrete Formwork
03157
Wood Concrete Formwork
03157.20
Wood Concrete Formwork for Deck
03157.30
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.
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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