Work Breakdown Structure

A hierarchical system which sub-divides larger

elements of the project into smaller elements called

work packages.

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

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.

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

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

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

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
Project
Number

Area
Code

Work Type
Code

Distribution
Code

9708B 05 03157.20 3
Cost Code for stripping concrete formwork for

bridge deck (Labor).

Project Number

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

Area Code

9708B 05 03157.20 3
Geographic location

OR
Associate Field Cost to Specific

supervisor or Management

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

Distribution Code

9708B 05 03157.20 3
1. Total
2. Material
3. Labor
4. Equipment
5. Sub-Contract

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

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.

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

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.

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.

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.