SCOPE MANAGEMENT

Scope management includes the processes required to ensure that the project scope includes all the work required—and only the work required—to complete the project successfully.² Many tools used for scope management involve the WBS.

Project Charter

The project charter is one of the primary documents used to define a project, its objectives, and outputs, and to establish the general framework for its implementation. A commonly used variant, the project manager’s charter, serves as the contract between the project manager and the project sponsor and establishes the parameters of the assignment, including resources and authority. It usually is prepared following an authorization to spend resources on a project and may include a statement of work.

The project manager prepares the document; it is then reviewed and approved by senior management and, in some cases, the customer. In a matrix organization, the supporting organizations must concur as well. Charters vary in size and comprehensiveness depending on the size of the project and usually vary from three to ten pages in length. For small projects, the project charter may be a verbal agreement; however, the project manager should document the agreement for his or her own reference.

The paragraphs and sections within a project charter may vary from project to project, but the major areas addressed are shown in the outline in Figure 4-1. The outline needs to be tailored to the project and the project environment. The charter should include all the information and guidance needed to acquire resources and begin development of the WBS and detailed project planning. For the purposes of this text, the important contents are the deliverable products, services, or results since this information provides the basis for development of the WBS.

FIGURE 4-1 Outline of the Project Charter

The WBS provides the outline of the written statement of work or scope statement and also the framework for related items used to characterize the project.

Statement of Work

The statement of work (SOW) is a document that describes in clear, understandable terms what project work is to be accomplished, what products are to be delivered, and what services are to be performed. Preparation of an effective statement of work requires a thorough understanding of the products and services needed to satisfy a particular requirement. Because the WBS is established based on work performed to deliver the end items, the WBS is used for the outline of the SOW. The WBS dictionary with minor modifications can readily be converted into SOW language for a contract document. A statement of work expressed in explicit terms will facilitate effective communications during the planning phase and effective project evaluation during the implementation phase, when the SOW becomes the standard for measuring project performance.

Using a standardized WBS as a template when constructing the statement of work for a project helps streamline the process. Using the WBS also facilitates a logical arrangement of the SOW elements, provides a convenient checklist to ensure that all necessary elements of the project are addressed, and directs the project to meet specific contract reporting or data deliverable needs.

TIME MANAGEMENT

The WBS is used as the framework for planning and scheduling. Using project management software or scheduling forms, the process is shown in Figure 4-2.

Figure 4-3 illustrates the WBS of the example in Chapter 2 in the section, Use of the WBS to Develop Activities, and was entered into Microsoft Project 98.^® The WBS is used as the primary input to activity definition: Step 1 of the process list of Figure 4-2. Figure 4-4 illustrates the same WBS but with the identification of the deliverables added as zero duration activities. Figure 4-5 represents the final schedule after the activities and their durations are added and the activities are linked. The process is logical, orderly, and easy once the WBS is completed.

FIGURE 4-2 Schedule Development Process

FIGURE 4-3 Step 1 of the Scheduling Process

The results of Steps 3 and 4 are illustrated in the completed schedule in Figure 4-5. The activities identified in Chapter 2 have been added and linked, identifying the predecessors and successors. (See Figure 2-14 for the final schedule, including the addition of project management activities.)

FIGURE 4-4 Step 2 of the Scheduling Process—Add Deliverables

FIGURE 4-5 Completion of Steps 3 and 4 of the Scheduling Process

Experience shows that once the WBS is entered into the software in the Gantt chart format, the activity definition actually can be performed faster than most people can type the descriptive activity names. Duration information, resource information, and linkages do not need to be performed in any particular order, and often are performed concurrently with activity definition. The important step is to get the complete WBS entered into the computer program down to the work package level; then the rest of the activity definition proceeds rapidly and comprehensively. Experience also shows that revisions to the WBS occur in this process as activities are defined.

COST MANAGEMENT

There are five special applications of the WBS in cost management:

1. Bottom-up cost estimation

2. Collection of historical data

3. Chart of accounts linkage

4. Earned value management system implementation

5. Budgeting.

Bottom-Up Cost Estimation

Bottom-up cost estimation is the most commonly used technique for estimating the total cost of a project. As the name implies, it is a summation of the estimated cost of all the activities or work packages of the project. The WBS is normally used as the framework for preparing the initial comprehensive estimate and subsequent budgets.

The estimation process is relatively simple; each activity is identified as discussed under Time Management, and the responsible person or organization is asked to provide an estimate of the work to be performed. These activity-level estimates are collected and summed to provide the total project estimate. On larger projects, work packages or cost accounts are used as the building blocks for the cost estimate.

Figure 4-6 is an example of a typical form used to collect work package data by WBS descriptor for bottom-up estimation. The same form, with minor modification, can be used for activity-level estimating. It is the comprehensiveness of a properly developed WBS that ensures that all costs are included. This form is then used to enter the data into the computer system. Alternately, of course, experienced personnel may enter these data directly into the computer during the scheduling process.

Collection of Historical Data

One of the purposes of the Department of Defense’s Work Breakdown Structures for Defense Materiel Items was to collect data for the seven types of military systems in a common framework. To achieve this, the use of a specified WBS was required for the first three levels of each system. “Using available data to build historic files to aid in the future development of similar defense materiel items is a very valuable resource.”³ Definitions are included (a WBS dictionary) of each Level 1-3 WBS element, which further assists in ensuring that interpretations of the content of each element are consistent from project to project.

FIGURE 4-6 Sample Work Package Cost Estimating Form

In many organizations, the products and projects are similar—for example, an engineering firm that specializes in designing and constructing highway bridges or a software firm that specializes in relational data bases. It is to their advantage to develop standard WBS structures and templates, at least at the top levels, to be able to collect historical cost data and perhaps other data as well. These data can then be used to assist in the cost estimation activity for new projects in the feasibility phases and to provide an initial top-down estimate for any new proposed similar project. More sophisticated organizations are able to develop cost estimating relations (CERs) using multiple regression techniques.

Chart of Accounts Linkage

The chart of accounts maintained by the accounting organization does not normally relate directly to the WBS. The WBS is output-oriented, and the chart of accounts identifies expense or cost categories that are inputs to the organization. Typical examples are labor, material, and other direct cost accounts. For cost management, the project manager needs a capability to relate the various categories of labor, material, and direct cost items to the appropriate project, cost account, and/or work package for proper allocation of incurred costs. The extent of the linkage depends on the need to control project costs, the level of control required, and the capability of the accounting system.

Earned Value Management System Implementation

Earned value management (EVM) systems require a detailed WBS and a close relationship between the WBS and the accounting system at the work package level. Ordinarily, cost accounts are established at the lowest level of the WBS at which actual costs are collected and compared to budgeted costs for particular organizations. Within cost accounts, work packages are identified, planned, and budgeted.

When implementing an EVM system, the organization must formulate and determine status on a monthly basis for each cost account established in the WBS.

Four types of data required for earned value/performance measurement are:

1. Budgeted Costs for Work Scheduled (BWCS)—the planned value

2. Actual Costs for Work Performed (ACWP)—actual costs

3. Budgeted Costs for Work Performed (BCWP)—earned value

4. Estimate at Completion (EAC).⁴

The primary report used for analysis of performance in an EVM system is called the cost/schedule status report. It includes these four types of data in addition to calculated cost and schedule variance data for each WBS element from the cost account level up to total project level.

Budgeting

Just as cost estimates are prepared using the WBS as the framework, budgets are similarly developed and coordinated. Budgets are planned and issued to organizations using work authorization forms, as discussed earlier. Budgets then become part of the cost baseline for measuring performance.

COMMUNICATIONS

The WBS provides the framework for identifying and organizing the communications mechanisms used on a project. Discussions of the project, parts of the project, and explanations of project work are facilitated when the WBS is used as an outline to identify the topic under discussion and relate the particular WBS element to the work as a whole. All reporting requirements for the project should be consistent with the WBS and WBS numbering system. It is common for customers or sponsors to require progress reports to be structured by WBS Level 2 or 3 elements.

Project reviews are frequently structured with discussions of specific WBS elements and, since most cost and schedule reports relate to WBS elements, it is a common framework. The other framework is the organizational breakdown structure (OBS). Action item and issue tracking systems frequently use the WBS number as one of the data elements to sort and relate the open items to specific deliverables.

Project correspondence also is expected to refer to WBS numbers when discussing areas of project work, and correspondence reference numbers frequently are WBS-based. Correspondence tracking systems have a WBS field for organizing correspondence. Filing systems consist of a day file for copies filed by date and a subject file using the WBS number where applicable. On large complex projects, the contract line items, configuration items, contract statement of work tasks, contract specifications, technical and management reports, and potential subcontractor responses are all related to the WBS numbering system.

For purposes of team building and developing an accurate WBS, the WBS development should be a team effort. The advantages are team discussion of all elements as well as improved understanding of the work to be done and where each individual fits within the overall project. Some geographically dispersed organizations use videoconferencing techniques to develop the WBS for new projects and, thereby, receive input from the most experienced persons company-wide.

PROCUREMENT MANAGEMENT

When a product or service is procured or outsourced, the customer usually provides the top-level WBS for the product or service in the request for proposal (RFP). One reason is that different bidders use the same framework for planning, cost estimating, and responding to the RFP, facilitating the evaluation and source selection process. If only a part of the project is to be outsourced, it usually is a discrete work package from the project WBS. For example, a project for building a house could have the HVAC system as a discrete element that is clearly identified and easily defined. The WBS facilitates communication and simplifies the planning and control on a large project where many work elements may be subcontracted.

The individual WBS element or elements from the project WBS that apply to a proposed subcontract are selected by the project manager for inclusion in a draft RFP. This is the initial time for open dialogue between the customer and potential contractors. Innovative ideas or alternative solutions are collected for inclusion in the final WBS and RFP, which includes a subcontract WBS and the initial WBS dictionary for the procured item or service. The RFP instructs potential contractors to extend the selected subcontract WBS elements to define the complete subcontract scope.

Contractors extend the subcontract WBS to the level that satisfies the critical visibility requirements and does not overburden the management control system. They submit the complete subcontract WBS with their proposal. The proposal should be based on the WBS in the RFP, although contractors may suggest changes needed to meet an essential requirement of the RFP or to enhance the effectiveness of the subcontract WBS in satisfying program objectives.

QUALITY AND TECHNICAL PERFORMANCE MANAGEMENT

There is limited interaction between project quality and technical performance management and the WBS, except to use the WBS element identification system to communicate areas of the project where there are quality or technical performance interests.

An exception is the numbering system used for a specification tree on some larger, complex systems projects. A specification tree structures the performance parameters for the system or systems being developed into a series or hierarchy of specifications. It subdivides the system into its component elements and identifies the performance objectives of the system and its elements. The performance characteristics are explicitly identified and quantified. This subdivision is the same as the decomposition in the product WBS.

The completed specification tree represents a hierarchy of performance requirements for each component element of the system for which design responsibility is assigned. The WBS numbering usually identifies the elements where performance specifications are required. Because specifications may not be written for each element of the WBS, the specification tree usually maps only the product-related elements of the WBS.

HUMAN RESOURCE MANAGEMENT

Project human resource management includes the processes required to make the most effective use of the people involved in the project.⁵ As such, there is limited interface with the WBS.

Development of an effective WBS is not as straightforward as it first appears. For example, in Chapter 2, alternate WBS structures are discussed and in many chapters information is provided on the preferred approach to preparing a WBS. A major obstacle in organizations is the culture of the organization, especially if organization and input-oriented WBSs have become common. Organizations develop a certain way of doing business, and changes—even obvious improvements—are not always easy to accomplish. Strategies such as those discussed by Kotter are necessary to introduce changes in cultures.⁶

One of the best methods to start building a project team is to use the development of the initial project WBS as the vehicle. This has three advantages:

1. The new team quickly becomes involved in defining the project and project scope and, therefore, internalizes the project.

2. The expertise of the team is used to help ensure that all the work that needs to be performed is represented in the WBS—in other words, that the WBS is complete.

3. The WBS becomes the framework for communicating information concerning the project.

The resource assignment matrix is one of the tools used to plan the use of human resources. It is a cross-referencing of organization versus WBS and work package to show who is responsible for specific assignments on a project and the specific type of responsibility, such as performance, approval, reviewing, and coordination.

RISK MANAGEMENT

Project risk management is the systematic process of identifying, analyzing, and responding to project risk; the WBS provides a logical structure for this process.⁷ There are two areas where the WBS is important in project risk management. The first is an input to risk management planning where the WBS is used as a tool in the development of the risk management plan. This plan describes how risk identification, qualitative and quantitative analysis, response planning, monitoring, and control are structured and performed during the project lifecycle. The role of the WBS is to provide a roadmap to the elements that involve project risk.

The second area is the use of the WBS as an input to the risk identification process. The WBS is used as a checklist of all the work areas of the project to identify possible risks that require analysis and monitoring. Various techniques for qualitative risk analysis are described generically in the PMBOK^® Guide.⁸ One method involves using the WBS as the framework and identifying the risk probability of selected elements and the impact on the project of the same elements. The products of these two factors are ranked to determine the higher risk areas.

This qualitative approach for assessing risk can be used for any type of project: simple, complex, small, or large, and product, service, or result. Leading the team through the process builds understanding of potential problems and agreement about team response.

PROJECT INTEGRATION MANAGEMENT

Project integration management is defined in the PMBOK^® Guide to include the processes required to ensure that the various elements of the project are properly coordinated.⁹ The WBS is an obvious tool to assist in this function. There are two aspects of this PMBOK^® Guide knowledge area that involve the WBS: (1) the project plan, and (2) configuration management.

Project Plan

The project plan is a document used to guide both project execution and project control. A WBS defined to the level at which management control is exercised is included as a baseline document within the project plan. Figure 4-7 is an example of a sample outline for a project plan. Based on the project plan, a work authorization system, using the WBS numbering scheme to reference the relevant work, is used to sanction project work.

FIGURE 4-7 Sample Project Plan Outline

Configuration Management

Configuration management is the process of managing the technical configuration of items being developed whose requirements are specified, and managing the scope of the project. Deliverable items are designated in the WBS, the schedule, the statement of work, and/or other project documents.

Configuration management involves defining the baseline configuration for the configuration items, controlling the changes to that baseline, and accounting for all approved changes. In establishing the requirement for configuration management on a project, the project manager needs to designate which deliverables are subject to configuration management controls and the documents that formally describe them. When working on a contract, usually all deliverables are controlled. A contract deliverable designated for configuration management is called a configuration item. For software, this item is commonly called a computer software configuration item (CSCI).

In addition to deliverables, the contract statement of work and the WBS are subject to configuration management to control proposed changes that impact them. The WBS and WBS dictionary, scope statement, or statement of work are the documents that define the scope of the project. When the WBS is defined, and the project team and customer or sponsor agree that it is complete, it becomes part of the total baseline for the project. Work not covered by the WBS is not part of the project.

To add work to the project is to change scope. The project should use a formal process of change management to modify the WBS and supporting documents by adding or deleting work in the statement of work and changing project schedules and budgets accordingly. The WBS then becomes a major tool for controlling the phenomenon known as scope creep. Scope creep arises from unfunded, informal additions to the project work. Abramovici advises: “Controlling scope creep is one of the project manager’s major tasks, and he or she has to start working on it even before the project statement of work is written.”¹⁰

When a request for a change is received, either formally or informally, a first step in the analysis is to determine whether or not the change affects the scope of the project. If the work to be performed is covered by the WBS and described in the WBS dictionary or the statement of work, then it is in scope. Otherwise, the work is out of scope. In that event, the project manager must formally evaluate the impact of the change on cost, schedule, and technical performance, and make the necessary changes to contractual documents and plans to implement the change, if it is approved.

NOTES

1. Project Management Institute Standards Committee, A Guide to the Project Management Body of Knowledge (Upper Darby, PA: Project Management Institute, 2000), p.40.

2. Ibid., p. 51.

3. Department of Defense, MIL-STD-881 Work Breakdown Structures for Defense Materiel Items (Washington D.C.: Headquarters, Air Force Systems Command, Directorate of Cost Analysis, 1 November 1968), Section 1.4.3.

4. Q.W. Fleming, Put Earned Value (C/SCSC) into Your Management Control System (Worthington, OH: Publishing Horizons, Inc., 1983), p.52.

5. PMBOK^® Guide, p. 107.

6. J. P. Kotter, Leading Change (Boston: Harvard Business School Press, 1996).

7. PMBOK^® Guide, p.127.

8. Ibid., p. 135.

9. Ibid., p. 41.

10. A. Abramovici, “Controlling Scope Creep,” PM Network (January 2000), 44-48.