What is a work breakdown structure (WBS)?
A WBS is a framework that defines the deliverable or outcomes of a project. The WBS is a hierarchical view of what can be considered 100 percent of the scope of desired deliverables—all desired results—of the project.
The use of work breakdown structures originated in the late 1950s in the Department of Defense (DOD) for the use of defining project deliverables. Later in the 1960s, work breakdown structures evolved to include tracking costs in the WBS hierarchy along with the WBS listed deliverables and became a military standard in 1968.
When learning how to create a work breakdown structure, it is also important to understand what WBS is not. A WBS is not a project plan; a project plan outlines the activities needed to produce the deliverables listed on the WBS.
Work breakdown structures and manufacturing
Using WBS for DOD-related manufacturing has long been a requirement. However, defense contractors without the appropriate software have to create the WBS and manage the costs associated with the WBS deliverables outside of their ERP application. Excel is typically the tool that many companies use for their work breakdown structure software.
But when you create a work breakdown structure outside of the ERP with Excel or other application, you at a minimum have to manage your costs system that are not integrated. This is timely to support. It allows opportunities for mistakes (i.e. typos from dual and triple data entry) and requires a heavy amount of inefficient manual intervention. Additionally, most DOD contractors deal with auditors on a regular basis—it is very time consuming to validate accurate costs for the auditors.
Creating a work breakdown structure in ERP
An ERP application designed for project manufacturing should have built-in functionality that can alleviate many issues associated with managing the WBS externally. Creating a WBS within Infor CloudSuite Industrial or Infor VISUAL can not only serve as work breakdown structure software, but capture costs and indices needed for project-based manufacturers in an integrated manner. If one knows how to create a work breakdown structure in Excel, then they can easily do it in the Infor ERP applications.
It is also important to note that many engineer-to-order project-based commercial manufacturers have also adopted the use of work breakdown structures to better manage the defined deliverables of a project and subordinate projects.
The ability to capture engineering efforts and time, manufacturing labor, material costs, outside services cost, and burden against the projects for specific tasks and operations—and then be able to immediately see costs associated with the project and WBS—are game changers for companies.
Project-based manufacturers will be able to see important key performance indicators with integrated work breakdown structure software, such as actuals to budget, percent complete (including by cost code and monthly breakdown), estimate at completion, and cost to complete; and an indented WBS cost report showing actual cost, forecast cost, and percent complete for all levels of the work breakdown structure.
Summary
The ability to have an integrated WBS within your ERP is important. Having integrated project management tools, will provide project manufacturers with a system that is fully and easily audit-able for the defense contractors who are subject to DCAA audits as well. Finally, having embedded WBS ability and integrated project management in their ERP is a game changer for project based commercial manufacturers that need to trust the data and costs captured by their ERP system.
An integrated WBS allows companies to grow their businesses without having to add labor to support manual data transfer between spreadsheets and manual calculation of costs that are often tabulated long after the actual transactions took place. Competitive and leading manufacturers need to both know their project costs as they happen, and trust their data. Otherwise too many mistakes happen, and will negatively affect operation and hamper profitable project deliverables, as defined in the related work breakdown structure.
If you are having issues trying to manage the complex nature of non-integrated work breakdown structures, project manufacturing, and project costing with your various systems, please reach out for a free assessment. The team at Visual South will discuss options for improvement and address your business issues.
