The Project Breakdown Structure (PBS) provides another level of project organization beyond what the typical Work Breakdown Structure (WBS) and Cost Breakdown Structure (CBS) can provide. The PBS enables a large project to be broken up into embedded projects, while maintaining them in a single overall project super-structure.
Purpose of a Project Breakdown Structure
The purpose of a PBS is to break down larger complex projects into more manageable parts that can be run concurrently by separate project teams or managers. This breakdown makes big projects more manageable by enabling the simultaneous independent management of project components by different departments/divisions, while creating more transparency and accountability across the entire project for greater control.
How a Project Breakdown Structure Works
An embedded project has its own WBS and CBS, including its own team, budget, timeline, resource pool, risk register, KPIs and more. An embedded project automatically rolls up into a WBS title task and CBS title account in the parent project above it for higher-level visibility and controls. Any number of embedded projects and levels of embedded projects can be created to accommodate the super-structure of a single large project.
Download the Project Breakdown Structure Feature Brief to learn more and discover what it can do for your company.
Two Dimensions of the Project Breakdown Structure
The two dimensions of the PBS are breadth and depth. Breadth refers to breaking up a large project into a series of sequential embedded projects. For example, a construction project might be broken up into different phases done by different trade teams, such as Design, Engineering, Site Preparation, Foundation, and Construction.
Depth refers to breaking up a large project into different hierarchical levels of project responsibility. For example, within a construction project you may have one embedded project for Engineering. Then underneath Engineering, you can set up more embedded projects for the different types of engineering tasks that are completed by different project teams (e.g. mechanical, electrical, environmental).
You can use the PBS to scale a large project both horizontally and vertically.
The PBS is key to allowing different divisions, managers, controllers, etc. to work on their assigned components of a large project independently while maintaining managerial oversight and control.
PBS vs. WBS
Many use the terms Project Breakdown Structure and Work Breakdown Structure interchangeably. This use is incorrect as the WBS only refers to the operational side of the project while the PBS incorporates the operational and financial aspects of many projects in one structure.
Many use the WBS as both the financial and operational hierarchy of the project. This method is a major project governance flaw for project-based companies. It is imperative to detach the cost and work breakdown structures, particularly for large projects. If your project involves hundreds or thousands of tasks, it will grow to a point where it becomes impractical to manage the project financials based on the schedule (WBS). At this point you need to employ a CBS parallel to your WBS.
The PBS manages the connection between the WBS and CBS as well as it gives you the option to create more embedded projects with their own WBS and CBS underneath a parent. This structure enables you to manage costs at an appropriate account/GL level or category and create meaningful, real-time financial analysis at any level or for any portion of the project.
Why Use a Project Breakdown Structure?
How do you know if you need a PBS? Here are a few ways the PBS can help you better tackle big projects:
Project Delegation
Breaking up a big project into smaller embedded project components makes it more manageable by creating clear distinct areas of responsibility. It enables granular project-level controls and metrics for every component to ensure better financial management and delivery.
Accountability and Performance Tracking
The PBS allows you to track the budgets and performance of each unit to ensure all are operating profitably. This transparency allows you to pinpoint problems faster and more accurately to control costs and risks.
Project Periodization
Breaking up the project phases into separate embedded projects creates clearer reporting for financial periods and better manageability through distinct areas of accountability.
The Benefits of a Project Breakdown Structure
Here is how PBS delivers real value to your project business.
Better Cost Control
The PBS allows you to manage your budget at the detail required for optimal control while maintaining executive oversight. Real-time project financial metrics such as EAC, EVA and variances, tracked separately in embedded projects create more accurate forecasts for the business units and drive costs down through enhanced manageability.
Improved Risk Readiness
The PBS creates greater transparency and accountability. With more granular controls placed into the hands of managers at the appropriate level, issues are identified faster and can be resolved more readily within the project super-structure.
Improved Delivery
With a PBS, project managers and task owners have complete control over their components while fitting into the overall structure of a large project. This results in a more effective and efficient workflow at every level of management that delivers more projects on time.
Project Breakdown Structure and Project Business Automation
The PBS is a central component of Adeaca Project Business Automation (PBA). In fact, PBS is only possible with PBA. PBA is about integrating all the core project business processes into one system to provide real-time visibility into and more control over all projects and the business as a whole. PBS is just one example of the advanced capabilities that PBA brings to project business.
The PBS integrates the financial and operational aspects of a project and an unlimited number of embedded projects into a single manageable entity.
PBS is part of PBA, a new category of software solutions for project-based companies. Download the PBA Blueprint today, the Definitive Guide to PBA and creating a comprehensive business system for project-based companies.
