Work Breakdown Structure

In the future this post will be maintained here.

http://www.scmfocus.com/projectsystems/2010/09/14/work-breakdown-structure/

Why Understand Work Breakdown Structures?

Work Breakdown Structures were created by the US defense establishment for actual costing. However within SAP they are the critical elements within the SAP PS system. Understanding the WBS is important to understanding GPD (Grouping, Pegging and Distribution) which is a manufacturing solution for research and development, make-to-order and engineering-to-order environments. (More on GPD in the Appendix)

wbs-definition-graphic.png

What is a Work Breakdown Structure?

Simply put, Work Breakdown Structures are “buckets” to which cost centers are assigned , allowing Lockheed to track the costs of its PBL contracts. Below is a sample of a simple WBS structure for the creation of a bicycle. “A WBS is not a project plan, project schedule or a chronological listing. It is considered poor practice to construct a project schedule (e.g. using project management software) before designing a proper WBS. This would be similar to scheduling the activities of home construction before completing the house design. It is not possible to recover from an improperly defined WBS without starting over[citation needed], so it is worthwhile to finish the WBS design before starting a project plan or project schedule Parts is not.

Simple WBS Structure for Building a Bicycle

500px-wbsconstruction.png

WBS Capabilities

In a product-oriented WBS, functional categories of work may form “cost accounts” within a WBS element. Cost account managers are responsible for a functional area’s contribution to a WBS element. Cost accounts from several departments or functions may combine into one WBS element. Internal department planning for a cost account will be made up of individual work packages. A work package will typically have its own budget and schedule. Work packages should be small enough to be executed by individuals or small groups in a single department, and they should be of relatively short schedule duration. A small project might define a maximum work package size as two weeks of effort. Larger projects will assemble larger work packages that can be appropriately managed and controlled.” – SAP Help

WBSs allow you to map the structure of a project in SAP. The WBS is made up of WBS elements, which can be broken down further. Structuring the WBS is primarily answered by considering what you want to report on.

Dependent Configuration

Dependent configuration relates how a configuration one system affects another system. Here it involves other areas in SAP that are affected by WBS creation and use. One of the most important features of WBS usage is distinguishing between Plant Stock and Project Stock. Each material can be coded as several stock types. Typically Plant Stock is the more common, however in a project environment it becomes necessary to code at least some of the materials as Project Stock. Plant Stock vs. Project stock is broken down in the matrix below.

Plant Stock

Project Stock

For: planning collective requirements in warehouse material

For: individual project planning

Usage: Materials at subordinate BOM levels which are required in all projects can be planned and procured in the warehouse, independently of WBS elements. In requirements planning, all the requirements for a material are determined in one plant. Such procurement is made jointly, with no reference to a WBS element.

New Demand to A Location

Usage: In individual project planning, only individual requirements are planned – that is, materials which are required for a WBS element, are planned for that purpose, and procured with reference to the WBS element.

System

Assignment: The material is managed in general stock. It is not assigned to any particular project or sales order.

Assignment: In individual project planning, only individual requirements are planned – that is, materials which are required for a WBS element, are planned for that purpose, and procured with reference to the WBS element.

This procedure is used to plan the finished product and important components.

The material stock is assigned to a single WBS element in the project and is, as far as planning is concerned, available only for that WBS element. Stock is managed separately for each WBS element in a project definition.

Unlike general stock, you must specify the relevant WBS element, as well as the plant and storage location, in all goods movements involving project stock.

From: http://help.sap.com/saphelp_dimp50/helpdata/EN/49/7db835295f962de10000009b38f839/content.htm

Question: What costs will be allocated to a SAP PS Project?

Answer: We will want to allocate the costs of Purchase Orders, Stock Transport Orders and Service Orders to specific projects.

New Demand to A Location

Not New Demand to the Overall System

1. If there is sufficient inventory to cover the STO, a new demand is created at a location, however, this is not a new demand for the system. If one considers this a new demand then it is true to stay that an STO creates a new demand.

2. If there is insufficient inventory to cover the STO, a demand is created both at the location, and for the overall system.

What is Necessary to Tie Back to the PS PBL Project

A Network in SAP PS is a parallel hierarchy of the operations of a project rather than the financial areas of the project. The necessity is to tie the operational transactions (and their costs) back to the project. The transactions necessary to map to the PBL projects are:

  • Purchase Orders

  • Stock Transport Orders

  • Service Orders

“The grouping WBS element is the organizational unit which produces the goods and to which the material belongs. Requirements planning creates the replenishment elements (planned orders, purchase requisitions) which are assigned to the grouping WBS element. A separate planning section is managed for each grouping WBS element in the evaluations in inventory/requirements planning.”

wbs_exp.gif

A sample of WBS Elements in a project

From Project Management Academy:

Notice how the Project is the top of the hierarchy. A Work Package contains a WBS code along with costs. A Work Package is “..is a quantitative and qualitative description of an activity to be carried out in the project – for example, the work to be done and the result to be achieved for a clearly defined task within the project.”

Other Important Features of the WBS:

WBS Connections to Other SAP Transactions

WBS Links to Activities

1. The STO is tied in with MRP

1. If there is insufficient inventory to cover the STO, a demand is created both at the location, and for the overall system.

2. The procedure of converting purchase requisitions to Work Breakdown Structures can be monitored using PO history.

New Demand to A Location

2. A goods receipt can be planned in the receiving plant.

System

3. The system can run an availability check for the stock transfer.

3. The goods receipt (GR) can be posted directly to consumption.

Summary

The STO is both a type of Stock Transfer and a Purchase Order which has characteristics that closely map to the Transshipment in MCA, most notably its calculation of inventory movement based upon lead times. The STO is used to move materials between two Plants in SAP.

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3 thoughts on “Work Breakdown Structure

  1. Hi

    our company is using Finance and PS. Now we want to implement logistics. for that we need to activate the option Valuated Stock. How can we do the for existing project definition and wbs element.

    Regards

    Ganesh

  2. our compnay is using PS for telecom network projects (telecom network infrastructure build,expansions and upgarde) with turn key contracts and supply contracts with vendors and suppliers. We also use stock material components using valuated project stocks and non -stock material components using Direct Purchases.We monthly settle at AUC and then AUC-FXA at technical completion.

    We are using 3-level WBS i.e. Project at level 1 WBSE -Dev Region at level 2 WBSE -Asset Class (AUC assigned) at the 3rd level WBSE. Networks are attched at Level 1 WBSE and actvities in Networks are assigned to the 3rd level WBS Elements.

    We are facing problems in site-wise Asset Creation in Fixed Assets (FI-AA), creation of project PIP and Project Progress determination and Progress Reports.

    It is good PS block and is very helful.

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