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Unique doesn’t have to mean complex.
Published: 01/07/2010
How unique is unique? The answer to this riddle is central in determining which work breakdown structure (WBS) methodology most accurately explains project deliverables and how they should be estimated, controlled, and completed. The quality strategy used to segregate and decompose WBS deliverables can be based on any number of characteristics of the product or project including time phases, functional phases, final deliverables, incremental deliverables, or by subproject (which may have a portion of each characteristic.) Complex engineer-to-order (ETO) products characterize the most unique WBS quality strategies.
The term “engineer to order” itself is indicative of a product with a unique design, a process in which the design, procurement, development, and production phases will run concurrently or have some overlap. It is for these reasons that complex ETO products require a work breakdown structure based on a hierarchy of deliverables that mirrors the product breakdown structure. This structure naturally establishes a chronological schedule of events for each task as the WBS deliverables and work packages are decomposed.
The product breakdown structure should reflect the upper levels of the bill of materials. The upper portion of the bill of materials should be a hierarchy of deliverables or assemblies. Their content should not be segregated in a “grocery list” style where overall material and labor types are grouped by category. Instead, the bill-of-materials levels should be structured more like a recipe, so the contents and resources needed for a particular deliverable are grouped together. This methodology enables a lean integrated plan for the procurement of material and labor required to complete the deliverable in question.
It is important to have the product breakdown structure, and therefore the WBS, reflect the final deliverable as well as a hierarchy of incremental deliverables that are structured to mirror the order in which material, resources, and labor are prioritized. The work packages should be structured to reflect the level of assembly. A view of the proposed WBS methodology for complex ETO environments is shown in figure 1.
Figure 1: Work Breakdown Structure for Complex Engineer-to-Order Environments
©2009 Joe Tizedes
Figures 2 and 3 show two examples of a WBS deliverable hierarchy representing the construction of a house. The two illustrations, and corresponding WBS, vary depending on the construction and assembly methods. This variation drives different WBS deliverable hierarchies to reflect the manner in which they come together to produce the final product. The first example is a conventional site-built house, and the second example is a modular house. The examples assume that the final deliverable (the completed house) is essentially the same in both cases. The different WBS quality formats reflect the structure of the incremental deliverables.
Figure 2: Site-built house
©2009 Joe Tizedes
For a site-built home, the second-level deliverables are a framed house, a wired house, a plumbed house, and all of the inside and outside finishing materials.
Figure 3: Modular house
©2009 Joe Tizedes
For a modular home, the second-level deliverables are four complete framed, wired, plumbed, and finished quadrants of a house. The deliverables also include minor amounts of inside and outside touch up materials.
Other WBS methodologies are based on time phases, or functional breakdowns, instead of the product breakdown structure. These can be the correct strategies for non-ETO products under certain circumstances. For example, breaking out WBS deliverables based on functional departments or project phases may be appropriate in the following situations:
• The project involves the management of a specific demand, or order, for a final product that is either a simplistic make-to-order product or repetitive manufacturing commodity.
• The content and complexity of the final product is well defined in advance, as is the requirement from each functional area.
In these cases, the focus of management can be on optimizing the efficiency of the functioning processes without the significant risk of driving off course the departmental agendas concerning the timing and priority of projects. The method is appropriate when content and complexity of the deliverables are clearly established prior to the start of the project.
If the product is consistently high volume, the environment does not lend itself well toward being managed at a project level.
Consider the factors that cause variation in quality project performance. With complex ETO products, more variation between projects is likely dictated by the wide range of content and complexity of the deliverables as opposed to the performance of various functions. Intuitively, the lack of commonality among complex ETO products dictates that any variation in performance is more likely to be driven by special causes. The lack of high-volume repetitive tasks or parts makes it difficult to test for, or suggest, normality in variation. Simple make-to-order or repetitive products have a more fixed scope and more repetition of the same tasks. This is an environment in which normal variation can more likely be measured.
There are an infinite number of unique formats in which a customer may require the “price” to be segregated by categories of their preference. It is important not to let the requirements of the quote format drive the WBS. The ETO WBS strategies described above reflect the order in which lower level deliverables will be combined; it also dictates the schedule and roll-up structure of costs to be incurred. The quote documentation should be merely a reporting exercise rather than driving the WBS methodology. A customer may require that the quote be delivered in categories of “total material vs. total labor” or “capitalized equipment vs. custom equipment.” Neither of these divisions of cost represents a series of deliverables that combine to produce the final deliverable. There are many quoting and enterprise resource planning software packages available on the market that enable the quality project manager to follow proper WBS strategies while still slicing and dicing the data to meet quote report format needs.
Utilizing this WBS strategy and software technology will enable the fundamental requirement of measuring actual costs against quoted costs and price. It provides the ability to segregate material and resource costs from the labor used to apply that material. Formatting the ETO WBS correctly, quality managers can segregate the costs of the logistics and integration efforts associated with the commoditized components. It is easier for quality managers to make outsourcing decisions because they understand the incremental cost and timing requirements for each WBS deliverable. ETO companies stand a better chance of mitigating risk, improving quality, and retaining revenue.
Creating and managing a WBS structure comes with several burdens, including maintaining WBS with current cost and timing data at the appropriate level of detail. It generally increases the size of project timelines; with proper implementation it eliminates the need for other off-line tracking documents that often provide similar levels of detail. The WBS is more than a description of the full scope of the project; it is an illustration that displays the order in which each piece fits together. The WBS structure turns an otherwise complete ETO environment into a rather simple and logical roadmap. Unique is unique… unique need not be complex.
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