James and Linda Talk About the Structure of the Investment Project
After having made himself familiar with the project structures, James has now defined the template for the investment projects at Hybrid Machinery, using a work breakdown structure (WBS). He creates a first investment project from this template, and discusses the project structure with Linda, who works as a project controller at Hybrid Machinery.
Structuring investment projects
WBS is a model of a project and shows the project activities to be carried out in a hierarchical structure. The various work packages in the project are described as individual Work Breakdown Structure elements (WBS elements). You can divide these WBS elements at various levels until you reach the level of detail you require. Since the WBS is structured hierarchically, the data can be summarized and displayed at the corresponding higher-level WBS elements.
You assign organizational units such as a company code, a business area, a profit center, and a plant for each WBS element. Before you create a WBS, you have to create a project definition. The project definition is a framework for all the objects created within a project. The project definition contains data that affects the entire project. Examples are start and finish dates, organizational data, and planning parameters. It contains default values that can be passed on to the WBS elements.
This is a list of typical steps that are carried out for investment projects:
- Create a suitable Work Breakdown Structure (WBS) using the Project Builder
- Plan dates manually if required
- Plan costs for WBS elements manually or calculate costs
- Budget WBS elements
- Carry out project activities and record actual costs and commitments on the WBS elements
- Calculate overheads and settle assets under construction in Asset Accounting
The WBS forms the basis for all subsequent planning tasks in a project. The focus here is on planning, analyzing, describing, controlling, and monitoring costs, basic dates, and the budget. However, costs, dates, and payments are often planned using activities that are assigned to WBS elements. Shown here are the various types of tasks that a WBS can support during a project.