WBS and CBS – Cost Engineering – Page I

1 Work Breakdown Structure (WBS) 2 Cost Breakdown Structure (CBS)

Definition
Framework for organizing and ordering the activities that makes
up a project. Systematic approach to reflect a top-down product
oriented hierarchy structure with each lower level providing more
detail and smaller elements of the overall work.1
1AACE International
Definition
A hierarchical structure that divides budgeted resources into elements of
costs, typically labor, materials and other direct costs. The lowest level, when
assigned responsibility, typically defines a cost center.
Hierarchical breakdown of a project into cost elements or cost categories.1
1AACE International

3 Example* - WBS 4 Example* - CBS

1- Project X
4 levels Task or level of WBS - $ xx.xx

Major Project 1.1- ON-SITE 1.2- OFF-SITE

elements Direct Cost - $ xx.xx Indirect Cost - $ xx.xx Others** – $ xx.xx
Subprojects
Or design 1.2.1- Pipeline 1.2.2- Storage tank 1.2.3- Utilities
elements Labor - $ xx.xx Material - $ xx.xx Equipament - $ xx.xx

1.2.2.1- Design
Salary - $ xx.xx
Disciplines
1.2.2.2- Civil construction
Fringe Benefits - $ xx.xx Cost
the selected 1.2.2.3- Electro
Level ID mechanical assembly
breakdown
Others - $ xx.xx Description- $ xx.xx
1.2.1- Description *Both examples do not show all
structure parts. **e.g. Profit, taxes, contingency.
 WBS and CBS – Cost Engineering – Page II
5 Example – WBS with CBS included
1- Project X - $ 10 M
1.1- ON-SITE - $ 6 M
1.2.1- Pipeline $ 1 M
6 Analysis
 What is the project cost estimated? $ 10 M
 What is the OFF-SITE cost estimated? $ 4 M
1.2- OFF-SITE - $ 4 M  What is the Storage tank cost estimated? $ 1 M
 What is the civil construction cost estimated? $ 30k
1.2.3- Utilities - $ 2 M
 What is the civil const. labor cost estimated? $ 3k
1.2.2- Storage tank - $ 1 M
 And wages? $ 1,700

1.2.2.1- Design – $ 10k
1.2.2.2.1- Direct Cost - $ 6k
1.2.2.2- Civil const.- $ 30 k
1.2.2.2.2- Indirect Cost* - $2k
1.2.2.3- Assembley- $ 60 k
1.2.2.2.3 – Others* – $ 2K
 It is not shown in Picture 5, but Project labor cost is
possible to discover. It occurs because all
disciplines have labor costs, consequently it can be
summarized. For example, $ 4 M.

1.2.2.2.1.1- Equipament - $ 2k

1.2.2.2.1.2- Material - $ 1 k
1.2.2.2.1.3.1- Salary - $ 1,700

1.2.2.2.1.3- Labor - $ 3K
1.2.2.2.1.3.2- Fringe Benefits - $ 700
Level ID Planned Cost
*Attention point: indirect costs and other
1.2.2.2.1.3.3- Others - $ 600 costs (e.g. profit) can be allocated at M = 1,000,000
1.2.1- Description - $ xx,xx K = 1,000
higher levels of the WBS.