Welcome back. In this lecture, we are going to focus on creating a Master WBS for a program with Multiple Projects within it. By the end of the lesson, you will be able to develop a master work break down structure to level three that includes a total of three projects. You'll also be able to determine and refine the project resource needs in support of multiple projects. Lastly, you'll be able to understand how a good work breakdown structure can improve cost estimation. What is a work breakdown structure? A work breakdown structure is a component of the scope management plan. The scope management plan, is your how to guide, for how you will manage all the scope elements of your program or projects. The WBS is a hierarchical decomposition of the total scope of the work to be carried out by the project team. It shows the project broken into smaller more manageable components and/or deliverables. Here's an example of a WBS for a company holiday party project. You'll notice that level 1 is the very first level of the work breakdown structure. It's the name of the project. In this example, we see that the project's name is the company holiday party. To identify that we are at the top level of our WBS, we will number this item as 1.0. The numbering becomes important because all subsequent numbering for activities or work packages underneath this project will be broken down as sub-components of the project number. Below level one, is level two. In level two, you will see the primary sub-components under the company holiday party project. The first sub-component is food and drinks. The second is people. The third is venue. The fourth is attendee gifts. Notice the numbering for level two items. We see that food and drink listed as 1.1. This means that, it is the first sub-component of the company holiday party project. Notice that people is 1.2, which means that it's the second sub-component of the company holiday project. The venue sub-component is numbered 1.3. The attendee gift's work package is 1.4. Now, let's look at all the work packages which make up these sub-components. This is known as Level 3. In level 3, you will notice that under the sub-component 1.1, food and drinks, there are four work packages: dinner menu, dessert menu, appetizer menu, and drinks menu. Notice the number of these three level items. It is 1.1.X. X is the number which represent which order the items are listed within level 3. Under the 1.1, food and drinks sub-component. The first level 3 work package under food and drink dinner menu, is numbered 1.1.1. You will notice that dessert menu is 1.1.2. The appetizer menu is numbered 1.1.3. The drinks menu is 1.1.4. Let's shift our attention to the numbering of level 3 items for some of the other work packages. Looking at 1.4 attendee gifts, which is the fourth sub-component under the company holiday party, we see that the numbering for level 3 items follows the same convention as level 1 number dot level 2 number dot level 3 number. Given this, what is the WBS number for the gift wrap work package? 1.4.4 is correct. Gift Wrapping is the fourth work package under the fourth sub-component attendee gifts, under the project company holiday party. Let us turn our attention to creating a program WBS. You will notice that it's not much different than creating a project WBS. The first changes that we are no longer looking at one project. We are now focused on a program, called the Employee Appreciation program, which has three projects in it: company holiday party, peer recognition and company Carnival for employees and their families. Originally, the company holiday party was listed at level 1 as 1.0. Now it's actually under Employee Appreciation program as the first project. Thus, company holiday party has been numbered 1.1 and the employee appreciation program is numbered 1.0. This means that, the company holiday party is the first project under the Employee Appreciation program. The peer recognition project which is the second project under the Employee Appreciation program is numbered 1.2. The company Carnival for employees and their families, is the third project under the Employee Appreciation program. It's numbered 1.3. Notice that each of the underline sub-components for the three projects has been updated to show that there are components underneath a project and a program. For example, the last sub-component under the project 3. The company Carnival for employees and their families is number 1.3.6. It is the project management sub-component. This means that it is the sixth sub-component within the company Carnival project under the Employee Appreciation program. The sequential numbering technique becomes a simple and easy way to understand the relationship of a project, sub-component, work package or activity when it's outside of the WBS structure. This comes in handy when managing multiple projects. Now it's your turn. Looking at the following program WBS, can you name the fourth subcomponent under the peer recognition project? Provide its name and number. 1.2.4 Awards ceremony is correct. Next question. Looking at the following program. WBS. Can you name all Level 4 items? Provide their names and numbers. The following are the level four items on the program WBS: 1.2.5.1 Designed, 1.2.5.2 Development, 1.2.5.3 test, 1.2.5.4 release. These level four work packages are under sub-component 1.2.5 website for nominations under the peer recognition project. The variation which often comes up when you work with programs, is a grouping of related work packages and activities that have funding allocated to them. This higher level grouping is called a control account. The funding within a control account is then used on each of the work packages and activities within it. We do not have any control accounts in this example. However, it's an important variation to know. Once you have a detailed WBS, you can begin identifying the resources you'll need per activity and work package to complete this. The process is known as estimate activity resources. Pinback defines estimate activity resources as, the process of estimating the type and quantity of material, human resources equipment, or supplies required to perform each activity. Close quote. One technique used to estimate the resources, people, equipment, materials, etc, is to complete a resource breakdown structure. A resource breakdown structure is a hierarchical representation of the resources needed by category and type. Another technique is to identify all resources needed to complete the items within your WBS. Identifying the WBS resource needs is one way to identify the resources you need to complete a program. The first step is to take your program WBS and then, using your historical information from similar past projects or by interviewing others, or by brainstorming with the project team, identify all the resources you need for each work package or activity within the program WBS. Here's the exact same program WBS we reviewed earlier. Notice that gift wrap work package number 1.4.4 requires the following resources: the project manager, the project coordinator, wrapping paper, tape, ribbon, and 200 medium sized gifts. We can see from this list that the people needed are the project manager and the project coordinator. The materials needed are 200 gifts and wrapping paper, tape and ribbon for those 200 gifts. See, it's not so hard, is it? You may be wondering why it's important to go back to your program WBS and identify all the resources, people, materials, supplies, software, equipment, etc. Often, project managers focus on identifying resources at a holistic project level. This is a good approach. However, when we do this we may accidentally exclude materials needed to complete a specific work package or activity or even neglect specialized resources. Thus it's important to go back and ensure you're capturing the resources needed for all your project activities. Also, your resource needs will impact your overall budget. Per PMI 2016, Pulse of the Profession report, 53 percent of all projects completed in 2015 did so within their initial budget. This means that 47 percent of them were delivered over budget. This is a very startling statistic. One key reason why this happens is faulty estimating of costs and resources need. Thus it's very important to plan the work which needs to be done via a program work breakdown structure. Identify all the resources needed to complete the full scope of the work. Lastly, plan the cost estimates to complete the work. Let's look at some common project cost estimating techniques. Expert judgment is a project estimating technique where we gather inputs from subject matter experts on what cost could be and use those estimates as either the estimated amount or as part of an estimating calculation. For example, let's say that we are the project managers of the company carnival project. To help us set a budget for this year's carnival, we reach out to Jane who has a lot of experience putting carnivals together. Using Jane's past and current knowledge of costs and the work involved, a project budget is calculated. This is an example of using expert judgment. Another estimating technique is called analogous estimating. With this technique, we go back to similar past projects and use the cost estimates of similar activities from those projects as the basis for estimating the costs of our current projects activities. For example, on the company holiday party project, we need to estimate the cost of a venue. We look at last year's holiday party and see that the team spent $5000 on a venue. Since the number of attendees has not changed from last year, we estimate that we need about $5000 for the venue for this year's party. This is an example of analogous estimating. Bottom-up estimating is a technique where we determine the work, resources and costs for items at the lowest level of the WBS. This could be the activities or tasks. From there, we sum up the costs of the tasks and activities into their corresponding work packages. We also add any additional costs which may be associated with the work package itself, but it's not included in activities or tasks that have already been reviewed. We complete this process to calculate the cost of every project work package. Once we have the cost of every work package, we then add up the costs of the work packages. The total of the work packages becomes the project estimated budget. Bottom-up estimating accounts for the projects related costs such as labor, materials, supplies and etc. The next estimating technique is three-point estimating. This technique was specifically designed to help address uncertainty within project estimates. It originated from the project evaluation and review techniques known as PERT. These three values used in three-point estimates were used to fit a PERT distribution model for Monte Carlo simulations. Since then, it was adopted for mainstream project management. It's a great way of estimating costs or durations when there's a high level of uncertainty in the project's estimates. To use three point estimating, we take our best cost estimate added to our most likely cost estimate and then add our worst cost estimate. We then divide the sum of these numbers by three to give us an average cost. Let's take an example. Let's say there is a high level of uncertainty in how much the wrapping paper will cost for the company holiday party because we might be able to get a discount from the vendor, since we need a large amount of paper, but we're not sure. We believe that the best price we can get is $15 for all the wrapping paper we need. That's excellent. But there's a chance that the vendor may not go that low. Thus we believe that the most likely cost will be $30. What if we end up in a situation where the vendor will not provide any discounts at all and we need to pay full price? The worst case cost of the wrapping paper is $42. Using three-point estimating, we calculate that we should budget $29 for the wrapping paper. This is calculated as $15 for the best case, plus $30 for the most likely cost, plus $42 for the worst case estimate. The total of these three numbers is $87. We then divide the $87 by three, to give us the average cost of $29. The last estimating technique we will discuss is parametric estimating, where we used data or any cost, resource or duration information that we might have to estimate the cost of an activity. For example, we know that it takes two people one hour to install 100 square feet of carpet. In a thousand square foot home, the activity of installing carpet will take 10 hours for two people. Each person is paid $15 an hour. How much should we estimate the cost of this activity? Did you say $300? If so, you are correct. That's calculated that 10 hours for two people; so, 10 hours times two people, the result is 20. Is then multiplied by their hourly rate of $15 an hour which gives us a total cost of $300 for this activity. When determining the overall costs of the project, project managers find that they use a combination of all the techniques in some form or fashion. Thus it's important to understand that you can combine the estimating techniques as you feel is appropriate.
