How to Understand the Work Breakdown Structure

Executive Summary

  • Work breakdown structures or WBS are used by Project Systems in SAP.
  • We cover a simple WBS for building a bicycle. It is necessary to tie back to a Project Systems project.
  • We show a sample of the WBS elements in a project.

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.

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.

A Simple WBS for Building a Bicycle

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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.

Usages of the WBS

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

  • For: Planning collective requirements in warehouse material
  • 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.
  • Assignment: The material is managed in general stock. It is not assigned to any particular project or sales order.

Project Stock

  • For: Individual project planning
  • 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.
  • 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.

New Demand to a Location

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

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.

New Demand to The Overall System

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:

“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.”

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 Connection to Other SAP Transactions

  1. STO is tied in with MRP
  2. The procedure of converting purchase requisitions to Work Breakdown Structures can be monitored using PO history.
  3. The system can run an availability check for the stock transfer.

WBS Links to Activities

  1. If there is insufficient inventory to cover the STO, a demand is created both at the location, and for the overall system.
  2. A goods receipt can be planned in the receiving plant.
  3. The goods receipt (GR) can be posted directly to consumption.

WBS elements tie to project stock. (From SAP)

The text below copies interesting passages from Project Management with SAP Project Systems, Mario Franz, SAP Press, 2007

“While you enter the planned dates of WBS elements manually of via projecting or inheritance, the planned dates of processes are automatically calculated in the system. This determination of the planned dates of networks is called scheduling. Depending upon the transaction from which you trigger the scheduling, you use network scheduling, overall network scheduling, or WBS scheduling.

  • “Forward scheduling
  • Earliest dates
  • Backward scheduling
  • Latest dates
  • Only capacity requirements”

Network Scheduling

all activities of an individual network are scheduled. In network scheduling the scheduling settings are determined from the network scheduling parameters, but can also be temporarily modified.

Resource Planning

If you mapped a project using only a WBS, you can plan costs for internal or external resources and later assign activity allocations, purchase requisitions, purchase orders, goods receipts and acceptances. A logistics resource planning in the sense of capacity planning or an automatic data exchange between the project structure and the purchasing documents is only possible in SAP Project Systems if you also implement networks.

Capacity Planning with Work Centers

Work centers are organizational units in SAP that define where an activity can be performed and by whom. If you have already defined work centers for production or maintenance, you can use these work centers in networks as well. The usage field in the basic data of the work center determines the task list types and order categories in which the work center can be used.

Workforce Planning

A work center can consist of several available individual capacities. However, if you perform your capacity requirements planning only at the work center level, you won’t be able to specify which individual capacity of the work center will provide th respective service. Therefore, you can’t recate meaningful capacity evaluations for the individual capacities.

PS performs workforce planning, that is, a distribution with a direct reference to personnel numbers. The work distribution can later be used as a default value for the time data recording using the time sheet.

The prerequisite for workforce planning is that PS is provided with various HR master data.

Capacity Leveling

You can use capacity planning boards both for capacity leveling of work center capacities and for scheduling individual capacities of the work centers.

Service

PS supports for procurement. Services to be provided by an external vendor are planned using service activities by specifying purchasing info records or outline agreements. Purchasing processes can be triggered automatically. In service specifications, you can create a list of planned services in a hierarchical structure if necessary. For this purpose you can use service master records from purchasing that might already store various data of a service. Purchase requisitions due to service activities use the same document type and the same account assignment category like external processed activities. Depending upon material and purchasing group of the purchase req, a transfer to an external purchasing system can be performed as well.

Material Planning

Using WBS elements you can plan costs for procuring material as well as assign various documents like material reservations, purchase requisitions, purchase orders, goods receipt, and issues to WBS elements. An integrated material planning where data is automatically exchanged between a project and purchasing or production, however, is only available if you use networks. To plan materials via networks, you must assign material components to the network activities.

Assemblies

Stock items that you assign with a negative required quantity to an activity are referred to as assemblies. While a positive quantity represents a materials requirement, the negative quantity of an assembly documents that the network provides material. From the point of view of MRP, assemblies represent planned additions to a stock. If you implement assemblies and use networks instead of production orders for producing individual materials. If this requires multilevel production processes and you want to make the corresponding material movements as transparent as possible in the MRP.”

Conclusion

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.

SAP Supply Planning Consulting

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