58 Project Management for the Oil and Gas Industry

describe the overall project goal. Overall project planning and control can be
improved by using a WBS approach. A large project may be broken down
into smaller subprojects that may, in turn, be systematically broken down
into task groups. Thus, WBS permits the implementation of a “divide-and-
conquer” concept for project control.
Individual components in a WBS are referred to as WBS elements, and
the hierarchy of each is designated by a level identifier. Elements at the
same level of subdivision are said to be of the same WBS level. Descending
levels provide increasingly detailed definition of project tasks. The com-
plexity of a project and the degree of control desired determine the number
of levels in the WBS. Each component is successively broken down into
smaller details at lower levels. The process may continue until specific
project activities (WBS elements) are reached. In effect, the structure of the
WBS looks very much like an organizational chart. But it should be empha-
sized that WBS is not an organization chart. The basic approach for prepar-
ing a WBS is as follows:

Level 1 WBS: This contains only the final goal of the project. This
item should be identifiable directly as an organizational budget
item.
Level 2 WBS: This level contains the major subsections of the project.
These subsections are usually identified by their contiguous location
or by their related purposes.
Level 3 WBS: This level contains definable components of the level 2
subsections. In technical terms, this may be referred to as the finite
element level of the project.

Subsequent levels of WBS are constructed in more specific details depend-

ing on the span of control desired. If a complete WBS becomes too crowded,
separate WBS layouts may be drawn for the Level 2 components. A statement
of work (SOW) or WBS summary should accompany the WBS. The SOW is
a narrative of the work to be done. It should include the objectives of the
work, its scope, resource requirements, tentative due date, feasibility state-
ments, and so on. A good analysis of the WBS structure will make it easier
to perform scope monitoring, scope verification, and control project work
later on in the project. Figure 3.5 shows an example of a WBS structure for a
hypothetical design project.

Project Organization Structures

Project organization structure provides the framework for implementing
a project across functional units of an organization. Project organization
structure facilitates integration of functions through cooperation and syn-
ergy. Project organizational structures are used to achieve coordinated and