The following seven steps explain the design and use of the Work Breakdown Structure.
Step 1: A list of the task breakdown in successively finer levels of detail is created using information from the action plan. This process is continued until all meaningful tasks or work packages have been identified and controlled.
Step 2: Data relevant to the Work Breakdown Structure is identified for each such work package.The personnel and organizations responsible for each task are listed. A linear responsibility chart will be helpful to show who is responsible for what. This chart will also show the critical interfaces between units that may require special managerial coordination. The Project Manager can keep track of who must approve what and who must report to whom using this list.
Step 3: All the work package information should be reviewed with the individuals or organizations who have responsibility for doing or supporting the work in order to verify the Work Breakdown Structure's accuracy. Next, the resource requirements, schedules, and subtask relationships can be aggregated to form the next higher level of the Work Breakdown Structure and continued on to each succeeding level of the hierarchy. At the uppermost level, there should be a summary of the project, its budget, and an estimate of the duration of each work element.
Step 4: For the purpose of pricing a proposal, or determining profit and loss, the total project budget should consist of four elements:
(i) Direct budgets from each task as just described
(ii) An indirect cost budget for the project which includes general and administrative overhead costs, marketing costs, potential penalty charges and other expenses not attributable to particular tasks.
(iii) A project contingency reserve for unexpected emergencies
(iv) Any residual which includes the profit derived from the project and which may on occasion be