The concept of work packages can be rather difficult to understand. But for anyone looking to take the project management professional exam, it is a key topic to learn.

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Work packages are important when preparing the Work Breakdown Structure (WBS) for any project.

Let us take a closer look at the concept of a work package to understand it better.
 

What is a Work Package?

A work package is the smallest unit of a Work Breakdown Structure.  When preparing a Work Breakdown Structure using the Decomposition technique, deliverables are generally broken down into smaller, more manageable chunks of work.

This process of deconstruction continues until the deliverables are small enough to be considered ‘work packages’. Each of these packages should be small enough to help the Project Manager estimate the duration and the cost. These packages can be scheduled, cost estimated, monitored and controlled.

Why are Work Packages Important?

With work packages, the development of Work Breakdown Structures becomes easier, and project managers will have a finer level of control over assignments.

Other benefits include:

- Work packages allow for simultaneous work on different components

Work packages allow for simultaneous work to be done on different components of a project in parallel by multiple teams. Each team follows the tasks defined for the work package and completes them by the specified deadline.

Once the teams have finished their individual work packages, the entire project comes together with seamless integration. Completion of a work package is most often overseen by a specific person, whether a manager, supervisor, a team lead, or a designated team member.

- Costs of activities are aggregated at the work package level so they can be measured, monitored and controlled.
 

Even though costs are estimated at an activity level, these cost estimates are aggregated to the work package level, where they are measured, managed and controlled. For each work package, we can determine the direct labor costs, the direct costs for material, equipment, travel, contractual services, and other non-personal resources, as well as the indirect costs associated with each of these work packages .

The individual costs of all the work packages are then aggregated to arrive at the authorized cost baseline or the authorized budget for the project.

Measuring Work Package Performance with Earned Value Measurement

The performance of a work package can be measured by the Earned Value measurement technique, a commonly used performance measurement metric. It integrates project scope, cost and schedule measures to help the project management team assess and measure project performance and progress. It calls for the preparation of an integrated baseline against which the performance of the work packages can be measured for the duration of the project.

Earned Value Measurement develops and monitors 3 key dimensions for each work package.

1.Planned Value: Planned value is the authorized budget allocated to the work to be accomplished for the work package.
2.Earned Value: Earned value is the value of work performed expressed in terms of the approved budget assigned to the work package.
3.Actual Cost: Actual cost is the total cost actually incurred and recorded in accomplishing work performed for a work package.

Variances from the approved baseline are also monitored.
 

Measuring Work Package Performance – Other Metrics

Cost Variance: It is a measure of schedule performance on a project. It is the difference between the earned value and the actual costs. The relation to determine Cost Variance is: CV = EV – AC

Performance indices are also useful for determining project status.

Cost Performance Index: The cost performance index (CPI) is a measure of value of work completed compared to the actual cost or progress made on the project.

Relation: CPI = EV / AC

These CV and CPI values for work packages are documented and communicated to stakeholders.
 

- Work Packages allow team members to have a clear understanding of their roles and responsibilities.

Work packages allow team members to have a clear understanding of their roles and responsibilities with organization charts and other aids. Various formats exist to document team member roles and responsibilities.
Most of these formats fall under three types: hierarchical, matrix-based, and text-based.

For instance, the responsibility assignment matrix (RAM) is a matrix based chart which is used to illustrate the relationship between work packages or activities and project team members. On larger projects, a higher level RAM can be used to define what a project team group or unit is responsible for within each work package. Also, a lower level RAM can be used within the group to designate roles, responsibilities and level of authority for specific activities.

- Risks can be managed at the level of work packages in a Work breakdown structure 

The work breakdown structure is a critical input to identifying risks as it facilitates an understanding of potential risks at both micro and macro levels. Risks can be identified and subsequently tracked at the level of work packages.
 

How to Prepare a Work Package - Guidelines

When breaking a WBS down to the level of work packages, the WBS nodes could be decomposed to ridiculously low levels, wasting time and actually making the project difficult to understand, manage and change. There are many things to be considered when deciding how far to decompose the WBS or how best to create a work package, but a few important factors to consider are:

1.  Work Packages should be small enough to be estimated for time and cost.
2. The project manager and the project team should be satisfied that the current level of detail at the work package level provides enough information to proceed with subsequent activities.
3. Work packages should be small enough to be assigned to a single person or a group who can be held accountable for results.
4. Although this may differ from project to project, most project managers concur that the 8/80 rule can be applied to measure a work package. This rule says that no work package should be less than 8 hours and greater than 80 hours.
5. Work packages can lie at different levels in the WBS hierarchy. Project managers should not artificially force their WBS into a structure where all the work packages lie at the same level in the WBS hierarchy. This results in problems as the project progresses, like forced detail -where you could have monitored and controlled specific parts of the work at a higher level- or not enough scrutiny where you really need it.
 




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