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The first major step in building a schedule (sometimes called a Project Plan) is to create a Work Breakdown Structure (WBS). This is a way to identify to work that is required to build the deliverables of the project. The WBS allows you to break the large project down into small enough steps that the work can be understood. The process for building the WBS is as follows
1. Identify the large “chunks of work” of the project
First determine the large chunks of work that must be completed for the entire project to be completed. When you start, it does not matter how you define the large chunks of work. For instance, a traditional breakdown might be "planning / analysis / build / implement", which lays out the project in a high-level timeline. The breakdown could also be by major deliverable such as "permits, pool, fence, landscaping". You can break down the work into whatever structure makes sense for your project.
2. Evaluate each lower element of the WBS
Check each component of the WBS to see if it meets the following two criteria.
Do you (or someone on your team) understand the detailed work required to complete this work component? The detailed work components on the WBS will ultimately be moved to the schedule. You don’t want to have activities on your schedule that no one on your team fully understands.
Do a quick estimate of the work. Are the effort hours required to complete the work less than your estimating threshold? A rule of thumb is 80 hours or less, but this could be higher or lower based on the size of the project. If you don't understand the work, the chances are it will be larger than your estimating threshold as well.
If you understand the detailed work required to complete the component and if the estimated level of effort is smaller than the estimating threshold you do not need to break the component down further.
3. Continue to break down each component as needed
Work components that require more effort than the estimating threshold, or work components that you do not fully understand should be broken down further into smaller pieces of work. As you break the work down, you are ultimately going to create activities that are required to complete the deliverables. This is referred to as an "activity based WBS". The detailed activities from the WBS are what get carried forward to the schedule.
This process of breaking the work components into a lower level set of components should continue until all of the work components are represented as granular as necessary to ensure that no activities have estimated effort larger than the estimating threshold, and that you understand the work. This takes you to levels 3, 4, 5 etc. Rarely would you need to break the work down greater than five levels.
There is one exception to this process. If your project is large and long, it is likely that you may not know enough to be able to break all of the work down to a discreet level. Work that takes place a long way in the future may have to be left at a higher level. These are known as planning components. In that case, you can leave the work components at the higher level until you get closer to execution (three months), at which time you will know enough to be able to break the work down at a more granular level.
When you are done with the process above, you will understand the work at the lowest levels of the WBS and the work will be smaller than your estimating thresholds. At that point the WBS is completed.