Project setup, WBS and cost codes

What it is

Who does it

Project manager

Defines the scope breakdown, key packages and reporting levels the project will be run on.

Quantity surveyor or cost manager

Selects the classification standard and builds the cost code structure that the estimate and cost reports will use.

Planner

Aligns WBS elements with schedule activities so progress and cost can be compared on the same basis.

Finance or commercial lead

Confirms company-level codes, currency, tax treatment and how project costs map to the accounts.

System administrator

Creates the project, sets up users, roles and access rights for the project team.

How it runs

1. Register the project

   Create the project with client, location, currency, tax settings and key dates. Record the contract form expected, since it affects payment and change procedures.

2. Choose the classification standard

   Pick the cost classification the client and market expect, such as NRM, DIN 276 or MasterFormat, and decide whether an internal code set sits underneath it.

3. Build the WBS

   Break the scope into buildings, zones, elements or trade packages down to the level at which cost and progress will be controlled.

4. Define cost codes

   Create the cost code list linking WBS elements to cost types such as labour, plant, materials, subcontract and preliminaries.

5. Set up the team and permissions

   Add users with roles that match their responsibilities, so that estimators, buyers and site staff see and edit only what they should.

6. Configure validation rules

   Switch on data checks for the chosen standard so missing codes or incomplete positions are caught early.

7. Freeze and communicate

   Issue the agreed structure to the team and control later changes to it through a simple approval step.

How it differs by country

United Kingdom

RICS NRM1 gives a standard element breakdown for cost planning, and NRM2 sets rules for detailed measurement of building works. Many cost managers structure the cost plan to NRM1 groups from the start so that it can be compared with benchmark data.

Germany

DIN 276 defines cost groups (Kostengruppen) such as 300 for building construction and 400 for building services, used for public and most private building projects. HOAI work stages (Leistungsphasen 1 to 9) set when cost estimates of increasing accuracy are required.

France

Projects under the loi MOP, now part of the Code de la commande publique, follow defined design phases such as ESQ, APS, APD, PRO and DCE. Works are usually split into lots by trade, which often becomes the first level of the breakdown.

United States

CSI MasterFormat organises specifications and cost data by work results in divisions, while UniFormat organises by building systems and is common for early estimates. Many contractors code costs to MasterFormat divisions with an internal job cost structure beneath.

International

On FIDIC-based projects the breakdown should reflect the bill of quantities or schedule of payments in the contract, since interim payments and variations are valued against them. Lenders on international projects often require cost reporting in their own format as well.

Common mistakes

• Building the WBS around the drawing set rather than around how the work will be procured and controlled, which leaves packages that cross many codes.
• Creating too many cost codes, so that site staff code at random and the reports become noise.
• Using a different structure for the estimate and the budget, which makes the handover from estimating to delivery a manual re-coding exercise.
• Ignoring the client's required reporting standard until the first cost report is due.
• Allowing ad hoc changes to the code list during the project without recording them, which breaks comparisons between periods.

In OpenConstructionERP