An Organizational Breakdown Structure, or OBS, is a pyramid- or tree-like structure which describes the relationships and work responsibilities of the people in your organization. The highest level of the OBS is the top level of management. The organizational structure is progressively detailed downward to the lowest level. To create an OBS, you use the OBS window.
Within the OBS, two separate organizational hierarchies (or trees) are available to provide detail and summary project data through the company organizational structure:
A Performing Organization tree reflects the hierarchy of reporting within a company or "line" organization.
A Responsible Organization tree is for projects that employ some degree of matrix management. The Responsible OBS can be a functional category such as engineering, production, management, or manufacturing.
Some projects use both trees while others use neither, managing the project within the WBS framework only. You may create one or both types of OBS tree for each project.
When you create an OBS element, you specify a parent department ID. Child departments become parent departments and their parents become grandparents when you assign them subordinate departments. In the example below, Engineering is a parent of Department 600 and a grandparent of Departments 601 and 602

When creating the WBS, you assign the WBS tasks to the OBS departments to create the Responsibility Assignment Matrix (RAM), typically matching work package WBS tasks with the Performing OBS departments, and cost account WBS tasks with the Responsible OBS departments.
Creating an OBS is described in Creating the OBS.