Accounting and the Work Breakdown Structure

A well-planned work breakdown structure can help you track and measure important information about the project and bill your clients correctly and efficiently.

From an accounting perspective, the work breakdown structure should facilitate the following:

• Assigning labor costs to the right employees and projects.
• Assigning expenses to projects.
• Providing accurate and tailored client invoices.

Accounting Requirements

Typically, an accounting staff has these general requirements for a work breakdown structure:

• The ability to meet contractual billing needs, such as determining whom should be billed, what billing methods and terms to use, who performed the work, and when clients should be billed.
• Detailed expense information, including how expenses should be applied to the project as a whole or to its individual components.
• Detailed labor information, such as who worked on a project, how long each person worked, and what to pay the individual.
• An easy, efficient, accurate way to get data from project managers.
• A balance between the need to record information for general ledger purposes and project management's need to manage the project.
• A structure that is manageable. Can employees reasonably track their time at the levels that you are defining?
• A flexible structure to accommodate most of your billing requirements.

Your accounting staff does not want the following:

• A structure too simple to capture the required data.
• A structure so complex that it becomes hard to extract and manipulate the required data.
• The project manager to be a bottleneck for important information.