Importance of proper PBS structure

Properly organizing your Product Breakdown Structure (PBS) in TruePlanning® is a critical first step to an accurate and defensible estimate.  The fundamental questions to ask are:

  1. What are you estimating?
  2. How is the system built?
  3. Where does integration occur?

The answers to these three questions will assist the estimator in developing a PBS that truly reflects the work being accomplished.  Incorrectly structured projects may result in overestimation due to unnecessary levels of integration and test.  There is also a risk of underestimation by leaving out necessary levels of integration and test.  We will visit each of these questions now, and provide examples of how the answers can guide us in proper PBS structuring.

Question 1:  What are you estimating?

Is this a hardware estimate?  Software?  Or some combination of the two?  What are the deliverables for this project?  To provide an example, imagine that you are the estimator for an aircraft avionics upgrade.  The project will consist of newly developed hardware for the communications system and identification system, as well as newly developed software to operate across both components.  There will also be hardware and software developed for the navigation and guidance system.  The eager estimator may be rushing to open TruePlanning® and create a project.  Not so fast!

Question 2:  How is the system built?

We now know we will have three hardware components and two software components.  Is there any reason to delineate between the hardware or software components?  Do they all interoperate together?  Are some components “stand alone”?  To answer this question, it helps to visualize how the components are actually constructed.  Will you be estimating a new radio as one component, or do you have enough data (and time) to estimate down to the circuit board, chassis, wiring, and other lower level pieces of a radio?  White boarding, brainstorming, or old fashioned pencils work well here.  Now is the time to work through changes in the structure before creating a project in TruePlanning®.  Very often, the PBS structure is dictated by the scope and purpose of the estimate, as well as the available cost and technical data, not to mention the time allotted for completion.  Regardless of your methodology, it is vital you receive some validation from another estimator, an engineer, or a program manager.  


Question 3:  Where does integration occur?

Great news!  Our knowledge of the project is expanding.  We realize there will be a communication component, and identification component, and a navigation component.  Additionally, there are two software components.  We now know that the Comm and ID hardware, along with the Comm/ID software will be integrated, tested and assembled together to ensure the Comm/ID portion of the project is operational.  Likewise, the Navigation hardware and software will be integrated, tested and assembled together to ensure the Navigation portion of the project is operational.  In the end, we also learn that the Comm/ID assembly and Nav assembly must then be integrated, tested and assembled together to ensure the entire avionics upgrade project is operational.  What does all this mean?  We have three points of integration or three assembly cost objects in our estimate.  Not one, not four, just three.   We will incorporate Assembly cost objects for a purpose:  to account for labor and material required to integrate, assemble and test the cost objects directly below it in the PBS.  


Begin With the End in Mind

Every estimator has a unique process or methodology in determining the structure of the estimate.  This is part of the art in the art and science of estimating.  Regardless of what I am estimating, I like to begin with the end in mind.  How do I have to report my results?  Will I be using a MIL STD 881C format or some custom cost element structure?  Depending on the answer, the estimator is encouraged to arrange and customize the estimate as much as possible in TruePlanning® to aid in mapping the estimate later.  The screen shots below are a good example of how, with just a little bit of forethought, I can greatly improve the visibility and cross referencing of a TruePlanning® estimate to a typical standardized reporting format.


Help Wanted

There are many resources available to assist you through the estimating process.  PRICE Systems is well known for providing extremely fast and thorough customer service.  Visit our new website at


Under the PRICE Resources tab, you will find a number of recorded videos walking you through many features of TruePlanning® step-by-step.  I recommend viewing the following TruePlanning® Technique video: TPT 010 – How to Create a Project With TruePlanning®.  In addition to training videos, you’ll find blogs, white papers, webinars, and other resources on the website.  You can also call us anytime at        1-800-43-PRICE for advice on structuring your estimate.  Finally, you can contact me directly at 937-258-7187 or with any questions.