What is the Cost Breakdown Structure?

Rabio data structure is based on the Cost Breakdown Structure (CBS). In this post we are going to see in detail what is the CBS and how it is involved in Rabio form and reporting system.

Developing a Project

For the development of a project, it is necessary a CBS which is a cost allocation to the lowest level of the Work Breakdown Structure (WBS).

Cost Breakdown Structure (CBS) is a breakdown of the costs of the various components and elements of the project’s structure including all works or services done by the subcontractors. The CBS is used to continuously check & compare the actual costs with the budget, and integrate them into the cost control management system.

Hierarchical Structure

The CBS is required for Project Business to appropriately manage the financial aspect of any project. It is the planning structure financial controllers use to create budgets and calculate various financial metrics such as: estimate at completion, cost to complete, variances and earned value.

Unfortunately, CBS is missing in most project tools, including project management. In many cases, CBS is either not utilized at all or it is created and managed in a common spreadsheet.

When Cost Breakdown Structure is missing

In real life when CBS is not used, the WBS takes place to five valuable pieces of information for the financial and operational hierarchy of the running project. This is a huge problem for companies that are project-based. It is necessary to detach the cost and work breakdown structures, especially for large projects.
If you are involved in a project with hundreds or thousands of tasks, eventually it will come to a critical point where it is not practical to manage the project financials based on the schedule (WBS). When reaching this point it is necessary to use a CBS parallel to your WBS. What the CBS will do is to give you the ability to manage costs at a more flexible account/GL level or category and create meaningful, real-time financial data with extended analysis directly connected to the WBS.

When management tries to manage projects financially and operationally using a single hierarchy (the WBS) in most cases they are about to face up failure. By default, the single hierarchy:

  • contains insufficient details for operational planning
  • it is too granular for
    • budget
    • estimation
    • cost collection
    • variance management.

Therefore, companies compromise on both sides and performance suffers as a result.

On a spreadsheet?

Spreadsheets solve many problems but when it comes to a CBS then things are different. When a CBS is maintained in a spreadsheet it is separated from operations so much that it is not possible to represent the actual situation of the project. When changes occur on the WBS they do not flow through to the CBS and the other way around. In most cases, the awful result is that CBS and WBS are not synchronized.

Rabio & Cost Breakdown Structure

Rabio was developed using the cost breakdown structure (CBS). For Rabio this is the central data structure where all project financial activities are recorded and managed.

In Rabio the CBS allows project management to define the level of details required to efficiently and effectively manage a given project or contract. In order to provide control on a project Rabio with CBS manages and tracks:

  • Budget
  • Actual Costs
  • Earned Value
  • Projection
  • Forecast
  • any other progress and productivity indicators

The data structure in Rabio is created based on Cost Centers (CC) and Cost Type Keys (CTK) following a typical Cost Breakdown Structure (CBS).

Check how you can manage equipment cost with Rabio using CBS here.

Create and control your construction budget with Rabio

Rabio is open-source software that was designed to manage and control budgets, their costs, and produce reports based on a flexible cost breakdown structure. It is budgeting software and it is distributed for free.

You can easily use it for your personal needs or your business. Using Rabio ‘s managers system you can design and control your budget and compare it with costs at any time using the easy reporting internal system.

Furthermore, you can alter your budget or create forecast and projection managers and compare new data with the original budget.

Rabio is open-source

You can download Rabio open-source version here

cost breakdown structure
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