As we mentioned in a previous section, a well-achieved cost breakdown structure is a direct consequence of a well-achieved work breakdown structure. So, the first step to analyzing your general cost structure is to analyze your WBS. 

A reasonable cost breakdown structure addresses all project tasks, however small they may be. For this reason, you must analyze the work breakdown structure to identify all the related labor, materials, and even indirect costs.  

Often, the project planning can surprise you, giving you some tasks that were not in the original scope. Deeply analyze to reach an excellent result.

Divide the direct costs into two categories: labor and material costs. The first corresponds to how much you will pay laborers or contractors to complete a specific task. So, you need to calculate the cost of every activity within the project.

We know that calculating all the costs incurred on a project is a challenging task. Initial estimates can vary over time. For this reason, it's mandatory to adopt intelligent strategies to estimate the actual costs of labor. 

Parametric estimation is one of these strategies. Knowing the topics and how long the activities can take is essential.

This step is very similar to those mentioned above. The difference is that here you will calculate the project's cost estimate of the materials. i.e., the price of all the physical things the employees will use to complete tasks. Material costs refer to various expenses, such as the following:

• Equipment costs.
• Raw material costs.
• Spare parts costs.
• Supplies costs.  

Of course, the material cost estimating will depend on the nature of your business. For instance, a construction company will have more material project expenses than a digital marketing agency.

Your project budget should always consider contingency as a crucial part of your estimates. In other words, having a margin of overspending will help you to finance works even if they are out of project budgets. No matter how accurate your CBS is, contingency may always happen.

Several factors can affect your direct, material, and logistics costs. Most of them are impossible to anticipate. For instance, the price of materials can go up at any moment, and the overall cost of a specific task may be more expensive than estimations. 

Project managers must identify potential risks and integrate them into the general financial aspect. This way, a well-achieved project cost breakdown structure lets contingency enter the equation.   

Projecting contingency costs require checking previous projects to see possible contingencies and their final cost. Future projects must always look back and learn from experiences so as not to suffer losses.

The last stand to control costs and develop an excellent cost breakdown structure CBS is to match your estimates with the project budget. It's mandatory since most project-based companies calculate the original budget from a top-down project plan analysis. Others make a bottom-up analysis. 

This analysis needs to provide a detailed cost of the integrated parts of the project. Besides, sometimes the same companies must remember to include mandatory items, such as administrative costs, management costs, hidden costs, etc.

For better control, check whether the cost data you obtain from the CBS matches what the project entails and the available budget. If it does, the project lifecycle will succeed, proving that the accounting system and estimates are working. If it does not, you can always run another careful planning or even look for some strategies to control other costs to deliver good project outcomes.

The following cost breakdown structure templates will help you organize the cost and calculate them by estimating the time of all your project activities at a high accuracy level.      

The templates require Microsoft Office to edit them. As we know that getting the Office suite can be a bit expensive on the official Microsoft website, we’re here to offer  you Office 2021 at a reasonable price. Get a reliable copy of a Microsoft Office 2021 Professional Plus Key Retail Global at €6,20.

Construction Cost Breakdown Structure Template

Although cost breakdown structures are generally represented through a hierarchical representation, such as a treemap, the best way to get a CBS with more detail is by using a spreadsheet like the one you see in the example before.

The only thing we can say to you at this point of the post is to consider all the small tasks, regardless of their importance. Integrate all the granular information and the proper pricing of activities, and you will have a CBS with outstanding reliability.  

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