Project Management in the Oil and Gas Industry

4.3.2 Organization Breakdown Structure (OBS)
The Organization Breakdown Structure uses the same method for deter-
mining the levels of components of the project as the WBS. The system can 
be divided as well as the project management and organizational structure 
so that management knowledge can facilitate the identification of respon-
sibilities within the project.
Moreover, the organization breakdown structure assists in surveying 
the work activities.
The organization should be known to everyone who is involved in the 
project in order to facilitate communication and define responsibility.
The organizational structure is usually followed by the project manager 
and a group of managers, each of whom oversees a portion of the project. 
For example, note that the electrical work supervisor will be responsible only 
for the activities required to implement the electrical work for the project.
It is clear how important the development of the project management’s 
structure should be conducive to easy movement of information to and 
from the project manager to support his decision-making.
4.3.3 OBS/WBS 
Matrix
The organization breakdown structure and work breakdown structure 
matrix are shown in Table (4.5). The OBS is in the horizontal row and the 
vertical presents the organization.
From the above table, every person in the organization has a number of 
cells that present the work breakdown structure. For example, the project 
manager will do all the stages, so the cost will be for all these activities, the 

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Project Cost Control 127
mechanical supervisor is allocated for mechanical work only, and the civil 
supervisor is allocated to civil work and foundation work.
4.3.4 Work 
Packages
The cost will be divided into work packages and this is the last level for the 
WBS that presents the project activity on which the time schedule and cost 
depend.
For every activity, it is required to define the following in order to cal-
culate the cost:
• Execution time start and finish
• The resources to execute this activity
• The cost to execute the activity
Cost account (CA) is the cost budget for the activities that will be exe-
cuted in this account. It will be a budget for everyone responsible in the 
organization and this direct cost is usually the material and labor cost to 
execute the activity.