Project Management in the Oil and Gas Industry

Table 4.5 WBS/OBS matrix.
Civil 
work
Foundation 
work
Mechanical 
work
Electrical 
works
Design 
works
Planning 
work
X
X
X
X
X
X
Project 
manager
X
Planning 
supervisor
X
Design 
supervisor
X
Electric 
works 
supervisor
X
Mechanical 
work 
supervisor
X
X
Civil work 
supervisor
X
Concrete 
works 
supervisor

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128 
Project Management in the Oil and Gas Industry
For example, the concrete supervisor will be responsible for executing 
the following activities:
• The foundation with cost: $150,000
• The first floor with cost: $60,000
• The other floors: $400,000
So, in this case he or she will be responsible for three cost allocations 
with a total cost of $610,000.
Indirect cost, so far, is not taken into account in indirect expenses as 
the indirect expenses don’t account in the work expenses or, to be more 
precise, in the execution of the WBS and, therefore, such costs are charged 
to the administrative management of the project or elements of project 
management.
For example, the concrete foreman in the previous example has a salary 
and consumes equipment and other expenses. These expenses cannot be 
added or charged to the specific activities, as he will supervise the founda-
tion, columns, slabs, and others.
Those expenses must be paid on a regular basis during the execution of 
these activities. Also, any other expenses of supervision must be taken into 
account or any other administrative expenses such as offices for the engi-
neers, technicians, computers, cars to transport engineers, and expenses 
and salaries of engineers and senior management.
For example, if concrete work will continue for a period of six months 
and indirect expenses as the former salary and miscellaneous expenses 
each month are $10,000, at the same time the cost of concrete materials 
and manufacturing from mixing until curing it cost around $440,000, it 
can all be calculated based on the quantity of concrete. Note that the for-
mer who is supervising this activity is included in the indirect cost by allo-
cating for this activity for six months.
The total budget or estimated indirect costs is 6 × $10,000 = $60,000.
Thus, the total reinforcing concrete budget is as follows:
Direct cost = $440,000.
Indirect cost = $60,000.
Total cost = $500,000.