Global WBS Accounts in Project Accounting - PAGE 2

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EARNED WORK is another meaning of EARNED VALUE expressed in dollars, or other monetary terms. To grasp the concept, consider that EARNED WORK ($) is equal EARNED VALUE (%) multiplied by FORECAST VALUE ($)

            Project Cost Accounts and their related Global WBS Accounts are used to track financial progress defined by EARNED VALUE% and EARNED WORK$, where:

EARNED VALUE% = Progress expressed in percentage of the work completed so far;

EARNED WORK$ is obtained from this equation:


The calculations of EARNED WORK are simple, and could be done also by using EXCEL worksheet, because there the dual-entry accounting method is not mandatory. However, the advantage of computer software that utilizes database is obvious, because then input data can be also retrieved from combos containing accounts of Project Participants, what simplifies greatly the whole procedure.  The computer software, called TECA (an integral part of the book called Project Accounting for Complex Engineering Projects) calculates Earned Work from Earned Value, and vice versa, within Project Cost Accounts and their related Global WBS Accounts.

Each global WBS Account may comprise any number of Cost Estimate Positions. For example, gWBS Account called ‘Instrumentation Materials’ may contain 99 position of the Cost Estimate, each stipulating some instrumentation material that shall be procured from some vendor, defined later. Another gWBS Account, called ‘Reactor Building, Unit I, Structure’ may contain positions of construction works such as Foundation piles, Ground Floor Slab, Containment Structure, Interior Framing Structure, Basic Plumbing & Sanitary Work, Basic Electrical Work, Basic Insulation, Painting – each job to be performed by some contractor, defined later. Another gWBS Account called ‘Other Indirect Engineering’ may contain engineering costs such as Salaries of Secretaries, Computers of Secretaries, Office Materials, Telephone, Fax and Internet, Office Personnel Travel, and Office Personnel Accommodations. The contents of every gWBS Account must obey the Code of Accounts Rules, stipulated below.

In Dual-Entry Project Accounting, the Code of Accounts utilizes four (4) types of accounts, COMMITMENT, COST, EXPENSE and BOOKING, as show below in FIGURE #1.

There are four (4) rules that shall be followed to ensure that the Project Accounting done with TECA performs correctly.

 RULE #1 Account must relate to one Generic Group only

Several Positions of Cost Estimate Position may be embedded in one gWBS ACCOUNT, that has its corresponding PROJECT COST ACCOUNT, and then both the gWBS Account and the corresponding Cost Account shall be allocated to only one of the eight possible Generic Account Categories:

  • Engineering , direct
  • Engineering, indirect
  • Materials, direct
  • Materials, indirect
  • Construction, direct
  • Construction, indirect
  • Prorates
  • Contingency

RULE #2:  Categories of Generics must not be combined                                    FIGURE #1 - Accounts in Dual-Entry Project Accounting 

            The listed eight generic categories must not be combined in one [gWBS Account] = [Cost Account]. For example, the account (usually one Work Package) must not be both Materials and Construction combined. It must not be also Direct and Indirect costs combined, or Contingency and Prorates combined. If so, than both the Estimating Engineer and the Cost Engineer must regroup the defective Work Package accordingly.

To the Materials category must belong only such accounts where the material purchase is a separate activity from that of the Construction. For example, if reinforced concrete material will be purchased and supplied by the contractor who will also bill the Project for the construction work requiring this material, then such Material Work Package must belong to Construction and not to Materials. On the other hand, all equipment purchased by the Project must belong to Materials. There is also no need to identify Subcontract Work Packages separately, as they shall belong to Construction

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