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Costs are allocated to the lowest level of the WBS. The tasks at this level can often be subdivided into discrete activities to be completed by different departments therefore one task may have several costs elements. Once costs have been assigned to tasks, it is possible to monitor the project in terms of actual, forecast and earned cost on a task.
In order to be able to summarise costs within projects across projects a CBS needs to be developed. The majority of organisations have a standard CBS that is applied across all projects and is nearly always determined by the finance department. Finance often refers to the structure as the code of accounts which includes other elements over and above pure costs. With some computerised tools, a separate CBS is set up which is normally a simplified version of the code of accounts so that it can be understood more easily by non-financial managers.
The overall purpose of the CBS is to breakdown all the associated costs for purposes of identification and control.
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