The ‘Controlling’ Function
Principles of Management
What is Controlling?
Simply put…
It is the process of monitoring activities to ensure they are being accomplished as planned and correcting any significant deviations.
Why is it needed?
To cope with changes… internally & externally
To facilitate delegation and teamwork To create better quality and add value
This will in turn, lead to: Judge accuracy of the standards that were
set Improve performance Minimize undesirable behaviour
Understanding the Control Process
Controlling Process
Understanding the Control Process
Establish standards Quantity / targets, Quality, Monetary and Time-
related
Monitor performance Periodically checking and correcting minor
deviations / problems
Measure actual performance Actual measurement over a pre-decided time period.
Eg: annually, half-yearly.
Take corrective actions Post evaluation of ‘where one stands’, the co. takes
actions to ensure original plans are met.
So in Essence, Controlling is…
Both anticipatory and retrospective.
The process anticipates problems and takes preventive action.
With corrective action, the process also follows up on problems.
An Effective Control System Needs to have:
Acceptability by all those who will enforce decisions
Flexibility Accuracy Timeliness Cost effectiveness Balance between objectivity and
subjectivity Coordinated with planning, organizing and
leading
Controlling Techniques
A variety of tools and techniques are used to help the manager control activities in their areas.
Types Of Controlling Techniques
Traditional Techniques
Personal observation
Break-Even analysis
Statistical reports
Budgetary control
Modern Techniques
Management Audit
Return on Investment
PERT & CPM
GANTT
Management Information
Techniques
GANTT
PERT (Programme Evaluation & Review
Technique)
BUDGETING
What is the GANTT chart?
A Gantt chart is a type of bar chart that illustrates a project schedule.
Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project.
Terminal elements and summary elements comprise the work breakdown structure of the project.
Illustration
Programme Evaluation & Review Techniques (PERT)
Definition:
Project management technique that shows the time taken by each component of a project, and the total time required for its completion.
PERT breaks down the project into events and activities, and lays down their proper sequence, relationships, and duration in the form of a network.
PERT is a scheduling tool, and does not help in finding the best or the shortest way to complete a project.
PERT Diagrams
PERT Diagrams
Illustration: simple building project to put an A/C unit in a factory
Task ID Task Descriptions
Prerequisites Optimistic Duration
Most likely Duration
Pessimistic Duration
Expected Duration
1 Build Internal Components
None 1 2 3 2
2 Modify roof and floor
None 2 3 4 3
3 Construct collection stack
1 1 2 3 2
4 Pour concrete and install frame
2 2 4 6 4
5 Build high temperature burner
3 1 4 7 4
6 Install control system
3 1 2 9 4
7 Install air pollution device
4,5 3 4 11 6
8 Inspection and testing
6,7 1 2 3 2
Advantages of PERT
Ensures Planning
All managers are involved
Forward-looking - Hence, helps to prevent deviations and take corrective measures quickly
Facilitates in decision-making
Improves communication
Disadvantages of PERT
Error in estimation of time & cost as no scope for ‘gestimates’
Quite complicated. One needs good knowledge and understanding for right application
Overemphasis on time, less on costs
Budgeting
Definition:
“Budgeting is a part of management process which includes preparation of budget”.
Budget control, Budget co-ordination activities are related with budget.
Objectives of Budgeting
Establish Balancing Act.
Maximization of Profits.
Planning.
Forecasting.
Control Expenditure.
Advantages of Budgeting
Achievement of goals.
Control Expenditure.
Better Utilization Of Resources.
Solving Financial Difficulties.
Co-ordination in Working.
Limitations of Budgeting
Changing Conditions.
Time Consuming.
Budgets are based on Plan Estimates.
Conflicts among Departments.
Inaccuracy.
Effective Budgeting
Objectives.
Education.
Communication.
Reward & Punishment.
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