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Management

Management in all business and organizational activities is the act of getting people
together to accomplish desired goals and objectives using available resources efficiently
and effectively. Management comprises planning, organizing, staffing, leading or
directing, and controlling an organization (a group of one or more people or entities) or
effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment
and

manipulation

of human

resources, financial resources, technological resources,

and natural resources.


Nature of Management
Nature of management can be described as follows.
Continuous Process: Management is a never ending process. It will remain the part of
organization till the organization itself exists. Management is an unending process as past
decisions always carry their impact for the future course of action.
Universal in Nature: Management is universal in nature i.e. it exists everywhere in
universe wherever there is a human activity. The basic principles of management can be
applied any where whether they are business or non-business organization.
Multidisciplinary: Management is basically multidisciplinary. Though management has
developed as a separate discipline it draws knowledge and concepts of various other
streams like sociology, psychology, economics, statistics etc. Management links ideas and
concepts of all these disciplines and uses them for good-self of the organization.
Management is a group activity. Management is a vital part of group activity. As no
individual can satisfy all his needs himself, he unites with his co-workers and work
together as an organized group to achieve what he can not achieve individually.
Management is goal oriented: Management is a goal oriented activity. It works to
achieve some predetermined objectives or goals which may be economic or social.

Dynamic: Management is dynamic in nature i.e. techniques to mange business changes


itself over a period of time.
System of authority: Authority is power to get the work done by others and compel
them to work systematically. Management can not perform in absence of authority.
Authority and responsibility depends upon position of manager in organization.
Management is an art: Management is considered as art as both requires skills,
knowledge, experience and creativity for achievement of desired results.
Management is Science. Management is considered as science. Science tells about the
causes and effects of applications and is based on some specific principles and
procedures. Management also uses some principles and specific methods. These are
formed by continuous observations.

Functions of Management

Management operates through various functions, often classified as planning, organizing,


staffing, leading/directing, controlling/monitoring and Motivation.
1. Planning

It is the basic function of management. It deals with chalking out a future course
of action & deciding in advance the most appropriate course of actions for
achievement of pre-determined goals. According to KOONTZ, Planning is
deciding in advance - what to do, when to do & how to do. It bridges the gap from
where we are & where we want to be. A plan is a future course of actions. It is an
exercise in problem solving & decision making. Planning is determination of
courses of action to achieve desired goals. Thus, planning is a systematic thinking
about ways & means for accomplishment of pre-determined goals. Planning is
necessary to ensure proper uti

lization of human & non-human resources. It is all pervasive, it is an intellectual


activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing
It is the process of bringing together physical, financial and human resources and
developing

productive

relationship

amongst

them

for

achievement

of

organizational goals. According to Henry Fayol, To organize a business is to


provide it with everything useful or its functioning i.e. raw material, tools, capital
and personnels. To organize a business involves determining & providing
human and non-human resources to the organizational structure. Organizing as a
process involves:

Identification of activities.

Classification of grouping of activities.

Assignment of duties.

Delegation of authority and creation of responsibility.

Coordinating authority and responsibility relationships.

3. Staffing
It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement
of technology, increase in size of business, complexity of human behavior etc.
The main purpose o staffing is to put right man on right job i.e. square pegs in
square holes and round pegs in round holes. According to Kootz & ODonell,
Managerial function of staffing involves manning the organization structure
through proper and effective selection, appraisal & development of personnel to
fill the roles designed un the structure. Staffing involves:

Manpower Planning (estimating man power in terms of searching, choose


the person and giving the right place).

Recruitment, selection & placement.

Training & development.

Remuneration.

Performance appraisal.

Promotions & transfer.

4. Directing
It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered lifespark of the enterprise which sets it in motion the action of people because
planning, organizing and staffing are the mere preparations for doing the work.
Direction is that inert-personnel aspect of management which deals directly with
influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals. Direction has following elements:

Supervision

Motivation

Leadership

Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is


the act of watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with
zeal to work. Positive, negative, monetary, non-monetary incentives may be used
for this purpose.
Leadership- may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding.
5. Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards.
An efficient system of control helps to predict deviations before they actually
occur. According to Theo Haimann, Controlling is the process of checking
whether or not proper progress is being made towards the objectives and goals
and acting if necessary, to correct any deviation. According to Koontz &
ODonell Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and plans
desired to obtain them as being accomplished. Therefore controlling has
following steps:
o Establishment of standard performance.
o Measurement of actual performance.
o Comparison of actual performance with the standards and finding out
deviation if any.

o Corrective action.

Project management
Project management is a discipline of planning, organizing, securing and managing
resources to bring about the successful completion of specific project goals and
objectives.
It is an organized endeavor to accomplish a specified non-routine task. Although projects
are not repetitive, they take significant amount of time to complete

A project is a temporary endeavor, having a defined beginning and end (usually


constrained by date, but can be by funding or deliverables), undertaken to meet
unique goals and objectives, usually to bring about beneficial change or added
value.

Objectives

To accomplish its assigned mission

It must adhere to tight time schedule, adhere to strict budgets, report to top
management personnel of the organization etc.

Ensure Projects are Delivered within Budget

Ensure Projects are Delivered within Schedule Commitments

Deliver Quality Solutions

Reduced Errors

Improved Effectiveness

Appropriate Risk Management and Internal Controls

Continuous Process Improvement via Collaboration

Implement Project Communications and Oversight

Phases:

Traditionally, project management includes a number of elements: four to five process


groups, and a control system. Regardless of the methodology or terminology used, the
same basic project management processes will be used.
Major process groups generally include]:

Initiation

Planning or development

Production or execution

Monitoring and controlling

Closing

Initiating
The initiating processes determine the nature and scope of the project.
The initiating stage should include a plan that encompasses the following areas:

Analyzing the business needs/requirements in measurable goals

Reviewing of the current operations

Financial analysis of the costs and benefits including a budget

Stakeholder analysis, including users, and support personnel for the project

Project charter including costs, tasks, deliverables, and schedule

Planning and design


The main purpose is to plan time, cost and resources adequately to estimate the work
needed and to effectively manage risk during project execution.
Project planning generally consists of

determining how to plan (e.g. by level of detail or rolling wave);

developing the scope statement;

selecting the planning team;

identifying deliverables and creating the work breakdown structure;

identifying the activities needed to complete those deliverables and networking


the activities in their logical sequence;

estimating the resource requirements for the activities;

estimating time and cost for activities;

developing the schedule;

developing the budget;

risk planning;

gaining formal approval to begin work.

Additional processes, such as planning for communications and for scope management,
identifying roles and responsibilities, determining what to purchase for the project
generally advisable.
For new product development projects, conceptual design of the operation of the final
product may be performed concurrent with the project planning activities, and may help
to inform the planning team when identifying deliverables and planning activities.
Executing
Executing consists of the processes used to complete the work defined in the project plan
to accomplish the project's requirements. Execution process involves coordinating people
and resources, as well as integrating and performing the activities of the project in
accordance with the project management plan. The deliverables are produced as outputs
from the processes performed as defined in the project management plan and other
frameworks that might be applicable to the type of project at hand.
Monitoring and controlling
Monitoring and controlling consists of those processes performed to observe project
execution so that potential problems can be identified in a timely manner and corrective
action can be taken, when necessary, to control the execution of the project. The key
benefit is that project performance is observed and measured regularly to identify
variances from the project management plan.
Monitoring and Controlling includes:

Measuring the ongoing project activities ('where we are');

Monitoring the project variables (cost, effort, scope, etc.) against the project
management plan and the project performance baseline (where we should be);

Identify corrective actions to address issues and risks properly (How can we get on
track again);

Influencing the factors that could circumvent integrated change control so only
approved changes are implemented

In multi-phase projects, the monitoring and control process also provides feedback
between project phases, in order to implement corrective or preventive actions to bring
the project into compliance with the project management plan.
Project Maintenance is an ongoing process, and it includes:

Continuing support of end users

Correction of errors

Updates of the software over time

In this stage, auditors should pay attention to how effectively and quickly user problems
are resolved.
Closing
Closing includes the formal acceptance of the project and the ending thereof.
Administrative activities include the archiving of the files and documenting lessons
learned.
This phase consists of:

Project close: Finalize all activities across all of the process groups to formally
close the project or a project phase

Contract closure: Complete and settle each contract (including the resolution of
any open items) and close each contract applicable to the project or project phase.

Techniques:
The three basic project planning techniques are Gantt chart, CPM and PERT. All monitor

progress and costs against resource budgets.

Gantt Chart

Gantt chart is now commonly used for scheduling the tasks and tracking the progress of
energy management projects. Gantt charts are developed using bars to represent each
task. The length of the bar shows how long the task is expected to take to complete.
Duration is easily shown on Gantt charts.

CPM - Critical Path Method

DuPont developed a Critical Path Method (CPM) designed for Complex project, like the
above example, require a series of activities, some of which must be performed
sequentially and others that can be performed in parallel with other activities. This
collection of series and parallel tasks can be modeled as a network. CPM models the
activities and events of a project as a network. Activities are shown as nodes on the
network and events that signify the beginning or ending of activities are shown as arcs or
lines between the nodes.

PERT- Programme Evaluation and Review Technique

The Program Evaluation and Review Technique (PERT) is a network model that allows
for randomness in activity completion times. PERT has the potential to reduce both the
time and cost required to complete a project.

PERT Programme Evaluation and Review Technique

It is the name given to planning, monitoring, controlling and evaluation of


complex projects

It is used for non repetitive-projects

It has been used for projects such as defense and nuclear powered submarines.

It is a planning tool which enables the project manager to estimate the time
required to complete a proposed project.

Provides a time schedule for various project activities

Checking scheduled time against the actual time taken for an activity

Minimize delay time in various parts of the overall job and helps on exp editing
the completion of the projects.

It is method of budgeting resources to predetermine the job on schedule

PERT tells us how to set up network, how to calculate completion tie and how to
monitor and control work.

Advantages:

PERT chart explicitly defines and makes visible dependencies between the WBS
elements

PERT facilitates identification of the critical path and makes this visible

PERT facilitates identification of early start, late start, and slack for each activity,

PERT provides for potentially reduced project duration due to better


understanding of dependencies leading to improved overlapping of activities and
tasks where feasible.

The large amount of project data can be organized & presented in diagram for use
in decision making.

Disadvantages:

There can be potentially hundreds or thousands of activities and individual


dependency relationships

The network charts tend to be large and unwieldy requiring several pages to print
and requiring special size paper

The lack of a timeframe on most PERT/CPM charts makes it harder to show


status although colours can help (e.g., specific colour for completed nodes)

When the PERT/CPM charts become unwieldy, they are no longer used to
manage the project.

The Network Diagram


In a project, an activity is a task that must be performed and an event is a milestone
marking the completion of one or more activities. Before an activity can begin, all of its
predecessor activities must be completed. Project network models represent activities and
milestones by arcs and nodes. PERT is typically represented as an activity on arc
network, in which the activities are represented on the lines and milestones on the nodes.
Steps in the PERT Planning Process
1. Identify activities and milestones
The activities are the tasks required to complete the project. The milestones are the events
marking the beginning and end of one or more activities.
2. Determine activity sequence
This step may be combined with the activity identification step since the activity
sequence is
known for some tasks. Other tasks may require more analysis to determine the exact
order in
which they must be performed.
3. Construct the Network Diagram

Using the activity sequence information, a network diagram can be drawn showing the
sequence of the serial and parallel activities.
4. Estimate activity times
Weeks are a commonly used unit of time for activity completion, but any consistent unit
of time can be used. A distinguishing feature of PERT is its ability to deal with
uncertainty in activity completion times. For each activity, the model usually includes
three time estimates:

Optimistic time (OT) - generally the shortest time in which the activity can be
completed. (This is what an inexperienced manager believes!)
Most likely time (MT) - the completion time having the highest probability. This is
different from expected time. Seasoned managers have an amazing way of estimating
very close to actual data from prior estimation errors.
Pessimistic time (PT) - the longest time that an activity might require.
The expected time for each activity can be approximated using the following weighted
average:
Expected time = (OT + 4 x MT+ PT) / 6
This expected time might be displayed on the network diagram.
Variance for each activity is given by:
[(PT - OT) / 6]2

5. Determine the Critical Path


The critical path is determined by adding the times for the activities in each sequence and
determining the longest path in the project. The critical path determines the total time
required for the project. The amount of time that a non-critical path activity can be
delayed without delaying the project is referred to as slack time. If the critical path is not
immediately obvious, it may be helpful to determine the following four quantities for
each activity:
ES - Earliest Start time
EF - Earliest Finish time
LS - Latest Start time
LF - Latest Finish time
These times are calculated using the expected time for the relevant activities. The ES and
EF determines the earliest time at which an activity can start and finish considering its
predecessor activities. The latest start and finish times are the latest times that an activity
can start and finish without delaying the project. LS and LF are found by working
backward through the network. The difference in the latest and earliest finish of each
activity is that activity's slack.
The variance in the project completion time can be calculated by summing the variances
in the completion times of the activities in the critical path. Given this variance, one can
calculate the probability that the project will be completed by a certain date such that the
project can be accelerated by adding the resources required to decrease the time for the
activities in the critical path.
6. Update as project progresses

Make adjustments in the PERT chart as the project progresses. As the project unfolds, the
estimated times can be replaced with actual times. In cases where there are delays,
additional resources may be needed to stay on schedule and the PERT chart may be
modified to reflect the new situation.
Terminologies:

PERT event: a point that marks the start or completion of one or more activities.
It consumes no time and uses no resources. When it marks the completion of one or
more tasks, it is not reached (does not occur) until all of the activities leading to
that event have been completed.

predecessor event: an event that immediately precedes some other event without
any other events intervening. An event can have multiple predecessor events and can
be the predecessor of multiple events.

successor event: an event that immediately follows some other event without any
other intervening events. An event can have multiple successor events and can be the
successor of multiple events.

PERT activity: the actual performance of a task which consumes time and
requires resources (such as labor, materials, space, machinery). It can be understood
as representing the time, effort, and resources required to move from one event to
another. A PERT activity cannot be performed until the predecessor event has
occurred.

Optimistic time (O): the minimum possible time required to accomplish a task,
assuming everything proceeds better than is normally expected

Pessimistic time (P): the maximum possible time required to accomplish a task,
assuming everything goes wrong (but excluding major catastrophes).

Most likely time (M): the best estimate of the time required to accomplish a task,
assuming everything proceeds as normal.

Expected time (TE): the best estimate of the time required to accomplish a task,
accounting for the fact that things don't always proceed as normal (the implication
being that the expected time is the average time the task would require if the task
were repeated on a number of occasions over an extended period of time).

TE = (O + 4M + P) 6

Float or Slack is the amount of time that a task in a project network can be
delayed without causing a delay - Subsequent tasks (free float) or Project
Completion (total float)

Critical Path: the longest possible continuous pathway taken from the initial
event to the terminal event. It determines the total calendar time required for the
project; and, therefore, any time delays along the critical path will delay the
reaching of the terminal event by at least the same amount.

Critical Activity: An activity that has total float equal to zero. Activity with zero
float does not mean it is on the critical path.

Lead time: the time by which a predecessor event must be completed in order to
allow sufficient time for the activities that must elapse before a specific PERT
event reaches completion.

Lag time: the earliest time by which a successor event can follow a specific PERT
event.

Slack: the slack of an event is a measure of the excess time and resources
available in achieving this event. Positive slack would indicateahead of schedule;
negative slack would indicate behind schedule; and zero slack would indicate on
schedule.

Fast tracking: performing more critical activities in parallel

Crashing critical path: Shortening duration of critical activities

CPM Critical Path Method


The critical path method (CPM) is an algorithm for scheduling a set of project
activities. It is an important tool for effective project management.

It is helpful in calculating the minimum time and the sequence of tasks needed to
complete a project

It is mostly used for construction projects such as bridges, dams, canals etc.,
where engineers try to complete the job at the earliest to avoid rising costs.

Features:

Determine the critical path on which the project duration depends.

It gives the most economical schedule for a fixed duration.

It determined the pattern of the allocation of available limited resources.

Purpose of CPM

To ensure logical discipline in planning, scheduling and controlling projects.

To encourage more long range and detailed planning of projects

To provide management with periodic reports on the progress of projects.

To identify the most critical element of the plan

To identify the critical path that takes the longest time in the completion of the
project.

Ex. The following table gives activities in a construction project and the other relevant
information.
Activity: 1-2 1-3

2-3

2-4

3-4

4-5

Duration: 20

10

12

10

25

Solution:

To find critical path:

All possible critical paths

path durations

1.2.3.4.5

20+10+6+10= 46

1.2.4.5

20+12+10=42

1.3.4.5

25+6+10=41

Critical path will be 12-3-4-5 and project duration will be 46 days.

PERT

CPM

1) Origin: military

1) origin: Industry

2) Event oriented approach

2) activity oriented approach

3) Allows uncertain

3) does not allow uncertainity

4) Probabilistic model

4) deterministic model

5) Time based

5) cost based

6) It averages time

6) does not average time

7) It estimates 3 different times

7) it estimates only one

Of completion

completion time