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CONTROLLING

MEANING
controlling may be defined as
the process of analysing actual
operations and seeing that actual
performance is guided towards
expected performance.

DEFINITION
According to Koontz and ODonnell,
The managerial function of controlling
is the measurement and correction of
the performance of activities of
subordinates in order to make sure that
enterprise objectives and the plans
devised to attain them are being
accomplished.

IMPORTANCE
Control is an indispensable function
ofmanagement.
Without control a manager cannot do the complete
job of managing.
Through control the management keeps
organisational activities directed towards
objectives.
Control is necessary to ensure smooth functioning
of an organisation.
By controlling, management ensures that
resources are utilised economically and efficiently.

CONTROL PROCESS

TECHNIQUES OF
CONTROLLING
The various techniques of control may
be classified into two broad categories:
Traditional techniques
Modern techniques

TRADITIONAL
TECHNIQUES
Personal
observation
Good organisation
structure
Unity of objectives,
policies, procedures and methods
Statistical reports
and analysis
Budgetary control
Profit and loss
control
External audit
control
Break even point
analysis
Overall control
criteria

MODERN TECHNIQUES
M
anagement audit
R
eturn on investment
R
esponsibility accounting
P
ERT and CPM.

PERT AND CPM


N
ETWORK TECHNIQUES
PERT and CPM are the two most popular
network techniques. Network analysis is being widely
used as a tool of management planning and control.
Network diagram is drawn up to present the
interdependence and inter-relationships between all the
operations involved in the project.

CONT
I

n network analysis, an activity is defined as an


operation required to accomplish the goal. It is
denoted by an arrow in the diagram.
I

t requires a specific time span for completion. An


event is a point of time when an activity is begun or
completed. It is denoted by a circle in the network
diagram.

PROJECT EVALUATION AND


REVIEW TECHNIQUE (PERT)
PERT is a visual network which is most appropriate
for planning, monitoring and controlling complex
and unique projects.
The steps involved in developing the PERT diagram
are as follows:
Breakdown the whole project into a number of
clearly identifiable activities.
prepare a network diagram to show the
sequence of activities. It has a beginning point and a
terminal point for the project.

CONT.
Ti
me estimates for each activity are prepared. Three estimates
for each activity are prepared.
(a) optimistic or shortest time
(b) pessimistic or longest time
(c) normal or most likely time.
Th
e critical path is determined. It is the longest path through
the network in terms of time.

CONT
It represents the sequence of activities
that is critical for the completion of the
project. If there are delays in these
activities, the completion of the entire
project will be delayed.
The initial plan is modified and improved
to control or minimise the time involved
in completion of the project.

CRITICAL PATH
METHOD(CPM)

he basic steps and principles


involved in CPM are the same as
those in PERT. But there are some
differences between PERT and CPM:

DIFFERENCE BETWEEN
PERT & CPM
PERT
ERT allows uncertinity in the
duration of activities.
hree estimates are made for
each activity.

CPM
P
n CPM it is assumed that the
duration of every activity is
constant.

nly one estimate is made for


each activity.

n CPM the focus is on cost.

n PERT main focus is on time.


ERT is more suitable where
activity timings are relatively
unknown.

PM is more appropriate for


projects with well-known times.

APPLICATIONS OF
PERT/CPM
PERT/CPM is a very versatile tool for project
management. Some of the common uses of this
technique are:
Large weapon system
Building/construction projects
Ship-building
Airport facilities building
Construction of a new plant
Launching new products
Installation of computers.

ADVANTAGES OF
PERT/CPM
It forces
managers to analyse uncertainities.
This
eliminates wastage.
It focuses
attention on critical activities.
The
network needs to be constantly reviewed and updated on the basis of feedback
from lower levels.
It results
in improved communication.

LIMITATIONS OF PERT/CPM

t is seldom possible to estimate accurately the time and


cost involved in various activities of a project.

rrors in estimation make the pert chart erratic and


unreliable as a control aid.

t is suitable mainly in cases where time is of essence.

t has very little application to simple, routine and


repetitive projects, e.g., continuous processes.

REQUIREMENTS OF AN
EFFECTIVE CONTROL
SYSTEM
Basic requirements of an
effective management
control system are:
Suitable
Understandable
Economical
Flexible
Expeditious
Forward Looking

rganizational
Conformity
ndicative of Exceptions
at Critical Points
bjectivity
uggestive of Corrective
Action.

BY
V.NIRANJANA
BP120709