Overview of

Techniques of Control

Presented By:Devi Kumari(321)Divesh Sahni(322)Dering naben(323)Ekta Kumari(324)Ekta Uniyal(325)

Controlling

Controlling is an essential function Of management in every organization. The management process is incomplete

and sometime useless without the control function.

Importance of Controlling Coping with uncertainty. Detecting irregularities. Identifying opportunities. Handling complex situations Decentralizing Authority Minimizing cost.

Process of Control

Techniques of Control

Control techniques provide managers with the type and amount of

information they need to measure and monitor performance.

Budgetary Control

A budget is a planning and controlling device. Budgetary control is a technique of managerial control through budgets. It is the essence of financial control. Budgetary control is done for all aspects of a business such as income, expenditure, production, capital and revenue. Budgetary control is done by the budget committee.

Types of Budget• Sales Budgets

• Selling & distribution Budget

• Production Budget

• Production Cost Budget

• Capital Expenditure Budget

• Cash budget

• Master budget

Financial Ratio Analysis It examines the relationship between specific figures on the

financial statements and helps explain the significance of those figures:

• Liquidity ratios: It measure an organization's ability to generate cash.

• Profitability ratios: It measure an organization's ability to generate profits.

• Debt ratios: It measure an organization's ability to pay its debts.

• Activity ratios: It measure an organization's efficiency in operations and use of assets.

AuditingAudit can be of two types•Internal audit•External audit

Internal Audit

• Carried out by the members of the organization

• Its objective is to provide reasonable assurance that the assets are properly safeguarded and its financial records reliably kept.

External Audit

• Largely a verification process which involves independent appraisal of organization’s financial accounts and statements

• Conducted by accounting personnel employed by an outside CPA firm or by chartered accountants

ReportsA major part of control

consists of preparing reports to provide information to the management for

purpose of control and planning

Types of reportsThe following are the certain type of reports

• Top Management:a) profit and loss accountb) Balance sheetc) position of workd) cash flow statemente) position of working capital

Continue…..

• Sales management:Actual sales compared with budgeted sale to

measure performance

• Production management:To foremanTo Works manager

Direct Supervision and Observation

1.'Direct Supervision and Observation' is the oldest and the most traditional technique of controlling.

2. The supervisor himself observes the employees and their work. This brings him in direct contact with the workers.

3. The supervisor gets first hand information, and he has better understanding with the workers.

4.This technique is most suitable for a small-sized business.

Break Even Analysis• It deals with the study of the relationship

between costs, volume, & profit.• It determines the probable profit and losses at

different levels of activity.• The sales volume at which there is no profit,

no loss is known as breakeven point.• It can be calculated as ,• Breakeven point=fixed cost/selling price per

unit – variable cost per unit.

PERT

The Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT, is a statistical tool, used in project

management, that is designed to analyze and represent the tasks involved in completing a

given project.

Diagram of PERT

Terminology

• PERT event• Predecessor event• Successor event• Optimistic time (O)• Pessimistic time (P)• Expected time (TE)• Critical path• PERT activity

CPM

The critical path method (CPM) is an algorithm for scheduling a set of project

activities. It is an important tool for effective project management

Basic TechniqueThe essential technique for using CPM is to construct a

model of the project that includes the following: A list of all activities required to complete the project, The time (duration) that each activity will take to

completion, and The dependencies between the activities.• Using these values, CPM calculates the longest path of

planned activities.• This process determines which activities are "critical

and which have "total float" .• Determines the shortest time possible to complete the

project.

Diagram of CPM