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.