Control techniques141

CONTROL CONTROL TECHNIQUESTECHNIQUES

April 10, 2023 2

CONTROL TECHNIQUES

BUDGETING

TRADITIONALNONBUDGETARY

CONTROLDEVICES

BALANCED SCORECARD

BENCHMARKING

LINEARPROGRAMMING

MANAGEMENTBY

EXCEPTION

PERTCRITICAL

PATHMETHOD

GANTTCHART

FINANCIAL RATIO

ANALYSIS

COSTCONTROL

INFORMATIONTECHNOLOGY

April 10, 2023 3

WE HAVE FOLLOWING COMMONLY KNOWN WE HAVE FOLLOWING COMMONLY KNOWN ORGANISATIONAL CONTROL TECHNIQUESORGANISATIONAL CONTROL TECHNIQUES

BUDGET AS CONTROL TECHNIQUE

TRADITIONAL NONBUDGETARY CONTROL DEVICES

BALANCED SCORECARD

BENCHMARKING

FINANCIAL RATIO ANALYSIS

April 10, 2023 4

LINEAR PROGRAMMING

GANTT CHART

CRITICAL PATH METHOD(CPM)

PROGRAM EVALUATION & REVIEW TECHNIQUE(PERT)

MANAGEMENT BY EXCEPTION AS CONTROL DEVICE

INFORMATION TECHNOLOGY

April 10, 2023 5

BUDGETINGBUDGETING

BUDGETING: THE FORMULATION OF PLANS FOR A GIVEN FUTURE PERIOD IN NUMERICAL TERMS

SOME BUDGET DEVELOPMENT METHODS ARE AS FOLLOWS:

TOP-DOWN BUDGETING

BOTTOM-UP BUDGETING

ZERO-BASED BUDGETING

FLEXIBLE BUDGETING

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ADVANTAGE OF BUDGETINGADVANTAGE OF BUDGETING

1. BUDGET IS AN INSTRUMENT WHEREBY MANAGEMENT DETERMINES THE FUTURE COURSE OF ACTION.

2. BUDGET IS ALWAYS RELATED TO A SPECIFIED PERIOD.

3. BUDGET IS EXPRESSED IN QUANTITATIVE TERMS.

4. BUDGET IS ONLY AN ESTIMATED PLAN OF ACTION.

5. BUDGET PROVIDES STANDARD TO BE ACHIEVED.

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LIMITATIONS OF BUDGETINGLIMITATIONS OF BUDGETING

1. PROVES DANGEROUS WHEN IT IS BASED ON WRONG ESTIMATES.

2. SOMETIMES BUGETARY CONTROL BECOMES COMBERSOME.

3. BUDGET OFTEN CONTROL WRONG THINGS.

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TRADITIONAL NONBUDGETARY TRADITIONAL NONBUDGETARY CONTROL DEVICESCONTROL DEVICES

THE ARE SEVERAL TRADITIONAL NON BUDGETARY CONTROL DEVICES SUCH AS USE OF;

STATISTICAL DATA OF MANY ASPECTS OF THE OPERATION

SPECIAL REPORTS AND ANALYSIS OF SPECIFIC AREAS

THE OPERATIONAL AUDIT AND INDEPENDENT APPRIASAL BY A STAFF OF INTERNAL OR EXTERNAL AUDITORS

PERSONAL OBSERVATION SUCH AS BY WALKING AROUND

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FINANCIAL RATIO ANALYSIS-FINANCIAL RATIO ANALYSIS-

EXAMINES THE RELATIONSHIP BETWEEN SPECIFIC FIGURES ON THE FINANCIAL STATEMENTS AND HELPS TO EXPLAIN THE SIGNIFICANCE OF THESE FIGURES.

LIQUIDITY RATIOS

PROFITABILITY RATIOS

DEBT RATIOS

ACTIVITY RATIOS

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COST CONTROLCOST CONTROLCOST CONTROL- COST CONTROL IS APPLIED MAINLY BY BIG

MANUFACTURING COMPANY, HOTELS ETC TO HAVE STRICT CONTROL OVER COST AND REDUCE PER UNIT COST. THE OTHER OBJECTIVES OF THE COST CONTROL INCLUDE:

1. ACCURATELY ASSERTING PER UNIT, PER PROCESS AND PER DEPARTMENT COST.

2. DETERMINING SOURCES OF WASTAGE RELATING TO LABOUR AND MATERIALS.

3. ON THE BASIS OF STANDARD COST FIGURES, ESTIMATING THE COST OF PROPOSED PRODUCTION LOT TO QUOTE COPETITIVE TENDER PRICE.

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4. PREPARING COMPARATIVE COST FIGURES OF REPLACEABLE MATERIALS, MACHINES OR LABOUR.

5. COMPARING FINANCIAL FIGURES WITH COST FIGURES.

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BENCHMARKINGBENCHMARKING

BENCHMARKING- THE SEARCH FOR THE BEST PRACTICES AMONG COMPETITORS OR NONCOMPETITIVES THAT LEAD TO THEIR SUPERIOR PERFORMANCE.

BENCHMARK- THE STANDARD OF EXCELLENCE AGAINST WHICH TO MEASURE AND COMPARE.

THE METHODOLOGY ADOPTED IS AS UNDER:

1. IDENTIFY THE PROBLEM AREAS.

2. IDENTIFY OTHER INDUSTRIES.

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3. IDENTIFY ORGANISATIONS THAT ARE LEADERS IN THESE AREAS.

4. SURVEY COMPANIES FOR MEASURES AND PRACTICES.

5. VISIT THE “BEST PRACTICE” COMPANIES TO IDENTIFY LEADING EDGE PRACTICES.

6. IMPLEMENT NEW AND IMPROVED BUSINESS PRACTICES.

April 10, 2023 14

COST OF BENCHMARKINGCOST OF BENCHMARKING

BENCHMARKING IS MODERATELY EXPENSIVE PROCESS, BUT MOST ORGANISATIONS FIND IT MORE THAN PAYS FOR ITSELF. THREE MAIN TYPES OF COSTS ARE:

• VISIT COSTS

• TIME COSTS

• BENCHMARKING DATABASE COSTS

April 10, 2023 15

BALANCED SCORECARDBALANCED SCORECARD

BALANCED SCORECARD- A PERFORMANCE MEASUREMENT TO THAT LOOKS AT FOUR AREAS- FINANCIAL, CUSTOMER, INTERNAL PROCESSES, AND PEOPLE/INNOVATION/GROWTH ASSETS-THAT CONTRIBUTES TO A COMPANY’S PERFORMANCE.

THE FOUR GENERAL PERSPECTIVES WHICH HAVE BEEN PROPOSED BY BALANCE SCORECARD ARE AS UNDER:

• FINANCIAL PERSPECTIVE

• CUSTOMER PERSPECTIVE

April 10, 2023 16

• INTERNAL PROCESS PERSPECTIVE

• INNOVATION AND LEARNING PERSPECTIVE

LIMITATIONS

• SCORES ARE NOT BASED ON ANY PROVEN ECONOMIC OR FINANCIAL THEORY.

• BALANCED SCORECARD DOES NOT PROVIDE A BOTTOMLINE SCORE.

April 10, 2023 17

LINEAR PROGRAMMINGLINEAR PROGRAMMING

ACCORDING TO WILLIAM M. FOX “LINEAR PROGRAMMING IS A PLANNING TECHNIQUE THAT PERMITS SOME OBJECTIVE FUNCTION TO BE MINIMISED OR MAXIMISED WITHIN THE FRAMEWORK OF GIVEN SITUATIONAL RESTRICTIONS.”

REPRESENTATION- AX1+BX2≤Z

REQUIREMENTS-1. OBJECTIVE FUNCTION.2. CONSTRAINTS.3. LINEARITY.4. NONEGATIVITY5. FINITENESS.

April 10, 2023 18

ADVANTAGESADVANTAGES

1. FACILITATES LOGICAL THINKING AND STUDY OF DATA.

2. ONE CAN EVALUATE THE COSTS AND BENEFITS OF DIFFERENT ALTERNATIVES.

3. HELPFUL IN MAKING ADJUSTMENTS IN THE PLAN.

4. CAN BE APPLIED TO A VARIETY OF MULTIDIMENSIONAL PROBLEMS.

April 10, 2023 19

LIMITATIONSLIMITATIONS

• SOLVES PROBLEM OF LINEAR NATURE.

• CANNOT PROVIDE SOLUTIONS TO PROBLEMS WHICH INVOLVE VARIABLES NOT CAPABLE OF BEING EXPRESSED QUANTITATIVELY.

• UNCERTAINTIES ARE NOT CONSIDERED.

• RESULT UNDER THIS TECHNIQUE ARE NOT NECESSARILY TO BE IN WHOLE NUMBERS.

April 10, 2023 20

GANTT CHARTGANTT CHART

• THIS CHART SYSTEM WAS DEVELOPED BY HENRY L. GANTT.

• GANTT CHART- A BAR CHART THAT SHOWS THE TIME RELATIONSHIPS BETWEEN THE “EVENTS” OF A PRODUCTION PROGRAM.

• MILESTONE BUDGETING OR MILEPOST- ADVANCED TECHNIQUE OF GANTT CHART MILESTONE BREAKS A PROJECT DOWN INTO CONTROLLABLE PIECES.

April 10, 2023 21

CRITICAL PATH METHOD(CPM)CRITICAL PATH METHOD(CPM)

• DEVELOPED BY M.R. WALKER OF USA IN 1956.• IT IS USED FOR OPTIMISING RESOURCE ALLOCATION AND

MINIMISING OVERALL COST FOR A GIVEN PROJECT.• PROCEDURE- 1. BREAK DOWN THE PROJECT INTO VARIOUS ACTIVITIES

SYSTEMATICALLY.2. NUMBER ALL THE EVENTS AND ACTIVITIES.3. CALCULATE THE EARLIEST START TIME, EARLIER FINISH

TIME, LATEST START TIME AND LATEST FINISH TIME.4. DETERMINE TOTAL FLOAT TIME.5. IDENTIFY THE CRITICAL ACTIVITIES AND CONNECT THEM

WITH DOUBLE LINE ARROW.6. CALCULATE TOTAL DURATION OF PROJECT.

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CPM NETWORK DIAGRAMCPM NETWORK DIAGRAM

4

1 2 3 6

5 7 8

4

9

2 3

1

107

2

5

6

April 10, 2023 23


• HIGHLIGHTS THE CRITICAL ACTIVITIES.

• PROVIDES A TECHNIQUE OF PLANNING AND SCHEDULING.

• GIVES COMPLETE INFORMATION OF ACTIVITY.

• HELPS TO IDENTIFY POTENTIAL BOTTLENECKS.

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• OPERATES ON ASSUMPTION OF PRECISE TIME.

• DOES NOT INCORPORATE STATISTICAL ANALYSIS IN DETERMINIG TIME ESTIMATES.

• FOR EVERY CHANGE INTRODUCED ENTIRE PROJECT EVALUATION HAS TO BE REPEATED.

• NOT SUITABLE FOR A SITUATION WHICH DOES NOT HAVE DEFINITE START AND FINISH TIME.

April 10, 2023 25

A

B

C

D

E

I GANTT CHART

J F M A M J JU A S

April 10, 2023 26

A

B

C

D

E

1 2 3 4

5 6 7 8

9 10 11 12

13 14

15 16 17 18 19

II GANTT WITH MILE STONE

J F M A M J JU A S

April 10, 2023 27

A

B

C

D

E

1 2 3 4

5 6 7 8

9 10 11 12

13 14

15 16 17 18 19

JAN MARFEB APRIL MAY JUNE JUL AUG SEP

III GANTT WITH MILE STONES AND NETWORK OF MILESTONES

April 10, 2023 28

PROGRAM EVALUATION AND REVIEW PROGRAM EVALUATION AND REVIEW TECHNIQUE(PERT)TECHNIQUE(PERT)

• PERT- A TIME EVENT NETWORK ANALYSIS SYSTEM IN WHICH THE VARIOUS EVENTS IN A PROJECT OR PROGRAM ARE IDENTIFIED WITH A PLANNED TIME ESTABLISHED FOR EACH.

METHODOLOGY• PREPARATION OF THE NETWORK .• NETWORK ANALYSIS.• SCHEDULING.• TIME COST TRADE OFFS.• RESOURCE ALLOCATION.• PROJECT CONTROL.

April 10, 2023 29

1

2 9

4 8

3 7 10 13

116

512

PERT FLOWCHARTPERT FLOWCHARTEVENTS(MAJOR MILESTONES OF PROGRESS) IN THE MAJOR ASSEMBLY OF AN AIRPLANEEVENTS(MAJOR MILESTONES OF PROGRESS) IN THE MAJOR ASSEMBLY OF AN AIRPLANE

(1)ORDER PROGRAM GO AHEAD (2)INITIATE ENGINE PROCUREMENT(3)COMPLETE PLANS AND (1)ORDER PROGRAM GO AHEAD (2)INITIATE ENGINE PROCUREMENT(3)COMPLETE PLANS AND SPECIFICATIONS (4)COMPLETE FUSELAGE DRAWINGS (5)SUBMIT GFAE*REQUIREMENTS (6)AWARD TAIL SPECIFICATIONS (4)COMPLETE FUSELAGE DRAWINGS (5)SUBMIT GFAE*REQUIREMENTS (6)AWARD TAIL

ASSEMBLY SUBCONTRACT (7)AWARD WINGS SUBCONTRACT (8)COMPLETE MANUFACTURE OF FUSELAGE ASSEMBLY SUBCONTRACT (7)AWARD WINGS SUBCONTRACT (8)COMPLETE MANUFACTURE OF FUSELAGE (9)COMPLETE ASSEMBLY OF FUSELAGE ENGINE (10)RECEIVE WINGS FROM SUBCONTRACTORS (11)RECEIVE (9)COMPLETE ASSEMBLY OF FUSELAGE ENGINE (10)RECEIVE WINGS FROM SUBCONTRACTORS (11)RECEIVE

TAIL ASSEMBLY FROM SUBCONTRACTOR (12)RECEIVE GFAE (13)COMPLETE AIRCRAFTTAIL ASSEMBLY FROM SUBCONTRACTOR (12)RECEIVE GFAE (13)COMPLETE AIRCRAFT*GFAE:GOVERNMENT FURNISHED AIRPLANE EQUIPMENT*GFAE:GOVERNMENT FURNISHED AIRPLANE EQUIPMENT

17.3

102.1

52.0

40.6 18.6

8.6

10.017.3

56.0

12.3 10.3 40.08.0

8.6

12.0

April 10, 2023 30


• FORCES MANAGER TO PLAN.

• FORCES PLANNING ALL THE WAY DOWN THE LINE.

• CONCENTRATES ATTENTION ON CRITICAL ELEMENT THAT MAY NEED CORRECTION.

• MAKES POSSIBLE A KIND OF FORWARD LOOKING CONTROL.

• ENABLES MANAGERS TO AIM REPORTS AND PRESSURE FOR ACTION AT THE RIGHT SPOT AND LEVEL IN THE ORGANISATION STRUCTURE AT THE RIGHT TIME.

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• TECHNIQUE IS NOT USEFUL WHEN THE PROGRAM IS NEBULOUS AND NO REASONABLE ESTIMATES OF SCHEDULE CAN BE MADE.

• PERT HAS ITS EMPHASIS ONLY ON TIME AND NOT COST.

• NOT PRACTICABLE FOR ROUTINE PLANNING OF RECURRING ACTIVITIES.

April 10, 2023 32

INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

THE DEVELOPMENTS IN INFORMATION TECHNOLOGY GREATLY FACILITATES ORGANISATIONAL CONTROL AT A RELATIVELY LOW COST.

INFORMATION TECHNOLOGY HAS PROMOTED THE DEVELOPMENT OF MANAGEMENT INFORMATION SYSTEM.

MANAGEMENT INFORMATION SYSTEM- A FORMAL SYSTEM OF GATHERING, PROCESSING AND

DISPERSING INFORMATION INTERNAL AND EXTERNAL TO THE ENTERPRISE IN A TIMELY, EFFECTIVE, AND EFFICIENT MANNER TO SUPPORT MANAGERS IN THEIR JOBS.

April 10, 2023 33

HOW MIS IS USEDHOW MIS IS USED

1. MANAGERS NEED INFORMATION TO MONITOR ORGANISATIONAL PERFORMANCE AND TO CONTROL ORGANISATIONAL ACTIVITIES.

2. COMPUTERS ARE BEING USED TO COLLECT AND STORE INFORMATION FOR CONTROL PURPOSES.

3. USE TO MONITOR EACH EMPLOYEE’S COMPUTER USAGE TO MEASURE EMPLOYEE PERFORMANCE.

April 10, 2023 34

LIMITATIONS OF INFORMATION LIMITATIONS OF INFORMATION TECHNOLOGY CONTROLTECHNOLOGY CONTROL

1. PERFORMANCE LIMITATIONS

2. BEHAVIOURAL LIMITATIONS

3. HEALTH RISKS

April 10, 2023 35

MANAGEMENT BY EXCEPTIONMANAGEMENT BY EXCEPTION

• CONCEPT OR POLICY BY WHICH MANAGEMENT DEVOTES ITS TIME TO INVESTIGATING ONLY THOSE SITUATIONS IN WHICH ACTUAL RESULTS DIFFER SIGNIFICANTLY FROM PLANNED RESULTS.

• ATTENTION IS GIVEN ONLY TO THOSE MATERIAL DEVIATIONS REQUIRING INVESTIGATION.

• THE TOOLS THAT FACILITATES THIS CONCEPT INCLUDE DECISION SUPPORT SYSTEM, PERFORMANCE REPORT ETC.

April 10, 2023 36

CONCLUSIONCONCLUSION

PLANNING IS SUICIDAL WITHOUT CONTROL AND VICEVERSA. ORGANISATIONS USE VARIOUS TOOLS FOR CONTROLLING. HOWEVER APPLICATION OF THESE CONTROL TECHNIQUES DEPEND ON SITUATION AND REQUIREMENTS OF THE ORGANISATION.

April 10, 2023 37

REFERENCESREFERENCES

• MANAGEMENT- HEINZ WEIHRICH, MARK V. CANNICE, HAROLD KOONTZ.

• MANAGEMENT- STEPHEN P. ROBBINS, MARY COULTER• MANAGEMENT- STONER, FREEMAN, AND GILBERT.• PRINCIPLES AND FUNCTIONS OF MANAGEMENT- J.K.JAIN.• WWW.WIKIPEDIA.ORG.• WWW.ASK.COM.• WWW.GOOGLE.COM.

ANY QUERY ?ANY QUERY ?

THANK YOUTHANK YOU

Technology

Control techniques141