Assignment for Week 7

Short Questions (2 marks each)

Q.1) Explain the concept of Earned Value Analysis?

 It is a project monitoring and measurement system that: establishes a clear relationship between planned
accomplishments and actual accomplishments. It reinforces and rewards good planning practices

 “Earned Value Analysis” is:

• an industry standard way to:

• measure a project’s progress,

• forecast its completion date and final cost, and

• Provide schedule and budget variances along the way.

• By integrating three measurements, it provides consistent, numerical indicators with which you can
evaluate and compare projects.

Q.2) List down the elements in control process for projects?

 Performance

 Cost

 Time

Q.3) Explain the various elements of corporate planning process?

 Strategies

 Vision/mission

 Objectives

 Goals

 Procedures

 Programmes and Budgets

Long Questions (4 marks each)

Q.1) Discuss the three important elements of project control ?

Project control is focused on mainly 3 elements of the project:

 1. Performance
2. Cost
3. Time

These are some of the things that cause a project to control of performance, costs and time.
1. Performance:

a) Unexpected failure: example- In Australian state of Victoria made safety helmets mandatory for all bicycle riders. While
there was a reduction in the number of head injuries, there was also an unintended reduction in the number of juvenile
cyclists—fewer cyclists obviously leads to fewer injuries, assuming all else being equal. The risk of death and serious
injury per cyclist seems to have increased, possibly due to risk compensation. While helmet use reduces "the risk of head
or brain injury by approximately two-thirds or more", the decrease in exercise caused by reduced cycling as a result of
helmets laws is counterproductive in terms of net health.
b) Insufficient resources: While carrying out a project, resources should be planned according to the requirement of it but
sometimes due to changing environment supply of the resources become irregular and which hampers the performance of
the project.
c) Quality or reliability problems: Due to some inherent causes there is a deviation from the planned or desired quality which
increases effort, the rework needed to be done on that activity to achieve the desired quality and affects the overall
performance.
d) Changes in system specifications: As the project progresses it becomes more difficult to implement the changes in the
project, if the client demands changes in the specification the whole process of the project life cycle has to be repeated this
affects the effectiveness and the efficiency of the project team
e) Interfunctional complications arise: For a project there are different departments working with each other you need to
have a proper coordination among these departments, some of the issues are miscommunication, lack of transparency in
operation, delay etc. which affect the course of the activities and reduces the overall performance.

2. Cost

Every project in business revolves around cost, any team or organisation does not want their project to be a costly
project and don’t want their project to go out of the estimated cost. It is virtually impossible to predict with 100%
accuracy what will happen once a project is underway. If there a technical failure in the project the expenditure will
increase as you will either have to repair the defect or replace the machinery to continue the project. Budget problem
arises mainly because the organizations or project manager accepts a bid that was too low or estimates the overall cost of
the project very less than that which it will actually incurred. Estimation of the expenses should close to the actual
expenses, if it’s a long term project stretched over a decade or more the future value of money should be taken into
account as the value of money keeps on changing, not considering this factors will induce variances in the cost of the
project and the cost of the project will be more than that of the expected cost. In this changing environment, the prices of
the inputs for the project or the raw material required for the project will keep on changing so while forming a budget its
necessary to take into account the appropriate approximate figures.

3. Time

Maintaining of your project schedule is very important. Not only does it help you complete your project on time,
but it also helps you avoid the unnecessary cost overrun due to not following of your schedule. Because as you cross the
estimated time, your costs start rising exponentially.
 For example, you have rented some equipment for a certain period. However, if you need this equipment for some
extra days, you may have end up paying more because the equipment may not be available at the previously negotiated
price.
If the task sequencing is incorrect then you have then you to undo the performed task and the get the sequence
right and then proceed on to the next task which consumes extra time in redoing and get again in the right order.
For example, while tying a tie, it has a definite sequence if you don’t follow that right sequence you will end up
having a wrong knot and then you will have to correct it and again perform the same activity with correct sequence but
this will consume extra time than the normal time which it would taken, given that the sequence would have been right.
Customer changes specifications then you have to rework on the project which will consume your time in understanding
the changes and applying then in the system to get the customer specified output. Government imposes regulations on the
activities that we perform so we design our systems that need to be applied in the project according to the government
regulation, then when there are alterations or changes in the regulations we then again need to look into our activities
whether are they according to the regulations or no? if no then you need to change activities and design them according to
the new regulations. This process is a time consuming one but which needs to be followed.
These are some of the important causes the induce variation in the project and so project control becomes a very
important activity in the project life cycle.

Q.2) Explain the concept, uses and resistance for control systems in organizations?

Control System would provide a “the whole net-work by which a manager ensures that the target will be
achieved.

The control system would provide “a framework /set-up by which the manager can ensure control over the actions
of the sub-ordinates as well as control over the whole operations in an organization”.

Goals, strategies ,objectives and policies are related to management control systems.

Goals and objectives of the organization define the boundaries of the control system.

The designer of control system should possess a clear idea about them.

The goals and objectives are translated into operational constraints for each organization sub-unit by the control
system.

The goal and objectives are achieved by coordinating the control processes of each sub-unit within the framework
of overall strategies and policies.

A management control system is a system which gathers and uses information to evaluate the performance of
different organizational resources like human ,physical, financial and also the organization as a whole in light of the
organizational strategies pursued.

1. Controlling is checking current performance against the predetermined standards contained in the plans with a
view to ensuring adequate progress and satisfactory performance.
2. Control is an important function of management. It is the basis of planning and helps the management in
achieving adequate progress and satisfactory performance. It covers almost all management activities and keeps check on
the other functions of the management. It creates an atmosphere of order and discipline in the enterprise.
3. Essential steps in the control procedure are: (a) Establishment of standards for measuring performance (b)
checking and reporting on performance and (c) taking corrective action.
 4. Essentials of effective control system are: control system should suit the needs of the concern, promptness in
reporting deviations and it should be forward-looking, flexible, economical, simple and constructive.
5. Control involves the comparison of actual results with desired results. Firm has to plan for specific results.
Strategic control Involves three phases of operation: (i) Precontrol. (ii) Concurrent control and (iii) Post control systems.
Strategic control

It is the final component of the strategic management process.

It involves monitoring critical environmental factors to ensure that strategic plans are executed and implemented
as perceived, assessing the impact of strategic plans and adjusting such plans required.

It would be exercised by the top managers who usually view the events from an organizational perspective and
would be concerned with strategic issues.

Strategic control should be more focused on creating and maintaining competitiveness and long-term
effectiveness.

Controls must encompass performance indicators, information system and specific mechanism to detect
deviations as well as monitor the results/performance.

Tactical /management control

It can be said to be the control exercised by the management over the managers. It is a process that helps evaluate,
monitor and control the various sub-units within the organization to ensure efficient and effective procurement, allocation
and utilization of resources for accomplishing the pre-determined goals of an organization.

It is exercised by the middle/tactical managers. The tactical control focuses on ascertaining and ensuring the
implementation of tactical plans at the functional or departmental levels. Tactical controls monitor periodic results as
regards the functional area or department and help initiate corrective action whenever and whatever required.

Middle managers are responsible for departmental goals, objectives, programmes and budgets.

Operational control

It is at the operational level and on the ground/shop floor that the grass-root result/ performance actually happen.

Along with strategic controls and tactical controls, therefore operational controls become critical for
accomplishment of short-term and long-term organisational goals.

It is exercised by the front line/operational managers.

Operational control regulates the day-to-day output relative to schedules, specifications, and costs. Are product
and service output high-quality and delivered on time? Are inventories of raw materials, goods-in-process, and finished
products being purchased and produced in the desired quantities? Are the costs associated with the transformation process
in line with cost estimates? Is the information needed in the transformation process available in the right form and at the
right time? Is the energy resource being used efficiently?
 Operational control can be a very big job, requiring substantial overhead for management, data collection, and
operational improvement. The idea behind operational control is streamlining the process to minimize costs and work as
quickly and efficiently as possible.

A good control system has been influenced by certain vital factors. They are as follows:
1. Simplicity: The control system should be simple and should be easily understandable by those who operate it. If the
operating system is not properly understood by the users (managers and workers) the control becomes ineffective. The
control information supplied by the top should be assimilated at the operation level by the workers. The information
relating to control should serve the purpose of that operation or method or procedure otherwise it becomes useless.
Supposing finance manager sends some financial data to the lower level, like finance superintendent, in the form of
statistical or mathematical formulae, the superintendent cannot understand that easily. Hence it will be of doubtful utility.
Therefore, simple and easily understandable control system have to be evolved.
2. Adaptability: The control system should suit to the kind of operation it is intended to serve. Control systems vary from
business to business, department to department in the business and one level to another in the same structure. Different
control systems are adopted at the policy levels and different ones at the operation level. Even in functional areas like
marketing, finance, production, human resource management or any other functional and sub-functional areas, the control
systems differ. Techniques are different. The size of the business also determines the type of control systems to be
adopted. Therefore whatever the control system devised should be adaptable to that particular activity for which it is
designed.
3. Cost: There should be cost effectiveness in control systems. It should be economical in operation. Operations which do
not require high degree of accuracy or quality which are expensive should not be designed for such operations. Control
system should be based on the actual standard of accuracy. This brings down the cost of operation. Hence, control system
should be economical and effective
4. Versatile: The control system should be more dynamic in nature and versatile. It should be adjustable to changes. More
flexibility is needed in control systems. There will be contingency in every plan of action irrespective of the fact that plan
is thoroughly prepared. In such a contingency, if the existing control system fails, it should permit necessary changes that
are required to meet the contingency. Control system should also identify the deviation in operation from the original
plan. As Goetz puts "It is possible that some aspects of plan might fail. The control system should report such failures and
deviations and should contain sufficient elements of flexibility to maintain managerial control of operations." Therefore
one of the essentials of control systems is that it should be versatile and should be adjustable to any change required at the
activity level. An element of flexibility should be there.
5. Quick Action: The control system should provide for quick action on the part of the concerned to correct the deviations
in planned activity. "Day after the feast" policy should not be there in the control system. Deviations bound to take in
planned programmes as plans are for costs of future activity. Therefore control system should facilitate to take quick
corrective measures by the men at work. Late action will not serve the objectives of the plan. Therefore the control system
should provide for quick corrective measures, whenever deviations are noticed in planned activity.
6. Progressive Feature: Control system should possess progressive feature and should foresee the possible deviations in
the planned activity. This facilitates the corrective action to be taken even before the deviation takes place. The control
system should be positive, progressive and forward looking. For example, raw material control in production activity. If
the firm foresees the variation in production or anticipates the supply variation it can adopt a corrective measure even
before the problem could arise and see that the production takes please as per the plan.
7. Need Based System: The control system should be in accordance with the needs of the organisation. It should conform
to the organisation pattern. It must be capable of fixing responsibility on the deviators. If concept of "Accountability" is
not found in the control system, it loses its ground. Organisation and control are interdependent of each other and control
system should match to the organisation needs.
8. Identify the Sensitive Areas: Plans contain certain sensitive or critical areas in their operations. Management principle
of exception should be followed to operate such sensitive activities. The control system should also identify such sensitive
operations to have effective control.
9. Purposeful: Human element is more involved in planned activity. The control system to be adopted should consider the
human instinct and adopt control measures which are objective and purposeful. As far as possible human element should
not be disturbed in the operational procedure. Control measures should be objective and make human element to react
positively to the control measures.
10. Scope for Corrective Action: The control system, besides identifying the deviations, should also contain a system
which can suggest corrective measures. Supposing the production cost has increased and has resulted in fall in profit. The
deviation — excess cost of production over the predetermined cost should be identified and in what area it has occurred. It
is in row material or labour or other overheads should be identified and accordingly corrective measures can also be
suggested. If the control system only identifies the deviation and does not suggest the corrective action, the system fails in
operation.

Uses of Control System

1. Accomplishing Organisational Goals:
Controlling helps in comparing the actual performance with the predetermined standards, finding out deviation
and taking corrective measures to ensure that the activities are performed according to plans. Thus, it helps in achieving
organisational goals.

2. Judging Accuracy of Standards:

An efficient control system helps in judging the accuracy of standards. It further helps in reviewing & revising the
standards according to the changes in the organisation and the environment. 3. Making Efficient Use of Resources:
Controlling checks the working of employees at each and every stage of operations. Hence, it ensures effective
and efficient use of all resources in an organisation with minimum wastage or spoilage.

4. Improving Employee Motivation:

Employees know the standards against which their performance will be judged.
Systematic evaluation of performance and consequent rewards in the form of increment, bonus, promotion etc.
motivate the employees to put in their best efforts.

5. Ensuring Order and Discipline:

Controlling ensures a close check on the activities of the employees. Hence, it helps in reducing the dishonest
behaviour of the employees and in creating order and discipline in an organization.

6. Facilitating Coordination in Action:

Controlling helps in providing a common direction to the all the activities of different departments and efforts of
individuals for attaining the organizational objectives.
It prevents faulty operations and creates a good base for future faultless operations and help in taking sound
decisions.
 Control systems help taking corrective measures in case the plan activity is deviated from original designs and
also assist in adopting follow-up actions.
Control systems provide a good opportunity for decentralisation of authority.
Control brings about co-ordination in planned activity.
Workforce in the organisation will be disciplined by adopting good control system and brings about operational
efficiency.
Limitations of Control system
Control systems are not free from 'Limitations.' Control system, functions as a component of management process
which is controllable by the organisation. But there are other factors which are not controllable by the organisation like,
government policies, consumer behaviour, political unrest, market behaviour, change in technology etc. These
uncontrollable factors may hamper the organisational efficiency if proper strategies are not adopted from time to time.
Some of the control systems are expensive and cannot be implemented by small firms. Only common systems are
adopted.
Quantification of some of the control operations is not possible. The behaviour or morale of employees etc.
cannot be analysed in terms of quantity.
Mental agitation on the part of employees may also affect control systems.
1. Difficulty in Setting Quantitative Standards:
It becomes very difficult to compare the actual performance with the predetermined standards, if these standards
are not expressed in quantitative terms. This is especially so in areas of job satisfaction, human behaviour and employee
morale.
2. No Control on External Factors:
An organization fails to have control on external factors like technological changes, competition, government
policies, changes in taste of consumers etc.
3. Resistance from Employees:
Often employees resist the control systems since they consider them as curbs on their freedom. For example,
surveillance through closed circuit television (CCTV).
4. Costly Affair:
Controlling involves a lot of expenditure, time and effort, thus it is a costly affair. Managers are required to ensure
that the cost involved in installing and operating a control system should not be more than the benefits expected from it.