Ttem 8 2 Web

EDITORIAL BOARD
Editor Dzafer Kudumovic Table of Contents

Execute editor Lana Kudumovic
Security printing with colorant control in the UV,
Secretary Nadja Sabanovic visual and INFRARED spectrum.........................................................480
Technical editor Eldin Huremovic Ivana Ziljak Stanimirovic, Jana Ziljak Vujic, Branka Moric,
Cover design Almir Rizvanovic Maja Rudolf
Lector Mirnes Avdic Effects on the traffic safety – effects by the surveillance system
Lector Adisa Spahic over the work of stations for technical inspections of vehicles
in the Federation of B&H in the period of 2007-2012...........................486
Members Vilko Ziljak (Croatia) Fuad Klisura, Sabahudin Jasarevic, Safet Brdarevic,
Slobodan Kralj (Croatia) Dragana Agic, Muhamed Barut
Marin Milkovic (Croatia) Experimental testing of reinforced concrete beams
Davor Zvizdic (Croatia) strained in bending.................................................................................495
Joza Duhovnik (Slovenia) Vladimir Radojicic
Janez Dijaci (Slovenia) Application of fuzzy logic in the process of vehicle routing
Ivan Polajnar (Slovenia) in logistic support...................................................................................501
Goran Cirovic, Dragoljub Sekulovic, Dragan Pamucar,
Tadeja Zupancic (Slovenia) Miodrag Regodic
Milan Medved (Slovenia)
New rationalization methods of rotary printing in the field
Jelena Ivanovic Sekularac of planographic printing........................................................................513
(Serbia) Mario Barisic, Nikola Mrvac, Marin Milkovic
Nebojsa Vidanovic (Serbia) Mechanical properties of timber-concrete joints with
Venceslav Grabulov (Serbia) metal dowel-type fasteners....................................................................524
Hasan Hanic (Serbia) Bosko Stevanovic, Ivan Glisovic
Zijah Burzic (Serbia) Optimal reinforced concrete beams design using
Amir Pasic hybrid GA-TABU algorithm.................................................................533
(Bosnia and Herzegovina) Aleksandar Milajic, Dejan Beljakovic, Goran Pejicic
Vesna Maric-Aleksic Method of optimum organization of driver intoxication control......541
(Bosnia and Herzegovina) Milan Vujanic, Dalibor Pesic, Milan Bozovic, Relja Mirovic,
Milan M. Vujanic
Avdo Voloder
(Bosnia and Herzegovina) Lithostratigraphic CO2 substrata and the depth of carbonated
Samir Causevic mineral water systems in the lithosphere of Serbia............................550
(Bosnia and Herzegovina) G. Marinkovic, P. Papic, V. Dragisic, J. Stojkovic, V. Zivanovic,
J. Andrijasevic
---------------------------------------
Address of the Sarajevo, Using the DOE method by experimental research
of conveyor belts quality........................................................................558
Editorial Board Hamdije Kresevljakovica 7A Milos Grujic, Miriam Andrejiová, Daniela Marasová, Peter Grendel
phone/fax 00387 33 640 407 Morphological development of regulated rivers,
ttem_bih@yahoo.com, case study of the river Toplica...............................................................565
Vjekoslav Djekovic, Ljubomir Letic, Grozdana Gajic,
http://www.ttem.ba Nedjo Milosevic, Milorad Janic, Vesna Nikolic
Published by DRUNPP, Sarajevo Mathematical basis for direct map projection transformation.........574
Volume 8 Number 2, 2013 Aleksandar Ilic, Goran Cirovic, Dragoljub Sekulovic,
Miodrag Regodic, Dragan Pamucar
ISSN 1840-1503
Organizational structure change support for
e-ISSN 1986-809X manufacturing firms management............................................................ 585
Impact Factor 0.351 Mirjana Misita, Miladin Stefanovic, Dragan D. Milanovic,
Danijela Tadic, Dragan Lj. Milanovic
(ISI Journal Citation Reports 2011)
Table of Contents
3D approach in airport location studies................................ 592 Transformational and charismatic leadership –
Dejan Gavran, Dusan Nikolic, Sanja Milicevic, full range leadership model: paradigm for change ............. 713
Vladan Ilic, Vasilije Medenica, Aleksandar Vuckovic Srdjan Nikezic, Savo Markovic, Dragan Bataveljic
Automation of dynamic forms generation Asymmetry in strength of thigh muscles
in enterprise applications......................................................... 601 in basketball players.................................................................. 723
Andrija Jandrlic, Dusan Tosic Izet Radjo, Osman Handzic, Gordana Manic,
Ifet Mahmutovic, Haris Alic, Ekrem Colakhodzic
Electromagnetic compatibility of inverters
in low power wirelless technology enviroment Is sufficient attention given worldwide to construction
within globally unlicensed ISM 2.4 ghz short-range rehabilitation in civil engineering schools?........................... 729
radio frequency band................................................................ 614 Ignacio Lombillo, Maria V. Biezma, Luis Villegas
Amir Hadzimehmedovic, Vlado Madzarevic,
Ranking and managing business goals
Mario Pejdanovic, Jasna Hivziefendic
of manufacturing organizations by balanced
Sustainability of relationship between budget deficit, scored approach under uncertainties..................................... 740
public debt and economic growth........................................... 621 Danijela Tadic, Predrag Pravdic, Zora Arsovski,
Rajko Tepavac, Aleksandra Nikolic, Drago Cvijanovic Slavko Arsovski, Aleksandar Aleksic
Management of supply chain processes by Measurement of investment portfolio performances.......... 745
evaluating and selecting suppliers.......................................... 628 Milivoje Davidovic, Husein Mehmedovic, Goran Sijan,
Zora Arsovski, Bruno Bojic, Dragana Rejman Petrovic, Darko Marjanovic
Igor Milanovic, Dejan Vidojevic
Cause related marketing as a tool in poverty
Information model for decision support system and reduction in Serbia.................................................................... 754
generation battery of models for ability assessment............ 638 Svetlana Mihic, Ibrahim Okanovic, Dejan Supic
Zoran Andjelkovic, Jelena Andjelkovic Labrovic
Influence of information communication technology
Using differential dynamic current analysis to on companies management...................................................... 763
reveal secret key in smart card’s cryptographic core.......... 646 Zivko Kulic, Goran Milosevic, Srdjan Milasinovic,
Milena Djukanovic Zelimir Kesetovic, Slobodan Ristic
Education in mechatronics and industrial needs of Applications of stone’s regression model
Montenegro for mechatronics engineers............................... 650 in the bank’s interest rate risk management......................... 768
Marina B. Mijanovic Markus Zeljko Racic, Dragan Bozic, Novica Pavlovic,
Lazar Ozegovic, Veronika Boskov
Developing an international IT- based research
collaboration between university and enterprises .............. 657 Legislation and practice at the area of fire protection......... 775
Marija Th. Semmelrock-Picej Milica Boskovic, Nenad R. Putnik, Slobodan Misovic,
Goran Boskovic, Milan Gligorijevic, Dane Subosic
Accuracy analysis of the classification model
evaluation in the e-learning environment ............................. 667 Numerical representation of information technologies
Gabrijela Dimic, Kristijan Kuk, Petar Spalevic, audit results by means of risk assessment metrics............... 781
Zoran Trajcevski, Zoran Todorovic Zoran Ciric, Jelica Eremic, Otilija Sedlak,
Mirela Kljajic-Dervic
Improvement of education work process quality
by applying VSM – Lean tools ............................................... 676 The end of political state and necessity of
Milan Radosevic, Ilija Cosic, Mirko Sokovic, introducing an economic state................................................. 789
Jovica Markovic, Aleksandar Rikalovic, Janez Kusar Zivota Radosavljevic, Milan Radosavljevic, Carisa Besic,
Dragana Djuric, Dusan Vasic
Strategic role of human resource management.................... 682
Dobrivoje Mihailovic, Ranko Lojic, Branko Ninkovic, Risk management and insurance in the coal industry
Ana Nikodijevic, Slobodan Ristic of the Federation of Bosnia and Herzegovina....................... 802
Safet Kozarevic, Emira Kozarevic, Adil Kurtic,
Importance of cost accounting in quality
Edina Siljegovic
management evidence from Serbia........................................ 688
Edin Suljovic, Djerdji Petkovic Reusable components design of optimal decision tree
algorithms for classification of securities holders ................ 814
Risk and incentives in franchising contracting:
Ljiljana Kascelan, Vladimir Kascelan,
Development of a conceptual model....................................... 699
Edita Becic, Evgen Dervaric, Josef Windsperger, Socio-economic aspects of educational benefits in
Matej Lahovnik socio-economic development of countries in transition ...... 821
Slavko Karavidic, Marija Cukanovic Karavidic,
Seismic activity in epicentral area of Kraljevo..................... 706
Dragica Jovancevic, Milos Stanojevic,
Milena Nikolic, Milan Bacevic, Milan Punisic,
Katarina Radosavljevic
Danijela Vukoicic, Ivana Penjisevic
Table of Contents
The impact of innovation on the economy
competitiveness, unemployment rate,
average salary and inflation..................................................... 829
Branimir Pavla Inic, Aleksandra Vucelja, Nebojsa Zakic,
Andrej Jergovic
Using Contemporary 3D WEB Technologies
in the process of CAD Model Design...................................... 837
Ratko Obradovic, Otto Peter, Milan Vidakovic,
Branislav Popkonstantinovic, Branislav Popovic,
Zoran Milojevic
Analysis of adoption degree of wedge (V)
turn techniques over the respondent’s
anthropometrical characteristics............................................ 845
Rasid Hadzic, Dusko Bjelica, Dobrislav Vujovic,
Aldijana Muratovic, Danilo Acimovic
Control volume finite element method
for modeling of spur gear frictional heat............................... 854
Janko Jovanovic, Esad Tombarevic, Igor Vusanovic
Security in Electronic Payment Systems:
IDEF1X Model........................................................................... 860
Tamara Uros, Milan Milosevic, Zivota Radosavljevic,
Vukasin Lale, Maja Andjelkovic
A development methodology for Web service based
systems and vendor specific development tools.................... 865
Jelena Matkovic, Kresimir Fertalj
Integration processes and technological intensity ............... 875
Davor Filipovic, Najla Podrug, Maja Darabos
Cyber crime in the states of Western Balcan ....................... 886
Zaklina Spalevic, Bozidar Banovic, Miroslav Vrhovsek
Statistical evaluation of nitrates in precipitation
and karst springflow: The Petnica spring in
Western Serbia........................................................................... 896
Ristic Vakanjac V., Papic P., Golubovic R.,
Damnjanovic V.
Improving performance management by
integrating formal and informal management
control systems........................................................................... 904
Darja Peljhan
Instructions for the authors..................................................... 916
technics technologies education management
Security printing with colorant control in the

UV, visual and INFRARED spectrum
Ivana Ziljak Stanimirovic1, Jana Ziljak Vujic2, Branka Moric3, Maja Rudolf 1
1
Faculty of Graphic Arts, University of Zagreb, Croatia,
2
Politechnic, Zagreb,Croatia,
3
Narodne novine d.d., Tiskarska djelatnost, Zagreb, Croatia.
Abstract The second assertion in respect to the efficiency

of the new approach to steganonographic techno-
A colorant control method is set herewith tar-
logy is based on the existence, finding and choice
geted at obtaining the desired light absorption
of a spot UV-F colorant that has a positive Z value
in three spectrum areas: the ultraviolet, visual
[2]. Parameter Z defines the absorption of infrared
and the infrared. Two graphics are used. The A
light measured at 1000 nanometers. In this manner
graphic is visible in the visual spectrum only. The
procedures have been set for designing pictures
B graphic has two states (F and Z) that are visi-
that can be seen in the infrared spectrum with the
ble in the ultraviolet (UV), and the infrared (IR)
help of adequate instruments. This paper is an
spectrum, under condition that the graphic is not
extension to the up-to-date graphic colorimetrics
visible in the visual spectrum. All the states in the
as to controlling light absorption in an extended
graphics are brought into coordination with the
range; as shown in Figure 1.
CMYFIR (cyan, magenta, yellow, fluorescent and
infrared) algorithm, so that they form a unique
system in security printing. The UV colorant has
been designed having several specific characteri-
stics. Firstly, the color migration from the VS into
the UV has been made possible, and a completely
new color appears in the UV spectrum. When UV
light is focused on graphic F, the brown color tran-
sits into a green that is visible in the VS as a new
color. Secondly, it is possible for this same color
to migrate from the VS to the IR, and in graphic B
into state Z detectable with an IR camera. Figure 1. Spectrum areas in Projektina [4], the
Key words: security printing, CMYFIR sepa- forensic technology security scanning system
ration, CMYKIR separation, UVcolorants, IR co-
lorants, F parameter
2. The mathematical model of CMYFIR
separation
1. Introduction
A mathematical model has been developed in
The first assertion in the paper is that the UV flu- this direction on how the CMY colorant depen-
orescent colorant (F) is good enough to replace the ds on the F colorant, but with the goal of speci-
CMY (cyan, magenta, yellow) process components fic reproduction behavior in the three mentioned
for the visible spectrum. This has made it possible areas. Visibility, invisibility, recognizability of the
to apply the CMYK theory [1] but with applying graphics by this CMYFIR method is improvement
spot colorant F. The mentioned theory is targeted of security printing with the following assertion: It
at hiding the IR graphic that will be afterwards re- is not possible to produce a reproduction, photosta-
cognized with an IR detector. The hidden graphic tic copy or make a selection of printing channels
that is not observed with the naked eye will be seen on basis of the picture’s prints with the goal to pro-
under UV light and it will have a new color tone. duce false reproductions and counterfeits.
480 Volume 8 / Number 2 / 2013

Initial two independent graphics that come to- Picture A is a computer graphic with some ten
gether in a CMYFIR separation are shown in Fi- color tones in the style of “security clothing”. Some
gure 2. and 3. areas have been designed as uniform spot tones
with the goal to determine more easily the transition
states in picture B. This is “control quality” of the
CMYF separation mathematical presentation, be-
cause our eyes will detect anomalies in rough repla-
cements of darker or lighter tones that come from
picture B. This picture must be completely hidden
from our sight in the final printing reproduction.
UV graphics are single-tone graphics (bankno-
tes, documents) in the area of security graphics.
The most frequent UV colorants are colorless,
invisible colorants with a transition into yellow,
orange or blue under the influence of UV light [4].
These graphics are recognized with the help of
“UV lights”. They are totally independent of the
other graphics in the documents. Most often it is
a print over a print – an overprint. For example,
the invisible color does not interfere with the other
graphic elements on the banknote.
In this paper we start from the assumption that
a dark UV colorant is used for producing the spe-
cial B graphic. However, although it is made with
Figure 2. Picture A for the visible spectrum a visible colorant, this B graphic’s form is hidden in
the neighboring CMY colorants and is not displayed
in the visible spectrum. Reproduction of multi-to-
ne pictures uses the transfer of the colorant into the
screening cell as a positive and null state for each
colorant channel separately. The ultraviolet colorant
has been set for this printing technology as a repla-
cement for CMY colorants. The channel for the UV
colorant is equal to the screened graphic from pictu-
re B. The colorant is not black, more precisely – it
is not carbon black according to CMYKIR techno-
logy. New relations are set in this paper for mutual
changing of CMY and the brown F colorant towar-
ds the CMYFIR separation, with the goal of having
picture B appear in the UV and NIR spectrum only.
The portrait chosen for this paper has different
coverage tones. The portrait as a theme is the usual
task in banknote security graphics that is designed
in a single tone with linear structures [4]. A por-
trait in the form of a multi-color graphic is set in
the paper for experiments that can be observed in
all phases of translation from its initial form to the
Figure 3. The target B picture for the infrared ultraviolet and infrared states.
spectrum C0 (Cyan), M0 (Magenta), Y0 (Yellow) in pixel
coverage percentage are the only input data for
Volume 8 / Number 2 / 2013 481

estimating the CMY value in the range from zero

AfUV= ;
to 40% of picture B coverage. Three independent
variables D, E, and G have been derived from C0, ........................................ (5)
M0, Y0 (X0). The regression model has been deri-
ved from data on “colorant twins” for a wide range The screening system is set at a 40% coverage.
of color tones. It was necessary to have as many The described relations are not used for a cove-
as six independent variables to create an accep- rage exceeding 40%. Extensive experiments have
table reproduction that creates a twin at 40% of shown that the picture in the IR spectrum is reco-
the F colorant coverage. The recommendation of gnizable to a sufficient degree as the set B graphic.
graphic colorimetrics is followed to differentia- Therefore the coverage value of graphic B decre-
te twins with the “delta E” value being less than ases continuously to the maximum blackening
three (Kipman). value of 40% before the CMYF separation’s be-
DC, EY, and GM stand for their initial values at ginning. The darker and the lighter surfaces have
X0. The model uses the links of each C0, M0 and Y0 been produced as the state between X0 and X40.
components with another two components. Those The relation is set for the final X (CMY) state for
are the first three independent variables. The pro- the Z coverage of each individual pixel:
posed algorithm is a system of linear equations
where three independent variables have been ad-
ded and are determined by the following relations: X= ; = -(Z/40)* ( - )
DC=C0/M0 +C0/Y0 ........................................ (6)

EY= Y0/M0 + Y0/C0; ........................ (1)
GM= M0/C0 + M0/Y0 Result X is obtained by subtracting the Z value
from the coverage value in picture A in state X0.
While searching for an ideal model it has been The influence of graphic B being removed is
determined that each of the C, M, and Y values de- noticed in CMY channels that have been prepared
pends on the coverage participation of all null se- for CMYFIR reproduction. The addition of C,M,Y
paration X0 initial states. The intensity amounting channels does not bring back picture A. Coverage
to 40% pixel coverage is sufficient for an infrared values of the corresponding pixels in Picture 2 are
picture to be well recognized by the camera. obtained only after joining C,M,Y channels (Fi-
Relations are set: gure 4) together with Picture B (Figure 3). Those
surfaces vary from null to estimated values accor-
X40=A fUV * T ;............................. (2) ding to the relation model 1 to 6. Channel F for the
UV colorant is equal to the B picture with covera-
ge decrease in the range from null to a maximum
X40 = ; ............................. (3)
40%. Values between null and that maximum are
estimated in linear relation.
In ultraviolet scanning there is no information
on CMYF channels because the UV scanner pro-
vides RGB values for all the three RGB channels
T= ; ................................ (4) at the same time. The information on mixing four
colorants has thus disappeared forever. CMYZ
colorants cannot be derived from the print even
when scanning is carried out in the near infra-
Values for the F-fluorescent UV colorant have red spectrum. The problem lies in the fact that
been estimated on basis of linear regression: scanners use the RGB record for this procedure
too. Even when a 1000 nm scanner is selected, the
produced picture is gray and it does interpret the
absorption NIR-1000 state, but in the RGB record

Figure 4. Channels C, M, and Y with the IR picture subtraction according to models 1 to 6

type. The other values from the visible spectrum CIEL.L*a*b* visible color system. The UV picture
cannot be selected from the secured reproduction is a multi-color picture, different in this respect as to
produced with the CMYF method. the single-tone IR picture.
The portrait is completely hidden in the visible
spectrum. This reproduction with process CMY and
ultraviolet colorants is revealed under the influence
of UV and IR light. A single-tone gray portrait appe-
ars under the influence of near infrared light, very
much like the original. This state of the reproduction
is observed under a NIR camera or an IR scanner [3]
CMY colorants do not have any influence whatsoe-
ver on the Z portrait at 1000 nm. Those colorants do
not have absorbing properties at 1000 nm, so the IR
camera does not recognize them.
Figure 5. F-UV (365 nm)
3. Ultraviolet and infrared recognition

The abstract computer graphic prepared for the
visible spectrum has some ten or so colored surfa-
ces. Nine color tones from picture A have been cho-
sen at pixel positions shown in Table 1, Column 1.
This illustrates UV light response for different coats
of CMY components. After UV scanning at 360 nm
(Projektina), measuring has been made in the RGB/ Figure 6. Z graphic scanned at 1000 nm

The brown UV color appears in the visual

spectrum as green if illuminated with a UV light.
The intensive white lines included randomly are
UV lines incorporated in the security paper during
factory production. All the reproductions in this
paper were printed on such substrate.
4. The relation of changing the UV fluores-

cent colorant with CMY components
The UV response brightness depends on the
coverage of the portrait’s single pixels and on the
mutual relation of CMY components. The computer
graphic with shapes of „protected island“ masking
clothes has become recognizable. It is also the secu-
rity system against counterfeiting. The portrait pictu-
re parts that are lighter have a thinner coat of the UV
colorant. They are darker in the UV spectrum, in the
teeth area. And vice versa. The brightness of the UV
picture is greater in the darker parts of the portrait,
as for instance, in the hair and eye area. The picture
looks like a negative of the original.
Detailed data for nine chosen tones from the
original picture A and the reproduction: Column 1:
sequence number of pixel positions for the chosen Figure 7. The diversity of the quotient falls re-
color; Column 2: C0M0Y0 values for the planned placing CMY with F for dyes 1, 3 i 5
graphic for the visible spectrum for the chosen color;
Column 3: CMY values for 40% coverage of the UV The conventional GCR [5] theory is based on
colorant. Column 4: the decrease coefficient when replacing the CMY colorant with black in a ratio
exchanging the CMY for te UV colorant; Column one to one for each CMY component. This „decre-
5: CMYF values for individual chosen pixels. The ase“ of process colorants is less in real-life appli-
F component responds in the NIR light; Column 6: cation when producing printed matter. The fluo-
the UV color is visible in UV light. Data display in rescent UV colorant described in this paper has a
the CIELab system (measured with s SpectorEye/x. dark composition and a specific low decrease of
rite(5)) and the RGB visual system obtained after the CMY colorant. In dark tones it is so low that
scanning with Projektina [3] at 365 nm. there is almost no such example in real-life four-
Table 1. For colors that appear in pictures 1 - 6
No, C0M0Y0 (F=0) CMY, F=40% Koeficjent pada CMY UV (mjereno) CIELab/
CMY,F
(piksel pozicija) (X0) mjereno izracunato u povećanju F RGB, mjerno
1 (107,117)x 29,76,76 7,65,63 -0.551, -0.272, -0.323 20,72,71,16 57,7,23 / 150,131,98
2 (64, 240) 74,80,95 54,61, 74 -0.506, -0.465, -0.524 65, 72, 86,17 47,2,19 /120,110,83
3 (60,200) x 70,56,35 53, 31,6 -0.436, -0.636, -0.733 60,42,19,22 65,-4,12 / 155,157,135
4 (50,310) 41,39,86 22,16,73 -0.472, -0.579, -0.316 31,26, 79,22 67,-17,34 / 154,169,104
5(188,384)x 45,40,30 24, 16,-4 -0.513, -0.588, -0.846 37, 31,16,16 72,-9,15 / 171,180,149
6 (210,400) zub 80,31,75 68,2,58 -0.307, -0.732, -0.429 80,30,75,1 32,-5,-5 / 70,79,84
7(70,370) 80,31,75 68,2,58 -0.307, -0.732, -0.429 73, 14, 65,23 63,-25,31 / 134,163,99
8 (430,273) 86,82,85 68, 61, 69 -0.447, -0.525, -0.403 77,71,77,21 54,-15,37 /124,136,70
9(300,260) oko 50,38,99 33,17,87 -0.427, -0.521, -0.291 44,30, 94,15 52,-11,11 /125,139,116

color process printing. The decrease coefficint the CMY process colorants and the ultraviolet F
values range from 0.3 to 0.7 and are not correla- spot colorant create a new method of separation in
ted with individual CMY components. Only the security graphics. The new method is based on the
introduced model given in the relations from 1 to UV colorant’s characteristic to absorb the infrared
5 has linked a wide tone system range of changing light as well. Color management has thus been
CMY as a dependence on C0M0Y0 null separati- extended to three spectrum areas setting therewith
on without the UV fluorescent colorant. a new system in security printing.
Small values of the colorant CMY decrease is The proposed mathematical model is a linear
favorable for the CMYFIR separation because a equation system whose parameters have been set
design with lighter tones can be planned. On the experimentally for a precisely set fluorescent secu-
other hand, CMYKIR separation is critisized for rity colorant. This method may be extended to rese-
the presence of dark tones and „white“ patches arching of other mutual relationships in spot color
in lighter tone areas. The low values of the CMY separation with process components. The stegano-
decrease coefficient open the possibilities to use graphic approach in hiding the secrity graphic is
thicker coats of the F colorant and to change the extended with the goal to disable producing copies
40% coverage that is a limitation of the mathema- of documents or securities with the help of known
tical model in the paper. The limit is determined and existing tools and graphic technologies.
as the moment when one of the CMY components
drop to null value. That is the end of CMYFIR References
separation application. A compromise is introdu-
ced here for the described state: the value null is 1. Klaudio Pap, Ivana Žiljak, Jana Žiljak-Vujić. Image
Reproduction for Near Infrared Spectrum and the In-
set for negative values of C or M or Y, and this is
fraredesign Theory. // The Journal of imaging science
at the expense of picture Z quality in the infrared and technology. 2010; 54 (1): 10502 -1-10502 -9.
spectrum. Such a case is at point 5 (188,384) whe-
re the Cyan colorant is estimated with the value 2. Vilko Žiljak, Klaudio Pap, Ivana Žiljak-Stanimirović,
of minus four. If picture B coverage at this point Jana Žiljak-Vujić. Managing dual color properties
with the Z-parameter in the visual and NIR spectrum.
amounted to 40% or more, the program controls
// Infrared physics & technology. 2012 ; 55: 326-336.
would set this data back to null. However, as point
5 has the need for Z state to be only a 16% covera- 3. www.forensictechnology.com/projectina/; http://www.
ge value, this data has remained and there was no projectina.ch/eng/products.aspx?id=7&lang=EN.
need to carry out a correction in the reproduction
4. Žiljak Vilko, Kuna, papirnati novac Republike
with CMYF separation. Hrvatske, Hrvatska narodna banka i FS, Zagreb
ISBN 953-6052-14-8, 1994.
5. Conclusion 5. Kipphan Helmut (ed.), Handbook of Print Media:
Steganography has been introduced into secu- Technologies and Production Methods (Springer-
Verlag, Berlin, Germany, ISBN 978-3-540-67326-2,
rity graphics for the ultraviolet, visible and infrared 2001.
spectrum. A colorant has been produced that has a
different response in the listed areas, but in such
a way that it is possible to control the hiding and Corresponding Author
appearing of graphics according to a set design.A Ivana Ziljak Stanimirovic,
Faculty of Graphic Arts,
multi-color graphic is set in the visible spectrum, Zagreb,
independent of the graphic carrying the informati- Croatia,
on with steganographic characteristics. A conditi- E-mail: ivana.ziljak@grf.hr
on is set for the two graphics – that the second one
can not be seen by the naked eye if observed un-
der the usual white (sun) light. A fully independent
graphic is set in the visible spectrum that hides the
security graphic. The mutual relationship between

Effects on the traffic safety – effects by the

surveillance system over the work of stations
for technical inspections of vehicles in the
Federation of B&H in the period of 2007-2012
Fuad Klisura1, Sabahudin Jasarevic2, Safet Brdarevic2, Dragana Agic1, Muhamed Barut1
1
IPI-Institute for Commercial Engineering, Zenica, Bosnia and Herzegovina,
2
Faculty of Mechanical Engineering in Zenica, Zenica, Bosnia and Herzegovina.
Abstract Key words: professional staff, a|TEST, video

surveillance, ISO/IEC 27001:2005
This work will present a brief analysis of the
current usage of a unified information system
a|TEST, as well as the introduction of video sur- 1. Introduction
veillance over the operation of stations for techni- Pursuant to the Decision of the Government of
cal inspections of vehicles in Federation of Bosnia FB&H which was passed and signed by the Agree-
and Herzegovina (FB&H). Their application has ment on mutual rights and obligations between the
increased improvement of the quality of perform- Federal Ministry of Transport and Communica-
ing of the control of roadworthiness of vehicles, tions and the Institute for Commercial Engineer-
which contributes to the overall increase in the ing L.L.C. Zenica, the tasks referring operation of
level of traffic safety on the roads in B&H and be- stations for technical inspections of vehicles have
yond. The quality of information system a|TEST been transferred, such as table 1.
is confirmed by implementation of standard ISO/ From the aspect of traffic safety on the roads,
IEC 27001:2005 during year 2009, as well as by the technical inspection of vehicles is important in
standard of video surveillance system which is terms of protecting the environment from pollu-
present only in 3500 companies in the world. This tion and global warming, as a world problem. The
confirms the quality of work of information sys- purpose of technical inspection is that the techni-
tem a|TEST in Federation of B&H. cal malfunction of the vehicle is as smallest cause
Table 1. An overview of transferred tasks to the professional institution
Transferred tasks (works)
Monitoring of regulations from the area of control of the vehicle roadworthiness, which are brought by the
neighbouring countries, European Union and other international organizations;
Professional training for the controllers of vehicle roadworthiness, for managers of stations for technical inspections
and for other persons who work on professional tasks of technical inspection; periodic assessment of the knowledge
of controllers of vehicle roadworthiness and other persons who work on professional tasks of technical inspection;
Control of performed calibration of equipment which controls the vehicle roadworthiness.
Connecting of stations for technical inspection of vehicles and other interested parties into a unified information
system related to the tasks of technical inspection of vehicles;
Cooperation with professional, scientific organizations, institutes, companies and other legal bodies from the area
of technical inspection of vehicles;
Development of written instructions and information and professional publications from the area of technical
inspection of vehicles;
Data processing and preparation of analysis from the area of technical inspection of vehicles;
Implementation of a video surveillance system in the stations for technical inspection in FB&H;
Printing the forms for conduction of technical inspections in FB&H (for preventive, for technical-exploitation
conditions) and their distribution;

of traffic accidents and to ensure safe operation 2. a|Test integral information system
of road transport with the least undesirable con-
By the Decision of the Government of Federa-
sequences. Employees at stations for technical in-
tion of B&H, dated 01 April 2008, the entry of all
spections are corrective factor who directly affect
data on technical inspections into a unified infor-
the traffic safety. Although in years 2009, 2010,
mation system a|TEST has become mandatory in
2011 and 2012 there was significant growth of
the area of Federation of B&H, before the other
number of defective vehicles, we are still far from
two parts of the state.
the average of defective vehicles in comparison to
Unified information system a|TEST is a web-
the standards of European countries.
based application for data entry on technical in-
Application of the information system a|TEST
spections into the central database. It is designed
enables authorised staff of Professional institution
to be placed together with the data at one place,
of IPI L.L.C. Zenica significantly greater control
and that stations for technical inspection access it
and surveillance over the work of stations for
through the internet connection (Figure 4.). Print-
technical inspections. As a result of the measures
ing of all reports shall be made from a central
of control and surveillance over the work, the au-
server. Thus, everything that is entered into a uni-
thorised users of information system at stations for
fied information system is recorded, such as who,
technical inspections are permanently indicated
what and when someone did it and from which
to the mistakes and shortcomings in the work, as
station for technical inspection of vehicles.
soon as they are detected.
In the beginning of year 2008 numerous seminars
The importance of this project was recognized
were held on the issue of the problems from men-
by the State Ministry of Communications and
tioned authorisations where all employees from 156
Transport, so the unified information system was
stations for technical inspection of vehicles had to be
defined in the amendments to the Regulations on
present, on a regional principle in the entire area of
technical inspections of vehicles (Official Gazette
FB&H. After that mandatory education prescribed
of B&H, No. 13/07, 72/07, 74/08, 3/09, 76/09), (1),
by the Regulations, we conducted first assessment-
which was published on 28 September 2009 on the
acreditation tests whch resulted in the issuance of
State level. According to this regulation, it states:
licenses and stamps for the persons who passed the
“Information system is a comprehensive whole
exam. By the end of year 2009 the same education
which incorporates the equipment for measuring
was held for professional staff in FB&H and in all 12
of prescribed values for the vehicle about vehicle
stations for technical inspection of vehicles in Brčko
roadworthiness and which enable print of meas-
District of Bosnia and Herzegovina. [2]
urement results including, on graphic display, in-
Professional staff in all stations for technical in-
put of values and measurement results that cannot
spection of vehicles in FB&H (controllers of vehicle
be automatically downloaded into the information
roadworthiness and managers of stations for techni-
system. The system is connected through IT with
cal inspection of vehicles) was informed about the
the computer support for automatic processing
work of a unified information system a|TEST in
of measured values, their storing into a unified
written form and through the video instructions.
database and includes equipment, programs and
Introduction of a unified information system
method (internet connection) for transmission,
into the work of stations for technical inspection
distribution and use of data in the process of vehi-
of vehicles changed public opinion on the com-
cle registration and other tasks that are performed
plete territory of Bosnia and Herzegovina because
in authorised station for technical inspection of
there was a common practice to carry out techni-
vehicles, authorised entity ministries or service of
cal inspections irregularly. Insurance companies
Brčko District of Bosnia and Herzegovina, pro-
and agencies for vehicle registration dictated the
fessional institution or Agency for Identification
work of stations for technical inspection oe vehi-
Documents and Electronic Data Interchange (ID-
cles in the way that they “increased” their business
DEA)”.[1]
and introduced a fictious conduction of technical
inspection of vehicles.

Constantly monitoring and analysing the work

of stations for technical inspection of vehicles, all of
them started with data entry on conducted inspec-
tions with minor defects. The biggest problem in that
starting period was in regard to not entering of data
on conducted preventive inspections. All stations for
technical inspection of vehicles that, due to their own
reasons, did not enter data on conducted inspections
into unified information system are adequately sanc-
tioned. Besides indicators on the number of conduct-
ed inspections the unified information system offers
a range of other data, as well as data on the perceived
defects on vehicles during technical inspection of
vehicles. Mandatory application of unified informa-
tion system a|TEST in the area of Federation of B&H
created prerequisites for further development and
improvement of this system, for which there was a
strong support from the competent Federal Ministry Figure 2. Certificate standard ISO/IEC
of Transport and Communications. 27001:2005 for video surveillance
Considering as necessary the professional insti-
tution of IPI – Institute for Commercial Engineer-
ing from Zenica has successfully implemented the
standard ISO/IEC 27001:2005 in year 2008, relat-
ing to the information security management (Fig-
ure 1), then for the video surveillance, year 2012
(Figure 2) and ISO/IEC 9001:2008 for the area of
research and experimental development in natural
and technical sciences (Figure 3).
Figure 3. Certificate standard ISO/IEC

9001:2008 for the company
3. Application of video surveillance at the

stations for technical inspection of vehicles
During exercising professional supervision
over the work of stations for technical inspections
of vehicles in the period after official commis-
sioning of an unified information system a|TEST
Figure 1. Certificate standard ISO/IEC certain anomalies were noticed regarding regu-
27001:2005 for aTEST larity of procedure for performing of technical

inspections of vehicle in the areas of FB&H and

Brčko District of B&H. This primarily relates to
the absence of vehicle at stations for technical in-
spections of vehicle and issuing of certificate of
technical roadworthiness of a vehicle about that
fictitious inspection, as if all legal procedures of
work were complied.
In mid-2008, in coordination with the Federal
Ministry of Transport and Communications an
elaborate on justification of introduction of video
surveillanece over the work of stations for techni-
cal inspection of vehicles was made. The goal was
to eliminate irregularities in the work of stations
for technical inspections of vehicles in FB&H, i.e.
absence of vehicles during the inspection (this is Figure 4. Schematic overview of the main server
the usual problem of all new countries of former in the IPI – Institute in Zenica and authorised
Yugoslavia). The elaborate was officially approved stations for technical inspctions of vehicles in
by the Government of FB&H on 1st May 2009 and FB&H entity [4]
began to apply in real time. The video surveillance
with OCR recognition of registry plates represents
an additional link in the unified information system
a|TEST, so without vehicles on site it is impossi-
ble to enter data on conducted technical inspection
(Figure 5), and no certificate on conducted technical
inspection of vehicle can be printed. On the basis
of experience in the work of stations for technical
inspections of vehicles in FB&H the video surveil-
lance over the stations for technical inspections of
vehicles was also introduced in the area of Brčko
District of B&H and it existed for one year, but
wizhout official support of competent institutions
in Brčko District of B&H.
Amendments to two regulations: Regulation on
preventive technical inspections of motor vehicles Figure 5. Presentation of the form of entry of
and trailers and Regulation on technical-exploita- technical inspection of vehicle into integral infor-
tion conditions for vehicles used for performing mation system a|TEST (with installed OCR sys-
certain sorts of transport, new Certificates were in- tem – recognizing of the registrs plates)
troduced, and came into effect with the beginning
of the application of video surveillance at stations The application of the new Regulation on the
for technical inspections. The serial numbers for Registration of Vehicles (Official Gazette number
each certificate separately have been introduced, 69/09), started on 28 September 2009 with official
and each station delegates certain series of num- application of eTP form (data on conducted tech-
ber registered through uified information system nical inspection is electronically sent to the Min-
a|TEST. Thus, we cancelled the practice that tech- istry of Interior). In addition to the electronic ap-
nical inspections are performed without registering plication form, which replaced former paer forms
on the occasion of delivering reports to the profes- (certificates on conducted technical inspections
sional institution and Federal Ministry of Transport of vehicles), the classification of vehicles was
and Communications, and without possibility of changed, too, and is adjusted in accordance with
supervision. [3] the ECE classification of vehicles.

4. Indicators on the conducted technical On the basis of obtained data on inspections in

inspections upon introduction of video year 2012, Table 3 and Figure 6 present the over-
surveillance system view of average vehicle age per vehicle type and
Unfortunately, we need to critically look at the age structure of vehicles in Federation of B&H at
statistics done so far on the causes of traffic acci- intervals of five years.
dents which in Bosnia and Herzegovina show that Based on the analysis we have the data that the
the share of technical irregularities of vehicles was average age of passenger cars in year 2009 was
only 0,97% during the accidents (in RS entity), and 16,43 years, and in year 2012, as it can be seen from
1,97% in the entity of FB&H. This is impossible if the table, the age of passenger cars was 16,99 years.
we look at the average age of only passenger cars of Table 3. Average age per vehicle type in year
over 16,9 years. In European terms where the aver- 2012 [7]
age vehicle age is 6-8 years, the share of technical Vehicle type Average age
irregularities in traffic accidents is from 10 to 20 %. L1 - MOPED 7,57
This proves that the entire system here failed, start- L2 - MOPED 7,93
ing from the police which is first to make an on- L3 - MOTORCYCLE 11,88
sight inspection, to the traffic experts because they L4 - MOTORCYCLE 31
are the only ones authorised for reconstruction of L5 - MOTOR TRICYCLE 15,72
traffic accident, which again according to the EU L6 -LIGHT QUADRICYCLE 5,31
norms is a nonsense. Reconstruction of a traffic ac- L7 - QUADRICYCLE 5,4
cident is conducted by the professional teams, ex- M1 – PASSENGER CAR 16,99
perts who know how to do their job. M2 - BUS 14,44
Table 2. presents data on conducted technical in- M3 - BUS 18,32
spections per type of inspections and total number of N1 - TRUCK 13,16
conducted inspections. From year to year there is a N2 - TRUCK 19,71
constant growth in the number of inspections, which N3 - TRUCK 15,81
is primarily a result of the measures taken in the con- O1 - TRAILERS 11,65
trol of work of stations for technical inspection. O2 - TRAILERS 15,5
It should be noted that by 19 January 2013 a total O3 - TRAILERS 20,42
O4 - TRAILERS 14,21
of 3 million conducted technical inspections of vehi-
WORKING MACHINE 14,42
cles was entered and processed through the base of
T1 - TRACTOR 25,58
a unified information system in Federation of B&H.
T2 - TRACTOR 26,61
In the end of year 2010 there were active 155
T3 - TRACTOR 23,74
stations for technical inspections and total number
T4 - TRACTOR 21,01
of stations did not change. In 2010 there were 157
T5 - TRACTOR 20,06
stations with approval for work, in 2011 there were
160 stations, and in the end of 2012 there were 162
active stations for technical inspections of vehicles.
Table 2. Total number and number of conducted inspections per inspection types in Federation of Bo-
snia and Herzegovina [5], [6], [7]
Technical- Regular
Regular Preventive Extraordinary
Year exploitation six-month Total
inspections inspections inspections
inspections inspections
19.04-31.12.2007* 15.713 339.667 0 36.007 0 391.387
2008. 39.333 477.992 0 55.258 0 572.583
2009. 49.311 461.210 5.549 54.065 9.513 579.648
2010. 54.096 468.625 34.064 25.898 14.464 597.147
2011 50.642 480.467 40.035 19.392 8.369 598.932
2012 49.586 486.878 39.983 17.478 8.519 602.444

As for the fleet in the Federation of B&H (year

2012) there is extremely high percentage of vehicles
older than 20 years (year 1992 and earlier) – 37,59%.
Based on the data of conducted inspections in
Federation of B&H in year 2012 the age structure
of the vehicle type M1 - passenger car, where the
percentage of vehicles older than 20 years (year
1992 and earlier) is 39,45%.
In the development of integral information sys-
tem there was a problem when entering incorrect
data about vehicle age by the owners of vehicles,
which was corrected by constant monitoring and
control of entered data by the authorised personel
of the Institute, and by placing of restrictions in
the system a|TEST.
Here we should emphasize that we obtained Figure 7. The age structure of vehicle depending
data on average vehicle age on the basis of data on on the year of vehicle production in Federation of
all conducted inspections. Due to the smaller num- B&H for year 2012. [7]
ber of periodic and regular six-month inspections,
which were conducted on several occasions dur- 4.1. Number of recorded device malfunctions
ing a year for certain types of vehicles, some mini- and number of defected vehicles at their
mal deviations are possible in relation to presented first and repeated inspection in years
data that can be tolerated (buses and trucks). 2009 and 2012
In the future period the possibility of any incor-
rect data about the vehicle age is eliminated, and Total number of recorded irregularities in year
we are preparing the whole series of interesting 2010 was 19606 (year 2009 – 17852). The largest
reports on technical characteristics of vehicles that number of irregularities was detected in the sys-
are on the roads in Federation of B&H. tem of – brakes 12374 irregularities (year 2009 –
11967), then we have the suspension components,
axles, wheels with 2000 detected irregularities
(year 2009 – 1854). In year 2011 it can be seen that
the largest number of irregularities was detected
on the braking system – 13704 defects, then in
the suspension components, axles, wheels – 1920
detected irregularitieas and devices for lighting
and light-signaling – 1747 recorded irregularities.
Number of reported failures on vehicles in year
2012 had dropped to 17596 from which the brak-
ing system – 12015, then the devices for lighting
and light-signaling – 1699 reported irregularities,
and in the system of suspension components, ax-
les, wheels – 1663 reported irregularities. These
comparative data as well as the data given in Table
3 show that the system (established in April 2012
from three monitoring firms) failed along with the
Figure 6. The age structure of vehicle depending originator the Ministry.
on the year of vehicle production in Federation of
B&H for year 2011. [6]

Figure 8. Comparative ratio of number of recorded defects in years 2009 and 2010. [8], [9]
Figure 9. Comparative ratio of number of recorded defects in years 2011 and 2012
There is an evident increase in the number of The average number of consucted inspections
detected irregularities in years 2010 and 2011 in in Federation of B&H per one station for technical
comparison to year 2009, that is year 2012 as well inspection in year 2009 was 3739 inspections.
as number of inspections. In year 2010 this number was increased to
In relation to total number of conducted inspec- 3803 inspections, in year 2011 3720, and in year
tions there were only 3% of returned vehicles at 2012 3718 inspections of vehicles per one station
their first and repeated inspections. for technical inspections. [4]
Data on detected irregularities on the occasion of On the basis of data on results of conducted in-
vehicle inspections for year 2008 was not compared spections (year 2012) for the vehicles with engine
with the data from years 2009 and 2010 because it there are approximately selected 37% of vehicles,
is about data from the period of 01 April 2008 when with selected fuel tape of petrol, while 63% of ve-
we implemented the information system. hicles with selected fuel type of diesel. It should be
underlined that in the Federation of B%H for the
Table 4. Number of defected vehicles at their first and repeated inspections and number of recorded
malfunction of devices in the period of 2009-2012 years
Number of defected vehicles at Number of defected vehicles at Total number of
Year
their first inspection their repeated inspection defects
2009 9.027 256 17.852
2010 10.711 349 19.606
2011 9.324 186 19.640
2012 8.300 72 17.596
2011 - 2012 1.024 114 2.044

first time we entered vehicles with selected fuel type relevant authorised state bodies and other profes-
of petrol/LPG, and there are 3173 of such vehicles, sional organizations and individuals, which would
which is extremely small, and on this example it enable data collecting directly from the measuring
can be seen how much the negative impact has the device.
human factor, because these vehicles should and In this way we will resolve the problem which
must be more on the roads in FB&H. [4] was previously pointed out, that the authorised
personel at stations for technical inspection ocas-
5. Conclusion sionally enter invalid and irregular data into the
integral information system a|TEST. For these rea-
In coordination with the Federal Ministry of sons, a number of reports created from the integral
Transport and Communications the major step information system a|TEST do not serve properly
which was done by a system of professional insti- and we cannot make appropriate analysis. Thus,
tution and contractor, the IPI - Institute for Com- the impact of human factor would be decreased to
mercial Engineering L.L.C. Zenica, represents a a minimum.
significant contribution to bringing order to the run- All relevant bodies will be included in this im-
down area of vehicle roadworthiness as an impor- plementation, and it is a step forward that this will
tant factor for traffic safety, and thus an incentive affect establishing of safer road transport.
that other activities puts under control thorugh this
IT solution, such as various billing duties for vehi- References
cle registration, payments for budgets and so forth.
This work presents the results of data collected 1. Law on basics of traffic safety on the roads in B&H
on stations for technical inspection in Federation (Official Gazette, no. 6/06, 75/06, 44/07, 84/09)
of B&H for the period of year 2007 until the end 2. Klisura F.: Master’s Thesis, Subject: “Contribution
of year 2012. As it can be seen, the system for to a Survey of the impact of stations for technical
data monitoring as well as the quality of inspec- inspection of vehicles to the traffic safety in Bosnia
tion was improved since year 2009. A significant i Herzegovina“, Mechanical Engineering Faculty,
Zenica. 2010.
number of returned vehicles durinig inspections
presented in this work point to the fact that in- 3. Branković N., Klisura F.: (26-30.08.2008),
spections are carried out much more in details TMT 2008, 12 International Research/Expert
than in the previous period. Conference“Trends in the Development of Machin-
The results of the introduction of video surveil- ery and Associated Tehnology“, Thema :“The analy-
sis of the technical stations state in Federation of
lance system gave an invaluable contribution of im- Bosnia & Herzegovina and informatic integration in
provement to the field of traffic safety from all as- unique system“, Istanbul, Turkey, 2008.
pects. Also, it was proved that this area, regardless
all its specificity, can and must follow new trends in 4. Klisura F., Brdarević S., Mustafić I., Jašarević S.,
science. This all can help to better understanding of Plevljak F.: Efficiency of the integral information sys-
tem and Video surveillance over the work of stations
the issues of vehicle roadworthiness in both every- for Technical inspection of vehicles and traffic safety
day life and in reconstruction of traffic accidents. Contribution, Annals of Enginering Hunedoara-
With the intention that technical inspections are International Journal of Enginering Tome X(2012)-
not carried out by any “shortened process” and in Fascicule 3 (ISSN 1584-2673), Romania.
order to register all defective vehicles it is planned
5. Barut M., Klisura F., Đidić H., Hasić S.,: Profes-
to make IT connection of devices at stations for sional bulletin – IPI number 13., IPI – Institute for
technical inspection, for which the testing solution Commercial Engineering L.L.C. Zenica, January
which was made in the Institute and IT company 2011; pp 3-46.
aNET was coordinated with the Federal Ministry
6. Barut M., Klisura F., Halilović N., Peulić V.,: Profes-
of Transport and Communications, and pursunt
sional bulletin – IPI number 17., IPI – Institute for
to the order of the Government of FB&H. Pro- Commercial Engineering L.L.C. Zenica, January
fessional institution of Institute for Commercial 2012; pp 1-130.
Engineering has intensified cooperation with all

7. Barut M., Klisura F., Hrapo S., Kulović M. ,

Alispahić S., Vidović D.,: Professional bulletin – IPI
number 21., IPI – Institute for Commercial Engineer-
ing L.L.C. Zenica, January 2013; pp 3-44.
8. Brdarević, S.; Jašarević, S.; Klisura, F.: Significan-

ce of Video Inspection at the Stations for Technical
Examinations of Vehicle in FB&H and Brčko Dis-
trikt B&H), First Conference Maintenance 2010,
Zenica, Bosnia and Herzegovina, Ed. Brdarević, S.;
Jašarević, S., ISSN 1986-583X, June 10-13, 2010 ;
pp 143-150.
9. Jašarević S.,Klisura F., Barut M., Brdarević

S.: TMT 2009, 13 International Research/
Expert Conference“Trends in the Develop-
ment of Machinery and Associated Tehnology“,
thema:“Analysis of the data related to the prop-
ertehnical functioning of the vehicles in the Fed-
eration of Bosnia & Herzegovina“, Hamamet,
Tunisia, 16-21.10.2009; pp 717.
Corresponding Author
Fuad Klisura,
IPI-Institute for Commercial Engineering,
Zenica,
Bosnia and Herzegovina,
E-mail: fuad.k@ipi.ba

Experimental testing of reinforced concrete

beams strained in bending
Vladimir Radojicic
Faculty of Technical Sciences, Serbia,
Abstract When fracture of concrete beams appeared,

a sharp decline of force at the cross section fol-
In this paper is conduct experiments the of rein-
lowed. At one of the beams such break was mani-
forced beams with “T” cross sestion. It is tested the
fested as a shock (Figure 2).
beams reinfoced with ribbed reinforcement as with
different positions of mounted binders : vertical and
diagonal combining vertical and diagonal binders.
The beams are streined in bending with the
chort-time load until breaking (it is in dicated un-
der which load the craks and fissures appeared).
Obtained experimental results are compared to
the calculated with the purpose of the description
of the behavior of the the beams.
Key words: short-term load, cracks, break, beam,
stirrup, transverse force, bending moment, steel
1. The formation and development of cracks Figure 2. The fracture of the beam which was
under load, the strain of concrete and manifested as a shock
rebar, breaking force and break types
In this paper, the behavior of beams is given: re- When the break of the beam was caused by
inforced with ribbed reinforcement (Figure 1) for bending, along the reinforcement, while the prin-
the reception of the bending moment, but not for cipal stresses were less than the carrying power
receiving the transverse force, without the trans- of concrete, the pressure force in the press could
verse reinforcement - binders, which served as the have been increased even more for a certain value,
mark – referential standard beams. Representative while the beam underwent significant plastic de-
break types of beams with “T” cross section are formity; the registered stress in the armature con-
given, after being loaded until breaking. All “T” siderably exceeded the yield point, which means
beams were loaded with the concentrated force at that the reinforcement of such beams entered the
l/2 until the break occurred. reinforcement zone. If the stress in the armature
enters the reinforcement zone, the load increase
is possible, until the break of the concrete beams
happens in the meantime. The diagram σ – ε (Fig-
ure 3) present the results of the test of the concrete
prisms and diagram σ – ε the results of the tested
profiles showed in (tab.1) with their mechanical
characteristics (Figure 4).
The largest dilatations in the reinforcement
which qualitative analyse is given in (tab.1) oc-
cur at the point where the crack intersects the rein-
Figure 1. Method of reinforcing beams by ribbed
forcement (Figure 5). For a period, the appearing
reinforcement RA Figure 1-1 The cross section
cracks are expanding, and the new ones are occur-

ring, until the moment when one of them or the Table 1. Characteristics of the steel used
entire zone, starts to spread. With increasing width Carbon
of cracking, their length increases, the pressed Ф sv sm d10
content
zone of concrete is decreased, while the slightly RA 8 511,90 764,50 20%
the arm of internal forces gets slightly increased. 400/500 12 652,40 652,40 18% 4,8%
As a rule, in the large number of beams, the first

diagonal cracks appeared in the middle third of the
beam, almost symmetrically (Figure 6, Figure 7).
It should be noted that the diagonal cracks first
appeared in a beam rib, followed by the ones in the
lower plane(fifth), but at a load of over 495.0 kN.
Figure 3. Diagram σ – ε
Figure 6. Occurrence of cracks and scissures in

a beam
In 60% of cases, the first cracks appeared under

the force of 207.0 kN, which represents 70% of
the exploitation load. The value of the calculated
transverse shear-stress during the occurrence of
the first cracks in the neutral (rib) plane was τ0 =
2.848 MPA , the differences between the calculed
and measured values of the stress (table 2).
Figure 4. Diagram σ – ε for the steel used
Figure 5. The developement of the cracks in the Figure 7. The development of the craks referential
beam standard beams

Table 2. Numerical and measured tension values

of voltage in the beams RAM.3V
RA RA Measured
Load
16ф12 uф8/e=10,7 6ф12 u=ф8/e=7

Break. Stirrup stirrup
kN
sa sa tension
1 207,0 151,50 137,79 92,325
2 305,0 223,22 202,16 131,40
3 37,30 272,99 246,82 175,24
4 495,0 362,28 326,95 235,40
5 555,0 406,19 366,36 -
1 207,0 151,50 196,85 175,20
2 305,0 223,22 288,80 262,81 Figure 8. The break of the beam RAM.7.K
3 373,0 272,99 352,60 306,76
4 495,0 362,28 467,07 406,35 The break of the beam RAM.7.K occurred
5 615,0 406,19 523,37 - due the overpowering of the adhesion between
the concrete and the reinforcement above the
The care of concrete : First they were exposed supports. The break of the tested beam beams re-
the sealing process for six hours, consequently inforced with soft, smooth and ribbed reinforce-
followed by dampening (by water) for three days. ment, occurred in one of the following ways:
The beams were tested after 5 days. The average 1. Break due to the bending moment on the
strength under pressure was βk = 24.2 MPa. main-strained reinforcement.
This group of beams was made according to 2. Break due to exceeding of the limit values
recipe for concrete MB 40 , with three fractions. of the main tension pressures in the concrete
The same beams were “lying” on the panel during –shear break.
the steaming and nurturing. Cement used for this 3. Break due to malfunction of the main
group had the addition of slag (PC 20S). reinforcement anchorage.
Beams RAM.7.8. K were reinforced with
ribbed concrete steel for receiving the bending
moment of 16Φ12mm and ribbed diagonal stir-
rups Φ8/e=10.7cm (Figure 8).
Calculated tension in the horizontal reinforce-
ment for exploitational load, in relation to the limit
state σa = 405.5 MPa. Tension in the stirrups in re-
lation to the limit state σa =428.8.
The break in the beams occurred under the
force P = 615.0 kN. Maximum transversal force at
the break force was Q = 3l0.25 kN.
Normal tension in the reinforcement for the
break force was σa = 529.3 Mpa. Figure 9. Measured dilatation (tension) in the
Calculated tension in the reinforcement under concrete and reinforcement
the force of 495 kN in the tense reinforcement was
σa = 234.5 MPa, calculated in relation to the limit 2. Break due to the bending moment along
load σa = 426.3 Mpa (Figure 9). the main - strained reinforcement
For the exploitation load, the measured ten-
sion in the strained reinforcement was σa = 153.41 This type of break was recorded in those beams,
MPa. The first cracks in these beams, occurred un- where the transverse reinforcement – stirrup had
der the force of 305.0 kN and the shear tension of been determined according to the classical theory
τ0 = 4.21 Mpa. of reinforced concrete and the beams that had trans-
verse reinforcement, in excess of 30-35%, than was

really needed (additional percentage of transversal

reinforcement and stirrups obtained by measure-
ments according to the Ritter-Morsch theory).
Characteristic for this break type, at least in the
tested beams, is that first the diagonal cracks were
formed, while in the final break phase, a relatively
fast opening of vertical cracks in the vicinity of
l/2 occurred, spreading into cracks and fractures.
At the same time, significant deformities in main
reinforcement occurred at the crack locations. Figure 10. Break of the beam due to the reaching
After reaching the yield point, a sudden dilata- the limit values of the principal tension pressure
tion increase occurred in the reinforcement, fol-
lowed by the opening up of the vertical cracks
4. Break due to malfunction of the main
which progressively lengthened, decreasing the
reinforcement anchoring
repressed zone of concrete, while slightly increas-
ing the arm of internal forces. This type of break occurred in one RAM.7.K
At this stage the external load can be increased beam reinforced by ribbed reinforcement Φ12mm
as long the force arm can be increased. The mo- (16 Φ 12mm) and diagonal ribbed stirrups near the
ment the force arm reaches a maximum value, right support, at the length of 15 cm, characterized
and does not increase, there occurs the crushing of by segregation of concrete during concreting of
concrete in the compressed zone, and the normal beams. Under the force of 6l5kN and dilatation of
pressure tension reaches a value βp. the main reinforcement εa = l.3795 ‰, a stretching
Dilatation of the reinforcement after the break of reinforcement occurred. Break was manifested
was registered with the value εa = 23.26‰. At this as a strong shock, although the main reinforce-
load phase there occurred a significant plasticity ment still did not reached the fluxion phase. In the
of the compressed zone of concrete, accompanied immediate vicinity of the half of the range cracks
with the high cross section rotation. Deflections in the concrete in the lower zone did not appear.
were registered in l / 2 beams 2.5 cm.
4.1 Based on the measured values -
3. Failure due to exceeding the limit val- reinforcement dilatations εa and
ues of principal tensions in the concrete identified tensions σa in the main
pressure-transverse fracture transversal reinforcement, the following
conclusions can be made
This type of break occurred in a number of beams
(RAM.3.V, RAM.4.V) (Figure 10), mainly in For low forces and low tensions we can say that
elements whose βk slightly lower than projected. – the tension, in the main reinforcement follows the
In the surrounding area of the support zones, ex- moments along the beams, while the beam functions
ceeding of the principal tension pressure occurred, in phase – with no cracks. When the cracks begin
although the cross section was reinforced with a to appear and are notably more manifest, the beam
somewhat higher amount of transversal armature begins to behave like a bow with the grappling.
than really needed. Break was manifested initially Calculated tensions with respect to certain ten-
by scaling off the protective layer of concrete, fol- sions measured through dilatations, are higher, as
lowed by the crushing of concrete. Break occurred expected, in comparison to the classical theory of
with a strong burst. the limit load, because according to these theories
it is assumed that total tension is received by rein-
forcement, while the internal forces arm does not
depend on external load and the deformation of
the beam.Until the onset of cracking, the tension
forces are primarily received by concrete and rein-

forcement. When the cracks occur, redistribution caused by bending. Vertical crack were registered
of forces takes place. in these beams.
At the spot where the crack intersects the rein- The appearance of first cracks mostly depend-
forcement (the main or lateral), the total tension is ed on nurturing process of the elements and the
taken over by the reinforcement. Between individu- quality of the concrete.
al cracks there is concrete without cracks, which still The state of tension and deformation of the
connects the compressed and tensioned zone of the beam with cracks was not monitored in func-
beam. Reinforcement, intersected with the crack be- tion of the reinforcement percentage of the
haves like a “grappling”, “because in the immediate main reinforcement, because it did not vary.
vicinity around the crack, destruction of adhesion Dilatation arrangement in the stirrups εa in the
between concrete and reinforcement occurs. monitored cross sections (vertical and diagonal or
First appearance of cracks and their further de- diagonal) indicate that the dilatations are largest in
velopment depended on the quality of concrete, the lower zone of the beam or in the vicinity of the
particularly on the concrete maintaining process, neutral plane, which depends on where and how
(construction yielding in exploitation and possibly they occurred.
later), the type of load - short or long term. Tests In the compressed to break zone of the beam,
carried out by Kedič [1]. on the wall beams, indi- the stirrup tension was significantly lower than the
cate that the width of cracks in the period of one calculated one.
year, at constant long term load, can increase up On the basis of the measured dilatations and
to 2.5 times in comparison to the short term load. tensions in the stirrups, it can be concluded that the
He found, by monitoring the development most efficient reinforcement of the beam is with
of cracks whose width at short-term load ranged the diagonal, followed by the combined diagonal
from 0.15 to 0.17 mm, that these cracks expanded and vertical and vertical stirrups. The Figure indi-
after one year period, now ranged from 0.4 to 0.45 cates that the stirrup surface does not significantly
mm, noting that the new cracks appeared. change, as the inclination changes from 40° - 50°
Diagonal cracks in the tested beams were and the angle ranges between 30°- 60°. Increasing
forming an angle with the beam axis whose value the inclination of cracks for over 50° , the surface
was 35° -75° (Figure 11). of the transverse reinforcement begins.
The largest measured dilatation in the main re- Carrying capacity of reinforced beams with
inforcement before the beam break was εy = 23.26 diagonal stirrups strengthened with diagonal pins
‰, while dilation at which the reinforcement flux- in the support vicinity practically does not change.
ion was registered was εy = 2.43 ‰. However, it is useful to strengthen this area with
The fluxion was not registered in the stirrups, pins, in order to avoid local damage to the beam,
at least for loads for which it was possible to read which may result in the premature break.
the instrument. - Tensions measured in the concrete at the stage
The appearance of vertical cracks was only reg- before the onset of cracks can be said to agree with
istered in beams in whom the break was achieved the calculated tensions determined according to
by bending. the laws of the theory of elasticity.
These cracks occurred when the normal - In all observed cross sections, longitudinal
tension stress on the lower edge of the beam and transverse dilatations were measured. Their
reached the concrete tension strength in bend- development could not unobstructedly monitored
ing. The intensity of force during the occur- with the load increase. However, it is significant
rence of vertical cracks principally depended on to mention that tensions σy occur even in linear
the nurturing processes of the tested elements. beams, although minor compared to the tensions
The reinforcement percentage of reinforcing the σx. These beams operate as a kind of space grid.
main reinforcement did nor vary - it was con-
stant, while the reinforcement percentage of trans-
verse reinforcement varied. A number of diagonal
cracks appeared in the beam where the break was

of cracking. By increasing the load, the

width and length of cracks increased, the
compressed zone of concrete decreased,
while the arm of the internal forces slightly
increased until the appearance of break.
- The Beam, during the first occurrence
of cracks and increase of load, began to
behave like a a bow with the grappling.
- Break force greatly depended on the built
in quality of the used concrete.
In beams with “T” intersection loaded with
the concentrated force, although the panel
Figure 11. Crack distribution in the “T” beam
is positioned above the neutral line, it does
with cross section loaded with concentrated forces
not participate in the transfer of the normal
compressive tension (contrary to previous
Conclusion beliefs).
- Safety factor should be adopted depending
In reference to the analysis of the performed
on the load, functional conditions of the
tests, the first cracks appeared:
structure, the state of tension and the cross
- In adequately nurtured referential -
section, and should not be equally treat
standard - beams, reinforced with ribbed
under all conditions.
reinforcement, (for reception of the
- If the calculation of the transverse
bending moment), under the shear tensions
reinforcement is carried out according
of τ0 = 2.106 MPa, while break appeared at
to the limit state, assuming that overall
τ0 = 2.508 MPa;
tension force is entirely transferred to the
- In beams reinforced with reinforcement for
reinforcement itself, then the criterion for
the reception of the principal tension stress,
determining the transverse reinforcement is
under tensions whose values ranged from τ0
more stringent than in the classical theory
= 2.106 MPa to τ0 = 5.13 MPa;
procedure.
- I conclude that:
- I point out that it is necessary to carefully
The appearance of first cracks depends,
check the quality of steel (produced in our
primarily, on the concrete nurturing,
country) for the reinforced concrete, due
concrete quality, while their subsequent
to the impermissible deviation from the
development depends on the of methods of
prescribed strength.
reinforcing concrete with longitudinal and
transverse reinforcement.
- For a short term, steady loads, while References
concrete is in phase, before the onset of 1. Kedic M.N. Isljedovanjije trešćino stojkasti adno-
cracking, linear elements of the reinforced praljotnih željezobetonih blok-stenok pod dejstvijem
concrete behave elastically (sufficiently kratkovremenoj dljiteljnoj nagruzki, Stroiteljnje kon-
precise statement). strukciji, Vipusk, 1965.
- Measured voltages in the armature for
the torque reception, especially for the Corresponding Author
reception of the principal tension stresses Vladimir Radojicic,
are, considerably, below the tensions Faculty of Technical Sciences,
obtained by the theory of elasticity and the Serbia,
E-mail: vladar2@sbb.rs
limit states theory for the exploitation load.
- Redistribution of tension (forces) is
manifested, immediately before the onset

Application of fuzzy logic in the process of

vehicle routing in logistic support
Goran Cirovic1, Dragoljub Sekulovic2, Dragan Pamucar2, Miodrag Regodic2
1
The Belgrade University College of Civil Engineering and Geodesy, Belgrade, Serbia,
2
University of Defence in Belgrade, Military Academy, Belgrade, Serbia.
Abstract 1. Introduction
The route guidance system developed in this The vehicle routing problem (VRP) has played
paper is an Adaptive Neuro Fuzzy Inference Guid- a very important role in the distribution and supply
ance System (ANFIGS) that provides instructions chain management, in addition to many other areas.
to drivers (soldiers) based upon “optimum” route During the past five decades, many have engaged in
solutions. The possibility for more confidential research on various types of vehicle routing prob-
predictions, leaning on scientific methods and ac- lems and have had a lot of success. Most of them
complishments of information technology leaves have aimed at static VRPs, and all their information
more time for the realization of logistic needs. In is assumed to be known and not to be changed dur-
the DRG system for selecting a road route, which ing the whole process. However, most vehicle rout-
is presented in this paper, the experiential knowl- ing problems are dynamic in the real world. Dis-
edge of military drivers who run transport vehicles patchers often need to readjust the vehicles routes
in logistics support units is accumulated in a neu- to improve vehicle efficiency and enhance service
ro-fuzzy network which has the capacity to gener- quality when accidents or unexpected incidents
alize solutions. Longstanding ambitions to acquire occur. With advances in modern communication
desired levels of efficiency within the system with technology to enable people to quickly access and
minimal costs of resources, materials, energy and process real-time data, the dynamic vehicle routing
money are the features of executive structures of problem (DVRP) is being given more and more at-
logistic systems. Uncertainty is prevalent and una- tention. In dynamic vehicle routing problems, the
voidable in business operations. A dynamic route situation is essentially different. Transport requests
guidance (DRG) system routes drivers using the arrive in time according to a stochastic pattern, and
current traffic and combat conditions. ANFIGS the task is to route the vehicles in an orderly fashion
can provide actual routing advice to the driver to satisfy the demand.
(soldier) in light of the real-time traffic and com- Relative to the static problem, the dynamic
bat conditions. In the DRG system for the choice problem has many notable features [1,2,3]. They
of road route, the experiential knowledge of mili- include that the time dimension is essential, future
tary drivers who control the transport in logistics information is imprecise or unknown, rerouting and
support units is accumulated in a neuro-fuzzy reassignment decisions may be warranted, faster
network which has the capability of generalizing solution speed is necessary and so on. In particular,
a solution. The adaptive neuro-fuzzy network is it must be dynamic, given that the decision-making
trained to select the optimal road route on the basis is based on incomplete, uncertain and changing in-
of standard and additional criteria. As a result of formation. Thus, it is not possible for the decision
the research, it is shown that the suggested adapt- maker to solve the entire problem at once [4]. Re-
able fuzzy system, which has the ability to learn, views on the problem can be found in [5,6,7,8].
has the capability of imitating the decision mak- In the last decades, there have been many at-
ing process of the transport support soldiers and of tempts to solve the problem of assigning vehicles
showing a level of competence which is compa- to transportation routes. In its simplest form, the
rable with the level of their competence. vehicle assignment problem (VAP) can be formu-
Key words: vehicle routing, fuzzy logic, lo- lated as a linear programming problem [9] and
gistic. solved with an application of the simplex method

[10], the assignment algorithm often called the than their single criterion equivalents. Zeleny [30]
Hungarian method [11], network algorithms [10] proposes one of the first multiple criteria formula-
or the transportation method [12], as well as its ex- tions of a classical transportation problem. Singh et
tensions [13]. In real life situations, however, VAP al [25] investigate another variant of a transporta-
is more complicated and requires more advanced tion problem focused on optimization of the total
methods to be solved. Some authors [14,15,16] transportation time between certain origins and
formulate VAP in terms of the linear, integer or destinations. The authors consider three non-linear,
mixed integer programming problem. Some oth- time oriented criteria, such as: riding time, loading
ers [17] transform the linear, discrete model into time and unloading time, and a set of numerous
a non-linear, continuous form. In both cases, the constraints. The problem is solved by a heuristic
problems are formulated either in a deterministic procedure that utilizes a specific and original struc-
or non-deterministic form [17,18]. Many models ture of the problem. The optimal solution defines
are based on the queuing theory, too [19,20], and the minimum flow of materials in the transportation
they consider either a homogeneous [16,17] or a network and the minimum time required to distrib-
non-homogeneous fleet [14,15]. Some of the mod- ute this flow in a network. The computational ef-
els combine VAP with other fleet management ficiency of the proposed algorithm is analyzed on a
problems, such as fleet sizing [17,21,22], vehicle real life case study focused on the transportation of
routing [17] or vehicle scheduling [16,23] with- iron ore in the steel industry.
in time and capacity constraints [21,22,24]. The Milosaviljevic et al [18] formulate a VAP for
models usually refer to specific transportation en- a road transportation company. The authors con-
vironments, such as urban transportation [16], rail sider a heterogeneous fleet operating from a cen-
transportation [15,23] or air transportation [14]. In tral depot and define types of vehicles allocated
the majority of cases, the proposed vehicle assign- to specific transportation jobs. The decision prob-
ment models have a single objective character, lem is formulated in terms of fuzzy mathematical
however, different objective functions are consid- programming and solved by an original heuristic
ered. The most popular are: total transportation procedure. Fuzzy numbers are applied to model
costs [15], profit [14,17] or empty rides (flows) the dispatcher’s preferences and different catego-
[16]. Depending on the specific characteristics of ries of constraints associated with fleet assign-
VAP and the complexity of the decision models, ment. Further extension of this research is pre-
various solution procedures and algorithms are sented in the articles of Vukadinovic et al [28] in
applied to solve specific instances of VAP. which neural networks are applied to generate a
Rushmeiner [14] present interesting consider- set of fuzzy decision rules allocating vehicles to
ations on the assignment of airplanes to particu- transportation routes. Due to the fact that in many
lar transportation routes. They formulated VAP real life situations VAP is characterized by high
in terms of mixed integer mathematical program- computational complexity, especially when it is
ming with price-wise linear constraints. The deci- combined with other fleet management problems,
sion problem is solved by a Cplex solver for the several authors apply heuristic procedures to solve
GAMS system and a heuristic procedure for the the analyzed problems. In some cases heuristics
rounding of non integer solutions. are combined with other well-known techniques,
The most up to date approaches to modeling such as branch-and-bound algorithms [14]. In the
and solving VAP involve: stakeholders’ analysis last several years metaheuristic algorithms have
leading to multiple objective formulations of the earned great popularity as solution procedures for
problem [24], analysis of uncertainty and impreci- an assignment problem [32,33].
sion of data [18,26,27] and the application of arti-
ficial intelligence methods in the problem solving 2. Problem statement and definitions
procedures [28,29,30].
Zeleny [30] and Singh et al [25] claim that mul- The purpose of logistics in the Serbian Army is
tiple criteria formulations of different categories of to create force, weaponry and military equipment
transportation decision problems are more realistic and secure ongoing support in combat operations.

The primary goal of military logistics is to contrib- During combat operations in Bosnia and in
ute to national security by providing the necessary Kosovo, it could be seen that units actively partici-
systems and weaponry and military equipment pating in combat operations require active logis-
whose properties are reliability, effectiveness and tical support that is expressed primarily through
efficiency, a high degree of readiness and techno- the delivery of the necessary quantity of infantry
logical superiority over potential adversaries. Ac- and artillery ammunition. The amount of ammuni-
cording to the military doctrine of the Republic of tion used during combat operations is large, and
Serbia, the basic functions of logistics are: main- the lack of possibility to supply units with the am-
tenance, production, supply and transportation, munition they need threatens the combat readiness
services and facilities. of the units. The experience of logistics support
One of the most important functions of lo- officers involved in supplying the units during
gistics is transport and supply. Supply means combat operations shows us that in addition to the
the procurement, deployment, storage and care basic criteria for selecting a route for carrying out
of material reserves, including determining the a transport assignment, it is necessary to consider
type and amount of reserves at each level. Each the additional criteria that are primarily based on
day, traffic support units receive a large number the experience of the decision makers.
of transport requests from other units who want Experienced officers have constructed criteria
to carry different types of load to various des- which they use for selecting a route for carrying
tinations. Each transportation request is charac- out a transport assignment. When selecting routes,
terized by a large number of attributes, among vehicles are chosen with the structural and techni-
which the most significant are type of goods, cal characteristics which satisfy the conditions for
quantity of goods (weight and volume), place transporting particular types of load. Fuzzy sets can
of loading and unloading, the preferred time of quantify linguistic i.e. qualitative and imprecise
loading and / or unloading, and the distance to information that occurs when making decisions.
which the goods are shipped. Thus, fuzzy reasoning can be used as a technique
Since the Serbian Army fleet has many differ- by which descriptive heuristic rules are translated
ent types of vehicles, dispatchers have to make into automatic management strategy i.e. decision-
decisions every day about which type of vehicle is making. By developing a fuzzy system it is possible
most suitable to perform the task. In logistics bas- to transform the deployment strategy for vehicles
es, the vehicles most commonly used for transpor- on specific routes into an automatic control strategy.
tation tasks are the TAM 4500/5000 capacity 5 t,
FAP 1314 capacity 8 t, TAM 150 T11 capacity 12 3. Mathematical Model
t and FAP 2026 capacity 20 t. One of the essential
prerequisites for the choice of vehicle is the choice Different than existing studies, our research
of route for carrying out the transport request. problem addresses three unique uncertainty fea-
The criteria by which the logistics support or- tures (i.e., soft time windows for vehicle arriv-
gan selects and makes a decision regarding which als, fuzzy random pickups of unwanted materials,
route the vehicle should use for the task are: and fuzzy random travel times) that often exist in
– Type of road surface, a fuzzy random environment. To formulate our
– travel distance, model, necessary notations are defined below.
– travel time,
– route capacity, 3.1. Notations for modelling
– vulnerability of the roads to blockage, The variables and parameters used in the model
– traffic capacity and road capacity, are:
– vulnerability of the road route to enemy
K - The number of vehicles.
action,
– the existence of alternative roads along the N - The number of customers.
length of the route. J - Vertex set of all customer nodes, where
J = {1, 2,..., N } .

V - Index set of all vehicles, where V = {1, 2,..., K } . { ( ) }

t j ≥ max EET j , ti + si + t ij xijk , j ∈ J , i ∈ J , k ∈ V
xijk - A binary variable, where i ∈ J , j ∈ J , k ∈ V ......................................... (6)
and i ≠ j . xijk = 1 if vehicle k travels from t j ≤ ELT j , j ∈ J ............................ (7)
customer i to customer j , otherwise, xijk = 0 .
yijk - A binary variable, where j ∈ J , k ∈ V and {( ) }
l kj max lik + q j − d j xijk , j ∈ J , i ∈ J , k ∈ V
=
yijk = 1 if vehicle k serves customer j ;

......................................... (8)
otherwise, yijk = 0 . l kj ≤ Ck , j ∈ J , k ∈ V ........................ (9)

dij - The distance of traveling from nodes i to j .
1
d j - The demand of customer j . N
∑ L (t ) ≥ S
j∈J
j j a ........................ (10)

q - The amount of pickup materials of customer j .
Ck - The capacity of vehicle k . xijk ∈ {0,1} , yik ∈ {0,1} , ∀i ∈ J , j ∈ J , k ∈ V
........................................(11)
S a - The lowest customer satisfaction level which
a decision maker can accept. yik ∈ {0,1} , ∀i ∈ J , j ∈ J , k ∈ V
....................................... (12)
t�ij - The traveling time from customer i to
customer j .
∑x 0 jk = 1, ∑x 0 ik = 1, ∀i ∈ J , j ∈ J , k ∈ V
s j - The service duration time of customer j . j∈J i∈J ....................................... (13)
- The load of vehicle k leaving from customer The objective function (3) is to minimize the to-
j. tal travel distance of all vehicles, where 0 is the start
EET j - The endurable earliness time of customer j . node of all vehicles. Constraint (4) is to ensure that
the vehicle capacity is not violated for each vehicle
ELT j - The endurable lateness time of customer j . k e V. Constraint (5) is to make sure that each cus-
tomer i e J is visited by one and only one vehicle
Then, our research problem can be formulated k e V. Constraints (6) and (7) are to show the rela-
as the following model: tionship between xijk and yik, i e J, j e J and k e V,
which are the flow conservation constraints of VRP.
Constraints (8) and (9) are to ensure that the time
min f1 = ∑∑∑ xijk dij ..................... (1) window of each node is taken into account whenthe
k∈V i∈J j∈J
service starts. Constraint (10) puts restrictions on the
load of customer j, j e J, in which the pickup amounts
∑d j y jk , ∀k ∈ V .......................... (2) q~j are often unknown, because the customers just
j∈J can present an approximate amount. Constraint (11)
is to make sure that vehicle capacity is not violat-
∑y jk = 1, ∀j ∈ J .......................... (3) ed for each vehicle keV when it leaves customer j.
k∈V Constraint (12) is to ensure that the customer satis-
faction level is higher than Sa. Constraint (13) is to
∑x
i∈J
ijk = y jk = 1, ∀j ∈ J , k ∈ V ................ (4) ensure that xijk and yik are binary variables, where i
e J, j e J and keV. Constraint (14) is to ensure that all
vehicles start and end from start node 0.
As known, it is hard to handle the problem
∑x
j∈J
ijk = yik = 1, ∀i ∈ J , k ∈ V ................ (5)
when it involves uncertainty. Kwakernaak [25]
proposed an algorithm to get the expectation of

a discrete fuzzy random variable, and later Kruse It is worth noting that Model (15) is formulated
and Meyer [23] formalized it in a clear way. to target the actual problem faced by a large-scale
According to Angeles Gil et al. [2], a fuzzy ran- construction project. As pointed out early in the
dom variable can be transformed into a fuzzy inter- introduction, existing VRP research with uncer-
val by using the expected value function. An examp- tainties has mostly focused on fuzzy variables or
le is given below to illustrate the method of obtai- random variables but very limited coverage of
ning the expected value of a fuzzy random variable. fuzzy random variables. To our best knowledge,
Though a fuzzy random variable can be trans- known studies have only dealt with fuzzy random
formed into a fuzzy number easily, it is still hard customer demands or travel times, or both. In con-
to handle the model involving fuzzy numbers. The trast, our model extensively addresses the fuzzi-
method proposed by Heilpern [20] is used to trans- ness in time windows for arrival times as well as
form these fuzzy variables into the deterministic the fuzzy randomness in both pickups and travel
� , nL times. This model is new and relatively compli-
ones. Suppose that there is a fuzzy number N a
cated, and, moreover, there exists no known solu-
and na are the upper and lower ends of the α-cut of
R
tion algorithms in solving Model (15).
the fuzzy number respectively, the expected value
� is defined by Eq. (14):
of a fuzzy number N 2. From Fuzzy to Neuro-Fuzzy
1 1 The development of fuzzy logic was motivat-
∫ na da + ∫ na da
L R
ed in large measure by the need for a conceptual
E(N) = 0 0
.................. (14) framework which can address the issue of uncer-
2 tainty and lexical imprecision. Some of the essen-
In this study, it is assumed that there exists a tial characteristics of fuzzy logic relate to the fol-
least tolerable customer satisfaction level S a that lowing [24]:
can be accepted by the decision makers. Following – exact reasoning is viewed as a limiting case
the discussion above, our mathematical model can of approximate reasoning,
be transformed into Model (15) as described below: – everything is a matter of degree,
– knowledge is interpreted as a collection of
min f1 = ∑∑∑ xijk dij elastic or, equivalently, fuzzy constraint on
k∈V i∈J j∈J a collection of variables,
∑ d j y jk , ∀k ∈ V – Inference is viewed as a process of
 j∈J propagation of elastic constraints,
 y = 1, ∀j ∈ J
∑k∈V
jk – Any logical system can be fuzzified.

 ∑ xijk = y jk = 1, ∀j ∈ J , k ∈ V Fuzzy logic [33] enables a mathematical po-
 i∈J
 ∑ xijk = yik = 1, ∀i ∈ J , k ∈ V tential for the description of indefiniteness related
 j∈J to cognitive processes with man, such as thinking

{ ) }
and reasoning. It enables reasoning with incom-
 (
 t j ≥ max EET j , ti + si + t ij xijk , j ∈ J , i ∈ J , k ∈ V
plete and insufficiently precise information, which
 is also called approximate reasoning.
 t j ≤ ELT j , j ∈ J
Fuzzy logic is mostly used for modeling com-
 k
=
k
{( k 
) }
 l j max li + q j − d j xijk , j ∈ J , i ∈ J , k ∈ V plex systems in which it is hard to define, by us-
ing other methods, the interdependence that exists
 l j ≤ Ck , j ∈ J , k ∈ V
1 between certain variables. The models based upon
 ∑ L j ( t j ) ≥ Sa fuzzy logic are based upon “IF-THEN” rules [26].
 N j∈J Each rule establishes a relation between the lin-

 guistic values through an IF-THEN statement
....................................... (15) IF x1 is Aj1 AND … AND xi is Aji AND … AND xn is Ajn THEN y is B j

where xi, i=1, . . ., n are the input variables, y tive Network Based Fuzzy Inference Systems
is the output variable Aj and Bj are linguistic va- [28,29,30]; Fuzzy Neural Networks [31]; Simpli-
lues labeling fuzzy sets. The degree with which fied Fuzzy Inference Networks [32]. These ap-
the output variable y matches the corresponding proaches to FLSs generate what are called neuro-
fuzzy set Bj depends on the degrees of matching fuzzy systems that, in the view of all the different
of the input variables xi, i=1, . . ., n to their fuzzy authors and subsequent users, bring together the
sets, Aj, and on the logic format (AND, OR) of ease of – linguistic – interpretation and mainte-
the antecedent part of the rule. So, it immediate nance of FLSs, with the computational power of
calculates the degree of matching in each rule as neural networks that can be trained through a gra-
shown in Figure 1. dient-type similar to the back-propagation (BP)
algorithm. The BP algorithm is a gradient descent
algorithm in which the derivatives of an objective
function (generally an approximation error in the
form of (13) or (14)) with respect to the param-
eters are calculated by the chain derivative rule.
A first forward pass is performed to determine
the network output and a second backward pass
is performed to adjust the parameters for better
approximation in a pattern-by-pattern fashion. In
the second pass, gradient information is computed
through the quantities calculated in the forward
Figure 1. Applying rules
pass, originating in some computational savings.
Thus, the algorithms developed for supervised
Each rule gives a fuzzy set as a result, with a
learning or tuning of FLSs adjust the parameters
membership function cut in the higher zone. Each
based on gradient information.
of the rules gives a set of fuzzy sets with differen-
tly cut membership functions, whose deterministic
values all have a share in the inferential result [31].
There are two main characteristics of fuzzy
systems that give them better performance for spe-
cific applications:
– Fuzzy systems are suitable for uncertain or
approximate reasoning, especially for the
system with a mathematical model that is
difficult to derive.
– Fuzzy logic allows decision making with Figure 2. Structure of adaptive neuro fuzzy infer-
estimated values under incomplete or ence system
uncertain information.
The adaptive-network view of FLSs is useful
Artiflcial neural systems can be considered as in translating many existing approaches from the
simplified mathematical models of brainlike sys- neural network field to the fuzzy system field, as
tems and they function as parallel distributed com- well as to generate hybrid approaches, compari-
puting networks. However, in contrast to conven- sons etc. By using the given input/output data, an
tional computers, which are programmed to per- Adaptive Neuro Fuzzy Inference System (AN-
form specific tasks, most neural networks must be FIS), Figure 2, forms a fuzzy system of reasoning
taught, or trained. They can learn new associations, in which the parameters of affiliation function are
new functional dependencies and new patterns. set by using the algorithm of back propagation or
In the early ‘90s some researchers started combined with the method of the smallest square
looking at FLSs as adaptive networks i.e., Adap- error. The merit of the back-propagation algorithm

is to devise an efficient computational approach for delivery to the customers. The data used in our
for the determination of the gradients necessary model were based on the surveys collected from the
for updating all the (many) network parameters. customers (e.g., time window, demand, and pickup
While fuzzy logic performs an inference mech- at each site) and documents provided by the sup-
anism under cognitive uncertainty, computational plier (e.g., loading times, vehicle capacities).
neural networks offer exciting advantages, such as As can be seen (section 4) summarizes the dis-
learning, adaptation, fault tolerance, parallelism tance between every two nodes. Note that a ‘-’ is
and generalization. A brief comparative study be- used when there is no route between the two des-
tween fuzzy systems and neural networks in their ignated nodes. Section 5 is the summary of the up-
operations in the context of knowledge acquisi- loading time (for pickup) at each point, the demand
tion, uncertainty, reasoning and adaptation is pre- of material at each point. The permissible time
sented in the following table 1 [13]. windows for each point are detailed in Table 2, and
the amount of the materials to be picked up at each
5. Case study point is listed in Table 1. Also note that the pickup
amounts in Table 1 are expressed as fuzzy random
The GLNPSO algorithm described in Section 4 variables, i.e., numeric specific values are translat-
has been successfully implemented and applied to ed from original statements such as “it is about 0.2
solve a vehicle routing problem for material trans- ton more likely,” “it is 0.3 now, but it may increase
portation encountered by a large-scale water con- a little more in the future.” Furthermore, the dead
servancy and hydropower construction project in weight of each vehicle is assumed 10 tons.
Serbia. Computational results of using GLNPSO
have been compared to those produced by the tra- 5.2. Comparison between GLNPSO and the
ditional PSO technique as well as those under an classic PSO
environment with different conditions.
To have further insight into the performance
5.1. Case overview differences between GLNPSO and the classic
PSO, our computational work has been conduct-
In real world, a material supplier may provide ed for two separate algorithms, one is coded us-
materials to many construction projects. It is the ing GLNPSO as presented in Section 4, and the
case faced by the construction firm (i.e., referred to other, based on the classic PSO technique. Each
as the supplier hereinafter) that is in charge of the algorithm has been run 200 iterations to search for
material supply for four large-scale water conser- the best feasible solution. The search convergence
vancy and hydropower construction projects to be history towards the best solution found is recorded
completed in the mountain areas in west of Serbia. separately and depicted in Figures 3 and 4 respec-
Due to the fuzziness and randomness in pickups tively. By comparing Figure 3 with Figure 4, it is
and time windows constraints on travel times, in clear to see that GLNPSO performs much better
this study only one kind of material is considered to than PSO both in terms of the speed of conver-
Table 1. Properties of fuzzy systems and neural networks

Skills Fuzzy Systems Neural Nets
Knowledge acquisition Inputs Tools Human experts Interaction Sample sets Algorithms
Information Quantitive and Quantitive Qualitive
Uncertainty
Cognition Decision making Perception
Mechanism Heuristic search Parallel computations
Reasoning
Speed Low High
Fault-tolerance Low Very high
Adaption
Learning Induction Adjusting weights
Implementation Explicit Implicit
Natural language
Flexibility High Low

gence and the quality of solution found. As shown

in Figure 3, GLNPSO converges very fast with
its best solution at iteration 143, and then enters
a steady state. In contrast, as depicted in Figure 4,
the convergence of PSO is rather bumpy and lo-
cates its best solution at iteration 185, but its qual-
ity is worse than the best found by GLNPSO.
Figure 3. Convergence history - GLNPSO
Table 2. The results calculated by GLNPSO and PSO

Relative error Relative error Relative error
(0.279) (0.1312) (0.0291)
No.
Measured Predicted Measured Predicted Measured Predicted

value value value value value value
1. 0.720 0.441 0.720 0.589 0.720 0.691
2. 0.441 0.720 0.441 0.572 0.441 0.470
3. 0.812 0.533 0.812 0.681 0.812 0.783
4. 0.439 0.718 0.439 0.570 0.439 0.468
5. 0.676 0.955 0.676 0.807 0.676 0.705
6. 0.565 0.844 0.565 0.696 0.565 0.594
7. 0.744 0.465 0.744 0.613 0.744 0.715
8. 0.502 0.781 0.502 0.633 0.502 0.531
9. 0.839 0.560 0.839 0.708 0.839 0.810
10. 0.635 0.356 0.635 0.504 0.635 0.606
11. 0.639 0.360 0.639 0.508 0.639 0.610
12. 0.695 0.974 0.695 0.826 0.695 0.724
13. 0.697 0.976 0.697 0.828 0.697 0.726
14. 0.494 0.773 0.494 0.625 0.494 0.523
15. 0.681 0.402 0.681 0.550 0.681 0.652
16. 0.600 0.321 0.600 0.469 0.600 0.571
17. 0.357 0.636 0.357 0.488 0.357 0.386
18. 0.570 0.849 0.570 0.701 0.570 0.599
19. 0.656 0.377 0.656 0.525 0.656 0.627
20. 0.777 0.498 0.777 0.646 0.777 0.748
21. 0.817 0.538 0.817 0.686 0.817 0.788
22. 0.729 0.450 0.729 0.598 0.729 0.700
23. 0.525 0.246 0.525 0.394 0.525 0.496
24. 0.750 0.471 0.750 0.619 0.750 0.721
25. 0.418 0.697 0.418 0.549 0.418 0.447
26. 0.299 0.578 0.299 0.430 0.299 0.328
27. 0.687 0.408 0.687 0.556 0.687 0.658
28. 0.736 0.457 0.736 0.605 0.736 0.707
29. 0.802 0.523 0.802 0.671 0.802 0.773
30. 0.991 0.712 0.991 0.860 0.991 0.962

if its impacts on the solution quality are taken into

account. For the problem that has been solved, the
difference between the best solution found by GL-
NPSO and PSO is 204.2 (KM) (see Table 2). If
the driving speed is 40 KM/hour in the mountain
area, then GLNPSO saves five hours of travel time,
which makes 110 seconds extra solution time irrel-
evant in practical decision makings. As expected,
the fast progress in computing technology will fur-
ther improve the computing speed. What is more
Figure 4. Convergence history - classic PSO important is to have an algorithm that can locate a
better solution within a reasonable decision time.
The total travel distance associated with the
above solution is 2599.1. To ensure a fair compari- 5.3. Supervised learning problem
son, the same problem has been solved 10 times
with different initial particle swarms. The best solu- Parameter learning for many control problems,
tion found in each time is summarized in section 5. system identification, adaptive control and clas-
As shown in section 4, GLNPSO found its best sification problems can be reduced to a function
known solution (i.e., the one listed above with a approximation problem where, given a function,
total distance of 2599.1) five times out of the 10 we want to adjust the FLS parameters as to best
trial experiments (i.e., 50% hit ratio), whereas the approximate it. FLS could be regarded as a non-
classic PSO did not catch the same solution in any linear parametric mapping between the input and
trial run. Rather, the best solution found by PSO is output. We can express it as y = f ( x, w) where y
2803.3 (three times). Worse yet, its total distance is the scalar FLS output, x is the n-dimensional
is 7.85% farther than the one found by GLNPSO. input vector and is the p -dimensional vector
To have a better picture about the overall per- containing all the FLS’s adjustable parameters.
formance of GLNPSO in contrast to that of PSO, For our particular problem assumptions (singleton
the best, the worst, and the average solution found, fuzzification, singleton output membership func-
the difference between the best and the worst solutions or TS model, and Centre of Gravity (COG)
tion, and between the average and the best solu- or Centroid of Area (COA) defuzzification), the
tion are further analyzed and summarized. function f is given by
As shown above, it is clear that GLNPSO has a
R  n 
better and more predictable capability in locating
∑ d h(l ) ∏ m jk ( j ,l ) ( xij ) 
high quality solution as compared to the classic  j =1 
y ( xi ) y= ( xi1 , xi 2 ,..., xin )
l =1
=
PSO. GLNPSO can not only find a better solution, R  n 
but also maintain its average solution within a 1.4 ∑ ∏ m jk ( j ,l ) ( xij ) 
l =1  j =1 
% gap from its best solution found. On the con-
trary, the classic PSO is unstable in finding good ....................................... (16)
solutions and its average solution quality is 14.5%
higher than its best solution found. in the case of TS fuzzy models. It is desirable to
The above findings suggest that our developed adjust w so that f best approximates the data samples.
GLNPSO algorithm is an effective and efficient In general, the concept of “best approximation”
way to solve the VRP in a fuzzy random environ- is expressed through a mean square error (MSE)
ment. Nevertheless, our computational experience between the approximated and desired data, even
does reveal that the average solution time used by though we are not restricted to this type of error for-
GLNPSO is 420 seconds, which is longer than the mulation. Thus we can define an error function as
average time of 310 seconds used by the PSO algo-
1 N
∑
2
rithm. While GLNPSO takes more computing time = E ( w)  y ( xi , w ) − ydi  ............ (17)
(i.e., 110 seconds, < 2 minutes), it is truly minimal 2 N i =1

This function expresses the MSE in approxi- 2

R  n  
mating the data samples. Thus, the optimization of  ∑ h(l ) c ∏ m jk ( j ,l ) ( xij , wa )
d ( w ) 
an FLS can be stated as finding the parameters w E ( =  l =1  j =1  − y =i 1, 2,..., N
i w) Ei ( wa , w=
c)  R  n di 
that minimize E(w). Note that we can define some 
∏ m jk ( j ,l ) ( xij , wa ) 
 
instantaneous approximation errors  R d w  n m  
2
 ∑ 
 ∑ h(l ) ( c ) ∏ jk ( j ,l ) ( xij , wa )   l =1  j =1  
 l =1  j =1  
1 Ei ( =
w ) E2i ( wa , w=
c)  − ydi =i 1, 2,..., N .............................. (21)
Ei ( w
= )  y ( xi , w ) − ydi  = , i 1, 2,..., N R  n
..... (18) 
∏ m jk ( j ,l ) ( xij , wa ) 
 
2  ∑ 
 l = 1  j =1 In pattern-by-pattern
 training, the parameters
and thus rewrite the error function E(w) as the w are updated by gradient descent according to
average of the instantaneous errors
∂E ( w )
1 N
wold − h i
wnew = 1, 2,..., N .... (22)
,i =
E ( w) =
2N
∑ Ei ( w) ..................... (19)
i =1
∂w w= wold
This function expresses the MSE in approxi- where h is called the learning rate (i.e., the
mating the data samples. The optimization of an step-size) and is generally a small positive con-
FLS can be stated as finding the parameters w that stant. Training points are generally shuffled be-
minimize E(w). tween epochs so that they are always presented to
A common approach in the FLS and neural net- the FLS in a different order. Using Equation (13)
work literature, motivated by ease of computation, the update for w can be computed as
consists of presenting a sample datum, say the i-th,
to the FLS (or neural network) and updating the ∂E ( w ) 1 N ∂Ei ( w )
= ∑ ................... (23)
adjustable parameters in order to only minimize ∂w N i =1 ∂w
Ei(w). By constantly repeating this process while
In the pattern-by-pattern training mode the
alternating the presentation of all the data and
same sensitivities are computed but the parameters
using small updates, it is hoped to minimize the
whole E(w). This procedure is a type of stochastic are instantly updated, thus yielding N updates per
gradient algorithm generally named pattern-by- epoch and a different algorithmic path. The sen-
pattern (or on-line) training. The presentation of sitivities of interest (i.e., partial derivative of the
the entire set of data to the FLS is generally re- instantaneous error function with respect to the
ferred to as an epoch. In pattern-by-pattern train- adjustable parameters) can be computed by chain-
ing the adjustable parameters are updated N times rule derivation of Equation (14), thus, yielding
every epoch. The pattern-by-pattern approach is
an approximation to the minimization of (13) and ∂E ( w ) ∂Ei ( w ) ∂y ∂y
= =  y ( xi , w ) − ydi 
it has some rigorous theoretical foundations in the ∂w ∂w ∂w ∂w
stochastic gradient approximation (SGA) [18,19]. ....................................... (24)
We are now going to develop the problem for-
mulation for the pattern-by-pattern training mode. Substituting Equation (20) in (18) we obtain
The supervised learning problem can be formu- the training update equation
lated as
∂y
min E ( w ) .............................. (20) wold − h  y ( xi , w ) − ydi 
wnew = ,i =
1, 2,..., N
w ∂w w = wold
where the adjustable parameters w are uncon- ....................................... (25)

strained and E(w) is given by (13) for pattern-by
The pattern-by-pattern approach expressed by
pattern training. Using (12) we can rewrite (13) as
(21) is probably the most common approach used
and presented in the literature. Using singleton
consequent membership functions or TS models
along with COA defuzzification, the output of the

FLS is linear in the consequent parameters (as can the results obtained, we can conclude that the AN-
be seen from (12)), once the antecedent param- FIS model can reproduce the decisions of dispatch-
eters are fixed. In the case of a discrete universe ers with great accuracy, and thus allocate vehicles
of discourse, the result of defuzzification is calcu- to meet transport requirements. This is particularly
lated in accordance with important in situations when a decision needs to be
made by a logistics support organ which has a lack
n
of sufficient experiential knowledge and in condi-
∑ m (x )⋅ x i i
tions when making a quality decision is influenced
u= i =1 ......................... (26)
n by a large number of uncertainties. In addition, the
∑m (x )
i =1
i numerical results imply the potential applicability
of the proposed model used as a decision-making
where m(xi) represents the fuzzy set that re- tool for route selection.
sults after the accumulation phase, n represents
the number of levels of discretisation of the stated
fuzzy set along x, xi is i discrete value, and m(xi) is Acknowledgements
the fuzzified value of xi. The work reported in this paper is a part of
If there is a difference between the obtained the investigation within the research project TR
and expected data, modifications are made to the 36017 supported by the Ministry for Science and
connections between the neurons in order to re- Technology, Republic of Serbia. This support is
duce error i.e., membership functions are tuned gratefully acknowledged.
into adaptive nodes. Figure 4 shows the appear-
ance of the membership functions of the ANFIS
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New rationalization methods of rotary printing

in the field of planographic printing
Mario Barisic1, Nikola Mrvac2, Marin Milkovic3
1
Faculty of Humanities and Social Sciences, University of Osijek Josip Juraj Strossmayer, Osijek, Croatia,
2
Faculty of Graphic Arts, University of Zagreb, Zagreb, Croatia,
3
Media University, Koprivnica, Croatia.
Abstract free substrates, is detected as the dominant and

most significant industrial printing technology in
The methods of automation in the field of pro-
three real areas of consumerism:
cess industrial printing are suggested, relating pri-
– Cardboard packaging printing,
marily to the domain of rotary planographic print-
– Marketing printing,
ing, where the parameters which significantly im-
– Publication printing.
prove the overall process and define the necessary
rationalization parameters are projected.
Although the number of rotary printing tech-
Based on the empirical research results the
niques enables the printing of publication and
conclusions are drawn – they prove a significant
marketing products (copperplate printing, flexo),
increase in the efficiency of the printing process,
a systematic analysis proves the constancy and
measurable time savings and the improvement and
dominance of planographic printing technology
rationalization of raw materials consumption. These
[1]. The analysis and research area are limited to
parameters contribute significantly to the rational-
rotary printing, which leaves cardboard packaging
ization of the overall graphic processes manage-
out of the analysis – the examples of the industrial
ment, while the suggested methods and the overall
rotary application of packaging printing are scarce
improvement are proven by the measurement of all
and very rare. Therefore, the savings in the process
these parameters in industrial and real conditions.
of marketing and publication planographic printing
The research results in this paper can serve as re-
are proposed, using the measurable samples in in-
alistic savings recommendations of the production
dustrial conditions.
process, especially since experimental measure-
The motives for the topic of this research are
ments do not limit the analysis solely in the process
large industrial challenges present in the plano-
of consumption of raw materials, but position the
graphic rotary printing, according to Barisic [2], de-
time component as an equal factor of rationaliza-
pending on the offset print, i.e. sheet-fed. Compara-
tion, which contributes to the modern postulates
tive advantages in the field of rotation are known
and the strategy of integrated rationalization of pro-
– high speed, large volume of printed amounts,
duction parameters and a significant increase in ef-
double-sided printing, and folding sheets in one
ficiency within the rotary printing process. At the
pass. On the other hand, disadvantages are measur-
same time, an original contribution in the form of
able, and are present on a daily basis – a significant
methods that contribute to real and current rational-
time to prepare the machine for printing (the time
ization of the production process is realized.
required to adjust the rotation between two differ-
Key words: rotary planographic printing, ma-
ent jobs), a noticeable amount of the start macula-
chine preparation time, process print time, start
ture copies, process maculature copies through the
and process maculature copies
process of printing (washing rubber blankets), and
unstable printing process management compared to
1. Introduction offset printing, in which unexpected process errors
Planographic printing technology, given the and deviations from the standardized parameters
oleophobic or oleophilic characteristics, or hydro- are possible, which further disrupts the amount of
phobic or hydrophilic characteristics of print and raw materials consumption.

This is the main reason for the distributional 5. total printed edition – Nu,
and organizational allocation of work in a way that 6. total print time – Vu.
rational rotary printing is possible only in the area
of large circulations. The first part implies the recorded time in
The aim is to find the optimum method to lower which the printing of a certain publishing product
the limit of rationalization and enable rotary print- is entirely finished. The second part is character-
ing in the field of small and medium circulations ized by the time recorded at the beginning of the
(circulations of several thousand copies). This con- print process of the next publishing product. It is
tributes to the existing trends of a significant fall in necessary to emphasize that the plan is to record
the number of circulations of rotary printing key the time of new printing in which the subject of
products – magazines, books, newspapers, direc- the research and analysis does not limit the type
tories, marketing advertising brochures and flyers, of work. Subsequent publishing product is mea-
etc. Nowadays, although there are other examples, sured according to industrial and technological
there are still a large number of industrial rotary in- schedule. The aim is not to adjust time to the test
stallations, without the necessary supplements that samples. On the contrary, the aim is to adapt to
contribute to the rationalization and automation, the technological schedule of a realistic indus-
according to GAIN [3]. Given the demanding ini- trial production of magazines and journals. This
tial investment in the rotary complex (several times is considered a particularly important contribu-
more significant compared to the flat printing), thus tion since the measuring of results is carried out
contributing to the efficient and economically justi- within the daily production. There is no laboratory
fiable use of this technology [4]. adjustment or necessary confidence in the norma-
It is necessary to position the possibility of use tive characterization of machinery manufactur-
of rotary printing technique in a more rational way, ers, which is often a set of parameters that cannot
both in the smaller circulations, as well as in the be achieved in reality. It is realistic to expect the
area of improvement of economic category factors dependence of time and technical differences be-
of productivity factors – this is both for the effi- tween the two recorded times with more different
ciency in technology, and for the economic crisis in parameters (format, paper type, color print cov-
the printing segment on the global level, and for the erage, paper weight, paper strip width, different
influence of other media, according to Primir [5]. layers of color fastness, various factors of product
quality). It has been decided to methodologically
2. Theoretical background and research ignore these differences and to set the research ob-
plan ject in a way that the concentration measurement
is set by these parameters exclusively. If unit or
The experimental process of printing is lim- test measurement were performed, these variables
ited to journals and magazines in a large industrial could be significant. Given the experience, since
press, equipped with rotary planographic printing this is a long-term measurement, through twelve
systems. The results of printing are measured in working shifts in the printing department (four full
the following way: days), with a number of variables in a technical
1. the printing termination time of the current job description, these deviations are average in
publishing product (magazine sheet) – the long-term and do not generate significant differ-
print of the last sheet - v1, ence of the time component.
2. the printing start time of the first following The objective of this phase of time measure-
publishing product – machine preparation ment (v2 and v1) is to get a total machine prepara-
time - v2, tion time between two jobs, i.e. the time necessary
3. the number of copies of the new printed for the adjustment of all technological parameters
product before the first sales copy - the needed for the new job. This time was named the
amount of maculature copies – Ns, machine preparation time (Vs). Given the experi-
4. the copies printed during the whole edition ence, the average machine preparation time, ac-
– Np, cepted as normative and generally acceptable, is

between 45 and 70 minutes. It is a technological sary to detect and identify these instabilities and
and experiential value of the existing generation do the test and measurement after implementing
of machines for rotary planographic printing, the measures. The analysis within the unstable
without specifically installed automation routines, conditions is neither credible nor gives realistic
where the set relation is as follows: results in variables decided to be measured, and
the results could suggest insufficient quality of the
Vs=v2- v1 potential conclusion.
In doing so, the following relation is applied:
The number of copies required to stabilize the
print (density), the relationship of printing param- Nu=Ns+Np,
eters (register, relation water-color), and all other
elements necessary for the achievement of the val- Using the relational ratio of prints and needed
ue and quality of printing on the level of sales cop- printing time, the picture of efficiency of the press
ies (Ns) are necessary in order to measure the total is given. These parameters are sufficient for the ini-
number of start maculature copies, i.e. the number tial analysis, as the basis for the suggestion of meth-
of copies that are thrown away and are not for sale. ods for improving the parameters of rationalization.
Parameters Vs and Ns are basic measurable ele- The parameters measured in this way contra-
ments which are given a picture of initial efficien- dict the parameters that are believed to significant-
cy and flexibility of the printing plant and make ly improve the printing process in the direction of
a significant element of measuring the efficiency realistically emphasized parameters of rationaliza-
of the press. Empirically, depending on the qual- tion, which makes the printing system applicable
ity level of the magazine, the expected amount of and appropriate.
start maculature copies is 3,500-5,000. Two technical parameters are added to the sys-
Further measurements are restricted to the en- tem for the experimental and testing purposes:
tire process of printing the full run and the process – CIP3 (Cooperation for Integration of
number of printed copies is measured – Np. These Prepress, Press and Postpress) protocol [6],
parameters are measured precisely (time; number – console measuring systems according to
of printed copies), while the parameters related to the principle of Close Loop measuring
the interval of washing rubber blankets (the num- parameters [2].
ber of washings within the run and the interval be-
tween the two washes) are observed and recorded, The initial measurement process (without the
but are registered only within the total circulation proposed improvements) is measured experimen-
(Nu) and the overall time, and are not analyzed tally and implemented continuously, four days in a
numerically and separately. row, in 12 shifts (total time that is available for test-
The reason for this methodology is the following in real industrial conditions, which amounts to
ing - the interval of washing rubber blankets and 96 hours). The measurement process with the pro-
the frequency itself are important parameters of posed parameters of improvements requires con-
printing process stability. Given the experience, siderably more time (within one month of work)
but depending on the level of quality, they are ex- – this is the time required for periodic repetition
pected to reach a value in the range between 40,000 of weekly, semimonthly and monthly magazines
and 60,000 copies (the number of printed copies that are the subjects of the experiment. Therefore,
between the washing intervals). If the obtained only the magazines (all sizes) whose periodicity
results were within these parameters, the defined is known in advance are selected for the experi-
parameters of the experiment would be sufficient; ment. This is the only way it is possible to com-
however, if there is a need for higher frequency pare the unique parameters between the initial and
of washing rubber blankets, the experimental pro- improved measurement processes, with identical
cess should be stopped because different and less prints. It is necessary to further define or eliminate
favorable numerical values would result in some the possibility of changing any of the key vari-
of the instability factors in the press. It is neces- ables for the printing process. It is ensured that,

within the month in which the measurements are full tones (k, c, m and y) density value for different
made, the following constants can be found on the dot area values (25%, 50% and 75%), as well as
machine (identical color, identical rubber blanket, density combination of different intensity and dif-
identical wetting solution and silicone coating, un- ferent combinations of coloring by primary colors
changed dot gain curves in the field of creating the of subtractive synthesis – in the visual field of gray
printing form, and the constancy of the dot gain balance (cmy 25%, cmy 50%, cmy 75%), and in
increment on the printing machine). full tones (my 100%, cm 100%, cy 100%).
Minimal differences of technical parameters of
periodicity of testing repeat in two measurement
processes (initial and advanced) – they refer to the
minimal difference in the circulation and number
of pages, cumulatively do not represent a signifi- Figure 1. Control strip for the density control
cant variability and, for the purposes of this ex-
periment, are methodologically fully excluded. Initial and updated measurement in the CIP3
In both measurement cases, the determinant of system is measurable in a simple way. This system
measurability is the standardized print. Here the does not affect the process values of printing, but
pre-planned system of standardization is not given only the initial time and initial maculature copies.
up and the system which has been checked and Although the progression could be expected in
tested exists in the industrial process in everyday both variables by installing the CIP3, and with-
use in the press where the measurement is per- out installing the Close Loop console system, the
formed. Testing and measurements are done ac- experimental measurement process is integrated.
cording to the classification Fogre [6]. The starting The initial measurement provides an initial (found
point is the print of standardized quality, which is at the press) and basic hardware installation, while
the print that during the entire printing process of the measurement with the proposed methods of
full circulation achieves printing values within the improvement includes an integrated installation
standard according to which the printing process of both the proposed improvement systems. Cer-
is performed. The quality control of the print is tain elements of progression would be realistically
checked by measuring the control stripes placed on expected in both the single and the segment in-
the paper edge and on the part of the sheet which stallation. However, since these systems are con-
will be cut off and removed after the performed nected, the suggestions for integrated installation
test. In the area of quality printing, the focus is on are given. It is believed that this enables more sig-
achieving the standard values. Density of all color nificant and measurable areas of improvement and
values is measured, and printing of color prints is rationalization of printing, which detects the path
performed using the process colors of subtractive to more efficient business process.
synthesis. The request e d density value is mea-
sured as it shows the ability of the printed area to 3. Initial measurement process with the
keep an optimum level of color and how much the interpretation of results
measured print retained and reflected the light is
registered. Color strip is defined by measuring the The object of measurement is defined – the
quality of the prints of each of the colors in the se- sheets of a magazine within procedural and tech-
lected intensities, as well as the correlation of two nological schedules of the press without affecting
colors and all the colors respectively. their sequence, similarity, or quality difference. The
In the field of the initial measurement, the el- time frame of measurement is defined – four full
ements are measured by hand. In the field of the working days, i.e. twelve full shifts or ninety-six
measurement with an installed device, the elements hours, as the machine is available in the test period.
are measured mechanically using a Close Loop sys- Within that time, the sheets are printed as follows in
tem of console dynamic measurement of the wedge the table (Table 1), and the times Vs are given.
width, placed through the entire width of the paper The measurement fields are defined:
strip. The color strip measures density values for Ns, Np (Nu) and Vs.

Table 1. Test samples and registered times according to the real schedule of industrial production courses
Estimated
No. Technical description of the tested sample v1 v2 Vs
circulation
1 1st sheet (magazine I), cylinder width 96 cm, paper LWC 80 g/m2, 54,000 00.12 01.11 59
2 2nd sheet (magazine I), cylinder width 96 cm, paper LWC 80 g/m2, 54,000 03.11 03.54 43
3 3rd sheet (magazine I), cylinder width 96 cm, paper LWC 80 g/m2, 54,000 06.48 07.32 44
4 4th sheet (magazine I), cylinder width 96 cm, paper LWC 80 g/m2, 54,000 10.01 12.21 140
5 1st sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 13.22 14.16 54
6 2nd sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 15.23 16.01 38
7 3rd sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 16.55 17.34 39
8 4th sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 18.28 19.09 41
9 5th sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 20.02 20.41 39
10 5th sheet (magazine II), cylinder width 88 cm, paper LWC 65 g/m2, 17,000 21.22. 22.04 42
11 1st sheet (magazine III), cylinder width 84 cm, paper SC 75 g/m2, 22,000 23.01 23.47 46
12 2nd sheet (magazine III), cylinder width 84 cm, paper SC 75 g/m2, 22,000 0.22 01.11 49
13 3rd sheet (magazine III), cylinder width 84 cm, paper SC 75 g/m2, 22,000 01.53 02.37 44
14 4th sheet (magazine III), cylinder width 84 cm, paper SC 75 g/m2, 22,000 03.22 04.02 40
15 1st sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 05.34 06.09 35
16 2nd sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 07.41 08.23 42
17 3rd sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 09.55 10.31 36
18 4th sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 12.02 12.41 39
19. 5th sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 14.04 14.41 37
20. 6th sheet (magazine IV), cylinder width 88 cm, paper LWC 75 g/m2, 41,000 16.03 16.41 38
21 1st sheet (magazine V), cylinder width 88 cm, paper LWC 65 g/m2, 151,000 22.23. 23.11 48
22 2nd sheet (magazine V), cylinder width 88 cm, paper LWC 65 g/m2, 151,000 05.21 06.12 51
23 3rd sheet (magazine V), cylinder width 88 cm, paper LWC 65 g/m2, 151,000 12.01 12.41. 40
24 4th sheet (magazine V), cylinder width 88 cm, paper LWC 65 g/m2, 151,000 19.22 20.09 47
27 1st sheet (magazine VI), cylinder width 84 cm, paper SC 65 g/m2, 221,000 18.41 19.28 47
28 2nd sheet (magazine VI), cylinder width 84 cm, paper SC 65 g/m2, 221,000 03.21 03.56 35
Table 2. The system of density in industrial parameters of the press
Class A and B - Fogra 46 Class C - Fogra 41 Class D – Fogra 42
Cyan: 1.30 – 1.40; Cyan: 1.30 – 1.40; Cyan: 1.05 – 1.20
Magenta: 1.30 – 1.50; Magenta: 1.30 – 1.50; Magenta: 1.05 – 1.20
Yellow: 1.30 – 1.40; Yellow: 1.30 – 1.40; Yellow: 1.05 – 1.15
K: 1.55 – 1.75; K: 1.50 – 1.70; K: 1.20 – 1.40
The interval of washing rubber blankets is mea- Altogether, there are twenty-eight different
sured, as defined, but only as an indicator factor of samples measured, with a wide range of techni-
printing process stability. All parameters are mea- cal characterization in all major segments – pa-
sured by the standards of press (Table 2), which per type, paper weight, paper strip width, average
makes the target density values, as a parameter color coverage, complexity of the product quality.
which needs to be reached in order for the N and V The obtained values of Vs – machine prepa-
variables to be measured. ration time are shown in the following scheme
Here, A, B and C are groups of products ac- (Scheme 2).
cording to the demands of quality (A – products of The minutes necessary to prepare the machine
the highest quality, B – products of high quality, (V2-V1) are shown on the horizontal axis, be-
C – products of medium and lower quality). tween two jobs, for all the tested 28 jobs. On the

vertical axis, there is the time component of the

machine preparation in minutes. Here the mean
value is obtained using the following relation:
ΔVs= Ʃ (Vs1+Vsn) / n
Ʃ (Vs1+Vsn) = 1290 minutes,
where
n = 28
The obtained mean value (ΔVs) is:
Scheme 2. Machine preparation time within the
ΔVs = 46 minutes initial measuring
It can be concluded that the mean value of the

time needed for the machine preparation is 46 min-
utes, with a total of 1290 minutes spent (21.5 hours)
for the machine preparation, in four working days,
Table 3. Real obtained circulation values within the printing process
No. of a job Defined circulation (Nd) Ns Np Nu Nu-Nd
1 54,000 4,828 55,101 59,929 5,929
2 54,000 3,131 54,856 57,987 3,987
3 54,000 3,331 54,867 58,198 4,198
4 54,000 3,978 55,341 59,319 5,319
5 17,000 4,421 17,321 21,742 4,742
6 17,000 3,522 17,754 21,276 4,276
7 17,000 3,743 17,632 21,375 4,375
8 17,000 2,987 18,331 21,318 4,318
9 17,000 3,442 18,009 21,451 4,451
10 17,000 3,128 17,583 20,711 3,711
11 22,000 4,756 23,331 28,087 6,087
12 22,000 3,738 23,075 26,813 4,813
13 22,000 3,421 23,335 26,756 4,756
14 22,000 3,454 22,476 25,930 3,939
15 41,000 4,665 41,877 46,542 5,542
16 41,000 3,754 41,754 45,508 4,508
17 41,000 3,111 42,321 45,432 4,432
18 41,000 3,741 42,005 45,746 4,746
19 41,000 3,345 41,754 45,099 4,099
20 41,000 2,942 42,142 45,084 4,084
21 151,000 4,501 153,212 157,713 6,713
22 151,000 3,274 154,754 158,028 7,028
23 151,000 3,431 153,338 156,769 5,769
24 151,000 2,745 152,754 155,499 4,499
25 151,000 2,698 152,972 155,670 4,670
26 151,000 3,132 153,132 156,264 5,264
27 221,000 4,343 224,328 228,671 7,671
28 221,000 3,465 223,856 227,321 6,321
Δ 3,608 5,009

in 12 shifts, in twenty-eight different jobs. Based It is necessary to analyze the medium obtained
on the above, one might conclude (1290/4) that, values. The table shows the following:
on average, more than five hours is spent daily for
the machine preparation. This is a really significant Δ Ns = 3,608 copies
time component because it generates close to two Δ (Nu – Nd) = 5,009 copies
thousand hours a year in which the machine is not
printing but is executing the necessary preparatory The above shows that the average number of
processes. Thus, in a press organized in this way, 81 maculature copies required for printing twenty-
days a year is spent on preparing the printing press eight different products is 3,608 copies, while the
in the rotary industrial production area. average total number of maculature copies (actual
In the area of circulation, all printed copies printed copies for the press, without the technolog-
are elaborated and measured, and the results for ical supplement for graphic processing) is 5,009
all twenty-eight products are provided in the table copies. Here the following relation is applied:
(Table 3). The starting point is the sales circulation Δ Ns + Δ (Nu – Nd) = 8,617
that is defined in the first tabular view; the starting
circulation – which is needed for the printing stabi- Therefore, to print twenty-eight different prod-
lization before the first sales printed copies (macu- ucts in defined circulations, 21.5 hours were spent
lature) – is measured, and the process circulation (from the total of 96 hours), and for each product,
through the entire process of printing the real cir- 8,617 of maculature copies were spent on average.
culation (without the start maculature copies). It is The results have clearly demonstrated the initial
necessary to emphasize that the measurements are hypotheses about the possible application of rotary
restricted to the predicted circulation variables - printing within the area of the large circulation.
Ns (start maculature copies), Np (process circula- Only large circulations can justify the technological
tion during the print), and, for the exactness of the loss in time and the number of printed copies of this
experiment, the part (50-150 copies) needed as a kind. Although certain machine preparation time,
technological supplement for graphic processing, the normative number of maculature copies, and
is deducted from each of the total circulations. For the overall technological normative component of
each work order, the amount of technological sup- printed copies and the time required are expected,
plement for graphic processing is deducted sepa- the obtained results show a lack of competitive-
rately in order to limit the measuring exclusively ness of rotary printing in the area of planographic
to the printing process efficiency. printing in small circulations. An objection to the
The obtained values of Ns – start maculature methodological drawback of the summation Δ Ns
samples are displayed in the following scheme and Δ (Nu – Nd) is possible since the differences
(Scheme 3). On the horizontal axis, the tested sam- within the Δ (Nu - Nd) are noticeable. This could
ples are shown, while the vertical axis shows the probably be acceptable to a certain extent since the
values of maculature copies. larger the circulation of the product, the bigger the
number of washing rubber blankets is (regardless
of their interval), and in every wash (given the ex-
perience) 400-500 prints are lost (these values were
confirmed in the measurements). However, since
the integrated suggestions for the improvement
of these values are projected, the motive is to also
monitor the condition Δ (Nu – Nd) after the imple-
mented improvements, i.e. to see whether there is a
correlation between the number of process macula-
ture copies and the suggested improvements. In this
way, the possible objection to methodology would
lose its significance and would not be relevant for
Scheme 3. Maculature values – Ns this experiment.

4. Measurement process using the suggested cal comparison of both experimental phases to re-
rationalization methods main correct. Average values from the initial test-
ing were not re-calculated since by excluding the
It is realistic to conclude that the previously ob-
two products this new value shows insignificant
tained results are positioned clearly enough. Previ-
differences. This distinction does not affect either
ous measurements suggest that the methods used to
of the elements of the defined methodology. Due
reduce all of the measured values are necessary. Time
to the different printing schedule compared to the
saving is necessary in the field of machine prepara-
initial measurement, the table (Table 4) provides
tion. Saving in the area of start maculature copies is
only the total time component – Vs.
necessary. Process savings are also necessary.
Table 4. The time component measured using the
By the experimental method of measuring the
new suggested printing methods
printing parameters within realistic industrial pro-
No. Vs
duction conditions, it is proposed to implement a
close application relation between the process of 1 27
creating a printing form and the printing process 2 31
itself. This is the first suggestion within the meth- 3 24
ods of improvement and the first essential step of 4 24
5 32
technical acceleration of this type of communica-
6 37
tion. It is believed that properly set protocol CIP3
7 39
system [6], according to Barisic, contributes sig-
8 19
nificantly to the automation and speed of manag-
9 18
ing this phase of the industrial process. Schematic
10 24
presentation of the organization of the protocol
11 17
within the CIP3 system and Print Production For-
12 27
mat (PPF) application support is shown in the fol-
13 25
lowing scheme (Scheme 4).
14 31
15 31
16 26
17 24
18 19
29 30
20 27
Scheme 4. The operation of CIP3 PPF protocol 21 24
22 32
As stated in the research plan, the products 23 36
with regular and periodical publishing were se- 24 42
lected for the experiment. Although a challeng- 25 41
ing time component is required for repeating the 26 34
experimental measurements of identical products,
and even though these products are not printed The obtained results are shown graphically in
in the same order as during the initial testing, the the following scheme (Scheme 5).
tabular description of new experimental measure- Here the relation for the improved measured
ments is shown in the following table (Table 4). time component is applied:
Due to the reduced number of sheets (magazine
ΔVsk = 28.5 minutes
II and magazine IV) in real publishing periodi-
cals of tested products, the experimental part was Going back now to the obtained time results
carried out on 26 products – the products under in Table 1 (and if we exclude the products under
numbers 10 and 20 were excluded from the first numbers 10 and 20, for transparent comparison),
tabular description in order for the methodologi- the comparative time results are visible in the fol-

lowing scheme (Scheme 6), where the lower curve ally, the circulations compared to the previous
shows the improved values, while the upper curve month were slightly changed, which does not af-
shows the process of the initial measurement. fect the significance of the experiment.
Table 5. Real circulation values within the prin-
ting process obtained using the suggested impro-
vement methods
Defined
No. of
circulation Ns Np Nu Nu-Nd
the job
(Nd)
1 52,000 1,706 53,131 54,837 2,837
2 52,000 1,841 53,073 54,914 2,914
3 52,000 2,111 52,754 54,865 2,865
4 52,000 1,736 52,687 54,423 2,423
5 19,000 1,643 19,758 21,401 2,401
Scheme 5. Obtained results 6 19,000 2,004 19,613 21,617 2,617
7 19,000 2,134 19,911 22,045 3,045
8 19,000 2,454 19,681 22,135 3,135
The total time saving of the machine prepara-
9 19,000 1,987 19,882 21,869 2,869
tion is visible in the following record:
10 22,000 2,093 23,011 25,104 3,104
Δ Vs – Δ Vsk = 17.5 minutes 11 22,000 2,243 22,916 25,159 3,159
12 22,000 2,132 22,849 24,981 2,981
where Δ Vsk is updated and improved time. 13 22,000 2,227 22,693 24,920 2,920
It can be noticed that with the proposed im- 14 36,000 1,988 38,391 40,379 4,379
provement, it is possible to save up to 40% of the 15 36,000 2,399 38,131 40,530 4,530
total time. If this information is displayed relation- 16 36,000 2,066 37,682 39,748 3,748
ally in the longer period of time, within a four-day 17 36,000 2,087 37,725 39,812 3,812
production, we do not need 21.5 hours, but much 18 36,000 2,772 37,923 40,695 4,695
less – 12.9 hours (which makes a saving of few 19 147,000 2,152 149,123 151,275 4,275
hours a day). Within one year it is no longer 81 20 147,000 1,759 148,894 150,653 3,653
but 46 days a year. Therefore, the suggested ra- 21 147,000 1,976 149,583 151,559 4,559
tionalization method can realistically save more 22 147,000 1,591 149,711 151,302 4,302
than one month a year, just in the time process 23 147,000 2,421 148,864 151,286 4,285
of preparing the printing press. 24 147,000 2,143 149,131 151,274 4,274
25 206,000 1,439 208,032 209,471 3,471
26 206,000 1,754 208,473 209,786 3,786
Δ 2,133 3,502
Schematic description (Scheme 7) shows the

obtained results of start maculature copies while
the following scheme (Scheme 8) shows compara-
tive description of the initial and improved test
results. On the horizontal axis (Scheme 7), there
are tested products, while the vertical axis shows
maculature copies. The lower curve (Scheme 8)
shows the measurement using the improved meth-
Scheme 6. Comparative view of the initial
od of printing, while the upper curve shows the
measurement and the new suggested method
initial measurement.
For the area of maculature copies, the tabular
description is updated to 26 products. Addition-

Δ Ns + Δ (Nu – Nd) = 8,617
Scheme 7. The results of the printed circulation

obtained using the improved printing method
Scheme 9. Comparative description of the initial
and updated total number of the maculature copies
5. Conclusion
The key segment of the whole printing process
and measuring the given variables
Ns, Np (Nu) and v1, v2 and Vs
proves the projected hypotheses. Rotary indus-
trial environment in all key parameters is more de-
manding than the printing processes in the domain
Scheme 8. Comparative description of the initial
of flat printing. The time component of managing
and updated number of start maculature copies
the entire rotary business is an extremely demanding
variable. Unlike planographic printing, all the print-
Here it is necessary to analyze the medium ob-
ing corrections, adjustments and definitions occur
tained values. The table shows the following:
during the full-speed of the rotation work. Precisely
Δ Nsk = 2,133 because of this fact, along with the exceptional com-
plexity of the managing the variable of time spent –
Δ (Nuk – Ndk) = 3,502 maculature copies are one of the key segments of the
Where: rotary efficiency. Although the investment in the ro-
tary industrial environment is many times more de-
Δ Nsk + Δ (Nuk – Ndk) = 5,635 manding compared to investment in offset printing,
Finally, the following scheme (Scheme 9) great caution is needed when configuring rotation.
shows a comparison of the initial and updated to- Due to the major financial investment expenditures,
tal number of maculature copies, with the same a withdrawal from the significant elements of auto-
curve ratio as in previous schemes. mation is common. Although a rotation equipped in
The above shows that the average number of this way raises the level of investment for several
updated maculature copies (using the improved hundreds of thousands of euros, all the drawbacks in
method) is for 1,475 copies lower than in the ini- operating with the initally equipped rotations with
tial testing, while the total number of maculature the elements of basic equipment were proven. This
copies required for printing twenty-eight different decision results in a printing process which is not
products is 3,608 copies, while the average total fully rational and efficient.
number of maculature copies of Δ Nsk + Δ (Nuk – By measurements and conducting the experi-
Ndk) is lower for 2,982 copies. ment, it is proven that the process of printing pa-
rameters set in this way resulted in one full work-

ing month a year which rotations thus equipped References

must additionally spend in the time component 1. Bolanča Stanislav: „Glavne tehnike tiska“, Acta
of the machine preparation. This is an insufficient Graphica, Zagreb, 1997; p. 176
level of efficacy.
The level of configuration set in this way results 2. Barišić Mario, Žiljak-Vujić Jana, Lajkovič Josipa:
in a much higher consumption of paper (and thus Close Loop Density Control as an Improvement Re-
garding Paper Waste in Heatset Printing Technology,
all other components – color, the wetting solution, Tehnički Vjesnik/Technical Gazette, 19(4).
silicone, gas, electricity are just some of the most
significant). Here the difference is not trivial; it is 3. GAIN – Graphic Arts Intelligence Network: „The
measured in several thousands of sheets of paper European Printing Industry Report“, Barcelona,
consumed per product unit. The suggested method Spain, 2009; p. 203.
is the method of integrated installation of CIP3 PPF 4. Tomaš Ante, Mrvac Nikola, Vrtlar Fabijanko, Borko-
application protocol between the process of creat- vić Jakov, Principi uštede u novinskom tisku // Zbor-
ing the printing form and the printing process, with nik radova - Matrib 2012 / Alar, Željko; Jakovljević,
the installation of CloseLoop system of an automat- Suzana (ur.). Zagreb: Hrvatsko društvo za materijale
i tribologiju, 2012; p. 337-342.
ic measurement of key printing parameters.
Using these methods has proven a printing sys- 5. A study for members of PRIMIR and NPES, The
tem which is much more advanced and efficient. Association for Suppliers of Printing, Publishing and
Efficiency in various areas of measurement is ex- Converting Technologies – Prezentirano u sklopu
pressed in a respectable difference in the obtained predavanja Commercial Printers Segment, Graphic
User Assotiation Conference, Athens, 2011; p. 7.
results. Scientifically conducted experimental
measurement process gives systematic recom- 6. Barišić Mario: Automatizirana Nakladnička knjižna
mendations which can contribute methodologi- produkcija, Acta Graphica, Zagreb, 2006; p 11.
cally to the improvement of the industrial process
of graphical business.
Corresponding author
The key value of the suggested methods and Nikola Mrvac,
the key value of the proven scientific contribution Faculty of Graphic Arts,
are reflected in the methodology of the conduct- University of Zagreb,
ed experimental measurement. The possibility in Zagreb,
which a large industrial press implemented the Croatia,
E-mail: nikola.mrvac@gmail.com
testing of these methods, before making a decision
on the investment was used. This gave the experi-
ment an exceptional value since it was conducted
in conventional industrial conditions, without any
adjustments. The existing settings of the machine
were used, along with the existing raw materials
(it was insisted on their constancy during the mea-
surement), the present system of quality, and all
other industrial parameters. Moreover, there was
no impact on the printing schedule, but the exist-
ing technological process was followed.
The possibilities of implementation of such a
complex experiment in real industrial conditions
are extremely rare.
Therefore, the suggested rationalization meth-
ods of printing within the field of planographic ro-
tary printing, as well as the defined methodology
and the experiment conditions, are considered an
original and unique scientific contribution.

Mechanical properties of timber-concrete

joints with metal dowel-type fasteners
Bosko Stevanovic¹, Ivan Glisovic¹
Faculty of Civil Engineering, University of Belgrade, Serbia
Abstract and serviceability [5]. By the composite structures

The success of a timber-concrete composite the sensitivity to vibrations and the excessive de-
structure depends solely on the performance of flections of the timber floors are eliminated. The
the connection system. Experimental studies per- sound insulation is improved by the use of the
formed by many researchers introduced a wide concrete slab due to the higher dead load of the
range of fasteners and techniques to combine tim- floor. The system also performs well in terms of
ber and concrete. This paper deals with investi- fire resistance. Concrete is an efficient barrier
gation of different mechanical connectors. Some against the spreading of fire, while the char that
joining concepts consisting of metal dowel-type develops from the wood of the beams provides
fasteners (nails or screws) to connect glulam tim- insulation to protect the concrete and the connec-
ber beam and concrete slab were tested through tors against high temperature. Further advantage
“push-out” test in order to obtain their load-slip re- is that the concrete slab essentially provides dia-
lation. The slip modulus and strength are presented phragm action to resist lateral loading.
and discussed. The results from the shear tests of Advantages in comparison to reinforced con-
mechanically jointed timber-concrete composite crete floors are based on the use of the timber both
systems showed clearly that its behaviour mostly as a formwork and as a construction element, the
depends on two parameters: the fasteners proper- possibility to use the space under floor earlier and
ties and embedding characteristics of timber. the option to leave the ceiling with the generally
Key words: Timber-concrete joints, dowel- same rustic appearance. From an ecological aspect,
type fasteners, shear test, slip modulus. timber-concrete composite floors are superior to re-
inforced concrete floors. This superiority results pri-
marily from the lowest energy necessary to produce
1. Introduction
timber instead of steel and concrete. Lower carbon
Timber-concrete composites represent a con- dioxide emissions are additional considerations [6].
temporary technology used for structural elements An efficient composite solution is only obtained
of many kinds of construction, such as buildings when an effective joint is used to connect timber
and bridges [1-4]. This technology connects a solid and concrete. An effective joint is a joint with
or glued laminated timber beam (or plate) with a enough strength to transmit the shear loads devel-
concrete slab cast above it by means of a connec- oped at the interface and stiff enough to limit the
tion system [1]. The mechanical properties of the slip between timber and concrete [7]. The behav-
two components are used optimally while timber is iour of composite cross section is bounded by two
subjected to tension and concrete to compression. extreme situations (shown in Figure 1): no connec-
Timber-concrete composite systems show a high tion (non-composite action) and a perfect connec-
stiffness with a comparatively low dead weight. tion between the materials (full composite action).
The application of timber-concrete composite In the first case, there is horizontal motion (slip)
structures as floors is of primary interest. On the between timber and concrete resulting in indepen-
one hand historical floors can be renovated with- dent resistance of the two materials to the bending
out damaging the ceiling and on the other hand loads. The elements have individual neutral axes
the composite structures are an economical pos- and discontinuous flexural stress at the interface.
sibility to remove defects of usual timber floors In the second case, no interlayer slip and both ma-
in old buildings, with regard to bearing capacity terials are forced to act together. The cross section

has single neutral axes and two flexural stresses are key/anchor connectors [4-5, 7, 9-19]. Examples
identical at interface. This stress distribution results of continuous systems include epoxy adhesives,
also in different strains resulting in much lower de- glued-in punched metal plates or steel meshes
formations in the composite element. Therefore the and punched steel profiles screwed into timber
mechanical behaviour of the joint has a crucial im- [17-21]. If investigated through shear tests, these
portance in the behaviour of composite structures. connections show very different behaviour both in
It has a direct influence on the stresses as well as on terms of stiffness and of failure load. To evaluate
deformations of the structure. the effectiveness of some of the proposed discrete
connection systems for timber-concrete compos-
ite beams, a basically comparative experimental
research has been carried out. It has to be empha-
sized, however, that with the low number (three)
of samples tested for each connection type, values
of mechanical properties can only indicate the rel-
ative performance of one connection system with
respect to another. More specimens need to be
tested in order to identify design values represen-
tative of the actual performance of each connec-
Figure 1. Various composite actions under
tion system. In the following experimental results
bending action
are presented and discussed.
The calculations of stresses and deformations
in timber-concrete composite structures are usual- 2. Materials and methods
ly performed on the basic of linear-elastic behav-
iour for all the materials and joints, as indicated 2.1 Test specimens properties
in Eurocode 5-Part 1-1, Annex B [8]. This mod-
Shear tests can be conducted with either asym-
el uses two properties of the joint, the stiffness
metrical or symmetrical specimens [16]. In this
through the slip modulus and the strength through
experimental program, the symmetrical configu-
the ultimate capacity of joint. The slip modulus
ration was chosen. In general, the test specimens
is necessary to determine the effective bending
consisted of a central timber beam connected to
stiffness. This parameter is basic for calculation
two side concrete slabs by means of two or four
of the stresses distribution, the deflection and the
connectors, symmetrically arranged, by shear
shear load in the fasteners. On the other hand, the
plan. The series of specimens are characterized
ultimate strength is necessary to verify the shear
only by different connections systems made with
capacity of the fasteners. With these two proper-
nails or screws. The dimensions of test specimens
ties, the behaviour of the joints is represented by
are presented in Figure 2.
a bilinear load-slip curve defined by slip modulus
The timber used for timber member was glued
and the ultimate load capacity.
laminated Fir with mean density of 476 kg/m3.
Since the beam-to-slab connection plays a lead-
The specimens were stored at climate conditions
ing role on the behaviour of composite structures,
20/65 (temperature of 20°C and air humidity of
different solutions have been proposed in the past
65%), leading to a moisture content of approxi-
to get out connections those are at the same time
mately 12% in timber.
simple, economical and stiff enough. Generally,
The concrete slab is made of normal weight
connection system can be either discrete, such as
concrete. The concrete used was selected to repre-
when it is composed using a number of discrete
sent a concrete type commonly used in these situ-
mechanical fasteners, or it can be a continuous
ations. To avoid cracks due to shrinkage reinforce-
element along the timber beam. Common dis-
ment (Q131) is installed in the concrete.
crete systems include nails, screws, dowels, nail
As mentioned above, specimens in each se-
plates, specific proprietary connectors and shear
ries are characterized by different beam-to-slab

Figure 2. Configuration and dimensions (cm) of the test specimens
connection system. In detail, specimens named E – ZP: the connection is made with screws
have nails as connectors, while specimens named Ø10x150 mm placed perpendicularly with
Z have screws as connectors. They are clearly il- respect to the shear plane at a spacing of 100
lustrated in Figure 2 and described hereafter: mm;
– EP: the connection is made with nails 5.0x150 – ZK: the connection is made with screws
mm placed perpendicularly with respect to Ø10x150 mm inserted at an inclination of
the shear plane at a spacing of 100 mm; 45° to the shear plane at a spacing of 100 mm.
– EK: the connection is made with nails
5.0x150 mm inserted at an inclination of 45° Nails of series EK are set in pairs with one nail
to the shear plane at a spacing of 100 mm; in the direction of shear and one against it. Screws

of series ZK are set all together in the direction of The tests were conducted in accordance with
shear. The basic idea of inclined fasteners was to EN 26891 [22]. This standard sets out the rules and
load the connectors longitudinally, in tension and principles for determination of the strength and de-
compression, a mode in which they demonstrate a formation properties of timber-timber joints made
considerable stiffness. This leads to truss-like ar- with mechanical fasteners. However, since there is
rangement of the connectors with angle of 45° to no specific standard for timber-concrete joints, this
the shear plane [9]. procedure is normally used. The experimental pro-
Properties of materials (timber, concrete, steel) cedure involves a multi-stage loading regime, the
are determined according to the Serbian Code pro- key elements of which are: initial loading to 40% of
cedure (SRPS Standards). Table 1 lists material estimated maximum load (Fest), approximately the
mechanical properties. working load of the joint; removal of load to 10%
Table 1. Material properties of Fest and finally loading to failure. The tests were
Timber performed with load control up to 70% of Fest and
Modulus of elasticity (// to grain) 10920 MPa from that point, with displacement control. In ac-
Flexural strength 86.5 MPa cordance with the specifications, the total duration
Compression strength (// to grain) 45.1 MPa of the tests should be between a minimum of 10 min
Tension strength (// to grain) 104.7 MPa and a maximum of 15 min. The load reached before
Concrete (after 28 days) or at a slip of 15 mm, was recorded as the maxi-
Modulus of elasticity 34129 MPa mum load Fmax for each specimen. The estimated
Compression strength 42.9 MPa maximum loads Fest were based on the results of the
Steel nails screws preliminary tests. Afterwards, if estimate deviated
Tensile strength 602 MPa 591 MPa too much from the maximum (ultimate) load, for
the next tests the load procedure was changed.
The preparation of the timber element for the
test specimens began with pre-drilling. The pre-
drilling was done to ordinarily diameter of holes
for the metal dowel-type fasteners (d1 = 0.85d
= 4.3 mm for nails and d1 = 0.7d = 7.0 mm for
screws) and to a depth equal to the length of the
fastener in the timber member. The fasteners had
depths inside timber of 100 mm and of 50 mm in-
side concrete (see Figure 2). The timber sections
were then placed on formwork in preparation for
pouring the concrete. A plastic foil was installed
between the timber and the concrete in order to
prevent excessive wetting of timber and reduce
the timber-concrete friction that would occur dur-
ing the tests. The specimens were cured for 7 days.
The first specimens were tested 28 days after the Figure 3. Push-out test set-up
concrete was poured.
The load was applied with a 250 kN capacity
2.2 Test set-up and procedure hydraulic jack and recorded by means of a load
cell. In order to distribute the force applied at the
The so called “push-out tests” were conducted top of timber element and at the bottom of the con-
at the Material Testing Laboratory of the Faculty crete members, tick steel plates were used for the
of Civil Engineering, University of Belgrade, Ser- entire area. To measure the slip deformation four
bia. A total of 12 specimens (3 samples in each test transducers linear variable differential transducers
batch) were tested using the experimental set-up (LVDTs) were used. The load was measured at the
as presented in Figure 3. point of application, on the top of the timber mem-

ber, while the relative displacement between tim- Numerical characteristics of the load-slip rep-
ber and concrete was measured at half height of resentative are given in Table 2 where the values
the test specimens in two shear planes in the front refer to par of nails in connectors EP and EK and
and in the back. The measurements were recorded one screw in connectors ZP and ZK. The maxi-
by data acquisition equipment every 0.5 second. mum load Fmax and corresponding slip νmax provide
information about the load capacity of the joint,
3. Results and discussion while the slip modulus Ks provides information
about the load-slip behaviour of the joint at an
For the evaluation of the push-out tests the elastic stage. The maximum load and maximum
measured displacements of the 4 LVDTs were av- slip are obtained directly from load-slip curve,
eraged. Results for all of the tested connectors, for while the slip modulus is obtained from Fest (es-
all replications, by means of load-slip curves are timated maximum load), ν01 (slip measured when
presented in Figure 4. All test specimens showed 10% of the estimated load is applied) and ν04 (slip
a real ductile performance until reaching the ulti- measured when 40% of the estimated load is ap-
mate load. In general, there are two main parts in plied) in accordance with Eq. 1 [22]:
the load-slip behaviour before and after yielding.
The initial part is characterized by relatively high 0.4 Fest 0.4 Fest .................. (1)
stiffness contrary to the stiffness of the second = Ks =
4
phase that is far lower. The plastic behaviour pre- (n 04 −n 01 ) í 04,mod
3
sented on the curves reaffirms that a steel failure
occurred for each specimen.
Figure 4. Load-slip curves obtained in the shear tests

This value is the stiffness of the joint which is load in comparison of all series. However, this
considered in the serviceability limit states. In the connection type is characterized by a relative low
ultimate limit states, the joint stiffness is consid- deformation capacity. In all tests of the ZK series
ered as [8]: maximum load is achieved much before the slip
of 15 mm. Dispersion of ultimate load and slip
2 modulus values for joints in ZK series is rather
Ku = K s ................................ (2)
3 high, thus a large number of specimens need to be
analyzed in order to reach more accurate results.
The EP series connector appeared as the most The characteristic failure modes of investigated
ductile system due to its ability to carry load under connectors are shown in Figures 5-8. Cause of fail-
large deformation. Resistance was still increasing ure in these tests were either shearing off or pulling
for the slip exceeding 15 mm. out the fasteners. In order to observe the deforma-
Connector types EP and EK reached compara- tion of connector, specimens pulled apart after test
tive ultimate load and slip modulus. Type EP con- to destruction. The portion of the fasteners that was
nection had the higher resistance while the higher embedded in the concrete member was remained
initial stiffness was observed by the EK type con- undamaged. On all occasions there were clear plas-
nection. All EK series tests showed a decrease in tic deformation in metal fasteners on the timber side
capacity once the peak load was reached. In one of at the interface between timber and concrete mem-
the three tests the maximum capacity was reached bers, indicating that plastic hinge was formed.
for the slip less then 15 mm. As expected, the connection failure was caused
The results are consistent for the ZP specimens. by reaching the bending and withdrawal capac-
The initial stiffness was less then the one in EP or ity of the fasteners and the timber embedding
EK series connectors. However, the ZP series con- strength. Timber to concrete connections with fas-
nectors had the ultimate load higher then obtained teners loaded perpendicular to their axis (EP, ZP)
in EP or EK connectors and slip modulus did not failed due to a combined embedding/bending fail-
drop off quickly as the slip increased. The ZP type ure. With decreasing angle between the fasteners
connector continued to increase in load capacity axis and the direction of shear, the tension (with-
even after a slip of 15 mm. drawal) component became dominated (ZK). The
As expected, the ZK specimens showed the nails in type EK connections, which were not sub-
highest stiffness and reached the highest ultimate jected to tension, were affected by bending.
Table 2. Shear test results

Strength Deformation Slip modulus
Series Spec. Fest Fmax ν01 ν04 νmax Ks ave. Ks ave. Ku
(kN) (kN) (mm) (mm) (mm) (kN/mm) (kN/mm) (kN/mm)
E1 - - - - - -
EP E2 7.50 8.89 0.16 0.92 15.00 2.96 3.24 2.16
E3 7.50 9.36 0.17 0.81 15.00 3.52
E4 8.00 7.58 0.14 0.95 15.00 2.96
EK E5 8.00 7.35 0.15 0.89 15.00 3.24 3.77 2.51
E6 8.00 6.80 0.04 0.51 10.03 5.11
Z1 9.50 10.78 0.71 1.75 15.00 2.74
ZP Z2 9.50 10.46 0.07 1.32 15.00 2.28 2.58 1.72
Z3 9.50 10.71 0.44 1.49 15.00 2.71
Z4 9.50 11.32 0.04 0.73 2.42 4.13
ZK Z5 12.50 12.15 0.10 0.38 1.37 13.39 9.41 6.28
Z6 12.50 15.99 0.07 0.42 4.90 10.71
Note: testing of the specimen E1 was unsuccessful

Figure 5. Failure with EP connectors: (a) specimens after testing, (b) concrete pulled from timber, (c)
timber pulled from concrete
Figure 6. Failure with EK connectors: (a) specimens after testing, (b) concrete pulled from timber, (c)
Figure 7. Failure with ZP connectors: (a) concrete pulled from timber, (c) deformed screw

Figure 8. Failure with ZK connectors: (a) specimens after testing, (b) concrete pulled from timber, (c)
4. Conclusion method proposed in EN 26891 to determine the

joint slip modulus may lead to results not complete-
The global structural and deformation behav-
ly representative of actual behaviour of the joints
iour of timber-concrete composite systems strong-
made with metal dowel-type fasteners. For these
ly depend on the load-slip behaviour of the con-
joints, the determination of slip modulus is very
nectors between the two components timber and
sensitive to the point (load, slip) and value of the
concrete. So the load capacity and stiffness of the
estimated maximum load used.
connectors are most important factors to lead to an
From this study, the effect of application of
economic fabrication of timber-concrete compos-
different connector types to slip modulus can be
ite systems. Another crucial parameter is the cost
recognized, but the determination of a mathemati-
of the connector, including the labor cost, that if
cal relationship between them needs a more com-
too high may avert the use of composite system.
prehensive investigation. Also, further insight is
The connection technique presented here em-
needed with respect to the long-term and the dy-
ploys metal dowel-type fasteners (nails and screws)
namic behaviour.
which are forced into calibrated holes drilled in tim-
ber beam. The reasons for using these connectors
include the availability of materials, its minimal Reference
fabrication and easy assembly on site. The analysis 1. Ceccotti A. Composite concrete-timber structures.
of the results obtained in the shear tests showed that Prog Struct Engng Mater, 2002; 4: 264-275.
the behavior of the mechanical fasteners depends
mainly on the fastener properties and embedding 2. Van der Linden M., Blass J.H. Timber-concrete com-
posite floor systems. Proc. of the 4th international
properties of timber. The joints with nails or screws wood engineering conference, New Orleans, Louisi-
characterized low-moderate strength and stiffness ana, USA, 1996; pp 3.309-3.315.
but large plastic deformation capacity. Besides, this
type of joints showed a high non-linear mechani- 3. Girhammar U.A. Composite timber and concrete
components for walls. IABSE 12th congress, Vancou-
cal behavior that can be divided into two parts with
ver, Canada, Final Report, 1984; pp 961-968
completely different properties before and after the
joint yielding. The main difference between these 4. Marcia N.T., Soriano J. Benefits of timber-concrete
two parts is joint stiffness, which decreases signifi- composite action in rural bridges. Mater Struct,
cantly after the joint yielding. Thus, the calculation 2004; 37: 122-128.

5. Steinberg E., Selle R., Faust T. Connectors for 18. Lukaszewska E., Johnsson H., Fragiacomo M. Per-
timber-lightweight concrete composite structure. J formance of connections for prefabricated timber-
Struct Eng 2003; 129(11): 1538-1545. concrete composite floors. Mater Struct 2008; 41:
1533-1550.
6. Buchanan A.H. Can timber buildings help reduce
global CO2 emissions? Proc. of the 9th world confer- 19. Miotto J.L., Dias A.A. Glulam-concrete composites:
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Oregon, USA. 2006. tem. Materials Research 2011; 14(1): 53-59.
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concrete joints. Doctoral thesis, Delft University of haviour of a continual metal connector for a wood-
Technology, Delft, The Netherlands. concrete system. For Prod J .2004; 54(6): 76-84.
8. CEN (2004) Eurocode 5: Desing of timber structure- 21. Negrão J.H., Oliveira F.M., Oliveria C.L. Investi-
Part 1-1: General rules and rules for buildings, EN gation on timber-concrete glued composites. Proc.
1995-1-1. Brussels, Belgium, 2005. of the 9th world conference on timber engineering
WCTE 2006, Portland, Oregon, USA, 2006.
9. Meierhofer A.U. RF 2000, a new efficient for timber/
concrete composite structural elements. Proc. of the 22. CEN, Timber structure-Joints made with mechani-
1992 Conference- Timber Engineering, Bordeaux, cal fasteners-General principles for the determina-
France, 1992; pp 383-393. tion of strength and deformation characteristics,
EN 26891, Brussels, Belgium, 1991.
10. Stevanović B. Practical use of composite timber-
concrete beams connected by nails. Proc. of the 5th
world conference on timber engineering, Lausanne, Corresponding author
Switzerland, 1998; pp 4.256-4.263. Ivan Glisovic,
University of Belgrade,
11. van der Liden M. Timber-concrete composite Faculty of Civil Engineering,
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Serbia,
12. Gutkowksi R.M., Brown K., Shigide A., Natterer J. E-mail: ivang@imk.grf.bg.ac.rs
Investigation of notched composite wood-concrete
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long-term performance of the “Tecnaria“ stud con-
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Whistler Resort, Canada, 2000.

Optimal reinforced concrete beams design

using hybrid GA-TABU algorithm
Aleksandar Milajic1, Dejan Beljakovic1, Goran Pejicic2
1
University UNION Nikola Tesla, Department for Civil Engineering, Belgrade, Republic of Serbia,
2
“Goran” D.O.O., Samac, Bosnia and Herzegovina.
Abstract sideration of prices of concrete, steel, formwork

and human labour. Therefore, it is obvious that the
This paper presents innovative approach in
practicing engineers need an efficient designing
optimum detailed design of the reinforced con-
method that would give results which would be
crete structures by using the hybrid of two meta-
not only satisfying considering given legal stand-
heuristics, genetic algorithm and TABU search.
ards but also considering optimality criteria. Ma-
The principal design objective is to minimize to-
terial and labour costs are also important issues in
tal cost of the structure while obtaining realistic
design and construction of the reinforced concrete
and applicable solution, i.e. the one that satisfies
structures, as well as the applicability of obtained
all the requirements considering strength and ser-
solution in practice, i.e. at the building site.
viceability and offers sufficient data for applica-
Although there is a great number of scientific
tion at the building site. While most of the insofar
papers on application of genetic algorithms for
approaches consider the reinforcement only as a
solving the cost optimization problems in the area
total amount of the steel, presented methodology
of reinforced concrete structures, the problem of
offers detailed scheme of the reinforcing bars di-
optimal reinforcement choice and placing has gen-
ameters and placing pattern. Standard genetic al-
erally remained unsolved, or, more precisely, with-
gorithm was improved by introducing Tabu search
out satisfying universal solution applicable in the
as the secondary search tool. The optimum design
practice. The great majority of researchers have
results are compared with those obtained by us-
been focussed on developing genetic algorithms
ing traditional designing approach and by basic
for optimal design of reinforced concrete beams
genetic algorithm. An example problem with its
limited to the basic data, such as cross-sectional
solution and discussion of the results is presented.
dimensions and the total required quantity of steel
It is concluded that proposed methodology yields
reinforcement [1], but application of these solutions
rational and applicable designs.
in practice would demand further analyses because
Key words: Optimization, genetic algorithm,
the reinforcement design includes numerous details
tabu search, reinforced beam.
beyond the amount of steel, such as the choice of
bar diameters, the number of bars and their posi-
1. Introduction tioning within the given cross section in accord-
Traditional practise in designing reinforced ance with the code of practice. Further researches
concrete structures includes finding out cross-sec- improved the applicability of results by taking the
tional dimensions and reinforcement that would optimal reinforcement spacing into account, but it
meet the legal standards proscribed by a given was usually done in more or less generalized man-
code of practise considering primarily strength and ner, without detailed analyses of all possible rein-
serviceability, as well as other imposed require- forcement bars combinations and placing patterns
ments. If the requirements are not met, than the [2, 3]. Only a few authors offered the solutions fully
cross-sectional dimensions and/or amount of the applicable in practice, i.e. with detailed information
reinforcement have to be iteratively modified until on reinforcement placing scheme [4].
all the required criteria are satisfied. In engineer- This paper presents improved methodology
ing practise, i.e. in reality, this iterative process is for detailed optimal design of the reinforced con-
usually carried out carelessly, without deeper concrete structures using hybridized genetic algorithm.

Problematic features of the genetic algorithms are can be calculated after adopting the final rein-
improved by introducing the Tabu search as the sec- forcement pattern and depends on diameters and
ondary search tool, which reduced the size of the lengths of chosen bars and stirrups.
basic optimization problem to just two variables Since the structural geometry, material proper-
(cross-sectional dimensions). Since the required ties and prices, support conditions and loads (except
steel area in critical cross sections depends on the self-weight) are usually predefined in the design-
sectional dimensions, the problem of detailed rein- ing process, the only variables in this study are the
forcement design according to its applicability in cross-sectional dimensions, i.e. width b and depth
practice is solved within the built-in Tabu search h. There is no need to include the total steel area in
module. Proposed approach is tested on different critical cross sections in the variables because it can
examples and the comparison of the results with the be calculated according to the given code of prac-
ones obtained by non-hybridized genetic algorithm tice, in this particular case EUROCODE2 standard
and the ones obtained by the standard designer (EC2) for the reinforced concrete structures. Ac-
practice confirmed that improved genetic algorithm cording to EC2, the required steel area for typical
outperforms other techniques both from the practi- cross section (Figure 1) is given as:
cal and the economical point of view.
M
As =
sd
................................ (4)
2. Optimal design of the reinforced-concrete z fyd
beam
Standard mathematical form of any structural
optimization problem can be defined as:
Minimize objective function
F(Xi), i =1,…,n
subject to constraints:
cj(Xi)≤0, i = 1,…,n; j = 1,…,m
with XiL ≤ Xi ≤ XiU, i =1,…,n Figure 1. Typical cross section with flexural rein-
If the aim is to achieve the final price as low forcement
as possible (cost optimization), mathematic form
of the objective function will be defined as a total However, as it was said earlier, complete solution
price of the beam: of the problem should include details about bars di-
ameters and placing scheme, especially considering
F ( x) = V P c+ W P s+ A P f .............. (1)
c s f
the great variety of possible combinations. There-
where Vc is the volume of concrete, Ws is weight fore, detailed reinforcement design needs special at-
of steel, Af is total area of formwork and Pc, Ps and tention and will be discussed in the Section 3.
Pf are unit price of concrete per m3, of steel per Constraints in this optimization problem are
kg and of formwork per m2, respectively. Prices of chosen based on geometry, serviceability and re-
the materials include material, fabrication and la- quirements given in the EC2. Reinforcement fea-
bour. Total amount of concrete and formwork can tures, such as bar diameters, numbers and pattern,
be calculated as: are considered separately, as will be explained
later. All constraints are presented in the normal-
V c = b h l ................................. (2) ized form. For every constraint cj, there is corre-
sponding penalty coefficient pj which represents
A f = (b + 2 h ) l ............................. (3)
normalized degree of violation of that constraint.
where b and h are cross-sectional dimensions, 1. Depth of the beam should be greater then or
l is length of a beam. Total amount of the steel equal to the corresponding width:

h 3. Reinforcement choice and spacing

c 1= − 1 ................................. (5)
b After calculating required amount of the rein-
forcement for a given cross section (4), a designer
0 , c 1≥ 0
p 1=  ........................ (6) is supposed to choose proper combination of re-
a b s (c1 ) , c1 < 0 inforcing bars which would have the total area
as close as possible to the calculated one, and to
2. Crack width (w), calculated in accordance
specify their exact positions in a cross section in
with the EC2, should not be larger than the maxi-
accordance with rules and requirements given
mal allowed value wmax = 0.4 mm:
in a code of practise. Having in mind that rein-
wmax forcement bars come in more than ten different
c2 = − 1 ............................... (7) diameters, this task is not as easy as it is usually
w
considered. Furthermore, it is common practice
0 , c2 ≥ 0 among designers to choose the bars quite care-
p2 =  ....................... (8)
a b s (c2 ) , c2 < 0 lessly, which can increase total amount of the steel
for more than 10%.
3. Maximum deflection (δ) should not be larger Codes of practise can vary more or less be-
than the maximal allowed value δmax = l/250: tween different countries but they all generally
d max come down to the same set of requirements be-
c3 = − 1 ............................... (9) cause what is obligated in one country usually is
d
accepted as a rule of thumb in another and vice
0 , c3 ≥ 0 versa. A typical reinforcement template with plac-
p3 =  ...................... (10)
abs(c3 ) , c3 < 0 ing requirements is shown in Figure 2.
In this study, all requirements considering the

reinforcement (minimum and maximum percent-
age, clear spacing between bars etc.) are taken
into account within separate module for creating
the reinforcement pattern. As the required area
of steel is calculated according to the maximum
design moment MSd (4), providing that amount of Figure 2. Typical reinforcement template and
steel will implicitly satisfy the condition that ulti- requirements
mate moment capacity should be greater than the
maximum bending moment MSd. The first three requirements in Figure 2 mean that
Fitness of any solution considered within a bars with greater diameter should be placed closer to
search is estimated by the level of violation of the concrete surface. The fourth requirement practi-
problem constraints. In order to transform con- cally results from the previous three and means that
strained problem into unconstrained one, which total area of bars in row 1 should be greater than or
is the most appropriate for the genetic algorithms, equal than of in row 2. The fifth one is for avoid-
feasibility is introduced by using penalty func- ing the combinations of significantly different diam-
tions. In this study, quadratic penalty function is eters. The last two requirements provide proper con-
used for integrating constraints into the objective ditions for adequate concrete mixture pouring and
function: vibrating. They mean that the clear horizontal and
vertical spacing (Sh and Sv) between the bars should
2 not be less than a specified value or the maximum
 3  bar diameter, and not greater than the maximum
F 1 ( x) = F 1 + ∑ p j  ......................(11)
 j =1  spacing permitted by the code of practise.
Great variety of bar diameters allows making
numerous combinations and patterns that would
both meet the abovementioned requirements and

produce the total reinforcement area within a very building site faster and with more accuracy. Value
narrow interval of values slightly greater than the of the reinforcement pattern coefficient can be cal-
required value. Therefore, when talking about the culated as:
reinforcement pattern, the term ‘optimal’ should
not necessarily mean ‘the minimal one’ but also j r = c d c u .............................. (12)
the one that would be relatively simple for man-
ufacturing at the building site and with minimal where cd is coefficient of distribution and cu is
possibility of making mistake. When it comes coefficient of uniformity.
down to a choice between two solutions with ap- Coefficient of distribution (cd) describes spatial
proximately equal solutions, one of which consists distribution of reinforcement bars within a given
of different bar types and other one of the same cross section and includes number of rows (nr) and
bars in cross-section, an experienced designer number of bars per row (nb), as well as the correction
would always choose the second one. if the number of bars in the last row (nbl) is not the
As it can be seen in the Figure 2, complete de- same as in the other rows. If the last (highest) row is
scription of the reinforcement pattern would de- full, i.e. the same as the other rows, than nbl=nb.
mand additional variables (number and diameter
of bars in each group), as well as penalty functions ( )
c d = a n r2 + b n r + c 1 0 −3 .................... (13)
for all the requirements considering bars’ spacing, where:
which would demand additional variables per
beam. This problem can be solved either by sim- a = −2 5 − 5 n b ............................ (14)
plification of the reinforcement pattern [2, 3], or
by solving it by partial or total extraction from the b = 8 2 5 + 115n b −1 0 n bl .................... (15)
genetic algorithm [4, 5]. In order to avoid any un-
necessary simplification and to develop efficient c = −11 0 (n b −n bl ) ......................... (16)
and applicable algorithm, the latter approach was
used in this study. Coefficient of uniformity (cu) describes num-
Since the exact value of the penalized fitness ber of different bar diameters used in a given cross
function (11) can not be calculated without suf- section (nd) and can be calculated as:
ficient data about the chosen reinforcement pat-
tern, for every solution (pair of cross-sectional di- cu = 0 .9 0 + 0.1 0 n d ....................... (17)
mensions b and h) considered within the primary
search, built-in module generates temporary data- 4. Optimization tools
base of acceptable reinforcement patterns which
meet requirements given in Figure 2, as well as During last decade, hybridization of me-
the demands considering minimum and maximum taheuristics has been successfully implemented in
percentage of steel given in the EC2 standard. Af- solving different NP-hard problems by combin-
ter that, secondary search tool refines the search ing best features of different search methods [6].
by estimating generated patterns according to The most common method of hybridization is to
their applicability in practice described by the reuse population-based metaheuristic for the search
inforcement pattern coefficient, empirically devel- space exploration and to improve the solution by
oped after field research at the building sites [5]. introducing some local search method. Beside
The reinforcement pattern coefficient (φr) is de- that, researchers have shown that hybridization
fined as the ratio of time needed for placing and can also produce good or required results within
fixing a given pattern and time needed for the sim- considerably less computational time [7].
plest pattern, consisting of only two same bars in
the bottom row. If a choice between two patterns 4.1 Genetic algorithms
with the same steel area is to be made, the one with
lower reinforcement pattern coefficient would be Genetic algorithms belong to the class of the
the preferable one because it can be made at the population-based evolutionary algorithms, for-

mulated by the direct analogy with the evolution 4.3 Hybridization of genetic algorithm and
process, i.e. by the Darwinian principles of natural Tabu search
selection. Analogically with genes and chromo-
somes in nature, every variable in genetic algo- The idea of hybridization, i.e. combining dif-
rithm is called gene, while the vector consisting ferent meta-heuristics, is to use their different
of complete set of variables is called chromosome. advantages in order to overcome problematic
Genetic model of a search space is defined by a features of one method by including the second
data coding scheme, where the design variables meta-heuristic where the first one fails to perform
are transformed into a character string. The most in desirable manner. The advantage of the genet-
common coding scheme is the binary scheme, ic algorithms is that a solution improves rapidly
where design variables are transformed in strings during the initial phase, which is good for finding
consisting only of characters 0 and 1. promising regions for global optimum within giv-
During the process of reproduction, two par- en search space, but later the convergence slows
ents combine their good characteristics (genes) to down remarkably. On the other hand, depending
produce a better offspring. In genetic algorithms, on number and nature of the variables and chosen
this is accomplished through genetic operators, genetic operators, genetic algorithm can converge
namely reproduction, crossover and mutation. Af- prematurely to a local optimum. This indicates
ter all the stages of the reproduction are finished, that genetic algorithm is suitable for finding prom-
the new population of the individuals is created ising region for optimal solution, while the finer
and the reproduction starts all over. This process search should be performed by some other meta-
repeats until the stopping criterion is satisfied. The heuristic, in this case the Tabu search [10, 11].
convergence is assumed to be attained either when
average fitness of several successive generations 5. Implementation
remains unchanged or when the maximum prede-
In order to include all the above mentioned cri-
fined number of generations is reached [8].
teria and conclusions, as well as to obtain compa-
rable results, the computer program is developed
4.2 Tabu search and set to offer three possibilities: HD (Human
While the genetic algorithms work simultane- Design), GA (Genetic Algorithm) and GA-TS
ously on a group of solutions, Tabu search oper- (hybrid of Genetic Algorithm and Tabu Search).
ates on a single solution at a time and uses prob- Option HD represents the simplest form of the
lem-specific operators to explore a search space genetic algorithm, oriented only on finding opti-
and memory (called the Tabu list) while keeping mal cross-sectional dimensions and the required
track of parts already visited. The main advantage amount of steel As (4), leaving a designer to find out
of Tabu search is its possibility of strategic con- appropriate bars diameters and pattern. In the other
straining and freeing the search process by using two cases, for every solution considered within the
pre-defined restrictions and aspiration criteria i.e. genetic algorithm, i.e. for every pair of cross-sec-
favorizing and saving the attributes that have been tional dimensions b and h, a built-in module gen-
found good and guiding the search into new re- erates temporary database of satisfactory reinforce-
gions, and thus to overcome local minima and to ment patterns which would give total reinforcement
reach the global optimum [9]. area equal or slightly greater than the calculated
In general, Tabu search consists of the follow- one. Level of precision (maximal percent for which
ing four steps: the considered patterns may increase the required
1. Initialization, i.e. choosing a starting solution. amount of steel) is pre-defined by user.
2. Neighbourhood exploration. In case of the GA option, program finds the pat-
3. Choosing a new non-tabu solution. tern with minimal steel area without further con-
4. Repeat steps 2 and 3 until the termination sideration of its applicability, while the GA-TS
criteria are satisfied. option (solution proposed in this work) examines
the database by using the Tabu search module and

finds the most appropriate pattern considering its kN/m3 and 78.5 kN/m3 respectively. The strength
applicability, having in mind that the upper bound of concrete is 25 MPa and the strength of steel is
of allowable total steel area is already chosen by 400 MPa. Assumed prices of the materials are Pc
user and therefore can be considered economi- = 60 €/m3 for concrete, Ps = 1 €/kg for steel and
cally acceptable. Pf = 10 €/m2 for formwork. Database of possible
reinforcement patterns was formed with assump-
6. Design example and results tion that minimal required area of steel can be in-
creased up to 5%.
The program was tested on different examples In each case, an initial population of 50 individ-
by applying all three abovementioned modes on uals is randomly generated. Based on the previous
the same set of input data. In case of the HD mode, experiences and the nature of the problem, genetic
the final choice of the reinforcement bars diam- operators chosen for this study are: tournament se-
eters and pattern was done manually, with the typ- lection scheme, two-point crossover with probabil-
ical reasoning used in engineering practice. Ob- ity of crossover pc=1 and probability of mutation
tained results were compared and estimated both pm=0.03. Maximal number of generations is 100.
from the economical and practical point of view.
In this paper, the effectiveness of the proposed 6.2 Results and discussion
approach is illustrated on example of simply sup-
ported beam. Results obtained after running the program in all
three modes are presented in Figure 4 and Table 1.
6.1 Input data As it was explained before, reinforcement pattern
for the HD mode was created manually. In all three
Geometry and loading details are presented in cases, program has found the same optimal cross-
Figure 3. For every considered solution, value of sectional dimensions (25/32.5 cm), so the results
the self-weight (ws) is calculated according to the quantitatively differ only considering the amount
cross-sectional dimensions and added to the con- of reinforcement and, consequently, the total price.
stant dead load of 16 kN/m1.
Figure 4. Reinforcement patterns
Figure 3. Test example It should be noted here that in case of the HD

mode, presented pattern was adopted only basing
The range of cross-sectional dimensions b and on criterion that all bars should have the same di-
h is 20–50 cm for width (b) and 20–100 cm for ameter (as it is usually done in practice). Other con-
the depth (h), with increment 2.5 cm. Considered sidered patterns were rejected because of the fol-
diameters of the longitudinal reinforcement bars lowing reasons: 2Ø25 (9.82 cm2) does not satisfy
are the standard ones: 12, 14, 16, 19, 22, 25 and 28 criterion of maximal allowable crack width; 5Ø16
mm. The unit weight of concrete and steel are 25.0 (10.05 cm2) can not be placed in a single row and
Table 1. Experimental results

Mode b/h (cm) Ar (cm2) ΔAr (%) φr Price (€) ΔPrice (%)
HD 25/35 10.78 15.91 2.23 103.68 +4.85
GA 25/35 9.36 0.6 2.56 98.88 /
GA-TS 25/35 9.69 4.2 1.32 99.98 +1.11

would demand adding one more bar for achiev- ation of both economical and practical aspect of
ing symmetrical formation 4+2; 3Ø22 (11.40 cm2) considered solutions resulted in designs which are
would increase amount of the steel for 22.6 %. more applicable in practice than the ones obtained
Results presented in Table 1 show that proposed by using only the economical criterion. Proposed
methodology for optimal design has proven to be methodology can be successfully implemented in
successful in comparison with traditional design the design process.
method and genetic algorithm aimed only to find
solution with minimal cost. Solution found by the Acknowledgement
GA-TS mode has slightly higher price than the one
found by the GA (1.11%), but, on the other hand, Presented research was supported by the Min-
is remarkably simpler and easier to be successful- istry of Science and Technological Development,
ly implemented at the building site. Besides that, Republic of Serbia, project TR 36023.
according to the reinforcement pattern coefficient,
reinforcement scheme obtained this way would be References
achieved approximately twice as fast as the other
two, which can remarkably lower the amount of 1. Coello Coello CA, Christiansen AD, Santos Hernan-
dez F.: ‘A simple genetic algorithm for the design of
labour and duration of bar fixing.
reinforced concrete beams’, Engineering with Com-
Performances and basic chromosome statistics puters, 1997; 13: 185–96.
obtained from ten independent runs per mode are
shown in Table 2. Slightly faster program perfor- 2. Matous K., Leps M., Zeman J., Sejnoha M.: ‘Apply-
mance in the HD mode can be explained by its ing genetic algorithms to selected topics commonly
encountered in engineering practice’, Computer
simplicity in comparison with other two modes. Methods in Applied Mechanics and Engineering,
From the data about obtained results and the stan- 2000; 190: 1629–1650
dard deviations it can be concluded that hybrid
GA-TS have outperformed other two approaches 3. Camp C.V., Pezeshk S., Hansson H.: ‘Flexural de-
considering the reliability of results, which can be sign of reinforced concrete frames using a genetic al-
gorithms’, Journal of Structural Engineering ASCE, ,
explained by inclusion of the Tabu search as the 2003; 129(1): 105–15.
secondary search tool.
4. Govindaraj V., Ramasamy J.V., ‘Optimum detailed
design of reinforced concrete continuous beams us-
7. Conclusion ing genetic algorithms’, Computers and Structures, ,
2005; 84: pp. 34–48.
A methodology for optimum design of the re-
inforced concrete beams using a hybrid genetic 5. Milajić A., Beljaković D., Milovanović Z.: Compara-
algorithm is presented. The procedure is formu- tive analysis of genetic algorithms used for rein-
lated in such a manner that sequence of steps imi- forced concrete structures design, Proceedings of
the 4th International Conference Civil Engineering
tates decision making process in traditional de-
– Science and Practice, Zabljak, Montenegro, CD-
sign method in accordance with requirements and ROM, 2012.
specifications given in the EC2. Reduced number
of variables to just two significantly simplifies the 6. Blum C., Aguilera M.J.B., Roli A., Samples M.: ‘Hy-
calculation. Hybridization of the genetic algo- brid Metaheuristics: An Emerging Approach to Op-
timization’, Springer-Verlag Berlin, Heidelberg, SCI,
rithms has proven to be successful in comparison 2008; 114: 1-30.
with the non-hybridized genetic algorithm. Evalu-
Table 2. Program performances from ten independent runs
Number of generations Time (s) Price (€)
Mode
min max min max Min avg. max std.dev.
HD 5 14 9 30 103.68 105.50 108.20 1.66
GA 7 20 12 39 98.88 102.52 105.45 2.54
GA-TS 5 16 10 32 99.98 100.46 101.20 0.46

7. Hageman J.A., Wehrens R., van Sprang H.A.,

Buydens L.M.C.: ‘Hybrid genetic algorithm-tabu
search approach for optimising multilayer optical
coatings’, Analytica Chimica Acta, 2003; 490 (1):
pp. 211-222.
8. Haupt R. E. and Haupt S. E.: Practical Genetic Al-

gorithms. John Wiley & Sons, New York, 1998.
9. Glover F., Laguna M. Tabu Search, published by

Kluwer Academic Publishers, 2000.
10. Pengfei Guo, Xuezhi Wang, Yingshi Han: A Hybrid

Genetic Algorithm for Structural Optimization with
Discrete Variables, Proceedings of the International
Conference on Internet Computing and Services
2011; 223–226.
11. Gülcü A., Kuzucuoglu A.E., Bulkan S.: ’A com-

parison of genetic algorithms & tabu search for
a course timetabling problem’, TTEM - Technics
Technologies Education Management, 2011; 6 (4):
930–938.
Aleksandar Milajic,
University UNION Nikola Tesla,
Department for Civil Engineering,
Belgrade,
Republic of Serbia,
E-mail: a.milajic@sezampro.rs

Method of optimum organization of driver

intoxication control
Milan Vujanic¹, Dalibor Pesic¹, Milan Bozovic¹, Relja Mirovic², Milan M. Vujanic¹
¹ University of Belgrade, The Faculty of Transport and Traffic Engineering, Belgrade, Serbia;
² Republic Administration of Inspections Banja Luka, Department Bijeljina, Bosnia and Herzegovina.
Abstract WHO data [1] also show that, out of the total
number of deaths due to traffic accidents, 90% oc-
This study shows a deeper analysis of traffic
cur in undeveloped and developing countries, as
accidents involving intoxicated drivers, at the area
well as that these countries have less than 50%
of Sokolac and Vlasenica municipalities in the
of all the registered vehicles. Details on traffic
Republic of Srpska. Intoxicated drivers have been
accident victims show that undeveloped and de-
classified on the basis of their gender, age, edu-
veloping countries need urgent measures of traffic
cation level, and alcohol concentrations in their
safety level improvement, at all state levels. Ac-
organisms at the time of accident occurrence. Ve-
cording to WHO estimate [1], lack of imperative
hicle structure has been classified based on vehicle
measures towards traffic safety improvement will
category, whereas time of accident occurrence has
contribute to the fact that traffic accidents will be-
been analysed in relation with times of the day
come the fifth cause of death in the world, and that
and months of the year. A deep analysis of traffic
the number of death cases resulting from traffic
accidents has shown that the most frequently in-
accidents will grow to be 2.4 million a year.
volved drivers were male, with secondary educa-
United Nations General Assembly has brought
tion, aged between 21 and 25 or between 36 and
Resolution 64/2551 to declare the Decade of Ac-
45. Most frequently involved vehicles are passen-
tivities on Road Traffic Safety (2011-2020) [2],
ger vehicles, and accidents occur most frequently
with the emphasis on stabilization in regards with
within the period from March to October, from
injuries and deaths caused in traffic accidents, as a
19.00 to 5.00, on the roads inside resided areas as
global objective. The Decade of Activities on Road
well as on trunk roads. The analysed data showed
Traffic Safety represents a plan to decrease the num-
that most of the traffic accidents were fatal ones.
ber of deaths and injuries due to traffic accidents
Key words: traffic safety, traffic accidents,
on global level, with increasing activities towards
causes, circumstances, alcohol
traffic safety improvement at national, regional and
global levels [1]. The Global Plan of Decade of
1. Introduction Activities on Road Traffic Safety [3] specifies ac-
tivities being undertaken by national and local state
Injuries and death caused in traffic accidents authorities following the five columns, amongst
have become a growing global problem, which which is a column marked as ’’safer road users’’ [1].
can be seen in the WHO data [1]. Approximately Aiming to improve traffic safety level, coun-
1.3 million people get killed in traffic accidents tries should focus their activities towards a better
every year, and 20 to 50 million people obtain in- behaviour of traffic participants, and elimination of
juries [1]. Approximately 3,000 people get killed factors (risks) which contribute to traffic accident
every day, and half of them were either drivers or occurrence, since a decreased number of victims
passengers in automobiles. Injuries obtained in could be achieved through an enhanced awareness
traffic accidents are among three leading causes of the significance of safe participation in traffic,
of death to persons aged between 5 and 44. It has as well as through consistent law implementation.
been estimated that material damage due to traffic Factors which contribute to deaths and injuries due
accidents amounts over $ 500 billion a year, i.e. to traffic accidents include use of safety belts, use
between 1% and 3% of BDP/GDP [1]. of safety helmets, driving within the speed limits,

driving under the influence of alcohol. WHO [1] cohol in blood, nearly 50% of the total number of
has listed decreased driving under the influence of drivers [8]. According to the WHO [1], between
alcohol as the third activity concerning better be- 1% and 5% of drivers drive under the influence of
haviour of traffic participants. alcohol, while approx 20% of fatal and traffic ac-
Driving with alcohol concentration in the or- cidents involving heavy bodily injuries are caused
ganism larger than it is allowed (intoxicated driv- by driving under the influence of alcohol. In some
ers) is one of the most frequent factors contribut- countries (Canada, Slovenia, The United States,
ing to fatal traffic accidents, and achieving a de- France, Ireland, New Zealand), the percentage of
creased number of intoxicated drivers is a measure traffic accidents due to driving under the influence
giving the best results in regards with reduction to of alcohol exceeds 30% [9]. IRTAD’s report [10]
the number of deaths. Countries undertake system also confirms these facts, stating that there is more
measures aiming to decrease the number of intoxi- risk during the night than at daytime.
cated drivers, and efficiency of these measures is [11] has shown that male intoxicated drivers in
a result of intensified awareness of traffic partici- Florida are involved in about 4 times larger number
pants, planning, organizing, control, and sanction- of traffic accidents than female intoxicated drivers.
ing the violation at all state levels. In Florida, there are more intoxicated drivers in-
At the EU territory, approximately 31,000 peo- volved in traffic accidents aged between 25 and 64
ple were killed in traffic accidents during the year than those aged between 20 and 24, and the largest
2010 [4]. ETSC [4] shows that driving while the number of intoxicated drivers involved in traffic ac-
amount of alcohol in organism is 0.5 g/l enlarges cidents are aged 25-34. The number of intoxicated
the risk of traffic accident occurrence five times, drivers involved in traffic accidents is decreasing
and that a reduced number of intoxicated driv- with drivers’ age, which has been demonstrated by
ers could contribute to decreasing the number of [12]. [13] has shown that the largest number of in-
killed persons by 4,000, number of the injured by toxicated drivers involved in traffic accidents in the
150,000 a year, within the EU. During 2010, po- USA were aged between 15 and 34, and that a con-
lice reports from the territory of 22 EU countries siderable decrease to the number of traffic accidents
showed that approx 3,200 killed people had been due to reduced number of intoxicated drivers has
under the influence of alcohol during the accident, been recorded during the period 1950-2002, with
while approx 6,400 people killed in traffic acci- driving under the influence of alcohol having con-
dents in 2001were recorded to have been intoxi- tributed to 39% of total number of traffic accidents
cated during the accident. During the period 2001- in the USA. According to the information provided
2010, a decreased number of intoxicated drivers in [14], during the year 2005, 53.8% of the total num-
Ireland, Latvia and Slovakia, has contributed to a ber of fatal traffic accidents in Sao Paulo was de-
reduced number of deaths by 15% a year; whereas tected to have been related to drivers’ intoxication.
Italy, Cyprus, Israel, Portugal and Romania re- 11% of the total number of traffic violation reports
corded an increased number of victims as a result in Serbia within the period 2003-2007 was related
of enlarged number of intoxicated drivers [4]. At to alcohol influence [15].
the level of 22 EU countries, during the period A reduced number of intoxicated drivers at the
2001-2010, an average decrease to the number of area of Republic Srpska could contribute to a re-
killed persons due to driving under the influence duced number of deaths due to traffic accidents.
of alcohol was recorded to have been 7.6% a year, Efficient planning and implementing measures of
while an enhanced compliance with other rules precaution aiming to decrease the number of in-
and regulations contributed to reduction of death toxicated drivers at the area of Republic Srpska
cases by 5.3% a year. requires an analysis of fatal traffic accidents as
Many researches [5], [6], [7] have shown a well. The effects of prevention measures depend
considerable influence of alcohol on traffic acci- upon understanding the ratio and structure of in-
dent occurrence. Looking in absolute numbers, the toxicated drivers being involved in fatal traffic ac-
largest number of drivers who caused accidents cidents. No significant researches in relation to the
under the alcohol influence had up to 1.5‰ of al- ratio and structure of intoxicated drivers having

been involved in fatal traffic accidents, resulting age of the drivers; vehicle make and type; con-
in an emphasis on the importance of undertaking sequences of the accident; the period from traffic
prevention measures with a system approach to accident occurrence to indictment and verdict pro-
reduced number of intoxicated drivers, have been nunciation; amounts of fines and protection mea-
recorded at the area of Republic Srpska. sures depending on the circumstances of traffic ac-
Traffic participant intoxication control systems cident occurrence; were taken from court records.
are applied in countries with a tradition of traffic An analysis of court record availability, as well as
safety. Entry details in these systems are those re- that of details from the records, shows the signifi-
lated to an individual (who has committed a crimi- cance of performing a comprehensive analysis as
nal act or violation), with the result in the form to the percentage and structure of intoxicated driv-
of integrated – individual, group and general in- ers having been involved in traffic accidents (fatal
formation relevant for the system of intoxicated ones) in the Republic of Srpska; aiming to deter-
traffic participant management; with a particular mine the factual situation and provide precondi-
relevance to the education, health service, insur- tions for defining a system of prevention measures
ance organizations, police, prosecution and court, and system of intoxicated traffic participant con-
as well as regulatory authorities responsible for trol with a purpose to reduce the number of intoxi-
amending, i.e. passing the law. cated drivers and deaths due to traffic accidents in
The objective of this research is an analysis the Republic of Srpska.
of percentage and structure of intoxicated driv- The research has been performed following
ers having been involved in fatal traffic accidents interviews with court organs (chosen randomly)
(at the area of Sokolac and Vlasenica), as a basis aiming to ensure data availability and implement a
for performing comprehensive analyses as to the deep analysis of traffic accidents, which included:
percentage and structure of intoxicated drivers be- – Taking over and registering the available
ing involved in traffic accidents in the Republic of records;
Srpska, in order to determine the present situation – Inspection, listing and systematization of
and establish a system of prevention measures to- details from the records;
wards achieving a decreased number of intoxicat- – Data analysis and synthesis;
ed drivers and deaths due to traffic accidents. The – Drafting conclusions, proposals and
research has been carried out on a random sample recommendations.
of court records related to 34 traffic accidents in-
volving intoxicated drivers, which were available The data analysed in this study have been taken
at the Municipal Courts of Sokolac and Vlasenica. from relevant proving material contained in the re-
cords. Details on alcoholemia of those involved in
2. Research method and material traffic accidents were taken from medical documen-
tation contained in the records, the details on traffic
It is necessary to investigate the circumstances accidents were taken from records on initial investi-
under which traffic accidents involving intoxicat- gations, and the details on circumstances leading to
ed drivers occurred. For this purpose, a research traffic accidents were taken from experts’ findings
on a random sample of the available criminal court and opinions included in the records.
records at the Municipal Courts of Sokolac and The data were analysed by applying a percentage
Vlasenica has been done. Prior to data collection ratio of individual details within the total sample.
from court records, it is necessary to make crimi- Criminal court records are kept in an archive
nal court records available. The records contain of the competent courts upon closure of the pro-
certain details relevant for determining the cir- ceedings (bringing an effective court verdict) and
cumstances under which traffic accidents involv- they are not available to the public. An interview
ing intoxicated drivers occurred. Details needed (presenting the case, objective and purpose of the
for the analysis of traffic accident tendency by research) with the competent judicial bodies, and
months; parts of the day; weather conditions; cir- a written request, have provided availability (ac-
cumstances of accident occurrence; gender and cess) to court records. Court record inspection,

listing and systematization of the details contained nocturnal driving conditions, which is shown in
therein, were done in full compliance with the re- traffic accident analysis by time of the day. 65% of
quirements of competent courts. traffic accidents involving intoxicated drivers was
Two out of four interviewed courts made their recorded to have occurred during the night, while
data available, provided the records were analysed in 35% of traffic accidents was recorded to have oc-
the premises thereof. 34 court records were analysed, curred at daytime (Table 2 and Graphic 2).
out of which 13 records were within the jurisdiction
of Sokolac Municipal Court, and 21 were within the
jurisdiction of Vlasenica Municipal Court.
3. Results
Frequency analysis of traffic accidents by
months showed that the largest number of traffic
accidents was recorded during July (17.6%), with
the least number of traffic accidents having been
recorded in February, October and December (Ta-
Graphic 1. Traffic accident frequency per month
ble 1 and Graphic 1). 70.6% of traffic accidents
out of the total number thereof was recorded dur- Out of the total of 34 accidents involving in-
ing the period from March to October. toxicated drivers, 1 accident was recorded on a re-
The largest percentage of traffic accidents gional road, 22 accidents were recorded on trunk
(11.8%) has been recorded within the period from road (65%), and 11 of them in resided areas (32%).
2.00 to 3.00 hours and from 22.00 to 23.00, where-
as traffic accidents have not been recorded during
the periods from 5.00 to 6.00, 7.00-10.00, 13.00-
14.00 and 17.00-19.00 (Table 2 and Graphic 2).
67.6% of traffic accidents were recorded during the
period from 19.00 to 5.00.
Drivers’ intoxication contributes to an extend-
ed time before a reaction, further on it diminishes
focus and perception. Driving in nocturnal vis-
ibility conditions additionally reduces perception
capabilities, thus intoxicated drivers are more ex-
posed to the risk of traffic accident occurrence in Graphic 2. Traffic accident frequency per hour
Table 1. Traffic accident frequency per month
Month January February March April May June July August September October November December
Number
of 2 1 2 4 3 4 6 4 3 1 3 1
accidents
% 5.9 2.9 5.9 11.8 8.8 11.8 17.6 11.8 8.8 2.9 8.8 2.9
Table 2. Traffic accident frequency per hour
12-13
13-14
14-15
15-16
16-17
17-18
18-19
19-20
20-21
21-22
22-23
23-24
10-11
11-12
9-10
Time
0-1
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
Number
of 1 1 4 3 2 0 2 0 0 0 1 2 1 0 2 2 1 0 0 3 1 3 4 1
accidents
11.8
11.8
%
2.9
2.9
8.8
5.9
0.0
5.9
0.0
0.0
0.0
2.9
5.9
2.9
0.0
5.9
5.9
2.9
0.0
0.0
8.8
2.9
8.8
2.9

The largest number of traffic accidents with

intoxicated drivers was recorded in dry roadway
conditions (62%), then in wet – humid roadway
conditions (18%), and 12% of traffic accidents was
recorded in glazy conditions (Table 3). The least
number of traffic accidents was recorded in pres-
ence of snow on the roadways (9%). There is less
frequent traffic in slippery roadway conditions (ice
and snow), hence it is logical to have fewer traffic
accidents, which is also visible in the analysed data. Graphic 3. Drivers’ traffic accident involvement
20.6% of traffic accidents has been recorded in slip- frequency by age
pery roadway conditions (ice and snow) (Table 3),
and 79.4% of traffic accidents with intoxicated driv- The largest number of drivers involved in traf-
ers was recorded in dry and wet – humid roadway fic accidents has secondary education (88.2%),
conditions, which is matching to the traffic accident with no involvement of drivers bearing the uni-
analysis by months of the year. versity degree (Table 5).
Drivers’ age ratio in traffic accidents involv- Considering categories of vehicles involved in
ing intoxicated drivers is as follows, 21 to 25 with traffic accidents with intoxicated drivers, there is
29.4%, then 36 to 40 and 41 to 45 with 14.7% the largest number of passenger vehicles 85.3%
each (Table 4 and Graphic 3). (Table 6). Transporting compositions were in-
Male drivers were detected in 33 (97.1%) traf- volved in 3 traffic accidents, while a cargo motor
fic accidents, while one female driver aged 27 vehicle and a bus were involved in 1 traffic acci-
with 0.94 ‰ of alcohol in blood was detected in dent each (Table 6).
one traffic accident. Out of the total number of accidents with in-
Out of the total number of drivers having been toxicated drivers, 17 (50%) were fatal traffic acci-
involved in traffic accidents with intoxicated driv- dents resulting in death to 19 persons (Table 7). In
ers, 5 of them (14.7%) were employed as profes- 11 traffic accidents (32.4%), 11 persons obtained
sional drivers of motor vehicles, and 1 driver was heavy bodily injuries, and 6 traffic accidents re-
working at the police. sulted in major material damage.
Table 3. Frequency of traffic accidents according to roadway conditions

Roadway conditions Dry Wet - Humid Ice Snow
Number of traffic accidents 21 6 4 3
% 61.8 17.6 11.8 8.8
Table 4. Drivers’ traffic accident involvement frequency by age
Age 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60
Number of accidents 2 10 2 1 5 5 3 3 3
% 5.9 29.4 5.9 2.9 14.7 14.7 8.8 8.8 8.8
Table 5. Frequency of traffic accidents according to the education level
Education level Elementary school Secondary school College University degree
Number of accidents 2 30 2 0
% 5.9 88.2 5.9 0.0
Table 6. Structure of vehicles involved in traffic accidents
Vehicle category Passenger automobile Freight motor vehicle Transporting composition Bus
Number of accidents 29 1 3 1
% 85.3 2.9 8.8 2.9

Table 7. Demonstration of traffic accident ratio by severity of consequences

Traffic accident Fatal traffic Traffic accidents resulting in Traffic accidents resulting in
consequences accidents heavy bodily injuries material damage
Number of accidents 17 11 6
% 50.0 32.4 17.6
Table 8. Percentage of individual types of traffic accidents
Traffic accident Knocking down a Switching to an opposite Getting off Collision in the middle Collision while
type pedestrian direction movement lane the roadway of the roadway overtaking
Number of
2 10 2 1 5
accidents
% 5.9 29.4 5.9 2.9 14.7
Table 9. Demonstration of traffic accident structure according to alcohol concentrations in the organi-
sm of individuals involved in the accident
Alcohol concentration in
0.10-0.49 ‰ 0.50-0.99 ‰ 1.00-1.49 ‰ 1.50-2.49 ‰ 2.50-3.49 ‰ 3.50-5.00 ‰
the system
Number of accidents 0 4 10 12 7 1
% 0.0 11.8 29.4 35.3 20.6 2.9
Table 10. Demonstration of analysis of the time elapsed from accident occurrence to bringing an in-
dictment
Elapsed time (in months) 1 2 3 4 5 6 7 8 9 10 11 12
Number of accidents 6 3 2 6 2 5 2 1 2 0 3 0
% 18.8 9.4 6.3 18.8 6.3 15.6 6.3 3.1 6.3 0.0 9.4 0.0
Out of the total number of injured individuals, traffic accidents (20.6%) involved a participant of
63.3% of them obtained injuries resulting in death, the accident with the detected alcohol concentra-
and 36.7% of individuals obtained heavy bodily tion in organism between 2.5 and 3.49‰, while 4
injuries. traffic accidents (11.8%) involved a participant of
4 drivers (out of the total number of drivers) the accident with the detected alcohol concentra-
abandoned the spot unauthorized and unlawfully tion in organism between 0.5 and 0.99‰.
between the time of traffic accident occurrence Analysis of court record details related to es-
and arrival of initial investigation team. tablishing alcohol concentrations in accident par-
The largest number of traffic accidents (29.4%) ticipant organism showed that:
occurred due to vehicle switching to roadway lane – Authorized individuals did not always
intended for movement of vehicles from the op- conduct breathalyzer test upon all the
posite direction, and a collision occurred while persons involved in a traffic accident;
overtaking in 5 traffic accidents (Table 8). 2 traffic – Authorized individuals did not conduct
accidents resulted in knocking down a pedestrian, breathalyzer test upon those involved in a
2 accidents led to vehicle getting off the roadway, traffic accident immediately after securing
while 1 traffic accident involved a collision in the the spot.
middle of the roadway.
Out of the total number of traffic accidents, 12 Gathering evidence on intoxication of all the
of them (35.3%) involved a participant of the ac- individuals involved in a traffic accident could
cident with the detected alcohol concentration in contribute to accuracy in determining the cause
organism between 1.5 and 2.49 ‰, while 10 traf- and circumstances leading to the accident, time
fic accidents (29.4%) involved a participant of the of alcohol consumption, as well as inaction of
accident with the detected alcohol concentration persons involved in a traffic accident. Authorized
in organism between 1 and 1.49 ‰ (Table 9). 7 individuals’ failure to gather evidence on intoxica-

tion of individuals involved in a traffic accident possible further planning the measures to reduce,
affects the accuracy of determining intoxication of i.e. prevent driving under the influence of alcohol:
persons involved in a traffic accident at the time – The described results show that the largest
of its occurrence. A proof of alcohol concentration number of traffic accidents with intoxicated
in the organism of a person involved in an acci- drivers, looking by the months, occurred in
dent, collected during the initial investigation can July, and the least number of traffic accidents
contribute to establishing the intoxication phase of was recorded in February, October and
the person at the time of the accident (absorption, December, with the largest number of traffic
peak, or elimination). Failure and delay in gath- accidents involving intoxicated drivers
ering evidence on intoxication exclude gathering having happened within the period from
evidence on intoxication of the participants at the March to October.
time of the accident. – An analysis of traffic accidents by hours
During the first 12 months, 32 indictments shows that the largest number of traffic
were brought, out of which the largest number accidents with intoxicated drivers has
was brought during the first and 4th month (18.8% occurred from 2.00 to 3.00 and within the
each), then during the 6th month (15.6%) upon ac- period 22.00-23.00. In regards with time
cident occurrence. 53.1% of indictments were ini- of the day, the largest number of traffic
tiated during the first 4 months after the time of the accidents has occurred from 19.00 to 5.00,
accident, and 75% of indictments were brought and details show that nocturnal visibility
during the first 6 months (Table 10). conditions reduce perception ability, thus
An analysis of court record data shows that intoxicated drivers are more exposed to the
19 (55.9%) verdicts were brought upon finaliza- risk of a traffic accident during the night.
tion of court proceedings, 9 (26.5%) verdicts were – An analysis of accident location, depending
brought after a settlement between the defendant on road category, shows that the largest
and court, in 3 cases the process was adjourned, number of traffic accidents has occurred
and 3 cases were not brought to an end (Table 11). on a trunk road and in a resided area, with
8 (42.1%) verdicts were brought during the first the least number of traffic accidents having
year from traffic accident occurrence time, 5 ver- occurred on a regional road, while an
dicts (26.3%) were brought during the second year analysis of roadway conditions showed that
after the traffic accident. the largest number of traffic accidents had
Analysis of court verdicts does not provide a occurred in dry roadway conditions, and in
basis to determine the legal relationship between dry and wet – humid conditions respectfully.
criminal acts and pronounced sentences. It can be – The analysed details show that the largest
seen that different imprisonment sentences are number of drivers involved in traffic accidents
pronounced for the same criminal acts, and that was aged between 21 and 25, then of those
the pronounced sentences of imprisonment are not aged from 36 to 45, and the analysis of gender
followed by the same measures of prohibition to ratio shows that there are more male drivers
steer a vehicle. involved. Out of the total number of drivers
involved in traffic accidents, the largest
4. Discussion and conclusion number of them has secondary education.
– The described details show that the largest
An analysis of the research results lead to cer- number of vehicles involved in traffic
tain conclusions which could represent a basis for accidents are passenger automobiles, and
Table 11. Demonstration of analysis of the time elapsed from accident occurrence to bringing a court verdict
Elapsed time in 24 36 48 84 96 108
6 9 11 12
months (2 years) (3 years) (4 years) (7 years) (8 years) (9 years)
Number of accidents 2 2 1 3 5 1 1 2 1 1
% 10.5 10.5 5.3 15.8 26.3 5.3 5.3 10.5 5.3 5.3

that transporting compositions, a freight Some measures of preventing, i.e. reducing the
vehicle and a bus were involved in traffic number of drivers under the influence of alcohol
accidents as well. include an intensified police control, and cam-
– Half of the traffic accidents were fatal ones. paigns of traffic safety in regards with the time,
– Details on alcohol concentrations in the location and target group of drivers.
organism of drivers involved in traffic
accidents show that certain number of References
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testing, thus there is no evidence on 1. World Health Organization (WHO) World report on
road traffic injury prevention, Geneva.2004.
alcohol concentration in the organism of
these drivers, while the largest number of 2. WHO (2011a). Decade of Action for Road Safety
drivers were detected to have had alcohol 2011-2020 (http://www.who.int/violence_injury_pre-
concentrations in their organism between vention/publications/road_traffic/decade_booklet/en/
1.5 and 2.49 ‰. index.html, accessed 15.06.2012.). 2011.
– An analysis of circumstances leading to 3. WHO (2011b). Global Plan for the Decade of Ac-
traffic accidents showed that the largest tion for Road Safety 2011-2020 (http://www.who.int/
number of traffic accidents had resulted from roadsafety/decade_of_action/plan/en/index.html, ac-
vehicle switching to a traffic lane intended cessed 15.06.2012). 2011.
for opposite direction vehicle movement,
4. European Transport Safety Council (ETSC) Drink
which leads to a conclusion that intoxication Driving: Towards Zero Tolerance. 2012.
influences drivers’ capability to assess the
traffic conditions. A less number of traffic 5. Haworth N, Smith R, Brumen I Case-control Study
accidents resulted from a collision while of Motorcycle Crashes Report CR 174. Australian
Transport Safety Bureau. 2002.
overtaking, as well as hitting a pedestrian.
– Details on breathalyzer to individuals 6. Fontaine H, Gourlet Y Fatal Pedestrian Accidents in
involved in traffic accidents show that France: A Typological Analysis. Accident Analysis
authorized persons do not always conduct and Prevention,1997; 29: 303-312.
alcohol-testing upon all those involved
7. Elvik R, Vaa T, The Handbook of road safety mea-
in traffic accidents, and that authorized sures. Oxford, United Kingdom, Elsevier. 2004.
persons do not perform alcohol-testing upon
accident participants immediately after 8. Pandurović S . The methodology of medical preven-
securing the spot. tion of road traffic injuries caused by alcohol. Fac-
– The largest number of indictments was ulty of Medicine, Belgrade. 1983.
brought during the first 6 months after the 9. World Health Organization . Drinking and driving: a
traffic accident, and the largest number of road safety manual for decision-makers and practi-
court verdicts was brought during the first tioners, Geneva. 2007.
year after the traffic accident, which is
10. OECD/ITF . IRTAD Road Safety 2011 Annual
visible from the record data. Report, Organisation for Economic Co-Operation
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Considering the aforementioned results, it is 2012.
clear that the target group of undertaking system
measures of precaution and repression towards 11. Abdel-Aty AM, Abdelwahab TH . Exploring the
relationship between alcohol and the driver charac-
reducing the number of traffic accidents with in- teristics in motor vehicle accidents. Accident Analy-
toxicated drivers, are male drivers (age between sis and Prevention, 2000; 32: 473–482.
21 and 25 and from 36 to 45) who drive passenger
automobiles in resided areas and on trunk roads. 12. Mason J, Fitzpatrick K, Seneca D, Davinroy T .
Identification of inappropriate driving behaviours.
Intensified measures are to be implemented with-
J. Transport. Eng. 1992; 118, 2.
in the period from March to October (during the
year), and from 19.00 to 5.00 (during the day).

13. Ramstedt M . Alcohol and fatal accidents in the

United States – A time series analysis for 1950 –
2002. Accident Analysis and Prevention 2008; 40:
1273–1281.
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sed 20.08.2009).
15. Pesic D, Vujanic M, Lipovac K, Antic B (30 No-

vember. Analysis of possibility for traffic safety
improvement based on Serbian traffic violation
database analysis. Scientific Research and Essays
2011; 6(29): pp. 6140-6151.
Relja Mirovic,
Republic Administration of Inspections Banja Luka,
Department Bijeljina,
Bosnia and Herzegovina
E-mail: r.mirovic@inspektorat.vladars.net

Lithostratigraphic CO2 substrata and the depth

of carbonated mineral water systems in the
lithosphere of Serbia
G. Marinkovic1, P. Papic2, V. Dragisic2, J. Stojkovic2, V. Zivanovic2, J. Andrijasevic2
1
Geological Survey of Serbia, Belgrade, Serbia,
2
University of Belgrade, Faculty of Mining and Geology, Belgrade, Serbia.
Abstract regional geological-structural features (anticlinal

The lithostratigraphic CO2 substrata of carbon- domes, fault zones, and the like). All CMW occur-
ated mineral water (CMW) and the depth of the rences in Serbia were treated in a monograph by
CMW systems were considered for the lithosphere D. Protić [1] and were mainly classified by their
of Serbia. This analysis was based on: the known genetic relation to metamorphic rocks and less
thermometry of CO2 liberated from the process of by their relation to volcanism and sedimentation
carbonate and graphite transformation, the geo- basins. The same author described local geology
thermal conditions prevailing in the lithosphere of and structure of each CMW occurrence, its physi-
Serbia, the association of magmatite with CMW cal properties, chemical composition, gas content
and the available regional geological data. It was and radioactivity, and the research records. The
inferred from the distribution of 64 CMW occur- lithostratigraphic substrata [2] are not mentioned
rences that 93 % of CMW systems were formed in publications on the CMW of Serbia. In a few
in the Vardar Zone (VZ), a geological-structural published papers, the authors treated individual
unit of Serbia, and marginally in the adjoining or groups of occurrences at the known watering
zones. Researches indicate that the VZ segment of places. How large an amount of CO2 may be gen-
the lithosphere contains the main CO2 generators, erated from a mass of carbonate rocks under suit-
that CO2 generation evolves in magmatite from able geothermal conditions was clearly indicated
thermal transformation processes of carbonate by [3]. M. Milivojević [4] studied thermal waters
and/or graphite from Proterozoic and Mesozoic in Serbia, including CMW, and concluded that
lithostratigraphic units of the lithosphere and that “all occurrences of what the thermal water rep-
CO2 migrates through deep neotectonic disconti- resents originate from meteoric water or recent
nuities from the “granite layer” 3–8 km below the atmospheric precipitations”; he also defined the
surface. The zones of the lithosphere with identi- geothermal situation in the lithosphere of Serbia.
fied CMW systems are: (1) graphite and carbon- The available research data are the results of an
ate (dolomite and calcite) transformation and CO2 isotope study of thermal water and temperature
generation at a depth of 8 km; (2) carbonate trans- logging in numerous deep exploratory boreholes.
formation and CO2 generation at a depth from 3 Lithostratigraphic CO2 substrata and the depth of
km to 8 km; (3) filtrate and CO2 mixing at a depth CMW systems in the lithosphere of Serbia have
from 2 km to 4 km; and (4) CMW system forma- not yet been considered in publications on CMW.
tion at a depth from 2 km to 3 km. The study results presented herein are based
Key words: lithostratigraphic substrata, CO2, on previous research and the expectation that the
mineral water system, Serbia lithogeochemistry, the geotemperature, the geo-
logical-structural setting and the hydrogeology
must have been closely interrelated at the loca-
Introduction
tions where the CMW systems formed.
More than sixty occurrences of carbonated The purpose of this study was to define the
mineral water (CMW) are registered on the ter- three-dimensional relationship between the CMW
ritory of Serbia, most of which mark different systems and the known geological-structural units

and the system depths in the lithosphere of Serbia. °C) and dolomite (150–200 °C) metamorphism
The points of departure were the assumptions that were determined in situ by Patrick and White [6] in
CMW formation must have been related to the part the Salton Sea geothermal system from drill-holes.
of the lithosphere in which the CO2 gas was gener- For identification of the lithostratigraphic CO2
ated, that the main CO2 degassing rocks were car- substrata and the depth of the CMW systems, this
bonates [3] or the dominant lithostratigraphic CO2 study considered the spatial relationship between
substrata, and that CO2 was generated from cal- the CMW occurrences and the regional geologi-
cite, dolomite and/or graphite during their meta- cal-structural units and zones based on the chemi-
morphism under certain geothermal conditions. cal composition and genetic relation between the
The study also considered previous available CMW and the structural-lithologic magmatite
research data concerning the U, Ra, Rn and F con- units. Pursuant to the study of geothermal con-
centrations in the CMW that confirmed the genetic dition, or segments of the lithosphere in which
CMW relation to magmatic processes, regional geotemperature provided for the transformation
geological prospecting [5], a geothermal model of of carbonate and graphite minerals and for gen-
the Serbian lithosphere [4] and experimental ther- eration of CO2, it was possible to relate individual
mal transformation of dolomite and calcite [6] and lithostratigraphic CO2 substrata to the correspond-
of graphite [7]. On the grounds of the above-men- ing rock complexes in the lithosphere identi-
tioned, the depth ranges of CO2 generation from fied during regional geological and geophysical
thermally metamorphosed carbonate and graphite prospecting. The parts of the Serbian lithosphere
could be determined and a schematic model of the recognized as the primary CO2 generators and
Serbian lithospheric zones of CO2 generation (I containing the major actual CMW systems were
and II), infiltrate and CO2 mixing (III) and CMW zoned with respect to geochemistry, hydrogeol-
system depth (IV) developed. ogy, structure, structural-geology and geologic
The depths of the CMW systems in the litho- thermometry.
sphere of Serbia [8] are related to the depth of the
thermal transformation of carbonate and/or graph- Results and discussion
ite minerals degassing CO2 and to the expected
depth of free water and CO2 mixing. The assumed Igneous rocks and CO2
depth of mixing, and thereby the depth of the
CMW systems, is based on the interpretation that The CMW occurrences in Serbia are spatially
the permeability of deep tectonic discontinuities related to granite intrusions and to volcanic rocks
decreases with the depth, on the one hand, and the (Fig. 1). Generally, the prevailing CO2 substrata
concentration of CO2 and other ascending gases are not igneous rocks because the amount of car-
increases, on the other. This led to the conclusion bon in their minerals is low. Thus, the amounts
that meteoric water percolates not deeper than the of carbon in igneous and in sedimentary or meta-
zone of CO2 generation, and thereby the water cir- morphic rocks, cited by Omoto and Raj [7], are
culation process can evolve to the same depth. 7 % and 93 %, respectively. The relationship of
CO2 and igneous rocks (Fig. 1) originates from the
contact-metamorphism of magmatite and adjacent
Methods
rocks that contained carbon in their minerals [3].
The researches [4] of geotemperatures in the lith- Carbonate acid gas may generate also through the
osphere of Serbia were based on geophysical ther- process of regional metamorphism [9]. Previous
mometry in more than fifty deep boreholes drilled research data indicated a carbonate concentration
for different purposes. The same author identified over 90 % about 10 km deep into the Proterozoic,
the meteoric origin of CMW based on δ18O and Paleozoic and Mesozoic of the Serbian lithosphere
δ2H isotope concentrations and standard diagrams. (Fig. 2). Carbonate concentrations of less than 7
Analyses of the two isotopes and of δ13C were made % are found in the “granite-metamorphic layer”
in the Jožef Stefan Institute of Ljubljana, Slovenia. roughly between 10 and 20 km deep.
The minimum temperatures of calcite (300–320

Table 1. Indications of CMW correlation with magmatite in the lithosphere of Serbia

Location Elements characteristic of CMW and magmatite
in Fig. 3 Potential relation based on correlation
(number of the proximity of igneous rocks U Ra Rn F
occurrences) µg/L Bq/L Bq/L mg/L
Tertiary intrusions in Paleozoic
1 (14) 0,1 – 5,1 0,15 – 0,72 7,4 - 350 0,1 – 5,0
rocks and Tertiary volcanism
Proterozoic gneisses without
2 (3) 0,3 – 4,0 0,33-0,41 11,5-22,0 0,44-0,48
intrusions and volcanism
Paleozoic intrusion in Paleozoic
3 (1) 1,0 0,06 9,6 0,1
rocks, Tertiary volcanism
Tertiary intrusions in Paleozoic
4 (10) 0,6 – 7,0 0,06-0,51 7,8-155 0,1-1,7
and Proterozoic gneisses
5 (3) No magmatite in the area 0,5 – 8,0 0,12-0,15 12,21-22,2 0,2-4,0
6 (9) Tertiary volcanism 0,4 – 3,5 0,12-0,24 7,4-111,7 0,3-14,2
Paleozoic intrusion and
7 (2) 0,2 0,12-0,18 18,5-37,0 1,4-12,0
Tertiary volcanism
8 (8) Tertiary volcanism 0,6 – 8,0 0,12-0,24 11,1-196 0,1-12,0
Paleozoic intrusion in Paleozoic
10 (1) - 1,4 40,7 2,1
Paleozoic intrusions in Paleozoic
11 (6) 0,7 – 1,7 0,1-1,18 14,8-20,35 0,8-5,2
13 (1) No magmatite in the area 0,6 0,38 18,5 0,3
64 occurrences Paleozoic and Tertiary magmatism 0,1 – 8,0 0,06 – 1,4 7,4 – 20,35 0,1 – 14,2
Figure 1. CMW occurrences in Serbia with

respect to granitoid intrusions (the Tertiary and
the Paleozoic) and igneous rocks (the Tertiary) of
the Serbian lithosphere
1. Tertiary sedimentation basin;
2. Tertiary igneous rocks; 3.
Tertiary granitoid intrusion;
4. Paleozoic granitoid intrusion;
5. CMW occurrence;
6. Geological-structural unit boundary;
7. Geological-structural subunit boundary.
(Geology reprinted from the Geological Map of Yugoslavia,
Scale 1:500.000; produced by the Federal Geological Institu-
te, Belgrade, 1970).
Geological-structural units: CB. Carpathian-Balkan Region;
SMM. Serbian–Macedonian Massif; GnC. Gneiss complex;
GC. Greenrock complex; VZ. Vardar Zone; DIE. Drina–Iva-
njica Element; OB. Ophiolite Belt; EDB. East-Durmitor
Block.

1. CMW occurrence; 2. Lithosphere field of temperatures

over 150 °C at a depth of 3000 m (Milivojević, 1989), the
southern part extrapolated; 3. Lithosphere field of temperatu-
res over 200 °C at the depth interval 5000–7000 m, excluding
the Pannonian Basin [4]; 4. Geological-structural unit boun-
dary; 5. Geological-structural subzone boundary; 6. Number
of occurrences genetically related to a regional structure
(anticlinorium, volcanic massif, fault zone); VZ. Vardar Zone;
DIE. Drina–Ivanjica Element; OB. Ophiolite Belt; EDB.
East-Durmitor Block.
Granitoid inclusions are known to exhibit ele-

vated natural radioactivity and, according to Miličić
[10], to provoke structural-magmatic activation of
fluorine. The elevated concentrations of radioactive
Figure 2. Geotemperatures in the Serbian litho- elements (Rn, Ra, U) and/or fluorine (Table 1) in al-
sphere based on the temperature diagram for the most all regions and zones of the CMW systems in
regions of background and anomalous geotem- Serbia clearly indicate the genetic relation between
peratures (modified from Averev [17]). Tertiary magmatite and CMW, probably affected
1. Temperature in volcanic regions of the background ge- through the processes of thermometamorphism as a
othermal heat flow values; 2. Temperature within the range result of contact-metamorphism, elevated geother-
of thermal anomalies; 3. Serbian lithosphere geotemperature
field (adopted from Milivojević [4]); 4. Minimum temperature mal heat flow in parts of the lithosphere permeated
for dolomite and calcite (150 and 320 °C [6] and for graphite by magmatite and hydrothermal processes in the
transformation (350–600 °C, adopted from Omoto and Raj latest stage of magmatism.
[7]) and CO2 generation; 5. Geotemperature field of carbo- Figure 1 also shows that CMW mainly occurs
nate transformation and CO2 generation; 6. Geotemperature marginally on granitoid intrusions and volcanic
field of reducing carbon transformation and CO2 gassing. rocks. For example (Figure 3), CMW occurrence 1a
in a Tertiary intrusion is on Cer, 1c on Bukulja, 4 on
Željin and Jastrebac, 11 on Golija, 6 at Lece, 5 and
6 on Kopaonik, 8 at Klokot Banja, 3 in a Paleozoic
intrusion at Kučevo, 7 in Bujanovac; but no occur-
rences of CMW were found in the Tertiary igneous
and granitoid rocks of E and SE Serbia, which sug-
gests that magmatite intrusion in a complex of sedi-
mentary and metamorphic rocks (Figure 2) is only
one formational factor of the CMW systems. Deep
(neo)tectonic structures, lithostratigraphic CO2 sub-
strata, and more are also necessary for CMW forma-
tion. The CMW occurrences 12 and 13 (Figures 1
and 3) are not surrounded by any exposed magma-
tite, but it is indicated at some depth by the elevated
radium readings (Table 1); also with occurrence 13,
the anticline with CMW occurrences in all likeli-
hood is adjusted to an intrusion.
The available information suggested the possibil-
ity of CO2 generation in the Serbian lithosphere pri-
marily from carbonate-high units of the geologically
youngest igneous rocks. As may be seen in Figure
Figure 3. CMW occurrences with respect to the 2, these are Proterozoic, Paleozoic and Mesozoic
known geological-structural units and geotem- sedimentary and metamorphic rocks to about 10 km
peratures in the lithosphere of Serbia under the surface. Tertiary magmatization of these

rocks is most abundant in the VZ (Figure 1). Car- of Serbia (Figures 2, 3 and 4) and regional research
bonate-high rocks within the extensive VZ permeat- data on the lithosphere geology (Figure 4) are the
ed by Tertiary intrusive and igneous magmatites and following (Table 2):
abundant hydrothermal water indicate magmatism – Lithostratigrahic CO2 substrata in the SMM
as the principal catalyst of CO2 release from carbon- and in the VZ, DIE, OP, IDB and KB a
ate rocks. Thus, the assumed correlation seen in Fig- priori pertain respectively to the Proterozoic
ure 1 between Tertiary intrusive and volcanic rocks metamorphic rocks and the “granite-
and the CMW systems in Serbia is plausible. If the metamorphic layer”, and to the Mesozoic–
“granite-metamorphic layer”, roughly between 10 Proterozoic complex of rocks and the
and 20 km below the surface, contains carbon up to “granite-metamorphic layer”;
7 %, which is far less than in the layer of sedimen- – The actual CMW systems are mainly
tary and metamorphic rocks, it would suggest a very related to the lowest temperature gradient of
slight possibility of the CO2 generation dominantly the lithosphere, where calcite and dolomite
from this layer. transformation may evolve at depths of less
The established correlation between the CMW than 3–5 km;
and igneous rocks and magmatic processes is sig- – The temperature gradient increases with
nificant for a definition of the CO2 substratum and the distance from where it is the lowest,
the depth of CMW systems, because it confirms and so does the minimum depth suitable for
that neotectonic structures, which were preferen- dolomite and calcite transformation, which
tial water conduits, intersected or were concordant is 5–7 km deep or more;
with the faults and, according to Miličić [10], were – The lithostratigraphic CO2 substrata and the
feeders of abundant igneous and intrusive rocks CMW systems were formed in the transitional
on the territory of Serbia. The high geotempera- zone between Proterozoic metamorphites and
ture in the lithosphere (Figure 3) accounts for the Paleozoic–Mesozoic rock complexes and the
small depth of mineral (dolomite, calcite, graph- “granite-metamorphic layer” (Figures 2 and 4).
ite) thermal transformation and CO2 generation. It
is known that elevated concentrations of radioac-
tive elements (U, Ra, and Rn) and F indicate their
derivation from acid igneous rocks. On this basis,
the CMW systems formed in the lithosphere of
Serbia are probably conformable with granitoid
rocks at a depth of about 15 km (Figures 2 and 4).
Lithostratigraphic CO2 substrata

As Figure 1 and Table 2 illustrate and based on
the CMW distribution on the territory of Serbia
with respect to the known geological-structural Figure 4. A section through the lithosphere of
units and zones [5, 11, 8, 12, 13, 14], 93 % of the Serbia in a unit of the Inner Dinarides (modified
CMW systems are located in the Vardar Zone (VZ), from Anđelković [8]).
1. Pz–Mz sedimentary and metamorphic rock complex with
the Drina–Ivanjica Element (DIE) of the Inner Di-
magmatic intrusions; 2. Ptz metamorphic rocks; 3. granite-
narides (UD) and the western Gneiss Complex metamorphic layer; 4. basalt layer; 5. min depths for the
(GK) of the Serbian–Macedonian Massif (SMM). optimal geological and temperature conditions for geoche-
The CMW occurrences are mainly confined to the mical processes of CO2 production from dolomite (3 km)
south-central Serbia; some are isolated in the cen- and calcite (8 km).
Geological-structural units: CB. Carpathian–Balkan Re-
tral and there are none in N, E and SE Serbia.
gion; SMM. Serbian–Macedonian Massif; GnC. Gneiss
Conclusions based on minimum temperatures Complex; GC. Greenrock Complex; VZ. Vardar Zone, DIE.
for dolomite and calcite transformation and CO2 Drina–Ivanjica Element, OB. Ophiolite Belt, EDB. East-
degassing [6], geotemperatures in the lithosphere Durmitor Block.

Table 2. Geological-structural and lithostratigraphic setting and minimum depths of the actual CMW
systems in the lithosphere of Serbia
Estimated min depth
Lithostratigraphic CO2 Number of
Geological-structural unit/zone of lithostratigraphic
substrata (location in Fig. 3) occurrences
CO2 supstrata
Carpathian-
Paleozoic metamorphic and 1
Balkan Region - 5-7 km
granite-metamorphic layer (3) (1,5 %)
(CB)
Serbian- Gneiss Proterozoic gneiss complex and
17
Macedonian Complex granite-metamorphic layer (2, 3-5 km
(25 %)
Massif (SMM) (GnC) 4, 6, 7)
Mesozoic-Paleozoic rocks and
Vardar Zone 37
granite-metamorphic layer (1, 4, 3-5 km
(VZ) (56 %)
5, 8, 9,10)
Drina-Ivanjica Mesozoic-Paleozoic rocks and 8
Inner Dinarides 5-7 km
Element (DIE) granite-metamorphic layer (11) (12 %)
(ID)
Ophiolite Belt Mesozoic-Paleozoic rocks and 3
5-7 km
(OB) granite-metamorphic layer (12) (4 %)
East-Durmitor Mesozoic-Paleozoic rocks and 1
5-7 km
Block (EDB) granite-metamorphic layer (13) (1,5 %)
Table 2 and Figures 1 and 3 illustrate the fre- strata, may transform into a source of CO2 thermal
quent occurrence of CMW in the VZ and its fluids mainly through two processes: oxidation (C
boundary area to the adjacent geological-struc- + O2 → CO2) and hydrolysis (for example, 2C +
tural units or zones (SMM-GK and DIE). Being 2H2O → CO2 + CH4). The former is significant for
related to deep tectonic discontinuities, their pres- the surface conditions, and both are important for
ence is evidence that the VZ, compared to other the conditions of high-temperature metamorphism.
geological-structural units and zones, is character- The reducing forms of carbon (graphite and graph-
ized by complex structural-geological and tecton- ite schist) in the lithosphere of Serbia are found in
ic patterns. The occurrences of CMW become less Proterozoic metamorphic rocks of the SMM [15]
frequent with distance east and west from the VZ, and Paleozoic schist of the Inner Dinarides. The
or disappear altogether. ranges of δ13C for the reducing carbon (in organ-
Figure 2 shows that the temperatures in the ic compounds and graphite) from –15 to –30 ‰
granite layer of the lithosphere conform to the [7] and of CMW carbon in free CO2 and HCO3
background heat flow, i.e., there is no notable tem- from –10.03 to +1.78 ‰ [4] suggest insignificant
perature anomaly. The elevated geotemperatures amounts of reducing carbon in the CMW of Serbia.
in the VZ part of the lithosphere (Figure 3) result
from the Tertiary volcanic activity and the effects Depth of the carbonated mineral water
of magma intrusion. Figure 2 also shows that the (CMW) systems
lithostratigraphic substrata from which CO2 is lib-
erated to form CMW must be deeper than 3–5 km, The depths of the CMW systems in the litho-
where the geothermal conditions (t > 150 °C) sup- sphere of Serbia are presumably related to the depth
port dolomite and calcite transformation, or deeper and intensity of the CO2 generation zones, and to
than 8 km (t > 350–360 °C) for the transformation the deep tectonic discontinuities, their size, porosity
of carbonate and reducing carbon. and the like [16, 3]. The meteoric origin of the ther-
Omoto and Raj [7] maintain that the reducing mal waters in Serbia [4], including CMW, are also
forms of carbon (graphite), as potential CO2 sub- considered. If transformation of carbonate miner-

als (dolomite and calcite) and reducing carbonate zones. This leads to the conclusion that the depths
(graphite) evolved in the lithosphere of Serbia at of the CMW systems in Serbia are 2–3 km. The wa-
depths smaller than 8 km and the transformation of ter circulation processes in these systems evolved
carbonate within the depth range from 3–5 km to within the established CMW time intervals (from
8 km (Fig. 2), the gas concentration in the porous 18000 – 40000 years for the major CMW systems).
tectonic structures would gradually increase from
8 km to 3 km below the surface. The tectonic dis-
continuities and the general porosity of rock masses
increase in density upwards from the CO2 genera-
tion depth; hence the CO2 is distributed through an
ever larger network of discontinuities (Fig. 5). As a
consequence of the foregoing, there must be den-
sity and intensity zones of the tectonic structures
and of the rock porosity in the Vardar Zone of the
Serbian lithosphere. While rising through deep tec-
tonic structures, the CO2 is distributed by younger
discontinuities. The CO2 distribution, according to
the example of the Western Eger Rift [16], evolves
10–15 km below the land surface though a Y-struc-
ture, to which the CO2 free zones on the surface are Figure 5. CO2 degassing and CMW formation
related. In the lithosphere of Serbia, CO2 is gener- zones and CMW system depths in the lithosphere
ated at smaller depths and even if conducted by of Serbia (see Figs. 2 and 4).
Y-structures, the “free zones” at the surface cannot 1. Upper temperature boundaries (a) over 150 °C and (b)
be very wide. Water percolates deep into the litho- over 360 °C; 2. Deep discontinuity; 3. Comparatively deep
discontinuity; 4. Inferred VZ boundary depths; 5. CO2 flow
sphere only where it is conducted by neotectonic
direction; 6. CMW surface occurrence.
fault zones that intersect the deep-seated fault zones I - Graphite and carbonate transformation and CO2 genera-
or revived fault structures. Neotectonic structures tion zone; II - Carbonate transformation and CO2 generation
provide for the percolation of meteoric water from zone; III - Percolated water and CO2 mixing zone; IV - CMW
the surface and its mixing with CO2 from the litho- system depth interval.
spheric depth (below 3–5 km). The sketch figure
given in Fig. 5 shows a section through the consid- Conclusions
ered segment of the lithosphere based on the infer-
ences in this paper that more than 93 % of the CMW The distributions and depths of the CMW sys-
systems in the Serbian lithosphere are related to the tems, determined using data on the spatial posi-
VZ and the boundary areas of the adjacent geolog- tion of the lithostratigraphic CO2 substrata, are
ical-structural zones and the analogous knowledge useful information for an exact and qualified study
of the gas flow in the Western Eger Rift [16]. of the hydrogeological aspect of their formation.
Figure 5 shows the CO2 degassing zones I and The inferred spatial and the identified genetic re-
II, the CO2 and free water mixing zone III, and the lation of the actual CMW systems in the Serbian
formation of the CMW system zone IV. The CO2 lithosphere to Tertiary magmatism and δ13C iso-
mixes with free water at a certain depth while as- topic analysis in the CMW led to the conclusion
cending, which may be considered the depth of that the CO2 derived from oxidizing carbon (do-
the formation of the CMW system. If the “granite lomite and calcite) primarily gassed through the
layer” of the lithosphere decreases in porosity with processes of thermal metamorphism. The conclu-
increasing depth, on the one hand, and the CO2 sion based on the known geothermal conditions
concentration increases in deep discontinuities, on in the Serbian lithosphere and the deep geother-
the other, the percolation of water will certainly mal processes was the depth correlation of the
be more difficult and the mixing zone (III) will be thermal processes and the Proterozoic metamor-
above the CO2 degassing and high-concentration phic rocks and the Paleozoic–Mesozoic complex

of sedimentary and metamorphic rocks, precisely 9. Korotkov A.I. Hydrogeochemistry in Regional Geo-
the transitional “granite-metamorphic layer” be- logical and Hydrogeological Prospecting (in Russian).
Nedra, Leningrad, 1983; 231.
tween these rocks, 3–8 km deep. The established
spatial and genetic relation of the CMW to the 10. Miličić J. Fluorite in the Tectonomagmatic Activa-
geotectonic unit the Vardar Zone and the latest tion Zone in Serbia (in Serbian), Bulletin of the
Tertiary magmatism will help searches for the Geoinstitute, Belgrade, 1991; 25: 217–220.
location and abstraction of CMW. The acquired
11. Dimitrijević M.D. The Dinarides, a View about the
data were employed to subdivide the lithosphere Tectonics (in Serbian), Vesnik (Geology) XI, Ser.
segment of the formation of the largest CMW A, Vol. XL, YU ISSN 0514-5961. UDK: 55.001.
system into the following zones: I graphite and Federal Institute for Geological and Geophysical
carbonate transformation and CO2 degassing at Investigation, Belgrade, 1982; 113–147.
a depth of 8 km; II carbonate transformation and
12. Popović R. Geochemical and Metallogenic Evolu-
CO2 degassing 3–8 km deep; III free water and tion of the Moravian Massif in the pre-Mesozoic
CO2 mixing in the depth interval from 2 km to Time (in Serbian). Bulletin of the Geoinstitute, vol.
4 km and IV CMW systems 2–3 km under the 31. BIBLID 0537-846X (1995), 31 (267–284). UDK
surface. Pursuant to these studies, the maximum 550.4+553.07, Belgrade, 1995; 267–284.
depth of the CMW prospects in the lithosphere of 13. Popović R. Interrelation of the Gneiss and Green-
Serbia is less than 2 km. rock Complex in the Moravian Massif (in Serbian).
Bulletin of the Geoinstitute, vol. 37. BIBLID 0537-
846X (2002), 37, UDK 551.1 (497.11), Belgrade,
References 2002; 67–72.
1. Protić, D. Mineral and Thermal Waters in Serbia
(Monograph in Serbian). Geoinstitute, 17, UDK 14. Bogdanović O. Serbian–Macedonian (Rhodopean)
553.7 (615.327) (497.1). ISBN 86-7156-003X, Bel- Mass – Boundaries, Geology and Tectonics (in
grade 269, 1995. Serbian). Vesnik (Geology) XXXV/XXXVI, Ser. A.
Federal Institute for Geological and Geophysical
2. Ceron J.C., Palido-Bosch A. and de Galdeano C.S. Investigation, Belgrade, 1978; 141–151.
Isotopic Identification of CO2 from a Deep Origin
in Thermomineral Waters of Southeastern Spain. 15. Pavlović Z. Distribution and Minerogenetic Char-
Chemical Geology 149, 1998 ; 251–258. acter of Graphite in Serbia (in Serbian). Bulletin of
the Geoinstitute, Belgrade, 1996; 32: 263–271.
3. Xiaoyong Y. et al. Calculation of the CO2 Degassing
during Contact Metamorphism and Its Geological 16. Weinlich F.H., Bauer K. et al. Gas Flux and Tecton-
Significance: The Model and Example from the Sh- ic Structure in the Western Eger Rift, Karlovy Vary
uanshan Area of the South Tan-Lu Fault Belt. Acta – Oberpfalz and Oberfranken, Bavaria. GeoLines,
Geologica Sinica. 2008; 82; 3 562–576. 2003; 15: 181–187.
4. Milivojević M. Assessment of Geothermal Resources

of Serbia, Doctoral thesis, Faculty of Mining and Corresponding author
Geology, Belgrade, 1989; 478. Petar Papic,
5. Dimitrijević M.D. Geology of Yugoslavia, Geoinsti- Faculty of Mining and Geology,
tute, Belgrade 205, 1995. Belgrade,
Serbia,
6. M.L.J. Patrick and White D.F. Origin of CO2 in the E-mail: ppapic@rgf.bg.ac.rs
Salton Sea Geothermal System, Southeastern Cali-
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University of Belgrade, Belgrade, 1988; 690.

Using the DOE method by experimental

research of conveyor belts quality
Milos Grujic1, Miriam Andrejiová2, Daniela Marasová3, Peter Grendel3
1
Faculty of Mining and Geology, University of Belgrade, Department for Mine Haulage and Hoisting, Serbia,
2
Faculty of Mechanical Engineering, Technical University of Košice, Department of Applied Mathematics and
Informatics, Košice, Slovak Republic,
3
Faculty of Mining, Ecology, Process Control and Geotechnologies, Technical University of Kosice, Logistics
Institute of Industry and Transport, Košice, Slovak Republic.
Abstract longitudinal cutting (Marasová et al., 2006). For

the research of conveyor belts properties we can
Design of experiments is important and effec-
apply several methods, for example simulation,
tive tool which makes possible to identify factors
simulation methods and softwares (Fedorko et
with the most significant effects to the process and
al., 2012), optimalization of parameters (Petruf
its outputs. The article deals with realization and
et al., 2006) or we can use methodology of trans-
evaluation of the experiment for the monitoring of
port logistics (Rosová, 2010). And the simple way
the quality of conveyor belts manufacture quali-
of conveyor belts research is also application of
ties in connection with the breakdown resistance.
mathematical and statistical method which is pre-
It also determines regression model for monitored
sented in this article.
conveyor belts. The regression model explains ex-
perimental results at 98%.
Key words: conveyor belts, design of experi- 2. Materials and method
ment, factors, effects of factors 2.1 Method
1. Introduction For conveyor belts quality analysis on the part

of their breakdown resistance it is possible to use
The article is aimed at assessing the quality of the DOE method (Design of experiment) which
conveyor belts (CB) under laboratory conditions makes it easier to analyze the results of experi-
on the part of their breakdown resistance and the mental research. The experiment can be defined
results of impact forces measurements are the ba- as arbitrary interference to the process with the
sis for assessing of their quality. The goal of the goal to notice or measure the effects of this inter-
article is to optimalize the selection of CB and ex- ference. Variable which presents the output of the
pertly to review on the part of various factors. The experiment is called response (output variable).
meaning of the outputs also has all-society inci- Inputs (input variables) which are changing with
dence because it can give rise to decrease of costs the goal to review their effect to the responses, are
for users of belt conveying, limiting of stand time factors. Setting of factors to the value is called the
in the production and environment protection, in- level of the factor (Horníková, 2009; Terek and
cluding disposal of waste. Hrnčiarová, 2004). By experiment planning two
The conveyor belt is the main and the most im- levels are the most commonly used (so-called
portant part of belt conveyors and it is exposed to two-level experiment) usually referred to as the
the intensive stress, abrasion, wear, atmospheric bottom (low) level and top (high) level which are
actions, chemical and thermal effects. Belt con- marked in the short (coded) by the symbols +1 (or
veyors are ranked among continuous transport „+“) and -1 (or „-“).
systems capable to transfer a large amount of ma- The DOE method presents sequence of planned
terial. The operational experience shows that the treatments in which input factors are deliberately
use of conveyor belts is largely induced by con- changed and consequently identified the corre-
veyor belts wear and damages by breakdown or sponding changes of the response. The main goal

of this method is to determine which of the factors 2.2. Materials

inputing to the process, or their interactions are de-
termining for the monitored response and by that Measurement of the impact force which dam-
to find also an optimal setting of key input factors. ages or break downs the conveyor belt was real-
Planned experiment is directed by pre-prepared ized by the help of testing device (Figure 1).
plan. This plan determines the number of realized
treatments, conditions for treatment realization and
the sequence of the treatments. The basic proce-
dure, stage of experiments planning are divided into
these steps (Horníková, 2009; Montgomery, 2002):
– Determination of the experiment goal,
– Selection of the response and determination
of factors,
– Proposal and executing of the experiment,
– Assessment of data, conclusion and reco-
mmendations.
The number of monitored factors and their le-

vels depend on the actual situation of the proposed
experiment. In case of one factor effect investiga-
tion we are talking about one-factor experiment. If
we verify the effects of k-factors on the response,
we will talk about k-factor experiment. In general Figure 1. Testing device for impact force mea-
factors may have various number of levels, but it surement
is very often proposed only two, max. three levels.
These proposed experiments are marked as 2k, or The test device has jaws for conveyor belt
3k, where k is the number of factors, and this mar- sample clamping (Figure 2) and hydraulic system
king also corresponds to the number of treatment for belt sample tensioning for the required tension
needed to realize in the proposed experiment. force by the type of CB. The hydraulics allows
After planning and realization of experiment better clamping and tension of the belt sample
it is detected the effect of factors on the respon- and by that to get more relevant results of the test
se. The effect of the factor is defined as a respon- (Grinčová and Berežný, 2008).
se change caused by the change of factor level. The construction of the testing device is based
If these are one of the main factors, we will talk on the present requirements arising from the pres-
about the main effect of the factor. ent research (Taraba, 2004), from the requirements
The calculation of the main effect of the factors of conveyor belts producers – enterprise Continen-
is possible to realize by several ways. In 2k factor tal Matador Rubber, Inc., Púchov (Taraba, 2006)
experiment the effect of the F factor is possible to and from the requirement of conveyor belts users
estimate as a difference among the effect on the on the quality of produced conveyor belts made on
level „+“ and „-“, or it is a difference of average the four-cylinder combined line (Taraba, 2010).
values of bottom and top level of the factor (Mont- During the test it is possible to change these
gomery, 2002; Antony, 2003). parameters: the weight of the ram, the head of
It applies ram, the height of ram impact, the type of con-
veyor belt. The weight of the ram is possible to
......................... (1) change from 50kg and more. The head of the ram
can have the shape of ball (Figure 3), pyramid and
where is average response at high level cone. Various shapes of ram head simulate various
setting of a factor F, and is average response shapes and acuteness of the edges of transported
at low level setting of a factor. material.

force and also impact force in units of kN. After the

testing the ram is uplifted and it is secured against
free fall because of the evaluation and possible ma-
nipulation with the conveyor belt, or testing head of
the ram (Berežný and Grinčová, 2010).
Measurements of impact and tension forces
were made for two types of conveyor belts: P 630/3
and P 2000/4. In both cases it is a rubber-textile
CB with multicomponent polyamide textile car-
cass. The height of ram impact was changed from
the height 0.6 m to the height 1.6 m with the diffe-
rence 0.2 m. The weight of the ram is 50 kg, by the
other measurements, the weight was changed with
Figure 2. Hydraulically controlled jaws
differentiation of 10 kg to 80 kg. Tests were reali-
zed for two types of rams head (sphere, pyramid)
without the supporting system.
3. Result and discussion

The goal of the experiment, input factors and
monitored outputs of the process were set at the be-
ginning of the experiment. This experiment moni-
tors the effect of four factors (Table 1): weight of
the impact weight (factor A), height of the ram
impact (factor B), type of conveyor belt (factor C)
and type of ram head (factor D). The goal of the
experiment is to determine which of the factors or
their interactions have significant influence on the
Figure 3. Sphere head of the ram impact force Fr [kN] effecting by the ram impact
on the conveyor belt (response Y).
2.3 The methodology of the conveyor belts Table 1. Input factors and their levels
testing by impact Weight of Height of Type of Type of
the ram the ram conveyor the ram
At the beginning of the experiment, it is cut out Mark
[kg] impact [m] belt head
of the conveyor belt the sample with the length A B C D
1.4 m and width 0.4 m. Conveyor belt is fixed Low
50 0,6 P630/3 Sphere
at both ends to the hydraulically operated jaws. (-)
By the help of further hydraulic device the CB is High
80 1,6 P2000/4 Pyramid
stretched by the stretching force amounts to 1/10 (+)
of the belt strength belt specified by the producer.
The ram with the correspondent weight is lifted by There are several ways how to draft a plan by
hoist to the required height of which it is lowered which the experiment will be realized. Complete
by free fall to the conveyor belt. factor plan is the most widely used. By four-factor
The impact force is measured by two strain- experiment 24=16 experiments are possible and
gauge sensors and module MCP3 which records Table 2 presents these with values of each factors
the size of the stretching and also size of the impact and the response Y.
force during the measurements. During one mea- Figure 4 presents graphic representation of the
surement cycle lasting 10 seconds it is possible to experiment by the cube. Corners of the cube pres-
get up to 20 000 values for the size of the stretching ent the values of response.

3). We determine the estimate of the effect of inter-

action between the factors A and B by the equation
..........................................(3)
where , , a are the

Figure 4. The 24 design for experiment average of the results by combination of the levels
, , and .
The Table 2 presents the general plan of the Table 3. Main effects of the factors
complete four-factor experiment with two levels A B C D
without repeating with the interactions in coded va-
(Low) 10.0475 9.0799 12.1445 13.0853
riables. The low level of the factors is marked by
(Up) 16.9190 17.8866 14.8220 13.8811
the symbol „-“ and the high level by „+“. For deter-
Effects of
mination of the optimal level of factors it is also im- 6.8715 8.8067 2.6775 0.7958
factors
portant to know which pair (trio, tetrad) of factors
have reciprocally important interaction. The marks The following output of the program Minitab
of interactions are conjunction of the marks in the presents the effects of all main factors (A,B,C,
equivalent columns (Montgomery, 2002). D) and interactions of the second grade (AB, AC,
It is possible to calculate the main effect of the AD, BC, BD, CD) (Miller, 2010):
factors by several ways. If we have 2k factor expe-
riment, it is possible to calculate the effect of the Term Effect Coef SECoef T P
factors A, B, C and D as a able to calculate the Constant 13.4833 0.1579 85.38 0.000
effect of the factors A, B, C, and D as a difference A 6.8715 3.4358 0.1579 21.75 0.000
among the effect of the level „+“ and „-“. It applies B 8.8067 4.4034 0.1579 27.88 0.000
C 2.6775 1.3388 0.1579 8.48 0.000
D 0.7958 0.3979 0.1579 2.52 0.053
A*B 1.8468 0.9234 0.1579 5.85 0.002
A*C 0.2860 -0.1430 0.1579 -0.91 0.407
......................... (1) A*D 0.4818 0.2409 0.1579 1.53 0.188
B*C 0.8043 0.4021 0.1579 2.55 0.052
where , , , , , , B*D 0.1000 0.0500 0.1579 0.32 0.764
mark the average of results for corresponding C*D 0.4713 0.2356 0.1579 1.49 0.196
factors.
In the case of 24 complete two-factors experi- It is obvious from the output of the program
ment it is also possible to calculate the main effect and table 3 that the factor B (height of the ram
of the factor A by the equation (Montgomery, 2002): impact) and the factor A (weight of the ram) have
the major effect on the monitored response. The
factor D (type of the ram head) has very negligible
effect. The significance of the factors effects or
interaction is tested by the t-test, whereby it is ex-
pressed by p-value in the output of the program.
It applies that the effect of factors or interaction is
......................................... (2) not statistically significant if the p-value is more
than the select significance level ( ). It
The positive result of the effect means that by
results from the analysis that three main factors A,
the increase of the factor A the monitored response
B, C and interaction AB have statistically signifi-
Y is also increased. In the same way we determine
cant effect on the response, i.e. on the output value
the main effect of other factors B, C and D (Table
of the impact force.

the regression model, which applies to the rela-

tion input and output variables. The model of the
complete four-factor experiment containing main
factors and all two-level interactions is presented
by the relation
......................................... (4)
Figure 5. Pareto chart (Output: Minitab) where is the response, , , , ,

to present the values of factors A, B, C, D
We use Pareto chart (Figure 5) and Normal and interactions among correspondent two factors
probability plot (Figure 6) to evaluation of factors (for example presents the interaction AB).
effect and their interactions. In the case of normal The coefficient is the middle value of the
probability plot all factors and interactions out of response, to are coefficients of the regres-
recounted straight line are regarded as important. sion model and is the random error. The point
It results from the both charts that the weight of estimate of the regression model is
the ram (factor A), height of the ram impact (fac-
tor B), type of the belt (factor C) and common
interaction of the first two factors A and B have
important effect to the response.
........................................ (5)
where , , to are estimates of regres-

sion model coefficients which we can also calculate
by the help of effects (Montgomery, 2002; Antony,
2003). It applies and coefficients , , to
amount to one half of correspondent effect.
The statistical importance and interactions are
done on the basis of the p-value, which we com-
pare with the significance level ( Table
4). In our case, the effects of three factors A, B and
Figure 6. Normal probability plot (Output: Minitab) C and interaction AB are statistically important
therefore we realize the analysis again. Reduced
From the following charts of interactions among final regression model is:
factors it proves that as among factors A and B it is
soft interaction, so among other pairs AC, AD, BC, ........ (6)
BD and CD it is not a significant interaction.
The next step is the evaluation of the experi-
ment and analysis of the results by the help of ......................................... (7)
Table 4. Point estimate of coefficients of the regression model
value 13.483 3,436 4,403 1,339 0,398 0,923 -0,143 0,241 0,402 0,050 0,236
p-value 0.000 0.000 0.000 0.000 0.053 0,002 0,407 0,188 0,052 0,764 0,196

The general check of the suitability and ade- Figure 9 presents the contour plot which shows
quacy of the model is done by the help of analy- as a area with the main factors (weight of the ram
sis of variance. Because the value of adjusted R- A, height of the ram impact B) on the axes and the
squared is 97,70%, it means that the found constant values of the response value are shown
regression model explains experimental results as lines. The lines in the contour plot are slightly
next to 98%. curved what shows evidence of the weak interac-
The value from the equation (7) is called sup- tion among these factors.
posed (fitted, theoretical) value and real vaules
of the response obtained by the experiment are
called as observed (real) values. In the case of set-
ting of minimal level of important factors A,B and
C the supposed value is calculated by the equation:
Figure 9. Contour plot (Output: Minitab)
4. Conclussion
The results of the experiment show that the
weight of the ram, the height of ram impact, the
type of the belt and common interaction of the first
two main factors have the major effect on the the
Figure 7. Plot of residuals versus fitted values size of the impact force. The last main factor – type
(Output: Minitab) of the ram shows as an unimportant factor by the
examined height of the impact (from 0.6 m to 1.6
Monitored values and obtained supposed val- m). The other interactions among factors (except
ues allow to calculate residuals. Figure 7 presents for the interaction among the weight of the ram
the plot of residuals versus supposed values and and impact height) are also unimportant. Analysis
Figure 8 presents the normal probability plot of and evaluation of the experiment was done in the
residuals. program Minitab.
Planning of experiments is a powerful and im-
portant tool which gives a possibility to find those
factors which significantly effect the process. It is
based on the fact that various setting of the inputs
and examination of corresponding responses of
outputs allows to know and subsequently to im-
prove the process. The use of the method is advan-
tageous for the experiment with more factors be-
cause it discloses factors significantly influencing
the response. The method has an importance for
planning and effective realization of experiments
and it conduces to the reduction of the number of
Figure 8. Normal probability plot of residuals
required tests what may results in the first place
(Output: Minitab)
time, financial or material savings.

Acknowledgement 11. Taraba,V.: Polstoročie výroby dopravných pásov

v Púchove. In: Doprava a logistika. Mimoriadne
This work was supported by the Scientific číslo, 2006, ISSN 1451-107X
Grant Agency of The Ministry of Education of the
12. Taraba, V: Logistický a technologický reinižiniering
Slovak republic No. VEGA 1/0922/12 - Research
kombinovanej štvorvalcovej linky na výrobu do-
of effect of material characteristics and technologi- pravných pásov. 2010. In: Acta Montanistica Slo-
cal parameters of conveyor belts on size of contact vaca. 2010; Vol. 15, extra No. 1: p. 4 - 8. ISSN 1335
forces and resistance to motion in pipe conveyors – 1788. http://actamont.tuke.sk
with experimental and simulation methods.
13. Berežný, Š, Grinčová, A. Regresná analýza
špecifických matematických modelov získaných pri
References skúškach dopravných pásov proti prierazu. In: Do-
prava a logistika. 7. Mimoriadne číslo, 2010. ISSN
1. Marasová, D., Taraba, V., Grujić, M., Fedorko, G., 1451-107X.
Bindzár, P., Husáková, N. Belt transport (in Slovak).
FBERG, Košice, 2006; 274 14. Miller, I. DOE . Design and analysis of experiments
using MINITAB (in Czech), Interquality, Praha,
2. Fedorko, G. et al.: Change of the flow rate and its 2010, ISBN 978-80-902770-5-2
effect on simultaneous filling of the mould. In: Meta-
lurgia International. 2012; Vol. XVII. No. 9: p. 226
– 228. ISSN 1582-2212 Corresponding Author
Milos Grujic,
3. Petruf, M., Fedorko, G., Husáková, N.: Optimal- University of Belegrade,
izácia pásovej dopravy v banských podmienkach/ Faculty of Mining and Geology,
Optimalization of belt transport in mining condition. Department for Mine Haulage and Hoisting,
2006. In: Transport & Logistics. 2006; No. 10: p. Belgrade,
36-40. - ISSN 1451-107X Serbia,
E-mail: mgrujic@rgf.bg.ac.rs
4. Rosová, A.: Sústava ukazovateľov distribučnej lo-
gistiky, logistiky dopravy a materiálového toku ako
jeden z nástrojov controllingu v logistike podniku.In:
Acta Montanistica Slovaca. 2010; Vol. 15, extra No.
1: p. 67-72. - ISSN 1335-1788 http://actamont.tuke.
sk/pdf/2010/s1/11rosova.pdf.
5. Horníková, A. Design and evaluation of experiments

with applications (in Slovak). Iura Edition, Bratisla-
va, 2009, ISBN 978-80-8078-281-8
6. Terek, M., Hrnčiarová, Ľ. Statistical Quality Control

(in Slovak). Edícia Ekonómia, Bratislava, 2004,
ISBN 80-89047-97-1
7. Montgomery, D.C. Design and AnalysisofExperiments.

J. Wiley, New Yourk, 2002, ISBN 0-471-31649-0
8. Antony, J. Design of experiments for Engineers and

Scientists. Butterworth-Heinemann Oxford, 2003,
ISBN 0 7506 4709 4
9. Grinčová, A., Berežný, Š. Tvorba regresného modelu

na základe experimentálnych skúšok dopravných pásov
proti prierazu. In: Acta Montanistica Slovaca, Košice,
2004; Vol. 13, No 4: ISSN 1335-1788.
10. Taraba, V.: The methods of conveyor belt basic

characteristics testing and special tests. 2004. In:
Transport & Logistics. 2004; Number 7: p.59 – 68.
ISSN 1451-107X.

Morphological development of regulated

rivers, case study of the river Toplica
Vjekoslav Djekovic, Ljubomir Letic, Grozdana Gajic, Nedjo Milosevic, Milorad Janic, Vesna Nikolic
Faculty of Forestry, University of Belgrade, Belgrade, Serbia
Abstract and bank scouring and destruction, which gener-

ates various morphological forms of the cross pro-
River channel morphology depends on hy-
file (Figure 1) [3].
drological-hydraulic and geo-morphological pa-
rameters of the river valley and the river chan-
nel. These parameters, as the main factors of the
channel morphology, develop over a long time
period during which water discharge and river
sediment transport are harmonised. The effect of
the above parameters on channel morphology was
researched in the river Toplica catchment, as part
of the Kolubara drainage basin. The location of
the experimental reach is Serbia, the Balkan Pen-
insula, Southeastern Europe. The research started
in 1980, and is still underway. This paper presents
and analyses the research data and the impacts on
the structure and form of morphological processes
in the regulated river conditions. Figure 1. Deformations of the river Toplica cross
Key words: Sediment; River channel defor- profile (photo. Đeković)
mation; Morphology; Flow traction force; Erosion
process The lower course is characterised by the ac-
cumulation of sediment delivered from the upper
and middle courses [4].
1. Introduction The alluvial plain along the Toplica middle and
The catchment hydrographic network is de- lower courses is the area with fertile agricultural
vided into the zones of upper, middle and lower land, suitable for intensive agriculture. Frequent
courses. The zone of the upper course, i.e. the up- flooding of peak flows disturbs the normal agricul-
stream area, is the source of water and sediment. tural activities. River improvement was necessary
Sediment is transported along the mid-course and and, to ensure safe conditions for agricultural ac-
it is deposited in the lower course zone. In small tivities in the river valley, the cross profile was de-
streams, the zones are not always clearly distin- signed for 5% flood probability (Q5%=18.0 m3·s-1).
guished, and the upper course extends directly as The initial phase of the experimental study of the
far as the lower course zone, where sediment is channel morphological changes started as soon as
accumulated and deposited. The channel morpho- the river engineering works on the river Toplica
logical changes have a very significant effect on were completed (1982). The analysis of the condi-
the intensity of agricultural land-use changes [1]. tions of the channel morphology changes was car-
The study catchment is covered with vegeta- ried out by modelling performed on a reach of the
tion which protects the soil from pluvial erosion river Toplica [5].
and ensures the uniform discharge in years [2]. River channel formation is the result of com-
Water in the middle and lower courses is relatively bined processes of reciprocal activities of solid
clear, not loaded with sediment, so there is a sig- and liquid phases. Hydraulic calculations concern-
nificant energy potential and capacity for channel ing the analysis of river channel formation and the

channel deformations represent the synthesis of all – taking of undisturbed samples of material
calculations in the sphere of river hydraulics [6,7 ] from the river channel, bottom and banks
The theoretical description of the channel defor labaratory analyses of geomechanical
formation phenomena is reduced to the system of characteristics.
equations which define the three-dimensional two-
phase turbulent current in the deformable channel Further morphological research included the
(the Reynolds equation, 1950). data on cross profile geometry characteristics, and
The theoretical analysis of river channel defor- the stream hydrological-hydraulic and psammo-
mation consists of two basic modern approaches: logical characteristics.
– analytical approach, which includes the This study presents the results of the research
simulation of the complete physical proce- on the river Toplica. The study method was direct
sses, starting from the physical laws of measurement of the changes in cross-section pro-
two-phase fluid motion in the deformable file over a long time period. The regulation was
channel; sized for Q5%=18m3·s-1. The morphological chang-
– stochastic approach, which treats river es were analysed on the selected 22 fixed profiles
channel as the product of alluvial processes along the alignment. After the regulation works
of random character [8]. were completed, the new channel was left to the
natural cycle of development during which it was
This paper deals with the effect of hydrological- subject to a series of morphological phases and the
hydraulic parameters on the development of chan- balancing of sediment supply and the transport ca-
nel morphology [7] in the middle course of the river pacity of the reach. The accurate research required
Toplica during the research period 1982 - 2011. the modelling method with the 1:1 scale model, so
The river Toplica is the right tributary of the the experiment was established in the field. In this
river Kolubara. Its location is Europe, the Bal- aim, we selected a 3 km long reach from Vrujci
kans, the western part of Serbia, between 44005’ Spa to the village Komanice. The pofiles were pre-
- 44022’ N and 20007’-20008’ W. The river Toplica cisely marked by land surveying beacons (poly-
is a small river with catchment area of 96 km2. The gon points) outside the embankment zone, on both
main stem is 30 km long, and the mean catchment sides of the regulation. Cross profiles, longitudi-
slope is 18.00%, and mean stream slope 2.55%, nal profiles and situation plans were successively
and the lower course slope is 0.27%. The aver- measured by surveying instruments over the pe-
age floodplain width is 700 m, it is very fertile and riod starting from the execution of the regulation
suitable for agricultural production. works in 1982 to 2011.
The river is equipped with two gauging stations Hydrological-hydraulic analyses are based
and water level is recorded automatically. The ob- on the analysis of the recorded water levels and
jective of our study was to define the physical- the discharges at the gauging stations “Markova
geographical parameters which are decisive in Crkva“ and “Komanice“. Water with suspended
the formation and establishment of stable channel sediment was sampled from the channel every day
reaches [9]. at the same time, to determine the suspended sedi-
ment concentration in water samples. The daily
2. Material and Method concentrations and the total water discharge were
calculated (Figure 1).
The effect of the selected parameters on the de- To reduce the too large amount of measured
velopment of morphological changes of improved data, this paper presents only three characteristic
channels was researched by the following methods: cross profiles. The presented results (surveyed in
– experimental research on the selected 1982-83, 1988, 1992 and 2009) point to intenten-
experimental reach on the river Toplica: sive morphological changes.
– direct surveying of the changes in the river
alignment and the changes in the channel
longitudinal profile and cross profile;

3. Results and Discussion 1989, 1990, 1991, 1992, 1993, 1996, 1998, 1999,
2000, 2001, 2002, 2008 and 2009 were the years
The field type of earth regulation is applied in
with elevated discharges, and 1982, 1983, 1986,
non-urban zones to protect the riverine area and
1987, 2005, 2006 and 2007 were the years with
agricultural lands from overbank flooding and to
relatively lower discharges.
prevent waterlogging and covering the fertile land
Maximal annual discharges were recorded at
with sterile sediment. [10].
the gauging station “Markova Crkva“ during the
The hydrological research was performed at the
period 1980 – 2009. The highest annual discharge
gauging station “Markova Crkva“, near the con-
in the study period amounting to Q= 29.43 m3.s-
fluence in Kolubara over the period 1980 - 2009. 1
was recorded in 2009, and the lowest maximal
Table 1. Maximal annual discharges recorded at
discharge Q=4.45m3.s-1 was recorded in 1983.
the gauging station “Markova Crkva“ and the
The duration of peak discharges was short, and
discharge duration (Source: original)
the duration of low discharges was long, which
Extreme discharges Discharge duration points to the torrential regime. Table 1 shows the ex-
Year Qmin Qmax Q>1 Q>5 Q>10 treme discharges of the river Toplica. The duration
m3.s-1 m3.s-1 Days of discharge Q >1.0 m3.s-1 was >100 days in rainy
1980 0.070 12.20 120 17 5 years, <50 days in dry years. Peak water discharges
1981 0.110 15.00 100 10 2 Q >10 m3.s-1, lasted for 4-5 days in rainy years, and
1982 0.120 8.70 48 4 0 in dry years, they appeared once or did not appear at
1983 0.060 4.45 96 40 0 all. To analyse the effects of hydrological-hydraulic
1984 0.100 15.20 90 14 4 parameters of the stream, the discharge was record-
1985 0.140 16.20 60 18 5 ed at the gauging stations and the discharge curve
1986 0.123 8.25 88 19 0 was defined in the function of water depth.
1987 0.150 9.00 125 13 0 At the same gauging station, torrential water
1988 0.230 19.20 100 20 1 was sampled to determine the suspended sediment
1989 0.125 14.90 94 11 5 concentration. It can be concluded that the variation
1990 0.180 16.00 132 20 4 (C) ranged from the maximal value close to 1.0kg/
1991 0.090 24.10 112 35 2 m3, to the minimal value close to 0, Figure 2.
1992 0.075 18.50 110 25 2
1993 0.045 16.20 96 23 5
1994 0.067 13.80 120 29 4
1995 0.053 14.80 118 25 4
1996 0.086 17.60 100 33 5
1997 0.092 12.80 135 35 5
1998 0.120 16.42 123 15 3
1999 0.135 18.34 110 32 3
2000 0.110 18.43 145 12 4
2001 0.098 17.56 122 10 3 Figure 2. Correlation between water discharge
2002 0.080 19.35 115 13 4 and suspended sediment transport at “Markova
2003 0.125 13.28 89 12 3 Crkva“ P (kg s-1) (Source: original)
2004 0.132 14.45 93 8 2
2005 0.076 12.82 95 4 1 The correlation of discharge and suspended
2006 0.092 13.93 103 5 1 sediment transport qas a very strong correlation.
2007 0.090 13.15 132 5 2 Table 2 presents the maximal annual values of
2008 0.089 18.26 125 13 3 suspended sediment concentration. Higher sus-
2009 0.245 29.43 118 15 5 pended sediment concentrations over 1991, 1992,
and 1996 were expected because they were rainy
Table 1 shows that, during the study period, the years with the discharges Q>10 m3.s-1 occurring
following years 1980, 1981, 1984, 1985, 1988, 4-5 times per year and the channel morphological

changes occurred within that hydrological range.

Peak water waves lead to river sediment transport
and higher concentration of suspended sediment.
Suspended sediment concentration, Figure 2,
depends directly on water discharge defined by
the formula:
The highest concentrations of suspended sedi-

ment occurred during the maximal discharges. At
the end of the study period (1982-2011) of the riv-
er Toplica experimental reach, it can be concluded Figure 4. Local deformation of the Toplica channel
that small and medium waters with long duration with lateral contribution of eroded material (photo:
formed the cross profile in the cunette form, and V. Đeković)
peak waters with relatively short duration contin-
ued flowing within the designed and constructed Table 2. Maximal concentrations of suspended
cross profile. The waves of peak water induced the sediment (Source: original)
motion of bed load formed by streambank scour- С max Incidence
Year
ing and collapsing [11].The input of sediment kg/m3 C >0.10 kg/m3
(lateral contribution of eroded material) induced 1980 0.75 18
periodic widening of the river channel and the 1981 0.81 19
balancing of transport capacity with the available 1982 0.46 5
volume of sediment, Figure 4. 1983 0.83 10
Final surveying of the cross-section profile 1984 0.82 11
was performed during April 2011 and the new- 1985 0.76 7
formed longitudinal profile was defined, Figure 1986 0.55 12
3. Based on the hydraulic analysis, the calculated 1987 0.46 11
capacity of the formed cross profile amounted to 1988 0.73 6
Q1%=46.40m3· s-1 [12]. 1989 0.77 7
1990 0.45 12
1991 0.93 18
1992 0.91 35
1993 0.77 25
1994 0.69 19
1995 0.79 8
1996 0.87 11
1997 0.67 18
Table 1 presents the peak water discharges when

the discharges Q >1.0 m3.s-1 lasted for 135 days. It
Figure 3. Longitudinal profiles with energy and can also be noted that peak water discharge lasted
water level line, hydraulic calculations “Hec-Ras” for a very short time, but the discharge of very low
for Q=46.40 m3/sec (Source: original) water extended throughout the hydrological year,
which is the basic characteristic of torrential wa-
tercourse [13].

no new quantities of sediment and no sediment

deposition anong the river channel. The sediment
delivered from the upper parts of the catchment is
transient and it is transported along the entire sec-
tor and there are no signs of channel erosion and
sediment accumulation [1].
Figure 5. Cross profile No. 2, 0+071.20 km of the In recent times, the regulation has been very
river Toplica during 1983, 1988, 1992, and 2009 poorly maintained and it has been left to natural
(Source: original) cycles of morphological development, so willows
(Salicx alba) and alders (Alnus glutinosa) flour-
ish on the banks. Recently established vegetation
protects the streambanks against collapsing and
sliding but simultaneously it creates the barriers
for the discharge of high water levels, creating the
conditions for repeated river bank overtopping
and riverine flooding, Figure 8.
Figure 6. Cross profile No. 11, 1+694 km of the
river Toplica during 1982, 1988, 1992 and 2009
(Source: original)
Figure 7. Cross profile No. 18, 2+578 km of the

river Toplica during 1982, 1988, 1992, and 2009
(Source: original)
Figure 8. Vegetation formed on the streambanks
The cross-section profiles presented in Figs. 5, creates the conditions for overbank flooding
6 and 7, as well as all the profiles which have not (photo: V. Đeković)
been presented in this paper, show the tendency of
the channel botton lowering and cunette incision The hydraulic regime of the river Toplica ex-
in the alluvial deposits of the floodplain. perimental reach was defined by hydraulic calcula-
On some reaches, there are rockfalls and bank tions and the classical method of hydraulic analysis
slidings, and they are the zones of increased lateral of natural streams using the basic equation of non-
contribution of material. The causes of morpho- uniform, stationary flow in a prismatic channel.
logical changes are non-uniform geomechanical It was found that the cross profile dimensions
characteristics of the river valley and river chan- increased many times (by riverbed lowering and
nel, as well as the increased tractive forces. [7]. cunette formation), so in the final phase the cross
Streambank sliding and collapsing, in the past profile accomodated peak watrers amounting to
research period, pointed out the high local contri- Q1%=46.40 m3·s-1, compared to the initially designed
bution of sediment, and also pointed to local and state Q5%=18.00 m3·s-1 (Muškatirović, 1991).
general channel deformations throughout the sec-
tor of experimental reach. However, over time the
stream reached the state of dynamic equilibrium,
i.e. the channel regime. This means that there were

where: ∆Z – denivelation of the water level in some of the essential causes of lowering the regu-
the reach from a profile to a profile, К – is mean lated channel bottom line. The changes in the par-
ticle-size distribution of the material from the river
value of the discharge module ( ), and
bed and banks presented in Figure 10 induced the
V u and V n are discharge rates on upstream and
2 2
onset of periodic sediment motion, leading to non-
downstream profiles (from a profile to a profile).
uniform sediment grain sizes along the river chan-
The results of hydraulic calculations and analysis
nel. Also, there are lateral tributaries which deliver
are presented on Figure 9 for the three morphologi-
coarser sediment fractions into the main stem.
cal states (1982, 1992, and 2004).
Figure 9. Longitudinal profile of the river Toplica

regulated channel in three morphological states
(streambed lines and water levels for the given
discharges) (Source: original) Figure 10. Particle-size distribution of the mate-
rial from the bed and banks of the river Toplica
Based on the analysis of the longitudinal pro- experimental reach (Source: original)
files for three characteristic morphological states,
it can be concluded that cunettees were formed in
the regulated channels and the strembed were low-
ered on average by 1.5-2.0 m. In the new formed
conditions, the small and medium water is dis-
charged through the newly formed cunettees, Figs.
5, 6, 7. Over time, from the initial state, flow rates
increased, and they are defined by the formula:
The analysis of the changes in particle-size dis-

tribution of the samples from bore holes shows
Figure 11. Direct shear (Source: original)
non-uniform sediment grain mean diameters, de-
pending on the profile, Figure 8. Particle-size dis-
tribution of the material conditions the change in
the tractive force critical value:
t 0 = 0,047 ⋅ g ( r s − r )d sr (Meyer-Peter Miller)
In addition to the changes in sediment grain siz-

es, Figure 7, there are also changes in other geome-
chanical characteristics of riverbed structure such
as cohesion and angle of internal frictiin Figure 8. Figure 12. Change in mean sediment diameter
Geomechanical characteristics of the material are from bore holes (Source: original)

Critical tractive force refers to the sediment in To fully understand the effect of hydraulic pa-
the river channel in the case when 50% of sedi- rameters on the morphological development of
ment from the particle-size distribution curve, unlined regulated watercourses, we shall present
in the determined hydrological-hydraulic condi- the flow velocity changes under the discharge Q =
tions, starts to move along the course. The onset 15 m3.s-1, as well as the permissible tractive forces
of sediment motion creates the conditions for the along the river bed for three morphological states
appearance of non-uniform morphological char- of the regulated channel, in 1982, 1992 and 2009,
acteristics in the channel. In this way, the phases according to the formula:
of accumulation and the repetitive motion of the
deposited sediment are defined . The value of criti- [N·m-2]
cal tractive force was defined for all the cross pro-
files along the experimental reach based on Mey- where:
er-Peter Muller’s formula (1975). The results are - tractive force
presented in Figure 9. - water density;
g - acceleration of gravity;
t 0 = 0,047 ⋅ g ( r s − r )d sr hmax – maximal water depth in the stream cross-
section;
If permissible tractive force is greater than the J0 – slope of the water surface in decimal form.
critical tractive force, the result is channel erosion,
and if permissible tractive force is equal to critical
tractive force, the result is the beginning of sedi-
ment accumulation in the river channel.
Based on Meyer-Peter Muller’s formula, criti-
cal tractive force was defined for all the cross pro-
files along the experimental reach and presented
in Figure 12.
Figure 14. Permissible tractive force, under

Q=15m3.s-1
(Source: original)
Figure 13. Critical tangential stress

(Source: original)
The change in the critical tractive force along

the experimental reach, due to the change in the
alignment of the new constructed channel in the Figure 15. Changes in flow velocity of the ex-
alluvial plain, was the cause of the non-uniform perimental reach Q=15m3.s-1
(Source: original)
sediment accumulated during various phases of
the floodplain morphological formation. The new
Figure 14. shows that the velocities increased
constructed channel was formed in different lay-
over time. This can be explained by the forma-
ers of the floodplain. The value of criticali tractive
tion of a cunette within the designed cross profile
force under discharge amounting to Q=15 m3.s-1
and by the concentration of the course along the
was t=40 N/m2.
lines of the greatest slope and the greatest depths

in the cross profile. The sizes of the cunette are not Based on the above, it can be concluded that
sufficient for the analysed discharge Q>15m3.s-1. the tractive force depends on the maximal depth
Greater discharges lead to greater velocities in in the cross profile and not on the hydraulic radius:
the regulated channel, which in turn caused ero-
sion and the lowering of the channel bottom line. [N·m-2]
Greater velocities and grater tractive forces are the
causes of general channel deformation through- The river hydraulic and psammological param-
out the sector. Also, permissible tractive forces eters are adjusted over stationary time. After the
are greater than critical tractive forces under dis- works which disturbed the natural balance, the
charges Q > 15m3.s-1. In the study conditions, river improved channel commenced an altered mor-
channel was not able to resist the elevated tractive phological development, which should lead to a
forces, and this resulted in morphological changes new equillibrium state of the river morphological,
in the cross profile. hydraulic and psammological parameters which
were disturbed both in the catchment and along
the natural river alignment. There is a dependence
4. Conclusions between the intensity of the channel morphologi-
The goal of this research was to point to the cal changes and the variation in the hydraulic pa-
consequences of the flood wave passage through rameters along the river.
the unprotected and unlined regulated river chan- Also, there was a time tendency of the balance
nel and also to point out the possible directions of hydraulic parameters along the experimental
of development of morphological processes in reach. However, the variations in sediment grain
the regulated conditions. After the morphological sizes point to the torrential character and to peri-
changes were observed, we analysed the condi- odic detachments of river sediment in peak wa-
tions which lead to major morphological changes ter waves. The greatest morphological changes in
and the methods of ther attenuation and control, in the regulated channel of the experimental reach
order to create favourable and safe conditions for occurred during the periods of peak waters. In
agricultural production. the past period, in some reaches, hydraulic pa-
According to literature sources, it is generally rameters of discharge (velocities, tractive forces)
accepted that morphological changes mainly oc- conditioned general deformations of the regulated
cur as the result of increased tractive forces in the channel. Such changes caused the bed lowering
streams and the wetted perimeter, in which the and the channel incision in the alluvium, forming
interparticle cohesion cannot sustain the the shear a cunette within the designed cross profile. The
forces defined by the equation: cunette formation created the conditions for the
incidence of higher velocities and increased trac-
[N·m-2] tive forces, and to the development of vegetation
on the streambanks.
However, it was found that the above was The concentration of suspended sediment in
not true, because (R) is the hydraulic radius, or the river is directly dependent on water discharge,
the mean depth in the cross profile. Morphologi- defined by the formula:
cal changes occur where the depths are maximal
(h=hmax). The maximal depths in the cross profile
create the conditions for augmented tractive forc-
es, and exceed the critical value at which tractive
forces are higher than critical tractive forces, at The greatest concentrations of suspended sedi-
which the cross profile is still stable. It is defined ment occurred during the periods of maximal dis-
by the formula: charges. Consequently, the theoretical conclusion
that sediment in torrential watercourses is trans-
ported periodically by peak water waves was con-
firmed by this study. At the end of the study pe-

riod (1982-2011) on the experimental reach of the 8. Muškatirović D., Textbook, Regulacija reka.
river Toplica, it can be concluded that small and Građevinski fakultet, Belgrade. (in Serbian) 1991.
medium waters with long duration periods formed 9. Petković S., Đeković V., Relation Between Morpholo-
the cross profile in the cunette (canal) form. Flood gy of Small Streams and Geomorphic Geological and
waters which had short duration periods over- Erosional Factors of Watersheds. 6th International
topped the cunette, but did not flow over the de- Symposium on River Sedimentation. New Delhi.
signed profile. Bed load was moved by the waves 1995; 425–433.
of peak stream flows. It was formed by stream- 10. Cowan W. L., Estimating hydraulic roughness
bank scouring and collapsing, which created new coefficients. Agricultural Engineering, July 1956;
conditions for lateral delivery of eroded material. 473– 475.
This occurrence caused periodical widening of the
11. Kondolf G.M., Piegay H., Landon N., Channel
river channel and the harmonisation of transport
response to increased and decreased bedload sup-
capacity and the available quantity of sediment in ply from land-use change: between two catchments.
the river profile. During the study period, the sizes Geomorphology 2002; 45:35– 51.
of the cross profile increased many times. The de-
signed alignment was sized to accommodate peak 12. Sloan J., Miller J.R., Lancaster N., Response and
recovery of the Eel River, California, and its tribu-
water amounting to Q5%=18m3·s-1, but due to mor- taries to floods in 1955, 1964, and 1997. Geomor-
phological changes, at the end of the study period phology 2001; 36: 129– 154.
the channel cross profile accommodated peak wa-
ter amounting to Q1%=46.40m3·s-, Figure 2. 13. Đeković V., Analysis of the effects of drainage-basin
physical-georaphical parameters on the develop-
ment of erosion processes and channel morfology
References - the example of the river Resava, Barcelona. First
European Coference on Erosion Control; Abstract
1. Keesstra S.D., Huissteden J.van, Vandenberghe J., Book, Barcelona-Sitges May 1996; 29-31.
Dam O.V., Gier J. de, Plezier I. D., Evolution of the
morphology of the river Dragonja (SW Slovenia) due
to land-use changes. Geomorphology , 2005; 69: Corresponding Author
191-207. Nedjo Milosevic,
Faculty of Forestry,
2. Ortigosa L., Ruiz Flano P., Changes in runoff and University of Belgrade,
erosion as a consequence of land-use changes in the Belgrade,
Central Pyrenees. Physical Chemical Earth 1995; Serbia,
20: 301– 307 E-mail: nedjo.milosevic@gmail.com
3. Lamakin В.В., Textbook, Dinamiceskie fazi rechnih
dolin i aluvialnih atlazenii - Zemljevedenije Moskva.
(in Russian) 1950.
4. Karasaev I,F., Textbook, Ruslovie procesi pri prebro-

ske stoka, Leningrad. (in Russian) 1975.
5. Đeković V., Doktorska disertacija: Istraživanje

zakonitosti morfološkog razvoja malih vodotoka,
Šumarski fakultet, Belgrade (in Serbian, with Eng-
lish Abstr.) 1993; 1-211.
6. Rogersa R.D., Schumm S.A., The effect of sparse veg-

etative cover on erosion and sediment yield. Journal
of Hydrology 1991; 123, 19– 24.
7. Surian N., Rinaldi M., Morphological response to

river engineering and management in alluvial chan-
nels in Italy. Geomorphology 2003; 50: 307– 326.

Mathematical basis for direct map projection

transformation
Aleksandar Ilic1, Goran Cirovic2, Dragoljub Sekulovic3, Miodrag Regodic3, Dragan Pamucar3
1
Ministry of Defence of the Republic of Serbia, Belgrade, Serbia,
2
The Belgrade University College of Civil Engineering and Geodesy, Belgrade, Serbia,
3
Ministry of Defence of the Republic of Serbia, University of Defence in Belgrade, Serbia.
Abstract system based on different datum, one operation at

a time [1]. In accordance with recommendations
Transformation of map projections bears sig-
of the ISO Technical committee the concepts of
nificance whether related to construction, cartog-
conversion and transformation of map projections
raphy, surveying, or other related fields. The trans-
should be separated. Map projection itself implies
formation of map projections entails a multitude of
a conversion of coordinates which occurs during
computing and other tasks for translation of point
the transition from ellipsoidal coordinates to two-
coordinates and image data from the source to a
dimensional Cartesian coordinate system.
desired map projection, with the condition of da-
There are different methods of transformation of
tum transformation. Each transformation of map
map projections. Each transformation method rep-
projections is based on appropriate mathematical
resents a specific algorithm containing related pa-
solution which establishes a singular “point-to-
rameters. In map projections, parameter values are
point” relationship between two fields. Specifical-
determined by performing filed measurement, tak-
ly, it establishes an unequivocal “point-to-point”
ing into account accuracy errors. Different surveys
relationship between an ellipsoid (a sphere) and
will ultimately produce different surveying results.
a plane or, ultimately, between two planes. The
“point-to-point” relationship is obvious and evi-
dent when discussing transformation of geodetic 2. Mathematical basis and transformation
points and the same goes for the transformation of tasks
a cartographic display, which implies the transfor- The general solution to the transformation of
mation of discrete points that constitute a figure or coordinates from one Cartesian system to another,
a field line. The result of this transformation is a apart from scale alteration, entails two more op-
new field containing figures and lines as the image erations – translation and rotation, in which the
of the original (source) field. order of operations is not important. Translation
Key words: Map projection, Transformation, implies shifting one system toward another until
Transformation parameters. their respective coordinate origins align, whereas
rotation implies the rotation of axis of the source
1. Introduction coordinate system and their alignment with axis of
the new coordinate system.
Map projection does not refer only to maps,
For translation of coordinates to take place
plans or drawings, but it can be said that map pro-
(Figure 1) it is necessary to know the origin coor-
jection gives the ultimate meaning to any database
dinates of the new coordinate system in the source
conceptual model. A conceptual model involves
system, and vice versa, and those are a - abscissa,
defining a database in terms of geometric enti-
b -ordinate and c – applicate of the O2 point in
ties such as points, lines, planes, and descriptions.
the source system x1, y1, z1. It is also necessary to
These geometric entities are defined in space by a
know the rotation angles of corresponding axis in
corresponding map projection. Transformation of a
both coordinate systems.
map projection refers to transformation of coordi-
Rotation angles are usually denoted by the ap-
nates, that is, translation of coordinates of one map
propriate coordinate axis (x2x1,y2y1,z2z1,…).
projection coordinate system to another coordinate

Today, map projection transformation is per-

formed easily and very fast using appropriate soft-
ware designed on the basis of mathematical algo-
rithms for solving specific transformation problems.
There are several solutions for the map projection
transformation problems. All solutions to this prob-
lem stem from theoretical premises, but two essen-
tially different solutions have been identified – direct
and indirect transformation. Direct transformation
implies defining relationships and dependency be-
tween Cartesian coordinates in the source projection
and corresponding Cartesian coordinates in the new
projection. Indirect transformation uses geodetic
(ellipsoidal) coordinates (j,l) [2] and [3].
Mainly, source projection transformation given
in the equation:
Figure 1. Transformation of coordinates from a x = f1 (j , l ),

source projection to a new coordinate system .........................(2.3)
y = f 2 (j , l ),
When discussing Cartesian coordinate system,

there are nine rotation angles but it is sufficient can be presented by equations of the new pro-
to know any three values while other values are jection:
determined depending on necessary conditions. If
we mark the coordinates of a point T as x1,y1,z1 in X = f 3 (j , l ),
........................... (2.4)
the source coordinate system, and its coordinates Y = f 4 (j , l ).
as x2,y2,z2 in the new coordinate system, the trans-
formation equations would be: From the equations (2.3) it follows that:
x1 = a + x2 cos(x2 x1 ) + y2 cos( y2 x1 ) + z 2 cos(z 2 x1 ), j = F1 (x, y ),
y1 = b + x2 cos(x2 y1 ) + y2 cos( y2 y1 ) + z 2 cos(z 2 y1 ), l = F2 (x, y ).
............................ (2.5)
z1 = c + x2 cos(x2 z1 ) + y2 cos( y2 z1 ) + z 2 cos(z 2 z1 ), .
...................................... (2.1) and when replaced, as in (2.4), it follows that:
and vice versa: X = F3 (x, y ),

........................... (2.6)
Y = F4 (x, y ).
x2 = (x1 − a ) cos(x1 x2 ) + ( y1 − b ) cos( y1 x2 ) + (z1 − c ) cos(z1 x2 ),
y2 = (x1 − a ) cos(x1 y2 ) + ( y1 − b ) cos( y1 y2 ) + (z1 − c ) cos(z1 y2 ),
z 2 = (x1 − a ) cos(x1 z 2 ) + ( y1 − b ) cos( y1 z 2 ) + (z1 − c ) cos(z1 z 2 ). Functions F3 and F4 express the dependency be-
tween Cartesian coordinates of the points in the
..................................... (2.2 ) source projection and their corresponding points
in the new projection, and they are the basis for
Coefficients in equations (2.1) and (2.2) are tak- specific transformation methods and procedures.
en successively and represent the cosines of rota- From the equation (2.5) clearly follows that
tion angles that each axis of the source coordinate map projection transformation in this case im-
system takes in the new coordinate system, corre- plies a solution of a reversed projection task for
sponding with the coordinate being calculated. the source projection. This practically means that
the procedure of projection transformation favors

a group of geodetic projections, that is the pro- squares method, provided that coordinates of sev-
jection in which geodetic coordinates (j, l) can eral common points are known for both coordinate
be easily determined using Cartesian coordinates systems (both projections). Starting with known
(x,y) [4]. In the majority of other map projections coordinates, equations for deviation are developed
transformation is possible only through approxi- (3.2) i.e. an appropriate system of normal equa-
mate methods. One particular problem related tions, separately for abscissas and ordinates. So-
to map projection transformation is the impact lution to these equations requires that the sum of
brought by the change of ellipsoid, orientation, squared differences between calculated and source
and scale parameters. coordinates is minimum.
Differences between the source and calculated
3. Direct transformation of map projections coordinates of corresponding points are character-
ized by n-degree transformation errors. If system-
Direct transformation entails finding a direct atic errors for a given area do not exceed certain
analytical relation between Cartesian coordinates limit, than the n-degree transformation for that
of the points in the source projection and their cor- area is acceptable [2] and [3].
responding points in the new projection, using ex- Expanded expression (3.2) is:
panded projection equations. Strict solution to the
problem of direct transformation is very complex, X = a0 + a11 x + a1 2 y + a21 x 2 + a2 2 x y + a2 3 y 2 + a31 x 3 +
so typically approximation is used, which entails
+ a3 2 x 2 y + a3 3 x y 2 + a3 4 y 3 + a41 x 4 + a4 2 x 3 y +
developing F3 and F4 functions into polynomials:
+ a 4 3 x 2 y 2 + a 4 4 x y 3 + a 4 5 y 4 + Rx ( x , y ) ,
k m
X = ∑∑ ai j , x i , y i , Y = b0 + b11 x + b1 2 y + b21 x 2 + b2 2 x y + b2 3 y 2 + b31 x 3 +
i =0 j =0
..................... (3.1) + b3 2 x 2 y + b3 3 x y 2 + b3 4 y 3 + b41 x 4 + b4 2 x 3 y +
k m
Y = ∑∑ bi j , x i , y i . + b4 3 x 2 y 2 + b4 4 x y 3 + b4 5 y 4 + Ry (x, y ),
i =0 j =0
..................................... (3.3)
where xi, yi represent coordinates of the points where coefficients:
in the source projection, aij and bij represent con-
stant coefficients calculated on the basis of value
1  ∂ n F3 
of F3 and F4 functions in a row of equally arranged ai =  ,
points in an area1, and X, Y coordinates represent n!  ∂x i ∂y j 
....................... (3.4)
the corresponding points in the new projection. 1  ∂ n F4 
Polynominals (3.1) can also be expressed as: bi =  i j  ,
n!  ∂x ∂y 
k i
X = a0 + ∑ (ai n x + ai m y ) , for i + j = n are proportional to partial deriva-

i =1
i
............... (3.2 ) tives of functions F3 and F4 considering origin of
k
Y = b0 + ∑ (bi n x + bi m y ) .
the coordinates, and Rx (x, y) i Ry (x, y) are the
i =1 remaining members, specifically members of the
fifth and higher degrees.
It is common in map projection transformation
where i is the transformation degree, n and m
not to consider the remaining members – they are
are ordinals which in each line of transformation
regarded as systematic errors of the respective de-
assume values from n = 1 to m = i+1.
gree of transformation. The necessary condition
The most probable values of transformation
for determining ai and bi coefficients is knowing
coefficients are determined by applying the least
the coordinates of an appropriate number of points
1 Area – a group of points equally arranged in na plane or in the source projection for the corresponding
other mathematically defined surface. points in the new projection. The number of points

for which it is necessary to know the coordinates When coordinates of the points in the new pro-
depends on the number of unknown coefficients jection are represented in the form of fractions of
i.e. the degree of the polynomial. This practi- liner functions with common denominator:
cally means that for a first degree polynomial it a0 + a11 x + a1 2 y
is necessary to know the coordinates of at least X= ,
three points in the source, and their corresponding c0 + c11 x + c1 2 y
points in the new projection; for a second degree ................... (3.7)
b0 + b11 x + b1 2 y
polynomial at least six points; for a third degree Y= ,
c0 + c11 x + c1 2 y
polynomial ten points, etc. If the same point is
used as the coordinate origin, that is, when Car- this is called homographic or line transforma-
tesian coordinates (x, y) and (X, Y) are based on tion, which necessitates knowing at least four pairs
a unique geodetic coordinate system (j, l), then of points. Points lying on one line in the source
coefficient a0 = b0 = 0, so the minimum number of projection are replicated to the points also lying
necessary points is lower by one. For the purpose on one line.
of transformation control it is recommended to use Cases more complex than those stated above
more points than the previously stated minimum are transformations of straight lines into curves and
number, where the system of linear equations is vice versa. This type of transformation implies con-
solved using least squares method with an appro- sidering members of the second or higher degrees.
priate accuracy evaluation [5]. Naturally, the ques- Having in mind (3.2) and (3.3), equations for the
tion now is which degree polynomial should be second, third and fourth degree transformations are:
used in map projection transformation? Selection
of polynomial is affected by the projection type, X = a0 + a11 x + a1 2 y + a21 x 2 + a2 2 x y + a2 3 y 2 ,
scale of the graphic content and size of the terri-
Y = b0 + b11 x + b1 2 y + b21 x 2 + b2 2 x y + b2 3 y 2 ,
tory that is the subject of transformation.
The simplest type of transformation is similar- ...................................... (3.8)
ity transformation, which necessitates two pairs of
given points (identical in both projections), and X = a0 + a11 x + a12 y + a21 x 2 + a2 2 x y +
which can be presented by equations:
+ a2 3 y 2 + a31 x 3 + a3 2 x 2 y + a33 x y 2 + a3 4 y 3 ,
X = a0 + a1 x , Y = b0 + b11 x + b12 y + b21 x 2 + b2 2 x y +
.......................... (3.5)
Y = b0 + b1 y . + b2 3 y 2 + b31 x 3 + b3 2 x 2 y + b33 x y 2 + b3 4 y 3 ,
Similarity transformation can be applied in a ...................................... (3.9)
group of cylindrical projections, that is, when both
the source and new projections are either confor- X = a0 + a11 x + a12 y + a21 x 2 + a2 2 x y + a2 3 y 2 +
mal, equivalent or equidistant.
+ a31 x 3 + a3 2 x 2 y + a33 x y 2 + a3 4 y 3 + a41 x 4 +
One of the possible transformations is affine
transformation which necessitates three pairs of + a4 2 x 3 y + a4 3 x 2 y 2 + a4 4 x y 3 + a4 5 y 4 ,
given points under the conditions that they do not
Y = b0 + b11 x + b12 y + b21 x 2 + b2 2 x y + b2 3 y 2 + b31 x 3
lie on the same line. Affine transformation is usu-
ally applied in systems with different laws of pro- + b3 2 x 2 y + b33 x y 2 + b3 4 y 2 +b 41 x 4 + b4 2 x 3 y +
jecting ellipsoidal surface on a plain2. Affine trans- + b4 3 x 2 y 2 + b4 4 x y 3 + b4 5 y 4 .
formation equations are first degree polynomials:
.................................... (3.10)
X = a0 + a11 x + a1 2 y ,
.................... (3.6)
Y = b0 + b11 x + b1 2 y . Solving these equations requires 6 (six), 10
(ten), or 15 (fifteen) pairs of points. Appropriate
2 For example, transformation from Gauss-Kruger to system of normal equations is formed separately
stereographic projection. for abscissas and ordinates, and their solution re-

quires that the sum of squared differences between If the transformation parameters are not known, it
calculated and source coordinates is minimum: is possible to determine them only if coordinates
of identical points in both systems are known.
2
In general, two Cartesian coordinate systems can
∑ [x − f (x , y )] = [v ] = min .
n
2
i i i x be distinguished by the position of the origin, axis
i =1
2
...........(3.11) orientation and scale. Regarding the datum trans-
[ ]
n
formation, it would be preferable but not necessary
∑ [y
i =1
i − f (xi , yi )] = v y2 = min .
to determine seven parameters:
– three translations,
where, n – is the number of necessary (given) – three rotations and
points, or unknown coefficients ai or bi. – scale factor.
Mean systematic error of transformation for
specific degree is calculated from the difference To solve the above mentioned system of seven
between the given values and values of coordinates unknown variables it is necessary to know the coor-
calculated after transformation. If this value does dinates of at least two corresponding points and the
not exceed certain limit, transformation of the cho- height of the third point in both coordinate systems
sen degree is acceptable. Transformation accuracy (datums). Having the coordinates of a greater num-
increases when moving from a second to a third de- ber of corresponding points enables higher-quality
gree of polynomial approximation, while differenc- transformation, that is, greater number of points al-
es in results decrease with the increase of degree [4]. lows the application of the least squares method,
and renders evaluation of parameters more reliable.
4. Determining global transformation The most commonly used direct transforma-
parameters for the Republic of Serbia tion is similarity transformation that can be gener-
ally expressed as:
The State Survey and Cadaster Law from 2009
stipulates that the position of points in the horizon-
tal reference system is expressed by two-dimen- ( )
N B = U 0 + (1 + s )R OA − U 0 + T , ........... (4.1)
sional, rectilinear coordinates in the conformal
Universal Transverse Mercator (UTM) projection, where:
on the GRS80 ellipsoid. Previous state coordinate s – scale factor,
system (JU datum) was defined by the Gauss- R – rotation matrix,
Kruger projection (three degrees zone) with pa- T – translation vector between datum origins,
rameters of the Bessel ellipsoid and Hermanskogel
datum. The orientation of the ellipsoid was gener- N – coordinates in the new datum,
ally global and topocentric [6], and the entire state O – coordinates in the original datum,
system was materialized through the trigonometric
network. Characteristics of the former state coor- U 0 – centroid coordinates.
dinate system, which are primarily related to the
wrong network orientation, assuming mathemati- Usually, the central point of the area is taken as
cally correct transformation, are a source of vari- transformation starting point. Matrix R describes
ous problems. The aforementioned problems with rotations of points relative to coordinate axis of
regard to the transformation of map projections in the old datum (projection).
the broad sense can be collectively referred to as Therefore, there are three matrices:
problems of geodetic and cartographic continuity.
Knowing the transformation parameters enables the  cos k sin k 0
transformation process to establish a direct analyti- RX (k ) = − sin k cos k 0 , ............. (4.2)
cal relationship between the coordinates of points  0 0 1
in both datums, that is, between the coordinates
of points in the original and the new projection.

where:
 cosq 0 sin q 
XA, YA, ZA – denote source projection coordi-
RY (q ) =  0 1 0  ,............. (4.3) nates and datum,
− sin q 0 cosq  XB, YB, ZB – denote new projection coordinates
and datum,
TX, TY, TZ – denote translation components,
1 0 0 
s – denotes scale factor change,
RZ (w) = 0 cos w sin w  ,............ (4.4) R – denotes rotation matrix.
0 − sin w cos w
Matrix R describes rotation of points relative to
coordinate axis of the new datum and represents
where: k, q, w are rotation angles relative to X, the product of three matrices (4.2), (4.4) and (4.4).
Y and Z axis, respectively. One characteristic of this model of transformation
If rotation angles are less than 3² the above is that the required rotation effect about datum axis
three matrices can approximated with one matrix: can be achieved through translation parameters.
For example, the required rotation about Z – axis
1 k −q  can be replaced by a combination of appropriate
RX ,Y , Z = − k 1 w  ,................ (4.5) translations along X and Y - axis.
 q − w 1  In the following part global transformation
parameters are determined for the territory of the
Republic of Serbia using Bursa-Wolf model, as a
where k,q and w are expressed in radians. specific case of Helmert (similarity) 7-parameter
Most commonly used transformation models transformation, in three different versions. Global
[7] are Bursa-Wolf [8], [9] (Fig. 2) and Moloden- transformation parameters required for the trans-
sky-Badekas [10], [11], [12]. The Bursa-Wolf formation from UTM system on WGS84 ellipsoid
model is a specific 7 – parameter similarity trans- to the former state coordinate system have been
formation described in the equation (4.1). determined using the least squares method, with
condition that the sum of squared difference of co-
ordinates in the new system and coordinates in the
original system is minimum.
These parameters have been determined using
13 common points equally distributed across the
territory of Serbia. Coordinates of correspond-
ing points in the UTM (WGS84) system were
obtained in field measuring. In the first version,
transformation problem is solved with translation
parameters, where rotation parameters and scale
factor change are zero (Table 4.1).
Table 4.1 Translation parameter value (Bursa-
Wolf 3 – parameter transformation)
Figure 2. Bursa-Wolf transformation model
Parameter Value Dimension
This transformation model can also be present- dx - 693,029 [m]
ed as: Translation dy 199,322 [m]
dz - 483,275 [m]
X B   X A  TX  eX 0,0 [²]
 Y  = (1 + s ) R  Y  +  T  Rotation eY 0,0 [²]
 B   A   Y  eZ 0,0 [²]
 ZB 
  ZA 
  
TZ 
 Scale factor change s 0,0 [ppm]

The second version of the Bursa-Wolf model

gives produces values of translation and rotation
parameters, with a condition that the scale factor
change is zero (Table 4.2).
Table 4.2 Values of translation and rotation para-
meters (Bursa-Wolf 6 – parameter transformation)
dx -528,768 [m]
Translation dy -248,013 [m]
dz -479,389 [m]
eX 6,13009 [²]
Rotation eY 2,119025 [²] Figure 3. Molodensky-Badekas model
eZ -15,161066 [²]
Scale factor change s 0,0 [ppm] Molodensky-Badekas model has the following
form:
The third version uses all seven parameters re-
quired for transformation from the UTM system  xB   xm  Tx   x A − xm 
to former state coordinate system (Table 4.3).  y  =  y  + T  + (1 + s )R  y − y  ...... (4.6)
Table 4.3 Values of transformation parameters  B  m  y  A m
 z B   z m  Tz   z A − z m 
(Bursa-Wolf 7 – parameter transformation)
where:
dx -508,290 [m]
Translation dy -240,311 [m]
- xm, ym, zm – denote centroid coordinate in the grid,
dz -458,459 [m] - Tx, Ty, Tz – denote Molodensky-Badekas trans-
formation parameters.
eX 6,130092 [²]
Rotation eY 2,119025 [²]
Although this model provides values for ro-
eZ -15,161066 [²]
tation and scale parameters like the Bursa-Wolf
Scale factor change s -4,755358 [ppm]
model, translation parameters are different. Table
4.4 gives global transformation parameters for
Generally, in all three versions of the Bursa-
the territory of Serbia, calculated according to the
Wolf model the rotation origin coincides with the
Molodensky-Badekas model.
origin or the source coordinate system, that is,
Table 4.4 Global transformation parameters for
centroid coordinates in the new datum are zero.
the Republic of Serbia (Molodensky-Badekas)
This model is based on a high correlation between
translation and rotation parameters. Transforma- Parameter Value Dimension
tion parameters shown in previous tables define dx - 693,029 [m]
the mathematical relation between the UTM sys- Translation dy 199,322 [m]
tem and the former national coordinate system, dz - 483,275 [m]
which, it should be noted, contain the effects pro- eX 6,130092 [²]
duced by the change of position of certain points Rotation eY 2,119025 [²]
eZ -15.161066 [²]
that occurred in time between different surveys.
Molodensky-Badekas model (Figure 3) is a Scale factor change s - 4,755358 [ppm]
more general transformation model in which rota-
tions are relative to the grid centroid in the new All transformation parameters presented above
datum. This model excludes a high correlation be- are used for datum transformation from WGS84 to
tween rotation and translation parameters. Bessel ellipsoid with orientation of the former state
coordinate system. For reverse transformation,
from the old datum to WGS84, all that is necessary
is to change the signs of transformation parameters.

5. Transformation accuracy mation parameters, that is, matrices that determine

mean squared errors of those values.
Global transformation parameters for the ter-
Transformation model: Bursa-Wolf (version 1)
ritory of Serbia have been determined from 13
System A: WGS84
equally distributed points which contain all three
System B: JU Datum
coordinates in both datums. Therefore, these glob-
Rotation origin: C0=0.000 U0=0.000 Z0=0.000
al transformation parameters pertain to a relatively
No. of common points: 13
large area of transformation.
The following part provides evaluations of the
previously calculated transformation parameters
System A: WGS84
for all three versions of the Bursa-Wolf model and
System B: JU Datum
for the Molodensky-Badekas model. Appropri-
Rotation origin: C0=0.000 U0=0.000 Z0=0.000
ate covariance matrices have also been provided,
which define interdependence between transfor-
Table 5.1 Evaluation of translation parameters (3 – parameter Bursa-Wolf transformation)
Parameter Value s Dimension
dx -693,029 1.3000 [m]
Translation dy 199,322 1.3000 [m]
dz -483,275 1.3000 [m]
eX 0,0 0,0 [²]
Rotation eY 0,0 0,0 [²]
eZ 0,0 0,0 [²]
Scale factor change s 0,0 0,0 [ppm]
[vv] 1064,78 [m2]
Covariance matrix for parameters:
.169 E + 01 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 
.000 E + 0 0
 .169 E + 01 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0
.000 E + 0 0 .000 E + 0 0 .169 E + 01 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0
 
C = .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0
.000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000E + 0 0
 
.000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0
.000E + 0 0
 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0 .000E + 0 0
Dimensions are: [m], [m], [m], [rad], [rad], [rad], [1].
Table 5.2 Evaluation of translation and rotation parameters (6 – parameter Bursa-Wolf transformation)
dx -528,768 15.2006 [m]
Translation dy -248,013 20.3688 [m]
dz -479.389 13.7055 [m]
eX 6.130092 0,5740 [²]
Rotation eY 2.119025 0,6299 [²]
eZ -15,161066 0,6001 [²]
Scale factor change s 0,0 0,0 [ppm]
[vv] 60,5426 [m2]

 .231E + 0 3 − .124 E + 0 3 − .180 E + 0 3 .635E − 0 5 .442 E − 0 4

− .224 E − 0 4 .000 E + 0 0
 − .124 E + 0 3
 .415E + 0 3 − .310 E + 0 2 − .463E + 0 4 − .102 E − 0 4 .490 E − 0 4 .000 E + 0 0
 − .180 E + 0 3 − .310 E + 0 2 .188E + 0 3 .108E − 0 4 − .395E − 0 4 .387 E − 0 5 .000 E + 0 0
 
C =  .635E − 0 5 − .463E − 0 4 .108E − 0 4 .774 E − 11 .396 E − 12 − .284 E − 11 .000 E + 0 0
 .442 E − 0 4 − .102 E − 0 4 − .395E − 0 4 .396 E − 12 .933E − 11 − .197 E − 11 .000 E + 0 0
 
 − .224 E − 0 4 .490 E − 0 4 .387 E − 0 5 − .284 E − 11 − .197 E − 11 .846 E − 11 .000 E + 0 0
 .000 E + 0 0
 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0 .000 E + 0 0
Dimensions: [m], [m], [m], [rad], [rad], [rad], [1].

System A: WGS84
System B: JU Datum
Rotation origin: C0 = 0.000 U0 = 0.000 Z0 = 0.000
Table 5.3 Evaluation of transformation parameters (7 – parameter Bursa-Wolf transformation)

dx -508,290 17,1225 [m]
Translation dy -240,311 19,6985 [m]
dz -458,459 16,0541 [m]
eX 6.130092 0,5466 [²]
Rotation eY 2.119025 0,5998 [²]
eZ -15,161066 0,5715 [²]
Scale factor change s -4,755358 2,1242 [ppm]
[vv] 53.4884 [m2]
 .293E + 0 3 − .812 E + 0 2 − .779 E + 0 2 .576 E − 0 5 .401E − 0 4 − .203E − 0 4 − .194 E − 0 4

− .812 E + 0 2 .388 E + 0 3
 . 403 E + 01 − . 420 E − 0 4 − .926 E − 0 5 .444 E − 0 4 − .731E − 0 5 
− .779 E + 0 2 .403E + 01 .258 E + 0 3 .982 E − 0 5 − .358 E − 0 4 .351E − 0 5 − .199 E − 0 4
 
C =  .576 E − 0 5 − .420 E − 0 4 .985 E − 0 5 .702 E − 11 .359 E − 1 2 − .258 E − 11 .759 E − 2 4 
 .401E − 0 4 − .926 E − 0 5 − .358 E − 0 4 .359 E − 1 2 .846 E − 11 − .178 E − 11 .600 E − 2 4 
 
 − .203E − 0 4 .444 E − 0 4 .351E − 0 5 − .258 E − 11 − .178 E − 11 .768 E − 11 − .331E − 2 4 
 − .194 E − 0 4 − .731E − 0 5 − .199 E − 0 4 .809 E − 2 4
 .425 E − 2 4 − .289 E − 2 4 .451E − 11 
Transformation model: Molodensky-Badekas

System A: WGS84
System B: JU Datum
Rotation origin: C0 = 4306420.975 U0 = 1619293.727 Z0 = 4401449.834

Table 5.4 Evaluation of transformation parameters (7 – parameter Molodensky-Badekas transformation)

dx -693,029 0,3063 [m]
Translation dy 199,322 0,3063 [m]
dz -483,275 0,3063 [m]
eX 6.130092 0,5466 [²]
Rotation eY 2.119025 0,5998 [²]
eZ -15,161066 0,5715 [²]
Scale factor change s -4,755358 2,1242 [ppm]
[vv] 53,4884 [m2]
 .938 E − 01 .271E − 31 .861E − 31 − .216 E − 21 − .116 E − 2 0 .730 E − 21 − .573E − 21 

 .270 E − 31
 .938 E − 01 .183E − 31 .566 E − 21 − .172 E − 21 .608 E − 21 .271E − 21 
 .861E − 31 .183E − 31 .938 E − 01 − .494 E − 21 − .106 E − 2 0 .385 E − 21 .556 E − 21 
 
C =  − .216 E − 21 .566 E − 21 − .494 E − 21 .702 E − 11 .359 E − 1 2 − .258 E − 11 .206 E − 2 7 
− .116 E − 2 0 − .172 E − 21 − .106 E − 2 0 .359 E − 1 2 .846 E − 11 − .178 E − 11 − .139 E − 2 7 
 
 .730 E − 21 .608 E − 21 .385 E − 21 − .258 E − 11 − .178 E − 11 .768 E − 11 − .505 E − 2 8 
 − .573 E − 21 .271E − 21
 .556 E − 21 .206 E − 2 7 − .139 E − 2 7 − .505 E − 2 8 .451E − 11 
6. Conclusion of the transformation significantly affects the num-

ber and arrangement of the points that are used. In-
Coordinate transformation uses parameters
creasing the number of the points increases the ac-
which can be empirically derived from a series of
curacy of the transformation. If the projection grid
corresponding points in both coordinate reference
of the source map projection is more complex i.e. if
systems. Accuracy of transformation parameters
the curvature and density of lines is higher, a suc-
depend on applied methods for their determina-
cessful transformation requires a greater number
tion, and measurements, including measurement
of given points. After transformation, spaces with
errors. The accuracy of coordinate transforma-
lower quality of the transformed data can be identi-
tions between two datums depends on the accura-
fied on a larger area, which also requires a moder-
cy of transformation parameters and the accuracy
ate increase in the number of the points for those
of both coordinate reference systems. According
parts of space. Consequently, a moderate increase
to the accepted research results, the maximum rec-
in the number of points in certain parts of the area
ommended size of the area in the transformation
enables the quality to be sustained in the remaining
of cylindrical, conical and azimuthal projections,
area (part of the grid).
symmetric with respect to the central meridian, is
In principle, it can be concluded that when the
10 ° 10 ° ´ along parallels and meridians.
transformation of map projections of a smaller re-
In terms of transformation of the oblique and
gion requires greater accuracy, it is necessary to
transverse projections that have only one linear axis
determine the local datum transformation param-
meridian, the size of the area of transformation is
eters. Major influence on the implementation of
lower and amounts to 5 ° ´ 5 ° along parallels and
appropriate technique and accuracy of the results
meridians. The solution for direct transformation
obtained by transformation of map projections
commonly applies polynomials of the second, third
is the sufficient number of dependable common
and fourth degree (highest). Further increase of the
points. In this case, strictly speaking, the transfor-
degree of the approximation polynomial generally
mation parameters obtained for the transition from
does not produce a qualitative shift. The accuracy

WGS84 to the old national datum are “transient” 10. Molodensky M.S. Eremeev, V. F., Yurkina, Mi I.,
(current) and relate to the time when measure- Methods for Study of the External Gravitational
Field and Figure of the Earth, Israeli Program for
ments were taken. Observing from that perspec-
the Translation of Scientific publications, Jerusa-
tive, the resulting transformation parameters com- lem, 1962.
pletely satisfy the accuracy required for transfor-
mation of map projections. 11. Badekas J. Investigations Related to the Establish-
ment of a World Geodetic System, Report No. 124,
Department of Geodetic Science, Ohio State Uni-
Acknowledgements versity, Columbus, Ohio, USA, 1969.
The work reported in this paper is a part of the 12. Coordinate Conversions and Transformations
investigation within the TR 36017 research proj- including Formulas, OGP Publication 373-7-2 –
ect supported by the Ministry for Science and Geomatics Guidance Note number 7, part 2 – July
2012. (http://info.ogp.org.uk/geodesy/guides/docs/
Technology, Republic of Serbia. This support is G7-2.pdf).
gratefully acknowledged.
References Miodrag Regodic,
1. ISO/TC 211, 2007a, ISO19111:2007 Geographic in- Military Academy,
formation - Spatial referencing by coordinates (In- University of Defence,
ternational Organization for Standardization), 2007. Belgrade,
Serbia,
2. Jovanović V. Coordinate systems and the necessity to E-mail: mregodic62@gmail.com
secure geodetic and cartographic continuity with neigh-
boring countries, Military Academy, Belgrade, 1974.
3. Torge W. Geodesy. Walter de Gruyter GmbH and

Co., Berlin, Germany, 2001.
4. Svećnikov N. Geodetic Coordinate Transformations,

4th Congress of the Association of Geodetic Engi-
neers and Surveyors of Yugoslavia, Sarajevo, 1968.
5. Božić B. Accuracy analysis of coordinate transfor-

mation from global geocentric system to the national
coordinate system, a study, Military Geographical
Institute, Belgrade, 1998.
6. Muminagić A. Orientation of the national triangula-

tion network, Journal of Geodesy, Zagreb, 1967.
7. Andrei C.O. 3D affine coordinate transformations.

Masters of Science Thesis in Geodesy. Stockholm,
Royal Institute of Technology (KTH), School of Archi-
tecture and the Built Environment, 2006, pp. 2 – 7.
8. Bursa M. The theory for the determination of the non-

parallelism of the minor axis of the reference ellipsoid
and the inertial polar axis of the Earth, and the planes
of the initial astronomic and geodetic meridians from
observations of artificial Earth satellites, Studia Geo-
physica et Geodaetica 6, 1962, pp. 209 – 214.
9. Wolf H. Geometric connection and re-orientation

of three-dimensional triangulation nets, Bulletin
Geodesique, 68, 1963, pp.165-169.

Organizational structure change support for

manufacturing firms management
Mirjana Misita1, Miladin Stefanovic2, Dragan D. Milanovic1, Danijela Tadic2, Dragan Lj. Milanovic1
1
2
The Faculty of Mechanical Engineering, University of Belgrade, Serbia,
The Faculty of Mechanical Engineering, University of Kragujevac, Serbia.
Abstract doing business refers mostly to large size firms

that have had to transfer from centrally planned
The paper shows an investigation of changes
production to a market-oriented model. As large
in organizational structure across 100 manufactur-
size firms were over-sized in employee numbers,
ing firms, which are the outcome of doing business
throughout the transition period the firms of the
in a transitional economy. The aim of the research
metal industry responded to changes by restruc-
was to investigate the relationship between the pa-
turing programs. The restructuring programs most
rameters of organizational structure, size and profit
commonly meant downsizing, separation of core
rate of those firms for the period 2003-2009 and to
from non-core activities, rationalization of costs
analyze the organizational structure change support
etc. In some firms changes of organizational struc-
in order to achieve the best business results. The
ture were followed by changes in methods of do-
investigation is a longitudinal study in which the
ing business and transition to a market-oriented
sample comprised manufacturing firms with a ris-
principle of work, while in others organizational
ing trend in profit rate during the observed period.
inertness of the massive systems was one of the
This concept of research has the aim to establish a
major impediments to the adaptation process.
model of management of organizational structure
Aulakh and Kotabe [1] report that during the
parameters in order to improve business results.
past two decades the participation of developing
The dependence of changes in profit and those
countries in the global economy has been increased
of organizational structure parameters, as well as
as a result of market economy liberalization. Within
changes in firm size and those of the observed or-
the context of institutional reforms one of the great-
ganizational structure parameters were examined
est challenges for businesses in developing coun-
by applying correlation analysis and multiple re-
tries is how to respond to the challenges presented
gression analysis.
by a radically changed competitive environment.
A trend of flatness is present in shaping the or-
The aim of the investigation is to explore the
ganizational structure pyramid, which means that
relationship between the parameters of the organi-
there exists the trend of decreasing the number of
zational structure and size of manufacturing firms
hierarchical levels and of expanding the span of
in a transitional economy for the period 2003-
control in manufacturing firms doing business in a
2009 and to find the most appropriate organiza-
transitional economy.
tional structure change support in order to achieve
Key words: organizational structure, organiza-
the best business results.
tional change, manufacturing firms
In considering the presented problem, let us
start from to-date conclusions on organizational
1. Introduction size and vertical and horizontal differentiation as
parameters of organizational complexity.
In the past fifteen years firms doing business in
This research is a continuation of a previ-
a transitional economy, most commonly under the
ous study carried out in 30 Serbian manufactur-
influence exerted by the countries in the region,
ing firms, mainly from the metalworking industry
have had to change their methods of business ac-
(seven oil and oil derivative processing companies)
tivities, to apply a market-oriented principle in
during the period from 1994 until 2006 [2]. In that
doing business and to adapt to a new competitive
research the results showed that there was a high
business climate. Adapting to novel conditions of

level of correlation between size and organizational organizational size and organizational structure
structure in metalworking enterprises of a country parameters. The results also indicated that in Aus-
in transition. Also, the results indicated that large tralian organizations there is a higher dependence
size firms, especially of the metal industry, were between organizational size and the number of
tending to reduce their size, so as to adapt to newly hierarchy levels than between organizational size
developed conditions of business operations and and span of control.
to become more flexible. The opening of markets, Mileti, Gillespie and Hass [9] studied the inter-
pressure imposed by competition, reduced product dependence of organizational size and the spatial,
demands etc. result in lower turnover and thereby vertical and horizontal complexity of an organiza-
downsizing. Profitable business operations in such tion in the heterogeneous sample of government or-
conditions call for rational operations and utiliza- ganizations in California. The conclusions point to
tion of internal potentials. One of the measures specified changes and expansions compared to the
to make use of internal potentials is the manage- conclusions of Blau’s generalized formal theory of
ment of organizational changes. The size and form differentiation. They measured organizational size
of an organizational structure are tools that can be only through the number of employees. Horizon-
employed by the management to more efficiently tal differentiation was measured via the number of
adapt to newly developed conditions of doing busi- departments, divisions. Vertical differentiation was
ness. The results of previous research [2] indicate expressed by the number of different work posi-
that there is a big unused organizational change tions calculated from a top -bottom organizational
potential which could be used to enhance business structure. Spatial dispersion was represented by the
results. The influence of organizational size on or- number of geographically distant, separate organi-
ganizational structure is one of the most heavily zational units. Using the results, they established a
researched issues in organizational theory. Among positive dependence between vertical and horizon-
the earliest investigations related to the mentioned tal declining size differentiation with growing or-
topic the works by Mansfield [3] and Meyer [4] ganizational size (similar to Blau and Schoenherr’s
were the most prominent. Afterward, as early as conclusions), and a stronger influence of size on
1970, Blau [5] established that with growing orga- vertical differentiation than on horizontal differ-
nizational size the declining size differentiation is entiation (coefficients of dependence are 0.51 and
generated. Blau and Schoenherr [6], among other 0.24). Such conclusions support those claiming that
conclusions, indicate a causal relationship: A large in larger size organizations divided organizational
size promotes structural differentiation. Structural units are more pronounced.
differentiation always includes horizontal com- Delmastro [10] tested some of the predictions
ponents, such as the number of different jobs or of economic theory (a recent conclusion could be
branches. A vertical component means the number found in [11]) on organizational architecture by
of levels of authority. looking at the relation between the depth of the
On the basis of research in Japanese manufac- management hierarchy of plants and plant and
turing firms, Marsh and Mannari [7] concluded that industry-specific variables in 438 Italian manu-
results for a cross-sectional relationship of organi- facturing plants. “The findings show that the plant
zational size-structure are different from those ob- size, the characteristics (i.e. vintage, and extent of
tained by longitudinal analysis. In Japanese manu- use) of the production and communication tech-
facturing firms, the changes in administrative inten- nology in use, the plant’s ownership status (i.e.
sity in declining size organizations are not simply State versus private ownership, and differences
the mirror image of what happens to personnel in the nationality of firms to which plants belong)
components in growing organizations. They call it figure prominently in explaining the complexity
the ratchet effect by which the number of manag- of a plant’s organization.”
ers increases more rapidly in growing organizations Gareth [12] argues that there is an interdepen-
than decreases in declining size organizations. dence between the number of employees in an en-
Blunt and Jones [8], based on empirical stud- terprise and the number of hierarchy levels, where
ies, found a strong positive correlation between it was found that:

– Enterprises with 1000 employees have 4 1

hierarchy levels; DU A i j = (U A j − U A ( j −1) ) i ⋅ ;
100
– Enterprises with 3000 employees have 7
i = 1, 2,...,2 3; j = 2, 3,..,1 2.
hierarchy levels;
– Enterprises with 10,000 – 100,000
employees have 9 or 10 hierarchy levels; P i j - profit for i-th firm and j-th year
– The growth in the number of hierarchy D P i j (%) - per cent of profit changes for i-th
levels was lower than the proportional firm and j-th year
growth of organizational size.
1
DP i j = ( Pj − P ( j −1) ) i ⋅ ;
Gareth [12] also studied factors affecting the 100
shape of a hierarchical structure. He found that i = 1,2,...,2 3; j = 2, 3,..,1 2.
with growing decentralization there are a declin-
ing number of hierarchy levels in an organization- Dependent variables are organizational struc-
al structure, because the authority is delegated to ture parameters: number of hierarchy levels and
lower levels. With increased standardization there span of control:
is a lesser need for superior managers, because BN - number of hierarchy levels
rules replace direct supervisors.
RM - span of control
2. Research description Also, for these parameters we introduce the

concept of per cent of changes to follow up the
In this section the hypotheses are proposed for
character of organizational structure parameters
investigating the changes in organizational struc-
throughout the study period
tures across manufacturing firms, which are the
result of doing business in a transitional economy. 1
Notations for relevant parameters used to define D B N i j = ( B N j − B N ( j −1) ) i ⋅ ;
100
them are given first. i = 1, 2,...,2 3; j = 2, 3,..,1 2.
Notations for relevant parameters:
BZ - number of employees 1
D R M i j = ( RM j − RM ( j −1) ) i ⋅ ;
100
Dl o g BZ i j (%) - per cent of changes of loga-
i = 1, 2,...,2 3; j = 2, 3,..,1 2 .
rithmically transformed number of employees for
the i-th firm and the j-th year
for the i-th firm during j years comprised by the
1
Dl o g B Z i j = (log B Z j − log BZ ( j −1) ) i ⋅ ; longitudinal study.
100 In the analysis of data related to macro-organi-
i = 1, 2,...,2 3; j = 2, 3,..,1 2. zational structure of firms included in the sample,
throughout the study period, the following data
U P - total annual turnover were segregated:
DU P i j (%) - per cent of changes in total annual – number of hierarchy levels,
turnover for the i-th firm and the j-th year, – span of control
1 as two parameters by which we describe orga-

DU P i j = (U P j − U P ( j −1) ) i ⋅ ; i = 1, 2,...,2 3;
100 nizational structure in a form suitable for further
j = 2, 3,..,1 2. analysis and the application of statistical methods
and techniques. Spatial dispersion was ruled out
UA - total annual assets because in firms comprised in the sample this pa-
DU A i j (%) - per cent of changes in total annual rameter virtually had a negligible role. For firm
assets for the i-th firm and the j-th year, size, we used a logarithmically transformed num-

ber of employees as a basic criterion of firm size, which we can test the effects of several parameters
but other criteria were also taken into account, and on the change of a particular parameter of organi-
those are total turnover and total assets. zational structure.
In determining the number of hierarchy levels In a previous investigation [2] it was indicated
in the macro-organizational structure of the ob- that in a transitional economy inflexibility of large
served firm, the following procedure was applied: size companies comes to the fore. In this regard, we
– hierarchy levels in the organizational have extended the previous investigation to point
structure of a particular firm were numbered out that firms should implement organizational ad-
starting from the top of the macro- justment to the conditions of business operations in
organizational structure, the transitional economy. The sample was expanded
– number of hierarchy levels in the department/ to 100 Serbian firms, the primary factor not being
division, where the hierarchy is highest i.e. the large size firm and its dealing with metalwork-
“deepest”, was taken as a representative of ing, but that the firm is of a manufacturing profile
the number of hierarchy levels of the macro- and successful in business operations, i.e. that there
organizational structure in a particular firm. exists s rising trend in profit rate. Consequently, the
sample of firms was not defined in a random man-
Span of control as a parameter by which we de- ner, but the Chamber of Commerce was asked for
scribe the organizational structure of a particular data on more than 100 of the most successful firms
firm, was considered as follows: in the previous period irrespective of their size and
– on the first hierarchy level in the organizational manufacturing orientation. Data on income size, in-
structure of the observed firm, depending come growth for each period 03/04, 04/05, 05/06,
on the type of organizational structure i.e. 06/07, 07/08 and 08/09 were available for each firm
horizontal differentiation principle where from the Republic Agency for Development, Bel-
there are departments, divisions and the grade Stock Exchange and the Republic Institute
like, while span of control was considered for Development. The aim of thus set up research
as the number of those organizational units was to obtain information about the model of or-
– departments, divisions etc. ganizational structure adjustment in successfully
operating firms, i.e. firms that have a defined de-
The characteristics of the proposed model for velopment strategy and proved to be successful in a
investigating the changes in organizational struc- transitional economy.
tures in manufacturing firms in transitional condi- The concept underlying the research is found in
tions, which affect the model recognition level are the hypotheses as follows:
as follows: – There is a high dependence between change
– investigation was conducted on a sample of of organizational structure parameters and
100 manufacturing firms, change of profit rate in firms operating
– investigation is a longitudinal study, which successfully in a transitional economy.
may generate different results in the case – There is a high positive correlation between
when investigations are cross-sectional. change of profit rate and per cent of change
– span of control was taken at the first in the span of control in firms operating
hierarchy level in the macro-organizational successfully in a transitional economy.
structure of the observed firms, but not as a – There is a higher is correlation between change
mean value of span in all superior-inferior of profit rate and the studied parameters of
relations, which indicates that the result thus organizational structure than between number
obtained is a horizontal differentiation level. of employees and the studied parameters of
organizational structure.
In the choice of method for testing the obtained
data a correlation analysis will be applied to test The first hypothesis set should indicate if there
interdependence among the studied parameters is dependence between change of profit rate and
and multiple regression as a statistical method by per cent of change in organizational structure pa-

rameters, which shows the organizational adjust- served period. It should be pointed out that chang-
ment level relative to changed business operating es were calculated in this case for the first and last
conditions. If this hypothesis is confirmed, it is of observed years (2003 and 2009). In the remaining
importance to find out whether in successful firms cases, changes in the observed parameters were
operating in transitional conditions there exists the monitored for two successive years each.
trend of flatness shaping in organizational struc-
ture, i.e. if a rising trend in profit rate entails the
reduction of the number of hierarchical levels and
the expansion of the span of control.
3. Findings
The diagram below, Figure 1, shows changes
in the number of employees in 100 manufacturing
firms followed up through the period 2003-2009. Figure 2. Changes in profit rate for the period
The diagram shows that during the observed pe- 2003-2009
riod the number of employees in the observed
manufacturing firms had a trend of growth. By expanding the correlation analysis with the
parameters of organizational structure, such as the
per cent of change in the number of hierarchical lev-
els and the per cent of change in the span of control,
we obtained a high correlation coefficient between
some parameters but with a different proportional
relationship.
Table 1 shows the results obtained by applying a
correlation analysis between profit rate and organiza-
tional parameters. A positive relationship exists be-
tween profit rate and per cent of change in the num-
ber of employees and per cent of change in the span
Figure 1. Changes in the number of employees
of control, and a negative relationship exists between
for the period 2003-2009
profit rate and per cent of change in the number of
hierarchical levels. This indicates that the observed
Figure 2 shows changes in profit rate in 100
manufacturing firms adapt to a business environment
manufacturing firms followed up through the pe-
by decreasing the number of hierarchical levels and
riod 2003-2009. The diagram shows that during
expanding the span of control by employing new
the observed period the observed manufacturing
workers in order to increase profitability.
firms had a growing trend in profit rate.
A high regression coefficient (0.87) indicates
The correlation coefficient between the change
that a variation of organizational parameters has a
oin profit rate and the percent of change in the
significant influence on the potential financial re-
number of employees amounts to 0.69 for the ob-
sults of the manufacturing firm.
Table 1. Correlation between relevant factors

DP ij (%) D B Z i j (%) D B N i j (%) D RM i j (%)
DPi j (%) - Change in Profit rate 1
DBZ i j (%) - Change in Number of employees 0,694534 1
DB N i j (%) - Change in No. hierarchical levels -0,75779 -0,70281 1
DRM i j (%) - Change in span of control 0,869428 0,780275 -0,76988 1

Table 2. Multiple regression between relevant hierarchical levels than for number of employees/
number of hierarchical levels. The results of the
factors ( DP i j (%) and DB N i j (%) , DRM i j (%) )
investigations lead to the conclusion that the hy-
Regression Statistics potheses are confirmed. There is a higher corre-
Multiple R 0,880401 lation level between the change in the profit rate
R Square 0,775105 and studied organizational parameters compared
Adjusted R Square 0,770468 to the correlation coefficients between the change
Standard Error 5,008073 in the number of employees and the studied or-
Observations 100 ganizational parameters indicates a more efficient
redistribution of work tasks, increased efficiency
Table 2 shows the results obtained by applying of work due to contemporary technologies imple-
multiple regression analysis between profit rate mentation in compliance with a change in profit
and organizational parameters. A high regression rate. It is interesting that the level of dependence
coefficient (0.88) indicates that a variation of or- between change in profit rate and organizational
ganizational parameters has a significant influence parameters is higher than that between change
on the profit rate of a manufacturing firm. in profit rate and the number of employees. The
Table 3 shows the results obtained by applying results obtained by multiple regression analysis
multiple regression analysis between the per cent have just confirmed the starting assumptions from
of change in the number of employees and organi- the hypotheses. There are high regression coeffi-
zational parameters. A high regression coefficient cients between the summative impact of change in
(0.79) indicates a significant relationship between the studied parameters of organizational structure
the number of employees and the organizational and change in profit.
parameters of a manufacturing firm. There are rate (0.88), i.e. between the summa-
Table 3. Multiple regression between relevant tive impact of change in organizational structure
factors ( DBZ i j (%) and DB N i j (%) , DRM i j (%) ) parameters and the change in the number of em-
Regression Statistics ployees, the dependence being more pronounced
Multiple R 0,796505
in the former case (0.79).
R Square 0,63442
Adjusted R Square 0,626883 5. Conclusion
Standard Error 0,051104
Observations 100 The paper presents an investigation of the in-
terdependence between profit rate, number of
employees and organizational structure param-
4. Discussion
eters in manufacturing companies with a rising
The results show that a trend of flatness is trend in profit rate over a longer period of time
present in shaping the organizational structure (2003-2009) under conditions of doing business
pyramid, which means that there is a trend of de- in a transitional economy. All firms comprised in
creasing the number of hierarchical levels and of the sample are doing business in the same region
expanding the span of control in manufacturing under identical economic conditions, have a man-
firms doing business in a transitional economy. ufacturing orientation and a rising trend in profit
Also, the results show a high positive correlation rate during the observed period.
between profit rate and a change in the span of Results have shown that the relationship profit
control, and between number of employees/span rate-organizational structure is an important com-
of control, the coefficient of the correlation being ponent in the process of manufacturing firms’ ad-
higher for profit rate/span of control than for num- justment to the dynamic environment. In changing
ber of employees/span of control. There is also a conditions of economic operations, span of control
high negative dependence between number of em- is a parameter of organizational potentials by adapta-
ployees/number of hierarchical levels, this depen- tion of which the firm can respond faster to changes
dence being again higher for profit rate/number of in the region. Also, results obtained by the research

indicate that there is a higher dependence between 10. Delmastro M. “The determinants of the manage-
change in profit rate and change in the observed or- ment hierarchy: evidence from Italian plants”,
International Journal of Industrial Organization,
ganizational parameters than between change in the
2002; 20( 1): pp 119-137.
number of employees and change in the observed
organizational structure parameters, which is op- 11. Milanovic Lj.D., Milanovic D.D, Misita M., Klarin
posite to the belief that size-structure is dominant M., and Zunjic A. “Universal equation for the rela-
relationship. Results indicate that relationship profit tive change in profit of manufacturing company“,
Production Planning & Control, 2010; 21( 8): pp
rate-organizational structure becomes a predomi- 751-759.
nant component which is in line with the global aim
of a business manufacturing firm and reason for ad- 12. Gareth R.J. Organizational Theory, 4thed., Prentice
aptation to a dynamic business environment. The Hall,USA: 2004.
presented investigation indicates that in transitional
economies manufacturing companies, irrespective Corresponding author
of their size, should harmonize the parameters of Miladin Stefanovic,
organizational structure with the trend in profit rate The Faculty of Mechanical Engineering, University
along with shaping the flatness of an organizational of Kragujevac,
pyramid and an increase in employee efficiency. Serbia,
E-mail: miladin@kg.ac.rs
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3D approach in airport location studies

Dejan Gavran¹, Dusan Nikolic1, Sanja Milicevic1, Vladan Ilic1, Vasilije Medenica2, Aleksandar Vuckovic3,
1
Faculty of Civil Engineering, University of Belgrade, Serbia,
2
Retired General Inspector for Airports with Former Yugoslav Flight Safety Administration, Belgrade, Serbia,
3
Associate Designer at the Trebinje Airport Master plan.
Abstract the Croatian historical coastal city of Dubrovnik.

The vicinity of Dubrovnik creates an opportunity
The article presents the use of advanced 3D
for the new Trebinje airport to compete for pas-
techniques in airport location studies. Though
sengers with the existing Dubrovnik airport.
specific to the airports only, the activities such as
runway orientation and control of obstacles, could
be supported by CAD tools originally developed
for road design and ground remodeling. All these
techniques are based on triangulated 3D models:
triangulated models of the obstacle limitation sur-
faces and the TIN terrain model. Terrain protru-
sions through the obstacle limitation surfaces are
tested by using relatively small subset of options
used in ground remodeling. The extent of these
protrusions is measured by using complex tools
for volumetric analyses. “Shadow” terrain profiles
in the airport approach zones are created by using
modified profiling tools coming from road design. Figure 1. Future Trebinje International Airport
All these procedures are demonstrated on a rela- (TIA)
tively small and compact airport project located in
the mountainous region of the Balkans. There have been several attempts to find a suit-
Key words: Airport Design, Control of Obsta- able location for Trebinje airport. But primarily
cles, CAD, Digital Terrain Modeling because of the exceptionally rough terrain, both
in the approach zones and on the potential airport
locations, an adequate solution was not found.
1. Introduction Therefore, in late autumn 2008, The Faculty of
Though primarily oriented to education and Civil Engineering was asked by The Municipal-
scientific research, The Faculty of Civil Engineer- ity of Trebinje to take the lead in master planning
ing – University of Belgrade in Serbia is frequently for a new airport. Though the well known fact
engaged on projects, some of them airport projects. that navigational, climatologic and environmental
Most of these projects are expansions and recon- analyses together are crucial in the search for an
structions. Even when engaged on master plans, optimal airport location, it immediately became
these master plans are usually confined to existing apparent that the proper setting of the approach
airport locations. Rarely do local engineers have the procedures in relation to the existing ground fea-
opportunity to participate on master plans which tures would be decisive. The morphological fea-
start with the search for an entirely new airport loca- tures of the terrain were so tight, that immediate
tion or with the, so called, location study [1], [2], [3]. checking of a particular runway profile for any
A few years ago, we have been engaged on a promising approach path was necessary. The vi-
master plan for Trebinje airport (Figure 1). Trebin- cinity of existing airports in Mostar, Podgorica,
je is small city in southern Hercegovina with Tivat and Dubrovnik, as well as the recently creat-
25.000 residents, the number expands to 70.000 ed borders between Croatia, Montenegro and Bos-
in summer months. It is merely 25km inland from nia and Hercegovina, imposed further limitations.

By tradition, design bureaus in former Yugosla- eration of a grid model is much easier to program
via are well equipped with software solutions for than that of a TIN model. But, for subsequent geo-
road design. Taking into account the fact the Eu- metrical analyses, the TIN model is much simpler
ropean design tradition imposes very demanding to work with. In fact, each triangular facet is a part
technical documentation (meticulous grading plans of a simple plane (as the three triangle’s vertices
for crossroads and other planar facilities, detailed define the perfect plane), while the grid cell is a
cross sections, specific superelevation concepts for part of a curved (twisted) surface. Since the cut-
pavement surfaces and pavement layers etc.) many ting of the longitudinal profiles and cross sections,
bureaus developed their own software solutions. volume calculations and other geometrical analy-
The years of crises and wars, during which it was ses are much easier to program on simple trian-
hard to adequately validate the engineering profes- gular facets, even when we are given grid terrain
sion, encouraged many young engineers to turn to models, we “explode” them into triangles. In fact,
software development instead. Thus, at any level each “twisted” grid cell (defined with four points)
of planning or design (master planning, conceptual could be easily exploded into two triangles (each
design, preliminary design, or construction draw- one defined with three points).
ings), almost every element of the airside (runway,
taxiway, holding bay or apron) is well supported
with adequate software solutions, yet these soft-
ware solutions were primarily intended for roads.
Of course, there are many features that are specific
to airports only: aircraft parking modules, fillets (in-
ner taxiway edges at curves) etc. But, even these el-
ements are covered with several domestic software
solutions. All in all, only the early stages of airport
location studies, dealing with the approaches and
general terrain limitations, are not adequately cov-
ered with the specific software tools. And that is
what this particular article is about: how to resolve Figure 2. TIN terrain model
problems in runway/approach orientation by using
software tools for general geometrical analyses de-
veloped for road design.
2. Digital terrain modelling

Any serious planning or design activity starts
from the digital terrain modeling (see Figure 2).
The most widely adopted terrain model for civil
engineering purposes is TIN (Triangulated Irreg-
ular Network) model. By definition, TIN model
connects terrain points by using non-overlapping
triangles tending to be as much equiangular as
possible [4], [5] . Figure 3. Grid terrain model [5], [6]
By simple editing (switching triangles’ edges)
it is possible to incorporate any kind of manmade
3. Obstacle limitation surfaces’ modelling
or natural feature (ridge, escarpment, pavement
edge) into the TIN, making the model identical With the terrain model ready, our design team
to the natural surfaces. For rough examination moved to tackle the control of obstacle limitation
of large areas of the terrain, the grid model could surfaces, which proved to be crucial for the entire
be quite appropriate (Figure 3) [5],[6]. The gen- design solution. The shape and size of obstacle

limitation surfaces were taken from ICAO (Inter-

national Civil Aviation Organization) manuals [7].
In general, these are imaginary surfaces constructed
around a particular runway. These are approach and
take-off surfaces (extending up to 15km in front of
each runway’s threshold), the inner horizontal sur-
face (circular surface with the radius of 4km, 45m
above the lower threshold), the conical surface
(climbing at the grade of 20% around the perimeter
of an inner horizontal surface, and having the width
of 2km) and the transitional surface climbing from
the runway strip up to the inner horizontal surface Figure 4. Obstacle limitation surfaces – Triangu-
at the rate of 1:7 (7:1 in American format, or cca lated model
14%). The entire set of surfaces is moved and rotat-
ed (together with the runway) in order to minimize
terrain protrusions. Obstacle limitation surfaces are
also checked against the natural (trees) and man-
made (buildings, towers, power lines) features.
To be operational, a triangulated model of ob-
stacle limitation surfaces was needed (Figure 4).
In essence, these surfaces could be easily modeled
by using general purpose CAD systems. Curved
approach or take-off paths could be modeled by
using software solutions intended for road mod-
eling. In fact, we even have simple software so-
lutions for generating triangulated obstacle limi-
tation surfaces developed 15 years ago and used
only twice till now [5]. Figure 5. Aerodrome Obstruction Chart – Type B
One of the most important features of The Aero-

4. Control of obstacles in 3D
drome Obstruction Chart – Type B are the thick
The existence of both models, terrain and ob- blue lines indicating terrain penetration through
stacle limitation surfaces, opens the way for their the obstacle limitation surfaces. While positioning
comparison. The graphical documents representing the runway centerline, the model of these surfaces
the relation between the obstacles and the obstacle is moved and rotated along with the runway. For
limitation surfaces are The Aerodrome Obstruction each promising position of the runway, hidden line
Chart – Type A and The Aerodrome Obstruction removal should be called in plan projection, thus
Chart – Type B. Aerodrome Obstruction Chart – indicating areas where obstacle limitation surfaces
Type B is more illustrative (Figure 5) [8],[9]. This sink beneath the terrain surface.
is the map representing obstacle limitation surfaces To sharply delineate the terrain penetration
in plan projection, as well as all natural and man- line, it is necessary to deploy specific tools. These
made obstacles in the area. Apart from being a cru- are the tools dealing with the penetrating triangles,
cial element of the airport location study, the Type in this case the terrain triangles and the triangles
B map accompanies the flight crew on the route to a forming the model of the obstacle limitation sur-
particular airport. The map informs the crew on the faces. We had at our disposal such a tool. It was
most prominent obstacles surrounding the airport. the software for decomposing penetrating tri-
Based on these obstacles the crew decides upon the angles into the subtriangles that do not intersect
procedures (turns) to be performed in the case of any more, but touch each other along the lines of
the abandoned approach etc. intersection. We had been using this tool for years

for the modeling of intersecting cut and fill slopes

(Figure 6) [5], [10].
Figure 7. The three cases of triangles’ explosions
Despite that fact, the algorithm that handles in-

tersection of multiple triangles is a sophisticated
one, because the subtriangles deriving from one
“explosion” (between two particular triangles) and
touching each other perfectly, must be checked for
potential “explosions” with the rest of the starting
triangles. To speed up the process, family relations
are introduced between the triangles. The pretrian-
gles are the triangles belonging to the starting set of
triangles, while the subtriangles created in the ex-
plosition of one particular triangle are brothers (or
sisters). Besides the brothers and the sisters, each
subtriangle has its mother and father: the triangle of
origination and the triangle in relation to which the
originating triangle was exploded. As the algorithm
starts to dissipate the triangles, the number of can-
didates for the “explosion” grows rapidly. Keeping
track of family relations, unnecessary (impossible)
“explosions” are skipped, making the software run
faster. But, to cut the long story short, to delineate
the intersection between the terrain triangles and the
triangulated model of the obstacle limitation surfac-
es only a small fraction of this algorithm should be
deployed. Only the intersection lines between the
pretraingles (deriving from the three cases illustrat-
ed on Figure 7) are generated.
Besides the plan projection presented on The
Aerodrome Obstruction Chart – Type B, some
Figure 6. Decomposition of triangulated cross sections (perpendicular to the runway cen-
intersecting fill slopes [5], [10]. terline) are always helpful (Figure 8). These cross
sections usually contain terrain and the obstacle
The software is supposed to work on triangu- limitation surfaces. But, in the case of Trebinje
lated cut/fill slope models. After decomposing airport we came to a conclusion that isopachytes’
the fill slopes’ triangles, the lower subtriangles projection would give a much clearer picture than
(below the intersection lines) are to be removed, any set of cross sections. Till now, we have been
while modeling cut slopes, the upper triangles are using isopachytes only on resurfacing and ground
the surplus triangles. In essence, one particular tri- remodeling projects. Isopachytes are the contour
angle could be decomposed in only three ways, lines delineating equal differences in elevation be-
while intersecting with another one (Figure 7). tween the two triangulated surfaces (the proposed

and the existing surface). At the location of each covered, the scale of Type B map and the sole pur-
node (from both triangulated surfaces) the differ- pose of these isopachytes, the interval of 50m was
ence between the two surfaces is measured and the adopted (Figure 10).
new point, having the elevation equal to that differ-
ence, is set at this position. The TIN model gener-
ated from these new points represent the thickness
between the two surfaces. On grading projects, the
model is negative in cut areas and positive in areas
to be filled. Contours generated from such a TIN
model are isopachytes (Figure 9) [10].
Figure 8. Cross section through the obstacle

limitation surfaces
For construction purposes, 1.0m isopachytes

are suitable for grading projects, while the interval
of 1.0 cm is suitable for road resurfacing projects.
On road resurfacing projects isopachytes may be Figure 9. Isopachytes’ generation [10]
used to represent the variable thickness of the lev-
eling course (the course laid after the scraping of
the existing pavement and beneath the newly ap-
plied wearing course).
In addition, highly accurate volumes can be
calculated between the TIN model represent-
ing the thickness and the formal horizontal plane
placed at the zero level, as the TIN itself ideally
represents cut/fill thickness.
In this particular case, apart from the terrain
penetration line through the obstacle limitation
surfaces, the idea was to somehow depict the sheer
extent of this penetration. Therefore, the TIN
model representing the “thickness” of the pen-
etration was created and contours were generated Figure 10. Isopachytes representing terrain pro-
from such a model. By definition, these contours trusions through the obstacle limitation surfaces
were isopachytes. Bearing in mind the area to be

As the isopachytes resemble the general mor- are parts of the planes, it is very easy to develop
phology of the terrain, the picture of the terrain the software tool which incrementally moves the
penetration extent becomes quite clear. When one imaginary horizontal plane upwards, intersecting
of the two surfaces to be compared is rather flat, this plane with the models’ triangles [5], [10] . The
then the general flow of the isopachytes resembles set of straight intersecting lines generated at each
the contours of the opposing surface. incremental elevation presents contours (at a par-
Though aware of the value of the isopachytes on ticular elevation). A serious numerical problem is
grading projects, in some cases we were not thor- not to generate intersecting lines at each incremen-
oughly satisfied with their application. When the tal elevation, but to connect these scattered lines in
first author of this article was engaged on a dredg- continuous (open or closed) chains that can be fur-
ing plan for Kuwait harbor, the isopachytes gener- ther splined, in order to produce smooth contours.
ated between the existing and the proposed bottom In fact, contours generated from obstacle limitation
of the harbor were hard to follow even for the eye surfaces could be left unsplined.
of the professional. This happens whenever the
vertical differences between the two surfaces are
relatively small and when the surfaces frequently
change sides in the vertical sense (between cut and
fill). Even when there is no vertical change in sides,
the isopachytes may produce quite a vague picture.
The first author of this article also recalls the proj-
ect of a landfill in Switzerland, when large quanti-
ties of material excavated from the tunnel had to
be disposed of in a valley. Though there was only
a fill to depict (no cut), the undulated valley bot-
tom caused rather irregular shapes of the isopach-
ytes. Anyway, while the isopachytes may produce a Figure 11. Contours generated from the obstacle
graphical “nightmare” on simple grading and resur- limitation surfaces
facing projects, their shapes are nice when applied
on the differences between the terrain surface and
the obstacle limitation surfaces surrounding the air-
port. In this case, obstacle limitation surfaces make
the unique surface that is a flat one and to make the
picture even clearer, only the ishopachytes in the
areas where the terrain is higher than the obstacle
limitation surfaces, are needed. Thus, if assigned a
similar project in the future, we will surely be using
isopachytes again, as no set of cross sections con-
tains more (and more readable) data than a single
plan with the isopachytes.
Contours generated from the obstacle limitation
surfaces are always welcome. In plan projection Figure 12. Aerodrome Obstruction Chart – Type A
they give a general three-dimensional picture of
the entire assembly of obstacle limitation surfaces. 5. Profiles of obstacles
In municipality plans they impose vertical limits
on the structures planned in the area surrounding The Aerodrome Obstruction Chart – Type A is a
the airport. With the triangulated 3D model of the combination of plan and profile projection (Figure
obstacle limitation surfaces completed, it is excep- 12). In the lower part of the document there is a rel-
tionally easy to generate contours from such a mod- atively narrow plan depicting the approach surface,
el (Figure 11). Bearing in mind that the triangles with all the obstacles marked with the symbols pro-

posed by ICAO. The longitudinal profile resides

in the upper part of the drawing. The profile spans
the length of the approach path. All the obstacles
marked in the plan projection are placed at their dis-
tinctive elevations in the profile. Runway and ap-
proach surface profiles are also superimposed.
The software for marking the obstacles and
the correlation of obstacles in plan and profile
projections had already been developed [5],[10].
But the most interesting part of the obstacle pro-
file is the terrain itself. The terrain profile is not a
simple longitudinal profile cut along the extended
runway centerline and following the approach
path, nor a kind of combination of the profiles
generated along the diverging edges of the ap-
proach path. The terrain profile is supposed to be
a kind of a shadow profile [8] . At each incremen-
tal step along the centerline of the approach path,
the maximum terrain elevation is taken from the
terrain cross section, providing the cross section
spans the exact width of the approach path at this
particular location. The profile outlines the exact
terrain shadow for the observer standing aside the
approach path (Figure 13). To produce such a pro-
file, we turned again to the existing software tools
intended primarily for road design.
When setting the vertical alignment of the
street, we do not rely only on terrain profiles (or Figure 13. Shadow terrain profile
existing pavement profiles) cut along the center-
line or the profiles taken at some specific lateral For the creation of a shadow terrain profile
offset in relation to the centerline (when setting along the approach path, only a small automation
the new pavement edges on resurfacing projects). is added to the existing tools. Points are now au-
There are always some points scattered in the vi- tomatically attached to every vertex of each ter-
cinity of the centerline that are not positioned at rain triangle enclosed within the approach path
some constant lateral offset and have to be ob- and then labeled with station/offset pairs in rela-
served while setting the vertical alignment of the tion to the centerline of the approach path. The en-
street. These might be entrances to nearby build- tire “cloud” of points is generated in this manner.
ings, shop windows etc. Each of these points is Then this “cloud” is transferred into the longitu-
present in 3D either as a point surveyed in the field dinal profile developed along the centerline of the
and imported into the CAD drawing, or as a part approach path. When taken from the TIN model
of the TIN model. By using simple tools [5], these produced by exploding the grid model into trian-
3D locations are labeled with the station and lat- gles, this cloud nicely reflects the terrain morphol-
eral offset in relation to the centerline. Then comes ogy (Figure 15). Finally, the outline of the shadow
the tool that reads the station and the elevation of profile is redrawn manually, through the highest
each point (lateral offset is not needed for this op- points within the profile.
eration) and transfers the points into the longitudi-
nal profile accordingly (Figure 14).

6. Runway site distance analysis

After resolving the general orientation of the
runway, we moved to the general design activi-
ties. Except aircraft parking maneuvers, taxiway
fillets and similar details, these design activities
are supported with software tools and the proce-
dures that are more or less standard in both road
and airport engineering. But, on this particular
project, the roughness of the terrain, not only in
the approach zones, but even in the airport zone,
seduced us to deploy more powerful tools than
needed. It immediately became apparent that the
sight distance along the convex vertical alignment
of the runway may impose visibility problems.
By ICAO regulations, from each point along the
runway centerline that is 3m above the pavement
surface, any point within the distance of at least
half the length of the runway and which is also 3m
above the pavement surface must be clearly vis-
ible. In other words, the pilot, whose eye level is
3m above the pavement, must see the obstacle 3m
high at the distance which is at least half the length
of the runway [11], [12] .
We even have the tools for checking the avail-
able sight distance along the 3D road model [10]
. The necessary prerequisite for such an analysis
is the existence of the two strings of points, one
generated along the driver’s eye trajectory (1.1m
above the pavement surface and 1.5m from the
right pavement edge) and another one generated
Figure 14. Transferring point from 3D to the lon-
over the trajectory of a potential obstacle (0.1m
gitudinal profile
above the road surface and 1.5m from the right
pavement edge). Launching the straight lines of
sight between the two groups of points and search-
ing for the potential penetrations through the com-
plex triangulated model tells what the available
sight distance at each stationing interval along the
road is (Figure 16).
But, taking into account the fact that the cen-
terline of the runway is an absolutely straight line,
any influence on the sight distance may come from
the elements of the vertical alignment only and not
from the terrain or airside features on either side of
the runway pavement. Thus, to check the available
Figure 15. Cloud of terrain points transferred sight distance, it is absolutely unnecessary to carry
into the profile out 3D model analyses. It is enough to concen-
trate on the longitudinal profile. First, the vertical
alignment of the runway should be copied for 3m

up. Then, the lines of sight (half the length of the the application of the isopachytes for the terrain
runway long) are drawn between the points of the penetration analyses and with the use of the clouds
copied alignment. If no intersection with the ac- of points for the creation of shadow profiles.
tual vertical alignment of the runway exists, then
the available sight distance is satisfactory. References
1. ICAO Airport Planning Manual – Part 1., Montreal,
1987.
2. FAA Airport Master Plans, Washington D.C., 2007.
3. Horonjeff R., McKelvey F., Sproule W., Young S.

Planning and Design of Airports, fifth edition, Mc-
Graw Hill Companies, 2010.
4. Green P.J., Sibson R. Computing Dirichlet Tessel-

lations in the Plane, The Computer Journal, 1978;
21(2).
5. Gavran D. Razvoj metodologije i tehnoloških postu-

Figure 16. Calculating the available sight dis- paka za prostorno projektovanje aerodroma, Doktor-
ska disertacija, Građevinski fakultet Univerziteta u
tance from the 3D model Beogradu, 1996.
6. Petrie G., Kennie J.M. Terrain Modelling in Survey-

7. Conclusion ing and Civil Engineering, Computer Aided Design,
The 3D control of obstacles, surrouding the 1987; 19 (4).
airports, starts with the creation of the TIN ter- 7. ICAO Annex 14 to the Convention on International
rain model followed by the triangulated model of Civil Aviation, Montreal, 2004.
the obstacle limitation surfaces. Terrain protru-
sions through the obstacle limitation surfaces are 8. ICAO Aeronautical Charts – Annex 4 to the Conven-
tion on International Civil Aviation, Montreal, 1989.
calculated by using the relatively small subset of
tools intended for modeling complex intersections 9. ICAO Airport Services Manual – Part 6. – Control of
among the cut and fill slopes. The extent of these Obstacles, Montreal, 1983.
protrusions was illustrated by using isopachytes
generated between the TIN terrain model and the 10. Gavran D. Gavran Civil Modeller, GCMx64 – User’s
Manual, Beograd, 2008.
3D model of the obstacle limitation surfaces. In es-
sence, the isopachytes are the contour lines delin- 11. ICAO Aerodrome Design Manual – Part 2. – Taxi-
eating equal differences in elevation between the ways, Aprons and Holding Bays, Montreal, 1983.
two triangulated surfaces. As the obstacle limita-
12. ICAO Aerodrome Design Manual – Part 1. – Run-
tion surfaces in plan projection, together with the ways, Montreal, 1984.
terrain protrusion lines, constitute the Aerodrome
obstruction chart – Type B, the shadow profile of
the obstacles presents the main portion of the Aero- Corresponding author
drome obstruction chart – Type A. These shadow Sanja Milicevic,
profiles are automatically generated by using the Faculty of Civil Engineering,
simple road profiling tools, applied on the clouds Belgrade,
of points scattered over the terrain surface. Serbia,
So, as we tried to be as innovative and effec- E-mail: smilicevic@grf.bg.ac.rs,
tive as possible on this particular airport location sanja.mil83@gmail.com
study, we stopped here, ending up with the trian-
gulated models of the obstacle limitation surfaces,

Automation of dynamic forms generation in

enterprise applications
Andrija Jandrlic1, Dusan Tosic2
1
University of Belgrade, Faculty of Mechanical Engineering, Belgrade, Serbia,
2
University of Belgrade, Faculty of Mathematics, Belgrade, Serbia.
Abstract data entry, in order to notify the user if the entered

form data are invalid as soon as possible, elimi-
With big expansion of the Web and Internet,
nating unnecessary round trip to the server [2].
enterprise web applications became the widest
Also, forms like those for tax returns, calculation
type of enterprise software and with them web
of interest rates and payment schedules, account-
browsers the dominant type of client. In such ap-
ing etc., can define different types of calculation.
plications users send data through various kinds
Main difficulties in developing of XHTML
of forms. The content of such forms is dynamic:
forms are:
in case of initialization the data shown come from
– leveraging on JavaScript language for client-
a defined data source, wherein the case of sending
side validation and calculation, showing
invalid form data, the same data are returned and
of error messages, marking of controls as
displayed to the user along with the error messag-
required and dynamic layering of controls
es. Changing the nature of the form from a static
on the form [3]. This dependency is the
to a dynamic one, depending on its complexity, is
main reason why resulting form is very
a time costly and often tedious task which is prone
complex, and the code is difficult to write
to mistakes due to its nature. We propose auto-
and maintain,
mated dynamic form generation based on XForms
– making form dynamic, by providing a way to
language. The key idea of our approach is to use
initialize form data on first entry, and showing
XSLT transformations for insertion of form model,
of form data along with error messages after
along with errors collected from failed server-side
submission, when server-side validation fails
validation. Separation of model and user interface
due to incorrect form data.
controls, in XForms form definition, enables this
approach. Our solution is implemented using Java
Enterprise systems heavily based on forms, for
as a server-side platform, but it can be easily im-
example system in Tax Administration for tax payer
plemented in any other similar language.
registration, has tendency to change forms structure
Key words: XForms, enterprise applications,
along with business logic validation and calcula-
dynamic forms, XSLT
tion very often. In such cases, automation of form
generation with domain layer code generation is of
1. Introduction outmost importance. Form for tax payer registra-
Form defines structural exchange of data be- tion, shown in Figure 1, consists of eight tabs with
tween client on one side, and server on the other. over two hundred entry fields, so it’s easy to imag-
In XHTML forms [1], the data structure represents ine how much time and how many lines of code it
set of name-value pairs. Names and values that be- takes to make it completely dynamic.
long to this set are completely determined by the A recent trend in Software Engineering is the
user interface controls in the form. Adding a con- Model-Driven Development (MDD) movement
trol within the form also adds a new name-value which has stirred up quite a bit of controversy
pair to the set of the form data. with its claims of being able to fulfill the promises,
Apart from the standard user interface controls, which were made (but supposedly not kept) during
a form almost always contains some sort of client the CASE era [4]. One of the most popular domain
side validation. This validation is executed during for domain-specific MDD approaches is Web Engi-

neering, especially Model-based User Interface De- A form generator should enable easy addition
sign. However, unlike that of other domains,Web of new forms for different user channels: web
Engineering endeavors are seen as distinct from forms, MIDP (Mobile Information Device Profile)
general Software Engineering projects [5], [6]. [12], etc. Such generator should fulfill the follow-
ing conditions:
– should shorten the complete cycle of form
generation: from process analysis, over
static forms to dynamic forms in the end,
– should shorten the time needed for
implementation of the service layer for form
data processing,
– should generate code which guarantees the
consistency and formal compliance of the
business form design and business rules
specification.
Figure 1. Tax payer registration form Forms generator, based on a formal description
of form attributes, generates components of the
In this paper we present an automated forms user interface for web channels, API of the service
generator. More precisely, we describe key points layer, business logic, data access objects (DAO)
which forms generator should fulfil. Main focus of and a base for form components, as shown in Fig-
this paper is to describe Model-Driven automated ure 2. Generator should be able to execute the fol-
form filling, along with localized server-side vali- lowing services:
dation error messages. Although idea of automat- – reaction to user actions related to adding of
ed generation of resulting forms from XML de- the new forms, as well as changes, deletion
scription, using XSLT transformations, is not new and archiving of the existing forms,
[7], [8], it is new in a context of XForms - based – generation of service API for support of user
applications. Clean separation of model from vi- interface for different channels.
sual forms components, makes XForms ideal can-
didate for forms development.
Form description (model, navigation, rules and
calculations), can be utilized in one of following
manner, or by their combination: 1) AutoWeb Sys-
tem, based on HDM-lite language – a variant of the
Web design language HDM, proposed by Fraternali
and Paolini [9] allowing the automatic generation
of data-intensive Web sites. 2) Custom Documents
Metadata Repository used for registration of meta- Figure 2. Conceptual model of the Form Generator
data of business documents of the system and their outcome
mapping to system mechanisms. One of its com-
ponents, UI screens model, describes form fields, Components generated by form generator,
actions and validation rules using database entries should be able to perform the following actions:
and presentational metadata are generated along – reaction to user actions,
with specialized tables for the data described by the – form validation and generation of error reports,
conceptual model, in similar manner as [9]. In both – processing of submitted form, in case of
cases, information is used by a runtime environ- successful validation.
ment to generate Web forms dynamically. 3) Using
UML and ER notations, in a fashion similar to one Form description is defined by using XML tech-
used by Executable UML [10] and [11]. nologies, and in this case, based on the XForms 1.1

specification [13]. A system that would use such In its structure and usage, forms generator is not
generator should enable gathering data from a set intended to be similar to any other ”heavy” plat-
of predefined data sources. Transformation scripts form as for example Oracle Forms [15]. From us-
would also be defined for the purpose of filling the ability stand, platform preceding forms generation
form with the data from the data sources. It is pos- should enable visual creation of XForms forms:
sible to use standardized and well documented tech- – Creation of visual appearance of the forms
nologies to describe transformations (XSLT [14]). by simple drag-and-drop of the controls of
In the context of tax return workflow, for example, it the user interface.
is possible to define business rules for the server side – Possibility to import a predefined XML
(targeting Java / Spring business layer and Spring schema, generate and create an XML model
/ JSP UI components) and the client side alike. All defined by it, as well as, bind model with the
rules are an integral part of the business flow event controls of the user interface.
and can operate over the form data model and data – Definition of model item properties, through
model from the data source. It is possible to define which it is possible to specify visibility,
the following actions on the client side: accessibility and other constraints in the
– calculation of the co-dependent values of model.
the form based on the entered data – Definition of calculation expressions.
– demanding additional data from the server – Definition of different strategies for
side based on user’s entry, displaying errors in case the server side
– defining a list of values for, so called, look- validation was unsuccessful, after form data
up form fields (e.g. a data choice from a submission, using an event handler or in
dropdown menu of predefined values), some other way.
– definition of user interface control types, – Possibility of form deployment to the server,
– enabling / disabling a field based on user’s thus enabling quick check of the visual
entry or from the server side data, appearance of the form,
– hiding / showing fields based on user’s entry – Calculation and validation.
or from the server side data. – Possibility of form archiving.
It is possible to define the following actions on Finally, we practically tested form generator for
the server side: different kinds of forms. The most comprehensive
– pre-population of the form data model using were forms for tax payer registration. Such forms
the server side data sources represent ideal example for testing and presenta-
– extraction of the data from the form data tion because they are composed of numerous parts
model and generation of system services with over two hundreds input fields, containing a
calls based on user’s actions. lot of client side validation and calculation rules.
The following diagram shows the conceptual 2. XForms

internal structure of the generator:
XForms markup language is an XML-based
language for developing of web forms. Compared
to XHTML forms, XForms provides a higher
level in base approach, by separating purpose of
form from its presentation and using declarative
markup for operations description in form-based
applications [16]. It also offers easy reuse of form
components, strong validation of data types and
eliminates unnecessary round trip to server in case
Figure 3. Conceptual internal structure of the of incorrect form data. It also provides indepen-
Forms Generator dency of form from the platform on which form

is rendered - for one form definition it is possible element is usually placed inside <head> element
to define different so called XForms processors of XHTML document (the part of the document
for different types of devices, like PDA, mobile that has no visual representation).
phones, etc. Also, with XForms the need for Ja- The model instance is defined using <in-
vaScript is drastically reduced. stance> element, as a child of the <model>
According to [13], [17] and [18], by using element. Data in the model can be used for defin-
XForms, form is divided into three main layers: ing initial form data, and they can be changed as
–– Instance, which contains only form data, well through the user interface controls to which
without any description of presentation layer they are bound to.
or validation. Instance is used for storing The Model Item Properties are defined using
and sending of data between user and server. <bind> element. For example, if model instance
It is defined in form of XML segment inside in tax registration form is registration-
a containing document, or as an external Form-instance, then it makes sense to define
XML entity which is then referenced using following constraints:
XLink [19]. – registration number must be eight digits
–– Model, which contains instances along with positive integer, required for input
various validation definitions, constraints, <xf:bind nodeset=”/registrationForm-in-
calculations and necessary meta-data which stance/registrationNumber”
required=”true()”
are used to define communication with the id=”registrationNumber”
Web server. Validation can use associated constraint=”. castable as
XML schema. Constraints and calculations xs:positiveInteger and string-length(.)
are defined using XPath 1.0 language [20]. = 8” />
–– User interface composed of various types
of controls, which are used to define the – In case the company, that is being registered
appearance and relations to a model instance as a tax payer, is selected to be a partner
(so called binding). This layer also includes company, it is obligatory to specify the
advanced functionalities, like repeating of number of partners
controls, dynamic bindings of user interface <xf:bind nodeset=”/registrationForm-in-
stance/numberOfPartners”
controls, etc. required=”/registrationForm/
partnerCompany=’true’”
XForms is not a free-standing document type, readonly=”/registrationForm/
instead it is designed to be a part of some other partnerCompany=’false’”
XML-based language, like XHTML, Synchro- id=”numberOfPartners”
constraint=”(/registrationForm-in-
nised Multimedia Integration Language (SMIL) stance/partnerCompany=’true’
[21] or Scalable Vector Graphics (SVG) [22]. and string-length(.) > 0
and . castable as xs:positiveInteger)
or
2.1 Model (not(/registrationForm-instance/
partnerCompany=’true’)
Model in XForms describes what form repre- and string-length(.) = 0)” />
sents and which data it contains. It is defined with
<model> element, containing data about model Attribute ”constraint” specifies a predicate that
instances, along with associated constraints. Con- needs to be satisfied for the associated instance
straints on XML instance can be static, expressed data node to be considered valid [13]. The value
through the XML Schema [23] suitable for defi- of this attribute is XPath logical expression.
nition when the rules are not changed during the XForms model also contains one or more
user’s interaction. On the other side, the model can <submission> elements for data submission,
include so called Model Item Properties - dynamic used to define information about what is sent,
constraints or calculations defined using XPath, where is it sent to and how.
and evaluated by XForms processor. The model

2.2 User interface controls xf:label>

<xf:alert>Please specify valid
XForms user interface controls define visual ap- 8-digit registration number</xf:alert>
pearance of the model. Values displayed in the user </xf:input>
interface controls are tied to nodes in the XForms
<xf:select1 ref=”partnerCompany”
model. A user interface control is bound to the mod- appearance=”full”>
el in one of the two following ways [24]: <xf:label>Partner company?:</
– with bind attribute whose value represents xf:label>
an identification of the previously defined <xf:alert>Mandatory field</
xf:alert>
bind element
<xf:item>
<xf:input bind=”registrationNumber”/>
<xf:label>Yes</xf:label>
<xf:value>true</xf:value>
– with ref attribute whose value represents </xf:item>
an XPath path to the node that the control is <xf:item>
bound to <xf:label>No</xf:label>
<xf:input ref=”/registrationForm/ <xf:value>false</xf:value>
registrationNumber” /> </xf:item>
</xf:select1>
The way the control is displayed depends on the <xf:input ref=”numberOfPartners”>

data type and model item properties of the node <xf:label>Nr. of partners:</
that the control is bound to. For example, the same xf:label>
<input> control can be displayed as a text field <xf:alert>
Number of partners is mandatory
or as a date picker control in case that the node
when company is partner company
data type is xsd:date. If the control is bound to </xf:alert>
an invalid node, an error message should be dis- </xf:input>
played. Also, if a node is marked as a read-only ...
value, the value in the control will not be editable. <xf:group>
The connection between the control and the
model is many-to-one, and one of the several rules Defined xf:group control does not represent
below may apply: a user interface control. It is rather a convenient
– parts of the model do not need to have a way to group controls and bound them to the mod-
visual representation, el through the “ref“ attribute by calculations rela-
– parts of the model can be used only for tive to the ”ref” attribute value of the group con-
output with the ”output” element, trol. As already noted, ”input” control is usually a
– parts of the model can be calculated, but not text field, except when the data type is specified as
directly entered, xsd:date type. ”Select1” control, depending
– parts of the model can have associated on the value of attribute ”appearance”, is shown as
multiple controls. radio button, drop-down list or list. The resulting
document is shown in Figure 1.
User interface controls are very similar to For all controls the user interface is also char-
HTML controls within the form and include text acterized by the following:
fields, drop-down lists, radio buttons, lists, but- – User interface is defined using cascading
tons, etc. Within each of the controls it is possible stylesheet (CSS), in the same way as in
to specify additional elements that determine the HTML. Each control therefore contains a
way in which the controls are displayed. ”class” attribute.
The model for defining the registration form, – Definition of specific DOM2 events and
could be visually described as follows: event controllers that handle them.
<xf:group ref=”/registrationForm”>
<xf:input ref=”registrationNumber”>
<xf:label>Registration number:</

2.3 Events and actions 3. Forms generator

Event model in XForms is based on the DOM2 Traditionally, the top layer of the web applica-
events specification, the same as in the JavaScript. tion is implemented using the Model-View-Con-
The novelty in the XForms is the possibility to de- troller (MVC) pattern. In it, the view represents
claratively register event handlers in accordance the current page that the user sees and where the
with the XML events specification. Events in data from the model are displayed. User interac-
XForms can be classified into four categories [17]: tions on the view are accepted and interpreted by
–– life cycle - an event that deals with setting the controller, which interacts with business ob-
up or tearing down the XForms engine, jects, builds models, and depending on the action,
–– notification - indicator that something forwards the appropriate model to the view [25].
happened, e.g. focusing on fields, the field The view is then displayed to the user again. In
has become valid / invalid, etc., this way, the roles of each component of the form
–– interaction - event that causes some kind of are clearly separated: the model is the holder of
processing, the information displayed on the view, while the
–– error - indicator that an error has occurred. controller manages the process and supplies the
view with the model. Form generator was applied
Action represents the way of answering to an to a web application that uses Spring MVC [26] as
event. Some of the most important actions defined the web library, Orbeon [27] as XForms proces-
by XForms are: sor and Saxon [28] as an XSLT 2.0 processor. To
– message - defines a message displayed to generate classes corresponding to the XML model
the user for which it’s possible to specify form and provide transformation of instances of
several levels of ”intrusion”, from an these classes into an XML model and vice versa, a
ordinary suggestive to a modal message. JiBX [29] library was used.
The following sequence defines an Separation of the model from the user interface
action showing the modal message after controls in XForms language enables automation
initialization of an XForms handler: of form generation. The void between the web de-
<xf:message level=”modal” ev:event= signer and the programmer can be completely cir-
”xforms-ready”> cumvented and making a form entirely dynamic
Hello!
</xf:message> can be automated in the following way: during the
problem analysis, a team of analysts firstly defines
– setvalue - sets the value for the node of the an XML schema used to depict an XML model of
model instance. The following sequence the form. In this phase different business rules and
initializes the value of a partnership calculations are defined on client side (the form
company registration document to ”false”: itself) and server side alike. Form created in this
<xf:setvalue ref=”registrationForm/ way can be then adjusted additionally and visually
partnerCompany” value=”false” enhanced by the web designers, by the rearrang-
ev:event=”xforms-ready” /> ing of the user interface controls and by definition
of different styles. That way the form receives its
– dispatch - sends event specified by the final appearance.
value of the ”name” attribute to an element Defining an XML schema provides a triple ben-
specified as the value of a ”target” attribute efit: it is used to define the appearance, types and
– send - sends form data, thus throwing an constraints over the model instance displayed on the
xforms-submit event form, to generate Java classes [30] on the server side
which correspond to the XML model and to gain the
The <action> element is used for grouping basic layer of server validation by its parsing.
actions. Actions, in that case, are executed in the Initialization of the model instance of the form
specified order. is accomplished by marshalling Java class instance
into XML, that is then inserted by an XSLT trans-

formation to the place of the previously defined throw new IllegalArgumentException(

model instance (defined by the analysts). XML “Value ‘” + source + “’ cannot be
converted to XML Source”);
document with the model instance is inserted into }
the resulting document using the XSLT function
document(object), which accepts an exter- Standard sources of XML documents are pro-
nal document URI as an argument. The standard cessed in a straightforward manner. In other cases,
Java library defines the interface javax.xml. a check is performed among JiBX marshallers by
transform.URIResolver whose method inspection whether there is one supporting con-
resolve(String href, String base) version from the model instance to an XML docu-
is called when the XSLT processor runs into ment. If such marshaller exists, it is used to mar-
document(object) method during process- shal an object, which is then inserted into the re-
ing of the XSLT transformation. Spring’s controller sulting document. Otherwise an error is reported.
provides model to the view in the form of a map, In the general case it is possible to define a mar-
where the key is the name of the model instance, and shaller that translates model instances regardless
the value is the instance itself. Therefore, the XSLT of the type (class), translating every class attribute
processor needs to be provided with a special imple- into an XML element with the same name, while
mentation of URIResolver which is in charge of in special cases customized marshallers can be de-
marshalling an object into XML and its import. A fined. The previous statement is significant since
suitable code snippet could look as follows: the aforementioned implementation of URIRe-
if (source instanceof Source) {
return (Source) source; solver should only be extended with a defini-
} else if (source instanceof Document) tion of a new marshaller in case there is a need for
{ it, without any code change.
return new DOMSource(((Document) At this moment it is important to mention that,
source).getDocumentElement());
during development of XForms forms, certain
} else if (source instanceof Node) {
return new DOMSource((Node) source); naming conventions had been introduced in order
} else if (source instanceof Reader) { to support easier automation. For example, model
return new StreamSource((Reader) instance identifiers should end with ’-instance’ in
source); order to follow the convention (e.g. the registra-
} else if (source instanceof Input-
tion form instance has the identifier ’registration-
Stream) {
return new Form-instance’). Bearing this in mind, the part of
StreamSource((InputStream) source); the XSLT transformation, used to insert a model
} else if (source instanceof Resource) instance into a form, is defined as follows:
{ <xsl:param name=”modelDocumentsNames”
Resource resource = (Resource) source; as=”xs:string*” />
return new StreamSource(resource. <xsl:template name=”copyAny”
getInputStream(), match=”node()|@*”>
resource.getURI().toASCIIString()); <xsl:copy>
} else { <xsl:apply-templates
for (Marshaller marshaller : mar- select=”node()|@*” />
shallers) { </xsl:copy>
if (marshaller.supports(source.get- </xsl:template>
Class())) { <xsl:template name=”copyInstance”
ByteArrayOutputStream baos = new match=”xf:instance”>
ByteArrayOutputStream(); <xsl:variable name=”instanceName”
marshaller.marshal(source, new select=”substring-before(@id,
StreamResult(baos)); ‘-instance’)” />
return new StreamSource( <xsl:choose>
new ByteArrayInputStream(baos.to- <xsl:when test=”exists(index-
ByteArray())); of($modelDocumentsNames, $instance-
} Name))”>
} <xsl:call-template
name=”insertModel”>

<xsl:with-param Using the xsl:param element, a global trans-

name=”modelDocument” formation parameter is defined with the ’model-
select=”document($instanceName)”/>
</xsl:call-template>
DocumentNames’ containing an array of model
</xsl:when> instance identifiers which should be replaced by
<xsl:otherwise> XSLT form transformation. In the example of
<xsl:copy-of select=”.” /> application registration, a model instance called
</xsl:otherwise> ’registrationForm-instance’ is dynamic and should
</xsl:choose>
</xsl:template>
be replaced with a valid instance using transfor-
<xsl:template name=”insertModel”> mation. On the other hand, the instance containing
<xsl:param name=”modelDocument” /> information about towns used only as reference
<xsl:copy> data based on which it’s possible to make a choice,
<xsl:apply-templates select=”@*”/> is left as is. The ’copyInstance’ template is applied
<xsl:copy-of
select=”$modelDocument” />
on model instances (xf:instance). It removes
</xsl:copy> the ’-instance’ suffix from the instance name, and
</xsl:template> verifies that such instance is marked for replace-
Figure 4. Processing XSLT transformation and inserting model instance into XForms form flow

ment. If so, using an already described function <level>CRITICAL</level>

document(object) and a registered URIRe- </error>
</errors>
solver, an XML document wih model instance
is retrieved and an already existing instance is re-
It is now possible to display error information by
placed. If not, model instance is left as is. Instance
using XSLT transformation to match every error to a
replacement is performed using XSLT functions
corresponding model node by XPath location, i.e. to
xsl:copy and xsl:copy-of. The first pro-
a user interface control that the node is bound to. Er-
vides more control during copying, but demands a
rors can be induced over that control in three ways:
more precise definition since it copies the content
1. By dispatching xforms-invalid event
of the current node without copying the attributes
(or some other, for this purpose, customized
and child nodes, whereas the latter function copies
event), that would be processed by the action
everything [31]. Processing and insertion into the
afterwards - an event handler previously
form flow is displayed in Figure.
defined by the analysts. Handlers would
In the case that not only data appear, but the
then, depending on the type of the error on
errors as well should be displayed on the form af-
the specific node, display localized error
ter an unsuccessful validation, situation becomes
messages. The advantages of this approach
significantly more complex. Collected errors are
are following: by dispatching an xforms-
gathered in a class instance specifically designed
invalid event, the XForms processor
for that purpose. This instance is marshalled into
is notified which model node is invalid; it
an XML document similarly as the model instance,
also enables the analyst to specify localized
and in this shape is made available to the XSLT
messages and specific actions based on error
transformation. XML documents containing infor-
during form development phase. Currently
mation on errors are defined according to specially
this approach is inapplicable, due to the lack
designed XML schema. Two main element types
of DOM2 events specification and inability
have been defined by the schema: basic (Er-
to pass arguments (context) to the event
rorType) and grouping (ErrorGroupType).
(in this case arguments and error code).
Each of the types defines sub-elements such as:
Because of this, there is no way to give
code, message, error level, as well as path to the
specific information about the error to the
invalid model node. Error details can be used at a
event handler, only to inform that some error
point where more detailed information should be
has occurred. This flaw has been rectified in
displayed along the error. Grouping type is useful
the upcoming DOM3 specification, so the
in situations where several errors are reported for
proposed approach will be applicable when
one node, by eliminating the need for repetition
the XForms language starts relying on it.
of the path to the model node. An example of an
2. Similar to the previous, by dispatching of
XML document containing information on valida-
the xforms-invalid event, with the sole
tion errors looks as follows:
<?xml version=”1.0” encoding=”UTF-8”?> difference that by an XSLT transformation
<errors xmlns=”http://www.pras.org/Val- an xf:switch element could be added, for
idation/Errors”> showing/hiding different parts of the form.
<error path=”registrationNumber”> Identifiers in such element are equal to the
<code>error.not_unique</code>
error codes. Each identifier uniquely identifies
<message>Company with provid-
ed registration number is already part of the form which should be shown. The
registered as tax payer flaw of this approach is that the XForms
</message> processor suffers from enhanced load and the
<level>CRITICAL</level> form is becoming more and more complex
</error>
depending on the number of errors.
<error path=”address/town/name”>
<code>error.missing</code> 3. By generating a suitable XHTML fragment
<message>Address of company head- using XSLT transformation that would
quarter is mandatory</message> display error message(s) based on error

code(s). This kind of approach does not of errors or errors with defined attribute ’path’,
burden XForms processor and does not whose value has been adjusted to contain the ab-
make the form more complex. Moreover, solute path to the invalid model node for easier
it is necessary to add model item properties matching with the value of the ’ref’ attribute of the
to the generated fragment, in order to mark corresponding user interface control). The content
the invalid model nodes to the processor. of such container elements is copied by applying a
This causes dispatching of the xforms- template with name ’copyError’.
invalid event to the related controls. <xsl:template name=”copyErrors”
match=”err:errors” mode=”copy-errors” >
<xsl:param name=”modelRootName”
In case that there are errors, the XML docu- required=”yes” />
ment with model instance, passed as an argument <xsl:element name=”{local-name()}”>
to the XSLT transformation, contains: form model <xsl:apply-templates mode=”copy-er-
instance and instance with the errors, both within rors”>
a <bind> element. This model is more appropri- <xsl:with-param name=”modelRootName”
select=”$modelRootName” />
ate for processor handling than the model where </xsl:apply-templates>
instances are defined separately. At the same time, </xsl:element>
errors element is part of namespace with the ’err’ </xsl:template>
prefix; model instance sent from the form does <xsl:template name=”copyErrorWithPath”
not belong to any namespace, while the remaining match=”err:errorGroup |
err:error[@path]” mode=”copy-errors”>
elements belong to the namespace with the ’bnd’ <xsl:param name=”modelRootName”
prefix. Document with errors is inserted through required=”yes” />
transformation as one of the instances of the form <xsl:element name=”{local-name()}”>
model. Part of the XSLT transformation, that per- <xsl:attribute name=”path”
forms insertion of the error model instance, called select=”xslext:getAbsolutePath($m
odelRootName, @path)” />
when there are errors in server, has XML docu- <xsl:apply-templates mode=”copy-er-
ment with the model instance as a parameter, and rors” />
it is divided into three parts: </xsl:element>
The first part of the template named ’inser- </xsl:template>
tErrors’ adds ’error-instance’ instance to the <xsl:template name=”copyError”
match=”err:*” mode=”copy-errors”>
form. XForms instances must not belong to any <xsl:element name=”{local-name()}”>
namespace, and since in XHTML forms there is <xsl:copy-of select=”@*” />
usually a default namespace (xmlns=”http:// <xsl:apply-templates mode=”copy-er-
www.w3.org/1999/xhtml”), it is necessary rors” />
to assign xmlns=”” next to the model instance. </xsl:element>
<xf:instance xmlns=”” id=”error-in- </xsl:template>
stance”>
<xsl:apply-templates By executing transformation, an instance with
select=”$modelDocument/bnd:bind/ errors is created, similar to the starting XML doc-
err:errors” mode=”copy-errors” > ument with errors, but with namespace removed
<xsl:with-param name=”modelRootName”
select=”name($modelDocument/bnd:bind/ and paths replaced by absolute ones.
bnd:model/*)” /> The second part of the template is related to no-
</xsl:apply-templates> tifying XForms processor about the user interface
</xf:instance> controls bound to invalid model nodes. This is
achieved by adding model item properties through
From ’insertErrors’ template, two other tem- transformation for every node having a reported
plates are applied. The first one inserts root ele- error. Nodes of the model, marked as invalid, are
ment ’errors’, without namespace (i.e. with local matched with errors by absolute path.
name), by applying function local-name(). <xsl:for-each select=”$modelDocument/
The second generates ’container’ elements (groups bnd:bind/err:errors/err:errorGroup
$modelDocument/bnd:bind/err:errors/

err:error[@path]”> /errorGroup[@path=’/registrationForm/
<xsl:variable name=”modelRootName” fullName’]) = 0” />
as=”xs:string”
select=”name($modelDocument/bnd:bind/ Model item properties are calculated and
bnd:model/*)” />
<xsl:variable checked on every change of the form state. As
name=”absolutePath” as=”xs:string” sending form data is disabled, as long as the form
select=”xslext:getModelRootAbsolutePath is invalid, it’s necessary to erase the error instance,
($modelRootName, @path)” /> so that constraints defined by added model item
<xf:bind nodeset=”{$absolutePath}” properties will be satisfied. This is achieved by
constraint=”count(instance(‘error-
instance’) adding an event handler for the xforms-sub-
/error[@path=’{$absolutePath}’]) = 0 mit event, to xf:submission control:
and <xf:delete ev:event=”xforms-submit”
count(instance(‘error-instance’) nodeset=”instance(error-instance)/*” />
/errorGroup[@path=’{$absolutePath}’])
= 0” /> Such handler removes the error instance from
</xsl:for-each> the model, causing the logical expression in the
constraint definition to be evaluated into value
Using transformation, every error grouping el- ”true”. In that way the form is marked as valid and
ement and every basic error type with ’path’ attri- its submitting is enabled.
bute, adds one model item property, with the fol- The third part of the template is related to the er-
lowing constraint: ror display itself. Template copies all user interface
count(instance(‘error-instance’)/er-
ror [@path=’{$absolutePath}’]) = 0 controls and checks if there are reported errors on
and the model node bound to current control with ’ref’
count(instance(‘error-instance’)/er- attribute. Matching is performed by comparing the
rorGroup[@path=’{$absolutePath}’]) = 0 value of the control’s ’ref’ attribute with the value
of error or errorGroup element’s ’path’ attri-
Such constraint checks whether there are re- bute. If such errors exist, an XHTML fragment is in-
ported errors on specific node set. Using added serted through transformation (in this case a <div>
model item properties, XForms processor is sig- element with certain style). Using xf:repeat
naled about invalid model nodes. For such nodes XForms element, nodes of the error instance, cor-
the processor will fire an xforms-invalid responding to the current user interface control, are
event on the related user interface controls. For iterated through and for each of them the content of
example, if there are reported errors for a regis- their message element, representing a localized
tration number and full company name, two fol- error message, is displayed.
lowing model item properties will be inserted by <xsl:template name=”copyControl”
transformation: match=”xf:input |
<xf:bind nodeset=”/registrationForm/ xf:textArea | xf:range |
registrationNumber” constraint=” xf:select | xf:select1 | xf:secret”>
count(instance(‘error-instance’) <xsl:call-template name=”copyAny” />
/error[@path=’/registrationForm/ <xsl:variable name=”path”
registrationNumber’]) = 0 as=”xs:string”>
and <xsl:value-of separator=”/”>
count(instance(‘error-instance’) <xsl:sequence
/errorGroup[@path=’/registrationForm/ select=”ancestor::xf:group/@ref” />
registrationNumber’]) = 0” /> <xsl:sequence select=”@ref” />
<xf:bind nodeset=”/registrationForm/ </xsl:value-of>
fullName” constraint=” </xsl:variable>
count(instance(‘error-instance’) <div class=”msg-error” xmlns=”http://
/error[@path=’/registrationForm/ www.w3.org/1999/xhtml”>
fullName’]) = 0 <xf:repeat nodeset=”instance(‘error-
and instance’)/error[@path=’{$path}’]
count(instance(‘error-instance’) |

instance(‘error-instance’) time for XML processing, in the last couple of years

/errorGroup[@path=’{$path}’]/error”> XML processing libraries and XSLT processors are
<xf:output ref=”message” />
<br xmlns=”http://www.
much improved, making that time insignificant. The
w3.org/1999/xhtml” /> proposed form generator is tested practically for dif-
</xf:repeat> ferent kinds of forms. One of these forms is form for
</div> tax payer registration. It represents an ideal example
</xsl:template> for testing and presentation because it is composed
of eight parts with over two hundreds input fields.
Control’s path to the model node in the before Time taken to complete the overall process that in-
mentioned template is defined with the path vari- cludes: submitting form data, returning back and
able. It is necessary, while determining the path, to displaying validation errors, is around three seconds,
check whether the control belongs to the xf:group which abides to recommendations of web applica-
grouping element. In that case the absolute path to tions usability. The results would be even better if
the node is resolved by adding the path from the additional time was not spent on form processing by
’ref’ attribute of the xf:group element to the rela- the side of the Orbeon XForms processor. Proces-
tive path of the control. The value of the ’nodeset’ sor embedded into application itself can be used in
attribute of the xf:repeat element is an XPath order to achieve better result, or even better, proces-
expression, providing as a result a set of nodes to sor embedded into web browser itself. It is planned
iterate through. The context of every iteration rep- for XForms language to be a part of the upcoming
resents the current node (error element). Body XHTML specification, so it is reasonable to believe
of xf:repeat element is then executed for each that, in the near future, embedded XForms proces-
node. Element <xf:output ref=”message” sors in Web browsers will be developed.
/> is simply used to display the text of the mes- In this work we also presented different strate-
sage element of the current node. gies for displaying localized error messages, col-
In previously described way a complete cycle lected during failed server-side validation. Defi-
of automated process of dynamic form genera- ciencies of XPath 1.0 and DOM2 events speci-
tion has been concluded, from form initialization, fication, on which XForms language relies on,
to displaying validation errors, during submitting represent the main diffculty in implementation
form data. Defining new forms does not require of form generator. This was one of the reasons,
neither code, nor XSLT transformation change, among other things, the choice fell to a less intui-
since the whole process of model and errors inser- tive strategy for display of validation errors. XSLT
tion and notification of XForms processor about transformations, used in form generator, should be
errors is executed automatically, regardless of the improved as well, when the next XForms specifi-
model instance sent from the form. cation becomes an official recommendation.
Our future work will be inclusion of a business
4. Conclusions and Future Work process description along with form definition,
using for example XML Process Definition Lan-
The form generator, presented and described in guage - XPDL [32], and authorization description
this work, is founded on proved and recommended using ARBAC02 [33] model. This could round up
XML-based technologies: XML Schema, XSLT and automate the whole business process, from
transformations, XPath and XForms languages. model and form definition, to actions, business
Separation of a form into different layers in XForms rules and validation.
language, and above all, clear separation of model
data from user interface controls, enables automa-
tion of complete form generation process. The References
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an object model on the server side after form sub- Language W3C Recommendation at http://www.
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University of Technology, 2006

Electromagnetic compatibility of inverters in

low power wirelless technology enviroment
within globally unlicensed ISM 2.4 ghz short-
range radio frequency band
Amir Hadzimehmedovic1, Vlado Madzarevic², Mario Pejdanovic², Jasna Hivziefendic1
¹ University of Tuzla, Tuzla, Bosnia and Herzegovina,
² Faculty of Electrical Engineering,University of Tuzla, Tuzla, Bosnia and Herzegovina.
Abstract tem integration is massively produced and widely

available. Figure 1. show a precentage of grid tied
Due to commercialization of photovoltaics in
solar systems in the past few decades and a trend
residential market as well as renewable energy
of integrating to the public electrical grid networks.
sources grid integrations, power electronics is more
widely used in preparation of grid parameters due
to better performance during disturbances as well
as reduced cost in maintenance and better failure
predictions. Unfortunately, due to the switching
nature of semiconductors, wave forms generated
within 2.4 GHz ISM band can have significant im-
pact on performance of such communication sys-
tems up to a point disabling them completely. EMC
is mostly achieved by addressing the EMI source
through techniques in the secondary environment,
such as shielding and filtering but modern approach
Figure 1. Percentage of grid tied solar systems [1]
requires analysis and avoidance measure during
component design phase. A full-bridge inverter
Power commonly found in renewable grid tied
have been analyzed by using the developed model
systems ranges from 2-10 kW for home PV sys-
for up to 5 GHz sampling frequency of the output
tems up to 50 GW for wind farms. Availability of
parameters in order to yield results for the targeted
grid tied solar systems targeted for residential us-
frequency within one period of base device fre-
age as a way of cost reduction especially in de-
quency. Results are compared with field measure-
regulated system with constantly changing energy
ments at inverter grid integrated solar power plant
prices, introduced continuous usage of inverters
(150 KWA) and only presented in a narrow targeted
for creating sinusoidal parameters for network
frequency band due to limits of current software
integration. Many of these systems do not have
tools and the size of the sampled data.
proper filtering capabilities as well as shielding in
Key words: grid-tied, converter, inverter, power
order to reduce electromagnetic interference.
electronics, radiated energy, Bluetooth, wireless.
Interference character depends on the frequen-
cy range of the disturbance and generally can be
1. Introduction divided as a conducted or radiated interference.
Figure 2. shows common frequency spectrum that
According to several international renewable
can be observed when dealing with semiconduc-
agency investments in renewable energy are rising.
tors in switching mode[3].
[1], [2] Grid integration of renewable sources is be-
coming a necessity as increased sources are avail-
able and mature semiconductor technology for sys-

Simulation system is analyzed in full-bridge in-

verter configuration. The converters are built with
the IGBT/Diode block. The IGBT/Diode block is
a simplified model of an IGBT (or GTO or MOS-
FET)/Diode pair where the forward voltages of the
Figure 2. Frequency spectrum disturbance forced-commutated device and diode are ignored.
clasification Voltage-sourced converters are controlled in open
loop with the Discrete PWM Generator block avail-
Effects of radiated electromagnetic interference able in the Extras/Discrete Control Blocks library.
are usually not analyzed during the design process The two circuits use the same DC voltage (Vdc =
and commonly are treated with conventional shield- 400V), carrier frequency (1080 Hz) and modulation
ing methods later. Observing frequency ranges for index (m = 0.8) [9], [10]. Figure 4 Matlab model of
radiated noise, it is known that most communica- fullbridge inverter.
tion protocols and standards are placed within this
frequency range. Wide usage of license free ISM
2.4 GHz band expanded rapidly due to low cost
hardware available almost in any modern commu-
nication device using Wi-Fi, Bluetooth, etc… Many
modern communication technologies have been de-
veloped with device autonomy as a targeted feature
which directly implied reducing the power output
of the communication circuitry. Development in Figure 4. Full-bridge inverter model
energy conservations, using smaller radiated pow-
DC voltage (Vdc = 400V) in a model represents
er emissions for communication is mandatory in
stable source of voltage from photovoltaic system.
many developed technologies including almost all
In order to analyze frequency range od 2.3-2.5
of them functioning at 2.4 GHz ISM band.
GHz, Nyquist frequency, output must be sampled
In the last decade, renewable energy sources
up to 5 GHz resulting in large sample since it is
as well as power electronics also developed rap-
analyzes with base frequency of grid frequency of
idly[4], [5]. Combined usage with purpose of
electrical power system.
grid integrations, allowed higher power outputs
which resulted in non-sinusoidal waves of cur-
rent and voltage on the conductors in higher levels
than before due to increased switching speed of
the components. Today, it is necessary to analyze
those waveforms in terms of EMC and influence
between renewable energy sources and communi-
cation technologies [6].
2. Description of simulation system

Transformerless photovoltaic grid-connected
inverter was modeled common for solar grid inte-
grations[7] [8].
Figure 5. Aliasing effect of undersampled signal
Discrete Fourier transformation was used for

analysis to find high frequency components of
base power system characteristic values, voltage
Figure 3. Simplified block diagram od PV system and current.

∞
 t t 3.1. Fullbridge inverter simulation results
x(t ) = ∑  a n cos 2π n + b n s i n 2 π n 
n =0  T T
T
2  t
an =
T0∫ x(t ) c o s  2 π n  d t
 T
T
2  t
T ∫0
bn= x (t )  2 π n  d t
 T 
Where an and bn represent Fourier coefficient’s.

By discretizing the function (sampled voltage and
current values)
 2π  ∞
X = k  = ∑ x[n]e − j 2 π k n / N , k = 0,1,2,..., N − 1
 N  n= x Figure 6. Voltage waveform on the fullbridge
inverter
numerical analysis can be applied with built in
Matlab FFT functions. With mathematical formu- Voltage waweform clearly shows number of
lation FFT analysis could be done using parallel triggers created by semiconductors in order to rec-
computing or computing cluster speeding up in- reate near sinusoidal waweform.
dependent calculations within application of the
executable code or creating large scale cumulative
analysis in systems consisting of higher of vari-
able sources such as wind farms. It is necessary
to implement such speed optimizations in order
to evaluate any physical component in given cir-
cuitry which results in significantly large samples
in every component output. Within this simulation
recorded waveforms have been captured at the
outputs of the semiconductor devices. Values are
recorded for the output voltage and current. In the
analysis, due to sample size, it is possible to ana-
lyze only one period of signal due to its periodic
character, discarding the initial transient effects.
Figure 7. Harmonic analysis of first 50 harmon-
3. Simulation results ics of voltage
Several IEEE and IEC standards which target
It is clear that higher harmonics are evident and
electromagnetic compatibility problems define
in consideration of power quality standards there
maximum allowed interference up to first 50 har-
are components that need attention.
monics for different classes of devices. The simula-
Analyzing the frequencies in targeted 2.4 GHz
tion results in his analysis will also include frequen-
range, it is evident that 3∙10-5 amplitude of initial am-
cy range up to 3 kHz.[9] Due to large number of
plitude of voltage at power system base frequency.
harmonics analyzed and a density of visualization
Current waweform created by semiconductors
graph it was feasible to visualize targeted range of
in order to recreate near sinusoidal waweform, is
2.3-2.45 GHz only which is presented in the paper.
singificant in far field analysis. It clearly shows the
effects of semiconductor triggering.

Higher harmonics are evident and in consid-

eration of power quality standards these compo-
nents generate close to sinusoidal currents and
would pass many of the power quality standards
within firs 50 harmonics.
Figure 8. Frequency components of voltage in

2.4 GHz range
Figure 11. Frequency components of current in

2.4 GHz range
Results show 7∙10-8 and 8∙10-8 amplitude of

initial amplitude of current at power system base
frequency.
idering equations describing electrical far end
fields around elementary doublet of conductor
(imaginary elementary antenna):
Figure 9. Current waveform on the fullbridge

inverter
Figure 12. Electrical far field of the electromag-

netic wave radiated by each elementary doublet
I ⋅ d ⋅ l ⋅ sin q
dHΦ= (1 + g ⋅ r ) e − g ⋅r
4⋅π⋅r2
d Er =
I ⋅ d ⋅ l ⋅ s i nq 2 cos q
4 ⋅ π ⋅ jwro
⋅
r3
[
(1 + g r )e − g r ]
Figure 10. Harmonic analysis of first 50
d Eq =
I ⋅ d ⋅ l ⋅ s i nq s i nq
[
⋅ 2 (1 + g r + ( g r ) 2 e − g r ]
harmonics of current 4 ⋅ π ⋅ jw r o r

If we are considering far end fields we can as-

sume:
l〈 〈 r → H r ≅ 0
IDS e − g ⋅r
H q ≅ w2 s i nq
4πC 2 r
Z w IDS e − g ⋅r
l 〈 〈 r → Ej ≅ w2 s i nq
4πC 2 r
Power of radiation in this case can be:

→
→ → → * → r Figure 13. Inverters at Kalesija (B&H) solar
P = E^H →Wr = ∫ S fera P
r
dS
power plant
2π
 w2 IDS 
l〈 〈 r → Wr ≅ 2π Z w  
2  ∫ ( s i nq ) dq
3
In order to eliminate ambient radiation on open
 4πC  0 area site, two measurement sets were made, with
inverters switched off and at full power.
We can analytically solve these equations for
vacuum where
mo
Zw =
eo
2
2 π  DS 
Wr = Rr I Rr = Z w  
2 l 
For far end field we can notice that the current

and wavelength play major role in energy radiated
from the conductor. Results of simulation shows
that at given frequency range devices are giving
7∙10-8 and 8∙10-8 amplitude of initial amplitude of
current at power system base frequency. Figure 14. Measurement at main distribution
Calculated value of maximum possible invert- point at distance of 0.25m
ers radiation power at this frequency range in case
of a solar power plant in Kalesija, B&H, measured Both measurements show no differences in the
at full inverter capacity is ~ 0,37 nW. This amount were recorded with frequency analyzer at targeted
of power can be emited if coupled with the geom- frequency as depicted in Figure 14.
etry of inverter lines within ideal antenna wave-
lengths that can lead to almost ideal radiation of
energy. Problem of such EMI is considered from
communication devices point of view since they
have their antenna geometry ideal for the same
frequency signal reception.
4. Measurements
Measurements have been conducted at the roof
of solar plant at the main inverter cumulative out- Figure 15. Results of 4 open area EMC measure-
put distribution point. Distance selected for the ment at 2.4 GHz
radiated measurements were 0.25 m, 3m and 10m.

According to the measurement such low intensi- Table 1. ERC recommendation 70-03 relating to
ty radiation on the powerlines could not be detected the use of short range devices (SRD) within 2.4
at tested distances, due to relatively small current at GHz range
the base frequency of the grid. Initial measurements Freq. range Power
were made using AARONIA SPECTRAN HF- Typical usage
(MHz) output
4060 Rev.3 Spectrum Analyzer (100Mhz-6GHz). Low Power Active Medical
Control measurements were created with a AGILE- 10 dBm
2483.5 – 2500 Implants and
NT 9320A RF Spectrum Analyzer (9 kHz - 3 GHz). e.i.r.p
associated peripherals
10 mW Telemetry,Telecommand,
2400.0-2483.5
5. Conclusion e.i.r.p. Alarms and Data in general
Wideband Data
Considering fundamentals of electromagnetic Transmission
compatibility (EMC), there are no significant dif- 100 mW Systems and Wireless
ferences between communication systems and 2400.0-2483.5
e.i.r.p. Access Systems including
power electronic based devices. From EMI point Radio Local Area Networks
of view the switching frequency in an electrical (WAS/RLANs)
system is much lower than in a communication Automatic vehicle
system, but with much higher operation voltage, identification systems
current, and power. However, from an application 2446-2454 500 mW for railways including
point of view, the electromagnetic Interference e.i.r.p. Automatic Vehicle
(EMI) problem in power devices is very different Identification for Railways
in a view of normal operation and desired effects. (AVI)
EMI problems can manifest themselves as errors SRD radiodetermination
or failures toward other equipment working with applications including SRD
25 mW
low power communications. 2400.0-2483.5 radar systems, Equipment
e.i.r.p.
During diagnostics other hardware or software for Detecting Movement
problems may be suspected and investigated which and Alert
are typical for usage of this type of communication ≤500 mW
Radio frequency
devices and the wideness of its public usage. 2446-2454 – 4W
identification (RFID)
Considering effects with parasitic inductance and e.i.r.p.
capacitance in the circuit’s emissions can be signifi-
cant to bring communication systems to a halt if sig- Due to power saving features typical usage usu-
nificant power can be emitted near receivers. ally starts from 1mW (class 3 Bluetooth). Although
This problem becomes more obvious consider- power emission in case of 150 kVA power plant
ing current trends of electrical drivetrain in automo- is not detectable with commercial communica-
tive industries, renewable resource popularity with tions measurement equipment (EMC frequency
grid integrations, as well as reduction of power in analyzer) due to low values expected to be found
the mobile devices, wireless networks, home en- at this frequency. Unnfortonatelly, considering that
tertainment and control, wireless sensor networks, currents in solar grid tied systems ranging from 20
medical data collection, building automation and A up to 100 kA in high power renewable sources
generally all low power devices using the 2.4 GHz integration currents with 2.4 GHz component can
ISM band for operation. Semiconductor device be significant enough and coupled with parasitic
manufacturers additional cost due to shielding and capacitance and inductance parameters on lines (in-
filtering could be reduced at design level. cluding the grounding installations) to significantly
According to ERC/REC/ 70-03 short range impact performance or even bring these systems
radars, wideband communication devices and to a halt starting from 2 kA. At best considerable
RFID (Radio-frequency identification) compo- drop of communications device range, as well as in-
nents have allowed power outputs ranging from creased number of errors during transmisson can be
25mW up to 4W. present. Considering wavelengths at these frequen-

cies is close to 125 mm it is not uncommon to find 8. R.Gonzalez, E. Gubia, J. Lopez, and L.Marroyo,
these lengths as well as half-length open conductors “Transformerless singlephase multilevel-based pho-
tovoltaic inverter,” IEEE Trans. Ind. Electron., Jul.
in such power electronics devices, which can lead
2008; vol. 55, no. 7: pp. 2694–2702.
to almost ideal transmission expected in modern
antenna device applications. 9. Harmonic analysis of PWM waveforms using the
Current power delivery standards are analyzing Powergui/FFT tool, G. Sybille (Hydro-Quebec)
parameters up to first 50 harmonics as the ones most
10. S. B. Kjaer, J. K. Pedersen, and F. Blaabjerg, “A
important for power system functions (protections, review of single-phase grid-connected inverters for
fault detection, measurements etc.) and are actually photovoltaic modules,” IEEE Trans. Ind., 2005;
encourage higher switching frequency which gives vol. 41, no. 5: pp. 1292–1306, Sep./Oct.
better results in terms of power quality criteria. Due
to higher switching frequency of power electron-
ics even higher levels of high frequency signals Amir Hadzimehmedovic,
are found in power system integration parameters University of Tuzla,
which contribute EMI in bands typically regulated Tuzla,
within communication industry. Bosnia and Herzegovina,
E-mail: amir.hadzimehmedovic@untz.ba
References
1. International Energy Agency (2012.), “Trends in
photovoltaic applications:Survey report of selected
IEA countries between 1992 and 2011,” [On-
line]. Available: http://www.iea-pvps.org/index.
php?id=1&eID=dam_frontend_push&docID=1239
2. REN21, Renewables Global Status Report 2010,

[Online].Available:http://www.ren21.net/Portals/97/
documents/GSR/REN21_GSR_2010_full_re-
vised%20Sept2010.pdf
3. Schmitt Ron., “Electromagnetics explained: a hand-

book for wireless/RF, EMC, and high-speed electron-
ics” 2002
4. J. M. Carrasco, L. G. Franquelo, J. T. Bialasiewicz,

E. Galvan, R. C. P. Guisado, Ma. A. M. Prats, J. I.
Leon, and N. Moreno-Alfonso, “Powerelectronic
systems for the grid integration of renewable energy
sources: A survey,” IEEE Trans. Ind. Electron., Jun.
2006, vol. 53, no. 4: pp. 1002–1016,
5. F. Blaabjerg, Z. Chen, and S. B. Kjaer, “Power elec-

tronics as efficient interface in dispersed power gen-
eration systems,” IEEE Trans. on Power Electronics,
2004 , vol. 19: pp. 1184–1194.
6. S. Lysiak, T.Reczek, T.W.Wieckowski, and Scientific

Thematic Network, “Electromagnetic compatibility
of devices, systems and installations for IT com-
munity EMC-net,” in Proc. Prog. Electromagn. Res.
Symp. (PIERS), Aug. 27–30, 2007, pp. 47–50.
7. N. Mohan, T. M. Undeland, and W. P. Robbins,

Power Electronics - Converters, Applications, and
Design, 2nd ed: John Wiley & Sons, Inc., 1995.

Sustainability of relationship between budget

deficit, public debt and economic growth
Rajko Tepavac1, Aleksandra Nikolic1, Drago Cvijanovic2
1
Business Academy, Novi Sad, Faculty of Economics and Engineering Management, Novi Sad, Serbia,
2
Institute of agricultural economics, Belgrade, Serbia.
Abstract total receipts and its total outlays within a year.

However, this definition is not a reliable criterion,
The aim is to draw attention to important prob-
which is why this term needs to be defined more
lems of budget deficit and public debt and its im-
precisely for the purposes of deficit analysis and
pact on economic growth. The state can not reach
its effects on other macroeconomic values. This is
a state of insolvency, whichleads to financial ruin
because the amount and importance of fiscal defi-
and instability, which can be achieved so that the
cit changes depending on the government level:
rate of growth of public debt over a longer period
general government; consolidated general govern-
does not exceed the rate of growth of GDP.
ment which, in addition to the general government
To explore the effects of budget deficits and
also includes off-budget funds; consolidated gen-
public debt on macroeconomic aggregatesand the
eral government which contains both receipts and
relationship (interest rates, public spending, pri-
expenditures of local government bodies; overall
vate consumption, private investment, national in-
public sector which also contains balance of finan-
come), were used for relevant studies and articles,
cial transactions from public enterprises as well as
as well as reports and publications (national and
financial transactions of finance sector (privatisa-
international). Analyzed existing data and trend-
tion funds and /or development banks). [1]
sin this area, as well as measures that affect the
In view of the above, the most complete mea-
optimization of public debt, quantitative methods,
sure of government’s impact on other sectors and
qualitative and descriptive analysis. The main re-
economy in general should contain government def-
sults derived from the available empirical research
icit at its broadest level. As is known, such measure
in this area indicate that high public debt, espe-
is rarely issued and thus, in the analyses, the fol-
cially whenit comes to its foreign components,
lowing are usually used: conventional deficit, pri-
dos not contribute to economic development and
mary deficit and cyclically adjusted deficit, and in
should not be an instrument for fostering econom-
the conditions of inflation, the real amounts of these
ic growth. In this regard, the government should
values. [2] . Cyclically adjusted deficit is applied in
take measures that contribute to the compliance
the analysis of multiplier based on the traditional
level of public debt and its servicing capabilities.
IS-LM model. Conventional deficit, as partly en-
Otherwise, short-term policy is qualitative nar-
dogenous, does not have a multiplier effect as it is
rowing of space for future decisions. Using debt to
a consequence of increase in transfer to the unem-
finance the current deficit or investment projects
ployed (unlike the deficit which is the consequence
by the state and the shifting of such costs in the
of increase in public investments), and as such is
future, usually affecting the flexibility of public
already incorporated in the multiplier. [3].
finances and mainly involves slow economic de-
Since government budget deficit is a residual
velopment in the coming years.
value, it is clear that there are considerable difficul-
Key words: budget deficit, investment, debt,
ties to assess its effects on economy in general and
consumption, economic growth.
on individual macroeconomic aggregates. This
stems from the fact that it is not irrelevant how
1. Introduction deficit comes about, whether as: the consequence
of tax reduction; the consequence of increase in
According to the conventional definition, fiscal
government expenditures; and particularly from
deficit is the difference between the government’s

the fact that the effects of deficit differ depending However, despite the fact that there are no suf-
on taxes i.e. expenditures being changed. From ficient hard evidence of fiscal deficit and public
the aforementioned in can be concluded that the debt impact mechanisms on economic growth,
impact of deficit on economy should be consid- some sufficient evidence can be produced of their
ered in the context of particular fiscal policy and negative effects on economic growth:
measures it rests on. 1. Squeezing out private investments;
The following important observation, which is 2. Squeezing out exports;
related to the previous stance, is the fact that there is a 3. Increase of interest expense in total
difference in the effects of permanent and temporary government spending;
deficits. Temporary deficit can have stabilising ef- 4. debt service diminishes growth chances;
fects while the impact of permanent deficits depends 5. financial instability. [7].
on the deficit financing: by monetary emissions and /
or debt. Namely, public debt does not increase when Аd 1) High public debt to GDP ratio may
deficit is financed by monetary emission nor does it “squeeze out” private investments, absorbing pri-
affect the change in the level of public debt, except vate savings which could, otherwise, serve for pri-
in the case when debt is denominated in the national vate investment financing, as follows:
currency and when it is not indexed. This basically – government debt increases total credit de-
means that public debt occurs as the consequence mand of economy, which can contribute to the
of permanent deficits which are financed from bor- increase in interest rates on the capital market;
rowing (in country or abroad). From the above, it – if maximum total debt to GDP (private and
can be concluded that deficit represents the change public) is defined, the increase in public debt
in the level of public debt between two years (if not causes the decrease in private debt;
financed by monetary emission), and its effects on – if there is a control of interest rates, public
economy match in the cases of permanent fiscal sector can squeeze out private sector
deficit and debt financing. [4]. competing for credits through implicit
taxation of financial assets;
2. Impact of fiscal deficit and public debt – investors may abandon the investments,
on economic growth particularly long-term ones, if higher taxes
are expected to be imposed in order to cover
There are three theories of the effect of budget a growing debt, thus creating the uncertainty
deficit and public debt: Keynesian, Ricardian and concerning future macroeconomic conditions;
Neoclassical school. Their common characteristic – reduced investments can slow down capital
is mostly in the fact that they consider deficit oc- increase in economy and also have an adverse
currence due to the decrease in tax revenues and impact on the employment decisions, which
not due to the increase in public expenditures (al- in the long run can have unfavourable effects
though Keynesian school in its original version on economic growth. [8].
observes the effects of increase in public expen-
ditures on the change in employment and output, Аd 2) Cumulative deficit i.e. public debt may
and subsequently the effects of decrease in tax cause “squeezing out” of net exports, since a rise
revenues). Generally speaking, differences rein interest rates as the consequence of deficit at-
garding deficit and public debt stem from different tracts foreign investments and increases the de-
assumptions of different school models. [5]. mand for the domestic currency. In addition, par-
Key knowledge claim of conventional theory ticularly in circumstances of flexible exchange
says: all effects of deficit follow from a single initial rate, increased demand may lead to domestic cur-
effect: deficits reduce national saving. When bud- rency appreciation and thus, to trade deficit. Once
get deficit reduces national saving, it must reduce the government becomes a net importer of goods
investments and /or net exports. These consequenc- it also becomes a net exporter of assets. In other
es of deficit are explained by the effects of two main words, this leads to increased foreign ownership
mechanisms: interest rates and exchange rate. [6]. of domestic assets which, in the long term, indi-

cates the decline in national product although, not bigger in case the private sector does not have
necessarily the decline in domestic product. [9] . sufficient foreign currency i.e. if it is also
All indicators of macroeconomic aggregates in the indebted. [10].
last years lead to the conclusion that Serbia hur-
riedly moves along this track. Аd 5) High and growing public debt always en-
tails potential or actual financial instability. Finan-
Аd 3) Growing public debt to GDP ratio, as a cial instability can be caused by real pressures on
rule, contributes to increased government expen- monetary policy (increased money supply or in-
ditures on interests, which diminishes chances for terest rate), change in the psychological attitude of
economic growth, due to the following reasons: economic entities toward money and capital mar-
– debt repayment by new borrowing leads to kets, and sensitivity of domestic financial stability
debt explosion and government solvency to the changes in interest rates on the international
crisis as creditors „send the bill“ for additional capital markets. [11].
rate in the form of the risk premium;
– if the government opts for debt financing by 3. The most important identities of macro-
reducing other outlays, it usually does so by economic relationships
revising capital expenditures which in the
structure of government outlays have the most From the perspective of macroeconomics,
pronounced positive effects on economic there are two very important relationships in every
growth. Planned measures of the Serbian economy. According to the first relationship, add-
Government for 2012 confirm this rule; ed value produced in a given year equals the sum
– debt financing by increasing taxes leads of consumption and investments minus net for-
to inefficiency and distortions relating to a eign inflows or plus net foreign outflows. To that
higher marginal tax rate. extent, we can say that the sum of consumption
and investments represents the aggregate demand.
Аd 4) Growth impact of high public debt to Thus, for example, if for any reason the sum of
GDP ratio is adverse, regardless of whether the foreign investments equalled zero, the government
debt is financed by borrowing in the country or can spend and invest only what was produced. The
abroad, because: aggregate demand supply imposes limitations to
– if the government is borrowing from its aggregate demand and vice versa. [12].
own citizens, receipts are redistributed to The second relationship in the form of math-
the benefit of securities holders who have ematical “identity” defines that investment in
different marginal inclinations to consume a given year equals national saving in the same
and save; year, plus /minus foreign financing. As is known,
– if the government is borrowing from abroad, national saving originates from three sectors – in-
problems in the balance of payment are come owners: households, economic entities and
likely to occur. Namely, debt repayment the government. Saving of these sectors can be
means the need to transfer the increased either positive or negative. Main relationship is
part of domestic resources abroad and the always fulfilled, even if a part of income creates
necessity to achieve a higher trade surplus deficit, since the positive saving of other income
(unless the foreign borrowing continues). owners and/or foreign financing (debt increase)
As such surplus in trade can occur only in contribute to balancing. [13].
private sector, the government will need Since mentioned relationships are not equal,
surpluses on domestic fiscal accounts to be their materialisation is not automatic. They repre-
able to buy foreign currency from the private sent the proof of the so-called „rules of thumb“ the
sector in a non-inflatory manner. This means acceptance of which can have its benefits, however,
that the government requires more taxes, they are also possible to break. This is exactly what
which implicates the occurrence of new has been happening in Serbia since 2000 to date.
tax distortions. The problem becomes even Aggregate demand grows faster than production:

consumption per capita grows faster than produc- G – T + rB = dB/dt + dM/dt.................. (1)
tion per capita, while real wage movements does
not depend on labour productivity. In saving equa- where: G – level of government spending (ex-
tion, negative government saving (budget defi- cluding interest payments on government debt),
cit) continuously grows, which coincides with the Т – tax revenue, r – interest rate on the govern-
drop in household net savings rate, intensified pur- ment debt B, and М – the level of high-powered
chase of real property, cars and other luxury goods, money (monetary base). The left side of equation
through the mechanism of consumer credit. On the (1) represents the budget deficit. The debt consists
other hand, business sector is by that very fact a net of primary public budget deficit (G - Т) and the in-
debtor, because this is the only way for it to finance terest payment on the government debt (rB). The
projects, which, as its final consequence, does not right side is the financing: budget deficit can be
produce a negative effect on the final picture. Inevi- financed by either issuing public debt (dB/dt) or
table consequence of it all is that foreign financing by issuing high-powered money (dM/dt).
considerably grows, which is primarily reflected in After a few iterations, the following equation
the increased current account deficit in the balance may be derived: [16].
of payments. [14].
Since relationships are discussed here which in ḃ = (g-t) + (r-x)×b.......................... (2)
the mathematical interpretation are called „identi-
ties” i.e. equations which are true irrelevant of the where: g = G/Y; t = T/Y and x - Ẏ/Y (the
value of any variable they contain, we can call growth rate of GDB).
them: “ a rule”. As is known, in general case the rule The equation (2) specifies the public debt dy-
can apply depending on whether the government or namics: when nominal interest rate r exceeds nomi-
any other supranational institution requires the rule nal growth rate x, the government should take the
to prevail or not. If observed dynamically, to direct measures to run a primary budget surplus (g-t), and
the economy growth towards the state of balance, if it fails to do so, the debt-to-GDP ratio would in-
the materialisation of the mentioned relationships crease without bounds. Finally, it would resulted in
should assume the following characteristics: outstanding public debt, which means that the ulti-
– a sound production rate, which can be mate condition for government solvency is:
achieved if in a few years time the average
consumption does not grow faster than ḃ= 0 or (r - x)×b = t - g. [17].
production, and from investments, even
in the circumstances when the foreign Accordingly, if government has accumulated
resources are withdrawing; sizeable deficit in the past, in the future, it will
– domestic saving does not lag behind the have to run adequate budget surpluses in order to
investment growth, which means that the prevent the debt - GDP ratio from increasing auto-
foreign investment proportion does not grow matically. At first, it can be concluded that the sole
and thus, the government does not enter in solution for the government would be the spend-
the condition of accelerated indebtness. ing reduction and/or tax increase. [18].
If the government is stable, then ḃ equals 0,
3.1. Budgetary convergence of Maastrichtian which implies d ≡ g × b (3) . [19].
type This identity corresponds with the key con-
vergence criteria for governments that intend to
The relation between budget deficit, public join European Monetary Union, and relates to
debt and economic growth rate may be considered the request for reduction of budget deficit to 3%
to be the third identity of macroeconomic relation- and public debt to 60% of GDP (defined by the
ships. A well-known budget restriction may serve Stability and Growth Pact). If we consider the
as the starting point for consideration of the afore- mathematical identity d ≡ g × b, and introduce
mentioned relationships: [15]. the budgetary convergence criteria, we will reach
the conclusion that stabilization of public debt to

60% of GDP can be achievable if and only if the the key Maastrichtian criteria, which defines the
nominal GDP growth rate equals 5%, i.e. 0,03 = relation between budget deficit, public debt and
0,05 × 0,60. However, there is no economically ra- economic growth rate, mathematically express as
tional explanation of this rule, since the reason for follows: d ≡ g × b. However, even if that is not the
reduction of public debt to 60% remains unclear. case, that is, in a situation of stable relation of bud-
From that point of view, this rule may be taken ar- get deficit and public debt, Serbia still has a practi-
bitrarily which is demonstrated in the calculations cal problem related to net cash flow to debt ration,
set out in the following table. [20]. which may have a negative influence on the cur-
Table 1. Simulation of budgetary convergence rency stability due to disarrangement caused by
Maastrichtian type the increase of interest rate. This policy keeps the
d g B Republic of Serbia at a respectful distance from
“given” criteria 3,0 5,0 60,0 EU integration, since it diminishes the chances
1. scenario 3,5 5,0 70,0 for fulfillment of the remaining three key conver-
2. scenario 2,5 5,0 50,0 gence criteria, which are no longer mentioned in
3. scenario 4,2 7,0 60,0 the official documents of the Serbian Government.
4. scenario 4,5 7,5 60,0
5. scenario 1,8 3,0 60,0 3.2. Unsustainability of budget deficit and
6. scenario public debt of Serbia
4,5 ??? 45,0
Serbia
Source: author’s calculation Public debt of Serbia has reached legally au-
thorized maximum of 45% of GDP, which is not
The calculations from Table 1 demonstrate that remotely the greatest debt in Europe. [22] None-
numbers 70% and 50% fit in very well in the given theless, Serbia has other problem: distrust of in-
identity (rule), and in that case, the correspond- vestors in its capability to repay relatively small
ing deficits are 3,5% and 2,5%. Secondly, since debt. Consequently, the debiting per rates is few
this identity (rule) is conditioned by the nominal times higher than GDP growth rate.
growth of GDP, in case of nominal growth that is On the other hand, foreign debt is already very
higher/lower then 5%, the budget deficit which high – over 70% of GDP. Experiences from other
stabilizes public debt to 60%, increases above or developing countries indicate that foreign debt of
decreases below 3%. Consequently, this rule al- over 60% of GDP is becoming critically high, i.e. it
lows quite high degree of flexibility, but it is, can result in debt crisis: cessation of payment (so-
unfortunately, indicative for candidate countries called Argentine crisis) or debt restructuring. Co-
and it is imposed as one of the conditions for new sidering the budget deficit projected for 2012 to the
countries to join the European Union. amount of 4,5% of nominal GDP, there is a reason
The observations of inconsistency between the to pose the question: how is this debt going to be
two criteria go in favor of the fact that public debt repayed? The final result of the policy the Serbian
is measured on the cash flow basis while budget government is leading would be the debt of 80% of
deficit is measured on actual basis. Consequently, GDP which will inevitably cause bankruptcy. This
the value of debt is put in relation to GDP in its is applicable even in a situation when fiscal stimu-
gross value, while deficit is expressed in net value. lus brings the investment process ’alive’.
Some opinions on granting to each country a high- Most of the european governments have de-
er degree of freedom in terms of fiscal deficit, are cided to ’fight’ the crisis of public debt and bud-
widespread, though under the condition that pub- get deficit with the increase of tax or decrease of
lic debt remain below some critical level. Thus, public spending, or with the combination of the
the government would have more possibilities for two policies. As opposed to the aforementioned
maneuvering in a short period of time. [21]. governments, Serbian government opted for new
The calculations given in the Table 1 (6th sce- indebtedness. In the next mid term period the fis-
nario) lead to the conclusion that the Serbian Gov- cal deficit is planned to be financed by loans from
ernment has withdrawn from the fulfillment of international financial institutions and the EU and

by issuing treasury bills of different maturity in or- would qualitatively narrow down the possibilities
der to reduce the rollover risk. [23]. for further decisions. The government’s use of pub-
Consequently, Serbian government discarded lic debt for financing the current deficit or invest-
both of the aforementioned policy, or as opposed ment projects and shifting such expenses to the fu-
to the idiom ‘choose the lesser of two evils’, the ture, very often has negative influence on the flex-
government has chosen both. Thus: the general tax ibility of public finance and usually implies a slow
remained the same, while public spending and bud- development of economy in subsequent years.
get deficit were not decreased, therefore, in the past Optimal limit of public debt would be the
three years, the public debt has increased for over 6 amount of debt that provides the accomplishing of
billion Euros. However, it is obvious that Serbian economic stabilization, development of financial
government should lead extremely conservative market and economic growth, while possible eco-
macroeconomic policy in order to gain credibility, nomic and social development are not threathened.
which implies significant reduction of budget defi- In that sense, the government should not reach the
cit and public spending in mid term, with moder- state of indebtedness that would lead to financial
ate interest rates which would boost the economic insolvency and instability, and that is achievable
growth, since it is the only way to gain the trust of if the growth rate of public debt is not higher than
foreign and domestic investors. [24]. the GDP growth rate for a long period of time.
When dealing with the macroeconomic context The amount of Serbia’s public debt is very dis-
of fiscal policy, the government should apply the turbing, regardless of the fact that it is still below
measures that will contribute to the sustainability the level of 60% of GDP determined by Maas-
of the level and public debt growth rate in order to trichtian criteria. The growth rate of Serbia’s to-
secure debt service. If the Fiscal reform is based tal public debt which was greater than the GDP
on the decrease of expenses, especially the wages growth rate in the past years is problematic, as
in public sector and expenditures for social secu- well as the reluctance of Serbian government to
rity, fiscal balance will be long-lasting and shall undertake the measures that would lead to fiscal
not lead to the drop in output and disruption in sustainablity and the stability of public finance.
economic environment neither in short nor in long
term. If fiscal reform is primarily based on the rise References
in tax income, the effects of such a reform would
be unsatisfying and the fiscal balance should not 1. Davina J, Schoeman N, van Heerden J. Alternative
Definitions of the Budget Deficit and its Impact on
be sustainable for a long period of time. [25].
the Sustainability of Fiscal Policy in South Africa,
Though it is possible to define the term ’fiscal http://www.essa.org.za/ download/ papers/006.pdf://
sustainability’ in varios ways, it is in general de- www.essa.org.za/ download/papers/006.pdf i http://
fined by its possibility to be coninued in the future, ideas.repec. org/a/ bla/sajeco/v70y 2002 i3p 251-
without any changes[26]. Therefore, sustainable 257.html
fiscal policy imposes the government to be able to
2. International Monetary Fund, IMF institute, Fiscal
service its debt today and in the future, without the Policy and Macroeconomic Stability International
adjustment of primary surplus. Monetary, World Economic Outlook, May 2001; pp.
85-116.
4. Conclusions 3. Tobin J. Its Macroeconomics in Perspective, Cowles
Foundation for Research in economics, Yale univer-
High public debt, especially if we consider its sity Box 208281, New Haven, Connecticut, available
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Management of supply chain processes by

evaluating and selecting suppliers
Zora Arsovski1, Bruno Bojic2, Dragana Rejman Petrovic1, Igor Milanovic1, Dejan Vidojevic3
1
University of Kragujevac, Faculty of Economics, Serbia,
2
Foreign Trade Chamber of Bosnia and Herzegovina,
3
Ministry of Finance, Tax Administration, Serbia.
Supply chains are a collection of organizations Organizations in the supply chain need to plan,
that define common objectives, strategies and plans. purchase, produce and deliver raw materials/prod-
To improve performance of whole supply chain, or- ucts in order to meet current or projected market
ganizations need to define the key elements of the demands. In addition, they should support the post
chain (processes, process maps, inputs and outputs sales activities in the warranty and non-waranty
from the processes, both internal and external com- period in the field of product quality, customer
munications, methods and techniques, interface, complaints, product returns and others. Every or-
standards, external environment, etc.). Researches ganization in the supply chain has a defined role,
suggests that the already known factors that affect structure and resources. Organizations can have dif-
organizational performance, such as strategy, tech- ferent roles as a supplier, customer or carrier, while
nology, human resources and others, must include elements of the structure include functional units,
an important determinant of performance of the processes, information, information resources, ma-
organization, which refers to the ability to manage terials, facilities, decisions, business practice, inter-
and improve business processes in organization. action and performance. The elements of the struc-
The main goal of research presented in this paper is ture of each organization are compatible and can be
to show development and verification of the model observed integrally as a single coherent whole, to
for the evaluation, selection and ranking of suppli- effectively achieve a common goal. Supply chain
ers, as an important factor for effective manage- is an integration of very large and complex, multi-
ment of supply chain processes. disciplinary dependent processes and information.
The methodological approach is based on the To improve performance of whole supply chain,
general theory of supply chains, quality manage- organizations need to define the key elements of the
ment system, business processes management and chain (processes, process maps, inputs and outputs
requirements of stakeholders. from the processes, both internal and external com-
The main results of research aiming to the veri- munications, methods and techniques, interface,
fication of the model for evaluation, selection and standards, external environment, etc.). At the same
ranking of suppliers, which is applied throughout time, all participants in the supply chain have to
the whole supply chain. In this way, the participa- apply the same principles to achieve the expected
tion of each member in the supply chain can be results of operations. In addition, organizations
determined by the product added value in the sup- conduct intensive and interactive relationships with
ply chain. their suppliers, collaborating in new product de-
The originality of this research is reflected in velopment, integrating key business processes and
the multidisciplinary and interdisciplinary ap- sharing information about the behavior and state of
proach to developing the model and its implemen- the system, as well as information for improving
tation in terms of limited financial, technological the system as a whole. Coordination of activities is
and human resources. a critical process in the supply chain [1]. To cope
Key words: Management, Supply Chain, Pro- with the challenges they face, the organization must
ces Performance, Evaluation and Selection of accept the management principles based on the pro-
Suppliers cess, especially if they want to successfull manage

their supply chains. Researches indicates that the and operational issues. In addition, supplier selec-
already known factors that affect organizational tion is decision-making process that exams many
performance, such as strategy, technology, human quantitative and qualitative indicators rather than
resources and others, must include an important bids. Many different supplier selection approaches
determinant of performance of the organization, have designed. In this research, approach oriented
which refers to the ability to manage and improve to business objectives and company stakeholder’s
business processes in organization [2]. Empirical requirements is proposed.
studies suggest a positive impact on process-orient-
ed organizational design on performance of organi- 2. Background for Research
zations [3]. Business Process Improvement (BPI)
in conditions of globalization of markets, for orga- The term Supply Chain Management was first
nization is a conditio sine qua non to keep up with presented by the consultants in the early 1980s.
changes in business environment, through business The concept is geared towards the integration of
processes adjustment to continuous technological, internal business functions in an organization, such
organizational, political and other changes [4]. as procurement, production, sales and distribution.
Development of supply chain management Intra-organizational view of the supply chain is
(SCM) requires a comprehensive system of per- then extended beyond the observed organization,
formance measurement process. Process perfor- which includes “upstream production chain” and
mance measurement system provides manage- “downstream channels of distribution” [7].
ment with information for monitoring, control, Simchi - Levi and Kaminsky [8] define SCM as
evaluation and feedback. This may be a driver of follows: “Supply chain management is a set of har-
motivation, action, continuous improvement and monized approach to the integration of suppliers,
achieving strategic goals [5]. manufacturers, warehouses and shops”. In this way,
The importance of business processes is reflect- planned production is realized and planned quanti-
ed in the fact that they are the main components of ties are delivered to the right location at the right
the organization and are used, among other things, time, while minimizing costs in the delivery sys-
to analyze the problems in organizations where it tem and a certain level of service and satisfaction
is based on the result of causes of conflict perceive of consumer demands”. The identified problems re-
the process to increase effectiveness and efficien- lated to supply-chain management, mainly related
cy of the planned achieve organizational goals. to poor coordination of activities and a large num-
Suppliers selection is a critical process of pur- ber of partners under uncertainty. Process-oriented
chasing management in supply chain due to the organization comprehensively applies the concept
key role of supplier`s performance on cost, qual- of a Business Process Management (BPM). BPM
ity, delivery and service in achiving the objectives not only involves the identification, design, imple-
of a supply chain. mentation and execution of business processes, but
In theory and praxis is emphasized the impor- also includes the interaction, control, analysis and
tance of supplier management since the cost of sup- optimization of processes [9].
plied parts and components greatly influence on Performance measurement of supply chain is
final cost of product. That means supplier selection based on supply chain performance model that
is the one of the most important decision making includes the planned objectives, measures, mea-
problems. The same conclusion could be found in surement methods, with specified procedures and
selection the adequate supplier significatly reduces responsibilities of participants in the supply chain.
the purchasing costs, improves corporate compe- Upon review of relevant literature in supply chain
tiveness and improves supply chain performances, area may be seen several important system for
eventually [6]. In comparison to former, conven- measuring supply chain performance. Gunasek-
tional approach of supplier selection, which was the aran et al. [10] lists several types of performance
matter of lowest bidder, recent trends of supplier se- measures for strategic, tactical and operational
lection, tends to long term partnership with resolv- level, as well as financial and non-financial mea-
ing various product developments, organizational sures. Measures for strategic decisions affecting

the top level of management. The tactical level ship) and AHP (Analytic Hierarchy Process) were
deals with resource allocation and performance the most common approaches. However, AHP
measurement in terms of objectives to be met in was more suitable for dealing with qualitative and
order to achieve the results specified in the stra- quantitative criteria for supplier selection then
tegic level. At the operational level indicators are TCO, which considered only data related to costs.
relevant to daily operations. Another research presented in [14] where 70
Shepherd and Gunter [11] have performed the journal articles analysed for period 2000-2008 re-
categorization of supply chain performance mea- vealed Data Envelopment Analysis (DEA) and
surement in the five supply chain processes: plan- AHP as the most used individual approaches. Since
ning, procurement, production, delivery and return DEA has been modified to handle qualitative data,
of the product or customer satisfaction, whether such as amount of know-how transfer or supplier
measured in cost, time, quality, flexibility and inno- reputation. AHP is still very frequently used multi-
vation, and whether the measures are quantitative criteria decision making technique in many differ-
or qualitative. The measures are categorized ac- ent areas such as education, engineering, finance,
cording to business processes or from management government, industry, management, manufactur-
level as strategic, operational and tactical. ing, etc. AHP can be used to make a consistent de-
Chan and Qi [12] present an innovative method cision with respect to multiple qualitative and quan-
of measuring performances. The goal is to build a titative criteria. The most popular AHP-GP (Goal
team to measure the performance of which mem- programming), dealing with three goals: cost, qual-
bers should be from different organizations. SCM ity and deliver reliability. Another used approach,
should be measured beyond organizational bound- QFD-AHP gives better integration of business
aries, and it is not to just focus on one organization. strategies into supplier selection process.
SCM can be divided into six general processes that Based on best practices and experiences to-
are interrelated: processes of suppliers, input lo- gether with business objectives and stakeholder
gistics, manufacturing, output logistics, marketing requirements many criterions were defined and
and sales processes and end customer, with each used in supplier selection process, such as: qual-
of the main process may be decomposed into sub- ity, delivery, price/cost, manufacturing capability,
processes. Typical problems that occur when mea- service, management, technology, research and
suring performances in supply chains are related development, finance, flexibility, reputation, rela-
to the weak linkages of performance measurement tionship, risk, safety and environment, etc. Each of
system with a defined business strategy, focus on the above-mentioned criterions can be expressed
partial performance indicators (mainly financial), with many related attributes [15, 16, and 17].
the use of isolated and incompatible measures and
a low level of integration in supply chains. 3. The proposed supplier selection model
In fact, many organizations in supply chains
are not yet ready to expand and improve model In this research, the importance of impact of
of performance measurement process that will business objectives and stakeholder requirements
include interaction and compatibility with mod- to the evaluating criteria and factors is ephasized.
els from other organizations in the supply chain Factors can be given arbitrarily and subjectively.
and thereby improve the performance of the entire If that happens, supplier selection process will not
supply chain. Sometimes it is very difficult to un- give adequate suppliers. The model was developed
derstand what is happening in the organization or for participant in the supply chain who belongs to
supply chain, because the information flow can be the third level, and distributes its products to manu-
limited and fragmented both within the organiza- facturers OEM X and OEM Y. The analyzed com-
tion (internal fragmentation) and between organi- pany purchase material from N suppliers. Supply
zations (external fragmentation). chains for individual projects are intertwined and
According to research presented in [13] where form a supply network globally. Procurement man-
154 journal articles on supplier selection analysed agement must constantly analyze suppliers on their
for period 1986-2002, TCO (Total Cost of Owner- ability to meet long-term needs of the organization.

In such a complex supply chain, it is very important

to have a good coordination between suppliers and
customers, so it is necessary to continuous take care
of suppliers through their evaluation and ranking.
Based on these indicators, the company manage-
ment is able to make appropriate decisions and take
actions to improve the performance of suppliers,
which ultimately led to improved performance of
the supply chain business processes.
Evaluation of suppliers in the supply chain re-
quires the involvement of all management levels,
because it includes various measures that are im-
portant for making decisions on the strategic, op-
erational and tactical level.
Research indicates that the known factors that
affect organizational performance, such as strategy,
technology, human resources and others, must in-
clude one more important factor of organizational
performance related to the ability to manage and Figure 1. Disaggregation of key business processes
improve business processes in the organization.
Control is no longer based on direct control of The model is based on stakeholders’ demands
business processes of individual organizations, and requirements of relevant ISO standards, as
but on the control of all processes between orga- well as management requirements for improving
nizations as members of integrated supply chains. business processes. It is based on three key criteri-
The importance of business processes is reflect- ons: quality (Q), logistic (L) and sales and service
ed in the fact that they are the main components of conditions (S) (Figure 2).
the organization and are used, among other things,
to analyze the problems in the organizations where Quality – Q
they perceive the consequences on the causes of Quality criterion, with the highest relevance
conflict processes to increase effectiveness and factor, contains two sub-criterions as follows:
efficiency of the organization to achieve planned Q1.1 - PPM (parts per million) and
objectives. Process-oriented organization is the Q1.2 - Supplier’s service.
organizational form that recognizes the integrative
nature of business processes. Q1.1 – Parts per million
Key business processes are the building blocks PPM value is equal to number of returned parts
of the organizational solutions and together with divided to total number of delivered parts multi-
the traditional functional units create its structure. plied by 1.000.000.
In this way, through the joint development and in- Table 1. Parts per million
teractive structures and processes, organizations Q1.1 - PPM value Evaluation in points
integrate all their activities towards achieving its 0 - 50 45
objectives and improving operations. The metrics 51 - 100 40
and measures are discussed in the context of the fol- 101 - 500 35
lowing supply chain processes: (1) plan, (2) source, 501 - 1000 30
(3) make, (4) delivery and (5) return (Figure 1). 1001 - 2000 25
Model for evaluation, selection and choice of 2001 - 3000 20
suppliers is based on the key processes model of 3001 - 4000 15
the participants in the supply chain, the interface 4001 - 6000 10
inside and between the chain and the entities of the 6001 - 8000 5
environment. > 8000 1

Figure 2. The proposed model for determining supplier scores
Q1.2 - Supplier’s service Logistic requirements – L

The following evaluations in points for service Logistic requirements criterion, which in this
are possible: model has average relevance factor, contains three
Table 2. Supplier’s service sub-criterions as follows:
B1 B2 B3 L1 - Supplier’s loyality,
Q1.2 - Supplier’s service
points points points L2 - Supplier’s flexibility and
Service 15 8 1 L3 - Documentation suitability.
For each category given in Table 2, different L1 - Supplier’s loyality

situations are defined: Table 3. Supplier’s loyality
–– B1 - 16 points: Supplier responds to the L1 - Evaluations for A1 A2 A3
claim within 2* working days (valid for criterion A points points points
extraordinary rejections) or 5* working days L1.1 - Quantity-
6 3 1
for regular monthly rejections after issuing compliant delivery
of claim (* - if there is no other requests), L1.2 – Temporally
6 3 1
–– B2 - 9 points: Supplier does not respond compliant delivery
to one or more claims as requested; urgent
measures for solutions and/or supplier’s –– A1 - 100% quantity-compliant deliveries
visit are necessary, and 100% on-time deliveries within the
–– B3 - 1 point: Despite several written month (100% compliant and on-time
requests, the supplier does not respond and/ deliveries are deliveries which can also
or does not arrive to the service; deadline be different compared with the orders, but
for the answer and/or visit is violated for 5 they definitely have to be arranged between
working days or even more. “customer - supplier” before the delivery),
–– A2 - One or more quantity and/or term
deviations are discovered; these deviations
do not jeopardize the customer’s production,

but they cause some extra activities to Table 6. Communication

purchase referees, D1 D2
–– A3 - One or more quantity and/or term L3.2 - Evaluation for criterion D
points points
deviations are discovered; these deviations Communication (availability of
lead to disturbances in the customer’s contact persons at any time, for any 1 0
production process and also extra activities kind of support and helt)
in purchase, planning, production and sales.
–– D1 – Good communication – contact persons
L2 - Supplier’s flexibility available at any time for any kind of support,
Table 4. Supplier’s flexibility –– D2 - Bad communication – contact persons
L2 - Evaluations for B1 B2 B3 are not available at any time for support.
criterion B points points points
Flexibility (increasing or
Criteria of rating of supplier’s sales condi-
decreasing of quantities tions and service – S
ordered, temporary 12 7 1 This rating reflects the supplier’s relation to the
accommodation of purchasing department in the line of presenting
deliveries) the offers, samples, acceptance and adjustment of
purchasing terms and feedback timing on claims
–– B1 - Flexibility due to increased or with 4D/8D reports.
decreased orders in the amount of 100% of Criteria consist of the following:
modification sent, –– S1 - Payment Terms,
–– B2 - Flexibility due to increased or decreased –– S2 - Suitability of QM system and
orders in the amount of 80% or more, –– S3 - Service (4D/8D reports).
–– B4 - Flexibility due to increased or decreased
Table 7. Payment Terms
orders less than 80%.
S1 – Evaluations for A1 A2 A3
criterion A points points points
L3 - Documentation suitability
Sub-criterion Documentation suitability, con- Payment terms in
sist of two sub-criterions as follows: accordance with X
4 2 1
L3.1 – Documentation’s suitability and General Purchasing Terms
& Conditions
L3.2 – Communication.
Table 5. Documentation’s suitability
–– A1 – 100% in accordance with X General
L3.1 - Evaluation for C1 C2 C3
General Purchasing Terms & Conditions,
criterion C points points points
–– A2 - 80% or in accordance with X General
Documentation’s suitability
3 2 1 General Purchasing Terms & Conditions,
(delivery note, invoice)
–– A3 - Less than 80% in accordance with
X General General Purchasing Terms &
–– C1 - Requested documentation is 100%
Conditions.
correct, all delivery plans are sent and
submitted on time,
Table 8. Suitability of QM system
–– C2 - Requested documentation is correct
in 80% of cases or more, delivery plans are S2 - Evaluations for B1 B2 B3
criterion B points points points
sent on time in 80% of cases or more,
–– C3 - Requested documentation is correct in Suitable supplier’s QM
4 2 1
less than 80% of deliveries, delivery plans system
are sent on time in less than 80% of cases.
–– B1 - Supplier possesses certificate ISO/
TS 16949 or ISO 9001 and plan to obtain
certificate TS 16949,

–– B2 - Supplier possesses certificate ISO 9001, 4. Results analysis

–– B3 - Supplier possesses neither of the above
Observed organization in the supply chain is
mentioned certificates and does not have
medium size with production program in the au-
plans for obtaining them.
tomotive industry.
Table 9. Service (4D/8D reports)
Based on data about monitoring of suppliers in
S3 - Evaluations for C1 C2 C3 C4 2011, in accordance with a common methodology
sub-criterion C points points points points
at the level of supply chain, three main criteria are
Service (4D/8D determined: the quality by factor of significance
4 2 1 0
reports)
0.6, logistic requirements by factor 0,28 and sales
–– C1 – 100% sending of 4D/8D reports with and service conditions requirements by factor of
each on claim, 0.12 (Table 11).
–– C2 - 80% or more sending of 4D/8D reports For each criterion, sub-criterions are separately
with reply on claim, monitored and quantified, with a total value of all
–– C3 – Less then 80% sending of 4D/8D established criteria and total score (range) of sup-
reports with reply on claim, pliers. According to the presented model for the
–– C4 – Never sending 4D/8D reports with evaluation, selection and ranking of suppliers,
reply on claim. suppliers could be divided into three groups (A, B,
C) by the total number of points in relation to the
Total rating of a supplier maximum of 100 points.
For each of three criterions (quality, logistics
and sales and service conditions) relevant catego-
ry (A, B or C) can be calculated (Table 10 - Evalu-
ation note) by first, summing the evaluated points
and after, recalculated it into the scale 0-100. The
total rating of a supplier is the total sum of all
points expressed above.
In the case that the supplier is ranked into group
C, their representative has to visit and present to or-
ganization those activities that will be implemented
to reduce and/or eliminate nonconformities in the
processes. Detailed analysis of the supplier’s rating
is available at organization. If the supplier is ranked Figure 3. Suppliers evaluation and selection
into group C three times in succession, or the dif-
ficulties with deliveries are very critical, an audit of The analysis showed that the majority of sup-
the process/system at the supplier’s must be held. pliers belong to group A (90-100 points), indicat-
Table 10. Relevant group/categories for each criterion
Evaluation
Group Description Remark
note
Supplied product meets reauire- Supplier is preferred and is obliged to keep/
90 - 100
A ments and needs for quality, logis- improve current quality. Supplier will be recom-
points
tics and supplier sales sphere. mended for new orders.
Supplied product partly meets Supplier is acceptable and is obliged to eliminate
70 – 89
B reauirements and needs for quality, internal nonconformities. Prevent can have an
points
logistics and supplier sales sphere influence on stopping of new project discussions.
Supplier is not acceptable and must present an
Supplied product doesn’t meet
< 70 action plan for elimination of detected non-
C requirements and needs for quality,
points conformities. Prevent can have an influence on
logistics and supplier sales sphere
eliminating the supplier from all projects.
Legend: A - Preferred B - Acceptable C - Unacceptable

Table 11. Supplier evaluation and selection
ing a relatively high level of overall quality of all rions and sub-criterions. In certain situations, joint
suppliers (Figure 3). teams are formed to monitor the implementation,
Average score for all criteria is relatively high verification and validation of implemented correc-
(87-92 points), with the lowest average score was tive measures.
for the criterion for sales and service conditions.
Individual lowest overall average score of 62
5. Conclusions
points is established for the supplier number 10,
where the individual average marks for each cri- In modern business environment SCM has
terion are 55 points for quality, 82 points for the become a critical success factor, which must be
logistic requirements and 80 points for sales and viewed and analyzed as a macro process, in line
service requirements (Figure 4). with business objectives, stakeholder require-
After analysis of supplier evaluation, priority ments, the requirements of relevant ISO standards,
management activities are carried out with suppli- applied ICT and BPM approaches, and must be
ers from groups C and B. Because of organization decomposed into key processes of the supply
management activities, suppliers received the re- chain participants and interactions between pro-
sults of evaluation and analysis. cesses and entities of the environment. One of the
key factors that affect the performance of SCM is
the level of processes quality in supply chains, in
which the significant role has processes of evalua-
tion and selection of suitable suppliers.
Based on the present model for the evaluation
and selection of suppliers and conducted research
of key processes for evaluation, selection and
Figure 4. Influence of factors on range for choice of suppliers, which are presented in this
suppliers in range C paper, we stressed the following:
Model for evaluation, selection and choice of
At the same time, suppliers are required to de- suppliers is based on the assumptions about the
fine corrective action plan, in accordance with the quality and management science, requirements of
overall and individual assessments within all crite- the relevant ISO standards, stakeholders and man-

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part of the promotion of relations with suppliers,
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the benefits of suppliers quality systems. Logistics in Supplier Selection, Under Conditions of
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their improvement. Initial Classification of Supply Networks, Interna-
The possibility of effective modification and tional Journal of Operations and Production Man-
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Acknowledgments ment: The Third Wave, Meghan-Kiffer Press, Tampa,
Florida 2003.
The research presented in this paper was sup-
ported by the Ministry of Science and Technologi- 10. Gunasekaran, A., Patel C., Tirtiroglu E. Performan-
cal Development of the Republic of Serbia, Grant ce Measures and Metrics in a Supply Chain Envi-
ronment, International Journal of Operations and
III-44010, Production Management 2001; 21(1/2): 71–87.
Title: Intelligent Systems for Software Prod-
uct Development and Business Support based on 11. Shephard C. and Gunter H. Measuring Supply Chain
Models. Performance: Current Research and Future Direc-
tions, International Journal of Productivity and Per-
formance Management 2006; 55(3/4): 242–258.
12. Chan F.T.S. and Qi, H.J. An innovative Perfor-

mance Measurement Method for Supply Chain
Management, Supply Chain Management: An Inter-
national Journal 2003; 8(3): 209–223.

13. Bhutta K. Supplier Selection problem: Methodology

Literature Review, Journal of International Technolo-
gy and Information Management 2003; 12(2): 53-71.
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Making Approaches For Supplier Evaluation and
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of Operational Research, 2010; 202(1): 16-24.
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Process From Quality Aspects, International Jour-
nal for Quality Research 2008; 2(4): 265-276.
16. Ranković V., Arsovski Z., Arsovski S., Kalinić Z.,

Milanović I., Dragana Rejman Petrovic D., Multi-
objective Supplier Selection Using Genetic Algo-
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Zora Arsovski,
University of Kragujevac,
Faculty of Economics,
Kragujevac,
Serbia,
E-mail: zora@kg.ac.rs

Information model for decision support system

and generation battery of models for ability
assessment
Zoran Andjelkovic1, Jelena Andjelkovic Labrovic2
1
Department of Information systems, Technical Faculty in Bor , Bor, Serbia,
2
Department of Human resource management, Faculty of Organizational Sciences, Belgrade, Serbia,
Abstract The greatest number of definitions for the deci-

Decision support systems (DSS) have got the sion support system is given by Turban. The term
aim to support business processes as well as the DSS can be used as an umbrella term to describe
processes of making decisions. On the basis of the any computerized system, that supports decision
long lasting research, two models have been devel- making in an organization. In the early 1970s, Scott-
oped. First, model of a Decision Support System Morton defined decision support systems (DSS) as
for knowledge and abilities estimation of individu- “interactive computer-based systems, which help
als and groups. Second, model for selecting tests decision makers utilize data and models to solve
from the Battery of models, where the tests of vari- unstructured problems”. The following is another
ous authors and designers have been implemented. classic DSS definition, provided by Keen and Scott-
In this paper, an example of a modular develop- Morton (1978): Decision support systems couple
ment of a Decision Support System will be present- the intellectual resources of individuals with the
ed. This DSS can be used as a universal model for capabilities of computer to improve the quality of
developing a specific information system for giving decisions. It is a computer-based support system for
support in making decisions. This paper covers the management decision makers who deal with semi
pattern for developing a model for new tests as the structured problems. [2] The basic components or
inclusive components of the existing system. These subsystems of each projecting system for decision
models, as implemented system elements, give the support systems are the database, model base and
predefined service which is able to communicate dialog subsystem [3].
with other models. In this way it is possible to allow By defining the models, which are the precondi-
some new models to be integrated into one unique tions for developing the integral software modules,
system for giving support in making decisions. there will be possible to make a fast implementa-
Besides the integration of new models, there is tion into the scalar system for the decision support
also the possibility of the original access to a mod- system. These software modules are possible to
el choice as well as the connection of the decision integrate without any changes or an additional test-
maker, as an adapting component of the system, ing. The dominant aim of this research is to obtain
who is, in fact, the last arbiter while choosing the the methodologically original models for assessing
most acceptable alternative. knowledge as well as the abilities of an individual
Key words: modular projecting, decision sup- or groups. Models of decision support systems must
port system, model, software, knowledge and abil- contain within themselves the hypothesis (supposi-
ity estimation. tion) that, in order to make a decision, it is necessary
for the decision maker to take into consideration fol-
lowing: 1) all available alternatives, 2) actions, 3)
1. Introduction
outcomes of individual actions (chosen alternatives)
Decision Support Systems are information sys- and 4) agreement between the outcome and the aim
tems which are complementary with the standard of individual actions (chosen alternatives) according
information system and their aim is to support, the established standard in advance (criterion).
mainly business processes, the processes for mak- The aim is an imagined and desired state of
ing decisions [1]. things worth wile achieving. Alternatives are di-

rections of actions which can be taken in some system for knowledge and ability estimation that in
given circumstances. Outcomes are the final re- its base there would be located the Battery of mod-
sults of each alternative which are supposed to els. The Battery of models consists of models com-
come closer to some extend to the set goal. ing from various designers from different sources,
The first and ever actual problem, which is in different kinds and applications, which can mea-
relation to the process of making a decision, is the sure the same or different characteristics and if they
choice. The choice procedure makes some sense are connected, they can be used for achieving some
only if it is possible to assess the desired knowl- practical aim (Figure 1). The defined system oper-
edge and abilities, that is, to anticipate and at the ates in two regimes: freely and adaptively guided.
same time to reject an ignorance or an inability The free regime means that the system will assign
which does not meet the set criteria. all models which are predefined by the definite aim.
The forecasting consists of a chain of proce- As for the adaptive regime, the system itself on the
dures which are usually finished by a statement of basis of identifying and general data (IOP) gener-
the decision maker about certain ability or a pos- ates a set of models which form the system for the
session of some knowledge, which was unknown specific testee. The guided regime means the res-
at the moment of making the statement. posability of the decision maker (expert in his field)
In this paper, the application of two models to designate which models will be used for testing
will be investigated: the model of a specific archi- the testee. The model of the Decision Support Sys-
tecture for the Decision Support System for the tem consists of four logical packages and these are:
purpose of knowledge and abilities estimation of a) Database (DB), b) Model base (MB), c) Dialog
individuals and groups and the model for selecting subsystem (executing the models) (DS) and d) the
tests from the Battery of models [4, 5]. The battery Report (R).
of models is usually used in practice when choos- The database consists of two groups of data:
ing professions. The models represent the tests of internal (basic data about the testee and answers
abilities or capabilities as well as the question- of the testee to some particular items of some
naires on interests. test) and the table of authentic data which were
For the sake of the pre-research, we generat- obtained by the empirical research. The tables of
ed the Battery of models with a set of items for authentic data are the data which are being used as
knowledge estimation on the course: Decision inlets or as initial values for the operation of indi-
Support System on the Faculty for Organizational vidual models. The data have been obtained by the
sciences in Belgrade. The Battery was applied and process of research and they make the compulsory
evaluated in the experiment which had been car- part of data base which can be changed only by
ried out on this faculty [6, 7]. the authorized researchers after the verified new
The formalization and methodological descrip- research have been conducted.
tion of the model of the specific decision support
system for knowledge and abilities estimation ap-
peared after a long period of research.
2. Model of the decision support system

The professional decision makers (DO) use the
support of the decision support system, where the
components have been integrated (models of in-
struments for measuring) which, through the out- Figure 1. The structure and components of
going results offer sufficient information, for the Decision Support System for knowledge and
sake of making decisions. ability estimation
The aim of the conducted research was to obtain
a specific architecture for the integral model of the The data, that have been included in the process
multidisciplinary and expanding decision support of decision making, can be obtained from different

sources and they are mostly selected from various in necessary for the decision maker so that he can
active data base by means of extraction. The data choose the proper test according to the set goal for
sources can be internal and external. Over the data the sake of which the whole testing is being con-
there exists the relational system for controlling ducted. The address register for tests within itself
these data. determines the set of assigning methods to a defi-
The Model base consists of two following nite test.
parts: the model of individual tests which are inte- Address register for methods. Like the ad-
grated in the Decision Support System, as well as dress register for tests, it helps the decision maker
mathematical models, procedures and simulating to become familiar with this method as well as its
models which are being used in those integrated content. The address registers are automatically
tests. The control over these models is hardly generated according to their definitions so that
necessary since they have been created purpose- the decision maker has no chance for making any
fully and they are being executed hierarchically changes. The address book also contains within
through the component “execution of models” and itself a special catalog of implementing methods.
they are implemented through the software com- Address register for procedures. It contains
ponents which exist as separate libraries of the ex- the overviewed data as well as explanations about
ecutive programs. The data for the bank of models each procedure with separate links on models
are mostly generated by the professional decision which are activated in each of these procedures.
makers and they usually contain the models which The decision maker does not have the possibility
will use the applications for an assessment. From to change procedures.
this Model base, the unique tests for a testee are Address register for models. The address reg-
generated. The Model base contains within itself ister for models is conceptually completely the
the implemented models and systems for control- same as the address register for tests. It is also a
ling these models. very specific catalog which contains the descrip-
The decision making usually requires the chang- tion of all models contained in the Model Base
es of the existing and entering of the new models. with a separate link on components which repre-
These requirements are achieved in that way that sent the executives of these models.
the model base is being projected as a flexible and The component of execution model has got a
adaptive one. In order to realize a quick answer of task to provide the model integration with the data
the Decision Support System to the requirements of and tests within the battery as well as the combi-
decision makers, the model base must have a good nation of defined operations (components) for the
connection with the data base. sake of conducting an interview or processing the
According to Turban [8] the model address reg- results. These components make it possible to do a
ister is a specific catalog in the model base. This simple operation with the components of the sys-
catalog contains the description of basic func- tem. This is a model which provides a direct con-
tions. The description of functions is available nection of the Decision Support System with the
to the user at any moment while using Decision user and it is achieved in such a way that the Deci-
Support System. Definitions, which are an integral sion makers can use the Decision Support System
part of the address register, can be obtained for the in a very simple way.
mathematical models as well. The address register The system can generate four types of reports
contains: 1) Address register for tests; 2) Address about each testee: numeric–graphic (profile), ver-
register for methods; 3) Address register for pro- bal–professional (intended for the decision mak-
cedures and 4) Address register for models. ers), standardized (intended for the customer) and
Address register for tests. The address regis- personal (intended for the testee). The number of
ter for tests is a specific catalog of integrated tests information about the testee, but (to some extend)
whose methods are being used for processing the and their validity depend on the number of tests
results of testee’s answers. The catalog contains a which are used to test the testee.
description of basic functions through which it is The numeric–graphic report shows graphically
possible to recognize the test. The test recognition the testee on the T–nomogram out of which it is

possible to read the gross and T–scores in relation designed according to the Barnum–effect1. This is
to the basic (valied) samples (Figure 2 – structural done deliberately so that it could be possible to
profile). avoid the immunity system of the defense mecha-
The verbal–professional report is a describing nism and so that the testee could accept the idea to
inventory of characteristics factors of the person- think of himself.
ality of the testee. The criterion for leaving out the
appropriate sentence from the verbal source for 2.1 Generating the battery of models for a
describing any testee is a T–score which is greater particular testee
than 55 or less than 46 (above and under the aver-
age scores: Figure 2). In other words, the profile For generating the battery of models for test-
of the proper sample is the psychometric basis for ing a particular testee, the leading method which
generating the verbal–professional report obtained is used by the model for identifying questionnaire
on the sample of 8009 testee. (IOP) (Figure 3.) has been used. The identifying
questionnaire as well as the general data about the
testee, on the basis of their content, ranges the tes-
tee into the group for determining the type of the
model which will be assigned to the testee.
Figure 2. Algorithm for generating and processing

results of the Decision Support System
Figure 3. Algorithm for realizing the method for
The criterion report on the tested testee ranges generating the model batteries for the Decision
the testee on the basis of the height of T–scores into Support System
the group under the average or above the average.
The last way of reporting (“a personal report”) The procedure of applying methods for a mod-
had been developed firstly for the needs of armed el choice is iterative and can be realized according
forces so that its members (of some special ser- to the following steps:
vices) could “work on themselves” for the sake of
improving their personal characteristics in terms
1 Barnum-effect is the phenomenon that people trivial
of their military service. Later, it turned out that
descriptions (which are accurate for all people) accept as
the testee, in the conducted researches, liked this true descriptions of their personality. The phenomenon
type of feedback information and it, in fact, most- is named after T.P. Barnum who claimed that “in good
ly motivated them to take part in researches. This circus has something for everyone.” For example: ... you
report is a little bit euphemistic so that it is being are kind, clever and reasonably social. Sometimes you
have problems with your partner, but successfully solve
them, etc ...

1. Checking if the protocol is filled. The method

first checks if the protocol is filled in with
the answers of the testee. If the testee did not
give all the answers to the items of the test,
than the usage of such a protocol must be
determined. If the percentage of answers is
not less than 80%, the method continues the
operation by substituting the answers with Od1
the corresponding values from the matrix of OdIOP =
O d 2 
expected answers.  : 
The matrix of expected answers contains  O d j 
the data about the medium values of the an- j = 1, 2 , 3, ... 2 5 ........... F .1 :
swers of the testee from the corresponding
sample. The sample has been formed ac-
cording to the status group of testee which
he belongs to. If there are a sufficient num-
ber of answers, the method continues the
operation. In cases when a testee has not TSPO
TSPO1 TTKD1 ... TBIG1
2 TTKD2 ...TBIG2

given a sufficient number of answers, the O
ekIOP
=
 : : ... :  .......... F .2.
method sends a message that the Protocol TSPO j TTKD j ...TBIG j 
is not usable and allows the decision maker
to generate the bank model manually. The
testee answers, to the items of the test, in

{
1 forfor OO dd jj >>13 forfor jj==235, 6 , 10 , 12 , 15 , 18 , 19 , 2 0 , 21, 2 2
for O d < 3 for j = 1, 8 , 1 7
j
the data base, have been memorized in the
following format: “2134444111 142441 2{ for O d j > 3 for j = 5 , 9
TSPO =  ... F .3.,
3421224231”. Each character of this record j
3{ for O d j < 3 for j = 4
is an answer to one of the items. The char- 
acter whose values are “O”, represent the 0{ for O d j = 0 for j > 0
items to which the testee did not give any 
{
answer.
1 forfor OO dd jj <>13 forfor jj==21,58
for O d <3 for j = 5 , 7 , 9 , 10 ,15 ,18 , 2 0 , 2 2
2. The message to the user. In cases when the
testee did not give a sufficient number of  j
answers, the system sends the message to TTKD =  2{ for O d j <3 for j = 3 , 6 ... F .4.,
j
the decision maker that the protocol is not
usable.
0{ for O d j =0 for j> 0
3. Forming the matrix for the answers of the

testee. In this step, the initial matrix for the
1{ forfor OOddjj >>33 forfor jj==21,213
for O d <3 for j = 2 0
testee answers is formed. OdIOP.(F.1.) The
matrix is formed out of the data which are 2{ for O d jj >1 for j = 2 5
in the data base and represent the testee TBIG =  ... F .5.
j 3{ for O d j >3 for j =15
answers to the items of the test. The matrix
is stored in the memory and is ready for 
further usage. Upon the request of the user 0{ for O d j =0 for j > 0
about a new testee, the matrix is reset each
time and from the beginning initialized with 4. Forming the empirical matrix OekIOP. (F.2.).
new data. The initialized matrix is shown on The matrix contains the in-between results
Figure 4. and it is formed each time when a new testee
is in question. (F.3, F.4, and F.5). The updated

matrix is being located into the memory and 25

is used each time when the results are being KOG _ FAK 1 = ∑ TSPO j = 2 + 1 + 1 + 1 + 1 = 6
j =1
processed. The matrix contains the constant
values which are obtained on the basis of for TSPO j ≠ 0... F .6
a comparison of the given answers of the
25
testee as well as the empirical data (Figure
VOLJ _ FAK 2 = ∑ TTDK j = 1 + 1 + 1 + 1 + 1 + 1 = 6
5) which are obtained by the research. For j =1
the sake of clarity, the forming of the matrix
is shown on the Table 1. for TTKD j ≠ 0... F .7.
25
Score calculating The values for scores are be- LICNOST = ∑ TBIG j = 2 + 1 + 1 = 4
j =1
ing calculated by summing up the matrix columns
OekIOP . (F.6, F.7, and F.8). for TTKD j ≠ 0... F .8.
In this step, the method represents scores for
IOP test to the decision maker. PIE − JRS compulsory in the battery
Battery generation. By analyzing the obtained Space , Perception , Intruder , Relations for KOG _ FAK 1< 7
Chose test :  TDK for VOLJ _ FAK 2 >5
results, the method includes some particular tests  BIG 5 for LICNOST >3
in a battery according to the following regulations
(F9, Table 2): ......... F .9.
Table 1. Matrix forming OekIOP

Condition Condition Condition
j Od TSPOj TTKDj TBIGj
for TSPO for TTKD for TBIG
1 2 1 for Odj<3 0 1 for Odj>3 0 0 0
2 1 0 0 0 0 1 for Odj>3 0
3 3 1 for Odj>3 0 2 for Odj<3 0 0 0
4 4 3 for Odj<3 0 0 0 0 0
5 4 2 for Odj>3 2 1 for Odj<3 0 0 0
6 4 1 for Odj>3 1 2 for Odj<3 1 0 0
7 4 0 0 1 for Odj<3 0 0 0
8 1 1 for Odj<3 1 1 for Odj>3 0 0 0
9 1 2 for Odj>3 0 1 for Odj<3 1 0 0
10 1 1 for Odj>3 0 1 for Odj<3 1 0 0
11 4 0 0 0 0 2 for Odj>3 2
12 2 1 for Odj>3 0 0 0 0 0
13 4 0 0 0 0 1 for Odj>3 1
14 4 0 0 0 0 0 0
15 1 1 for Odj>3 0 1 for Odj<3 1 3 for Odj>3 0
16 3 0 0 0 0 0 0
17 4 1 for Odj<3 0 0 0 0 0
18 2 1 for Odj>3 0 1 for Odj<3 1 0 0
19 1 1 for Odj>3 0 0 0 0 0
20 2 1 for Odj>3 0 1 for Odj<3 1 1 for Odj<3 1
21 2 1 for Odj>3 0 0 0 0 0
22 4 1 for Odj>3 1 1 for Odj<3 0 0 0
23 2 0 0 0 0 0 0
24 3 0 0 0 0 0 0
25 1 1 for Odj>1 0 1 for Odj<1 0 2 for Odj>1 0

Table 2. Included tests in the Decision Support System

Value Test included in the
No Name of test Condition
KOG_FAK1 VOLJ_FAK2 Personality battery
Compulsory in the
1 PIE-JRS - - - -
battery
2 PERCEPTION KOG_FAK1<7 6 6 4 Da
3 SPACE KOG_FAK1<7 6 6 4 Da
4 INTRUDER KOG_FAK1<7 6 6 4 Da
5 RELATIONS KOG_FAK1<7 6 6 4 Da
6 TKD KOG_FAK2>5 6 6 4 Da
7 TSU - - - - On demand DO
8 NEO-PI-R PERSONALITY>3 6 6 4 Da
In this step, the included tests have been pre- 3. Summary

sented to the decision maker (Figure 6)
In this paper it has been shown that it is pos-
Verification of models. In this step the decision
sible to classify the testee into a group for deter-
maker involves himself as an “instrument – model”
mining which model will be assigned to the testee
and he forms the final outlook of the battery. He
for testing using universal model.
uses the specification of the suggested tests which
Once the model has been chosen for testing an
should make a battery. The decision maker reacts
individual on the basis of already described OIP
to the test specification in accordance with the prin-
model it has been made possible for the decision
ciple of leaving out some definite tests or adding
maker to:
some new ones. In that way the final battery has
1) get familiar with the bases upon which the
been formed and the testee will be tested on it.
tested person functions,
2) to estimate knowledge of that person,
3) set aside the information that are important
(explanatory) for the concrete testee, on the basis
of the obtained structural profile (Figure 2), as
well as the enclosed computer description, or the
assessed knowledge and
4) at the same time, implement himself into the
system as an “instrument” and by using it to reject
the information (which the computer model has
given) which do not “stand” within the descrip-
tion of the concrete testee for whom the assess-
ment has been carried out or to reject the chosen
Figure 6. Screen form for presenting the chosen model for testing the testee.
models of tests on the base of the model of iden-
tifying questionnaire and the questionnaire with Besides the presented models in the paper there
general data has been also given the framework of the descrip-
tion for the whole specific Decision Support Sys-
The end of the work. In this step the work has tem. The detailed description of the given models,
been regularly finished, all the parameters have for the sake of their complexity, will be given in
been reset and a new request of the user is expected. the forthcoming papers.

References
1. Čupić M., Novaković T. “Application Generators for
Decision Support”, Naučna knjiga, Belgrade 1992.
2. Turban E., Aronson J.E., Liang T-P., Sharda R., “De-

cision Support and Business Intelligence Systems”,
8th ed, New York, Pearson Prentice Hall, 2007.
3. Klein M. and Methlic, “Knowledge-based Decision

Support Systems”, Jon Wiley and Sons, 1995.
4. Andjelković Z., “Contribution to development of

decision support systems methodology in knowledge
and ability estimation for individuals and groups”,
PhD dissertation, Faculty of Organizational Sci-
ences, Belgrade, 2004.
5. Lewis Goldberg, “International Personality Item

Pool- IPIP”, http://ipip.ori.org/ipip/
6. Anđelković J.: “Knowledge estimation applying

computer adaptive testing” 9th International sym-
posium “Management – Key Factors of Success”,
SYMORG, Zlatibor, 2004.
7. Anđelković J, Milosavljević G.: “Applying methodo-

logy of computer adaptive testing trough KAPI appli-
cation” 9th Festival of Informatics - INFOFEST,
Budva, 2004.
8. Turban Efraim, Decision Support and Expert Sys-

tems, 2nd Ed., MacMillan Publishing Co., New York,
NY, 1990.
Jelena Andjelkovic Labrovic,
Department of Human resource management,
Faculty of Organizational Sciences,
Belgrade,
Serbia,
E-mail: jeca@fon.rs

Using differential dynamic current analysis

to reveal secret key in smart card’s
cryptographic core
Milena Djukanovic
Faculty of Electrical Engineering, University of Montenegro, Montenegro
Abstract channel attacks, can extract hiden information

from the system without looking at flowing data,
This paper presents results obtained by em-
but rather exploiting the information contained
ploying method of differential dynamic current
in side effect physical phenomena [2]. More pre-
analysis in order to detect and reveal secret key
cisely, while secret data is being processed it can
implemented in cryptographic hardware. Using
be deduced by observing execution time, power
crypto core’s Field-Programmable Gate Arrays
consumption, electromagnetic radiation, dynamic
(FPGA) implementation with characteristics of
and leakage currents, etc.
symmetric cryptographic algorithm Serpent and
Since discovering side-channel attacks, espe-
appropriate equipment set-up, stored traces of
cially one attack has attracted huge attention since
device’s measured dynamic currents have been
it has been announced by Kocher [3]. This method
used in attack carried out by Matlab program. Ef-
is called Differential Power Analysis (DPA) and
ficiency of the proposed procedure of differential
uses the information that naturally leaks from a
dynamic current analysis has been tested for two
cryptographic hardware device, namely the power
different crypto core’s keys. The results of this in-
consumption. We could say that the DPA is a very
vestigation show that dynamic current can be ex-
powerful side-channel attack, since it allows the
ploited as a side-channel by an attacker, with aim
attacker to detect secret key by using a measure-
of extracting information about the secret key in
ment setup based on easy-to-use model and cheap
cryptographic hardware.
components. The attack is based on the fact that
Key words: differential dynamic current analy-
standard Complementary Metal-Oxide-Semicon-
sis, cryptanalysis, side-channel attack, smart card,
ductor (CMOS) logic exhibits a dynamic power
security.
consumption which strongly depends on the input
data. As an example, if we consider a simplified
1. Introduction model of a CMOS inverter loaded by a capaci-
Cryptographic hardware and algorithms are tance connected to the ground, current is drawn
daily used in applications such as electronic bank- from the supply only for a 0à1 output transition;
ing, wireless communications, transport, storing in the 1à0 transition the energy stored in the
medical data, audio and video decrypting, etc. and output capacitance is dissipated and no power is
by government agencies [1]. The rapid growth and consumed for 0à0 and 1à1 transitions. Also his-
spread of security critical systems-on-chips, such torically, the primary contribution to power dissi-
as microprocessor-based smart cards, have in- pation in CMOS circuits has been dynamic power
creased the interest of scientists in cryptographic [4]. This component of power consumption is due
hardware, research works on new attacks on one to CMOS switching activity and has a quadratic
side, and new countermeasures on the other side. dependence on supply voltage and a linear depen-
Namely, attacks on cryptographic algorithms dence on clock frequency. Of course, the influence
are usually divided into mathematical and imple- of implemented technology on security of smart
mentation attacks. The latter are based on weak- cards has proven to be very high [5], and according
nesses in the hardware implementation and can be to that with new technologies below 90nm and the
passive or active. Passive attacks, so-called side- scaling down of supply voltage - leakage power is

predicted to become more dominant than dynamic

power in next technology generations [6], [7].
This paper investigates dynamic current depen-
dence on input values in CMOS logic, with the
aim of showing how the information provided by
dynamic current measurements can be used to ex-
tract information about the secret key in a crypto
core. The remainder of the paper is organized as
follows. Section 2 presents designed smart card’s
model by writing a Very-high-speed integrated
circuits Hardware Description Language (VHDL) Figure 1. Graph of data_generator’s state tran-
code for crypto core with characteristics of chosen sisitons
cryptographic algorithm and FPGA implementa-
tion of designed crypto core, catalogue of adequate
equipment used for the measurements of dynamic
currents. Section 3 investigates does the code for
differential dynamic current analysis written in
Matlab program give expected results and detect Figure 2. Simulation diagram of crypto core
the exact secret key used in cryptographic hard-
ware, and Section 4 presents the conclusions that The crypto core model also contains Serpent’s
can be drawn from this paper. fixed S-Box which ciphers outputs of XOR gates
whose inputs are adequate bits of key and plaintext
2. VHDL design and FPGA implementation (input to an encryption algorithm). After successful
of Serpent crypto core declaration, signal mapping and compilation, with
the internal value of Key0= 0000, simulation dia-
VHDL is a language for describing digital gram of cryptographic core is presented in Figure 2.
electronic systems and is designed to fulfill a num- Crypto core’s model was programmed in FPGA
ber of needs in the design process [8]. Since most using Altera’s chip from family Stratix II – EP2S-
of the papers concerning side-channel attacks in- 60F672C5. After pin assignment and compilation,
vestigate Data Encryption Standard (DES) cryp- the measurements were carried out by following
tographic algorithm as an algorithm implemented set-up: ISO-TECH DC Power Supply, digital os-
in cryptographic hardware [9], this paper explores cilloscope Tektronix TDS 520D and software for
the efficiency of the attack on a cryptographic automatical set-up of oscilloscope (Figure 3).
core’s model with characteristics of Serpent algo-
rithm [10]. One of the components of our model
of cryptographic core is called data_generator. It
automatically generates 4-bit numbers with spe-
cial order to allow easier and faster measurements
of dynamic currents. So, for the input data 0000,
data_generator will generate 16 possible changes
of the input data: 0000 ™ 0000, 0000 ™ 0001,
0000 ™ 0010, 0000 ™ 0011,...0000 ™ 1111.
Data_generator realized like Finite asynchronous
Moore’s State Machine (FSM) is explained by
Cummings [11]. It also creates changes for all oth-
er input data: 0001, 0010, 0011,...1111 (Figure 1).
Figure 3. Measurment set-up

3. Differential dynamic current analysis key are in blue color) and Key8=1000 (in Figure
5 traces for this key are in red color), to show the
When executing differential dynamic current
difference between the traces of dynamic currents,
analysis attack, there are few steps that have to be
and to come to know if differential dynamic current
accomplished (Figure 4). First of all, an attacker
analysis written in Matlab program is faultless.
must be able to precisely measure and record dy-
namic currents of created crypto core with the dig-
ital oscilloscope, while the algorithm is running.
When measuring dynamic currents, we cannot
prevent the influence of noise. Various noise com-
ponents have to be considered, such as external
noise, intrinsic noise, quantization noise and algo-
rithmic noise. By careful use of mentioned high-
quality measurement equipment, external noise
for investigations described and done within this
paper has been notably reduced. Also, an attacker
must know what algorithm is computed (in this
case Serpent), just as the plaintext or the cipher-
Figure 5. Zoomed difference for recorded traces
text (output to an encryption algorithm). Our strat-
for two different keys
egy is to make a lot of measurements of dynamic
currents and then divide them with the aid of some The success of differential dynamic current
oracle into two different sets. Statistical methods analysis strongly depends on the number of used
will be used to verify the oracle and if and only samples. For this paper, 1000 samples were taken
if the supposed oracle has the same value as the for each key (Key2=0010 and Key8=1000). For
secret key in crypto core’s architecture, we will be example, obtained results for Key8=1000 have
able to see noticeable peaks in the statistics. shown that even 100 samples are enough to reveal
the secret key (Table 1). This is the consequence
of using precise measurement set-up.
The target of this attack were clock periods
where data values change and where dynamic cur-
rents have been measured. Since there is a delay
of one clock period in the crypto-core’s activity,
an offset of 100ns has been specified. For all 100
samples (traces taken for Key8) a Target_Bit has
been verified. This bit depends on value of input
data and the correct key, and particularly in these in-
vestigations represents the second bit of the crypto-
Figure 4. Steps of differential dynamic current core’s output data. There is no 100% right choice
analysis for Target_Bit, it is a matter of experience in crypto
core attacking area. Depending on the value of Tar-
For each of sixteen 4-bit input data, data_gen- get_Bit, counter_1 or counter_2 are increasing. Ac-
erator generates 16 possible changes of input data, cording to the value of Target_Bit (0 or 1), traces
which demands 32 clock periods. The number of all are divided into two groups. After computing the
clock periods is 16*32=512. Using clock frequency difference between mean values of two groups of
of 10MHz, the duration of this process is 51,2μs. traces, simulation of the differential dynamic cur-
Since height of oscilloscope’s window is 15μs, trac- rent analysis written in Matlab program can start.
es for almost first five input data can be recorded. After computing the difference between mean
Two different keys have been used for the mea- values of two groups of traces and executing the
surements, Key2=0010 (in Figure 5 traces for this simulation of differential dynmic current analysis,

the results of this attack show that the highest value age of high-quality and precise equipment set-up,
of all gained peaks is the one for the Key8=1000, numerous measurements of dynamic current over
which actualy has been used as a secret key. From crypto-core have been executed. This data in form
all above mentioned steps, it can be concluded of dynamic current traces has made possible to
that the programmed differential dynamic current actualize an attack using differential dynamic cur-
analysis attack was effective (Figure 6). rent analysis method and to reveal the secret key.
Table 1. Maximum values of DPA peaks for
different key_values References
Key MAX DPA
1. Mayes K. E., K. Markantonakis, “Smart Cards, To-
0000 1.0953
kens, Security and Applications,” Springer, 2008.
0001 1.1070
0010 1.1566 2. Rankl W., Effing W., “Smart Card Handbook,” 3rd
0011 1.1961 edition, John Willey and Sons, 2003.
0100 1.2286 3. Kocher P. C. , Jaffe J. , and Jun B. , “Differential
0101 1.2059 power analysis,” in Proc. of Advances in Cryptology
0110 1.2059 (CRYPTO’99), , 1999; pp. 388-397.
0111 1.0909 4. Rabaey J. M., “Digital Integrated Circuits: A Design
1000 1.5860 Perspective,” Prentice Hall, 1996.
1001 1.0213
5. Djukanovic M. , Vujicic V., “Influence of imple-
1010 1.1225
mented technology on e-payment systems security,”
1011 1.2777 OLS Journals Special Issue on Mobile Learning, E-
1100 1.2914 Society & E-Management, 2011.
1101 1.3383
6. Djukanovic M. , Giancane L., Scotti A. Trifiletti, “Im-
1110 0.9971
pact of Process Variations on LPA Attacks Effective-
1111 0.9853 ness,” in Proc. of International Conference on Com-
puter and Electrical Engineering (ICCEE09) , 2009.
7. Djukanovic M. , Giancane L., Scotti G., Trifiletti
A., Alioto M., “Leakage Power Analysis Attacks:
Effectiveness on DPA Resistant Logic Styles under
Process Variations,” in Proc. of IEEE International
Symposium on Circuits and Systems (ISCAS2011),
2011; pp. 2043-2046.
8. Pedroni V. A., “Circuit Design with VHDL,” MIT
Press, 2004.
9. “Data Encryption Standard,” in FIPS publication
46, National Bureau of Standards, U.S. Department
of Commerce, 1977.
Figure 6. Results of differential current analysis
10. Anderson R. , Biham E., and Knudsen L., “Serpent:
attack depending on key_value A proposal for the Advanced Encryption Standard,”
National Institute of Standards and Technology, 1998.
4. Conclusion 11. Cummings C. E., “State Machine Coding Styles for
Synthesis,” Sunburst Design, 1998.
This paper shows the realistic possibility of ex-
ploiting dynamic currents in order to detect and
reveal secret key in a cryptographic hardware. A Corresponding author
simple model of cryptographic core with charac- Milena Djukanovic,
Faculty of Electrical Engineering,
teristics of Serpent cryptographic algorithm has
University of Montenegro,
been VHDL designed and used for testing. After Montenegro,
FPGA implementation of crypto-core, with the us- E-mail: milenadj@ac.me

Education in mechatronics and industrial needs

of Montenegro for mechatronics engineers
Marina B. Mijanovic Markus
University of Montenegro, Faculty of Mechanical Engineering, Podgorica, Montenegro
Abstract grate and intensify interaction between different

engineering disciplines. Combination of Mechani-
Mechatronics is an engineering field which in-
cal engineering, Electronic engineering, Comput-
tegrates mechanical and, electronic engineering
er engineering, Software engineering brings sim-
and computer technologies for product design.
plicity, functionality, reliability and adaptability to
Modern engineers are faced with problems related
any system.
to products of mechatronic nature and with the
task of mechatronic product development. There-
fore, it is necessary to develop study programmes 2. Mechatronics in practice
and courses which provide future engineers with Mechatronic elements, devices and systems can
different multidisciplinary skills and expertise, be found in: metal processing, electro-mechanical,
so that they can meet rapidly changing industrial chemical, food, pharmaceutical, water processing,
demands and needs. With a view to analysing the electric power and petrochemical industry, then in
needs of Montenegro for mechatronics engineers, household appliances, typing, copy, medical, mea-
we conducted a survey of 30 Montenegrin com- suring, IT devices, motor vehicles, communication,
panies engaged in different business activities. entertainment and multimedia, tools, aviation and
Survey results showed increased need for the edu- space technologies, control and regulation, etc.
cation of engineers in the field of mechatronics. Mechatronics engineers can perform a wide
As a response to this need, Faculty of Mechanical variety of activities: product design, redesign of
Engineering in Podgorica developed a new study existing solutions, production, movement control
programme of Mechatronics, with undergraduate systems, computer integrations, process and device
and postgraduate studies. control, integration of functionality with embedded
Key words: mechatronics, mechatronics engi- microcontrollers, design of machines and systems
neer, industrial needs for engineers. with a particular level of intelligence, production
process management, maintenance of mechatronic
1. Introduction devices, organisation and management of small en-
Need for multidisciplinary approach to engi- terprises for production, service and assembly, mar-
neering disciplines is dominant in modern indus- keting, sales, laboratories, schools, agencies, etc.
try. New product design tasks are numerous, more Since the industry needs mechatronics, it is
complex and sophisticated and in order to handle necessary to educate mechatronics engineers who
them it is necessary to have knowledge beyond will have multidisciplinary knowledge which is
fundamental engineering fields, it is necessary to incorporated into mechatronics.
be familiar with computer engineering. Planning
of a new product integrates fundamental engineer- 3. Mechatronics studies in Montenegro and
ing fields: mechanical engineering, electrical engi- former Yugoslavia
neering, automatic control and computer technol-
ogies. All of this has brought us to the definition There is an evident increase of number of me-
of a new field called mechatronics (a portmanteau chatronics studies all around the world (Japan, Ger-
of mechanics and electronics). Generally accepted many, India, Australia, USA, etc.). Germany, for in-
definition of mechatronics is that it represents a stance, has the studies at 15 universities and 40 uni-
new concept which emphasises the need to inte- versities of applied sciences starting from 2007 [1].

In the region of former Yugoslavia, in all constitu- of Electrical Engineering, master postgraduate
ent countries, there are study programmes of me- studies, study programme Energetics and Auto-
chatronics: Maribor University, Slovenia, Faculty mation, course Automation and course Industrial
of Mechanical Engineering, interdisciplinary study electronics there is also an elective subject of Me-
programme - Mechatronics [2, 3]; School Centre chatronics with 5 ECTS.
in Celje, Slovenia, Secondary Vocational School, Higher education institutions are responsible
study programme - Mechatronics [4]; Polytechnic for technical, technological and economic de-
of Zagreb - Undergraduate professional study in velopment of a country. Their duty is to follow
Mechatronics [5]; Karlovac University of Applied global technological developments and contrib-
Sciences, Croatia, Mechatronics [6]; Secondary ute to economic development of the state. They
Technical School in Bjelovar, Croatia, Vocational are responsible for the development of education
study - Mechatronics [7]; University of Banja Luka, system which should educate innovative, creative
Bosnia and Herzegovina, Faculty of Mechanical and inventive engineers who are able to cope with
Engineering [8]; University of Tuzla, Bosnia and demands and needs of modern industry. We are of
Herzegovina, Faculty of Mechanical Engineering, the opinion that education in the field of mecha-
study department of Mechatronics, undergraduate tronics is of vital importance to the society, and
[9] and postgraduate studies [10]; Faculty of Techni- at the Faculty of Mechanical Engineering, Uni-
cal Sciences, University of Novi Sad, Serbia, under- versity of Montenegro, we initiated the procedure
graduate academic studies, master academic stud- to establish study programme of Mechatronics.
ies, doctoral academic studies, study programme of In order for the programme to be adequately de-
mechatronics [11]; Technical Faculty Čačak, Uni- fined, we have conducted a research of the needs
versity Kragujevac, Serbia, undergraduate academic of Montenegrin industry for Engineers of Mecha-
studies of Mechatronics [12] and study programme tronics and what skills they should possess.
of master academic studies of Mechatronics [13];
Faculty of Mechanical Engineering of the Univer- 4. Number of Engineers of Mechatronics in
sity of Niš, Serbia, study course of Mechatronics Montenegro
[14]; High Technical School of Vocational Studies,
Subotica, Serbia, study programme of Mechatronics Records of the Employment Agency of Mon-
is in the process of opening [15]; University of “St. tenegro states there are no unemployed Engineers
Cyril and Methodius“ in Skopje, Macedonia, Fac- of Mechatronics which got their degrees at foreign
ulty of Mechanical Engineering, academic 4-year universities. Additionally, in 31 wood processing
study programme of Mechatronics [16] and post- and furniture factories, 17 IT companies, around 80
graduate studies [17], etc. companies dealing with food (fruit, fish, vegetable
Analysis and comparison between the men- and meat processing, production of oils, bread, con-
tioned study programmes of mechatronics, and fection, milk, beverages, bottled water), 71 com-
similar studies all around the world, particularly panies producing electrical and machine elements,
in Europe, have shown that there are differences Aluminium Plant Podgorica (KAP), Tobacco Plant
between study concepts influenced by industrial Podgorica (DKP), Electric Company, Oil industry,
needs and demands. For world leading universi- Chemical industry, pharmaceutical industry, (Hemo-
ties with strong connexion and cooperation with mont Podgorica), Public Water Supply Company,
the industry it is normal to change study plans ac- i.e. in all the companies registered in Montenegro
cording to industrial needs. there are no employed engineers of mechatronics.
University of Montenegro has not still fully
recognised the need for the education in the field 5. Needs of the Montenegrin industry for
of mechatronics. At the Faculty of Mechanical Engineers of Mechatronics
Engineering, postgraduate specialist studies, Pro-
duction Mechanical Engineering, course Flexible With a view to investigating needs of the Mon-
Automation there is an elective subject of Mecha- tenegrin industry for engineers of mechatronics,
tronics with 4.5 ECTS credits, and at the Faculty the Faculty of Mechanical Engineering organised

Round table “Needs of the Montenegrin econ- On the Round table, 11 questionnaires were com-
omy for mechatronics engineers”. Representa- pleted, while 19 of them were completed via mail
tives from the field of economy expressed their or fax. The questionnaire was filled by competent
opinions regarding the knowledge necessary for company managers (owners, CEOs, technical direc-
modern engineers, according to the needs of their tors, heads of different sectors, etc.) and appropriate
respective companies. Additionally, they put their experts (mechanical and electrical engineers).
remarks and suggestions into a questionnaire.
Table 1. Companies which filled our Questionnaire

No. of
No. Company Activity
employees
KAP (Kombinat Alumijuma
1. aluminium production 1.500
Podgorica), Podgorica
2. Hemomont Ltd, Podgorica pharmaceutical industry 170
3. Termoelektrana Pljevlja production of electricity 312
Elektroprivreda Crne Gore AD,
4. Production, distribution and supply of electricity 2.800
Nikšić
5. Diam Bor Consult, Podgorica production of diamond tools 7
6. EMI, Podgorica electronics, mechanical engineering, engineering 45
Duvanski kombinat (DKP),
7. production of tobacco and cigarettes 200
Podgorica
storehouse of metal and metal products, processing of
8. „7. avgust“, Podgorica 65
metal and metal products
9. DAIDO Metal Kotor JSC, Kotor production of bearings for internal combustion engines 101
10. Dairy JSC Zora, Berane production and processing of milk and milk products 40
11. „WAS.Impex“ Ltd, Podgorica production of furniture 50
12. HardNet Ltd, Nikšić engineering, planning, sales of computer equipment 8
13. Hemko Ltd, Podgorica production of household and industrial chemicals 10
14. KRONUS MN Ltd, Cetinje production and sales of horizontal freezers 60
15. NEKSAN Ltd, Nikšić production of alcoholic drinks 60
„NIKPEK“, City bakery JSC,
16. bakery 86
Nikšić
17. TAGOR, Ltd., Podgorica planning, sales and service of computer equipment 18
18. UNIPRED, Ltd., Bijelo Polje manufacturing of metal constrictions 31
JSC „BJELASICA RADA“,
19. production of mineral water and non-alcoholic beverages 67
Bijelo Polje
production, sales, overhaul and service of woodworking
20. Ltd. „MIKRO“, Bijelo Polje 30
and agricultural machinery, spare parts and equipment
21. VAGAR Ltd., Podgorica weight measuring and automation devices 8
22. Montavar Metalac, Nikšić metal industry 138
23. Uniprom Pekara Ltd. - Nikšić bakery 32
24. Mljekara NIKA Ltd. Nikšić production and processing of milk and milk products 79
Mljekara Lazine - Šimšić
25. production and processing of milk and milk products 62
Montmilk Ltd., Danilovgrad
Production of fruit nectar, syrups, carbonated and non-
26. Pirella Ltd., Danilovgrad 94
carbonated drinks
27. Lipovo Ltd., Kolašin Production of still and sparkling water 26
Crnagoracoop JSC., Production of coffee (ground, vacuum and espresso), and
28. 167
Danilovgrad sweets (biscuits, chocolates, desserts)
29. Inpek JSC., Podgorica Production and distribution of food products 150
30. Water group Ltd., Kolašin Natural spring water bottling 25

The questionnaire consists of two parts. Part tain existing equipment from both mechanical and
I of the questionnaire, question 1-5, addresses the electrical engineering aspects. This point was em-
industry needs for mechatronics engineers, LLL phasised during Round table.
courses and mechatronics master studies graduates. Answers to questions 2 and 3 showed what
The largest three companies gave multiple profile of future engineers of mechatronics com-
answers to the question number 1, i.e. they need panies want to employ.
experts in mechatronic and mechanical engineer- Forth question was related to the readiness of
ing, and mechatronics and electrical engineering. the companies to invest into additional education
87% of companies consider that modern engineers of their employees through LLL courses. Two of
need multidisciplinary knowledge from the field the companies with less than 20 employees an-
of mechanical, electrical engineering and IT. swered they do not need a specialised training for
Answer to the question number two was that all mechatronics engineers, and two companies did
of the companies need engineers of mechatronics not give definitive answers. Remaining 26 compa-
now or in the future. nies (87%) has positive opinion in relation to this
Although it was necessary to choose one answer issue, and 17 of them think they will have the need
to the question number three, 3 companies with for specialised training of their engineers from the
more than 100 employees, chose multiple answers filed of mechatronics, but sometime in future. Oth-
regarding the fields for which they need engineers er 8 companies already feel the need for additional
of mechatronics, which is understandable and ac- education of their enginner when it comes to me-
ceptable as an answer. Lowest number of answers chatronics. 77% of companies consider it useful if
for new product development can be interpreted their engineers would continue their education on
through the context of status and structure of the postgraduate studies of Mechatronics.
Montenegrin industry, in which a small number of Answers fro the first part of the questionairre
companies deal with development of new techni- showed that Montenegrin industry needs engineers
cal products. Most of the companies want engi- of mechatronics, and showed that companies support
neers capable of applying advanced technologies specialised trainings for their engineers from the filed
or improving existing processes. Furthermore, the of mechatronics and continued education of their en-
companies want engineers who are able to main- gineers on postgraduate studies of mechatronics.
Table 2. Part I of the questionnaire with answers
Question 1. What type of knowledge should modern engineers have? No. of answers
specialised knowledge only in mechanical engineering 4
specialised knowledge only in electrical engineering 2
specialised knowledge only in information technologies 1
Interdisciplinary knowledge in mechanical engineering, electrical engineering and information
26
technologies
Question 2. Do you think that your company might need mechatronics engineers?
12 Yes 18 Yes, in future 0 No 0 I don’t know
Question 3. Which department of your company would have a need for mechatronics
No. of answers
engineers?
new product development 4
new advanced technology application 12
automation of existing processes 7
maintenance 10
Question 4. Do you have a need for specialised training for your engineers in mechatronics or related fields?
Question 5. Would you benefit if your engineers could continue their education in Mechatronics master
studies?

Part II of the questionnaire (questions 6, 7 and given answer is graded as very important - (5) to
8) helps in creating the study programs according insignificant - (1).
to the industry needs. The 6th question refers to Answers to the question number 6 clearly
the engineers in general. The importance of every showed the companies consider that the most
Table 3. Part II of the questionnaire with answers
Insignificant
importance
No answer
important
important
important
important
Everadge
What particular knowledge would you request for
not so
very
less
6.
employment of an engineer?
basic knowledge in mechanical engineering, electrical

6.1 22 8 4,73
engineering and information technologies
6.2 advanced knowledge in mechanical engineering 8 16 2 4 4,23
6.3 advanced knowledge in electronics 5 19 2 4 4,11
6.4 advanced knowledge in information technologies 11 14 1 4 4,38
Insignificant
importance
No answer
important
important
important
important
Avarage
What specific knowledge would you expect from a
not so
very
less
7.
Mechatronics engineer?
7.1 mechanical engineering design and calculations 7 6 15 1 1 3,62

7.2 CAD programs (AutoCAD, Solid Works) 9 11 8 2 4,03
7.3 electronics systems design 3 8 14 4 1 3,34
7.4 electro-mechanical components functionality 20 10 4,67
7.5 specification and application of sensors and actuators 13 14 2 1 4,38
7.6 machines and process control 14 13 2 4,27
7.7 controllers programming (PLC, microcontrollers) 8 13 8 1 4
7.8 programming languages (C++, Java, Fortran and others) 3 8 12 5 2 3,32
7.9 measurement and signal processing 8 13 6 2 1 3,93
7.10 modeling and simulation programs 9 8 11 2 3,93
7.11 mechatronics systems design 8 12 10 3,93
7.12 law regulative and standards awareness 11 13 5 1 4,21
Insignificant
importance
important
important
important
important
Without
Avarage
answer
What are the skills which you would want your new
not so
very
less
8.
engineers to have?
8.1 communication and presentation skills 12 13 5 4,23

8.2 team work ability 19 11 4,63
8.3 solving problems skills 22 8 4,73
8.4 planning and managing skills 13 13 4 4,3
8.5 computers and internet use 15 15 4,5
8.6 foreign languages proficiency (English, German) 11 16 3 4,27
8.7 foreign technical literature application 10 16 3 1 4,24
8.8 general technical knowledge 15 12 2 1 4,45
8.9 specific technical knowledge in a particular area 10 13 7 4,1
8.10 theoretical knowledge of engineering 8 15 7 4,03
8.11 practical solving of engineering problems 20 10 4,67
8.12 comprehension of new advanced technologies 16 14 4,53
8.13 technical legislative knowledge (EU directives, standards) 7 18 5 4,07

important for their engineers is interdisciplinary Answers to the questions gave basic information
knowledge from the field of mechatronics. 73% regarding the skills which are necessary for en-
of them graded that knowledge as very important, gineers of mechatronics on the labour market of
others graded it as important. Montenegro. It was the basis for the establishment
Four companies did not provide answers re- of Study Programme of Mechatronics on the Fac-
garding the grading of advanced knowledge from ulty of Mechanical Engineering in Montenegro.
mechanical and electrical engineering and IT.
Their indecisiveness can be interpreted as an ex- 6. Discussion and conclusion
clusive support to interdisciplinary knowledge in
the field of mechatronics. Other companies graded Recognising the need for the education in the
the importance of advanced knowledge from the field of mechatronics, the Faculty of Mechanical
field of mechanical engineering with 4.23, from Engineering, decided to open Mechatronics stud-
electrical engineering 4.11, and IT 4.38. ies with the structure 3+2. This structure was cho-
It is interesting that 25 companies marked ad- sen in accordance to development trends in this
vanced knowledge of IT as very important, and that field in Europe with exactly the same structure
only one company put that modern engineers should 3+2 (analysis of 87 European universities, [18]).
have special knowledge only in this field. It clearly As opposed to other, fundamental engineer-
shows the companies consider that multidisciplinary ing fields, for the successful development of this
skills are more important to specialised ones. study programme it is of vital importance to es-
One or two companies did not give answers to tablish cooperation between experts (professors)
some sub questions under question 7, so that aver- from different disciplines in order to: create opti-
age mark related to the importance of specific skills mal blend of courses and skills from the fields of
is calculated out of the number of provided answers. mechanical, electrical engineering, electronics, IT,
The highest mark was given to particular skills prepare teaching materials and new laboratory ex-
related to electro-mechanical components function- ercises and experiments from the field of mecha-
ality (4.67), specification and application of sensors tronics. Therefore, Study Programme of Mecha-
and actuators (4.38), machines and process control tronics (undergraduate and postgraduate academic
(4.27), law regulation and standards awareness studies) at the Faculty of Mechanical Engineering
(4.21), CAD programs (4.03) and controllers pro- is developed as a new study programme in coop-
gramming (4). It shows the highest marks were giv- eration with the Faculty of Electrical Engineering
en to knowledge necessary to use mechatronic sys- of the University of Montenegro.
tems. Slightly lower marks (ranging from 3.32 to Study Programme of Mechatronics, under-
3.93) were given to specific skills which are more graduate and master postgraduate studies, at the
connected to the development of mechatronic prod- Faculty of Mechanical Engineering is in the ac-
ucts, which is the reflection of the abovementioned creditation process. Plan and programme of the
condition of Montenegrin industry. studies, after the accreditation, will be available
Average mark related to importance of every on our website www.mf.ac.me.
skill of new engineers which are listed under ques-
tion 8 is above 4, which shows that they are con- Acknowledgement
sidered as very important by the companies. Above
mark 4.5 are: solving problems skills, team work Study Programme of Mechatronics at the Fac-
ability, practical solving of engineering problems, ulty of Mechanical Engineering of the University
comprehension of new advanced technologies and of Montenegro was developed through Tempus IV
computers and internet use, which shows that skills project 158644 – JPCR “Development of Region-
leading to fast reaction and problem solving are al Interdisciplinary Mechatronic Studies”-DRIMS
very useful. [19]. The project, apart from other things, enabled
The survey and questionnaire showed that us to adequately equip laboratories, development
Montenegrin companies strongly support, we can of specific courses, teaching materials and training
say, demand education of mechatronics engineers. of the teaching staff.

For the analysis of the needs of Montenegrin in- Corresponding author

dustry we used the questionnaire which was devel- Marina Mijanovic Markus,
oped within DRIMS Tempus project, and the author
Faculty of Mechanical Engineering in Podgorica,
of this paper also participated in its development. Montenegro,
The questionnaire was used by all Western Balkans E-mail: marinami@ac.me
partner higher education institution for the same
purpose. Apart from the University of Montenegro,
study programme of mechatronics, within Tempus
project [19] was also developed at three more uni-
versities on the Balkans: Skopje, Bitola and Priština.
References
1. hochschulkompass.de, Stand 09/2007
2. http://www.fs.uni-mb.si/podrocje.aspx?id=717
3. http://www.fs.uni-mb.si/podrocje.aspx?id=812
4. http://www.sc-celje.si/vis/programi/Strani/
Izobra%c5%beevalni%20programi.aspx
5. http://www.tvz.hr/strucni-studij-mehatronike/
6. http://www.educentar.net/HR/Programs/De-
tails/10248/Strucni-studij-mehatronike/
7. http://vtsbj.hr/visoka-skola/
8. http://www.scribd.com/doc/59474165/Nastavni-
Planovi-Prvog-i-Drugog-Ciklusa-Studija
9. http://www.mf.untz.ba/index.php?option=com_conte
nt&view=category&layout=blog&id=4&Itemid=23
#Mehatronika
10. http://www.mf.untz.ba/index.php?option=com_cont
ent&view=article&id=40&Itemid=29
11. http://www.ftn.uns.ac.rs/index.php?mode=view&ac
tion=document&document=282
12. http://www.tfc.kg.ac.rs/smerovi/mehatronika
13. http://www.tfc.kg.ac.rs/studije/master-mehatronika
14. http://www.masfak.ni.ac.rs/sitegenius/topic.php?id=94
15. http://www.vts.su.ac.rs/sr/study/mechatronika
16. http://www.mf.ukim.edu.mk,
17. http://www.mf.ukim.edu.mk,
18. http://vvv.etc.tuiasi.ro/reforma/eieee.pdf
19. www.tempus-drims.eu

Developing an international IT- based research

collaboration between university and enterprises
Marija Th. Semmelrock-Picej
Klagenfurt University, Klagenfurt Austria
Abstract rather than real-time knowledge in the sense of

“spoken words or texts”.
Customer knowledge management initiatives
Real-time knowledge means acquiring knowl-
often fail because they have been introduced with-
edge directly from a person, which means integrat-
out any clear aim, implementation process plan-
ing audio data. With the emergence of Web 2.0, a
ning and required competencies. To overcome
huge amount of customer knowledge in the form
these problems the main steps during the planning
of audio data is available and could be retrieved
of a successful international IT-based collabora-
and elicited for new business models [18] and
tion between university and enterprises is present-
customer-centric marketing activities. CRM-sys-
ed, illustrated with a concrete business case.
tems do not offer such functionalities. Moreover,
Key words: Information technology, customer
CRM-systems do not offer efficient, naturally for-
knowledge management, collaboration, interna-
mulated search algorithms with customer-friendly
tional organization.
graphic output [19].
Companies need an increasing number of com-
1. Introduction petencies in order to fulfill the above mentioned
requirements. Traditionally this research is con-
Today’s economy is knowledge-based, and the
ducted at enterprises in-house research laborato-
ability to acquire, share and apply relevant knowl-
ries. During the last decades companies in high-
edge [1], [2] is a key element in gaining a competi-
tech industries tend to collaborate with universi-
tive advantage [3]. But how can these knowledge
ties during the fuzzy front end phase and also the
processes be established and executed? Although
development phase in order to rapidly aquire fresh
there has been extensive research in this field [4],
new knowledge and to secure technological know-
[5], [6], [7], [8], [9], it is still complex [10] and
how and to minimize technological risks. They
difficult to implement customer knowledge man-
collaborate with research institutions and univer-
agement processes successfully [11]. Knowledge
sities to bridge their knowledge and resource gaps.
bases are incomplete, imprecise and inconsistent
This paper gives insights into an international
[12], and up to 84% of such knowledge manage-
IT-based research university-enterprise collabora-
ment activities fail [13], [14]. Economists mostly
tion between UK and Austria in the field of cus-
have to handle large amounts of data in heteroge-
tomer knowledge management. In order to be as
neous IT-systems [15] and in various databases or
concrete as possible it is best to explain the re-
excel-sheets in a very short time. Especially when
search collaboration by targeting a concrete busi-
real time response to customer demand is urgently
ness case, this will be the integration of speaker
needed, speedy availability and a high transfer of
recognition functions into a customer knowledge
knowledge is of primary interest.
management system. In detail the main research
A common IT-enabler for handling custom-
questions, objectives and the process of how such
er data is a customer relationship management
collaboration is developed and planned is de-
system (CRM system) [16]. Unfortunaly, CRM
scribed in order to help facilitate new collabora-
systems require a relatively high level of rigor
tions to improve technical innovations. The next
in terms of information and are not hindered by
sections starts with the presentation of the research
the recording of too much superfluous or redun-
business case description.
dant information [17]. Hence, CRM systems fail
because they mostly manage old customer data

2. Business case description management. However, the successful conceptu-

alization, development and introduction of such
2.1. Customer knowledge management technological functions and systems are influ-
enced by a number of other indirect factors and
There is general agreement that customer knowl-
barriers [25]. Besides the well known basic model
edge management is a very complex and multi-fac-
for the identification of such factors - the above-
eted phenomena [20]. As a result, there is a variety
mentioned TOM model [17] and the extended
of perspectives to address CKM issues. Following
model version [26] - the research findings of Chua
Bulliger [21], in order to successfully apply cus-
and Lams should be integrated: they identified
tomer knowledge management, three components
four categories for the successful development of
are required: human aspects, organizational aspects
knowledge management systems and for avoiding
and information and technology-oriented methods
the main four failure factors technology, culture,
and aspects (also known as TOM-model).
content and project management [27].
Many researchers describe organizational cul-
ture as a key factor in managing knowledge [28],
[29]. However, the literature provides neither a
clear definition of the term ‘culture’ [30], [31],
[32], nor of the term in the context of customer
knowledge management, nor how culture affects
knowledge transfer and which methods and tech-
niques may be conceivable to overcome problems
of transferring knowledge across cultural bound-
aries [33] especially between univer sities and
enterprises. National and organizational culture
Figure 1. Customer knowledge management of universities and companies has a mutual influ-
dimensions ence [34] and also affects the success of customer
knowledge management initiatives [35], [36]. As-
Figure 1 provides an overview of the dimen- pects like a common understanding, trust, famil-
sions of customer knowledge management. With iarity and long-term commitment to a university-
respect to the three customer knowledge manage- industry collaboration has a significant bearing on
ment dimensions (see figure 1), the relevant cus- the formation and success of such a collaboration.
tomer knowledge has to be managed and orga- To analyze these aspects, the development of a
nized on different levels, on the human side, the technology and cultural framework with a special
organizational level [22] and on a technology base focus on speech recognition and the preconditions,
[23] in order to enable the integrative management implications and benefits, in order to determine the
of implicit and explicit knowledge [24] and shar- contribution of speech recognition to the CKM to
ing of this knowledge in a codified way. reach organizational aims should be considered.
Knowledge elicitation consists of capturing,
obtaining, analyzing and interpreting knowledge
2.2. Speech-Music Classification
from any relevant knowledge source in a methodi-
cal and systematic way. The choice of technique With the emergence of Web 2.0 or Web 3.0, a
depends primarily on the type of knowledge to be great deal of audio data is available which is not
retrieved and the type of models used to represent indexed by the web. Most sites make intensive
it. Many techniques and methods exist. use of video, sound, web TV and radio. In these
This research collaboration addresses this issue systems, audio segmentation is part of the index-
and aims to analyze and evaluate speech recogni- ing task. Especially in the field of news, where the
tion techniques and methods. speech is typically interspersed with music and
The aim is to examine functions and intelligent background noise, audio segmentation becomes
methods in the context of customer knowledge a very important function. In order to use broad-

cast signals for customer knowledge management adapted to each acoustic class (one for music and
purposes, these input broadcast audio signals have one for speech) using eight Gaussian mixtures per
to be divided and classified into conversational class.
speech and music and then annotated. The clas-
sification result can be used for different purposes, 2.3. Speaker recognition
such as CRM-statistics or further processing of
speech (automatic speech recognition and tran- With respect to speaker recognition, two do-
scription etc.) or music identification (genre detec- mains of research are of actual interest, identifica-
tion, music identification etc.). tion and verification [43], [44]:
In the typical speech and music signals spectra, In speaker identification, the task is to deter-
humans can clearly recognize the difference be- mine which of a group of known speakers or
tween these two acoustic classes. Typically, differ- voices best matches a given input voice sample.
ent kinds of speech have certain common features; Speaker identification can be done for two known
for example, most speech energy is concentrated scenarios. In the so-called closed-set mode, the
at the lower end of the frequency spectrum (usu- scenario assumes that all speakers in the given au-
ally below 900 Hz). Depending on the type of mu- dio sample come from a group of known voices.
sic, the frequency spectrum can vary widely. This Otherwise, the system operates in an open-set sce-
depends on the musical genre. Because new do- nario where speakers who are ‘imposters’ and do
mains for segmentation are constantly emerging, not belong to a set of known voices can reduce the
speech/music discrimination and segmentation is accuracy of identification. Speaker identification
an active field of research. To date, a great deal is used for multiple applications, in forensics, in
of research effort has been put into speech/ music the adaptation of models for speech recognition,
segmentation [37], [38], [39], [40]. and data indexing.
Many nowadays known segmentation systems To verify that a given sample belongs to a par-
perform differently so that research in the field of ticular speaker from a known group, speaker veri-
systems features is still one of the main factors fication is used in order to determine whether a
in final performance [40]. Several approaches to person is who they claim to be based on a sample
speech/music discrimination have been proposed of their voice. Speaker verification is the basis for
by many authors [41]. They conducted various commercial speaker recognition applications. The
experiments with different speeches and music open-set task can be considered as the merger of the
signals and reported an accuracy of between 90% closed-set identification and open-set verification
and 94%, and used up to 13 features to charac- tasks. Up to now speaker verification is used for
terize distinct properties of speech and music sig- security applications such as controlling telephone
nals [42]. To find the appropriate system features access to banking services and broadcast news
which best fit to the customer knowledge manage- speaker identification, where verification is used
ment approach is of highest importance. to verify an identification claim.
Therefore the classification process can be per- The speaker recognition procedure performs
formed with a GMM classifier which uses a prob- speaker identification and verification through nat-
ability estimate for each model (speech and music ural human modality speech. The speaker recogni-
in our case) to measure how well the calculated tion process can be classified into text-dependent
feature is modelled by trained Gaussian clusters. and text-independent methods [45]. The former
A feature is assigned to whichever class is the best requires the speaker to provide samples from the
model of that feature. On the basis of the prob- same text for both training and recognition, while
ability values, the frames are classified, and in the the latter does not depend on a specific text. In this
segmentation step they are grouped into time an- system, a text-dependent speaker recognition pro-
notated segments according to predefined rules cess is implemented through a speech recognition
for segment duration. Training sets of dedicated technique. A typical speaker recognition model
training speech and music broadcast databases are consists of a feature extraction module and a pat-
used to train GMM models whereby one model is tern matching module [46]:

– The first module is the feature extraction where wj is the mixture weight of the particu-
module. The module estimates a set lar Gaussian and Ф(x;θj) is the mixture compo-
of features from the speech signal that nent. Input vectors are formed by using a defined
constitute speaker-specific information. The speaker training database, which is further used to
specific information is the result of complex estimate maximum probability model parameters
transformations occurring at various levels by using the iterative expectation maximization
of speech production: semantic, phonologic, (EM) algorithm.
phonetic and mostly acoustic [47]. To minimize the influence of background
– The second module is the pattern matching sounds which are present in different utterances
module, which is responsible for comparing of the training sessions, background modeling is
features derived from the feature extraction used to train a single spea-ker-independent GMM
module with the speaker models [48]. background model, also called a universal back-
ground model (UBM) [51].
In the process of verification, this module out- The verification process is then performed on
puts a similarity score between the test sample and the speech utterance x via a probability ratio test,
the claimed identity. The final module handles the where a hypothesis tests of two hypotheses are
decision process [46]. performed [52]:
Speaker recognition is a process whereby the a. Utterance x is from the hypothesized
speaker claims to be a certain person and the voice speaker,
is used to verify this claim. It is based on a Gaussian b. Utterance x is not from the hypothesized
mixture procedure, using Gaussian mixture mod- speaker
els (GMM) for speaker modeling [49]. A GMM is
defined with a combination of unimodal Gaussian The test between these two hypotheses is de-
densities, where a Gaussian density for a d-dimen- fined as:
sional feature input vector is defined as [49] [50]:
................ (6)
......... (1)
where p(x|A) is the probability of hypothesis

............................... (2) A and p(x|B) is the probability of hypothesis B. A
decision threshold defined as Ф is implemented in
................... (3) order to accept or deny the claimed speaker iden
tity. In the case of hypothesis, B the UBM speaker
where θ is a Gaussian with mean µ and covari- model is taken to model a speaker which is not the
ance matrix ∑ and x is the data being modeled. hypothesized speaker. Individual speaker models
The linear combination of k Gaussian probability are derived by maximum a priori (MAP) adapta-
density functions (PDFs) is further defined as: tion of the UBM model using the particular speak-
er speech data. Speech/non-speech segmentation
is also used to limit the probability calculation to
.................... (4) speech frames with important speaker information.
This enhances the accuracy of speaker verification
and calculations.
where
3. Research collaboration
and
3.1. Objectives and methodology
......................... (5) The research collaboration starts with the defi-
nition of the research scope and the research proj-

ect plan with detailed work packages. In this case mutual benefit. A precondition for this is a mixed
the research collaboration is part of an interna- project team of men and women and scientists and
tional R & D project on e-business and new busi- practitioners of the university and the industry.
ness models between university and enterprises in
the UK and Austria. The objective of the research 3.2. Measurable work packages
project is to identify, evaluate and develop new in-
novative strategies, methods and tools for CKM In order to make the research manageable and
with the integration of speech recognition func the success and costs measurable, the research
tions. The specific research questions and objec collaboration should be divided into several work
tives addressed by the research collaboration are: packages with the commitment of resources of
– What are the main failures, barriers and both, university and enterprise members, eg. WP 1
success factors in CKM in the U.K. in “Literature analysis”, WP 2 “Requirements analy-
comparison to Austria? sis”, WP 3 “Design model”, WP 4 “Gender issues
– What are the requirements regarding speech analysis”, WP 5 “Dissemination activities” and WP
recognition functions that can help in best 6 “Research collaboration/project management”, as
capturing customer knowledge from speech summarized in the following example project plan:
data?
– Which business model is appro priate for
this e-business domain?
The research collaboration will determine the

main failures, barriers and success factors in CKM
in the U.K. in comparison to Austria, the require-
ments for efficient speech recognition in the con-
Figure 2. Timeline of research collaboration
text of CKM and will identify or develop an ap-
activities
propriate e-business model.
The part of defining the research collaboration
Work package 1 is dedicated to an extensively
is crucial to the establishment of the research col-
review of literature. There is general agreement
laboration and a positive working atmosphere. In
that customer knowledge management and speak-
addition it is important to have an agreement on
er recognition are very complex and multi-faceted
the collaboration objectives, research methodol-
phenomenon [20]. As a result, there is a variety of
ogy, outcomes and competencies.
perspectives to address CKM issues. Based on the
At universities, the research metho dology
findings of the literature, this first work package
mostly involves extensive literature reviews, qual-
defines for example
itative research and an evolutionary case research
– the relevant terms ‘culture’, ‘knowledge
approach. Evolutionary case research is similar to
transfer’, ‘customer knowledge management’
a structured case in that it is an iterative, theory-
and ‘speech recognition’,
building approach based on refining a conceptual
– examines success and failure factors for
model [53]. Several approaches in the literature
CKM in the U.K. in comparison to the
are comparable, e.g. the interpretative IT evalua-
Austrian research findings, considering
tion model [54], the organizational learning-based
national and organizational cultural aspects
model for ICT acquisition [55] and the VISU-
– analyses the possibilities of speech re-
method [56].
cognition as a CKM tool and identifies
In this research collaboration, the case research
the main aspects and di mensions needed
will be carried out according to the similar concept
to study and apply speech recognition in
of development and experimentation (CD&E)
relation to CKM,
[57]. This is an iterative development process
– country-specific CKM perspectives of
with changes between the theoretical and practical
the U.K. will be compared with Austrian
phases of the research in order to derive maximum

perspectives in the field of speech

recognition: in general, most research
on speech recognition has been done on
English speech [58]. The main goal of
this literature analysis is to learn from the
methods, techniques and algorithms in this
research area which have been developed
by other researchers and to transfer it to the
Austrian or German language.
Based on the findings of the literature and with Figure 3. Processing chain
respect to the TOM model, a technology and cul-
tural framework should be developed which de- Thus the involved international partner’s prima-
termines the contribution of speech recognition ry motivation is to understand and analyze current
to the CKM. The output of this WP 1 is a CKM usage, experiences, reasons for not using speech
framework with a special focus on speech recog- recognition technologies, possible improvements
nition, the preconditions, implications and ben- and the functions [62] and methods that are needed
efits, in order to determine the speech recognition to define CRM-statistics and reports.
contribution to the CKM. The output of this WP is a research study. This
Work package 2, the requirements engineering raises the question as to whether there is a need
phase, manages the identification and documen- to develop a radically new business model, or if
tation of system requirements and methods [59], Porter’s strategic model from the 1970’s [63] can
[60]. Many frameworks and models have been be used even in a world of rapid change and ex-
suggested in the literature [61], [59]. For the pur- treme complexity. In affirmation of this, the author
pose of this research collaboration, an extensive finally proposes the first design model aspects that
review of the literature will result in the selection could support this development in the following
of the best suited requirements engineering framework package.
work. Drawing on this framework, the research Work package 3, design model aspects, evalu-
study will conduct a needs assessment by under- ates speech recognition software considering the
standing the existing stakeholder’s needs, condi- results of the interviews. It will provide an idea of
tions and environments, which would ensure the why it is difficult to capture speech and transform
acquisition of the relevant basic knowledge for an- it into text in terms of the impact on operational
alyzing and designing parameters and intelligent efficiency and effectiveness. It is of primary inter-
methods for speech recognition, which is only one est to analyze if the algorithms which are available
part of the knowledge processing chain, as seen in satisfy the relevant requirements.
the next figure: Work package 4 is dedicated to summarizing the
gender aspects of the research collaboration. At uni-
versities, the research is directly affected by gender
4. Footnotes
aspects [64] because subjects of the requirements
Footnotes - comments, explanations, etc., to analysis are people, and thus the gender dimension
the text should NOT be used. of the research undertaken in this work package
The research team intends to identify the level has to be arranged in a gender-sensitive balanced
of adoption of such systems, applications, methods sample of interview partners. The research in this
and algorithms by organizations and to identify the package is technology-driven, and therefore gender
currently perceived gap in the value provided by aspects should be considered. Men and women be-
such systems. The identification of such a gap is ex- have differently when using or evaluating technolo-
tremely helpful in understanding factors that affect gies, functions or technological methods.
use and in focusing on the services which people A very important task is to disseminate the re-
seek in order to make the new technology useful. search results. The focus here is on the promotion

of the research results to all types of public, the The management of the relevant data will
scientific community and other interested people. be carried out as shown in figure 3 “Processing
In WP 6, collaboration/project mana gement, Chain”, which transfers speech into text. This text
the optimal collaboration environment has to be will be refined and analysed in order to receive ef-
established with open co mmunication between ficient reports and customized statistics. With data
all team members, access to all information while collected from various decentralized sources and
running the collaboration, honest effort towards specific post processing technologies, a wide area
resolving tasks and all necessary resources and ex of solutions could be covered by this research:
pertise. As an international research collaboration – Market research – measuring trends and the
must give value to each partner, it must also have popularity of a particular product or service
financial benefits. on the basis of appearances in the media,
In order to reduce costs parts of the research such as internet, radio or television [65],
collaboration can be executed internationally and – CRM supporting statistics,
can be organized and managed with electronic me- – Public opinion research – for organizations
dia. With the help of these media the experience which conduct public opinion research,
gained at different places and the research results since they can obtain data for particular
will be integrated into one research collaboration relevant keywords under research, the
base. The main work packages to be carried out by frequency of recurrence and the positive or
the project team are (see the chart below) and can negative context of occurrence.
be implemented at different locations. – Control of commercials for advertising
The main activities in this research plan which companies which want to monitor their own
are carried out internationally are the development ads and those of the competition objectively
of a data interface, a query interface, the integra-
tion of the chosen speech recognizer and speech2 After completing the research activities the en-
text correction, and the integration of all the com- terprise transfers the research results and creates
ponents into the overall architecture, as is shown commercial products and services.
in figure 5 on the next side.
Figure 4. Further decentralized research work packages

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Accuracy analysis of the classification model

evaluation in the e-learning environment
Gabrijela Dimic 1, Kristijan Kuk1, Petar Spalevic2, Zoran Trajcevski3, Zoran Todorovic2
1
School of Electrical Engineering and Computer Science Applied Studies, Belgrade, Serbia.
2
Faculty of Technical Science, University of Pristina, Serbia.
3
Agency for Electronic Communications, Skopje, Republic of Macedonia.
Abstract the case of education based on e-learning technolo-

gies. Through application of classification models
In this work we analyze the classifier accuracy to data from the e-learning environment it is pos-
in development of a forecasting model for student sible to create a forecasting classification model.
grades. The forecast is based on the data on student To ensure successful use of the developed model
activities and utilization of various resources for in the e-learning environment it is necessary to ana-
studying in the e-learning system course. Through lyze and determine the accuracy and precision of
comparison of parameter values of the created the classification. Creation of a classification model
classification models we have identified models is based on the use of a classifier for forecasting the
with higher accuracy and precision in forecast- value of the selected class attribute depending on
ing. The analyzed course from which data were other attributes.
provided was realized in the context of the LMS When it comes to educational environments,
Moodle system and used as support to traditional teachers always classify students based on the
teaching, through provision of various electronic knowledge they possess, behavior and activities
resources and learning materials. Classifiers with during learning, motivation and other character-
higher accuracy and precision have generated istics [3]. Forecast and evaluation of student per-
forecasting models that can be useful agents for formance in the e-learning environment are de-
improvement of the e-learning environment. scribed in works [4], [5], [6], [7]. In this works,
Key words: Educational Data Mining, Classi- courses implemented in the e-learning environ-
fication, LMS Moodle system, E-learning. ment were analyzed. The most frequently applied
classification methods are decision trees, Bayes-
1. Introduction ian networks, neural networks, K-nearest neigh-
bor classifiers, and methods based on regression
From educational data, with the use of various
techniques. Average accuracy of these models was
data mining techniques [1], it is possible to extract
about 70%, and up to 90% at best.
the information and knowledge influencing im-
provement of the learning process and better under-
standing of student needs and behavior. The field 2. Classification and most frequently ap-
named Educational Data Mining (EDM) [2] complied classifiers
prises integrated data mining methods and process- The main objective of classification task is gen-
es implemented in the educational environment. eration of a forecasting model for the selected class
Success/failure of students is identified with the attribute [8]. This process includes two steps: su-
grade obtained on the exam. In this context, the pervised learning of the training set of data and then
forecast of final student grades enables the teacher classification of data instances based on the created
to identify and additionally assist students showing model. The most frequently used classifiers in-
a failure tendency during the very learning process. clude: Bayesian, Decision Trees, Neural Networks,
Classification is one of the main tasks of Data K-nearest neighbor, Support Vector Machines clas-
Mining, as well as EDM. It is oriented to studying sifiers [9].
of student characteristics during the learning pro- Bayesian classifiers assume that every event in
cess, both in the case of traditional education and in the model is possible and always has at least small

probability of occurrence that is given „a priori” – on a user defined set of data,

or derived from data [10]. Naive Bayes [11] clas- – through application of the n-fold cross
sifier generates a complex model limited by strong validation division on the input set of data,
independence of the assumption. In case of appli- – division of the input set of data into the
cation of Hidden Naïve Bayes [12] classifiers, a training set and testing set.
hidden parent, which combines effects of other at-
tributes, is created for each attribute. HNB inher- The data are divided into two parts, the training
its the structure simplicity from the Naïve Bayes set and testing set. A classification algorithm, which
network. HNB can be considered a significant depends on the selected method, is applied on the
improvement of the Naïve Bayes network and a training set. The classifier is tested through its ap-
promising model that would have greater applica- plication on the training set, whose class attribute
tion in practice. values are hidden. If the classifier classifies most
Decision trees [13] are probably the most fa- instances in the training set correctly, we can as-
mous classification techniques since they com- sume that it will function properly with future data
prise several ways of creation of easily interpret- as well. If the classifier makes too many mistakes
ing trees used for classification of categorical and when applied on the testing data, it can be conclud-
numerical values of attributes. These classification ed that a bad and unstable model has been created.
methods divide data into nodes and leaves until The model can be improved through modifi-
the entire set of data is analyzed. The best known cation of the set of data, i.e. through a repeated
algorithms are ID3 [14] and C4.5 [15]. process of data preparation and preprocessing, ad-
Artificial neural networks are nonlinear func- justment of the teaching algorithm or the use of
tion classifiers that learn from a prepared set of data another classification method.
and applied on new and bigger data sets aiming at The created classification model also includes
recognizing patterns [16]. In practice, for solving calculation of statistical measures TP – true posi-
nonlinear problems, a multilayer perception with tive rate, FP - false positive rate, Precision, F-
3-5 hidden layers is used most frequently. Measure and Confusion matrix which represent
Support vector machines (SVMs) [17] utilize basic parameters in the precision evaluation of the
very smart techniques for identification of nonlin- implemented classifier.
ear class boundaries, and in case of a small set of The TP rate shows the percentage of classified
data, for generation of complex nonlinear models. instances whose forecasting class attribute values
In practice, mapping is performed in an implicit are identical to real values.
manner, with the use of core functions, which are The FP rate shows the percentage of instances
nonlinear functions. whose forecasting class attribute values are not
K-nearest neighbor classifiers [18] represent identical to real values.
a completely different approach to classification. The Confusion matrix shows how many items
Unlike the others, these classifiers do not create an of the given class have been classified as actually
explicit model. The main idea is classification of belonging to that class, and how many of them
a new object through testing of the class value in have been classified into other classes by mistake.
K nearest data points. It is recommended that for a The Precision is a ratio between the number
small dimensional set of data the number of neigh- of instances that really belong to class X and the
bors K is set to a value between 5 and 10. The main number of instances classified as class X.
disadvantage of K-nearest neighbor classifiers is a The F-Measure is calculated pursuant to for-
difficulty in selection of distance function d and a mula (1), i.e. through combining the measures for
lack of an explicit K-nearest neighbor model. Precision and Recall.
2´Precision´Recall ............... (1)

3. Evaluation of classifier precision F-Measure =
Precision + Recall
Evaluation of classifier precision is made
through selection of one of the testing methods:

4. Related works and discussion In work [29] the authors compared machine
learning methods in forecast of the success in the
Most classification methods and classifiers
course (passed or failed) in Intelligent Tutor Sys-
mostly fit in data mining processes implemented
tems. For user knowledge modeling and forecast
in various environments. In case of their applica-
of student performance in tutor systems, the work
tion on the data extracted from the e-learning envi-
[30] describes the use of Bayesian networks.
ronment, the selection of an appropriate classifier
In work [31], an algorithm governed by the ge-
will mainly be influenced by the evaluation of ac-
netic programming grammar is used for forecasting
curacy and precision of the created classification
whether a student will fail or pass a specific LMS
model.
course through identification of activities that pro-
The use of traditional classification and re-
mote learning in the positive or negative sense, from
gression techniques in e-learning can be found in
the aspect of Multiple Instance Learning (MIL).
works [19,20,21].
The authors of [32] defines the framework of
Several regression techniques (decision trees,
software application development for the new
neural networks, linear regression, support vector
generation of educational systems. They conclud-
machines) have been used for forecasting student
ed that LMS development provides significantly
grades at the Hellenic Open University [22].
more information sources and information-gather-
The authors of [23] give comparison of dif-
ing methods.
ferent data mining algorithms in the process of
student classification for final grade forecasting
based on user data from the Moddle system. 5. Case study
The authors of [24] have analyzed specific be- For research described in this work we were
havior of students in a Moodle course. The work extracted data from the Computer Graphics LMS
describes the application of classifiers Neural Net- Moodle course held in the summer semester of the
works and Support Vector Machines (SVM) on school year 2010/11 at the School of Electrical
the data extracted from the log file of the analyzed Engineering and Computer Science Applied Stud-
Moodle course. ies in Belgrade. Electronic learning materials are
The use of artificial neural networks for ex- divided into several concepts: Tests for laboratory
traction of knowledge from the Moodle log file exercises, Moodle lessons, Self testing of student
is presented in work [25]. The information was knowledge, Semester knowledge checks. Students
combined with data on student final grades, and a could achieve the final score by taking the final
model for forecasting which students would com- exam in the paper form, held during the examina-
plete the course successfully was developed. tion period in the classroom.
In work [26] the authors compare different The goal of the classification process was to iden-
classification methods (decision trees, neural tify the patterns of student interaction with the of-
networks, Naive Bayes, instance-based learning, fered electronic material and to define the influence
logistic regression and support vector machines) they had on the grade achieved on the final exam.
with a genetic algorithm based on an induction The activities and behavior of all course par-
decision tree. From the discovered knowledge ticipants, students and teachers, are registered and
the authors derived short rules that explained and written in different tables of the relation database
forecast success or failure on the final exam. and in the event log. Transaction data from the re-
In work [27] the authors teach a neural network lation database are not a suitable source of data
for forecasting student performance in the course because data mining methods demand that all rele-
of informatics. To forecast the final grades they vant information for the analysis is grouped in one
use student results achieved during lessons, and table and organized at a certain detail level. This
they do not use grades obtained on the exam. summary table is made as a result of numerous
Thai-Nghe, N. and associates in work [28] preparatory operations such as extraction, group-
compare some techniques, using them for forecast ing, pooling, cleaning and transformation of data
of student performance. from the relation Moodle database.

6. Data preprocessing Through data cleaning, the missing values are

added, mistakes are identified and corrected. Ex-
Educational data can have numerical and cat-
traction of data characteristics ensures creation of
egorical values (obtained task points, a descriptive
new attributes on the basis of the existing ones. The
grading scale with a lower precision level). Data
range of numerical values is divided into intervals
from log files can also contain continuous values
that will be used as new attribute values. Methods
such as time spent for a given activity. Real data of-
of the discretization transform continuous attributes
ten contain wrong attribute values (noise) or some
into discrete values [33]. Even if some information
attribute values can be missing (missing values).
is lost, the resulting model produces more precise
Educational data are quite clean, they do not con-
classification. Discretization reduces the noise ef-
tain wrong values to a great extent, since they are
fect and ensures generation of simpler models.
collected automatically. However, there is frequent
For the case study described in the work, we
occurrence of missing values especially when data
generated views on the Moodle database through
from different sources are combined. For instance,
the use of SQL inquiries over appropriate tables
if data from surveys filled in by students are com-
[34]. In that way, we extracted data on student ac-
bined with data on results achieved on the exam,
tivities in the course during the semester, that is:
it is possible that some students did not fill in the
points obtained on laboratory exercise tests, the
survey or answered only some questions.
number of Moodle lessons read, average points
Outliers are data that considerably deviate
of all attempts of the preparatory test solving for
from most other values and do not fit into the
the first and second colloquium, points obtained
same model with other values. They are a result
on the first and second colloquium. The grades
of noise, and detailed observations and remarks
achieved on the final exam were not available
when it comes to educational data. Precisely, there
from the Moodle database, and they were pro-
are always some exceptions among students that
vided from another source of data. A summary
achieve good results with less effort and work, i.e.
table was created, and it included extracted data
those who fail the exam despite all expectations.
combined from different sources, which led to the
The main tasks of preprocessing are data clean-
occurrence of missing values. The table rows pre-
ing, extraction and selection of characteristics.
sented information for each student, and the col-
Table 1. Discretization of attribute values of the analyzed table (Figure 1.a, 1.b, 1.c)
Attribute Attribute description Categorization of nominal values Labels
up to 50% bad
tests_ A sum of points obtained on tests for
between 50% and 80% good
exercises laboratory exercises
more than 80% excellent
up to 30% lessons low
lessons The number of read lessons between 30% and 60% medium
more than 60% high
Average points of all attempts of the up to 50% bad
preparatory
solving preparatory tests. between 50% and 80% good
tests (1, 2)
up to 50% bad
Points obtained on the first and second
tests (1, 2) between 50% and 80% good
colloquium
5 failed
6 passed
7 sufficient
grade Student grades on the final exam
8 good
9 very good
10 excellent

umns referred to activities in the course and grades 7. Analysis of results

on the final exam. The attribute values of the ana-
Selection of classifiers for forecasting the stu-
lyzed table were numerical. If a student didn’t use
dent performance in the analyzed course, rep-
a specific Moodle course resource or did not take
resented an important part of the described re-
the final exam, a zero value was written in the ap-
search. Having in mind a relatively small set of
propriate table column.
the extracted data, we applied the training data set
During discretization of attribute values, cer-
method, which means that testing of the applied
tain modifications were made aiming at precision
classifier was carried out on the same data set on
analysis. The summary table in the CSV format
which it was trained. In that way, the set of data
was transformed into the ARFF format suitable for
was divided into a training set and test set, in the
machine learning [35]. Categorization of nominal
2:1 ratio. For each classification model created,
attribute values is presented in Table 1.
we analyzed the number of correctly classified in-
stances (CCI) and the value of statistical measures
TP rate (TP), FP rate (FP), Precision (P), Recall
(R), and F-Measure (F-M).
7.1. Decision trees

From this group, ID3 and J48 classifiers were
applied. Both classifiers created the model in 0.03
Figure 1.a. Categorization of nominal values for seconds, but the number of correctly classified in-
attribute tests_ exercises, preparatory tests (1, 2), stances was higher in the case of ID3 (74.11%)
tests (1, 2) than with the use of J48 (58.04%). Table 2 shows
the values of other parameters for the ID3 classi-
fier model.
Table 2. ID3 classifier model
Detailed accuracy by class Percent (%)
Correctly classified instances 74.11
Incorrectly classified instances 25.89
TP FP P F-M Class
0.88 0.14 0.73 0. 8 fall
Figure 1.b. Categorization of nominal values for 0.69 0.02 0.82 0.75 pass
attribute lessons 0.84 0.10 0.71 0.76 sufficient
0. 73 0.09 0.76 0.75 good
0.17 0 1 0.29 very good
0 0 0 0 excellent
7.2. Functional classifiers

From this group of classifiers we used RBF
Network, SMO (sequential minimal optimization
algorithm for training a support vector classifier)
and Multilayer Perceptron. The RBF Network
classifier generated a model with 63.4% of cor-
Figure 1.c. Categorization of nominal values for rectly classified instances in 0.45 seconds, while
attribute grades the SMO classifier needed some more time for the
model creation (0.69 seconds), and the number of
correctly classified instances was lower (58.04%).

However, in the case of application of the Multi- Table 5. K-nearest classifier method
layer Perceptron classifier, the model was gener- Detailed accuracy by class Percent (%)
ated in 1.31 seconds, but the number of correctly Correctly classified instances 56.25
classified instances increased (72.32%), and we
thus analyzed the model of this functional classi-
fier (Table 3). TP FP P F-M Class
Table 3. Multilayer Perceptron classifier model 0.71 0.19 0.62 0.66 fall
0.08 0.01 0.5 0.13 pass
Detailed accuracy by class Percent (%)
0.68 0.17 0.53 0.6 sufficient
Correctly classified instances 72.32
0. 7 0.22 0.54 0.61 good
Incorrectly classified instances 27.68 0 0 0 0 very good
TP FP P F-M Class 0 0 0 0 excellent
0.74 0.01 0.96 0.83 fall
0.62 0.01 0.89 0.73 pass 8. Comparison of accuracy of the applied
0.88 0.15 0.63 0.73 sufficient classifier evaluation
0.71 0.11 0.70 0.7 good
0.17 0 1 0.27 very good In Table 6 we presents evaluation of the ap-
1 0.06 0.36 0.53 excellent plied classification metods based on the common
criteria relevant for classification of data from the
7.3. Bayesian classifiers educational environment.
Table 6. Evaluation of the applied methods
To the analyzed set of data from the group of CCI TP FP P F-M
Bayesian classifiers we applied BayesNet, Na- Classification
(%) (%) (%) (%) (%)
ive Bayes, and Hidden Naive Bayes (HNB). The ID3 74 0.74 0.09 0.73 0.72
highest number of correctly classified instances MP 72 0.72 0.07 0.79 0.72
was generated in the case of the HNB classifier. HNB 69 0.69 0.10 0.7 0.67
Table 4 shows the values of other factors for the K-NN 56 0.56 0.16 0.51 0.51
evaluation of the HNB classification model.
Table 4. HNB classifier model Table 6 (Figure 2) shows that the highest per-
Detailed accuracy by class Percent (%) centage of correctly classified instances (74%) was
Correctly classified instances 68.75 generated with the use of the decision tree classi-
fiers, that is, ID3 classifier. However, the use of the
Multilayer Perceptron function classifier generates
TP FP P F-M Class a negligibly smaller number of correctly classified
0.67 0.05 0.85 0.75 fall instances (Figure 2), and the value of the Precision
0.62 0.03 0.73 0.67 pass parameter is 0.79 (Figure 3), while F-Measure (Fig-
0.76 0.14 0.61 0.68 sufficient ure 4) has the same value in both cases.
0.87 0.2 0.62 0.72 good
0.17 0 1 0.27 very good
0 0 0 0 excellent
7.4. „Lazzy“ classifiers

From this group of classifiers we used K-nearest
neighbours. The number of nearest neighbours K
was set to 5, and we selected the Euclidean distance
metric. Of 112 instances, 63 were correctly classi-
fied, while 49 instances were classified incorrectly.
Table 5 shows the values of other parameters. Figure 2. Correctly classified instances in percent
for ID3, MP, HNB, K-NN classifier

9. Conclusion
Classification techniques are widely used in tra-
ditonal education and modern educational technol-
ogies. The best classification results are achieved
when classifiers are trained on real data. The use of
classification methods for forecasting the learning
process successfulness in the e-learning environ-
ment opens a possibility for improvement of effi-
cacy, usefulness and adaptability of these systems.
In this work, with the use of four different sta-
Figure 3. Precision for ID3, MP, HNB, K-NN tistical techniques, we analyzed the accuracy of
classifier the created classification models for forecasting
the final exam grade based on the student activity
in the environment of the e-learning Moodle sys-
tem course. Selection of the appropriate classifier
was directed to creation of a model that would be
resistant to the occurrence of missing values and
outliers, and which would include all interdepen-
dencies between the class and other attributes. The
realization of this model is highly influenced by
data preparation and preprocessing.
Through an analysis and comparison of accura-
Figure 4. F-Measure for ID3, MP, HNB, K-NN cy results of the classifiers applied in this research
classifier we have found out that the most precise results
are achieved with the use of the decision tree ID3
Regardless of the fact that educational data are classifier.
mainly clean, the occurrence of outliers and miss-
ing values is unavoidable in most cases. A conse-
quence of this phenomenon is the appearance of
noise in the data, to which Bayesian and K-nearest
neighbor classifiers are especially sensitive. Deci-
sion tree classifiers can generate good results even
with the occurrence of missing values in the data,
but they are sensitive to data changes. In the de-
scribed study, most correctly classified instances
were obtained with the use of the ID3 decision tree
classifier, where its value of statistical measure
Precision was lower than in the case of the Mul-
tilayer Perceptron classifier. The higher value of
statistical measure Precision with the Multilayer
Perceptron classifier can be explained by the re-
sistance of neural network classifiers to noise and
incorrect inputs. Considering that neural networks
represent classifiers that generate more precise
models for big data sets, the number of correctly
classified instances is, however, slightly lower
when compared with the ID3 classification model.

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Improvement of education work process

quality by applying VSM – Lean tools
Milan Radosevic1, Ilija Cosic1, Mirko Sokovic3, Jovica Markovic2, Aleksandar Rikalovic1, Janez Kusar3
1
Faculty of Technical Science, University of Novi Sad, Serbia,
2
Faculty for Economics and Engineering Management,University of Business Academy, Serbia,
3
Faculty of Mechanical Engineering, University of Ljubljana, Slovenia.
Abstract more and more with less and less human effort,
Application of the lean philosophy in service less equipment, less time, and less space – while
systems and in higher education institutions is the coming closer and closer to providing customers
contemporary world trend. The Application of lean with exactly what they want“,[2]. Although they
approach can contribute to significant improve- have popularized the term ‘’lean’’ in order to de-
ments in real processes, rationalization, as well as scribe the production system of Toyota, the au-
the improvements in work process and work flow. thors of the MIT study were not the first people
In order to show the need for improvement of cer- who presented many of these ideas to the West.
tain processes, 350 students of the Faculty of Tech- Namely, numerous books had been written before
nical Sciences were polled and the application of Womack has pointed to different characteristics of
the Value Stream Mapping (VSM) tool with all of this concept. For example, Japanese architect of
its characteristics was shown afterwards. The VSM the Toyota manufacturing system [3] has written
tool, in terms of gathering data about the system, “Toyota Production System: Beyond Large-Scale
represents one of the elementary managerial tools Production”, [4] study on the Toyota production
for the implementation of Lean philosophy. This pa- system from the perspective of industrial engi-
per shows the analysis of the class preparation and neering, [5] have published the first edition of the
teaching by using the VSM – lean tools, improve- ‘’the Goal’’, [6] has written ”World Class Manu-
ment of the process as well as savings resources and facturing’’ etc. However, the book ‘’the Machine
improvement of the process. that Changed the World’’ was very popular with
Key words: VSM, Lean, Education, Service executives and a very sought-after document for
system lean manufacturing systems [7].
Lean approach represents a set of principles
(value, value stream, flow, pull and perfection),
Introduction
methods and managerial tools for effective and ef-
Lean manufacturing is a Japanese manufac- ficient planning, manufacturing and control in the
turing concept which has gained popularity since activity chain while supporting functions involved
the term “Lean”, designated as a part of the study in creation of new values. Its key components are:
on analysis of the world auto industry, was de- decentralized organization structures, quality man-
scribed in the book “The Machine that Changed agement in the function of consumer needs, see [8],
the World” by [1] The authors have shown how [9], [10], [11], [12], [13], [14] [15], humanization
the Japanese Toyota has taken over the leadership of work and management, integration of consumers
position from European and American auto in- and suppliers in the function of realizing maximum
dustries and realized hitherto unseen revival con- effects, oriented technology management in the
cerning manufacturing. Womack and Jones have function of business process demands, regionaliza-
defined the Japanese model “Lean” explaining tion, internationalization and mobility [16].
that it ”provides a way to specify value, line up When it comes to the tools and methods used in
value-creating actions in the best sequence, con- application of lean concept the most famous ones
duct these activities without interruption when- are: JIT (Just in Time), TPS (Toyota Production
ever someone requests them, and perform them system), 5S, Value Stream Mapping (VSM), Poka
more and more effectively. Lean means doing Yoke, Single minute exchange of dies (SMED)

etc. Although it has originated in manufactur- cused on the processes in the institutions of higher
ing systems, the application of Lean philosophy education, the benefits those institutions can get
in service systems is a new growing trend. In the by applying VSM according to Balzer are:
continuation of this paper, application of VSM “identification of the basic steps in the process,
(Value Stream Mapping) tool is shown that tool activity flow through the process,
enables creation of an image of the observed pro- information flows supporting the basic process,
cess, i.e. visualization of all activities in the pro- visual format used to present the steps, activi-
cess of creation of new or added value [17] Use of ties, flows in the process and
quality “tools” is a very significant for improving data on sizes of the system identified as the
effectiveness and efficiency in all organizations, most significant ones in the process evaluation,
including high education institutions [18] as well perspective of the university as well as the us-
as improvement of university processes and flows ers of the university services”.
[19]. The goal of this paper is to show the analysis
of the process of class preparation and teaching by Methodology
using VSM – lean tools as well as to suggest an
improvement to the process. In continuation this paper will show the appli-
cation of VSM - lean tools to the lecture prepara-
Lean tool - VSM tion and presentation. Besides the application of
VSM tools a survey has been conducted by few
“Wherever there is a product for a costumer, PhD students in which they interviewed 350 ran-
there is a value stream” represents the first defi- domly selected students from different depart-
nition that describes what Value Stream Map- ments at one faculty, which has around 12 000
ping in the book “Learning to See” [20]. In their students, on a large public university in the south-
book “Seeing the Whole – mapping the extended eastern Europe all in order to obtain more realis-
value stream”, MIT professors responsible for the tic perspective on the necessity of changes in this
worldwide promotion of Lean philosophy [21] segment of the faculty. The questionnaire consists
have described VSM as a “simple process of di- of 5 questions (answers are defined with 0 or 1 -
rectly observing the flows of information and ma- agree or disagree):
terials as they now occur, summarizing them visu- – Are you aware of the fact that your faculty/
ally, and then envisioning a future state with much university owns a comprehensive database
better performance”. Although there are many which enables access to complete lectures to
points of view on what VSM is [22], [23], [24], all students?
[25], [17] In other words, as one of many methods – Do you have the access to complete data on
i.e. tools, VSM makes it possible to promptly no- lectures from all subjects for every year of
tice the largest concentration of time that does not your studies at one place?
represent added value, but loss within the system. – Do you find it necessary to have a
On of the most important features of VSM is the comprehensive faculty/university database?
facts that it “represents one of the starting founda- – Do you think that would be useful to have
tions in data gathering and system analysis that, all the lectures and materials from other
next to the vision of the top management and staff departments of the faculty/university
training, represents the foundation for successful available?
implementation of Lean Philosophy” [17]. – Would you agree that the students could
When discussing the manufacturing and ser- prepare themselves for the exams better if
vice systems, we must note the benefits gained by they had all the lectures available at one
using VSM – lean tools. Authors [22] have given place?
a detailed description of the benefits concerning
manufacturing systems, while [24] has focused on The results of the survey (figure 1) with obser-
the application of VSM on service systems, spe- vations and initial state of process (figure 2) are
cifically on higher education. As this paper is fo- given further in the paper.

has kept track of 47 professors and assistants that

held lectures in the education module at the Faculty
of Technical Sciences. Average time spent at the
doorman was around 45.38 seconds which in the
given case amounts to 35 min. 54 sec. After obtain-
ing keys and equipment, professors/assistants leave
for their classrooms and the average times spent for
this action are presented in the table 1.
Figure 1. Survey table chart
Observation for question 1: none of the sub-

jects have given affirmative answer on the exis-
tence of such database. Very frequent question
was whether the database in question actually ex-
ists and how to access it. Figure 2. VSM of the initial state
Observation for question 2: although 13% of the
students said that all of the lectures could be found After arriving in the classroom, the time spent
in one place, they specified that this is true for their on setting up the equipment for the lecture had an
departments and were not sure if the same is true average time of 3 min. 25 sec. (a total of 160 min.
for all other lectures and for all five years of studies. 58sec) because in some cases there were issues like
Observation for question 3: Most of the partici- equipment malfunction, malfunction of the cables
pants (96%) agreed that forming such comprehen- connecting the computer with the projector, com-
sive database would be useful. puter virus, computer start-up time, etc. After that,
Observation for question 4: 89% of the students the lecture begins. These are fixed times defined
had more positive opinion since they believed they by the lecture timeline which cannot be reduced
could expand their knowledge and they also need (lecture time in the given case was 70h 5min.). We
data from other fields during their studies. have to mention that before and after the lectures
Observation for question 5: Large number of the materials are not available to students on the
students (78 %) agreed that they could prepare website. After the lectures, the equipment is being
for their exams better and 22% of the students an- disassembled and returned to the doorman. The
swered they do not agree with that statement. average time to disassemble computers amounted
The process starts with the teacher preparing to approximately 1min. 30sec. (total of 70 min. 05
lectures for students in collaboration with the assis- sec.). In the present case, the total time spent on
tant. On the day of the lecture Professor / Assistant the process of the lecture was 75 hours 50 min. If
goes to the doorman to take the keys so he could we exclude the time spent on lectures themselves
prepare the equipment for the lecture. This research we can conclude that time spent on the non value
Table 1. Average times spent going from the doorman to the classroom with regard to the floors
The Classroom occupancy by Repetition Average time spent Total time spent
clasroom semesters (observed for time observed on the observed on the observed
floor Winter semester of 2011) for sample sample [min] sample [min]
First floor 237 15 1.07 16.45
Second floor 225 21 1.42 35.42
Third floor 173 11 2.09 23.39
TOTAL 635 47 41.06

added (NVA) activities or activities that not directing materials that are in mechanical engineering,
ly contributing to value production amounts to 5 if necessary). In addition, the site can be directly
hours 45 min, i.e. 7.22% of total time. Consider- connected to the university site, which would au-
ing the lost time and resources as well as analysis tomatically allow universities to increase Webo-
of the VSM in the initial state, further in this paper metric factor that measures the amount of free on-
we will make suggestions to improve and enhance line access to academic records [26]
the observed process (figure 3). The new propositions for improvements exclude
times spent on trip made for obtaining keys from
doorman and returning the equipment, which saves
approximately 1h 12min. on the observed sample.
The equipment in the classroom would be set in
such way that the computer would be simply turned
and would be directly connected with the lecture
database from which the professor/assistant would
use the presentations directly. If we assume that
635 lectures are held in the teaching block during
Figure 3. VSM of the proposed lecture prepara-
the semester, it can be concluded that through the
tion process improvement
suggested proposal approximately 36h 9min. by
semester would be saved through eliminating the
Under improvement we consider introduc-
necessity of departure for obtaining the equipment
tion of a single internet platform at which all the
and keys and 10h 35min to put the equipment into
lectures would be uploaded. After creating a pre-
operation and the presentation preparation (note:
sentation, professors or assistants could set up a
in this work only teaching block was observed, we
presentation on the site a couple of days or even
have not included other classrooms of the univer-
months earlier, which would open the possibility
sity, amphitheatres, laboratory classrooms, etc..).
that a student at any time, or at least a day earlier,
As for the equipment in the classrooms, we could
has the opportunity to prepare in advance for lec-
remove computer keyboards which would save
tures as well as during the preparations for exams.
resources for the equipment and result in reduced
In addition to having access to lectures from their
maintenance of computers due to potential danger-
fields, the students will also have access to other
ous viruses and similar problems. Certain improve-
fields within the faculties (e.g., the industrial en-
ments and savings are shown in Table 2.
gineering student may at any time access teach-
Table 2. Improvements in the lecture preparation process at faculty for the given case
Savings/
Current state Future state
Improvements [%]
No. of keyboards in lecture blocks Saving 100% (minimum
25 pieces 0
classroom* of 30 000 RSD)
Total time for the given case* 75h 50min. 71h 56min. Decreased by 5.109 %
Time spent on obtaining keys and
Aprox. 7h 55min 0 Reduced by 100%
equipment from the doorman *
Time spent on assembling equipment
Aprox. 10h
and putting presentation into Aprox. 36h 9min Reduced by 68.68%
35min
functional work*
Time spent on disassembling Aprox. 5h
Aprox. 15h 52min Reduced by 66.7%
equipment * 17min
Currently ranked inside 10% of
Website traffic (Webmetrics) Increased Increased
all universities on Webmetrics
Student statisfaction / Increased Increased
*Times obtained through researched sample have been used as measuring data on the level of one semester

From table 2 it can be seen that implementa- conducted within other faculty and university pro-
tion of VSM tool can bring several improvements cesses, which represents a demanding challenge in
related to costs of equipment, time spending and the future.
website traffic. First, by applying VSM tool, a
number of keyboards in lecture block classrooms References
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Strategic role of human resource management

Dobrivoje Mihailovic¹, Ranko Lojic², Branko Ninkovic³, Ana Nikodijevic1, Slobodan Ristic1
¹ Faculty of Organizational Sciences, University of Belgrade, Serbia,
² University of Defense, Belgrade, Serbia,
³ SANI, Sabac, Serbia.
Abstract stances are: increasing competition; international

operations management; technological innova-
Human resource management is a term that can
tion; business in accordance with applicable regu-
be found in literature over the last 30-40 years. This
lations; union actions; ethical issues and best prac-
term has multiple meanings and beside scientific
tice as opposed to best match.
area and practical managing function, it stands for
Market conditions promote the personnel in
total approach towards human factor in organiza-
particular, as the only organizational resource of
tion. With scientific shaping of human resource
the multi-purpose role, because they are creators of
management and even more by growing competi-
new solutions, creators of new values and relations,
tion demands, human factor quickly becomes the
and they control the work process and development
most important resource of the organization. The
of the organization. People, their development,
current approach to human resource management
their abilities and motivation, and the style of man-
involves complex and dynamic process through
agement, become a decisive factor of competitive
which organizations recruit new talented members
capabilities and development of any organization.
and ensure the achievement of projected goals.
The need for expanding and deepening scien-
Since the early years of industrialization man came
tific and other knowledge about the man, his de-
a long way from a simple addition to machine to
sires and interests, abilities and potential, motiva-
become a strategic factor in the work process.
tion and satisfaction, goals and expectations, and
The strategic role of human resource manage-
thus the need for further development and use of
ment means that planned development of human
knowledge in human resource management, will
resources are directed towards the achievement and
become greater in time.
development of organizational potential and provi-
sion of relevant competitive advantage in the busi-
ness environment. Functions related to people in the Strategic role and significance of human
organization become part of management activities resource management
and responsibilities and they have a strategic role. Human resources don’t include only employ-
This paper has attempted to clarify the concept, ees, but also their overall value and potential. Hu-
importance and objectives of HRM. We analyzed man resources include overall human potential
the strategic role, and pointed to the importance in organization: available knowledge and experi-
of strategic approaches to management of human ence, abilities and skills, possible ideas and cre-
resources. ations, motivation and interest to achieve organi-
Key words: human resource management, ob- zational goals, etc.[1]
jectives, strategic approach. The importance of human resources is grow-
ing and effective management of these resources
Introduction is of strategic interest to organizations, which can
Organizations in which people work, are con- provide a competitive edge over rivals. Human re-
stantly changing and evolving, creating new trends source management implies the measures and ac-
and problems that require consideration and reso- tivities that, in the process of planning, recruitment,
lution. New trends and new circumstances have selection, socialization, training and improvement,
a direct impact on the strategic role of human performance rating, rewarding, motivating, protec-
resource management. Such trends and circum- tion of employees and enforcement of labor laws

and regulations, management takes in order to pro- Strategic role of human resource management in
vide personnel of required capabilities, quality and the organization is characterized by the following:
potential and adequate training and motivation to – Employees are treated as resources or as
achieve organizational and personal goals. human capital that needs to be invested in
In the development of theoretical thought in the by providing learning opportunities and
management of human resources, there are four development of “learning organization”;
clearly distinguished periods: the period of scientific – Human resources are viewed as the source
management, the period of recognition of social fac- of competitive advantage;
tors, strategic management period and the Japanese – Reducing the number of management levels
management affirmation period (scheme 1). [2] to provide more direct communication
between managers and employees;
– Decentralization of management process, in
other words, transfer of some jurisdictions
from higher to lower management levels;
– Participation of employees in management
through the involvement and active
participation in management activities;
– Ongoing flexibility of management process
and activities in order to find acceptable
and sustainable solutions for environmental
requirements;
– Increased independence in work and
decision making for employees, making
Scheme 1. The impact on the development of the- them happier and more motivated to work;
oretical thought in human resource management – Favoring knowledge, skills and creativity,
“which leads to the intellectualization of
The main role of human resource management is work overall, when thoughts and ideas
the alignment of the number and structure of human become fuel of the economy [4] “;
resources with the volume and structure planned by – Orientation to the man and his values as the
the organization. That is care about the human com- most important resource of the organization;
ponent in structure of organization. We distinguish – Commitment to achieving individual goals
between strategic and operational human resource and interests, not just to the goals and
management. [3] Strategic human resource manage- interests of the organization;
ment is based on general strategy of organization – Humanization of relations of production
and on strategies of individual organizational units, between the management of organization
while the operational human resource management and employees.
works on strategic plans of human resources.
Strategic understanding of human resource Conclusion can be made, that there has been
management do not just treat a man as an indi- a decisive turn in treatment and management of
vidual who goes to work to get paid, but as the in- human resources in the organization. All that con-
dividual with purpose to make some difference in tributes to the strategic importance of human re-
organization, in other words employees are treated source management, and presents a serious chal-
as a subject of management. Constant environ- lenge for people involved in this process.
mental changes, rapid development of science and The most important objectives of human re-
technology, increased competitiveness, everyday source management at the strategic level, in achiev-
difficulties and challenges are forcing organiza- ing the efficiency of the organization are: [5]
tional management to constantly search for good – Inclusion of all members of the organization,
and adequate solutions. their knowledge, skills and motivation to
achieve the strategic goals of the organization;

– Strengthening organizational effectiveness cording to events within the organization and en-
by providing development, creative abilities, vironment. There are three theoretical approaches
knowledge, skills and employee motivation; to strategic management of human resources: 1)
– Developing and strengthening the process universal approach, 2) matching or opportunities
of linking human resource management approach, and 3) approach based on resources.
objectives with business goals of the 1) Universal approach is based on the concept
organization; of human resource management as “best prac-
– Continuous improvement of human tice” and it is based on four objectives of human
resource management practices in line with resource policies that must be met in order to
the trends and changes in the environment; achieve the desired results (scheme 2) [6] .
– Transforming abilities, knowledge, skills
and employee motivation into a competitive
and strategic advantage;
– Creating a comprehensive strategy for
developing human potential in line with the
strategic development of organization;
– Consideration of long-term needs and
opportunities for development of human
resources in the context of long-term needs
and strategic goals of the organization;
– Development of innovative human resource
strategy, which will initiate a strategic
change in the organization; Scheme 2. Objectives of Human Resource Policy
– Developing a culture and climate of constant
changes and adaptation to demands of the These objectives of human resource policy are:
environment. – Strategic integration (human resource
management is integrated into the strategic
The objectives of human resource manage- planning);
ment are changeable, dynamic, interrelated and – Commitment (employees feel like part of
stem from the results that management wants the organization and that reflects on their
to achieve, from the level of individual working performance);
place to the level of the whole organization. They – Flexibility (structure of the organization is
apply to every employee and organization as a flexible);
whole and everybody should participate in their – Quality (high quality employees provide
definition, not only managers. Only for objectives high quality goods and services).
defined that way, one can expect activation of all
available potentials for achieving them. 2) Matching or opportunities approach is based
on two basic forms of incorporation. The first one
Strategic approach to human resource involves external integration (human resources
management strategy needs to match the demands of business
strategy) and the second one involves the internal
One of the most significant differences between match (all human resource activities match to-
the management of human resources and person- gether to make a whole). Support for this model is
nel management is a strategic approach. Human shown in schemes 6 and 7.
resources have to be the key initiators of organiza- Scheme 3 shows the management of human re-
tional development. Human resources strategy has sources with respect to organizational strategy and
gradually changed and evolved. Human resources environmental impact. [7]
strategy is a political and development process that
is created rather than formulated, and it changes ac-

– Resources are difficult to imitate (inability

of competitors to copy resource);
– Resource should be indispensable (human
resources do not become obsolete as
opposed to technology and can switch from
one market to another). [9]
The approach based on resources is often com-

mitted to executives. The relations between human
capital, human resource practice and competitive
advantage (scheme 5) [10] provide a conceptual
base for human resources as a source of competi-
Scheme 3. Strategic management and
tive advantage and creation of strategic abilities.
environmental impact
Pool of human capital must be developed through
the practice of human resources and must enable
Singling out only the human resource manage-
the organization to learn faster and more effec-
ment activities within this model, and how they
tively than competitors, making it more intelligent
can be united and designed to support the organi-
and more flexible than its rivals. Human resource
zational strategy is shown in Scheme 4.
practices have to recruit and develop pool of hu-
man resources and create a solid competitor prac-
tice within the organization. In the organization,
there must be a balance between interest of em-
ployees and interest of organization itself.
Scheme 4. Human Resource Activities

Scheme 5. HR model as a source of competitive
In the scheme above one can observe a frame- advantage
work in which are unified selection, evaluation,
training and rewards, as well as their mutual influ- HR organizational units are not sufficiently
ence on productivity of employees [8] involved in planning and development of organi-
Theoretical approach to the matching or oppor- zational strategy and human resources strategy as
tunities was analyzed, investigated, has been con- well. How much will human resource professionals
firmed or disputed, but whatever the critics said, be involved in human resources strategy, depends
this model still exists. on the business environment, organizational cul-
3) Approach based on resources reflects the ture, chief executive manager and quality of senior
relation between internal resources, strategy and HR professionals. If the organizational unit for hu-
performance. The development of human capital man resources wants to have a significant impact
provides a competitive advantage. There are four in the planning and development of organizational
ways in which human resources generate competi- strategy and human resources strategy, it has to:
tive advantage: – Explain the activities related to human
– The resource must have a value (value resources in terms of success;
is estimated by merging competence – Carry out the activities, first as business
of individuals with demands of the manager and then as manager of human
organization); resources;
– Infrequency of resources (organizations face – Appoint line managers for human resources;
some difficulties in finding a good talents); – Focus on business priorities;

– Offer the abilities of variant management unit for human resources) to propose a functional
that can be used immediately. strategy that will enable the implementation of or-
ganizational strategy.
Organizational unit for human resources is of- Dialog model (C) involves mutual communi-
ten excluded from the strategy forming process, cation and consider other possibilities of organiza-
while the human resources strategy first reflects tional strategy.
in the implementation of organizational strategies. Holistic model (D) treats human resources as
The most successful organizations are those who a key competitive advantage for the implementa-
have the ability to quickly implement a strategy to tion of organizational strategy. According to Baird
work, or to carry out implementation strategy of (Baird, 1983), there is no strategy without a HR
human resources. strategy.
Scheme 6 gives an overview of possible rela- Model based on human resources (E) represents
tionships between the organization and strategies human resources as a key competitive advantage
of human resource management. These relations for the achievement of any strategy. This model
are characterized by five different models: Sepa- is reflection of strategic HRM perspective, which
ration model (A); Matching model (B); Dialogue is based on resources and is considered as a shift
model (V); Holistic model (G); and Model based of human resources strategy from implementer to
on HR (D). driving force in the formulation of strategy.
Conclusion
The profession and practice of human resource
management is subjected to significant change
and redefining. Unfortunately, in many systems
and organizations strategic importance and role of
human resource management are not sufficiently
perceived, and their role is reduced to performing
common administrative tasks related to personnel.
For modern systems and organizations to be
able to successfully cope with increasing competi-
tion and rapidly changing, it is necessary to allow
the release of creative potential of the employees
by applying new principles regarding the human
factor. Knowledge must be in the forefront, which
Scheme 6. Possible relations between organization leads to the intellectualization of work overall. For
and human resources strategy this purpose it is necessary to recruit, develop and
retain human resources who are highly trained,
Separation model (A) is common in smaller or- motivated and dedicated to their work.
ganizations where there is no link between human The strategic role of human resource manage-
resource strategy and organizational strategy. ment is focused on understanding, predicting, di-
Matching model (B) predicts the integration of recting, changing, development and adaptation of
human resource strategy to organizational strat- human behavior and human potential in the or-
egy and it sees employees as key in the imple- ganization, which requires from employees com-
mentation of organizational strategy. This model mitment, self-control, high degree of confidence,
is represented in the organizations that direct their professionalism, ongoing education and striving.
business goals from top management to lower
organizational units, but it is also expected from
organizational units (including the organizational

References
1. Kulić Ž., Upravljanje ljudskim potencijalima, NIP
Radnička Štampa, Beograd, 2005; p. 21.
2. Price A., Human Resource Management in a Busi-

ness Context, Thomson Business
3. Babić M., Stavrić B., Menadzment: struktura i funk-

cije, KIZ-Centar, Beograd, 1999; p. 7.
4. Guest D. , Personnel Management, London, 1989;

p. 40.
5. Ilić B., Savremena politička ekonomija na pragu 21.

veka, Ekonomski fakultet, Beograd, 1997; p. 131.
6. Kulić Ž., Upravljanje ljudskim potencijalima, NIP

Radnička Štampa, Beograd, 2005; p.49.
7. Fombrun C., Tichy N. M. and Devanna M. A., Strate-

gic Human Resource Management, 1984; p. 35.
8. Fombrun C., Tichy N. M. and Devanna M. A. , Stra-

tegic Human Resource Management, 1984; p. 41.
9. Torrington D. , Hall L., Taylor S., Menadžment ljud-

skih resursa, Data Status, Beograd , 2004; p. 4.
10. Torrington D., Hall L., Taylor S., Menadzment ljud-

skih resursa, Data Status, Beograd , 2004; p.43.
Dobrivoje Mihailovic,
Faculty of Organizational Sciences,
Serbia,
E-mail: mihailovic.dobrivoje@fon.bg.ac.rs

Importance of cost accounting in quality

management evidence from Serbia
Edin Suljovic, Djerdji Petkovic
University of Novi Sad, Economic faculty of Subotica, Republic of Serbia
Abstract is focused on continuous improvement of opera-

tions, teamwork, increase customer satisfaction
Global competition challenge and rapidly chang-
and lower costs. [1]
ing technologies endanger classic instruments of
Quality costs are a term widely used, but is not
managing enterprise and they need understanding
fully understood. He does not actually represent the
and application of new management philosophies.
emergence of high-cost quality, but it represents
In order to compete successfully in new conditions
a cost that arise their non-creation. Quality costs,
enterprises put customers’ satisfaction at first place.
due to larger market demands tend steady growth,
It is by realizing and improving the quality of their
and therefore the position is a heavy burden on en-
products and services that enterprises ensure com-
terprises market. Companies, in their struggle for
petitive advantage during the length of time.
survival, “fight” to reduce the costs, but often not
Consistent quality management requires in-
taking which accounts to reduce the cost and how
formation necessary to review the effects of such
will this impact on costs in the future. [2] Monitor
management and for further improving the qual-
and control quality costs is possible if the organiza-
ity of continuous processes and products. Such
tion has developed cost accounting system.
information can be downloaded from the account-
Cost accounting is part of the accounting sys-
ing if the company has implemented quality cost
tem of each profit oriented organizations, and, un-
accounting while recording four types of these
like financial accounting, primarily intended for
costs (costs of prevention, appraisal costs, internal
internal users of accounting information. Since the
costs and external failure costs). In the context of
internal to an organization, cost and management
quality management defined by Deming’s PDCA
accounting are not legally regulated and therefore
cycle, the significance of accounting is very im-
can be adapted to the specific needs of the organi-
portant in all phases of the mentioned cycle. Re-
zation and its managers. [3]
search conducted on Serbian companies’ holders
Above suggests that accounting costs may
of certificate ISO 9001 shows that companies that
be important role in quality management. Qual-
recorded the quality costs witnessed a significant
ity management can be significantly facilitated if
reduction of produced defects. Such companies
managers have detailed and accurate information
recognize revenue increase and decrease the total
on costs quality evident in the reports provided by
cost of quality which seek to optimize.
the accounting system. Management this category
Key words: cost accounting, quality costs,
of costs is possible if the cost of quality can be
quality management
accurately detect and connect to the place of ori-
gin and the cost of the carrier itself, which is basic
1. Introduction information management in decision making and
planning activities associated with improving the
An important determinant of competitive ad-
quality of processes and outcomes. [4]
vantage of profit-oriented companies in today
market relations is the quality of products and ser-
vices provided. Achieving and improving quality 2. The role of cost accounting in QM
performance and business processes if it is pos- Financial information prepared by manage-
sible to manage quality. Manage the overall qual- ment accounting is adequate information support
ity specifically the concept of management that and could help managers to make better decisions

in the control character. Accounting information Cost of quality COQ) are the costs incurred to
with their qualitative characteristics - primary rel- prevent, or the costs arising as a result of, the pro-
evance and reliability - particularly the informa- duction of a low quality product. Costs of quality
tion contained in the financial statements arising are classified into four categories: [8]
from the management accounting, make the most 1. Prevention costs - costs incurred to preclude
dynamic and elastic part of the company informa- the production of products that do not
tion system. conform to specifications
How management and cost accounting, pro- 2. Appraisal costs - costs incurred to detect
vide managers information on all costs of enter- which of the individual units of products do
prises, it is for the purpose of monitoring the ef- not conform to specifications
fects of quality management accounting should be 3. Internal failure costs - costs incurred on
recorded costs thereby incurred. defective products before they are shipped
to customers
2.1 Concept and types of quality costs 4. External failure costs - costs incurred on
defective products after they have been
Quality costs in the history of Organizational shipped to customers
Sciences first mentioned in 1932. Today, many au-
thors agree that they constitute about 20% of the These four types of costs can be grouped into
total expenses. In Western Europe the largest per- two categories quality costs, with the costs of pre-
centage of the cost of waste on human resources vention and testing costs are considered costs of
while in South East Europe due to a number of cir- achieving quality and cost of internal deficiencies
cumstances caused by socio-political, social and and External costs include deficiencies in the cost
other effects of turmoil inability renewal means of of deviations from quality.
production and lack of equality in communication Table 1. Summary of quality costs in the company
with the surrounded by arms, most of the waste
Prevention costs Control
material. In our country, the cost of quality reach-
ing nearly up to 50%. This leaves our company Appraisal costs costs
Total quality
without oxygen, and it subside. [5] costs
The concept of cost of quality is ambiguous Internal failure costs Cost of poor
because the opinions of scholars quality divided, External failure costs quality
with one author under the specified term include
Source: Proposed by authors
only the costs caused by deviations from the spec-
ified quality, and others in this category include
Therefore, the total cost can be reduced by ob-
costs and expenses due to efforts to achieve or im-
serving the relationship between cost quality and
prove the quality of the process and outcomes.
level of compliance with the requirements of con-
The concept of quality cost appears fifties. [6]
sumers. When the degree of conformity to custom-
Quality-linked activities are those activities per-
er requirements are high therefore a poor quality
formed because poor quality may or does exist.
cost are low, but the control cost are high. When the
The costs of performing these activities are re-
level of compliance is low, the situation is reversed.
ferred to as costs of quality. Thus, costs of quality
Companies that measured the costs revealed
are the costs that exist because poor quality may
that the situation in certain companies, such that
or does exist. This definition implies that qual-
the total cost of quality processes represent 30%
ity costs are associated with two subcategories
of total sales. Some companies have achieved cost
of quality-related activities: control activities and
reduction from 30% to only 3%.
failure activities. [7] The costs arise because of the
quality control ensure that the effect (the product
or service) meets your specifications, and lack of
quality control costs arise when performance does
not meet predefined specifications.

2.2 Characteristic of the system of quality It is not enough to allocate quantities of defective
costs monitoring products, but to find the cause of the malfunction
and fix them. Possible causes of poor quality are:
Quality costs could have a significant share in – Inadequate raw materials,
total costs organization and as such they should be – Insufficient training for jobs,
monitored and controlled. Given that the informa- – Unclear procedures,
tion about the cost of great importance in decision – Faulty equipment.
making at all managerial levels, the cost of qual-
ity monitoring in the service is improving control Regular removal of the causes of poor quality
of business processes and, ultimately, achieving achieved stability of production processes and cre-
positive long-term business results. ates the opportunity for improvement.
The purpose of monitoring the quality and cost Better than this is definitely a preventive action
management has a basis in Deming cycle. Particu- to avoid the appearance of defects in the process.
larly, William Edwards Deming is considered one Prevention activities include product design pro-
of the guru quality management, in his honor in cess and prevention efforts, working with suppli-
the 1951st the Japanese-based national award for ers to improve service quality materials, training
contribution to quality. W. Edwards Deming in the staff before problems occur, and preventive main-
1950’s proposed that business processes should be tenance. Prevention costs less than the resulting
analyzed and measured to identify sources of varia- once they had occurred.
tions that cause products to deviate from customer The following figure will show the place of
requirements. He recommended that business pro- quality cost accounting within Deming’s cycle.
cesses be placed in a continuous feedback loop so According to the mentioned figure 1, the quality
that managers can identify and change the parts of cost accounting has an important role in continu-
the process that need improvements. As a teacher, ous quality improvement of business processes
Deming created a (rather oversimplified) diagram and effects of these processes. Specifically, ac-
to illustrate this continuous process, commonly counting planning should be accompanied by any
known as the PDCA cycle for Plan, Do, Check, Act. initiatives improve the quality of the organization.
The above cycle includes key actions to im-
prove quality, including: [9]
– Planning advancing,
– Plan implementation,
– Checking of plan implementation,
– Work towards achieving quality (if there is a
deviation) or towards improving the quality
(if the results of the verification phase
proved satisfactory).
In order to implement actions in the PDCA cy-

cle is necessary to conduct the following actions:
1. Define the quality characteristics of products
or services,
2. Decide on how to perform testing of each
quality characteristics,
3. Establish quality standards,
4. Establish the control system, Figure 1. The role of accounting in continuous
5. Find and eliminate the causes of poor improvement of quality (Deming’s PDCA cycle)
quality, Source: http://en.wikipedia.org/wiki/PDCA#cite_note-0/, with
6. Continue to improve the quality. accounting proposals by authors

After the implementation of improvement pro- measured to the extent possible and practical and the
grams quality following accounting records that benefits of those costs estimated. Such calculations
can be set up in two fundamental ways, one in the are likely to use estimates rather than actual figures.
general ledger [10] or as a separate accounting re- To collect quality costs, there needs to be a clas-
cord established as a quality costs (alternatively, sification of such costs to determine the expendi-
evidence in managerial accounting). Deming cy- ture type. The bulk of all quality costs incurred
cle, in this context, finish with quality costs report- by a company are associated with the quality of
ing and bring important information in managerial conformance. These costs are broken down into
decision making process, and, therefore, generat- four broad groups. Two of these costs - known as
ing ideas about further improvements in quality. prevention costs and appraisal costs – are incurred
Effective communication and interpretation of in an effort to keep poor quality of conformance
measurement and analysis cost of quality, manage- from occurring. The other two groups of costs -
ment is in the position better to evaluate and control known as internal failure costs and external failure
current activities to improve quality and plan future costs - are incurred because poor quality of con-
flow of initiatives. [11] A report of quality costs formance has occurred.
providing information about place of origin and the The costs of quality are accumulated and re-
holder of quality costs, namely, the activities that ported in a cost of quality report. The information
caused the lack of the process and products. This provided by a cost of quality report is used by
report is a good basis for making decisions about managers in several ways. [14]
further activities to exercise and improve quality. – Quality cost information helps managers see
the financial significance of quality. Because
2.3 Quality costs and reports quality costs are not normally accumulated by
the accounting system, managers are generally
Historically, quality costs have not been given not aware of the size and significance of these
separate recognition in the accounting system. In costs. Thus, cost of quality focuses attention
most instances the cost of quality is “buried” in on how costly poor quality can be.
a variety of general ledger accounts, including – To evaluate whether the distribution of
work-in-process inventory and finished goods quality costs is efficient or not. The report
inventory (for rework, scrap, preventive mainte- shows how much a firm spends in prevention
nance, marketing and advertising costs (e.g. recall and appraisal activities (voluntary
products) and personnel costs (e.g. training). expenditure) and the cost of internal and
Cost of quality is a measurement tool which external failure (involuntary costs). Quality
provides a measure of cost specifically associated costs should be distributed more towards
with the achievement or non-achievement of prod- prevention and appraisal activities and less
uct or service quality - as defined by all product or towards failure of various types. Otherwise,
service requirements established by the company this may indicate a poor distribution of
and its contracts with customers and society. The quality costs. However, while there are high
cost of quality can be substantial; on average it is payoffs from initially shifting quality costs
20 to 25 percent of sales for many US firms [12]. from the appraisal, internal failure, and
The measurement of quality performance is of external failure categories to the prevention
great importance in the business sector, particu- category, there is no “optimal” distribution
larly in view of the considerable efforts being put of quality costs among the four categories.
into the implementation of quality management – To help management in their efforts to reduce
techniques across a wide range of organizations. quality costs. The information accumulated
In trying to control the cost of quality, an orga- in the quality cost report provides a basis for
nization must first be able to calculate its total cost establishing budgets for various elements
of quality. Juran and Gryna [13] advocate the mea- of quality costs. These budgets can then be
surement of quality costs on a periodic basis as a used as a basis for evaluating management
management control tool. Quality costs should be performance and success with respect

to reducing total quality costs. Properly an overall measure of quality. Shank and Govinda-
designed quality cost reports assist in rajan [16] indicate that non-financial measures are
determining the type of activities that are essential to provide feedback to managers in their
most heretical in reducing quality costs pursuit of quality. Finally, in order to establish an
and when quality costs are accumulated in overall measure of quality, it is necessary to estab-
sufficient detail, quality cost reports help lish a range of measures (financial and non-finan-
management priorities quality improvement cial) which give an overall picture of the quality of
activities and promotes the idea that quality the products or services of the organization [17].
is everyone’s responsibility.
– To identify the relative importance of quality 3. Relationship analysis of accounting
problems faced by the firm. For example, the practices and quality management of
quality cost report may show that scrap is a enterprises in Serbia
major quality problem or that the company
is incurring high warranty costs. With this In the first part of research we need to look at
information, management can see where to the total number and structure of economic enti-
focus its efforts. ties in the Republic of Serbia. Therefore, we will
include data that directly affect the purpose and
Although a quality cost report is useful, it is im- goal of this paper.
portant to note that measuring and reporting quality When we analyze the numbers showed in fol-
costs do not solve the identified quality problems. lowing table and compare the total number of
Moreover, some important, but difficult to measure companies operating in Serbia in accordance with
and quantify, quality costs are typically omitted various types of ISO, HACCP and OHSAS stan-
from the quality cost report, such as unrecorded op- dards (see Table 3), and put in relation to the total
portunity costs, e.g., loss of further income arising number of business entities that exist in the terri-
from poor product design or customer ill will. tory of the Republic of Serbia 112.401 (Table 2),
Beside the financial measures of quality costs (2.343/112.401*100=2, 08%), we find that there is
(prevention, appraisal, and failure costs), compa- a better percentage those companies that meet inter-
nies use nonfinancial measures (e.g., number of national business standards than in 2011. year. This
customer returns, repeat purchases, the number of percentage is higher in neighboring countries, for
customers’ complaints, delivery delays, number of example in Croatia, 3.12%. But it is important to
defects and staff turnover) in order to evaluate how note that this trend is increasing, and that follows
well their actual performance satisfies customer world trend in number of companies aligns their
needs. Managers also pay close attention to first- operations with the ISO standard of 10%.
time pass rate in each process and in the company The ISO 9000 family addresses various aspects
as a whole, which indicates whether products are of quality management and contains some of ISO’s
being built to specifications. Non-financial mea- best known standards. The standards provide guid-
sures are helpful in revealing the future needs and ance and tools for companies and organizations
preferences of customers. They also indicate the who want to ensure that their products and services
specific areas which need improvement [15] and consistently meet customer’s requirements, and
may provide a viable alternative to quality costs as that quality is consistently improved. [18]
Table 2. Number and structure of enterprises and employees
Structure Number of firms % Number of employees %
Entrepreneurs 20.500 18,24 45.099 4,27
Small firms 88.306 78,56 372.573 35,26
Medium firms 2.751 2,45 213.591 20,21
Large firms 844 0,75 425.367 40,26
TOTAL 112.401 100 1.056.630 100
Source: Official dedication on the functioning of the economy in Serbia in 2011. Year [www.apr.gov.rs]

There are many standards in the ISO 9000 fam- Table 3. Structure and number of standards issued
ily, including: to enterprises in Serbia
– ISO 9001:2008 - sets out the requirements Type of Nr. of various
of a quality management system, %
standards standards
– ISO 9000:2005 - covers the basic concepts HACCP 359 15,32
and language, ISO 13845 17 0,72
– ISO 9004:2009 - focuses on how to make a ISO 14001 328 14,00
quality management system more efficient ISO 16949 1 0,04
and effective, ISO 22000 45 1,92
– ISO 19011:2011 - sets out guidance on ISO 27001 34 1,45
internal and external audits of quality ISO 9001 1355 57,84
management systems. OHSAS 18001 204 8,71
TOTAL 2343 100,0
Source: Register of certified enterprises in Serbia in 2012.
Year [www.pks.rs]
Table 4. Structure of enterprises included in research

Number of
Company name Place Legal form/industry Size
employees
Mikan Novi Pazar Doo/jeans 52 Small
Classic jeans Novi Pazar Doo/jeans 43 Small
Join Novi Pazar Doo/jeans 46 Small
Maxers Novi Pazar Doo/jeans 98 Small
Novi Pazar - put Novi Pazar Ad/architecture 506 Large
Korali Konarevo Doo/metals 44 Small
Pekarstvo Kraljevo Ad/bread industry 104 Medium
Kotlenik-promet Lađevci Doo/meat processing 186 Large
Tri jele Kraljevo Doo/wooden production 23 Small
Feniks-focus Kragujevac Doo/wholesale 35 Medium
Morava Kragujevac Doo/wholesale 52 Large
Ed-centar Kragujevac Doo/electricity 1037 Large
Kuč-company Kragujevac Doo/milk and cheese production 162 Large
Ortopedija Kragujevac Doo/medicine 28 Small
Prizma Kragujevac Doo/medicine 62 Medium
Marel Kruševac Doo/electrical equipment 15 Small
Hcp Kruševac Doo/office equipment 47 Medium
Flory Kruševac Doo/diet food industry 24 Small
As-car Niš Doo/car trade 17 Small
Milsa Niš Doo/fruits and vegetables preservation 35 Small
Metalplast Niš Doo/packing products 19 Small
Unijapak Niš Doo/flour products 124 Medium
Nelli Loznica Doo/cacao and chocolate production 114 Medium
Mlekara Leskovac Ad/diary production 60 Medium
Nevena Leskovac Ad/chemical industry 229 Medium
Z cosmetics Leskovac Doo/cosmetics 19 Small
Alti Čačak Doo/computers equipment 278 Large
Prvi maj Čačak Ad/chemical industry 98 Medium
Moka Čačak Doo/bread and cake production 138 Medium
Alta Beograd Doo/pharmaceuticals wholesale 3 Small

Imlek Beograd Ad/diary production 888 Large

Albo Zemun Doo/wholesale 44 Medium
Alucommerce
Beograd Doo/metals 13 Small
systems
Alpine Beograd Doo/architecture 150 Large
Belaco Beograd Doo/consulting 3 Small
Beohemija Beograd Doo/chemicals 427 Large
Buck Beograd Doo/light equipment 69 Medium
Chemol Beograd Doo/oil derivatives 21 Small
Chemico export Beograd Doo/chemicals wholesale 7 Medium
Coptech Beograd Doo/wholesale 5 Small
Comel Beograd Doo/machine and equipment wholesale 21 Medium
The subject of this paper is an ISO 9001 certi- 7. After the implementation of quality manage-
fied. The norm of ISO 9001 advocated process ap- ment program according to ISO 9001
proach in the development, implementation and standards, do you think that the Quality Costs
improvement effectiveness of quality management are lower than before? YES/NO
systems and increase customer satisfaction (satis- 8. Did the Quality Costs deviations are reduced
faction of their claims). The study included a sam- over time?
ple of 41 companies (see Table 4), which exist on
the territory of Serbia and also conducted through Respondents were strictly owners, financial
telephone interviewing. The course of study can be managers and chief accountants.
divided into two parts. In the next section we will
present results of research work within the frame- 3.1 Motives for the introduction of ISO
work of both the research work, respectively. standards in these companies and the
usefulness of the report on quality costs
Questionnaire used in research:
1. Do you think that the implementation of
3.1.1 Motives for Quality Certification
quality standards ISO 9001 enhance your
business? YES/NO This section highlights the factors which moti-
2. What are the motives for Quality Certification? vated Serbian companies to obtain ISO 9001 qual-
○ Customers’ pressure, ity certification. The adoption of total quality man-
○ Government contracts, agement by Japanese companies was motivated by
○ Market competition, the desire to compete in Western markets. The US
○ Overseas requirements, companies followed suit because they started to
○ Quality improvement. lose their domestic market to Japanese companies.
3. Did your company have implemented system The most important factors were: quality improve-
for preparation of Quality Costs Report? ment, market competition and overseas require-
4. How often do you prepare Quality Costs ments. Quality improvement received the highest
Reports: monthly, quarterly, semi-annually percentage (see table 4). Almost all respondents
or annually? acknowledged that quality improvement is an ex-
5. What are the uses of Quality Cost data? tremely important factor.
○ Product cost information, In summary, the motivation factors behind
○ Process improvement, ISO 9001 quality certification are competition
○ Product improvement, in the market, continuous quality improvement;
○ Quality cost planning. overseas requirements and cost reduction. These
6. How the accounting information on quality results are inconsistent with those found in some
costs affecting the reduction effects of the other countries. For example, Hudson [19] found
lack of production? that Australian manufacturing firms obtain quality

certification for the following reasons: continuous Table 5. Uses of quality cost data, [N=41]
improvement; to gain a competitive edge; over- Usefulness of
seas requirement; and customer pressure (private Frequency Percentage %
quality costs report
and government sectors). In addition, there are a. Product cost
some differences between Serbian companies and 9 21,95
information
companies in other countries. b. Process
Next table shows the results of interviewing 25 60,98
improvement
and percentage distribution of responses. It is im- c. Product
portant to note the following tabulation that most 12 29,27
improvement
companies reported two or three reasons or mo- d. Quality cost
tives for the introduction of ISO 9001 standards. 16 39,02
planning
Table 4. Motives for ISO 9001 quality certificati- Source: Research results
on, [N=41]
Motive Answers Percentage % 3.2 Analysis of accounting practices and
a. Customers’ pressure 9 21,95 quality management through three work-
b. Government contracts 4 9,76 ing hypotheses
c. Market competition 25 60,98
d. Overseas requirements 12 29,27 To prove the first working hypothesis was used
e. Quality improvement 29 70,73 McNemar’s test (at which is taken binomial distri-
Source: Research results bution). The above hypothesis is:
H1: Accounting information on the quality
3.1.2 Uses and benefits of cost of quality report costs affecting the reduction effects of the lack
of production.
When the respondents were asked about the Table 6. Overview of the relationship of accoun-
uses of a cost of quality report, they indicated ting quality costs records and achieving the lack
that they use it mostly for process improvement, of production
quality cost planning, product improvement and
Lack of production
product cost information (see table 5). This shows Record
that COQ is an integral part of continuous quality No Yes
improvement. This shows that although the litera- No 4 1
ture indicates that quality costs are being used for Yes 20 6
planning and control, they are not used in practice. Source: Research results
The results are consistent with previous research
[20]. Other uses added by respondents were: On the question of the existence of records of
– Targeting areas of quality improvement, quality costs replied positive 83% of the respon-
monitoring improvement efforts, motivating dents (Table 6) that were, at the same time, declared
employees towards quality goals to ensure the achievement of lower levels with the lack of ef-
that total quality control is applied to all fects of introducing a quality management system.
organization endeavors. Specifically, the results indicate that the records
– Customer satisfaction and continuous of the quality costs relating to the reduction of the
improvement. product realization insufficient quality.
The chart in figure 2 represented by the ratio of
Mentioned above will be presented through the observed companies at least occasionally monitor
following tabulation: the quality costs. It is evident that high percentage
(namely, 77%) of those organizations that recog-
nize the essential decrease defective products. The
result of the research is in line with one of the fun-
damental goals of quality management, and this is
the realization of the zero level shortfalls.

Figure 2. Achieved reduction in production of

products of insufficient quality
Source: Research results
It can be concluded that 77% of observed com-

panies that have a program for quality manage-
ment and implemented records of quality costs,
reduce waste in their operations. McNemar’s non-
parametric test was carried out with a significance
of 0.001, with a confidence level of 99%, and hy-
pothesis H1 accepted.
Another working hypothesis relates to the ef-
Figure 3. Reduction of quality costs deviations
fects of cost management quality. Therefore, the Source: Research results
hypothesis is:
H2: The costs of quality deviations are re- H3: Companies that at least occasionally
duced over time if company has a quality man- recorded quality costs often made statements
agement program. about them, they notice a reduction in total qual-
The above hypothesis (H2) tested with Wil- ity costs and increasing revenues are also noticed.
coxon’s test matched pairs of numerical values, Testing the third hypothesis was done by analy-
with significance at level of 0.044, and value of sis of variance with one variable factor, and the
Z is -2.016. This is a test showed the reduction of results are shown in Table 7.
quality costs deviations in 70% of companies that Some explanations related with the words writ-
have implemented systematic monitoring of qual- ten in the following table:
ity costs in its accounting. According previously –– V- Variations
above, can be accepted other working hypotheses. –– SV- Source of variations
The share of the quality costs deviations in total –– R- Reports
operating costs first and last of the period graph –– L- Level
is shown in figure 3 from which shows that over –– I- Income
time, the companies that manage quality, there to –– SDS- Sum of deviation squares
reduce these types of costs. The first consideration –– Var. – Variability
is taken over the forecast period which respon- –– F – Frequency
dents indicated as such (i.e., the initial period are – σ –Standard deviations
different among the surveyed companies), and the
last observed period is 2006th years. The results of variance analysis indicated that
One of the main reasons of impact on reducing all three previously described variables depends on
these costs is reduced by the lack of products. quality costs records, which is, of course, condition
The third working hypothesis takes into ac- of reporting and managing this category of costs,
count the impact of accounting records. which consequences are increasing the economic
Quality costs in the frequency of reporting on benefits realized as a business income. Significance
quality costs, estimated level of cost management was observed for all three variables (seen in Table
and quality achievement of higher returns by in- 7.) is less than 0.05. Therefore, the third hypothesis
troducing quality programs, and states: of this study may be accepted as valid.

Table 7. Analysis of variance - the quality costs mation on the point of deviation from the quality
records as a factor of influence and remove them faster. Therefore, not surprising
V SV SDS Var. F σ that the survey data obtained 77% of companies
R - between
that recorded costs of quality observed a signifi-
19,065 1 0,000
samples 18,964 32 32,170 cant reduction of production inadequate products.
- within the 38,029 33 Enterprises that manage quality and have a record
samples of quality costs, notes increases of revenue since
- total they are dedicated improving business processes
L - between 30,422 1 0,000 and the final performance (goods and services).
samples 40,133 34 25,773 Cost accounting allows reporting of quality
- within the 70,556 35 costs, which is, in most cases, members of the
samples board of directors intended. Thanks such reports
- total shall be exercised feedback between accounting
I - between 2,837 1 6,540 0,016 and quality management and the administration
samples 11,714 27 is able to define corrective measures to individ-
- within the 14,552 28 ual organizational segments that show deviations
samples from the set specifications and develop quality
- total improvement plans for the entire organization.
Source: Research results So, there is no doubt that measuring and reporting
cost of quality would provide firms with important
4. Summary and conclusions information to measure quality improvement and
control costs associated with quality. The benefits
The purpose of this study was to provide em- of such reports are likely to cover its costs.
pirical evidence on quality certification and cost
of quality measurement and reporting by Serbian
References
companies. The results show that a low percentage
of the responding firms obtained quality certifica- 1. Buble M. Menadžment, Ekonomski fakultet Split,
tion and especially ISO 9001 quality certification Split, 2006; 42.
what was the main topic of this research.
2. Perišić M. “Upravljanje troškovima kvalitete”,
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However, the majority is aware of the fact and is
planning to adopt COQ reporting in the future. If 3. Gowthorpe Catherine, Management accounting.
we include those companies which intend to adopt Belgrade: Datastatus, 2009; 4.
COQ reporting in the future, the results indicate 4. Perišić M. Janković S, Menadžersko računovodstvo
a reasonable rate of adoption. For many of the hotela, Hrvatska zajednica računovođa i financijskih
companies which have no intention of adopting djelatnika, Zagreb, 2006; 457-495.
a COQ reporting system, non-financial indicators
were used as performance measurement tools and 5. Jovetić S. Finansijski pokazatelji sistema kvaliteta u
bankama, Kvalitet, Beograd, 1998.
many of the firms stated that quality was part of
the firm’s culture. 6. Evans J.R. Lindsay W.M. The Management and
As can be seen in the work, very few compa- Control of Quality, Fifth edition, South-Western, Cin-
nies have their operations in tandem with the ISO cinnati (Ohio), 2002; 468.
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reasons and barriers for exporting Serbian prod- Cost management: Accounting and Control, 6th
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It, Management Accounting, January, 1992; 34-38.
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Edin Suljovic,
Economic faculty of Subotica,
Finance manager,
BROS JEANS, DOO,
Republic of Serbia,
E-mail: edin_suljovic@yahoo.com

Risk and incentives in franchising contracting:

Development of a conceptual model
Edita Becic¹, Evgen Dervaric², Josef Windsperger³, Matej Lahovnik1
¹ Faculty of Economics, University of Ljubljana, Slovenia,
² Faculty of Natural science and Technology, University of Ljubljana, Slovenia,
³ Center for Business Studies, University of Vienna, Austria.
Abstract Business format franchising enables franchisors

This study focuses on agency relationship be- to take advantage of the resources, capabilities and
tween the franchisor and franchisees. Finding dif- entrepreneurial spirit of a franchisee when establish-
ferent previous studies with inconsistent results, we ing new franchise units. Consequently, this gives a
propose a model of the relationship between risk franchisor a good opportunity to minimise the risk
and incentives in franchise contracts by using ad- of running its foreign operations [2]. In the EU,
ditionally new framework to explain the franchise France is the franchising leader with 1,369 brands
relationship. We argue in the article the relationship and 51,600 franchise outlets (franchise units). Be-
between risk and incentives depends on contract- cause some franchisors have more brands, the brand
ibility of the assets used in the franchise system. number is not the same as the number of franchisors.
Key words: franchising, strategy, risk, incen- The UK used to be in second place, but in 2010 it
tives was overtaken by Germany, which has 960 brands
with 58,000 franchise outlets (franchise units). The
biggest franchising business growth was observed
Introduction
in Poland, with the number of its brands rising by
There are two types of franchising: product and 47.5% from 2007 to 2009. Altogether, we can find
trade name (P&T) franchising and business format 11,731 brands in the EU. This figure should in fact
franchising. P&T franchising started as an inde- be reduced as some brands exist simultaneously in
pendent sales relationship between suppliers and several countries; regarding this, a 15% reduction
dealers. Business format franchising has been in- is appropriate, leaving a total number of brands of
creasing throughout the world since 1950. The US 9,971 for 20 countries [3]. Some characteristics of
Department of Commerce defines business format the Post-Communist economies still cannot be com-
franchising as an on-going business relationship pared with Western European developed economies:
between franchisor and franchisee that includes the privatisation process is incomplete, financial
not only the product, service and trademark, but and labour markets are underdeveloped and certain
the entire business concept. The European Fran- structural changes are still to be accomplished. Slo-
chise Federation was established in 1972; it ad- venia is taken as an example of the post-transition
opted the definition of business format franchising economy. It has been faced with a three-way transi-
and brought it to Europe. The Franchise Code of tion process in the last two decades: the transition to
Ethics in EU countries was established by defining an independent state, the reorientation from former
franchising as a system of marketing goods and/or Yugoslav to Western developed markets, and the
services and/or technology, which is based upon a transition to a market economy. It has also become
close and on-going collaboration between legally a ‘benchmark’ for other post-communist economies
and financially separate and independent busi- in the region due to its successful transition process.
nesses: the franchisor and its individual franchi- Most Slovenian firms need strategic partners in or-
sees, whereby the franchisor grants its individual der to compete in global markets [4]. Therefore, the
franchisee the right, and imposes the obligation to strategy of franchising has become very popular
conduct a business in accordance with the franchi- growth strategy for small and medium firms. Eu-
sor’s concept [1]. ropean entrepreneurs have recognised the growing

economic sense of franchising their businesses, es- the literature a number of theoretical explanations
pecially if they follow the best case studies made by for the existence of franchising and for the struc-
a business format franchise. We may therefore argue ture of franchise contracts [11] [12]. The major-
that in the near future franchising is set to become ity of studies analyse the franchise contract within
one of the most popular growth strategies in post- the framework of a principal-agent model. It is a
transition economies. dominant theoretical framework in organisation-
This study focuses on the agency relationship al economics focusing on the study of contracts,
between the franchisor and franchisees. The agency organisations, incentives, the theory of the firm,
model has its origins in the 1960s and 1970s [5] [6]. corporate control, labour, law and economics etc.
It explains the contractual relationship between a However, there are some unresolved problems as-
principal and an agent under information asymme- sociated with agency theory, especially the prob-
try. Specifically, it deals with the relations between lem of risk-sharing and incentives [13]. Research-
monitoring, incentives and uncertainty [7]. Agency ers have found negative and positive relationships
theory is the theoretical framework frequently used between risk and incentives [14] [15] [16] [17].
to address questions concerning how firms choose Still others have found no statistically significant
between franchised and company-owned units and relationship at all [18] [19] [20] [21].
how they select the terms of their contracts, such as Opportunism and control problems in agency
royalties and fees [8] [9] [10]. relationships arise from the delegation of tasks to an
The aim of this paper is to explain the relation- agent with private information. The basic agency
ship between risk and incentives in franchise re- model investigates the contract design as a tool to
lationships. Agency theory argues that incentives set up an efficient relationship between risk sharing
and risk are negatively correlated; however, several and incentives in franchising because the level of
empirical studies show a positive relationship. As a effort expended by franchisees is not directly ob-
result of our literature review, we propose a model servable by the franchisor. Empirical work has pro-
of the relationship between risk and incentives in posed a negative relationship between risk and in-
franchise contracts which will be empirically evalu- centives, yet the empirical results suggest a positive
ated in future research. We argue that the relation- relationship. The franchisor is typically responsible
ship between risk and incentives depends on the for providing training and general support to its
contractibility of assets and the underlying gover- franchisees. It is also the one in charge of promot-
nance mechanism. If a franchisor has entered into ing and advertising the chain globally, and (more
an employment contract with an outlet manager we generally) of developing and maintaining the value
expect a negative relationship, whereas if they have of the trade name. The franchisee, in contrast, is re-
entered into a franchise contract we expect a posi- sponsible for managing the outlet on a day-to-day
tive relationship between risk and incentives. basis. Its responsibilities include human resource
The paper is structured as follows: Section two management activities and keeping track of local
discusses the relevant literature. Section three de- needs together with taking care of local advertis-
velops hypotheses about the relationship between ing. The franchisee’s and franchisor’s inputs impact
risk and incentives in franchise contracting. The pa- on how the outlet performs. However, the intensity
per concludes with a trial of explanation how the re- of efforts devoted to such activities is not easily
lationship between the risk and incentives changes, monitored by the parties other than the individual
using past research suggestions [11] [13] [26] [28]. providers of such efforts. In a franchising-type re-
lationship both the franchisor and the franchisee
Literature review share the risk and incentives, as opposed to an em-
ployment relationship where a manager is tasked to
Franchising is typically defined as a contrac- run a company-owned outlet.
tual arrangement between two legally independent The central idea behind the principal and agent
firms. This form of organisation is a well-estab- model is that the franchisor as the principal has high
lished business phenomenon and, consequently, monitoring costs to control the outcome and behav-
given its economic importance, one can find in iour of the franchisees in the presence of asymmet-

ric information. According to agency theory, man- ously, to lower the costs of control, companies del-
agers of company-owned units have less incentive egate authority and transfer more residual income
to perform efficiently because a substantial propor- rights to the agents in riskier environments. In this
tion of their compensation is fixed income. Due to situation, employees with more authority and in-
moral hazard which arises through a lack of effort centives react more flexibly to the dynamics and
on the part of the agent and the principal’s inabil- complexity of the task environment. Consequent-
ity to adequately monitor the agent’s performance, ly, Prendergast can provide an explanation of the
this form of compensation encourages managers to positive relationship between risk and incentives
shirk or perform suboptimal. In this situation, the in agency relationships.
principal introduces a performance-based contract However, since Prendergast only focuses on
to motivate the agents. Based on agency theory, incentive contracts in employment relationships
there is a trade-off between transferring risk to the he cannot explain the varying roles of incentive
franchisees and the incentives [22]. This key char- contracts under different governance mechanisms.
acteristic of the principal-agent model has received On one hand, employment contracts are used in
a great deal of scholarly attention since the original hierarchical relationships. On the other, franchise
papers published by Holmstrom [23] and Shavell contracts are concluded between the franchisor (as
[24], yet the empirical results do not confirm the principal) and franchisee (as agent), the latter be-
negative relationship between risk and incentives in ing an entrepreneur. This fundamentally different
franchising. relationship may influence the design of incen-
To conclude, the research gap results from the tive contracts. Franchisees as entrepreneurs gain
inconsistency between the theoretical and empiri- profits due to uncertainty and risk, but employees
cal patterns regarding the allocation of residual (with risk aversion) prefer contracts with less in-
income rights (royalties) and risk. According to centive under high uncertainty.
the standard prediction of agency theory, royalties
(as performance-based incentives) and risk should Property rights theory and the relationship
be positively related. The empirical results do not between risk and incentives in franchising
confirm this relationship [25] [26]. In addition, re-
cent theoretical results in organisational econom- According to property rights theory, the struc-
ics also question the risk-incentive trade-off [27]. ture of residual income and ownership rights de-
In the following section, we develop hypotheses pends on the distribution of non-contractible assets
which may explain the positive relationship be- (intangible assets) that generate the firm’s residual
tween risk and incentives. surplus. In franchising, this means it involves a re-
lationship of sharing the intangible assets between
Relationship between risk and incentives in the franchisor and franchisee. For the franchisor,
contractual relationships the intangible assets refer to the brand name assets
and the system-specific know-how. These assets
Delegation View of Incentives represent proprietary knowledge that is not easy
to transfer because the investments in such assets
Prendergast [28] argues that the principal as- are costly and not easily controlled [29]. The in-
signs a task to the agent or allows the agent un- tangible assets of the franchisee are outlet-specific
restricted choice over its actions. In addition, he know-how, know-how about local advertising,
argues that under high uncertainty the relationship customer service, human resource management
between incentives and risk might be positive. An and administrative capabilities.
uncertain environment requires the delegation of The franchisor faces a problem of how to max-
responsibilities which, in turn, results in incen- imise its returns when they depend on the local
tive pay based on output. Companies (principals) intangible assets of the franchisee. In franchising,
offer high pay-for-performance arrangements in this intangibility of assets plays an important role
more uncertain markets as they have high costs in determining the allocation of residual income
of controlling the employees (agents). Simultane- and ownership rights [30]. If one of the agents

is the holder of intangible assets and the other of

tangible assets then, according to property rights
theory, the first should receive a bigger propor-
tion of the residual income and ownership rights.
Specifically, if we assume that the franchisor’s
system-specific assets are more important than the
franchisees’ local market assets for the generation
of residual income, it should receive a higher pro-
portion of residual income rights such as higher
royalties and/or a greater proportion of company-
owned outlets. Therefore, incentives in franchise
relationships are provided by ownership and re-
sidual income rights – the payment of royalties.
So what solution does property righty theory Figure 1. The franchisor and employed manager
offer to the problem of the relationship between
risk and incentive in the franchising context?
The relationship between risk and incentives in
contractual relations depends on the underlying
governance mechanism (i.e. internal governance
versus market or network governance). Under an
employment contract between headquarters and
outlet managers with more contractible assets, it
is more likely that the relationship between risk
and performance-based incentives is negative. In
this case, the franchisor can more easily monitor
the behaviour and the outcomes, resulting in more
monitoring and fewer incentives under increasing
risk due to environmental uncertainty.
Figure 2. The franchisor and franchisee
In contrast, under a franchise contract with
more non-contractible assets of franchisees it is
To summarise, we hypothesise that the relation-
likely that the relationship between risk and in-
ship between risk and incentives in franchise con-
centives is positive. This means that if the fran-
tracting depends on the contractibility of the assets.
chisees’ local market assets are very important
If the assets are contractible, as assumed in agency
for generating the residual income, the franchisee
theory, the relationship is negative; if the assets are
should receive a higher proportion of the residual
non-contractible, as assumed in property rights the-
income and hence pay lower royalties. In addition,
ory, the relationship is positive. From this proposi-
we expect that the importance of the local market
tion we derive the following hypotheses:
assets increases with local outlets operating amid
H1: If the assets are highly contractible,
higher uncertainty. Consequently, we expect that
the relationship between risk and incentives in
the governance mechanism (internal hierarchy
franchise contracting is negative. This refers to
through company-owned outlets versus network
incentive contracts between a franchisor and
relationships through franchised outlets) will in-
managers of company-owned outlets.
fluence the relationship between risk and incen-
H2: If the assets are highly non-contractible,
tives in contractual relations (see Figures 1 and 2).
the relationship between risk and incentive is
positive. This refers to incentive contracts be-
tween a franchisor and franchisees as outlet
managers. It implies that the relationship be-
tween royalties and risk is negative.

The second hypothesis can be specified for em- If we apply this framework to international
pirical testing as follows: If we differentiate the franchise relationships, the franchisor is less able
franchise systems according to the intangibility of to evaluate the environmental uncertainty than
the assets involved, we can expect that the positive under domestic franchising. Therefore, in an in-
(negative) relationship between risk and incentive ternational setting environmental uncertainty and
(royalties) is stronger for franchise systems with hence monitoring costs are increased due to the
more intangible assets compared to franchise sys- geographical and cultural distance involved [31]
tems with less intangible assets. [32]. In particular, exchange rate fluctuations, po-
H2a: The negative relationship between risk litical instability, legal uncertainty and high cul-
and royalties is stronger for franchise systems tural distance increase the uncertainty for the fran-
with more intangible assets. chisor which will impact the relationship between
H2b: The negative relationship between risk risk and incentives.
and royalties is weaker for franchise systems
with less intangible assets. Conclusion
Overall, we can summarise our research model This research paper develops a new framework
that focuses on the relationship between risk and to explain the relationship between risk and incen-
incentives under two franchise systems: (a) sys- tives in franchise relationships. Specifically, it is
tems with a higher degree of contractibility (less argued that the relationship between risk and in-
intangibility); and (b) systems with a lower degree centives depends on the contractibility of assets
of contractibility (high intangibility) (see Figures and the underlying governance mechanism of
3a and 3b). the contractual relationship. If the assets are eas-
ily contractible, the franchisor may establish an
employment relationship with the managers of
company-owned outlets. These employment con-
tracts are characterised by a negative relationship
between incentive and risk. If the assets are highly
non-contractible, the franchisor transfers the re-
sidual income and ownership rights to the franchi-
sees. Specifically, it will introduce franchise con-
tracts characterised by a negative relationship be-
tween royalties and risk/uncertainty. In addition,
Figure 3a. Intangibility and the relationship the negative relationship between uncertainty and
between risk and incentives royalties will be higher for franchise systems with
highly intangible local market assets.
However, each study has its shortcomings and
is confronted with some limitations. Hence, quali-
tative methodology may not fully capture all qual-
ity criteria of validity and reliability. With success-
ful replication and comparison between cases the
findings shall not be considered as the ultimate
answers to our research model. Our proposed
model refers to theory-testing research. We de-
cided to use the case study approach which tests a
probabilistic relation. This exploratory study with
proposed hypotheses does not give us the possibil-
ity to collect data from a large sample. The reason
Figure 3b. Risk and incentives in franchise lies within time demanding access to bigger retail
contracting and services companies in order to get appropriate

non-contractibility in franchise companies with 6. Wilson R. On the Theory of Syndicates. Economet-

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Seismic activity in epicentral area of Kraljevo

Milena Nikolic, Milan Bacevic, Milan Punisic, Danijela Vukoicic, Ivana Penjisevic
Faculty of Science, University of Priština (Kosovska Mitrovica), Institute of Geography
Abstract lier Limnička and later river phase.The youngest

Quartar sediments are made of river deposits and
Municipality of Kraljevo is located in the central
alluvial plains around the mentioned rivers.
part of Central Serbia. The Zapadna Morava river
Key words: geomorphology, geology, seis-
flows in the direction West-East, banks of which
mology, seismic phenomena.
are characterised by high mountains. In addition
to Zapadna Morava, important watercourses are
Ibar and Gruža, with numerous tributaries flow- 1. Seismic-geological characteristics of
ing towards Kraljevo – Cacak ravine and towards epicentral area of Kraljevo
Donjegruzanska ravine, making the core territory In terms of Neotectonic composition, the whole
of this municipality, which suffered heavily from area of Central Serbia belongs to Alpine – Meso-
the earthquake from 3 November 2010. Geologi- zoic – Cenozoic tectonic compressions, making a
cal composition of the Municipality of Kraljevo, large neostructural part of Serbia.
struck by the above mentioned earthquake, is Southern parts of Pannonia basin (peribasin
mainly characterized by Paleozoic, Mesozoic and area) were in Neotectonic period exposed to oro-
Cenozoic rocks. Paleozoic rocks mainly date be- genic collapse. Within this vast area (more than
fore Hercin orogenesis. These are: dolomites, ser- 2,500 km), relative depressions dominated in cer-
pentinites, phyllites and shale. Serpentinites cover tain phases of Neotectonic era, which were either
the area of Troglav, Stolovi and Goč [1], but they continued to recent period, or were transformed to
are present in Kotlenik and Gledicke mountains. elevations in different time intervals. Dominating
Mesozoic rocks are represented by bitumen limes depression structure of Central Serbia is represent-
and argilophyllites of late Triassic age, and their ed through tertiary Zapadnomoravski trench.
sediments range up to 100 m. They are dominat- North-East and North-West parts of Zapad-
ing in Lopatnica and Jelica. Tertiary sediments nomoravski trench are composed of a number
are formed in Oligocene and Miocene, and they of smaller depression structures, which are most
make geological base of Kraljevo – Cacak ravine probably its constituents in palaeographical sense.
[2], major part of which was struck by earthquake. These are Bumbarevo brdo – Toponica, Gruzan-
Geological base is also composed of sediments ski trench and Takovski basin. These depression
of lower Mediterranean, Sarmatia, Pannonia and structures are partially surrounded by Gledic
Ponte, which were the reason why as a result of mountains, Rudnik, Borac and Kotleni .
the mentioned earthquake these geological forma- Tertiary geological structure of Zapadno-
tions suffered from cracks of various depth and moravska depression covers the old basis, and
width, new springs etc. presents accumulation of young tertiary sedi-
The oldest sediments were discovered in the ments, while the most depressed parts are cov-
lower stream of the Ladjevac river, near Troglav ered by youngest alluvial deposits. Zapadno-
and Sirca, upper stream of the Lopatnica, where moravski trench or Cacansko – Kraljevacki basin
they are found mixed with clays and sands. Kralje- is the “biggest intra-Dinaric depression structure
vo – Cacak ravine and Vrnjacko – Gruzanska ra- [1,3,4,5]. The trench is oriented towards North-
vine are composed of sediments of latest Neogene West – South-East, and is located between the sys-
– Pannonia – Pontian series. Quartar sediments tems of parallel East-West-oriented faults.” The
can be found in all parts of the municipality, near mentioned direction of East-West, located within
the rivers of Zapadna Morava, Ibar, Gruza, Rib- Zapadnomoravski trench, was most intensively
nica and their tributaries. They belong to ear- exposed to horizontal movement and generation

of intensive seismic activity in the Municipality of 1.2. Aftershock

Kraljevo, although on the basis of macro-seismic
effects of earthquake it was observed that seismic Upon the main shock which occurred on 3 No-
energy is dominantly distributed in the direction vember 2010 at 01:56 in Kraljevo region, magnitude
South-East – North-West [1,3,4,5]. of which was registered at 5.4 of Richter scale, a
series of aftershocks was registered in the area. The
magnitudes of these earthquakes ranged between 1.0
1.1. The main earthquake and 4.4 of Richter scale. The earthquakes, magnitude
In order to finally define the location of the of which was 2.0 Richter or less, were just instru-
main shock, the location programme was applied mentally registered and could not be sensed. On 9
with the regional model SR1 (Serbia 1), since it November 2010, 258 earthquakes were registered in
better suits real conditions and is more harmon- the period of 13 hours. The station located/processed
ised with the effects generated by the earthquake. shows earthquakes magnitudes of which equal or ex-
From the above Table 1, we can derive the fol- ceed 1.5 Richter. Spatial distribution of these earth-
lowing: quakes is shown in epicentre map (Figure 1).
– The earthquake hypocentre was located on
13 km in depth.
– The inception time at the hypocentre was
00:56:54.76 GMT
– Epicentre coordinates are 43.762 N latitude,
and 20.713 Е longitude.
– The epicentre was located at 121 km southern
of Belgrade, or 4 km northern from Kraljevo.
– Based on these and instrumental data, the
epicentre was in the territory of Sirca village, Figure 1. This epicentre map shows the major
in the fault of preliminary length of 8 km. and subsequent shocks occurred on November 3th
2010 at 01:56.
Table 1.
prg LOCATION, Sesimic model: SR1, М=5.4, Io = 7-8 MCS
LAT
DATE HYPOC. TIME LON (Е) Z (km) GAP
(N)
03.11.2010. 0:56:54.76 20.713 12.8 76
43.762
Stand.dev. +/- 0.32 0.007 1.9 Hct=12
0.005
P-phase S-phase
stn delta h m s rez. tez. m s rez. tez. az.
GRU 14 0:56:57.60 -0.31 1.28 57:00.50 0.20 1.28 1
TRU 57 57:03.90 -0.50 0.93 334
DIV 69 57:06.40 0.06 1.28 57:15.10 -0.04 1.28 303
SVI 69 57:07.10 0.75 0.93 36
SEL 70 57:06.00 -0.59 0.71 152
SJE 82 57:08.70 0.28 1.28 57:18.70 -0.08 1.28 227
KUB 106 57:12.00 -0.35 1.27 57:25.70 0.01 1.27 47
BBL 106 57:12.50 0.14 1.27 57:27.30 1.58** 0.00 276
BEO 118 57:13.80 -0.57 0.78 57:29.40 0.15 1.26 351
TEK 129 57:17.40 1.22 0.04 57:33.60 1.16 0.08 313
BAR 138 57:17.70 0.05 1.24 57:35.20 0.18 1.24 140
ZAV 164 57:22.20 0.18 1.21 57:41.80 -0.91 0.08 109
Epicentre located at: 121km Southern of Belgrade
or at: 4km Northern from Kraljevo

Red circle presents the epicentre of the major of the so far strongest aftershock Figure 2 marked in
earthquake, yellow shows the strongest aftershock, the picture and epicentre map with yellow asterisk.
while lines show the faults along which the earth- Theoretical isolines are shown in dotted line on
quakes occurred. Blue circles present aftershocks isoseists map of wider area struck by earthquake.
epicentres. Blue colour shows earthquakes having The isolines were derived on the basis of prelimi-
occurred over the past 24 hours.The following his- nary data collected in a phone survey, and on the
togram shows magnitudes of aftershocks according basis of registered maximal accelerations read from
to their intensity. The number of aftershocks shown instruments installed in the network for strong
in the picture is compliant with Omori’s law of seis- earthquakes. Aftershocks can be also seen in Ko-
mic activity development in epicentre zone after the caeli earthquake, 1993 Killari earthquake, India,
occurrence of an intensive earthquake. The day after 1999 Chamoli earthquake in Garhwal Himalaya,
the main shock Figure 3, seismic activity in epicentre 2001 Bhuj earthquake, India and in Cariaco earth-
zone was reduced which resulted in the occurrence quake in Northeastern Venezuela [6, 7, 8, 9, 10].
Table 2. Settlements of the narrower area struck by earthquake
Place Intensity Place Intensity
Adrani 7 Mataruska Banja 6
Belusic 4-5 Milavcic 6-7
Bresnica 6 Milocaj 6-7
Velika Drenova 4-5 Milutovac 5
Vitanovac 7 Mrzenica 4
Vitkovac 6 Mrcajevci 6
Vranesi 5 Obrva 6-7
Vrnjacka Banja 5 Oplanici 7
Glavinci 4 Osaonica 4-5
Goricani 7 Pecenog 6
Gotovac 5 Podunovci 5
Grabovac 5 Poljna 5
Gracac 5 Prevest 5
Grdica 7 Rajinovac 6
Guberovac 6 Ratina 6
Donji Dubi 5-6 Rekovac 4-5
Drakcici 7 Ribnica 7
Zica 7 Samaila 7
Jagodina 4 Sarajevo 4
Jarcujak 7 Sijace Polje 7
Katrga 6 Sirca 7-8
Kaculice 7 Sirca Banja 7
Kovanluk 7 Sirca, Potocari village 7
Kovaci 7 Sirca, Ravni Gaj village 7
Konarevo 6 Slatina 6
Kosevi 5 Stubal 6
Kraljevo 7 Tavnik 6
Ladjevci Gornji 6 Trgoviste 6
Ladjevci Donji 6 Trstenik 5
Lepojevic 5 Cvetke 6
Lozna 5 Cibutkovac 7
Loznica 4 Sljivica 6
Loćika 4 Stulac 5
Mataruge 5 Sumarice 7

2. Post-seismic phenomena
Certain phenomena were observed in the soil of
epicentre area of Kraljevo after the main earthquake
Table 2. Namely, in the village of Sirca, a rupture
of more than 20 m long occurred, which is shown
in the map as location 1 Figure 4. The appearance
of the phenomenon itself, the rupture from which
warm grey-reddish sand emerged, is shown in the
picture. In the same village, location 4, at the spring
of Sircanska Banja, one of the springs increased its
capacity by 5-6 times. New aquifer also emerged.
Concentration of sulphur in water increased, but re-
stored to previous level two days later. Near Opla-
kici 2, a rupture of 4-5 m was observed, also pour-
Figure 2. Мagnitudes of aftershocks according
ing water and sand. In one of the wells 3 of Sirca,
to their intensity
which used to have water level at 5m of depth, the
water was completely displaced by sand.
Figure 3. The number of earthquake in day after

the main shoc
Figure 5. Isoseists of wider area struck by earth-

quake
Figure 4. Map of isoseists of the narrower area

struck by earthquake on November 3th 2010 Figure 6. Hot gray-red sand in Sirca

Seismic deformations can lead to the following

possible earthquake consequences, classified into
four categories:
1. Hydrological effects – changes in water
levels in wells, waves on water surfaces,
changes in spring capacities, etc.
2. Slope instability effects – dispersals, smaller
landslides, smaller drifts, landslides and
major drifts
3. Horizontal cuts in soil – smaller cracks and
large ruptures in soil, and
4. Converge processes or complex case –
landslides, liquefaction.
The notion of seismic dynamic terrain defor-

mation can include the occurrence of cracks in Figure 7. The locations of liquefactions occurred
soil, displacement of water, sand and silt from the in the central area of Kraljevo earthquake [16]
cracks and formation of sand or silt cones or cra-
ters, large and uneven terrain settlements. These 3. Defining macro seismic intensity
phenomena are the most widespread types of seis-
mic deformations occurring due to an earthquake. In order to define macro seismic intensity we
They occur in epicentre area, within the first iso- paid thirteen daily visits to the team of the Repub-
seists zone Figure 5, but quite commonly they lic Seismological Bureau and more than forty vis-
also occur outside the zone. They mainly occur its to professional authorities and organisations of
in alluvial plains and river islands of Pleistocene local self-government in Kraljevo.
– Holocene age (Velika Morava, Resava, Mlava, The visits included two hundred and twelve
Kolubara, Zapadna and Juzna Morava, Pecka Bis- settlements, out of which one hundred and ninety-
trica, Nerodimka etc.), rarely in sediments of river two were covered by reports developed by the Re-
and lake terraces and ravine sediments. Cracks in public Seismological Bureau, while the remaining
soil occurred in the village of Sirča are one of the ones were covered by reports developed by local
most common forms of seismic deformations in self-government units applying the same method-
alluvial river valleys Figure 7, Zapadna Morava ology for data collection related to earthquake ef-
valley in this case, and are consequence of dy- fects. The collected data pertained to: people and
namic loads in soil causing disintegration of the their behaviour, effects made to objects in nature
terrain surface layers. Along the ruptures on the and damages made to buildings. Based on the col-
Zapadna Morava valley, area of Sirca village, sand lected data and analysis thereof, and according to
cones were formed in sand soil saturated by water macro seismic scale, the earthquake of 7 degrees
as a consequence of earthquake from 3 Novem- in intensity was characterised as a very strong
ber 2010 Figure 6. Te width of the occurred cracks earthquake Figure 8.
varies between 1.5 and 2 cm. It is characterised by:
Changes in spring capacity, hydrodynamic а)
changes near Sirca village are also common con- – great fear of residents and attempts to run
sequence of earthquake. The duration of the oc- out of houses and flats,
curred effects is most commonly short. Post-seis- – it is difficult to maintain standing position,
mic phenomena can be also seen in work of Chi- especially in higher floors,
Chi earthquake epicentral zone Taiwan,. in Uureg – instability of persons in motor vehicles.
Nuur earthquake, Athens 1999 earthquake, Wen- b)
chuan earthquake and Sesia Zone, Western Alps – movement of furniture, making creaking
[11,12,13,14,15]. noise,

– objects are falling off shelves, References

– changes in well water levels, 1. Gočanin M., Prilog za geološko – petragrafsko pozn-
– reduction or increase of spring water capacity, avanje plana Goča i okoline, Geological annuals of
– increase or decrease of sand and gravel dikes. Balkan Peninsula, Belgrade, 1933; 11(2).
c)
– many buildings vulnerability of which falls 2. Ivković D., Aćimović Lj., Roksandić M., Gravimetri-
jska ispitivanje tercijalnog basena Čačak – Kraljevo,
into class b and many from class c suffered Bulletin of the Bureau for Geological and Geophysi-
damages of second degree. cal Research of Serbia, Belgrade 1957; 19.
Many buildings from class a and a lot of from 3. Luković M., Novi podaci o tercijaru okoline Kralje-
class b suffered damages of third degree. va, Collection of SASA papers, Geological Institute,
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Such macroseismic intensity is “in accordance
with the estimated intensity based on earthquake 4. Bačević M., Populacijsko agrarna obeležja ruralnih
magnitude of М=5.4 and hypocentre depth at 12 područja i njihova klasifikacija u opštini Kraljevo,
km, based on empirical equation for the estima- Univerzitet Kirilo i Metodije, Faculty of Natural
Sciences and Mathematics, Geographical Institute
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Skoplje, 1985.
on data of macroseismic effects of harmful earth-
quakes of Serbia”. 5. Nikolić M., Razvoj i oragnizacija mreže centralnih
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10. Baumbach Michael, Grosser Helmut, Romero Tor-
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Pazar and Jagodina, were struck by earthquake, hy- Monika, Welle Wolfgang, “Aftershock pattern of the
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The epicentre was located 4 km northern from eastern Venezuela”, Tectonophysics, 13 February
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Corespoding autor
Danijela Vukoicic,
Faculty of Science,
University of Pristina (Kosovska Mitrovica),
Institute of Geography,
Serbia,
E-mail: ddvukoicic@gmail.com

Transformational and charismatic leadership

– full range leadership model: paradigm for
change
Srdjan Nikezic1, Savo Markovic2, Dragan Bataveljic3
1
Faculty of Science, Kragujevac, Serbia,
2
University ’’Mediteran’’, Podgorica, Montenegro,
3
Faculty of Law, Kragujevac, Serbia.
Abstract tween transactional and transformational leader-

ship. James Macgregor Burns in 1978, with his
The theory and practice show that transaction-
book,, Leadership “has set the cornerstone for the
al leadership is a necessary, evolutionary path to
study of leadership as a new field which is written
transformational and charismatic leadership of the
in the years to more than two hundred studies and
time in a relatively stable business environment,
several programs on the functioning of organiza-
time for operating in a turbulent environment with
tions and governments.
many unknowns. Transformation phase and char-
Unlike transactional leaders who operate with-
ismatic leadership are characterized by different
in the framework of existing values, beliefs and
interactions of social actors, initiative, efficiency
goals of their followers, transformational leaders
and effectiveness, readiness for change and vari-
seek to change the above categories and create
ety of strategic choices in accordance with the re
new ones to encourage greater commitment of
quirements of the environment and the perception
followers. Intense commitment to the concept of
of new vision and business goals. It is an evolu-
transformational leadership is the result of at least
tionary path that coexists with the changes in the
two tendencies. First, many large companies such
environment and the inevitability of the appear-
as IBM, GM, Ford and others, have entered into
ance of transformational and charismatic leader-
a comprehensive program of transformation and
ship as a complex process based on the individual
change that had to be achieved in a relatively short
vision, courage and willingness to learn, openness
period of time. After the Second World War, until
to followers and values that include better and
the seventies, the business climate in the world,
more efficiently, based on a radical change in the
especially in the U.S., provided that such degree
organization and environment.
of stability that most organizations did not felt the
Key words: Transformational and charismatic
need for change, and consequently for the leader-
leadership, turbulent environment, a willingness
ship, as the force that leads to change. However,
to learn, the vision and mission, the followers
after 25-30 years of relatively slow and steady
growth in the seventies and eighties, especially
1. The basic assumptions of the last century, the business world has become far
transformational leadership more dynamic, competitive and volatile. Many,
by then successful companies, were faced with
As a term, transformational leadership was
the crisis and the need to radically change their
first mentioned in 1973, in the sociological study
former way of doing business. Second, the recent
J.V. Dowtona about leadership: “Commitment
theoretical base of leadership, which is based on
and charisma in the revolutionary process.” Since
an analysis of personal characteristics of leaders
1980, the transformational leadership is in the
and its behavior in different situations not taking
focus of many studies. By 2001, K.B. Lowe &
into account some, a lot of quirky qualities of lead-
WL Gardner found that is 1/3 of studies focused
ers. These new qualities demanded a new theory
on transformational and charismatic leadership.
or a new concept of leadership. It is the concept of
Burns has made a fundamental distinction be-
transformational leadership.

Figure 1. The key attributes of transformational

leader [1]
2. Dimensions of transformational leadership

Full Range Leadership Model shows different
developmental stages of transformational leader- Figure 2. The evolution of transactional leadership
ship. The figure 2 shows the four dimensions of into transformational [4]
transformational leaders who are effective in - ac-
tive quadrant. The first is idealized influence of The passive style implies certain actions and
a leader (II), which is another term for charisma. deviations following in relation to esta blished
The second is inspired and motivated leader (IM), standards, including the leader eh-post seem to be
where the leader has high expectations and inspires planned and approached the prescribed standard.
followers to achieve high goals. The third is, intel- The active style of leadership involves continual
lectually stimulated by the leader (IS), who gives activity, with a system of orders, instructions and
his followers the opportunity to express their cre- commands, in order to remove a sample of pos-
ativity and innovation. The fourth is individually sible deviations from the adopted planning stan
oriented leader (IC), where the leader acts more as dards [5]. It provides the business situation with a
a coach or counselor [2]. Transformational leader- minimum of dysfunctional consequences or delay
ship, therefore, tends to be at the top management on the basis of rational behavior and actions of so-
in organi zations [3]. Transactional leadership is cial actors, groups and organizational levels. Lais-
more inclined to monitor the organization, process- sez-Faire (LF), it is difficult to indentify as a form
es and outcomes in the market. Leaders who are of leadership with regard to possible freedom in
successful, according to [1], more inclined toward the choice of goals and behavior of organizational
factors II, IM, IS and IC. These factors, as we said participants. Laissez-faire is not in the true sense of
are in the highly active and effective quadrant. leadership style, given the impact of social actors,
There are two approaches of transactional lead- whose activities were not coordinated, limited or
ership model. Contingent reward (CR), where the formalized. It is a passive attitude towards actors
leader of the highest level of management in the or- and social groups, ineffective and useless for the
ganization sets what performance and requirements establishment and regulation of organizational re-
they need to achieve and in the end awards manage- lationships. It is preceded by a transactional style
ment for their achievements. Management (MBE) that is applied in arranged relationships of leaders
has two styles, active and passive leadership style and followers and the organizational conditions
and the means of active and passive forms of remu- that are formalized, hierarchical, and based on
neration are based on mana-gement by exception strict division of labor and responsibilities [5].
and rewards from situ-ation to situation.

3. Managing change in transformational 1. Establish a sense of urgency.

leadership 2. Formulate a strong lead coalition.
3. Creating a vision.
The best leaders are those ones who know how
4. Communicating the vision.
to balance short-term results and long-term vision.
5. Support others to embrace the vision.
Kotter believes the short-term changes in those
6. Plan to create short-term changes.
that take place from 6 to 12 months. Results and
7. Consolidate improvements and execute qua-
vision can be drawn on the matrix that has four
lity improvement of product performance.
dimensions. The low score and low vision are the
8. Institutionalizing new approaches.
problem for any organization. Good short-term re-
sults with low vision may satisfy short term needs
Key attributes of transformational leaders are
of the organizations for some time. Compelling vi-
shown in Figure 1: creativity, team orientation,
sion, which produce some results have to be aban-
respect for others, teaching, account ability and
doned. Only a good short-term result that is effec-
recognition. Transformational leadership assumes
tive can realize the vision of sustainable success.
the establishment of strong guiding coalition, be-
cause of the complex processes that are based on
the individual’s vision, his courage and willing
ness to learn and openness to followers and the
values it supports. A strong coalition includes the
establishment of mutual trust and common goals
to be achieved. Leadership that has to take part in
these changes must be based on the transitional
arrangements that are crucial for the effective re
structuring of the effect of economic recovery and
boom. Transformational leaders must be change
agents and fully committed to the vision they have
built and created. These leaders develop a vision
for the organization, inspire and give a collective
obligation of essential type for his followers to
Figure 3. Vision, a result of the success of this vision into a goal towards which they move.
sustainable transformational leader [6] Transformational leaders have the power to create
and staff a new set of corporate values and cul-
The greatest danger for the transformational ture. Transformational leader is an essential fac-
leader is if he is afraid that he will not have enough tor of development and corporate competence in
time to manage the long-term changes, because relation to other social groups and actors, whose
they focus only on quarterly and annual results. leadership is based on the transformation man
However, those who are 50 years old and younger agement, appropriate and stable conditions of
have the opportunity to provide many years of environment demands efficient use of available
transformation, and leadership of the organiza production factors, equilibrium paradigm and an-
tions. Successful transformation of the organi ticipated changes in the long run.
zation is the ultimate test of a leader, and therefore If we observe the transformational leader in
requires two skills: building coalitions and creat- an organization, over 80% of his key activities in
ing a vision. This is particularly important for a his area of its jurisdiction or change she has done
transitional period in which we live [6]. alone: setting the direction of change, motivating
Transformational leader must lead the orga and inspiring people, and about 20% of follow-
nization step by step to a complete reorganization ers and managers: planned, budgeted, organize
and market adjustment. It takes eight steps to com- and solve problems. Leaders are not created in ad-
plete the transformation. hoc situations, they must be educated, and there
are theories that leaders are born, or that are des-

tined for the top positions in the economy, politics, self-esteem and conviction in the correctness of
military, education, culture and other fields. In the their views. Also, the research of university of
literature there are different approaches to this is- Mebill considered that charismatic persons have
sue. Peter Drucker argues that’’ the basic qualities ideal goals and a strong commitment to personal
of leadership cannot create or promote, teach and achievements. The defining characteristic of char-
learn’’. On the other hand there are authors who ismatic leaders can have dominant features, such
claim that leaders are’’ created’’, not born. Ac- as: the special sense of vision, the ability to effec
cording to them leadership skills are acquired and tively deliver the vision to his followers and the
not a matter of biological destiny, but a matter of consistency and emphasized the need for vision
choice. Leaders are born and created’’. and effort to capitalize on their own values [7].
In ancient Greece and Rome, the ruler’s power
was not as rigorous and oppressive as in the East,
moreover, the organs of state power in certain pe-
riods have been constituted and functioned in a
fairly democratic basis and in the republican tradi-
tion (Sparta, and most of the Greek polis, Rome
during the Republic ), and it is known that the de
mocratic constitution of Athens even today repre-
sents the ideal to be pursued by the modern demo-
cratic state and that the Athenian democracy, and
today is the wellspring from which are powered
by modern political and legal doctrine. In such a
socio-political environment, there is a favorable
climate for the emergence of charismatic person-
alities (leaders in the contemporary meaning of
the word), a statesman, a true leader of masses
and popular tribunes, generals, orators, lawyers,
politicians, who are to become due primarily to
Figure 4. Elements of transformational lea moral and the intellectual force of their personali-
dership [Heskett, JL, Sasser, WE, Schlesinger, ties, personal initiative, ingenuity and democratic
LA (1997): The Service-Profit Chain, The Free relation to those who were led by them, ready to
Press: United States] listen and accept other opinions. There is a wide
range of the ancient leaders (the most nobly mean-
4. Basic understanding of charismatic and ing of the word), we will mention only some, not
transformational leadership pretending that our choice is the best one, but to
properly illustrate our thesis about the origins (and
The basis for a complete analysis of charismatic perhaps the right leadership) in antiquity. In Spar-
leadership was given by R. Haus. It is based on ta, which has all along been an aristocratic repub-
the views of the charismatic personality has spe- lic, and who set the standards of morality, patrio-
cial features, emphasized the structure of behavior tism and collective solidarity so high that no one
backed by the reference sources of power and in- before or after it has not conquered, there was a
fluence and certain discrete manifested tendency whole constellation of leaders-leaders, such as the
to influence others, to represent them and lead to legendary leader and legislator Likurg, basileus
real and perceived terms. Charismatic leaders have Lacedaemonian, Menelaus, Leonidas, Cleomenes
a high level of competence and confidence, ambi- and others. In Sparta, the authority of leaders was
tion, will and conviction, charm and a tendency to formed under unique specific circumstances. The
dominance, openness and the need to act for the reason for their existence was torn between two ir-
sake of higher interests. Simply, these are attri- reconcilable extremes’’ defeat the enemy in battle
butes of individuals with pronounced dominance, or fall from his hands,’’ [8]. Legal and moral rules

Spartans have unconditionally obeyed, which tells The focus of the entire political and social
the story Xenophon, arguing that the Spartans action in Athens, and therefore the leader ship,
should be’’ nice’’ to die [9], before to live without people management skills, there is freedom (eleu-
glory, because the battlefield was a disgrace’’ es- theria) and freedom of thought and speech (parre-
cape’’ [9]. In these moral, patriotic and collectiv- sia). Thus, the Athenian leadership is in complete
ist postulates, where everything was subordinate accord with the ethical ideals of the Greeks- har-
to state reasons, and even family relations and so mony (kolakogatijom). Ancient Greece affirmed
subtle, such as feelings of love and physical attrac- a fundamental ethical principle in the process of
tion between men and women, arose the leader- leading the people and the state and promoted the
ship and management skills, which is very close highest possible level of interaction between gen-
today’s leadership. eral and particular interests – citizens and state [8].
In Athens, especially in its democratic period, On these postulates lays modern leadership, or at
the function of the leader and the leader of a dem- least should be based.
ocratic nation or state body has a more democra- In ancient Rome, especially in the era of the re-
tized and more relies on the personal authority of public, national leaders and government officials
the leader, his moral and intellectual profile, in- were required to possess traits that differentiated
ventiveness, courage, determination, resourceful- them from the mass of those who have been led or
ness and ability to offer more appropriate solutions managed. In short, they had to live a life of virtue.
for each individual situation, and a willingness to Roman leadership was based on the leadership of
accept different opinions if it contributes more to the Greek, but I was more focused on pragmatism
adequately resolve the problem. In democratic and its material components, rather than doctrinal
Athens, everything was located in the orbit of free abstractions and ideal of harmony and virtue of law,
citizen-individual, even the process of governing general and individual interests. The Romans also
and leading a nation. History of Athens is rich had their admirable leaders even today. We will
with examples of true leaders in political, military mention only some, and above all to those who have
and any other plan. Great statesman, a greater re- the power of his personality, his moral and spiritual
former and one of the seven Greek thinkers, Solon profile gained the glory to become national leaders.
is an example of leader and leadership, acquired Mania Courier Dentate (winner of the Third Sa-
outside domain of political power and authority of maritan War), originally’’ snob’’ (homo novus), had
state organs. Solon’s leadership was based on the seized the high position owing to its own qualities
then enormous internal values of his personality and support plebs. His biography has for centuries
and not imposed by external political or military been an example’’ of Roman simplicity and mod-
authority. For his unimpaired prestige and high eration in their personal lives’’ [10].
reputation among the Athenians we can see from From antiquity leadership never ceases, but
the fact that he was a thorough reformist of the so- only took on new contours and promote new
ciety entrusted with the same passion for rich and values, which need to have leaders of the people
poor. In gratitude for the successful reform ren- and holders of political power. As in much of the
dered the Athenians built a monument to him and middle Ages dominated church doctrine and the
crowned him as the inscription - agios nomotetes theory of predestination, by which everything
(‘’sacred’’ the legislator). Solon was a great na- is predetermined, and the reward comes only in
tional leader, but not far behind Cleisthenes, Peri- the world after this to the merits what is done in
cles, Alcibiades, Aristides the Just, Themistocles, this life. In the first centuries of Christianity, the
Miltiades, Demosthenes, and Dr. Kimon. To this most important leaders of the people appear to
number should be added and the whole Pleiades be the church fathers. The doctrine of the divine
of Athenian demagogues (this term is now often origin of the ruler’s power strengthens a person as
wrongly used in pejorative sense), people’s lead- God’s chosen ruler of the country, which narrows
ers, gifted speaker, which were in their memorable the scope for other forms of leadership, except
speeches exercised a strong influence on the po- for purely political-ruling father leadership. Add
litical life of Athens and social importance. to this the doctrine of the Christian state and the

frequent occurrence of fanatical fideism, which There is no doubt that the transformational style
produces intolerance in the political plane [11], it used in the special conditions of business enter-
becomes clear why the leadership in the Middle prises. Thus, for example, transformational style is
Ages stagnated relative to antiquity. applied in conditions of high intensity and change
Studies have shown that the whole set of per- of major form or scope changes. However, it is not
sonal values and the capacity to influence the be- really needed in a situation where a high coverage
havior of others, their commitment to achieve the of organizational change, but its weak intensity, or
goals and personal satisfaction. Viewing’’ set’’ a high rate of change, but low coverage. Transac-
charismatic leader skills is given in Table 1. tional style is applied under relatively low inten-
Table 1. Set of the attributes of charismatic leader [7] sity of change and its relatively low coverage. The
1. Confidence. Charismatic leaders deeply believe mechanisms of this style are based on the exchange
in their own thinking and ability. of “identity” enable efficient function of enterprises
2. Vision. Charismatic leaders have an idealized and relatively easily adapt demands.
goal that takes precedence over the present. The
difference between the desired and current state
of the attitude of the followers of the visionary
qualities of leaders
3. Ability to express a vision. Charismatic leaders
are able to successfully explain and present a
vision. Ability to express the vision shows the
ability of leaders to understand the needs of
followers and to motivate them.
4. Strong belief in a vision. Charismatic leaders
are willing to risk, sacrifice and commitment to
achieve the vision.
5. Unusual behavior. Their behavior is not
conventional, but unusual and it is outside the Figure 5. Model changes of leadership content [7]
existing rules and norms.
6. They appear as change agents. Charismatic The changes being implemented are of incre
leaders are the bearers of radical changes and mental nature, step by step, based on plans and
requirements. They are not advocates of waiting standard procedures. Possible changes in the na-
and keeping the status quo. ture of the request and the discontinuity cause
7. Sense of the environment. Charismatic leaders changes of transformation techniques and the us-
realistically assess the impact and limitations of age of transformational leadership. Practice shows
environment, as well as events that can cause that in these situations, companies make strategic
certain changes.
changes in highest levels of companies, involve
ment of new individuals, experienced leaders, or
Switching from transactional leaders to trans- they start and finance the transformation with the
formational leaders is not an easy process or a existing structure.
process that can be achieved quickly, by pres- In the combination of two organizational chang-
sure and directive. This shift implies a change in es, such as intensity and extent of changes, accord-
complex mental seed in corresponding changes in ing to trends and their habits, we can apply the con-
awareness, the development of certain desire to cept of transaction and transformational styles. The
bring change, overcoming new significant skills, figure 6 shows the styles change from incremental
knowledge and implementation of acquired skills, improvements to the transformation.
feedback, and gaining new abilities and predispo- Thus we can conclude that the different type of
sitions. The figure 5 shows a model of “transition” organizational change requires different types of el-
elements of transactional style into transforma- ements. In terms of continuous development of en-
tional style. terprises, the transition from one lifecycle stage to

another, the most appropriate approach is transfor- – participation structures and expanded
mational approach. In terms of discontinuity, radical knowledge and spectrum
change is an appropriate example of the transforma- – Efforts to achieve Excellence through
tional approach, whose skills and abilities go beyond competitive superiority and domination [5].
the usual norms and rules. Moreover, discontinuous
changes call into question the “standard” interpre- Under these conditions, transformational lead-
tation schemes and require changes in existing cul- ership is based on the vision, the ability to com-
tural facilities. This is the direction that company is municate to other social actors, clear principles of
ready to follow, ready to maintain and develop the decision-making and implementation, ability to
dominant paradigm in terms of discontinuity. acquire knowledge, respect and understanding of
its followers. On this basis, transformational lead-
ers tend to use specific models for the effective
positioning of their companies:
1. The reactive model
2. Model changes in internal environment
3. Model changes in external environment
The reactive model can be effective in the short

term, since leaders are waiting for changes and re-
act to them after. They apply it in the stable con-
ditions, non fluctuation circumstances, when the
options are known and when the range of the par-
Figure 6. The application of managerial styles ticular phenomenon is reduced.
in different types of changes (from continuous to In the model changes of the internal envi
discontinuous) [1] ronment, the leaders base their actions on forecast-
ing standards and active participation in changing
5. Every change offers new opportunities environment that involves a reduction in work
force or means of certain organizational units and
The creation, promotion and operation of trans- selection of support in their development or mainte-
formational leaders is not always just the evolution nance. Changes in internal environment are carried
of leadership styles, based on transactional rules, out ex-ante in relation to changes in extreme envi-
which otherwise, inherent management whose ac- ronments and allow leaders to equip their organiza-
tions gives the expected results in a stable living tions for future roles or environment pressures.
environment. Transformational leadership occurs Model changes in extreme environments
because of the environment pressure which is means that leadership participates in changing
characterized by major changes, uncertainty, dis- the environment for their own needs. This can be
continuity, and requires direct stakeholders of the achieved through lobbying, advertising, innova-
company to achieve high profitability and effec- tion and coalitions with other market participants.
tiveness. Transformational leaders are set by: Finally, the model of linking internal and external
– new organizational conditions, environment with the help of negotiation and bar-
– more complex structure of social actors, gain with other partners where both environments
– groups and organizational units, harmonize with each other and change creates op-
– changed technical-technological base, in portunity to participate in changes that will pro-
the part of production andprocessing of in vide new chances [5].
formation’s, Analyzing changes in the turbulent envi
– changed market focus and orientation of the ronment which always provide new opportunities
consumer value and satisfaction, for leaders it is necessary to establish transforma-
– innovative culture and reduced resistance to tional categories of leaders so that given chances
change, in the future represent realized possibilities. There

are four catego ries of transformational leaders ning of chronological study of the history it
who differ in the way of accession to the resolu- is often referred to Moses.
tion of tasks and goals which they want to achieve:
1. The intellectual leader, see the ideas and
values that transcend the immediate, practi
cal needs and always change and transform
its social base, to keep in time with and it is
in a conflict with the status quo in the orga
nization. It has a vision to transform society
by raising social awareness.
2. The Reform leader requires the participa
tion of a large number of allies with various
reform and unreformed goals, which usually
originate from the leaders. Then he is often
faced with divisions in the organization and
his opponents are informal groups of orga
nizations that fight against the leader and his
reforms and seeking retention of the status
quo in the organization. They are afraid of
changes and their positions in the new re
formed organizational structure. Transfor
mational leader must with his moral dignity
to provide support in the organization for his
changes, and to increase daily number of his Figure 7. Transformation of leadership styles by
followers. Besides his moral characteristics James McGregor Burns
reform leader must have a sense of social
organization that he manages and to hold to The changes that occur in organizations or in
ethical principles in his work, which are so society leadership implications do not always rep-
cially useful. resent the chance for new opportunities. Burns’s’’
3. The revolutionary leader, as a transfor amoral’’ leader does not have the chance of new
mational leader requires of its employees changes that are beneficial to the organization and
to fulfill their obligations, perseverance, society. He fights for brute power and it cannot be
courage and selflessness. He is a reformer either transactional or transformational leader, but
who sees any change as a new possibility he can be the leader of the masses, but this lead-
of prosperity of the whole, therefore, his po ership always has a tragic end to his own people
wers as a leader he transferees to the entire (Mussolini, Hitler, Pinochet, and Stalin).
organization. It has a strong sense of vision Transformational leader transform moral val-
and mission. Often, if he is not a leader of ues into the leadership taking into consideration:
economic organizations, he appears as a po justice, freedom, team spirit and gender equality.
litical leader who motivates the masses to According to Edgar Schein transformation cre-
revolt in the service of the revolution. His ates a change in the company’s corporate culture
changes are profound and can cause earth and the way of how to design an organizational
quakes in all parts of society. Often it comes structure. The leader pays attention in any change
to social and political changes in the system. of measures that are taken in the organization, he
4. Charismatic leader often is treated in a control them and sends symbolic signals of corpo-
theory as a transformational leader, but rate culture so that set tasks will be achieved on
with special skills that gives him a greater the easiest way and achieve the stated goal [12].
prerogatives and personal charisma. As an
example of charismatic leaders in the begin

tion of economies transformational leadership is

the key to the additional effects, efficient restruc-
turing and economic recovery. Transformational
leadership is leadership that affects members to
achieve extraordinary performance in the context
of significant innovation and change. The qualities
of transformational leadership are: vision, charis-
ma, symbolism, promotion, intellectual stimula-
tion and integrity.
Figure 8. Input and output relations of successful Leadership enhances the conditions of tur
transformational leaders bulent environment, strengthening the processes
of globalization and the efforts of companies to
changes in the organization, management struc-
6. Conclusion
ture, and technology base and preserves product
Many uncertainties and gaps, and now, after so quality and improves competitiveness and meets
many years of studying transformational and char- the challenges of modern business.
ismatic leadership, and leadership in general, exist
in the theoretical principles and practice [13]. The Acknowledgment
fact is, that the changes in environment are com-
plex and they seek vision of individuals, courage The work is part of the research project 41010,
and willingness to learn, to work on the basis of funded by the Ministry of Science and Technolog-
radical changes that take place and that he is will- ical Development of Serbia.
ing to accept risk and uncertainty. Many scientists
and managers in global companies over the last References
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Srdjan Nikezic,
Faculty of Science,
Kragujevac,
Serbia,
E-mail: srdjan_nikezic@yahoo.com

Asymmetry in strength of thigh muscles in

basketball players
Izet Radjo1, Osman Handzic1, Gordana Manic2, Ifet Mahmutovic1, Haris Alic1, Ekrem Colakhodzic3
1
Faculty of Sport and Physical Education, University of Sarajevo, Bosnia and Herzegovina,
2
Faculty of Health Studies, University of Sarajevo, Bosnia and Herzegovina,
3
Faculty of Education, University Dzemal Bijedic, Mostar, Bosnia and Herzegovina.
Abstract analysis of the movement, and furthermore, on

By observing locomotory system as two sepa- highly significant analysis of some basic physi-
rate parts, within movement structure of sport ological parameters that can be monitored dur-
specific athletic activities, it can be concluded that ing the game. The pace and speed of the game is
each one of two components suffer different in- growing day by day, in the way that requires from
fluence of force intensity and volume as product the player maintenance and improvement of sport
of a specific movement action in specific sporting performance. Players’ performance is reflected
event. This research represents a transversal study through the entire anthropological status in basket-
with a goal to determine level of differences be- ball. Furthermore, player’s morphological charac-
tween two main components (left and right leg) of teristics, motor abilities, and functional capacity
locomotory system of basketball players by mea- should be adequate to the level of competition and
suring their morphological characteristics and mo- quality of play. One of the mechanisms that are
tor abilities. The subject sample consisted of cadet of importance for sport performance, primarily in
basketball players from Sarajevo Canton as well basketball, is a locomotory apparatus.
as cadet national team of Bosnia and Herzegovina The term asymmetries in isokinetics refer to
(N=68). For morphological measurements, four unequal torque values between the two limbs. Re-
variables that explained voluminosity and longi- search papers have showed that bilateral ratios are
tudinal measures for both leg were applied. Mo- valid tool to assess progress of rehabilitation proto-
tor abilities were presented through fifteen vari- cols [2, 12, 6, 13] Many papers reported the bilat-
ables on Biodex isokinetic system and Biodex eral difference to be an important predictor of in-
balance system. With overall fourteen variables, jury occurrence with differences greater than 10%
information regarding knee stabilizer muscle po- for lower limb [5,9] In contrast to weight training,
tential through isokinetic protocol (speed 60 °/s) maximal torque can be achieved through the whole
were obtained. Balance platform gave us insight range of motion with the isokinetic training prin-
in proprioceptive level of balance quality of sub- ciple, that may explain its larger training effect [11]
jects. Statistical analysis (T-test) gave us statisti- Investigating factors associated with muscle in-
cally significant difference between tested levels juries highlight the multifactor origin of this prob-
in variables knee stabilizer muscle potential. In- lem. Muscle strains, especially in the hamstrings,
formation obtained in present study can be used are common in athletic activities associated with
as a basis in planning and programming training high acceleration energy. In his recent study, [17]
processes with a main goal of producing up to date point out that muscle imbalance could increase in-
basketball players that could satisfy high criteria jury rate in top-level athletes but it seems difficult
of modern play. to assign a deviation from an assumed normative
value as imbalanced as the margins of acceptable
deviation are mainly unknown.
Introduction
Through analysis of mechanism for movement
If we want to find out which skills are the most in basketball players, observed as two separate
important and most common along the way of systems, this paper represent information on the
success in the basketball game, research has to possible existence of level differences between
be based on certain principles that are related to these systems.

The aim of the present study was thus to deter- to every test the machine was calibrated, ROM was
mine muscle strength variables of lower limbs in set at 90º and a warm up consisting of bicycle run
cadet basketball players in order to detect possible and stretching of quadriceps and hamstring muscles
asymmetries. were applied. A more specific warm up consisting
of 3-4 sub maximal repetitions at the testing speed
Materials and methods of 60 deg/sec for both quadriceps (knee extensors -
KE) and hamstring (knee flexors - KF) muscles in
Subject sample order to prepare subjects for regular testing. After 2
min the subjects performed 4 repetitions of maxi-
The sample consisted of overall 68 cadet basket- mal voluntary contractions of thigh muscles. The
ball players (Table 1) of representative competitors same person conducted all measurements and the
of BiH (Bosnia and Herzegovina) that were regis- same protocol for both legs was used [15]. Relative
trated in KSBIH (Basketball Association of Bosnia peak values of thigh muscle torques were recorded:
and Herzegovina), as well as club level competitors right and left knee extensors (KE-R and KE-L re-
from the various clubs in Sarajevo Canton. All the spectively) and right and left knee flexors (KF-R
participants had at least one year training experi- and KF-L respectively).
ence, without serious injuries of lower extremities In assessing balance ability (proprioceptive
bone-muscle system in the past six months. qualities) Biodex balance system was used in cal-
Table 1. Physical characteristics of subjects studied culating leg stability index.
Basketball players (N = 68)
Age (years) 16.61 (0.49) Statistical analysis
Body height (cm) 188.26 (8.46)
Body mass (kg) 77.25 (11.97) In the first stage of data analysis for given vari-
BMI 21.72 (2.53) ables, central dispersion parameters were calcu-
lated. T-test for independent samples was used to
All participants were medically examined pri- determine qualitative differences of two explored
or to the beginning of the training protocol, and areas, whereas factor analysis was applied in the
were confirmed with no clinical disorders of lower multivariate level of statistical procedures.
limb. All of them gave their written consent to par-
ticipate in this study. Results
Testing procedure During the regular pre-season testing we found

muscle imbalance or deficit in strength of thigh
Testing procedure and measurements were un- muscles in overall 9 athletes.
dertaken in diagnostic laboratory center at Faculty Table 2. Mean values (±SD) of Peak muscle
of Sport and Physical Education, University of Sa- torques (Nm) at 60°/s
rajevo. All the participants (N=68) were measured Leg
t p
during two days, due to the fact that measurements L R
of morphological characteristics did not have any KE 192.31±36.88 198.78±38.88 -2.403 0.019
negative influence on achieving best potential re- KF 103.07±20.77 111.38±23.03 -5.705 0.000
sults in tests of motor abilities. KE – Knee extensors; KF – Knee flexors; L – left leg;
Length and circumferences of lower leg and R – right leg;
thigh were measured for obtaining information in
morphological characteristics. In Table 2 are presented mean values of peak
Thigh muscle strength was measured under muscle torque (Nm) at 60°/s. Statistically significant
isokinetic conditions using Biodex isokinetic dy- difference appeared between knee extensors and
namometer (Biodex Corp., Shirley, New York) in flexors of left and right leg, all in favor of right leg.
concentric-concentric mode according to standard
testing protocol for subjects in sitting position. Prior

Table 3. Total and average work-output of knee extensors and flexors

Leg
t p
L R
Total work-extension (J) 768.05±176.37 820.66±178.55 -3.483 0.001
The average knee extensor strength (W) 119.96±22.37 124.83±25.42 -2.868 0.006
Total work-flexion (J) 479.55±123.23 522.28±128.96 -4.565 0.000
The average knee flexor strength (W) 68.50±17.50 76.20±18.65 -5.607 0.000
Table 4. Mean values (±SD) of anthropometric features of young basketball players
Leg
t p
L R
Lower leg length (cm) 46.11±3.13 46.14±3.14 -0.699 0.487
Thigh length (cm) 45.04±3.68 44.96±3.71 1.207 0.232
Lower leg girth (cm) 38.62±3.21 38.54±3.19 1.220 0.227
Thigh girth (cm) 57.11±5.39 57.29±5.44 -2.223 0.030
It can be seen in Table 3 that the total and the low correlation of leg stability index with strength.
average work-output achieved at the testing is sig- Results of T-test show differences between left
nificantly higher for the right leg. and right leg in variables that measures muscle po-
There were no statistically significant differ- tential of hamstrings, in particular Peak power of
ences found in anthropometric variables between knee flexors, Average power of knee flexors and
left and right leg, except for thigh girth on the low- Total work of knee flexors.
er level of significance (Table 4). Factor analysis of applied variables isolated
Hcon/Qcon ratios for left and right leg statistically four components that explain 81,030% of com-
differ in lower level of significance (p<0.05), how- mon variance in researched areas (Table 7). By
ever, measured values are in optimal ratio (Table 5). analyzing data, it can be noticed that each of
Table 5. Mean values (±SD) of Peak moment Hcon/ treated variables, except for balance index for left
Qcon ratios (%) of the right and left leg and right leg, has high projection. This somewhat
Hcon/Qcon ratios lower projection is in dominance of morphologi-
t p cal variables and isokinetic component that led to
L R
suppression of fewer number of balance variables.
54.17±8.84 56.58±8.82 -2.264 0.027
First isolated factor represents a factor of iso-
L – Left leg; R – Right leg
kinetic potential, for it has high projections of al-
For leg stability index measured with Biodex most every isokinetic parameters except for H/Q
balance system, no significant differences between ratio for both legs. Second isolated factor represents
left and right leg were found (Table 6). a combination of morphological characteristics,
Table 6. Mean values (±SD) of leg stability index variables that concerns girths as well as balance
for the right and left leg variables. Third factor is made of residual of mor-
Leg phological characteristics concerning longitudinal
t p
L R dimensionality of lower extremities. Forth factor is
Leg stability index 4.61±2.26 4.19±1.58 1.660 0.102 residual of values in two remaining variables of iso-
kinetic potential of H/Q ratio for both legs.
Heterogeneity of the sample in morphological
and motor abilities of isokinetic performance can
Discussion
be noticed in obtained values of basic and central
parameters for left and right leg. Variable that re- By analyzing values of basic and central param-
fers to balance shows no greater differences and eters for both legs, it can be noticed the presence
deviations indicating sample homogeneity. Inter- of heterogeneity within morphological characteris-
correlation matrix within motoric area is showing tics and motor abilities. The heterogeneity of ob-

Table 7. Basic description of extracted factors

Structure Matrix
Component
1 2 3 4
Peak power Left knee extensor 0.881 -0.477 0.254 -0.226
Peak power Right knee extensor 0.856 -0.534 0.239 -0.200
Total work of Left knee extensors 0.805 -0.453 0.292 -0.211
Total work of Right knee extensors 0.832 -0.508 0.235 -0.311
Average power of Left knee extensor 0.873 -0.413 0.331 -0.203
Average power of Right knee extensor 0.875 -0.456 0.265 -0.247
Knee Flexor – Left leg 0.876 -0.354 0.262 0.394
Knee Flexor – Right leg 0.817 -0.453 0.248 0.435
Total work of Left knee flexors 0.819 -0.202 0.184 0.416
Total work of Right knee flexors 0.815 -0.336 0.244 0.424
Average power of Left knee flexor 0.827 -0.147 0.147 0.392
Average power of Right knee flexor 0.834 -0.235 0.272 0.473
Hamstring/Quadriceps Left leg 0.022 0.090 0.027 0.831
Hamstring/Quadriceps Right leg 0.120 0.049 -0.031 0.883
Left leg Balance 0.223 -0.722 0.263 -0.132
Right leg Balance 0.046 -0.601 0.223 -0.095
Length of Left lower leg 0.328 -0.297 0.892 -0.029
Length of Right lower leg 0.341 -0.297 0.893 -0.042
Length of Left Thigh 0.123 -0.178 0.918 0.027
Length of Right Thigh 0.148 -0.175 0.920 0.039
Circumference of the Left Thigh 0.456 -0.929 0.108 -0.079
Circumference of the Right Thigh 0.425 -0.939 0.119 -0.080
Circumference of the Left lower leg 0.526 -0.921 0.282 0.059
Circumference of the Right lower leg 0.514 -0.922 0.288 0.042
tained results in morphology could mean that par- region was payed through applying isokinetics,
ticipants were not highly selected. Basketball rep- which have proved to be useful tool in identifying
resents sport for mainly tall men, where selection both physiological characteristics and pathologi-
from anthropometric point of view should be made cal conditions. However, there is still no general
in accordance to longitudinal dimensions, primar- consensus related with the importance of isokinet-
ily height, arm and leg length, foot size and hand ic as predictors for injury prevention.
diameter. In his recent study [1] suggest that the A variable that refers to balance in the motor
positional differences in quadriceps and hamstring area showed no major differences and deviations,
muscle strength of elite male basketball players are indicating the homogeneity of the sample. In ad-
the result of respective differences in body size, dition to reported results discussed within Inter-
whereas factors other than body size are respon- correlation matrix from present study, it has been
sible for the positional differences in ankle plantar- noticed low correlation of power variables with
flexor and dorsal flexor-strength. Heterogeneity of balance. The reason for this lower correlation
motor abilities (i.e. isokinetic potentials) is showing could be found in the explanation that force size
absence of training technology, within transforma- does not influence performance of balance tasks.
tional processes, that improves these performances. However, successful performance of balance tasks
In clinical and scientific research, knee joint depends on optimal level of force in synergy with
and thigh muscles have been described in nu- action of coordination and flexibility.
merous occasions using a variety of techniques In further analysis t-test for independent sam-
[14,15,3] . In last 30 years special attention to this ples for left and right leg was performed. Results

showed that Left and Right leg differed signifi- tion of its value as the predictor of the injury is open
cantly between tested levels in variables of knee [18,10]. Assessing muscle balance is considered im-
flexor muscle potential. These differences were portant, but independently, the peak moment ratios
in favor of Right leg. However, differences in provide limited amount of information.
balance (proprioceptive qualities) of basketball
players have not found. The structure of applied Conclusion
variables in factor analysis showed four isolated
main components: First component as factor of Muscle strength represents one of the main pa-
isokinetic potential (i.e. high projections in almost rameters of general physical condition, beside the
every isokinetic parameters except for H/Q ratio fact that is one of the most responsible parameters
for both legs). Second factor as combination of for sport results. In addition to maximal power, the
morphological characteristics, variables that con- correct strength ratio of different muscle groups,
cerns girths as well as balance variables. Third especially those related to the same kinetic chain is
factor is made of residual of morphological char- essential. In sample of subjects from different clubs
acteristics concerning longitudinal dimensional- presented in research, assumably, is not taken care
ity of lower extremities. Forth factor is residual of proper selection of basketball players, during the
of values in two remaining variables of isokinetic formation of youth selections. This is confirmed
potential of H/Q ratio for both legs. These given with facts of present study findings, where results
factors, with their predictive values, measured so- are showing large heterogenity of presented subject
phisticatedly, explain large proportion of variance, sample, especially for morphological characteris-
with 81.030%. This fact confirms the good psy- tics. Overall results have shown a muscle imbalance
chometric properties of instruments used. for knee flexor group, due to assimetry of stepping
It has been proved that bilateral imbalance in (dominant) compared to non-dominant leg. How-
strength especially of lower limb could be the ever, no imbalance for thigh muscles (quadriceps)
predictor of decreased performance or even the has been found, which can be explained as qonse-
predictor of higher injury risk. It has been stated quence of quality training process.
that bilateral deficit of quadriceps or hamstring
muscles greater than 10% is a milestone for in- Reference
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Is sufficient attention given worldwide to

construction rehabilitation in civil engineering
schools?
Ignacio Lombillo¹, Maria V. Biezma², Luis Villegas¹
1
Dept. of Structural and Mechanical Engineering, University of Cantabria, Santander, Spain,
2
Dept. of Science and Engineering of Materials, University of Cantabria, Santander, Spain.
Abstract fect buildings throughout their lifetime [1]. These

challenges mean that architectural heritage build-
The increasing demands in construction rehabili-
ings are subject to a number of difficulties in di-
tation (both from the point of view of safety and sus-
agnosis and intervention, limiting the application
tainability) require a new class of specialized Civil
of regulatory requirements and existing guidelines
Engineers with both technical and management
in the general area of construction. Therefore,
competences developed at the worldwide level.
the understanding, analysis and repair of historic
This paper studies and analyses the different
buildings constitute one of the remaining impor-
lecture contents related to construction rehabili-
tant challenges for modern technicians [2].
tation in Civil Engineering at worldwide level. It
In many countries, it is usual to act without de-
has been designed a survey taking into account
voting adequate resources to the study of the rea-
the most important variables in order to assess the
sons for the intervention being required, mainly
reality of rehabilitation in civil engineering work,
due to economic and time pressures. As a result,
studying each particular step. In this way, the fi-
there have been aggressive interventions, causing
nal product, building or rehabilitated construction,
a reduction in the historical value of a construction,
should maintain its structural integrity during its
or inappropriate interventions that do not solve the
useful life. We sent the survey to professors in 89
problem. It is therefore necessary to make some
universities in 30 countries in the five continents.
recommendations to ensure implementation of ra-
The aim was to promote the integration of Con-
tional analysis and rehabilitation methods.
struction Rehabilitation into the Civil Engineering
The peculiarities of existing structures, often
syllabus in higher education.
with a complex history, require the organization
The main conclusion is that construction reha-
of studies and proposals in well-defined phases,
bilitation is not sufficiently studied worldwide in
similar to those used in medicine (examination,
Civil Engineering Schools.
diagnosis, treatment and control). In addition, the
Key words: Construction Rehabilitation; Con-
methodological process followed should be in
struction Conservation; Cultural Heritage; Uni-
line with the recommendations proposed in the
versity; Civil Engineering.
International Council on Monuments and Sites
- ICOMOS Charter (2003) [3] and other official
1. Introduction guidelines (http://www.international.icomos.org/
en/charters-and-texts). As a result, intervention in
Modern societies consider the conservation of
old buildings requires special training of the tech-
cultural heritage a fundamental principle in cul-
nicians involved [4].
tural life. Nevertheless, analysis of existing build-
The building rehabilitation and maintenance
ings, especially in the case of historically signifi-
market is one of the most important economic
cant ones, creates challenges given the complexity
sectors in construction, especially in the most
of their geometry, the variability in the properties
developed societies. For instance, in Europe, in
of traditional materials, the different construc-
2010, rehabilitation and maintenance was a major
tion techniques, the absence of knowledge about
market, accounting for 28% of construction output
the existing damage, and how certain actions af-
with a value of 332·106 € [5]. In addition, there are

many other reasons as well as the purely economic may result from the failure of existing structures
ones, which indicate that the rehabilitation market due to their inadequate conservation can cause se-
has high growth potential in many countries: the vere consequences for the population and heritage.
growing social awareness that the conservation There are extreme situations and casuistry:
and enjoyment of built cultural heritage has ac- countries with no rehabilitation policy, countries
quired, the favorable prospects offered in certain that do not consider the possibility of traditional
areas by the cultural sector as an engine for ac- techniques. On the other hand, there is a remark-
tivity (Cultural Tourism), the progressive ageing able lack of basic knowledge about the behavior
of existing housing. Moreover, the rehabilitation of traditional materials, new components suitable
sector is a key topic in terms of sustainable urban for use and methods aimed at optimizing the dura-
growth: promoting low energy consumption (in bility of the rehabilitated structure.
contrast with demolition and new work), consum- In addition, the reasons for pathological process-
ing less material than new construction work, etc. es occurring in structures subject to rehabilitation
All these circumstances result in the need for are extremely varied, making it difficult to follow
specific training of the architects and engineers a model that serves as a general working protocol.
dedicated to this area, including civil engineers. The variables affecting these pathological process-
However, the definition of the basis of specific es, in turn, are very numerous and extremely com-
training that engineers involved in rehabilitation plex, since they can act synergistically.
should receive is not adequately dealt with [6], so At this point we must ask ourselves: When
their particular build-up is far from suitable for should a structure be rehabilitated? Is it more con-
this activity. venient to demolish the building and construct a
The purpose of engineering education research new one or to maintain the existing one? What
needs to extend beyond an interest in improving procedure should be adopted during the inspec-
an individual’s teaching, or developing a specific tion? Are the intervention proposals identical in
curriculum, by including a lot of questions that the all geographic locations? Moreover, we could add
teacher must be able to answer [7]. another question to all of these, why?
In practical terms, Civil Engineering educa- Civil Engineers, at the design level [10], should
tion must undergo significant changes, making be able to adopt an approach when answering these
Civil Engineers more creative and ready for the questions. We choose rehabilitation when, after an
challenges of the 21st century, adapting Civil exhaustive study of the existing pathological pro-
Engineers to the changing society and its evolv- cesses, we have objectively determined that the
ing needs (i.e., environmental protection, energy structure has lost the properties for which it was
independence, safety, etc.) [8]. A common theme designed, and presents a potential risk of failure,
in the courses is that engineering is an integrative with the socioeconomic impacts that this entails.
process and that curriculum innovation therefore Engineers should propose the use of the most
should be toward this end [9]. appropriate therapy for each case, always seeking
In this paper, we analyze the current dedication to a balance between rehabilitation process optimiza-
rehabilitation of construction within the Faculties or tion and cost [11]. In turn, those in charge of the
Schools of Civil Engineering worldwide, to provide rehabilitation work, usually also Civil Engineers,
sufficient input data to later reflect on the proposal should ensure the proper execution of work, with-
of a universal educational program with the aim of out skimping on resources [12]. This is of great sig-
joining forces and creating common strategies for nificance in highly industrialized countries, where
action in a building in need of rehabilitation. economic impact is the most important factor.
Within this working scheme, we must pay spe-
2. Motivation for the work cial attention to buildings whose need for rehabili-
tation and maintenance is especially significant due
We should see the rehabilitation of buildings as a to their status as World Heritage sites. These build-
necessity in the cultural, social, economic and envi- ings are included in the United Nations Education-
ronmental policy of any country, as the impact that al, Scientific and Cultural Organization (UNESCO)

List [13]. Nevertheless, there are recent buildings, metal or concrete. So the article tries to provide
which although not unique from the architectural an overview of the general approach in different
point of view, must be rehabilitated, sometimes countries, taking into account the different con-
simply due to changes in functionality or habitabili- struction types.
ty. Their lesser singularity does not preclude requir- We have based the methodology used in this pa-
ing similar exhaustive analysis. per on sending a carefully designed questionnaire,
In short, a rehabilitated structure will be a com- shown in Figure 1, to teachers from 89 universities
plex system, formed by the remains of old materi- in 30 countries in five continents. We have based
als, damaged or undamaged, and new materials, our criterion for selection of countries on the exis-
sometimes with different chemical compositions tence or nonexistence of World Heritage Sites listed
and properties. The result must have absolute by UNESCO. The selection criterion for the univer-
structural integrity, so it is necessary to develop sities in each country was essentially the university
a detailed study that will guarantee the suitability ranking, both worldwide, and within each continent
of the system to support service loads and guaran- and country concerned. For the selection of teach-
tee durability under the prevailing environmental ers, the criterion was teaching and research activities
conditions [14], while ensuring the compatibility related to the activity under study, namely rehabili-
of all materials used [15]. tation within Civil Engineering. We obtained their
The Civil Engineer must obtain the multidis- Email contacts either by consulting the websites of
ciplinary knowledge base necessary to carry out each university, or searching the database where the
optimal interventions on existing buildings in the authors of the most relevant research work on these
University. Teachers must motivate students to ac- issues appear. It should be noted that in a very large
quire skills for the rehabilitation of the building, number of schools this subject is not dealt with at
since it is affected by many variables. This situa- the teaching level, or from the quantitative, qualita-
tion requires clear objectives and methods coordi- tive or mixed viewpoint, as some authors working
nated with the help of the specialists experienced in the field of exploration of teaching methods sug-
in each particular area [16]. gested [17].
Therefore, we consider that this issue should
be obligatorily in Civil Engineering courses both
at bachelor’s degree and postgraduate levels, as
there is a growing demand for the rehabilitation
of buildings.
In this paper, after arduous logistical work,
based on detailed analysis of the questionnaire de-
signed by the authors from their experience, and
answered by teachers from around the world, it
has been concluded that rehabilitation of build-
ings is not sufficiently addressed in the Schools of
Civil Engineering worldwide.
3. Methodology used in the development of

the article
The aim of this study was to determine, the
dedication to construction rehabilitation that ex-
ists worldwide in universities having Faculties or
Schools of Civil Engineering. Obviously, the fo-
cus of this issue is very different when consider-
ing old buildings that are mainly based on wood Figure 1. Model of questionnaire
and masonry structures, or newer ones based on

The questions included in the questionnaire To perform the study, we initially considered
are a reflection of the preference and content countries with the highest number of listed build-
given by each teacher responsible for that subject ings (Figure 2), or in which these constructions
in the university, so we can see it as a novel, un- were of very high cultural significance worldwide
published study. in terms of: their age, having served as a model
for other later buildings due to the techniques and
3.1. Selection of countries based on the procedures followed, or their location. Europe is
UNESCO World Heritage Sites the continent that has most sites listed by UNES-
CO and wherein we found the broadest selection
UNESCO is a global body dedicated to review- of building types.
ing the need to select historic monuments, land-
marks, or recent buildings, due to their artistic and 3.2. Selection of universities based on QS
cultural value. As of March 2012, these include World University Rankings 2010 -
725 cultural, 183 natural and 28 mixed properties Engineering & Technology
in 153 participant countries.
Based on the QS World University Rankings
2010 - Engineering & Technology Database, we
selected universities in those countries with the
largest number of heritage sites listed by UNES-
CO, or those which, while having little relevant
heritage, occupy relevant positions in the ranking.
Moreover, in the case of countries that do not have
universities listed in the world rankings, we have
included those that are most significant in their
continent and/or country.
In Europe we contacted a total of 33 universi-
ties in 11 countries, in Asia, 17 universities, in 5
countries. In America we contacted 25 universi-
ties in 6 countries and in Africa, 11 universities
Figure 2. Countries selected for the study, detailing
in 6 countries. Finally, in Oceania, we contacted
the total number of Cultural Sites (UNESCO) and
a total of 3 universities in 2 countries. For each of
the universities we sent the survey to for each one
the countries, Table 1 summarizes: The number of
buildings or monuments listed by UNESCO, the
number of universities surveyed, and the name of
each and the number of surveys received.
Table 1. List of universities surveyed in the study

Total Number of Surveys
Country Surveyed Universities
Cultural sites Universities received
Politecnico di Milano // Università di Roma “La Sapienza” //
Italy 44 4 2
Università di Napoli Federico II // Università di Padova
Universidad Politécnica de Madrid // Universidad
Spain 35 4 Politécnica de Cataluña // Universidad Politécnica de 6
Valencia // Universidad de Cantabria
École des Ponts ParisTech // Université Toulouse III, Paul
France 33 5 Sabatier // Université Grenoble, Joseph Fourier // Ecole 1
Centrale de Lyon // Université Lille 1
Technische Universität München // Technische Universität
Germany 33 3 2
Berlin // Technische Universität Dresden

National University of Singapure // Tsinghua University // Peking

China 33 7 University // National Taiwan University // Tongji University // 0
Shanghai Jiao Tong University // Nanjing University
Universidad Nacional Autónoma de Méjico // Tecnológico
de Monterrey // Universidad Autónoma Metropolitana
Mexico 27 6 2
// Universidad Autónoma de Yucatán // Universidad
Iberoamericana // Universidad Autónoma de Nuevo León
Indian Institute of Technology Bombay // Indian Institute of
India 23 3 0
Technology of Delhi // Indian Institute of Technology Kanpur
University of Cambridge // Imperial College London //
United
22 5 University of Manchester // University of Edinburgh // 3
Kingdom
University of Bath
National Technical University of Athens // Aristotle
Greece 17 3 7
University of Thessaloniki // University of Patras
Iran 13 2 University of Tehran // Isfahan University of Technology 1
Czech Rep. 12 1 Czech Technical University in Prague 2
University of Tokyo // Kyoto University // University of
Japan 12 4 1
Osaka // Ritsumeikan University
Poland 12 1 Warsaw University of Technology 0
Universidade do Coimbra // Universidade do Porto-FEUP //
Portugal 12 4 4
Instituto Politécnico de Lisboa // Universidade do Minho
KTH, Royal Institute of Technology // Chalmers University
Sweden 13 2 3
of Technology
Universidade Estadual de Campinas // Universidade de
Brazil 11 4 São Paulo // Universidade Federal de Pernambuco // 2
Universidade Federal do Rio Grande do Sul
Ethiopia 6 2 Addis Ababa University // Mekelle University 0
Morocco 8 2 Al Akhawayn University Ifrane // Université Cadi Ayyad 0
Turkey 10 2 Istanbul Technical University 2
Massachusetts Institute of Technology, MIT // Harvard
United University // University of California Berkeley // California
States of 8 9 Institute of Technology Caltech // Carnegie Mellon 0
America University // Cornell University // Michigan State University
// University of California San Diego // Yale University
Cuba 7 1 Universidad de la Habana 1
Ecole Nationale d’Ingenieurs de Sfax // Ecole Nationale
Tunisia 7 2 1
d’Ingenieurs de Tunez
Pontificia Universidad Católica del Perú // Universidad
Peru 8 4 Peruana de Ciencias Aplicadas // Universidad Antenor 3
Orrego // Universidad de Piura
Egypt 6 1 Cairo University 0
Argentina 3 1 Universidad Tecnológica Nacional de Mendoza 2
South Africa 4 1 University of Pretoria 1
University Saad Dahlab of Blida // Université Mentouri –
Algeria 6 3 Constantine // Université des Sciences et de la Technologie 1
Houari Boumediene
Australia 3 2 University of Melbourne // University of Queensland 0
Jordan 3 1 Jordan University of Science and Technology 1
New Zealand 0 1 University of New Zealand 0
30 431 89 48

4. Evaluation of the current state of for rehabilitation of steel and cast iron structures
education in rehabilitation worldwide which only 34% of respondents deal with. Thus,
Results and discussion explanation of general and methodological con-
cepts, examples of pathology reports and previous
The first piece of data, before any processing of
studies, and rehabilitation of concrete structures
the surveys collected, is that we received a signifi-
are the most commonly discussed topics at bache-
cant number of responses in which it is acknowl-
lor’s degree level. This is confirmed by more than
edged that rehabilitation of buildings is not taught
70% of the surveys. In postgraduate study, as well
in Faculties of Civil Engineering. Furthermore,
as some of the above, over 70% of respondents
we appreciated a greater intensity of participation
explain examples of intervention in old buildings.
in certain European and Latin American countries.
In contrast, the least studied topics are rehabilita-
Focusing on the surveys received (a total of 48,
tion of earthworks (17% in bachelor’s degree and
35 bachelor’s degree level and 13 postgraduate), it
8% in postgraduate), strategies for monitoring and
will be presented the results obtained below, com-
control of buildings (37% and 31% respectively),
menting on the most characteristic aspects. Simi-
concepts about the history of construction (37%
larly, it should be mentioned that it is complicated
and 46%), aspects related to intervention in foun-
to unify the responses due to the priority that each
dations of buildings, whether historic or modern,
teacher / syllabus gives to a particular topic [18].
and as a matter of concern, rehabilitation of steel
At global level, considering the average values
and cast iron structures (34% bachelor’s degree
around the world (Figure 3), education about heri-
and 46% postgraduate).
tage rehabilitation is more extensive in postgradu-
The first conclusion is that it seems reasonable
ate study. Only two topics have a relatively high
to balance the preference with which different top-
priority at bachelor’s degree level. Specifically,
ics, which might be included in the syllabus of a
teachers deal with the topic related to the rehabili-
building rehabilitation course, are dealt with.
tation of concrete structures at bachelor’s degree
Figure 4 shows the preference in the subjects
level in 80% of the surveys received, while in
surveyed, at bachelor’s degree level, discriminat-
postgraduate the value is 62%. Similarly, teachers
ing among continents (no surveys were received
include building maintenance strategies in 69% of
from Oceania). We can see that the study is more
the bachelor’s degree surveys received, compared
comprehensive in Europe and, to a lesser extent,
to 46% in postgraduate.
in America compared to Asia and Africa, while we
can see that teaching in history of construction and
rehabilitation of old buildings has, in general, less
dedication than other topics.
Figure 3. Radial diagram of the teaching prefer-

ence in different topics related to construction
rehabilitation worldwide (per unit): 48 surveys
In addition, not all the topics covered in the sur- Figure 4. Radial diagram of teaching preference
vey are taught with the same preference. At bach- at bachelor’s degree level in different topics re-
elor’s degree level, there is less content related to lated to rehabilitation of construction in different
old buildings compared to modern ones, except continents (per unit)

4.1. Sectors by continent

Figure 5 shows the preference of dedication to
the topics surveyed in Europe. In bachelor’s de-
gree level is that teachers concentrate more on ex-
plaining interventions in modern buildings, while
at postgraduate level they devote more time to old
buildings. We should highlight the almost total lack
of attention to the topic of earthen construction re-
habilitation, although in certain European countries
(e.g. Spain) there is a rich heritage of constructions
with this material. Interventions on foundations of Figure 6. Radial diagram of teaching preference
old and modern buildings and the problem of mois- in different topics related to construction reha-
ture and control and monitoring strategies for exist- bilitation in America (per unit)
ing buildings also receive little attention.
Figure 7. Radial diagram of teaching preference

Figure 5. Radial diagram of teaching preference in different topics related to construction reha-
of diverse topics related to construction rehabili- bilitation in Africa (per unit)
tation in Europe (per unit)
Figure 6 shows the preference of dedication in
the topics surveyed in America. The most signifi-
cant aspect is that both at bachelor’s degree and
postgraduate levels, teachers pay more attention to
explaining intervention in modern constructions.
Practically no attention is given at bachelor’s de-
gree level to rehabilitation of steel and cast iron
structures (only 14% of participants dealt with this
subject). In general, the strengths are in the prefer-
ence with which they deal with concepts (71% and Figure 8. Radial diagram of teaching preference
100% at postgraduate level), general methodology in different topics related to construction reha-
(57% and 100%), and rehabilitation of concrete bilitation in Asia (per unit)
structures (71% and 100%).
Figure 7 shows the preference of dedication in Figure 8 shows the preference of teaching dedi-
the topics surveyed in Africa. The most important cation in the topics surveyed in Asia. The teaching
circumstances are the low integrity of the teaching focuses on explaining concepts and general meth-
given, both at bachelor’s degree and postgraduate odology of intervention, rehabilitation of concrete
levels. Most of the syllabus consists in rehabilita- structures and building maintenance strategies. They
tion of modern buildings with a little information reinforce this teaching by explanation of reports,
about general methodology and masonry structures. previous studies and examples of intervention. The

reduced training on traditional materials used in old

building (masonry, wood and earthwork) and the
lack of dedication to the rehabilitation of steel and
cast iron structures should be highlighted.
4.2. Analysis by level of development of each

country
If we base the analysis on the degree of de-
velopment of the countries studied, a classifica-
tion can be made according to two indicators: per
capita income in each country (http://es.wikipedia. Figure 9. Radial diagram of the preference of teach-
org/wiki/Archivo:World_Bank_income_groups. ing at bachelor’s degree level of different topics
svg. Accessed February 21, 2012) and the human related to construction rehabilitation, distinguishing
development index (http://es.wikipedia.org/wiki/ between more developed countries and others
Archivo:2010_UNDP_Human_Development_Re-
port_Quartiles_.png. Accessed February 21, 2012). 4.3. Analysis according to catalogued heritage
Based on these criteria, we can establish two of each country
major groups: on the one hand, countries with
greater development (those in the higher income Finally, we also compared the treatment of dif-
group or with very high human development) and, ferent topics depending on the catalogued heritage
on the other, other countries. Based on the above, of the countries chosen (Figure 10). We established
we grouped the countries surveyed as follows: three main groups: first those countries with more
– Countries with a high level of development than 20 buildings or monuments listed by UNESCO
(developed countries): Australia, Czech Rep., (China, France, Germany, India, Italy, Mexico, Spain
France, Germany, Greece, Italy, Japan, New and the United Kingdom), a second for all countries
Zealand, Poland, Portugal, Spain, Sweden, with between 10 and 20 (Brazil, Czech Republic,
United Kingdom, United States of America. Greece, Iran, Japan, Poland, Portugal and Sweden),
– Other countries: Algeria, Argentina, Brazil, and a third group composed of countries with fewer
China, Cuba, Egypt, Ethiopia, Iran, India, than 10 buildings listed by UNESCO (Algeria, Ar-
Jordan, Mexico, Morocco, Peru, South gentina, Australia, Cuba, Egypt, Ethiopia, Jordan,
Africa, Tunisia, Turkey. Morocco, New Zealand, Peru, South Africa, Tuni-
sia, Turkey, the United States of America.
We show the bachelor’s degree level survey re-
sults received (22 in the case of developed coun-
tries and 13 for the others) in Figure 9.
The treatment of the contents explained is more
comprehensive in more developed countries, al-
though the differences are not excessive. Almost
all subjects had a higher preference in teaching in
more advanced countries. We should highlight the
limited treatment given within the block denomi-
nated “other countries” to topics such as the reha-
bilitation of steel and cast iron structures, notions
about the history of construction, wood structures,
arches, vaults and domes. In contrast, explanation Figure 10. Radial diagram of the preference of
of general notions, both conceptually and method- treatment at bachelor’s degree level of different
ologically, along with the rehabilitation of concrete topics related to construction rehabilitation, de-
structures, receive a lot of dedication in all cases. pending on the country’s catalogued heritage sites

Taking into account the results of this study, the dologies for the seismic safety assessment
fact that a country has a larger number of heritage of constructions. Seismic strengthening
sites listed by UNESCO is not a reason in itself solutions for old masonry buildings and for
for rehabilitation teaching to be more integrated reinforced concrete buildings.
and intense.
5. Conclusions
4.4. Other topics taught
Currently, intervention in historic buildings
In the survey we sent to teachers involved in remains one of the most important challenges for
the possible teaching of Construction Rehabilita- modern technicians. In addition, rehabilitation and
tion in Civil Engineering Faculties (Figure 1), we maintenance of buildings is one of the most impor-
included a section where those interested could tant economic segments in the construction sector.
enumerate other content that they teach, comple- If, in addition to this, we take into account that the
mentary to the more general content contemplated rehabilitation market has high growth potential in
in the survey. This section summarizes the infor- many countries, we can conclude that this topic is
mation collected in the surveys related to this in- already an important niche activity and, therefore,
formation (13 at bachelor’s degree level and 6 at it constitutes work which Civil Engineers should
postgraduate level). not ignore.
– Criteria and principles for conservation of Consequently, there is a compelling worldwide
architectural heritage. need for specialized teaching of Civil Engineers
– The importance of identifying the structural engaged in this field. The universities should re-
system. consider the base of multidisciplinary knowledge
– Rapid Visual Screening Procedures. necessary to carry out optimal interventions in ex-
– Assessment of Existing Structures: In- isting buildings. In this sense, we should motivate
situ (Non-destructive inspection and our students to acquire skills related to construc-
Monitoring), in-laboratory investigation tion rehabilitation. Therefore, we consider this
techniques, and calculation techniques. topic is essential in the syllabus of Civil Engineer-
– Evaluation of existing structures through ing at bachelor’s degree level, particularly in spe-
structural integrity methods. cialization in construction, due to the increasing
– Provisional scaffolding. demand for construction rehabilitation.
– Demolitions: Types of demolition, work A first step in designing the strategy to follow,
previous to demolition, demolition methods, which we should translate into a course program,
and equipment for carrying out demolition. is the analysis of the current dedication to this top-
Protection measures. ic within the Faculties or Schools of Civil Engi-
– Processes of degradation of structural neering worldwide. Therefore, the main objective
materials: prediction models. of this study was to deepen that knowledge. For
– Special materials adopted to rehabilitate or this purpose, we contacted a total of 89 universi-
strengthen structures. ties in 30 countries, spread across the five conti-
– Mechanics of masonry in compression, nents, from which 48 surveys were received. Due
tension, shear, out-of-plane bending. to, on the one hand, the lack of answers and, on the
– Surface protection: Masonry, wood, other, the high number of responses stating that
concrete, steel and cast iron / Corrosion. they did not address construction rehabilitation
– External building elements (roofs and in the Civil Engineering syllabi, we can conclude
facades) and internal elements and finishing. that in a very large number of faculties they do not
– Humidity problems in modern buildings / deal with this topic at the teaching level.
Ventilation design / Rising Damp. Globally, we can see that the topics that shape
– Seismological Engineering. Effects of the field of knowledge of architectural heritage
earthquakes on constructions: Pathological rehabilitation are dealt with more completely at
processes from recent earthquakes. Metho- postgraduate level, with the exception of the reha-

bilitation of concrete structures. The little dedica- References

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E-mail: ignacio.lombillo@unican.es

Ranking and managing business goals of

manufacturing organizations by balanced
scored approach under uncertainties
Danijela Tadic1, Predrag Pravdic1, Zora Arsovski2, Slavko Arsovski1, Aleksandar Aleksic1
1
The Faculty of Mechanical Engineering, University of Kragujevac, Serbia,
2
The Economic Faculty, University of Kragujevac, Serbia.
Abstract Only about 35 percent of the 5,000 largest firms

The business goals on each perspective are de- used the BSC [9], which is more than the numbers
scribed by knowledge and experiance of manage- reported by [10] where is found that about a half
ment team of this perspective. For each industry, of all companies using BSC also use causal maps.
business goas are defined, separetely. In this paper, As profit organizations do their business on
the fuzzy rating weights of business goals of each rapidly and continually changing markets, the au-
decision maker are described by linguistic expres- thors maintain that BSC method modification is a
sions which are modelled by a triangular fuzzy necessity. In this paper, BSC method modification
numbers. Weight of each business goal is calcu- is performed in domain of modeling of business
lated by using proposed fuzzy Delphi method. The goals on all perspectives. However, in literature,
proposed model is illustrated by an example with there are no papers which treat the problem of
real data of profit manufacturing firms. determining business goals weights within BSC
Key words: business goals, BSC approach, method. Therefore, the authors find the proposed
fuzzy sets, fuzzy Delphi method model of business goals modeling within BSC
method to be one of the paper contributions.
The problem of defining different item weights
1. Introduction
was considered in numerous papers [11-12]. It can
The conceptual framework of the Balanced be realistically posed that management teams ex-
card Approach (BSC) was introduced by Kaplan press their estimations by linguistic expressions.
and Norton [1-8] for the purpose of designating, In this paper, linguistic expressions are modeled
evaluating and measuring factors that drive an or- by applying fuzzy set theory [13]. Fuzzy set the-
ganization’s performance. For-profit seeking cor- ory can be used for modeling all terms which are
porations, the financial perspective provides clear hard to define precisely and enables us to emulate
long-run objectives [3]. the human reasoning process and make a decision
The Financial Perspective covers the financial based on vague or imprecise data in [14].
objectives of an organization and allows managers The paper is organized as follows. Section 2
to track financial success and shareholder value. deals with the review of literature on determining
The Customer Perspective covers the customer item weights in different research domains. Mod-
objectives such as customer satisfaction, market eling and calculating of business goal weights on
share goals as well as product and service attri- each perspective by proposed fuzzy Delphi method
butes. The Internal Process Perspective covers is given in Section 3, whereas Section 4 gives an
internal operational goals and outlines the key illustrative example. Section 5 sets the conclusions.
processes necessary to deliver the customer objec-
tives. The Learning and Growth Perspective cov-
2. Literature review
ers the intangible drivers of future success such
as human capital, organisational capital and infor- This Section offers a concise retrospective
mation capital including skills, training, organiza- overview of papers which treat the problem of de-
tional culture, leadership, systems and databases. fining different item weights.

In [15] it is supposed that every decision maker i=1,..,I; j=1,..,J; k=1,..,K; n=1,…,N; e=1,..,E;
gives fuzzy rating of criteria weights. Their esti- ~e
mations can be represented as positive trapezoi- wr ∈ R.
dal fuzzy numbers. According to the nature of the
problem, the authors are of the opinion that it can These triangular fuzzy numbers are given in
be supposed that goal weights on every perspective the following way:
are set as a group-decision problem. Fuzzy rating – least important (y;1,1,1)
of each decision maker is expressed by aforehand
– little important - (y;1.5,2, 2.5)
defined linguistic expressions which are modeled
by triangular fuzzy numbers, with analogy to the – fairly moderately important - (y; 2,3,4)
above mentioned papers. Authors suggest a new – moderately important - (y; 3.5,5,6.5)
method for determining business goal weights – fairly important - (y; 6, 7, 8)
based on Dephi method. It is held that suggested
methodology enables more precise determination –– highly important - (y; 7.5, 8, 8.5)
of business goal weights in relation to methodolo- – most important - (y; 8, 9, 9) .
gies proposed in papers which are to be found in
literature. Fuzzified Delphi method can be denoted 3.2 Fuzzy Delphi method
as one of the main contributions of this paper.
In this paper, Delphi method is proposed and is
realized in the following phases.
3. Problem statement Phase 1. Each decision maker of a management
The paper further explains the problem of team gives own estimations which are described
ranking business goals. Business goals on each by one out of seven defined linguistic expressions.
perspective of a profit organization are defined ac- Step 2. Estimation analysis is realized by man-
cording to literature data [1-4]. In this paper, the agement team in the following steps:
considered problem is stated as a group decision- (1) the estimation mean is calculated:
making problem under uncertainties. Period of ~I 1 E ~e
time for evaluating and ranking business goals is wr = ⋅
E ∑wr ,
defined in advance. e =1
r=i, j, k, n, i=1,..,I; j=1,..,J; k=1,..,K; n=1,…,N

3.1 Modeling of business goal weights
~I ~
Relative importance of the considered business (2) Distance w r from each w r , with which two
goals on each perspective rarely changes. Gener- fuzzy number inter-section is non-zero, is calcu-
ally, the relative importance of determined busi- lated, r=i, j, k, n, i=1,..,I; j=1,..,J; k=1,..,K; n=1,…
ness goals on each perspective is different and es- ,N. Distance between two fuzzy numbers is a non-
timated on the basis of knowledge and experience negative function as follows [16].
of quality managers. (3) Decision makers recieve the written report
In this paper, fuzzy rating of management on the analysis results.
teams can be described by using one out of seven Phase 3. In the Phase 2, the management team
linguistic expressions. These linguistic expres- give their estimations with respect to the results
sions are modeled by triangular fuzzy numbers, obtained in Phase 1. Result analysis in this round
~e
is performed as Phase 2.
wr = (x; l r , m r , u r ) where: Phase 4. Results gained in Phase 2 represent
integrate expert opinions based on the reached
e- index of the member of a management team; consensus. Phase 3 is normally repeated until a
E is the total number of members of management consensus is reached on a particular topic [17].
team The consesus being reached, the relative impor-
r-index of the considere perspective; r=i, j, k, n, tance of a business goal r, r = i, j, k, n, i = 1, .., I;

~
Weight values gained for the other considered
j=1,.., J; k = 1,..,K; n = 1, …, N is denoted as wr. criteria are:
Relative weights vector of business goals be- ~
longing to the Learn and Growth Perspective is w 11 = (1.7 5, 3.1, 4.4 5) ,
gained according to the procedure described in ~
Section 3.2. It is denoted as w 21 = (5.7 5, 7.1, 8.4 5) ,

~
~ ~ ~  w 3 1 = (6. 9, 7.9, 8. 9 ) ,
w 4 =  w 1 , ... w n , ... w N  .
  ~
w 4 1 = (5.2 5, 6. 7, 8.15) ,
Weights vectors of business goals which belong ~
to: the Internal Processes Perspective, the Custom- w 5 1 = (6.3 5, 7. 6, 8. 7 5) ,
er Perspective and the Financial Perspective are ~
w 6 1 = (3. 0 5, 4.1, 5. 3 5)
denoted as w 3 , w 2 , and w 1 , respectively, so that: ~
w 1 2 = (1.3 5, 2. 7, 4. 0 5) ,
~  ~  ~ 
w 3 =  w k  1 x K , w 2 =  w j  1 x J , w1 =  w i  1 x I . ~
w 2 2 = (6. 2 5, 7. 5 , 8.7 5) ,
     
~
w 3 2 = (6. 1, 7. 4 , 8. 7 ) ,
4. Case study ~
w 4 2 = (4.0 5, 5. 5, 6. 9 5) ,
Goals for each perspective ([1],[5-6]), for the
case study presented in this paper, have been cre- ~
w 5 2 = (3 .5 , 5 , 6 . 5)
ated on the basis of the knowledge gained from
examining manufacturing firms given in leterature ~
w 13 = (5.9 5, 7.3, 8.6 5) ,
(about 30 firms) as well as more than 30 firms op-
~
erating in Serbia. The firms taken into consider- w 2 3 = (1. 2 5, 2. 4 , 3. 6 5) ,
ation in Serbia, are mainly small and middle-sized ~
companies. All businesses from Serbia are of a w 3 3 = (1. 6 , 3 , 4. 4 ) ,
similar structure, processes, organization, func- ~
tions and activities to those businesses analysed w 4 3 = (2.6 5, 4.1, 5.5 5) ,
in the literature. The data are based on six months’ ~
observation of manufacturing firms. w 5 3 = (2. 3, 3. 8 , 5. 3) ,

Further are given average weights of business ~
w 6 3 = (2. 5, 4, 5.5)
goals on the Learn and Growth Perspective. In a
similar way, the business goals of the rest perspec- ~
w 1 4 = (4. 7, 6. 2 , 7.7 ) ,
tives are estimated
fairly important most important x3 most important x3

moderately important x2 highly important x4 highly important x2
n=1 fairly moderately important x2 n=3 fairly important n=5 fairly important
fairly moderately important x 2 x2 x3
least important x2 moderately important moderately important x2
most important
most important x2 highly important x3 fairly important
highly important x2 fairly important x2 fairly moderately
n=2 n=4 n=6
fairly important x3 moderately important x2 important x5
moderately important x3 fairly moderately important x2 least important x2
fairly important

~
tegic importance for business operations. Goals
w 2 4 = (5. 6, 7, 8. 5) , defined on this perspective have similar develop-
~
ment values. Further follows a short overview of
w 3 4 = (3. 5, 5, 6. 5) , basic management measures to be undertaken for
~
improving progress of business goals belonging to
w 4 4 = (4. 3, 5. 8 , 7. 3) , the Internal Processes Perspective.
~
The second place of the considered goals in taken
w 5 4 = (1 .7, 3. 2 , 4. 7 ) , by the Financial Perspective goals. The most impor-
~
tant goal on this perspective is Maximizing free cash
w 6 4 = (1.6 5 , 3. 1, 4. 5 5) flow, which is achieved by better customer manag-
ing which further improves the cash flow efficiency,
Applying BSC programme, the following re- e.g. by applying up-to-date JIT methods. The third
sults are achieved: place is taken by Customer Perspective goals, which
are of the almost the same development importance.
The results imply that the management team of this
perspective should focus thier attention to all marked
goals of this perspective and undertake numerous
and various management measures which enable im-
provement of the named goals of Customer Perspec-
tive [6]. Goals set on the Learn and Growth Perspec-
tive have the least, but not negligible significance for
improving effectiveness of a profit organization busi-
ness operations. This perspective rank is expected as
all considered organizations operate in Serbia which
is a developing country. With the increased level of
economy growth, the importance of this perspective
can be expected to rise, as well as the goals defined
on this perspective.
6. Conclusion
Changes occurring in business environment
cause further changes in organization and man-
agement of profit companies. One of the ways to
improve the effectiveness of management is the
application of BSC method which enables an ex-
act way of achieving progress of each identified
5.1 Discussion goal on all organizational perspectives.
In general, determining goals priority on each
In this paper, by applying fuzzified BSC meth- perspective, as well as determining the growth of
od, the Internal Processes Perspective is shown each perspective of a profit organization adheres
to be the most important, though the Financial to uncertain and imprecise data which cannot be
Pespective could have been expected to be of the expressed by numerical values. It is appropriate
utmost importance, having in mind that profit or- to use linguistic expressions instead of numerical
ganizations have been observed. The achieved re- values for describing goal weights. In this paper,
sult implies that it would be neccessary to form weights of business goals are modeled by trian-
a special organizational unit (The Internal Pro- gular fuzzy numbers. Weight of each treated goal
cesses Perspective) which deals with problems of is obtained by fuzzified Delphi method which is
research and development which are of the stra- proposed in this paper.

This research work can be extended by adding Between Corporate Strategy and Business Process
more business goals, as well as adding different Management”, Int. J.of Quality Research, 2009;
2(4): pp. 317-325.
perspectives, depending on: (1) the considered or-
ganization type, (2) considered industry sector, (3) 12. Tadić D., Stefanović M., Milanović D.:”Fuzzy Ap-
corporate policy which is implemented within an proach in Evaluation of Operations in Food Pro-
organization, (4) internal and external changes, etc. duction”, Int. J.of Quality Research, 2007; 1(2): pp.
Also, it should be mentioned that the proposed mod- 97-104.
el presented in this paper can be easily extended to 13. Zimmermann H.J., “Fuzzy set Theory and its Ap-
analysis of other management decision problems in plications”, Lower Nijhoff Publishing, USA: Bos-
different industrial engineering research areas. ton, 1996.
14. Kaur P., Chakrabortyb S.: “A New Approach to

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M.:”Simulation of Quality Goals: A Missing Link

Measurement of investment portfolio

performances
Milivoje Davidovic1, Husein Mehmedovic2, Goran Sijan1, Darko Marjanovic1
1
The Faculty of Economics Subotica, Republic of Serbia,
2
High School of Economics Gracanica, Bosnia and Herzegovina.
Management of investment portfolio includes The investment portfolio is a collection of se-
technical and fundamental analysis, selection curities held by investors. The main motive for
of appropriate securities, designing the optimal investing in financial instruments is a profit poten-
portfolio structure, portfolio performance mea- tial of certain investments: fixed or variable yield
surement, monitoring and portfolio rebalancing. and capital gains. In addition, one of the motives
Investing in securities involves active, balanced of investments in securities is maintaining an ap-
or passive investment strategies. In addition, the propriate level of liquidity by reducing opportu-
structure of investment portfolio consists of in- nity cost. So, the portfolio management leads to
vestment securities and trading book. Investment the collision of two of the three basic investment
securities include liquid part that is a secondary principles - principles of liquidity and profitability.
liquidity reserve and the income part which is held Globalization, deregulation and IT develop-
to maturity in order to achieve the greatest possible ment has transformed the economic environment
profit. Trading book are securities that are traded across the globe. Investment in financial instru-
continuously in order to make a profit according ments reflects the changed economic environment
to current price differences. Investment activities in which financial institutions diversify their ac-
are based on information about rates of return, the tivities [1]. In this way, the demarcation line be-
degree of risk, economic forecasts and risk prefer- tween operations of banks, insurance companies,
ences. After creating an optimal portfolio that is mutual funds, hedge funds, financial companies is
on the efficiency frontier, investment managers removed. In the competitive “all against all” it is
perform ongoing monitoring by measuring per- necessary to continuously measuring and monitor-
formance of securities. Investment instruments ing performance of investment portfolios in order
and tools for evaluating portfolio performance to achieve satisfactory profitability at an accept-
are quite developed: Sharpe’s index, Treynor’s in- able level of risk. Financial theory and practice
dex, Sortino ratio, Jensen index, Modigliani alpha have developed several techniques and models
index, CAPM and APT. Using these indices and to measure the performance of securities. All of
models, portfolio managers assess portfolio per- these techniques and models are based on the real-
formance and redesign the portfolio structure to ized or expected rate of return that will reject cer-
bring current portfolio to the efficiency frontier as tain investments in the period of holding. Also, an
close as possible. Usability of these models and important determinant is variance of realized from
techniques are in creating and maintaining an op- expected rate of return, measured by standard de-
timal investment portfolio in accordance with the viation. Effective portfolio management is based
preferences of investors in terms of yield and risk. on active, balanced and passive investment strate-
Key words: investment portfolio, Sharpe’s in- gy in which investors in relation to their risk aver-
dex, Treynor’s index, Sortino ratio, Jensen index, sion and trade-off between return and risk trying to
Modigliani alpha index, CAPM and APT create their own portfolio that is optimal, efficient,
diversified and compatible with their preferences.
They apply a variety of models and technique of
portfolio performance evaluation - CAPM, APT,
Sortino’s index, Sharpe’s index, Jensen’s index to

create an efficient portfolio - the portfolio at the b) Structured-active investment strategy

efficiency frontier with highest level of individual (active strategy of risk control) - this
utility. The ultimate goal of portfolio managers strategy is used by investors who invest in
is continuous measurement of portfolio perfor- stocks, also called the index plus strategy,
mance, monitoring and portfolio rebalancing in but investors continue to focus on risk
order to achieve superior performance in the buy- management in relation to the benchmark
ing and selling securities. (e.g. a market index); in this strategy the
investor can allocate assets in stocks of
2. The aim of the paper companies from different sectors and in line
with estimates reallocate funds by selling
The aim of this paper is to outline the basic stocks of companies from one sector and
techniques and models to measure the perfor- by buying stocks of companies from other
mance of investment portfolios that are used by sectors; this sector rotation strategy still
banks, mutual funds, hedge funds, insurance com- produces a large active risk, since it involves
panies. These models and techniques are extreme- a highly concentrated investment position
ly important when making investment decisions. in relation to particular sectors; however,
Create and manage an investment portfolio is the it is also a passive-oriented strategy, since
multiphase process. First, investment managers the investor’s intention to keep the total
create an appropriate structure of the investment exposure in relation to investment at the
portfolio according to their preferences in terms of level of benchmark (exposure in relation to
yield and risk [2]. In relation to risk attitude they the market index).
implement different investment strategies. The c) Passive investment strategy – it involves
strategy of investment in securities is based on creating a portfolio with the same risk level
the basic investment principles, respecting trade- as a whole market; the most popular way to
off between risk and return, or the maturity com- balance the portfolio within this strategy is
position of the securities. If taken as a criterion to invest in all stocks that compose a market
trade-off between risk and return, we distinguish index; the investment manager does not take
between three strategic alternatives: [3] into account only the volume but also the
a) Active investment strategy - this strategy structure of investment portfolio: he buys
involves the use of trade account funds all the financial instruments that constitute
in order to achieve profitability. Active a market index, forming the structure of
approach to portfolio includes cross- the weights of individual investments in
purchase of financial instruments, which accordance with the weights that individual
causes some transaction costs. This strategy investments have in the market index;
appears in two forms: the objective of this strategy is to achieve
○ bull strategy - if portfolio manager returns at least equal to the average market
estimates that price will increase, he yield; this strategy respects the market
will purchase of securities; after price efficiency hypothesis and allows investors
increasing, manager sales the portfolio, to “ coexistence” with the market, or “fate
achieving profit on the difference sharing” in terms of profit and risk.
between lower purchase prices and more
sales price; After that, based on the investment strategy, in-
○ bear strategy - if we estimate fall in prices, vestor takes long and short positions in different
portfolio manager sale portfolio to realize financial instruments. In this way, he creates an
gains between the current higher prices optimal investment portfolio structure, on the ef-
and lower future prices; after price fall, ficiency frontier and at the highest level of utility.
investment manager can retrieve the same The structure of the investment portfolio includes
position in the securities realizing gains; [4]: (a) Investment securities: the liquid part - it’s
This strategy produces the active risk. liquid portfolio securities that are often referred to

as secondary reserves; in balance sheet this portfo- basis of the measurement results, investors con-
lio is referred as “available for sale”. This part of tinuously redesign the investment portfolio, pro-
portfolio is composed by government securities, mote business efficiency and increase profitability.
private money market securities and etc. These se- Increasing the micro efficiency causes an increase
curities are highly liquid, available for spot sales in efficiency at the macro level - increasing the fi-
with minimal losses, to maintain optimal liquidity; nancial market efficiency. Namely, based on mod-
(b) Investment securities: the income part – in re- els and techniques for portfolio performance mea-
ports of regulatory agencies it is referred as securi- surement, the investment analysis becomes more
ties held to maturity. This group includes a variety effective instrument in investment decisions mak-
of securities that investor hold to make a profit. ing. What is more effective investment analysis, it
It consists of bonds and notes with a state guar- is more efficient financial markets.
antee, corporate bonds, bonds issued by various
government agencies; (c) Trading book account - 4. Research methods
this part of the portfolio composed by the various
securities to increase profitability. These financial Investment portfolio valuation is one of the
instruments are not held to maturity, they are the main stages of portfolio management. Managers
subject of buying and selling to use the profit op- of banks, investment funds and other institutional
portunity from short-term price fluctuations. The investors improve portfolio performance through
value of the portfolio depends on the portfolio the various investment strategies. The success of
manager current assessment according to prices the investment fund is viewed through the degree
movement in the future. Here we apply the active of diversification, the expected return and risk [6].
investment strategy. Based on such factors, the numerous models have
After the portfolio structure built up, the next been constructed to assess portfolio performance.
step is investment portfolio performance measure- Sharpe’s index is an indicator of portfolio per-
ment, in order to assess the impact of each invest- formance based on relationship between risk pre-
ment on potential profit. Measuring portfolio per- mium and standard deviation of the portfolio. It
formance is extremely important task, given that in faces of these two parameters and it is called the
a changing economic environment, portfolio per- rate of prize in yield variability. This ratio implies
formance may vary at any time. These variations that the time series of expected returns have a nor-
can be positive and negative, so it is necessary to mal schedule. This is one of the main objections
determine portfolio performance by measuring to be sent to this portfolio performance measure.
whether the existing portfolio close or far from Namely, if there is skewness, this portfolio in-
the efficiency frontier. More importantly, based dex is not adequate measure of portfolio perfor-
on measurement results investment managers are mance, because then even the standard deviation
taking portfolio rebalancing (spot purchase-sale) as a measure of deviation is not effective. Also, in
to bring the portfolio to the efficiency frontier. evaluating portfolio performance this index takes
into account the total risk, and therefore market
3. The research purpose and specific risk. Since the process of diversifica-
tion reduces the non-systemic risk (specific risk),
The main purpose of the research is to improve there is a negative trade-off between the degree of
investment management techniques, in terms of diversification and reliability of the Sharpe’s index
investments in securities. Using different tech- as a measure of portfolio performance: the greater
niques to assess the performance of the investment diversification, the lower efficiency of this index.
portfolio, one gets a clearer picture of the securities
issuers because some changes in issuer business Is = average portfolio yield - risk-free investment
cause changes in securities prices in the financial yield / standard deviation
markets. In addition, by measuring investment
portfolio performance, investors improve basic In a graphical presentation of this index we
investment management techniques [5]. On the use the capital market efficiency line (efficiency

frontier). It has its “roots” at the point of risk-free Ri – the average portfolio yield; βim – the beta
investment return, and connects it with the inter- of the portfolio; Rf – the risk-free return;
section points of return and risk for each portfolio. Rm - the market index return;
Treynor’s index measures the portfolio per-
formance in a slightly different way compared to Modigliani risk-adjusted performance (M2
the Sharpe’s index. There are two key differences: or Risk-Adjusted Performance Alpha, RAPA) is a
first, Treynor’s index looks at the level of portfolio measure of portfolio performance relative to the
risk in the context of portfolio yield sensitivity to benchmark. This index compares the risk adjusted
systemic factors (this elasticity factor of portfolio portfolio return to a defined reference value. The
returns relative to growth in the market as a whole index measures how much the investor is reward-
is called the beta factor (β)), second, in a graphical ed for additional risk taking. It shows the ratio
presentation of this index we use a functional re- between the standard deviation of the underlying
lationship between yield and systemic risk (mea- portfolio and the comparable portfolio weighted
sured by the coefficient β), or instead of the capital with the average yield difference between the
market line we use security market line (SML - portfolio value and some reference value (eg,
risk-
Security Market Line). free rate of return).
It = average yield - risk-free investment interest M2alpha = x

rate / β
– the average positive return deviation relative
Sortino ratio is developed by Frank A. Sor- to benchmark;
tino, trying to differentiate “good” and “bad” de- – the standard deviation of portfolio return;
viations from the expected return. This differentia- – the standard deviation of portfolio return de-
tion makes it possible to calculate the risk adjusted viation relative to benchmark.
returns, based only on the negative deviation in
yield, while positive deviations are considered ab- In addition to the indices, numerous models of
solutely acceptable. Because the positive deviation valuation portfolio performances have been devel-
is preferred, this index “does not punish” portfolio oped to improve portfolio management. The two
performance based on them, but just focusing on most influential models are CAPM and APT.
the negative deviation (downward deviation). CAMP is based on the quantification inter-
dependence between the risk and of equilibrium
Realized portfolio return-Target rate of return (MAR) expected returns, where the overall risk equates
S = ----------------------------------------------------------------------------------- with systemic risk. It was developed by Sharpe,
Risk of negative deviations from the target rate Treynor’s, Lintner and Mosin’s who quantify the
relationship between expected and fair rate of re-
Jensen index - Michael Jensen is 1968 in his turn based on risk premiums and risk-free rate of
paper “The Performance of Mutual Fund in the return (eg . yield on government bonds). CAPM
Period 1945-1964 “ announced investment port- model is based on the following assumptions [7]:
folio performance ratio that takes into account the (1) investors have the same characteristics, except
ratio of portfolio performance that are the subject in terms of available resources and risk aversion;
of comparison. Jensen’s index establishes “an (2) capital market is perfectly competitive and in-
absolute measure of portfolio performance” as a dividual investors and their transactions can not
standard, the investment benchmark for the evalu- affect the prices; (3) all investors have the same
ation of other portfolios. Based on this index is investment period; (4) investors do not pay tax
possible to evaluate the performance of portfolio return and transaction costs; (5) all investors are
managers. These performances are a function of trying to build a optimal portfolio; (6) all investors
achieved results compared with target. are taking the same investment analysis of secu-
rities. Taking into account these assumptions, the
αj = Ri - [Rf + x βim (Rm-Rf)]

CAPM model defines the relationship between the separation of factors that systematically affect the
expected portfolio return and portfolio β. Expect- portfolio rate of return through factor analysis, and
ed portfolio return is equal to the sum risk free rate then quantify the impact of these factors. A set of
of return and the difference between the expected influential factors is difficult to unambiguously
yield of the total market portfolio and risk-free define, but quantitative studies have marked some
rate, weighted with β [7]. Beta is the regression important factors [10]: (1) the industrial produc-
coefficient (slope) securities yield on the market tion index; (2) the risk premium between securi-
portfolio yield, which represents the sensitivity of ties with different investment grade; (3) interest
securities yield to changes in the overall market. rates changes; (4) inflation rate changes; (5) unex-
APT is developed by Ross at the 1976th and it is pected changes of yield curve.
based also on the quantification of the relationship
between return and risk. It discriminates factors on 5. Research results
the basis of influence on the yield and risk. This
model is based on the law of one price, which sug- 5.1. Sharpe’s index
gests that if two assets have the same characteris-
tics, should be sold at the same price [8]. Seen in If we create a hypothetical portfolio with four
the context of financial markets, financial instru- possible scenarios and with equal probability,
ments that have the same characteristics in terms which would consist of two stocks and one bond,
of return and risk should have the same price. If we could calculate the Sharpe’s index.
you make up the imbalance in prices, it would be a If we assume that the risk-free rate of return is
current phenomenon that would encourage inves- 1%, then the results of this index for each portfolio
tors to simultaneous purchase and sale. Arbitra- combination are as follows: S1 = 0,3545, S1;S2 =
tion operations would quickly eliminate the scope 0,3640, S2 = 0,3812, S2; B = 1,1111, B = 0,1490,
for profit [3]. In this model, the financial market S1; S; B = 1,2327
imbalance is only an exception that confirms the Based on the obtained results it is possible to
rule: the equal prices of two instruments with the evaluate the efficiency of the portfolio. By defini-
same qualitative characteristics. Arbitration activi- tion, the higher the index, the portfolio more ef-
ties are a function of the relationship between the ficient. This can be proved by observing graphical
expected returns of two investment alternatives. CML of this hypothetical portfolio.
If there is a discrepancy between the expected re-
turns, the investors sell the asset with lower ex-
pected return and buy assets with higher expected
return. These arbitration transactions do not re-
quire additional money because the revenues from
the sale of an asset are equal to the expenditures
for the purchase of other assets [9].
In relation to the CAPM that incorporates all
factors into a single measure of systemic risk, Figure 1. CML of hypothetical portfolios
the operational version of APT models perform (Source: Table 1)
Table 1. Hypothetical portfolio of two stocks (S1, S2) and one bond (B)
Scenario Probability HPR S1 HPR S2 HPR B HPR S1; S2 HPR S2; B HPR S1; S2; B
R 0,25 -12,82 -8 9 -10,41 0,5 -2,64
P 0,25 17,95 14 -9 15,97 2,5 5,98
N 0,25 8,97 6 5 7,48 5,5 6,49
SQ 0,25 5,77 4 3 4,88 3,5 4,13
Expected return 4,97 4 2 4,48 3 3,49
Variance 125,41 62 45 91,48 3,25 4,083
Standard deviation 11,20 7,87 6,71 9,56 1,80 2,02

Figure 1 confirms the hypothesis about portfo- variability of return that is below a certain accept-
lio efficiency. Portfolio whose yield-risk combina- able limit (MAR, minimal acceptance volatility).
tion has a “steepest slope” is the most effective. Denominator in this ratio represents only negative
This is exactly the portfolio (S1, S2, B) which has deviations, those that overcome the lower bound
the highest Sharpe’s index. This portfolio has the (MAR) but MAR is usually 0%. The higher Sor-
biggest yield prize compared to the level of risk. tino ratio, the less ability that investment will
produce large investment losses. Therefore, more
5.2. Treynor’s index conservative investors prefer investments with the
maximum value of this index.
If we assume that the coefficient β for the hy-
pothetical portfolios are 1.00, 0.8, 0.6, 0.4, 0.3 and 5.4. Jensen index
0.2, respectively, we can calculate this index and
graphically present the SML for each portfolio. Jensen index is instructive to estimate abnormal
With the other data from Table 1, results are as returns relative to a targeted level. The logic of fi-
folows: S1 = 3,97%, S1;S2 = 8,70%, S2 = 3,75%, nancial markets is as folows: the risky instrument
S2;B = 6,66% B = 1,66%, S1; S2; B = 12,45% provides a higher yield compared to less risky in-
struments, or if the financial market is efficient,
each investment provides risk adjusted yield.
However, if a portfolio provides higher yield com-
pared to the risk adjusted returns, this portfolio has
a “positive α”, or it provides abnormal returns. The
limited value for assessing portfolio performance
using this index is 0 (zero): if the portfolio has a
Figure 2. SML of hypothetical portfolios index value less than zero, it achieved lower yields
(Source: Table 1) than the yield which is expected relative to risk
level; if the index value is zero this portfolio pro-
This index uses SML lines that start from the vides returns that are expected in accordance with
origin point towards the northeast, connecting the the degree of risk or it has average performance; if
origin point and the yield-beta combination of dif- the index value is greater than zero, this portfolio
ferent portfolio in the first quadrant of the coordi- provides extra yield.
nate system. It measures the angle that every SML
lines forming relative to x coordinate and also as 5.5. Modigliani risk-adjusted performance
the Sharpe’s index suggests that the most effective
portolio (with best performance) is portfolio that This index is very instructive for the interpretation
includes all three financial instruments (S1, S2, of the investment risk comparing the risk-adjusted
B). In relation to the Sharpe’s index, which is more yield and benchmark values. It suggests that the re-
effective in measuring portfolio performance of turns and risks of the portfolio should start “conces-
stocks, this index is more efficient when portfolio sion for concession” in relation to the benchmark. If
includes stocks and other investment alternatives. a portfolio has five times more average deviation of
risk in relation to the benchmark, then the portfolio
should have five times more average deviation of re-
5.3. Sortino ratio
turn. In this case investor will earn fair risk premium
Suppose, that the investment A provides a 5% and the yield is adjusted for additional risk.
yield in the first year and 5% yield in the second
year. Investment B provides a yield of 0% in the 5.6. CAPM
first year and 10% in the second year. The total
variance for these two investments is the same, but This model is based on approximations that do
B investment is more efficient. Therefore, when not fully correspond to reality in the capital mar-
calculating this index we use as a denominator ket, but its usability is indisputable. It could be ap-

plied to real world capital markets but it is neces- of 2009, these assets again achieved positive rates
sary to make appropriate modifications of initial of return, but it is noticeable that these rates are very
settings. One of the most important hypothesis close to zero yield at the end of period. Government
that needs to be modified is the “expected rate of bons provide much lower yield in observed period,
return.” Substituting the expected rate with real- but the yield is consistently positive.
ized rate of return we can apply this model to as- Based on informations from the website of the
sess the performance of securities, and its issuers. Belgrade Stock Exchange we calculated the rate
of return, average return, variance and standard
RXT = αx + βx + x RMT εxt deviation of the portfolio and whole market.
Based on regression analysis of KMBN addi-
If we take as example stocks of Comercial bank tional yields in relation to the market index (BEL-
Belgrade (KMBN) that is listed on the Belgrade EX15) we obtained the following results.
Stock Exchange listing and it is part of BELEX15, Statistics of regression is very interesting. All
and a government bond (A12) as risk-free invest- values obtained by regression may be indicated by
ment, we can create an index model to assess sys- statistically significant. These results tell us that
temic and non-systemic risk. the correlation coefficient between the extra yield
on KMBN shares and market index are 0.62 which
indicates a fairly uniform movement of these two
parameters. The adjusted R squared tells us that
38.44% variation in additional yields of KMBN
can be explained by variations of market index
additional yields, while 61.56% of variation can
Figure 3. Cumulative monthly returns on KMBN, be explained by specific factors. The standard er-
Belex 15 and government bond (A12) ror tells us that this stock has fairly large volatil-
Source: [11], [12], [13]
ity in observed period. This volatility has a range
from ± 0.74%. This stock provided yield below
Figure 3 shows the cumulative monthly rate of
the expected yield in relative to risk level, with
return for the stocks of Commercial Bank, BEL-
very small standard error estimate. Also, with 95%
EX15 and RS bonds (Series A12) form September
probability it can be confirmed that the alpha is
2006 to December 2011th. We see that in the initial
somewhere between -0.057% and -0.054%. Beta
period KMBN stocks and market index recorded
coefficient is 1.14 with a very small standard er-
positive return rates, and after that it became nega-
ror estimate, while the original beta is somewhere
tive. Interestingly, the amplitude of the variation rate
between 1.05 and 1.22. This estimate is based on
of return of these two assets is very high. At the end
Table 2. Descriptive statistics -September 2006 – December 2010 (Source: www.belex.rs)
Average yield Variance Standard deviation Coefficient of variation
KMBN -0,000238 0,000989 0,031451 -13191,6
BELEX15 -0,000451 0,000331 0,018193 -4032,31
Gov. Bond 0,055994 0,000108 0,010390 18,55
Table 3. Regression analysis results of KMBN stock (Source: www.belex.rs)
R 0,620475
R2 0,384989
Adjusted R2 0,384425
Standard error 0,745582
Number of observations 1090
Koef. Std. E. t-stat. p-value - 95% +95%
Intercept -0,055720 0,000792 -70,3804 0,00 -0,572773 -0,054166
Slope 1,136868 0,043523 26,1214 0.00 1,051471 1,222265

a 95% probability. We can conclude that it is an ment portfolio by using different models and tech-
investment (share), whose yields vary according niques. All models and techniques are based on
to the cyclical market fluctuations, since it is a beta the expected and the realized rate of return, devia-
greater than 1. tion actual yield from the expected yield, regres-
sion and correlation analysis. By applying these
5.7. APT techniques its promote portfolio management and
financial market is becoming more efficient itself.
APT is an additional instrument of investment Based on the index it is possible to make a com-
analysis that provides more efficient portfolio parative analysis of portfolio performance against
management. Although based on factors that are a benchmark portfolio. If two investment portfo-
difficult to determine, this model has improved the lios have the same risk level, but the first one has
analytical tools to define expected portfolio return. a lower profitability compared to the benchmark,
More broadly, this model is another useful tool for it is necessary to redesign the investment portfo-
improving the efficiency of financial markets. lio in accordance with the return-risk preferences.
Based on the results of performance measurement
6. Discussion it is possible to evaluate the quality of invest-
ment managers decision making. Also, using the
The research results show that it is possible to CAPM model it is possible to estimate the invest-
apply different indices and models to assess the in- ment portfolio performances, but also to separate
vestment portfolio performances. All performance the factors affecting the volatility of returns to the
measures are based on yield, expected rate of re- systemic (market) and non-systemic (specific)
turn, standard deviation, regression and correlation factors. This is very important, since it is based on
analysis. In terms of indices for measuring portfo- this model we can monitor the effectiveness of the
lio performance, the higher the index value sug- portfolio diversification.
gests that the portfolio more efficient. Also, based
on the index can be made a comparative analysis
References
of portfolio relative to portfolio benchmark. If a
portfolio has a greater risk than the benchmark, it 1. Markowitz H., Foundations of Portfolio Theory. The
should more profitable [14]. Results of regression Journal of Finance , June 1999, 46(2): pp. 289-321.
analysis show that the highest level volatilonosti 2. Barr R., McKibben W., The Prediction of Sistemic
in yield can be attributed to business factors re- and Specific Risk in Common Stocks. Journal of Fi-
lated to the issuer. This is logical, given that in- nance and Quantitative Analisis, March 1977; 8(2):
creasing number of securities (diversification of p.p. 317-333.
investment portfolio) can significantly reduce
3. Vunjak N., Davidović M., Antonijević T., Upravljanje
non-systemic portfolio risk . Investment managers investicionim portfoliom u funkciji ostvarivanja su-
use these indexes and models to improve the in- periornih korporativnih performansi banaka, NMM,
vestment portfolio quality. Based on these models Palić, 2011.
and techniques it is possible to evaluate the invest-
4. Rose S. P., Hudgins C. H., Bankarski menadžment
ment portfolios performances and the investment i finansijske usluge (prevod), Data Status Beograd,
managers efficiency. 2005.
5. Markowitz H. Portfolio Selection: Efficient Diversi-

7. Conclusion fication of Investment, Basil Blackwell, Canbridge
(USA), 1993.
The assessing of investment portfolio perfor-
mances is the condition sine qua none of success- 6. Elton J., Gruber M. J., Brown S. J., Goetzmann W.
ful investment management. Since the measuring N., Modern Portfolio Theory and Investment Analy-
portfolio performances tools are well developed, sis (6-th edition), John Wiley & Sons, Inc., New York,
investment managers and investment analysts 2003.
may get clearer results in terms of quality invest-

7. Bodie Z., Kane A., Marcus A. J., Essentials of Invest-

ments (8-th edition), McGraw-Hill Companies, Inc.,
New York, 2010.
8. Miler E., Arbitrage Pricing Theory: A Graphical

Critique, The Journal of Portfolio Management ,
Fall 1991; 16(1): pp. 123-142.
9. Šoškić D., Hartije od vrednosti (Upravljanje port-

foliom i investicioni fondovi). Beograd: Ekonomski
fakultet Beograd, 2010.
10. Chan N., Roll R., Ross S., Economic Forces and
the Stock Market, Journal of Business, , July 1986;
56(3): 383-403.
11. Beogradska berza. (n.d.). Beogradska berza.

Preuzeto Jun 2011., 15. sa KMBN-Komercijalna
banka a.d., Beograd: http://www.belex.rs/trgovanje/
istorijski/KMBN

Preuzeto Jun 2011., 15. sa Hartije od vrednosti
(Dužničke): http://www.belex.rs/trgovanje/istorijski/
A2012

Preuzeto Jun 2011., 15. sa BELEX15: http://www.
belex15.rs/trgovanje/indeksi/belex15/istorijski
14. Merton R., An Analicial Derivation of the Efficient

Portfolio Frontier, Journal of Finance and Quanti-
tative Analyises , Sep. 1972; 7(4): pp. 218-239.
Milivoje Davidovic,
The Faculty of Economics Subotica,
Subotica,
Serbia,
E-mail: milivojed@ef.uns.ac.rs

Cause related marketing as a tool in poverty

reduction in Serbia
Svetlana Mihic¹, Ibrahim Okanovic², Dejan Supic2
¹ Faculty of Business and Economy, Novi Sad, Serbia,
² Audit Office for the Institutions of FBIH, Sarajevo, Bosnia and Herzegovina.
Abstract One of the definitions of poverty the most pop-

ular gave Molly Orshansky, who is the creator of
Poverty is defined as a multidimensional phe-
officially accepted measure of poverty in the USA.
nomenon which, along to insufficient income for
According to its definition of “being poor means
satisfaction living needs, mean unemployment,
being deprived of those goods, services and plea-
inappropriate housing conditions, social welfare,
sures which others considered given”.[1] This def-
healthcare, educations and utilities services.
inition includes the most widely defined poverty
Republic Statistical Office of Serbia in 2008.
from the perspective of economic equality in soci-
Year implemented search of trend of poverty in
ety. The economic equality and poverty reduction
Serbia, or study about standards of living. Ac-
can affect the state as directly and indirectly. This
cording the result of this study, purity rate was de-
is inter alias to show a realistic image of the situ-
creased from 14% in 2002. Year to 6.6% in 2007.
ation and to indicate the possibility of marketing
Year. In Serbia in 2008. year were 7.9%, citizens
using charity towards poverty reduction in Serbia.
whose lived below absolute poverty line and
Poverty in the world in the past few decades
13.2% population whole lived of border on rela-
halved. According to the United Nations share of
tive poverty, per the latest public date of Republic
the world’s population living in extremely bad sit-
Statistical Office.
uation declined from 52% in 1981. to 26% in 2005.
One of the important tasks of Serbia, in the pro-
year [2]. Note that some regions for example. East
cess of joining the European Union, is to participate
Asia recorded above-average poverty reduction,
in the European process of social inclusion, what
while at the same time in some regions poverty
includes the development and improvement of in-
increased. Increasing income is recorded that dur-
volvement of individuals, enterprises and other so-
ing this period was at least partially contributed
cial groups in social change in Serbia. The aim of
to poverty reduction, but the improvement of non-
this paper is Charity marketing, and marketing to
monetary indicators of poverty, such as indicators
the social order, as a means companies to partici-
of education, health care, the expected length of
pate in reducing poverty rates. The company pub-
life, etc.. also had no effect. As a factor in poverty
licly demonstrate the value of your brand and moti-
reduction impact of all the present state and the
vate consumers to buy their product, percentage of
nongovernmental sector, through numerous ac-
sales given to charity, which creates synergy.
tions charity marketing.
Key words: poverty, marketing, cause related,
Available data and literature suggest that the
strategy
poverty trends in Serbia during last ten years of
the Twenty-first century to stand out from the world
Introduction trend. In fact, poverty in Serbia, was measured in
all analyzed indicators increased during the nine-
The word poverty has meaning and the mate-
ties of the twentieth century. Increase in poverty
rial deprivation of basic necessities. However,
from 1990 to 2000. Serbia is in connection with
this interpretation does not include other aspects
the drastic decline in economic activity in that pe-
of poverty that determine the quality of life of the
riod, which is caused by the general political and
population. Some of these aspects are the avail-
economic crisis due to wars, economic sanctions,
ability of education, health care, employment, cul-
the NATO aggression [3]. Factors that have con-
ture, etc..
tributed to the reduction of economic activity had

a direct and indirect impact on poverty. Negative and prevent households to become better stand-
economic developments officially not fully reflect ing? Answers to the above-mentioned issues, but
the increase in the number of unemployed. How- the additional hypotheses that will be formed in
ever, the reduction in economic activity in these the rest of the analysis will be based on data from
conditions led to a decrease in real wages of the Strategy living standards for the period 2002/2010
population, which ultimately caused the impover- year, which are available on the website of the
ishment of the population and social layering. World Bank in the part that follows the movement
Economic reforms were implemented after the of the population (www. Worldbank.org / LSMS).
2000 contributed to the acceleration of real eco- The following chapter presents this information,
nomic growth. This acceleration is accompanied the selection of the determinants of consumption
by even higher growth of real wages, pensions and and the methodology we used. Results are pre-
other social grants, remittances from abroad and sented in section 3 and the conclusions of the 4th.
other income of the population. Mentioned the pos-
itive macroeconomic developments and the impact 2. Poverty profile in Serbia - the key
on poverty reduction and economy stratification of indicators of poverty
the population. All the greater involvement of the
state in devising and implementing measures to im- A significant and continuous economic growth
prove living conditions can contribute to poverty since 2000, with real wage growth (which was high-
reduction. In order to reduce poverty the Govern- er than the growth of gross domestic product), then
ment of the Republic of Serbia 2003. adopted the the growth of pensions and other social transfers and
Strategy for Poverty Reduction. This strategy is in other income of the population caused a significant
line with the Millennium Declaration which, within decline in poverty in Serbia in period 2002 – 2010.
the United Nations in September 2000., signed by However, the number of employees stagnation and
189 countries of the world, including the Serbian. high unemployment are certainly mitigate the im-
Poverty Reduction Strategy in Serbia was focused pact that economic growth could have on poverty
on three strategic directions: reduction is achieved with the growth of unemploy-
– of dynamic economic growth with emphasis ment and the decline in unemployment. The number
on the creation of new jobs and increase wages, of poor by half 2007th year compared to the 2002nd
– on the prevention of new poverty as a result year Table 1. The basic goal is that the Government
of restructuring the economy, of the Republic of Serbia set for poverty reduction,
– on the effective application of existing and to halve poverty by 2010. achieved already in 2007.
creation of new programs, measures and acti- year. In 2002, 14%, or about one million people
vities directly aimed at poorest and vulnerable were poor, and 2007th year 6.6%, or about 490,000
groups (children, elderly, persons with [4]. Thus the total number of poor decreased by
disabilities, refugees and internally displaced more than 500,000. The poor were all persons
persons, Roma, the rural poor and uneducated), whose consumption per consumer unit was on aver-
particularly in less developed areas. age less than the poverty line that is in 2002. 5234
amounted dinar in 2007 8883 dinar. Extreme pov-
The aim of this analysis is to isolate the factors erty is not existed in this period, since almost no per-
that affect poverty in Serbia and demonstrate the sons whose consumption was below the food. The
importance and role of socially responsible mar- remaining two indicators of poverty, the depth and
keting in the fight against poverty, where the com- severity of poverty, which shows the distribution
pany is publicly demonstrating the value of your of poverty also significantly reduced in this period.
brand and motivate consumers to buy their prod- Depth (gap) of poverty in 2007 was 1.3%, which
uct, ie. percentage of sales given to charity, which indicates that poverty, if the state mobilized funds in
creates synergy. Among other things, will provide the amount of 1.3% the poverty line for each person
answers to the following questions: what defines, (poor and not poor) and focused poor (in addition to
and what affect consumption and poverty? What funds that the state has directed the most vulnerable
are the socio-economic factors that cause poverty categories), theoretical or eliminated.

Table 1. Indicators of Poverty in Serbia

1990. 1995. I-VI 2000. 2002. 2007.
percentage of poor 1) 36.5 14.0 6.6
gap of poverty 2) 1.0 4.1 3.1 3.0 1.3
income deficit 3) 18.7 23.2 25.4
severity of poverty 4) 1.0 0.4
gini coefficient 5) 0.280 0.250 0.280 0.293 0.297
Poverty Reduction in Serbia after the 2002nd is Regional structure of consumption of the popu-
a direct consequence of increasing consumption. lation indicates that the 2002/03 least poor popula-
Namely, according to data from the LSMS, more tion lived in Belgrade, which is not changed even
than double the increase in consumption after the in 2009 (figure 1, b). This fact is not surprising,
2002. The drop corresponds to the participation of given that the Belgrade households realized the
the population living below the poverty line from largest consumption per family member. How-
11.4% to 7.3%. Increase spending with poverty ever, in the period from 2002 to 2010. in Belgrade
reduction is inherent to the urban and the rural and recorded the largest increase in spending,
population. In fact, despite increasing absolute contributing to the participation of the popula-
differences in consumption in urban compared to tion living below the poverty line upward relative
rural population, poverty in rural areas decreased change (from 8.8% to 3%) compared to other re-
to a greater extent than urban. In this motion and gions in Serbia [5]. In Belgrade, poverty is highest
refer the following two charts, which represent the in the monitored period OPAC in Vojvodina and
trends in our sample. Sumadija, since in these regions recorded relative-
ly high growth of consumption. On the other hand,
the largest share of poor people living in Southeast
Serbia (14.4%) which corresponds with the lowest
consumption per household member [6].
a)
Figure 2. Percentage of households below the
poverty line by half the head the household
Poverty is relatively represented by the house-

hold in which a woman head of the family, as
shown in figure 2. Nevertheless, it is evident that
with these families reduced the percentage of
spending under poverty line, and faster than fami-
lies where the male head of the house.
2.1 Selection of determinants

b)
Figure 1. Average household consumption a) by Table 1. shows the definition of variables that
type of households b) by region we use as determinants of consumption. From a

theoretical perspective, a higher level of consump- per consumer unit. The reasons are as follows:
tion and low poverty rates that are sustainable in first, their individual consumption is financed and
the long run, mean income from work activities local public goods in his household, as implied by
(except when the person in any way be prevented the theory of clubs [6]. Namely, if one spends on
from working the active). In addition to income, non-exclusive goods (eg electricity, heating, cable
consumption and poverty can largely depend on television, air conditioning), it will affect their
which household wealth has. To comprehend the spending on other individuals. Second, domestic
effects of wealth, this analysis will use the imput- and family safety net, ie. insurance system that
ed value of durable goods, which has a specific serves individuals to ensure minimum consump-
household. In addition to this measured wealth, tion. Thus, for example, consumption of which
this analysis will also examine how housing con- is above the poverty level can result in individual
ditions and possession of certain durable goods consumption below the poverty level of household
affect consumption and poverty. For example, in- if the individual meets the needs of their consump-
frastructure projects (water supply and sanitation tion of other individuals in the household whose
services) can also have an impact on consumption consumption is currently threatened.
and poverty. This analysis gives particular impor- Also, the assessment of consumption in SZS
tance to study these factors. Infrastructure factors Belgrade takes as a reference value when examin-
are the focus of this analysis because only the state ing the influences of the region. However, in such
can affect them - this is a public good. Therefore, settings, we can not conclude that much, except
this analysis examines the indirect impact on state that the consumption in all other regions is lower
spending and poverty expressed through the avail- compared with Belgrade. Therefore, this analysis
ability of public goods. Besides indirect impact on chooses to take the reference value of Eastern Ser-
poverty through infrastructure projects and public bia, so we compare it with other regions.
goods, the impact of the state of poverty can be im-
mediate. One immediate impact is tested through 2.3 Econometric methods
the social welfare. The second is through a greater
occurrence of the state as an employer, or through The SZS (2010.) econometric evaluation are
an increase in public expenditures that directly af- limited to linear regression in which the consump-
fect revenues, and thus consumption and poverty. tion of households and explains the features of
his carrier, region, size of agricultural holdings,
2.2 Facts and figures education and status in the labor market. How-
ever, Econometric literature indicates that the
The semple panel from 2002 to 2010. in all evaluation equation of consumption must adjust
households with available data who participated the characteristics of linear regression data are
in the survey getting the relevant answers to cer- inconsistent and imprecise (which results can be
tain questions require the inclusion in the analysis misleading advice socioeconomic policy holders).
of data on municipal level. Although the data at The starting point in this analysis is the assess-
the municipal level comprehensive, highest level ment of household consumption equation similar
of the individual’s personal characteristics. The present in SZS. The equation we evaluate for each
reason is the possible aggregation of data from year as follows:
the household level to a higher level which leads
to loss of significant variations between the pres- Consumptioni=α+β’x,+εi .................... (1)
ent level of individuals, so coefficient of these
variables statistically negligible. Census data are where the variable is defined as the logarithm
available round the same basis SZS, which is for of consumption expenditure per consumer unit, i
the purposes of this analysis to a sufficient source. is household, α is a constant, x is a vector contain-
Although this analysis considers the additional ing the independent variable, β is the vector cor-
determinants of consumption compared with SZS, responding coefficients and εi is a error. This equa-
the unit of observation remains the consumption tion was evaluated by the method of least squares.

After evaluation of this equation, turn the panel, 3. Results

which will be evaluated equations have a slightly
In the introductory section, a preliminary anal-
different form:
ysis of poverty in Serbia has established that pov-
Consumptioni,t= α+β’xi,t+μi+εi,t ............... (2)
erty trends correlated with the movement of con-
sumption. Now we, using the above econometric
where the variables defined as in equation (1).
techniques, to determine whether the consumption
t is time and μi is the specific impact of each indi-
of the main factor that determines the likelihood
vidual who does not change through time.
that a household living below the poverty line.
Using the methods of fixed effects (fixed ef-
For this purpose, first to be analyzed the impact
fects or FE) in the panel allows us to remove μi
of household characteristics and household infra-
and all other potential impacts that are specific to
structure spending. Bearing in mind that the is-
each individual, and do not change through time.
sue of poverty in Serbia should be interested in
Use of this method we can remove variables such
the state, attention will be focused on the impact
as μi, which we can not measure or data are not
of community infrastructure and social assis-
available, which enables us to accurately assess
tance, since these categories of countries may be
the equation (2).
relatively easy to influence. Finally, we’ll give the
The panel used the method of random effects
answer to the question of which factors affect the
(random effects or RE), which allows assessment
likelihood that a poor household, while addressing
of the impact and predict that μi have distribution
the special attention to the impact of the consump-
with average 0 and constant standard μ deviation.
tion structure of the likelihood. All results of this
However, although the advantages of the method of
analysis will be expressed quantitatively, which
random effects apparent, the use of these methods
provides an answer to the question what the inten-
involve a large assumption that the invisible charac-
sity of the impact of each of the analyzed factors.
teristics of households everywhere the same.
Investigation of the causes of poverty in SZS
ends on the assessment of expenditure, while in 3.1. Determinants of household consumption
the analysis of turn indicator of poverty as a de-
As expected, total income and durable goods
pendent variable. Using probit models for the as-
consumption increases significantly. These influ-
sessment of the independent variables the analy-
ences are expressed in all specifications and signifi-
sis will assess which factors affect that particular
cant at the level of trust of even 1%. Consumption
household belongs to a group of poor in a certain
of urban households was significantly higher in the
period of time. The starting point for these models
panel and 2003 and 2010. year, and the difference
is Mroz (1987) [7]. and the equation itself, which
between agricultural and other households not con-
we described can be presented as follows:
firmed. Household size significantly reduces con-
sumption, and age of the holder of the household
P (poverty= 1|xi)= F(β’ xi) .................. (3)
increases. These effects were also statistically sig-
nificant at the level of confidence of 1%.
where the left side of equality is the probability
Panel regression showed that the infrastruc-
that a poor household, taking into account all the
ture of the local community in which the house-
characteristics of households contained in x. F is the
hold lives in a profound effect on his spending.
cumulative function with standard normal distribu-
Namely, the distance register list round of infra-
tion. x i β are defined and as in equation (1). Esti-
structure and public goods consumption decreas-
mation of probit model and the impact on the prob-
es, and this impact is statistically significant at the
ability that a poor household provides additional
level of confidence of 1%. This influence is miss-
insight into the dynamics of poverty. This model al-
ing only in 2010. year, which is at least partly a
lows us to investigate whether some characteristics
consequence of including variables that measure
of households are crucial to the level of consump-
the presence of the Census round. Presence of in-
tion found above or below the poverty line[8].
frastructure and public goods in the Census round

significantly increases spending, and a significant services significantly reduces the consumption in
impact on the confidence level of 1%. Also, con- 2003. and 2010. year, while the same variable has
sumption is higher in the Census circle in which the opposite effect in the panel. Humanitarian aid
the state is among the top three employers, and in the fuel significantly affects consumption only
this effect was statistically significant at the level in 2010. year, and the impact is negative. Over-
of confidence of 5%. Therefore we can conclude all, the impact of social assistance is much smaller
that public spending within the circle register list than expected, and the lack complete template
stimulate private consumption in the census round. prevents us to derive more general conclusions.
Infrastructure household may also have an im- When we analyze the impact of the region in
pact on consumption. Central heating significantly which households live on consumption, observed
increases the consumption of the panel and in each the following: consumption in South Serbia, Bel-
year except 2003. Having the phone and cable grade and Vojvodina are significantly different
television apparently increase spending. However, from consumption in eastern Serbia (which is the
this effect disappears when the application panel reference category). Consumption in South Ser-
fixed effects, which suggests that these character- bia is smaller, while the consumption of Belgrade
istics of household infrastructure actually draw and Vojvodina, more than consumption in Eastern
their influence from the correlation with some in- Serbia. Sumadija and Western Serbia does not dif-
visible features, and their influence disappears if fer in consumption of Eastern Serbia. Also, we see
using fixed effects. that the impact of the region in South Serbia are
It is interesting to also observe the impact of the not significantly different from eastern Serbia in
availability of gas consumption. If you look at the 2010. years, with the reduction coefficient in 2002.
age regression, we can conclude that the availabil-
ity of gas does not affect consumption. However, 3.2 What causes poverty and what it reduces?
panel regressions indicate the opposite -the avail-
ability of gas significantly increases spending, As was expected, the total income available and
and a significant impact on the confidence level durable goods have a significant effect on poverty.
of 5% to 1% (depending on specifications). From The panel regression results for 2002/3 year reve-
these results it follows that if we compare the two nue increase or the new durable goods to a large ex-
households with identical characteristics, differ- tent reduce the likelihood that a household is poor.
ences in terms of availability of gas will not cause At the same conclusions, with a confidence level of
significant differences in consumption. However, 1% of the allegations and the results of regression
if we compare one household through several pe- by age, except in the assessment for 2003. year.
riods, the household consumption will be higher Urban households in 2002. year had a lower
in the period in which the pipeline is available. probability of being poor, while household size
When you look at impacts of social assistance, was significant only in 2003. An interesting result
we see that the MOP significantly increased con- follows from the assessment for 2010., where we
sumption in the panel, while this has no impact when see that, if the catch of two families with identical
we can perceive each year separately (in the panel, characteristics, except that one Serbian and other
the impact is statistically significant at the level of minority nationalities more likely to be poor, we can
trust of even 1%). From this it follows that if we prescribe a minority household. This result was sta-
compare the two households, differences in terms of tistically significant at the level of confidence of 1%.
participation in the MOP will not cause significant Influences of the region have confirmed only for
differences in consumption. If, however, compare South Serbia, while households in other regions are
more than one household through the period, the less likely to be poor compared to Eastern Serbia.
household consumption will be higher in the time in Impact of infrastructure and public goods at the
which the household participated in the MOP. local level poverty was confirmed in 2010. year (for
Impact of discount for payment of electricity the 2002nd and 2003rd year is only available indi-
consumption is negative in 2002. year, while posi- cator of distance from infrastructure). Distance enu-
tive in other years. Discount for payment of utility merated round of infrastructure and public goods

increases the likelihood that a household in the cen- care system. After all, inadequate health insurance
sus round are poor. On the other hand, the presence keeps many women from detecting breast cancer
of infrastructure and public goods in the census in its early, and most curable, stage.
round reduces the likelihood that a household in the The Government of the Republic of Serbia
census round are poor. Condition of roads also af- faced with the process of company restructuring,
fect poverty, where better roads in the census circle high unemployment and high levels of social ex-
reduce the likelihood that households from the enu- clusion and consequences of internal migration
merated circle be poor. These effects were statisti- of population, was recognized and confirmed the
cally significant at the level of confidence of 1%. need to implement fundamental reforms in the
In addition to the impact through the infrastruc- field of social policy. Scarcity of reliable data on
ture, the rating for 2007. see also the year that the the households affected adversely the consistent
state affects poverty and direct consumption (eg, conduct of social policy in the past. Special cir-
impact on poverty reduction by increasing human- cumstances in Serbia led to it that some social
itarian aid to the fuel). groups were excluded and marginalized. Data on
poverty and living standards are viewed as part of
3.3 Socially responsible marketing in Serbia - the information system that Serbian government
the result of the actions that affect poverty and its ministries assist in decision making. The
reduction public is also very interested in data on poverty.
Therefore data on poverty are essential for stra-
In the 1980s, a new form of marketing was born: tegic planning in the Serbian government and for
Cause-Related Marketing (CRM), a hybrid of prod- donors in evaluating their strategy in the Pov-
uct advertising and corporate public relations. CRM erty Reduction Strategy. Data on poverty will be
aims to link corporate identities with nonprofit or- needed and when Serbia’s EU accession. Multi-
ganizations and good causes. As a tax-deductible dimensional poverty line, as he sees the EU (in-
expense for business, this form of brand leverag- cluding the output indicators health, education,
ing seeks to connect with the consuming public be- labor market and access to social pomooći), but is
yond the traditional point of purchase and to form part of the Poverty Reduction Strategy in Serbia,
long-lasting and emotional ties with consumers [9]. and this focus is necessary to maintain to meet the
However, what might seem like a fair exchange be- future demands on that plan. At a time when the
tween corporations in search of goodwill and non- prepared Poverty Reduction Strategy, the World
profits in search of funds also raises a range of trou- Bank together with other donors, enabled the
bling social, political and ethical questions. implementation of two surveys on the standard
CRM is, first and foremost, a market-driven of living. Analysis of data obtained in these sur-
system. Therefore, a non-profit organization’s veys by the Government of Serbia and the World
chance of obtaining CRM funding hinges on its Bank team for assessing poverty has become the
ability to complement sales messages [10]. How- backbone of the objectives of the Strategy for
ever, it is often the case that vital social issues are Poverty Reduction. Because of the constant need
only -- or are best -- addressed by “edgy” groups for data on poverty, DFID and World Bank agreed
or by using controversial tactics. For example, in to finance the next survey on living standards of
1983 American Express might have saved lives by citizens, in order to compare the results with data
highlighting HIV/AIDS, then considered a taboo from two surveys of living standards, and to mea-
subject because of its association with homosex- sure changes in the level of poverty and establish
ual lifestyles. Instead, the credit card raised funds time series data. Living Standards Measurement
to restore the Statue of Liberty and Ellis Island. Survey contributes to the improvement of links
Today, companies “fight” breast cancer by sell- between official statistics and user data, and this
ing pink ribbon pins, teddy bears or yoghurt, and in turn has resulted in numerous actions that are
donating some of the proceeds to research efforts. triggered by the fit of NGOs, which represent a
Imagine the impact if the companies instead, or in real example of Cause Related Marketing. Within
addition, advocated for a more equitable health- the “Food for All” arising under the media B-92,

which supports the Red Cross of Serbia, for the way that will help, and so are Aurora 212 and the
national cuisine began to arrive contingents food. National Theater decided to donate part of their in-
This was only the beginning of the widest ever come from the sale of tickets. If this is the biggest
undertaken actions to suppress poverty, and is an hunger strike in Serbia, where no matter how will
excellent example of connection between corpora- help, but the good will was crucial, and confirms
tions and NGOs in the implementation of Cause the fact that pupils Economic School “Valjevo”
Related Marketing. Action “Straik hunger against organized a humanitarian action to collect flour,
hunger” was launched by the widest population of sugar, oil, rice and similar foods. The entire action
our country to action. Within the “Food for All”, is guided by adequate marketing propaganda most
the total has so far collected food worth 930,000 popular TV and radio company in the territory of
euros. Donations of food were delivered folk cui- Serbia B 92, which is the initiator and the initia-
sine, humanitarian centers, shelters for adults, pen- tor of this good example of how companies can
sioners clubs, associations of single mothers and actively participate in the implementation of com-
the social work centers throughout Serbia. “Invej” prehensive social goals, in this case acting on the
company has donated 330 tons of edible oil and problem of poverty is evident in Serbia.
flour, thus the need for these foods by the national
cuisine to be done for several months. 12 million 4. Concluding remarks and
is the total value of these donations and consists of recommendations
80 tons of edible oil and 250 tons of flour. Lucic
group action is “Food for All” has joined a dona- Faced with enterprise restructuring, high unem-
tion of 250 tons of potatoes, 200 tons of onions ployment and high levels of social exclusion, as
and 100 tons of carrots and cabbage. The value of well as the consequences of international population
the donation is 200 thousand euros. This donation displacement, the Goverment of Serbia and SORS
is very important because it is a large quantity of recognized and acknowledged the need for funda-
donated foods. In addition, since it is a good qual- mental reforms in social policy area and collection
ity vegetables, not only solves the problem of lack of adequate data of social statistics. The public is
of food but take care about the overall health of also keenly interested in poverty data. Poverty data
users popular cuisine. Victoria Group Company, will become part of EU accession agenda: social
a leader in the manufacture of food products from inclusion indicators are facilitating coordination
soybeans, wheat and oil, solidarized with years of social inclusion [11]. Analysis of the poverty
and donated food in an amount of 600,000 euros. profile in Serbia shows relatively large regional dis-
Victoria Group is, in addition to donations of food, crepancies in poverty rates, as well as strong links
donated food and transportation to the place where between poverty and unemployment an education.
they will be distributed, which is an important ad- Our results clearly indicate that this statement is
ditional donations, because that would have other- true, because revenues from operating activities in-
wise had to pay for such services. Donation given creased consumption and also reduce the likelihood
by manufactures and Drugs Group Kolinska -5 that a household is poor. However, although rev-
tons of products, juices donation in 1000 has pro- enues from operating activities of the key determi-
vided Nectar companies, while Imlek donated 90 nants of poverty, there are other factors that deserve
liters of milk. Dr.Oetker Company donated 50,000 further observing. In previous chapters we saw that
bags of yeast Vileda has provided products for the the state may affect spending of households and
maintenance of hygiene, while Bozen Cosmetics poverty. The results showed that this effect may be
and donated by 1,000, or 500 meals in the Nation- direct (eg through social assistance to vulnerable)
al kitchens throughout Serbia. Companies Dia- and indirect (eg through investment in infrastruc-
mond and Frikom also donated 5 tons of products, ture and public goods, or through participation in
a donation in 1000 has provided a juice company the labor market on the employer). Therefore, our
Nectar, while Imlek donated 90 liters of milk. All analysis indicates that states can significantly stim-
companies and organizations that have joined the ulate private consumption if the infrastructure and
strike had the ability to independently develop the public good way, “which present” and “as close as

possible.” However, these activities are associated 4. Vukmirović Dragan i Smith Govoni Rachel, urednici,
with the process of decentralization and delegation Study of Living Standards Serbia 2002-2007, Re-
public Statistic Office of Serbia, Belgrade, Republic
that is currently taking place. The optimum ratio of
statistical Office . 2008.
these two types of public spending is not a ques-
tion that researchers can answer, but value the court 5. Hillman Arye L. Public Finance and Public Policy:
which made the carriers of socio-economic policy Responsibilities and Limitations ofGovernment,
based on the importance and benefits given to these Cambridge: Cambridge University Press. 2003.
types of spending [12]. 6. Mroz Thomas A. The sensitivity of an empirical
In order to reduce the level of poverty, social model of married women’s hours to work economic
problems to deal with other sectors such as pri- and statistical assumptions, Econometrica 1987; 55:
vate and nonprofit marketing to stimulate positive 765–799.
social change is social marketing, which includes
7. Barone Micheal J., Miyazaki Anthony D., Tailor
Cause-Related marketing, and is a powerful instru- Kimberly A. The influence of cause-related market-
ment for achieving change. Indicates the applica- ing on customer choice: Does one good turn deserve
tion of relevant principles of market marketing non- another?, Journal of the Academy of Marketing Sci-
marketing purposes - to influence the thinking and ence, 2000; 28( 2): 248-262.
behavior of certain groups of people direct positive 8. Bjeloglav Dragiša, David Hana , Krstić Gordana i
social change. Consumers can not take more than Matković Gordana, LSMS Project 2002-2003: life in
just the product that is present in the media or on Serbia through survey data. Beograd: Strategic Mar-
billboards, but for those goods company which per- keting. 2008.
forms some socially useful goals. Support social
9. Simcic Bronn Peggy, Belliu Vrioni Albana, Corporate
problems of the company has a tendency of growth. Social Responsibility and Cause Related Marketing:
Design and realization of high quality social cam- an Overview, International Journal of Adverting 2001.
paigns may provide greater interest of the citizens
for certain problems, their active involvement, 10. Hsiao Cheng , Analysis of Panel Data, Cambridge:
and greater performance and better positioning of Cambridge University Press. 2003.
non-profit organizations in the public. On the other 11. Petrović Zoran , Social marketing tools of social
hand, social marketing is an important communica- changes, Political review, 2007; 7( 2): 493-512.
tion bridge between civil society organizations and
the private sector - all factors of their sustainability. 12. Ross John K., III, Larry T. Patterson, Mary Ann
Stutts, Consumer Perceptions of Organizations that
Every year the U.S. spends over 1 billion dollars by Use Cause-Related Marketing, Journal of the Acad-
marketing to the social order [13]. While in Serbia emy of Marketing Science, 1992; 20( 1): 93-97.
growing number of companies that recognize the
importance of investing in the community, due to 13. Wooldridge Jeffrey M., Econometric Analysis of
lack of market inter-sectoral cooperation such ini- Cross Section and Panel Data, Cambridge: MIT
Press. 2001.
tiatives remain under-exploited.
References Corresponding author

Svetlana Mihic,
1. Schwarz John E., Freedom Reclaimed: Rediscover- Faculty of Business and Economy,
ing the American Vision, Johns Hopkins University Novi Sad,
Press. 2007. Serbia,
E-mail: svetlanamihic@gmail.com
2. Chen Shaohua, Ravallion Martin, The Develop-
ing World Is Poorer Than We Thought, But No Less
Successful in the Fight against Poverty, World Bank
Policy Research Working Paper Series, 2008.
3. Bogićević Biljana, Krstić Gorana, Mijatović Boško,

Poverty in Serbia and the reform of state aid to the
poor, the Center for Liberal-Democratic Studies. 2002.

Influence of information communication

technology on companies management
Zivko Kulic1, Goran Milosevic2, Srdjan Milasinovic2, Zelimir Kesetovic3, Slobodan Ristic4
1
Megatrend University - Belgrade, Serbia,
2
Academy of Criminalistic and Police Studies - Belgrade, Serbia,
3
Faculty of Security Studies, University of Belgrade, Serbia,
4
Faculty of Organization Sciences, University of Belgrade, Serbia.
Abstract way of conducting their bussines. A number of

Information Communication Technology (ICT) authors focused their researches on ICT as a new
have significantly cnahnged the overall way of fuc- source of competitive advantage.
tioning of modern companies. It is very powerfull Today’s competitive environment requires ac-
tool for modern managers helping them to signifi- cess to real-time information of right data, a must
cantly improve their perfomance in fulfilling all the have quality for businesses in order to be able to
basic managerial functions. Besides that it also has compete and thrive in information age. Every or-
powerful influence on the entire structure of a com- ganization faces a variety of challenges that char-
pany, but it is particulary strong on decision making acterize a volatile market, fluctuating raw mate-
process and company management, first of all top rial supply and prices, changing demand pattern,
and middle management. Paper is focused mainly heightened regulatory pressures, availability of
on the effects achieved by the IT influence on com- cash and credits, nurturing talents and skills of its
pany management and their activities and middle workforce. These macro level decisions are sup-
management. ported at micro level by stream of inputs from var-
Key words: Information Communication ious functional levels. However, good decisions at
Technologies, decision making, company, man- any level have been found to emerge from certain
agement, top management, middle management pre-requisites, and impementation and usage of
CIT is one of the most important. Recognizing
the potential of ICT to enable and support changes
1. Introduction
that are necessary for successfully competing in a
Organizational and management researches hyper-competitive environment. Besides that, ICT
long time ago agreed that one of the main factors adoption affect strategy by supporting long-term
that influence fuctioning of modern companies strategic objectives and the quest for profitability
is highly unstable and uncertain environment in and it also links to strategic planning systems. [3]
which they operate, that necessiate high level of Every decision is made within a decision environ-
flexibility.[1] Among the main features of modern ment, which is defined as the collection of informa-
bussines environemt often are named: a) complex- tion, alternatives, values, and preferences available at
ity (a number of tightly coupled acters and compo- the time of the decision. An ideal decision environ-
nents), b) diversity (its main components are very ment would include all possible information, all of it
heterogenous), c) dynamism (a number of fast and accurate, and every possible alternative. The fact that
unpredictable changes) and d) uncertainty (insu- decisions must be made within a limiting decision
ficient information on changes in environment in environment suggests two things. First, it explains
terms of quantity and quality that requires deci- why hindsight is so much more accurate and better
sion making in risk conditions). Many theorists at making decisions that foresight. As time passes,
are talking about new paradigm of conudcting the decision environment continues to grow and ex-
bussines that have to be adjusted to the dynamic pand. New information and new alternatives appear
and unpredictable world that looks like “organized even after the decision must be made.
chaos”. [2] In order to acheive “world--class ex- ICT enables plethora of criteria and alterna-
cellence” companies have to abandon traditional tives for any decision, extends the decision envi-

ronment so that most of information, values and pation across wider geographical boundaries, gen-
preferences get integrated with the goal. Historic erating feedback on actions taken (the managerial
data keeps on updated with time so that decision version of “informating” a process), and stream-
environment remains current. Segregation of data lining the time and resources a specific process
through applications and adequacy of hardware to consumes. While many firms have developed ex-
meet user’s required performance criteria today ecutive information systems (EIS) for their senior
across wide area network is providing new di- managers, at Xerox Corporation headquarters, IT
mensions to decision making process. Life cycle has been used to improve a specific managerial
approach to development is one such emerging process, i.e., the review of division strategic plans.
dimension. It emerges conclusively that ICT pres- Despite great possibilites, two decades ago only
ents alternative choices to be considered as many few companies have rigorously analyzed manage-
as possible to choose the one that has the highest rial activities as processes subject to redesign. Even
probability of success or effectiveness and best fits the notion of managerial activities involving de-
with our goals, desires, lifestyle, values, and so on. fined outcomes (a central aspect of our definition
Information technologies are not easy to de- of business processes) was somewhat foreign. [7]
fine, as for their intensive development so for the However in the meandime situation has con-
constant expansion of their application in both the siderably changed. Today it is notorious that In-
work and management process in a company. In formation Communication Technologies are in-
addition to this, information technologies should evitable tool for modern managers on various
be understood as a system combining computer levels and in different sectors. They are of enor-
equipment and communication devices, as well mous help in improving all basic management
as corresponding knowledge, methods and skills functions: planning, organizing, staffing, leading
required for their practical use, both in the process or directing, and controlling an organization or ef-
of production and the system of management. [4] fort for the purpose of accomplishing a goal.
Besides the term Information Communication It should be noted that, despite management’s
Technologies also is in use the term Advanced in- best intentions, the co-introduction of IT and com-
formation technologies that comprise devices that plementary organizational changes may not result
(a) ransmit, manupulate, analyze or exploit in immediate success, due to adjustment costs
information, learning, and other factors. [8]
(b) in which a digital coputer processes infor- The focus of our attention will be on the impact
mation integral to users communication or of ICT on management as a part of organizational
decision task; and structure of modern companies.
(c) that have either made their appearance
since 1970 or exist in a form that aids in 2. Influence of information technology on
communication or decision tasks to a management as a part of a company or
significanlty greater degree that did pre- organizational structure
1971 forms. [5].
IT contributes to faster and more successful ad-
It is not a new idea to apply IT to management aptation of a company to environmental changes.
tasks. For over twenty years, the potential of deci- Thanks to them and their application, the compa-
sion support systems, executive support systems, ny has become more flexible, and therefore more
and other managerial productivity and informa- ready to face challenges that are increasing under
tion tools have been trumpeted. Accordint to Dav- the conditions of contemporary business activities.
enport and Short the benefits have remained more The company which respects IT sufficiently and fa-
potential than actual because of the absence of vours their application in work and management is
systematic process thinking. [6] as a rule capable of fast and mainly painless change
The generic capabilities of IT for reshaping of production program. It all happens without many
management processes include improving analyt- crashes and in the manner in which the survival of a
ic accuracy, enabling broader management partici- company cannot be brought into question. The pro-

duction program change is made in order to raise in order to contribute to achieving set goals. Vision
the work productivity and product quality to a high- and strategy planning is their responsibility. They
er level and to provide for more rational and more can do it on their own or relying on the knowledge
successful business operation of a company. of other company subjects. It has started being re-
The more the company is information-based, the alized more seriously recently that the knowledge,
more it is in a position to produce inexpensive prod- capabilities and experience of each man within an
ucts, or to offer more inexpensive services. Even organization are valuable. They should be used
small companies, which cannot provide so-called skilfully. In that sense, the company management
optimum product series, can produce sufficiently is no more in a position to neglect or fail to observe
cheap products if they rely on information tech- the potentials available to them, which is also as-
nologies in the right manner or their everyday ap- sisted in a corresponding manner by Information
plication in work and management. Therefore, the Communication Technologies.
importance of optimum series which could have Information Communication Technology wid-
been provided only by large companies under the ens perspectives, enriches knowledge, accelerates
traditional business operations is not the same as it responses and increases the possibilities of com-
used to be. Rapid development and ever increasing pany leaders. Computers and other information
application of information technology have done equipment relieves them more and more from
the job. The production for the sake of scale gave current operative work, providing them to engage
place to the production for the sake of sale, since in the activities which are of company’s strategic
the company cannot benefit from a product which interest in more relaxed manner. Thanks to infor-
cannot be sold. On the contrary, it has only losses. mation data processing, it is possible for the man-
Under the circumstances when it is more difficult to agement at any time to know what the results of
sell and collect payment than to produce and pack business activities are, where the problems appear,
the goods, such an orientation is quite justified. what is the performance of the employees, what
Ever increasing presence of information tech- should be changed, and similar. This kind of infor-
nologies both in the company and its business op- mation is no longer needed from middle and other
erations contributes to changing its structure. The level of administration and management.
parameters shaping this structure also change form Well-conceived and updated data bases enable
to a certain extent, enriching it with new contents. company leaders to respond quickly and adequate-
The IT influence on these and such changes is not ly to all challenges and temptations. If the relevant
always the same. It manifests variously in differ- data and information are at hand at any moment
ent parts of organizational structure. Although it even the most complex situations are easy to re-
could be discussed in more details, our attention solve. Entrepreneurship psychology becomes a
here will focus only on the effects achieved by the rule and relying on knowledge, innovations and
IT influence on: [9] company management and timely information are the imperatives of the time.
their activities and middle management. [10] Instead of centralized and bureaucratic manner of
decision making the decentralized system of man-
2.1. Influence of ICT on company manage- agement is favoured. Organizational culture and
ment and their activities climate by which business philosophy, work cul-
ture, work moral and work discipline are recog-
Company management runs the company, its re- nized are easier to shape and accept, because the
sources and business operations and has the highest employees, in principle, do not have serious rea-
responsibility for the results of its business opera- sons to oppose the dominant system of values and
tions. High degree of responsibility means also high rules. Therefore, thanks to information technology
level of authority, which under certain conditions there have been great changes in the process of
can, and often must be used for the purpose of the company managements and its resources. Compa-
business success. Company management, as a rule, ny leaders are now turned more towards creative
consists of competent, responsible and conscien- activities and issues of strategic importance, since
tious people, whose task is to direct their activities they are largely relieved from operative or routine

jobs. In the recent twenty years many things have very fast the necessary data, information, analy-
changed in favour of a man and his future. ses and reports. A large number of middle manag-
Introduction of information technologies chang- ers and experts employed at the intermediate level
es the style of management in that the traditional of organization become excess, since information
management, which bases on autocratic style of technologies take over the largest part of their tradi-
management, is superseded. Namely, in the infor- tional jobs. Everything is changing so that even the
mation era, the quantity of live labour in companies company structures acquire new forms.
is reduced, but the large number of activities can be Reducing middle managers and various ex-
done outside the company, from distance, etc. The perts from the middle level of the company (such
concentration of labour at one place is also reduced, as analysts, independent advisors, reporting and
and thus the capability to manage by means of re- information experts and similar) to a minimum
ward and punishment. Taking into account that ev- number of people, in addition to some positive ef-
ery organization works in some interest in view, this fects, which mainly consist of reduction of busi-
means that that organization cannot be successful ness costs, entails also some negative consequenc-
in contemporary economy if it does not change its es, which reflect in limiting the development and
relationship with the employees and starts treating promotion of managers. If it is known that middle
them as its most valuable asset. managers are actually personnel nursery-garden
and the most important basis for recruitment of
2.2. Influence of information technology to perspective managers who are necessary to fill in
middle management the most responsible or the most prominent func-
tions in the company, it is not hard to conclude
Although the middle management usually in- how important it is to preserve it intact. However,
cludes several levels of management, this term despite this, the things evolve in the direction of
will be used here for so-called middle managers, further reducing of middle managerial level, since
who supervise the work of managers at the lower this provides for considerable work savings. Posi-
position(s), and in some cases even the activities tive effects of information technology influence
of the employees. Therefore, these are the manag- on middle managerial level, judging from every-
ers positioned at the middle of hierarchy inside the thing, prevail and this is why it should not oppose
company, wherefrom the conclusion can be made them. On the contrary, the application of informa-
on their duties, which in principle range all the tion technology in labour process and company
way to operative level, i.e. to production operative management system should still increase, since it
of the company. Their responsibility comes from is one of the important preconditions for success-
their position. In other words, middle managers ful business operations and survival in the market.
are responsible for the work and work results of
those subordinate to them, and under certain con- Instead of a conclusion
ditions for the work of the employees. At the same
time, they are obliged to make regular reports on Besides the influence on managerial procedures
the results of their work to higher managers, i.e. and effectiveness, ICT had also significant influence
the top management of the company. on overall management system in modern ogranzia-
Thanks to information technology, the system tions. The process of managing company, its opera-
of management and operation functions more suc- tions and its resources becomes simpler, more effi-
cessfully. It is easier and faster to access the nec- cient and more democratic. While the need for mid-
essary information, which contributes to more ef- dle management personnel partially decreased, the
ficient control of lower-positioned managers and all importance of the company management increased,
the employees. Computer systems and other infor- particularly in the part related to assuming the re-
mation devices provide data which are updated on sponsibility for the most creative, most responsible
a daily basis. Managing company and human re- and most complex jobs within a company.
sources has become simplified in many ways. Even New knowledge and new technologies create
in the biggest companies it is possible to access new civilization. If new civilization is not turned to-

wards a man, his increasing needs and interests, or 11. Milošević G., Osnovi ekonomije, Beograd, 2009;
economic progress, it is doomed to failure sooner str. 171.
or later. This fact is so obvious that even the crea-
tors of new economic order have become aware of Corresponding Author
it. [11] Under the influence of new knowledge and Zivko Kulic,
new technologies there appear constant changes in Megatrend University,
all spheres of human activities. These changes are Belgrade,
Serbia,
particularly expressed in the sphere of IT influence
E-mail: zkulic@megatrend.edu.rs
on the development and change in company’s or-
ganizational structure as a whole, and particulary
companies top and middle management.
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Applications of stone’s regression model in

the bank’s interest rate risk management
Zeljko Racic1, Dragan Bozic1, Novica Pavlovic1, Lazar Ozegovic2, Veronika Boskov1
1
Higher School of Professional Business Studies, Novi Sad, Serbia,
2
FIMEK- Faculty of Economics and Engineering, Serbia.
Abstract work defined by Basel II, which relates to the al-

location of the reserve on the basis of the assessed
The aim of this paper is to assess the impact of
exposure to interest rate risk.
variations in interest rate on bank’s stock return.
According to Basel II, there are four sources
The results of the research may lead to the con-
of interest rate risk. There are repricing risk, yield
clusion on the influence of differences in duration
curve risk, basis risk and optionality risk. The re-
between assets and liabilities on the observed re-
search includes the impact of repricing risk on the
lationship. The research that encompasses move-
sensitivity of market value of equity. This source
ments of stock prices of sixty-six US bank holding
of risk results from differences in maturity com-
companies in the period between 2001 and 2010
position (for fixed interest rates) or repricing of
uses analytical, synthetical and statistical data
interest rate for assets and liabilities (for variable
processing methods. The results suggest that the
interest rates) [2]. The impact of other sources of
movements of interest rates and stock return were
interest rate risk is not included in the study.
positively correlated, which means that the banks
Bank exposure of banks to interest rate risk
had expected an increase in interest rates, with
has been the subject of much research since the
orientation to long-term source of funding (the
1970s. Within the empirical studies of this prob-
existence of negative duration gap). Represented
lem Stone’s two-index regression model is often
methodology can be of great significance for a
used, which assesses sensitivity of stock return to
wide audience, which includes bank managers, in-
variations of interest rates [3].
vestors, bank regulators, and even academicians,
especially interested in how to measure, manage,
and hedge interest rate risk exposure. 2. Stone’s two-index regression model
Key words: Stone’s regression model, interest The researchers of the maturity composition of
rate risk, duration, market value of equity. the balance sheet impact on the market value of
equity under variations of interest rate are often
1. Introduction faced with lack of data about the banks’ assets and
liabilities. The details of the contracts of credit
Interest rate risk is one of the risk forms that portfolio in terms of the amount, interest rate, the
banks face while fulfilling the role of financial dynamics of payment and maturity are not pub-
intermediary on the markets. There is a constant licly available, which prevents the calculation of
threat that unexpected interest effects have ad- duration and hinders identifying the rule of deal-
verse influence on their income and economic val- ing with the issue. This problem can be effectively
ue. Due to the current global financial crisis, banks overcome by the application of Stone’s regression
are directing more attention to interest rate risk model which, on the basis of publicly available
[1]. Despite the increase in the share of income information on the banks’ stock prices, market
based on fees and commission, net interest income index and long-term government bonds, provides
is still the main source of income for banks. This statistically significant estimation of the observed
means that an increase in interest rate volatility on relationships [4]. The utility of the model is re-
the financial market leads to instability of total in- flected in the possibility to assess the impact of the
come, cost and market value of equity. Besides, structure of the balance sheet on the market value
there is the imperative to respect regulatory frame- of equity without a complex calculation of dura-

tion gaps. The estimates of regression coefficients application of weights on the sensitivity to every
obtained by the application of Stone’s model may defined time zone. The weights are usually based
be used as input for the study of factors that ex- on estimates of the duration of receivables and li-
plain the impact of variations of interest rates on abilities that are classified in each time span.
the banks’ stock return. Stone’s linear two-index The measure of percentage change of econom-
regression model is mathematically expressed as ic value of a particular balance sheet item, which
follows [5]: occurs due to the small changes in interest rate, is
called duration. Duration is the weighted value of
jt = β 0 j + β 1j mt + β 2j it + jt all payments from the time of issuing securities
to their maturity. Generally, duration is greater in
Rjt- the holding period return to the j- th bank the case of longer maturity (or the date of the next
common stock over the period ending at time t; price change) of a financial instrument and the less
Rmt- the holding period return to the market coupon payment occurring before the maturity.
portfolio over the period ending at time t; With the greater duration, changes in the level of
Rit- the holding period return on an index of interest rates have greater impact on the economic
constant maturity risk-free zero bonds (interest value of the given balance sheet item. Duration of
rate approximation), a particular balance sheet item can be mathemati-
b1j- regression coefficient which assesses the cally expressed as follows [7]:
sensitivity of stock return to the unit change of Rmt
b2j- regression coefficient which assesses the
sensitivity of stock return to the unit change of Rit .
The coefficient b1j provides the assessment of

the exposure of the bank j to market impact by
measuring the sensitivity of stock return to chang-
es of return on market index portfolio. The coef-
In addition to measuring the sensitivity of the
ficent β2j provides the assessment of the sensitivity
economic value of balance sheet items to the
of stock return to interest rate variations. Theo-
change of interest rates, banks often apply duration
retically, variations of the banks’ stock return are
analysis with the aim of assessing the sensitivity
negatively correlated with the variations of inter-
of the economic value of equity to the change of
est rates, which means that the anticipated results
interest rate. The best estimate of the sensitivity is
will have a positive sign β2j [6].
obtained by the application of Macaulay duration.
Once a month most banks calculate Macaulay and
3. The relation between Stone’s model and modified duration of their interest rate-sensitive
duration assets and liabilities in order to assess the changes
In order to complete the image of exposure to in the economic value of equity. The formulas for
repricing risk, banks apply gap analysis. This anal- calculating the duration of equity can be mathe-
ysis is based on the distribution of interest rate- matically expressed as follows [8]:
sensitive assets, liabilities and off-balance sheet
items in ″time zones″ either according to maturity
from the contract (in the case of fixed interest rate)
or the time remained to the following repricing (in
the case of variable interest rate). The difference
between interest rate-sensitive assets and inter-
est rate-sensitive liabilities should be calculated
within each time zone. In addition, gap analysis
is used for the evaluation of effects of variable in- Depending on the aversion to risk and expecta-
terest rate on the economic value of banks by the tions about interest rate movement in the future,

banks may use two strategies while planning the of the balance sheet and thus protected itself
structure of their balance sheet. The banks that from the influence of the change of the
want to take advantage from the changes in in- interest rate on the market value of equity.
terest rate have an aggressive approach meaning
the adjustment of asset and liabilities duration in The shown regularities which are obtained on
line with their own expectations. Conversely, the the basis of the pre-sign and size of the coeffi-
banks that want to be protected from interest rate cient β2j may be useful in the process of planning
risk have a passive strategy, i.e. the rule of the im- the structure of the balance sheet for a particular
munization of portfolio meaning the adjustment future period, especially if managers rely on the
of flows of assets and liabilities to get weighted technical analysis.
duration [9].
The possible variants of the impact of the struc- 4. Application of Stone’s regression model
ture of the balance sheet on the market value of
equity are shown in Table 1. If there is a positive The research of the impact of balance sheet struc-
duration gap in the level of balance sheet, the inter- ture on the stock return of banks in the case of varia-
est rate rise has influence on the fall in the market tions of interest rate was carried out on the sample
value of equity. On the other hand, a negative dura- of sixty-six US banks between 2001 and 2010. The
tion gap in the level of balance sheet influences the model is applicable for corporate enterprises but
rise in the market value of equity in the case of the better results are achieved in the banking sector be-
interest rate rise. Finally, banks may use the strategy cause the balance sheets of banks usually consist of
of immunization, whereby the duration of asset is interest rate-sensitive assets and liabilities.
equalled to the duration of liabilities (Table 1). The dependent variable of the model is the
The use of Stone’s regression model enables seven-day stock return of the bank holding com-
the estimates of regression coefficients. Based on panies from the sample, calculated on the basis
the pre-sign of the regression coefficient β2j the of weekly share prices. The market changes are
following conclusions may be made: assessed according to the seven-day return on the
– In the case of the positive value β2j, a rise market index S&P 1500 Composite [10]. The ap-
in the market value of equity of banks is proximation of the interest rate change is calculat-
influenced by interest rate fall and by the ed according to the series of weekly return on ten-
structure of the balance sheet in which the year constant maturity risk-free zero-bonds [11].
duration of asset is greater than the duration To determine the value of interest rate the concept
of liabilities. of yield to maturity was used. This concept rep-
– In the case of the negative value β2j, a rise resents the most reliable measure of interest rate
in the market value of equity of banks is [12]. In the case of countries with high credit rat-
influenced by interest rate rise and by the ing, the assessment of interest rate is based on the
structure of the balance sheet in which the calculation of the yield to maturity of long-term
duration of liabilities is greater than the risk-free zero-bonds. On the basis of these values,
duration of assets. the independent variable of the model is construct-
– If β2j= 0, it can be concluded that the bank ed, which can be expressed in the following way:
has applied the strategy of the immunization
Table 1. Reaction of market value of equity to the variations of interest rate

Duration gap Interest rate rise Interest rate fall
Duration gap > 0 Loss Profit
Duration of asset > Duration of liabilities (+β2j) (+β2j)
Duration gap < 0 Profit Loss
Duration of asset < Duration of liabilities (-β2j) (-β2j)
Duration gap = 0 Immunization Immunization
Duration of asset = Duration of liabilities (β2j= 0) (β2j= 0)

not have the same variance, it is said that they ex-

press heteroskedasity. There are numerous formal
procedures for detecting heteroskedasity. White
test was applied in the article showing that heter-
oskedasity was present in 75% of the cases [13].
The assumption of classic linear regression
Present value factor (PV factor) discounts the model requires that standard errors must be non-
nominal value of the risk-free zero-bonds to the correlated, i.e. that their co-variance should equal
level of its price at the moment t and it is defined zero. If this assumption is violated, there is the
by the following mathematic expression: autocorrelation [14]. The existence of autocorre-
lation is examined by Durbin-Watson test which
has shown that the autocorrelation is found in 45%
cases, whereas in the two cases the test does not
have the decision [15].
Since the research is based on the analysis of The Least Square Model gives the best assess-
time series, standards assumptions of two-index ment of the coefficients of the models provided
linear regression model are checked. The correla- that all the standard assumptions of the model are
tion coefficient between independent variables, r= met. However, when the residuals show heteroske-
-0.3209, witnesses the existence of the moderate dasity and autocorrelation, the assessment of the
multicollinearity. In order to obtain statistically sig- coefficients cannot be regarded as reliable. In 1987
nificant estimates of regression coefficients, multi- Newey and West developed a model for eliminating
collinearity has been removed by the orthogoanaly- the problems of heteroskedasity and autocorrela-
sis of the market index. The process of orthogoanal- tion [16]. The use of Newey-West model provides
ysis includes the analysis of the auxiliary regression statistically significant assessment of regression co-
model where the return of the market portfolio rep- efficients whose values are given in Table 3.
resent the dependent variable, whereas the changes
of interest rate are the independent variable. The
residuals of the auxiliary equation mean the varia- 5. Analysis of results
tions of the market index which occurred under the In the case of all sixty-six banks from the sam-
influence of all factors excluding the influence of ple, the coefficient β1j has a positive value. This
the interest rate. Placing the residuals in the basic means that variations of return on the market in-
model on the position of the values of the variable dex and stock return are positively correlated. In
S&P 1500 Composite, completely eliminates mul- 60% of the cases the shares of bank holding com-
ticollinearity in the model [5]. panies show the properties of ″aggressive″ shares
When analyzing time series it is necessary to ex- (β1j> 1), which means that their increase exceeds
amine whether there is the problem of heteroskeda- in percents the rise in return on the market portfo-
sity. If all the assessments of the standard errors do lio, and vice versa.
Table 2. Orthogoanalysis of the market index (STATA 11 software results)

Table 3. Estimates of Stone’s model regression coefficients for the sample banks
Rjt = b0j + b1j* Rmt + b2j * Rit +εjt
Bank holding company
b0j b1j b2j
1. Bank of America, National Association 0.0024 1.8586 ***
-0.3589***
2. JPMorgan Chase Bank, National Association 0.0023 1.5902*** -0.5033***
3. Citibank, National Association 0.0003 2.3122*** -0.4172***
4. Wells Fargo Bank, National Association 0.0026 1.4436*** -0.3256***
5. U.S. Bank National Association 0.0024 1.2151*** -0.3062***
6. PNC Bank, National Association 0.0019 1.3029*** -0.3409***
7. The Bank of New York Mellon 0.0005 1.3007*** -0.3962***
8. Capital One, National Association 0.0023 1.9401*** -0.4196***
9. SunTrust Bank 0.0015 1.4961*** -0.3242**
10. State Street Bank and Trust Company 0.0015 1.4573*** -0.3097***
11. Branch Banking and Trust Company 0.0012 1.1025*** -0.2576***
12. Regions Bank 0.0013 1.5980*** -0.2042**
13. Fifth Third Bank 0.0023 1.7407*** -0.4810**
14. KeyBank National Association 0.0010 1.6483*** -0.4254***
15. The Northern Trust Company 0.0006 1.1644*** -0.2899***
16. Manufacturers and Traders Trust Company 0.0019 1.0249*** -0.2547***
17. Comerica Bank 0.0017 1.4000*** -0.4094***
18. The Huntington National Bank 0.0023 1.6282*** -0.2910***
19. M&I Marshall and Ilsley Bank 0.0014 1.5853*** -0.3032***
20. New York Community Bank 0.0034** 0.9134*** -0.1804***
21. Banco Popular de Puerto Rico 0.0002 1.0953*** -0.2383*
22. Synovus Bank 0.0001 1.4723*** -0.3274***
23. First Tennessee Bank, National Association 0.0009 1.3214*** -0.3404***
24. BOKF, National Association 0.0030** 0.9472*** -0.1904***
25. Associated Bank, National Association 0.0014 1.2049*** -0.2255***
26. City National Bank 0.0024 1.0678*** -0.2625***
27. First-Citizens Bank & Trust Company 0.0026* 0.7911*** -0.2460***
28. East West Bank 0.0039 1.4781*** -0.4758***
29. Commerce Bank, National Association 0.0018* 0.7750*** -0.2090***
30. TCF National Bank 0.0014 1.2351*** -0.3947***
31. Webster Bank, National Association 0.0022 1.5367*** -0.3028**
32. The Frost National Bank 0.0019 0.7502*** -0.2228***
33. Silicon Valley Bank 0.0028 1.4832*** -0.5127***
34. Firstbank of Puerto Rico -0.0016 1.2767*** -0.4747***
35. First National Bank of Omaha 0.0015 0.3577*** -0.0176
36. Valley National Bank 0.0013 1.0065*** -0.2518***
37. Firstmerit Bank, National Association 0.0012 1.0556*** -0.2447***
38. Susquehanna Bank 0.0012 1.3298*** -0.2780***
39. BancorpSouth Bank 0.0022 0.9917*** -0.2411***
40. Bank of Hawaii 0.0034*** 0.9947*** -0.1709***
41. The PrivateBank and Trust Company 0.0058** 1.2160*** -0.2869***
42. UMB Bank, National Association 0.0028** 0.8607*** -0.1768***
43. International Bank of Commerce 0.0030 0.9832*** -0.3914***
44. Whitney National Bank 0.0012 1.0867*** -0.3061***
45. Umpqua Bank 0.0028 1.2705*** -0.3144***

46. Wilmington Trust Company -0.0016 1.0982*** -0.3211***

47. Cathay Bank 0.0027 1.4802*** -0.3515***
48. FirstBank 0.0005 0.3650*** -0.0462
49. MB Financial Bank, National Association 0.0027 1.1177*** -0.1222*
50. Iberiabank 0.0036** 0.8114*** -0.1968***
51. Citizens Bank -0.0027 1.7668*** -0.4303**
52. Trustmark National Bank 0.0019 1.0009*** -0.2418***
53. Prosperity Bank 0.0039*** 0.9088*** -0.2467***
54. First National Bank of Pennsylvania 0.0021 1.0201*** -0.1458**
55. National Penn Bank 0.0016 1.0869*** -0.2969***
56. Doral Bank -0.0034 1.4216*** -0.2953**
57. First Citizens Bank and Trust Company, Inc. 0.0022 0.2971*** -0.0314
58. Hancock Bank 0.0035** 0.8256*** -0.1555**
59. First Midwest Bank 0.0009 1.3444*** -0.2668***
60. Oriental Bank and Trust 0.0059 1.8866*** -0.3569***
61. The Park National Bank 0.0015 0.9245*** -0.2760***
62. Old National Bank 0.0005 0.9012*** -0.2249***
63. Westamerica Bank 0.0017 0.9200*** -0.1934***
64. S&T Bank 0.0017 0.8520*** -0.2164***
65. NBT Bank National Association 0.0027* 0.9325*** -0.2513***
66. Hanmi Bank 0.0007 0.8991*** -0.3387**
(*- significance 90%, **- significance 95%, ***- significance 99%)
1
The results of the application of the model assets is longer than the duration of liabilities.
show that β2j in all sixty-six cases has a negative However, Basel II recommends that the positions
sign, suggesting that the interest rate rise contrib- without definite intervals of repricing of interest
utes to the growth of the stock return of j, and vice rate or contracted maturity (e.g. demand deposits
versa. The positive correlation between interest and time deposits) and the positions whose real
rates and the stock return is in favour of the Behav- maturity may be considerably different from their
ioural Theory that advocates the view that the informal maturity should be classified into time
vestors often make decision without relying on the zone according to the previous experience [8].
fundamental indicators [17]. The period between Since the investors showed in this period strong
2001 and 2010 was characterized by two great cri- confidence in the growth of the US economy,
ses of the US financial market, which means that these balance sheet positions may be considered
the investors tend to believe in the growth of US long-term, which confirms the correctness of the
financial market despite the instability. results of the regression model.
On the basis of the negative sign of the re-
gression coefficient β2j, the inferences about the 6. Conclusion
structure of the balance sheets of the banks can
be made. If in this period the interest rate rise af- Stone’s regression model on the basis of the
fects the growth of the market value of equity, it publicly available information gives statistically
means that the duration of liabilities is greater than significant assessment of the sensitivity of the
the duration of assets (Table 1). The balance sheet stock return to the variations of interest rate. The
structure where exist is the negative duration gap significance of the model is reflected in the pos-
witnesses that the banks are financed from primar- sibility to have an assessment of the influences of
ily long-term sources. Such structure of the source the balance structure on the market value of equity
is at first sight uncommon for the banking sector without complex calculations of duration gaps.
since the traditional deposit-loan activity assumes Formally, in the research on the impact of in-
the balance sheet structure where the duration of terest rate variations on the stock return a positive

value of the coefficient β2j is expected. The reason 5. Kwan Simon H., Re-examination of Interest Rate
lies in the fact that banks finance long-term loans Sensitivity of Commercial Bank Stock Returns Using
a Random Coefficient Model, Journal of Financial
from short-term sources, which results in the ex-
Services Research, Nr.5, 1991; page 61-76.
istence of the positive duration gap in the balance
sheet. Therefore, the coefficient β2j with a positive 6. Flannery Mark J., James Christopher, M., Market
sign indicates that interest rate rise influences a Evidence of the Effective Maturity of Bank Assets
and Liabilities, Journal of Money, Credit, and Bank-
decrease in bank’s stock return. From the macro- ing, 1984 (part 1); 16 (4): page 435-445.
economic perspective, this scenario is in favour
of the Classical theory of fundamental analysis 7. Bodie Z., Kane A., Marcus A. J., Osnovi Investicija-
šesto izdanje, Datastatus, Beograd, 2009; page 323.
which is based on the assumptions that investors
act rationally and that they consider all the avail- 8. Bulaić M., Savić G., Savić. S.,et al, Efficiency assess-
able information in their decision-making process. ment of banks in Serbia, TTEM- Technics Technolo-
However, the results of the research deny all these gies Education Management, 2011; 6(3): page 657.
standpoints. The use of Stone’s two-index regres- 9. Ivanović P., Upravljanje rizicima u bankama, Beo-
sion model showed that in the period between gradska bankarska akademija- Fakultet za bankarst-
2001 and 2010 the increase in interest rate was vo, osiguranje i finansije, Beograd, 2009; page 364.
followed by the rise in the stock return of bank 10. Kapor P., Racionalnost i iracionalnost u finansi-
holding companies in the USA. From the perspec- jama, Industrija, 2011; 39(4): page 15- 41.
tive of the structure of the balance sheet, it means
11. Richie Nivine F., Mautz David R., Sackley William
that the duration of liabilities was longer than the H., Duration and Convexity for Assesing Interest
duration of assets, and that the banks expected an Rate Risk, Bank Accounting and Finance, Febru-
interest rate rise in this period of time. ary- March 2010; page 25-30.
The period between 2001 and 2010 was marked 12. http://www.standardandpoors.com/indices/sp-
with the two crises in the financial market in the composite-1500/en/us/?indexId=spusa-15--usduf--
USA. According to the research, it did not influence p-us---- taken 14.08.2011.
a fall in trust into the US financial market since the
13. http://www.federalreserve.gov/econresdata/re-
confidence in the market rise was retained despite searchdata.htm --> The U.S. Treasury Yield Curve:
the worsening of fundamental indicators. This con- 1961 to the Present, SVENY10. taken 12.06.2011.
clusion was supported with the Behavioural The-
14. Mishkin S. F., Monetarna ekonomija, bankarstvo i
ory, which argues that investment decisions often finansijska tržišta- sedmo izdanje, DATASTATUS,
ignore fundamental indicators including cognitive Beograd, 2006; page 64.
bias that lead to less rational behaviour [18].
15. Newbold P., Carlson W. L., Thorne B., Statistika za po-
slovanje i ekonomiju, Zagreb, MATE, 2010; page 869.
References
16. Mladenović M, ,Petrović P., Uvod u ekonometriju,
1. Stojković D., Đorđević D., Important aspects of cus- treće izdanje, Centar za izdavačku delatnost Eko-
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Changes on the Common Stock Returns of Financial Zeljko Racic,
Institutions, The Journal of Finance, Wiley- Black- Higher School of Professional Business Studies,
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page 1141-1153. Serbia,
E-mail: raciczeljko@gmail.com

Legislation and practice at the area of fire

protection
Milica Boskovic¹, Nenad R. Putnik¹, Slobodan Misovic¹, Goran Boskovic², Milan Gligorijevic³, Dane Subosic²
¹ Faculty of Security Studies−University of Serbia,
² Academy of Criminalistic and Police Studies, Belgrade, Serbia,
³ Ministry of Interior, Republic of Serbia.
Abstract vention measures, protection and reactions in case

In the past several years, a certain number of of this hazard. However, it appears that among stud-
fires occured in Serbia in hospitality facilities such ies in this field prevail those which aim at discov-
as cafes and nightclubs. Unfortunately, some of ering optimal models of financial risk and cost as-
these fires caused great loss of life. The tasks of this sessments in case of fire [4]. Certain studies focused
study are: the analysis of legislation in the field of on cost-benefit analyses of risk management in case
fire protection and assessment of the adequacy of of fire in specific organizations such as schools, city
prescribed measures; assessment of engagement governments or public transport [5] [6].
of responsible government entities in prevention,
but also in sentencing responsible persons in case Fire issues in Serbia – main goals and tasks
of violation of applicable regulations. The study of the study
applied a multi-method approach whose results
should determine with high certainty whether the The tasks of this study are: the analysis of leg-
prescribed penalty for violation of fire protection islation in the field of fire protection and assess-
regulations was stimulating or destimulating. ment of the adequacy of prescribed measures;
Key words: fire protection, law, practice, Serbia assessment of engagement of responsible govern-
ment entities in prevention, but also in sentencing
responsible persons in case of violation of appli-
Introduction cable regulations. The initial assumption in this
The discovery of fire was one of the major dis- study is that legal entities and responsible natural
coveries of prehistoric communities which used entities consciously do not perform prescribed fire
it to cultivate native grasses, modify forests or to protection measures in hospitality facilities.
subsitute hunting [1]. The importance of the dis- In order to determine whether the prevailing
covery and use of fire is undoubtedly significant. cause of fire in certain hospitality facilities is in-
However, contemporary communities, legal en- tentional, or not in compliance with regulations
tities and individuals have become increasingly by responsible people in those facilities, the study
negligent in fire prevention, personal protection applied a multi-method approach whose results
as well as environmental protection and the pro- should determine with high certainty whether the
tection of the facilities and the people for whom prescribed penalty for violation of fire protection
they are responsible. Arson, as a criminal offence, regulations was stimulating or destimulating. We
is not a rarity nowadays. This paper focuses on consciously emphasize that the results tend to
fire on facilities or inside the facilities which main show high probability, since possible full confir-
cause was human negligence. mation of our hypothesis demands deeper analy-
ses of physchological structures of personalities
Brief previous researches which would indicate the intent of individuals
to comply or not to comply with the mentioned
Numerous studies testify that fire is a serious haz- regulations. As scientists and researchers in the
ard to human and material resources [2] [3]. Many field of security and legal sciences, in this paper,
studies focus on the issues of risk management and we intend to analyze first of all criminal and legal
assessment and proposals for the most efficient pre- and systemic security elements significant for the

conduct of legal and natural entities related to fire However, Article 10 of this Regulation exempts
protection measures. from prescribed measures business facilities of up
to 150 square metres which are utilized for operat-
Methods ing independent businesses (surgeries, pharmacies,
agencies, services, catering). Apart from this cat-
This study comprises the application of the egory, there are two more categories of facilities ac-
following methods: 1) Analysis of existing legal cording to the degree of vulnerability to fire: I cat-
documents of the Republic of Serbia in the field of egory facilities (high vulnerability) and III category
fire protection; 2) Statistical analysis, processing facilities (certain degree of vulnerability).
and review of information about performed fire Law on Fire Protection for legal entities and re-
protection inspections of facilities and the num- sponsible natural entities imposes fines, as well as
ber of filed misdemeanour and criminal charges; potential temporary ban on operating a business.
3) Cost-benefit analysis in case of (non)compli- All forms of violating regulations and prescribed
ance with prescribed fire protection measures; 4) fines may be classified into two main groups: 1)
Interviews with professionals from the Ministry of Economic violations. Fines imposed on legal enti-
the Interior in charge of monitoring of regulatory ties for violations range from RSD 500,000.00 to
compliance and reaction in case of fire. RSD 3,000,000.00 (approximately EUR 4,000.00
– 16,500.00) and 2) Offences committed by legal
Legislation on fire protection in the Republic entities. Fines imposed for offences range from
of Serbia RSD 300,000.00 to RSD 1,000,000.00 (approxi-
mately EUR 2,500.00 – EUR 8,500.00).
The field of fire protection in the Republic of Certain provisions of the Regulation make the
Serbia is regulated by the Law on Fire Protection. preparation of protection plans a technical issue
[7] This Law and the accompanying bylaws, such more than a concrete operative task, which ren-
as the Regulation on Classification of Facilities, ders those plans unwieldy instead of making reac-
Activities and Land according to Categories of tions concise and precise by prescribed measures
Vulnerability to Fire [7], and Rulebook on the or- and prevention plans.
ganization of fire protection by the threat categories
[8] regulate among others the following issues in
Statistical analysis of data on activities of
the field of fire protection: entities subject to moni-
department for prevention - results and
toring compliance with regulations, fire protection
comments
measures, categorization of facilities according to
the degree of vulnerability to fire, criminal and mis- The Republic of Serbia has faced numerous
demeanour liability of legal and natural entities. fires in recent years. With the complexity and con-
Legal entities are obliged to act in accordance sequences they have, fires in hospitality facilities
with the mentioned Law and relevant bylaws, and forest fires pose a particular problem. In the
implement fire protection plans, as well as to pre- past several years, forest fires consumed a large
pare rehabilitation plans for the elimination of the amount of forest vegetation, and our fire brigade
consequences of fire. For performing duties and requested the assistance in manpower and tech-
implementing preventative measures and fire pro- nology from Greece and the Russian Federation
tection measures, entity – legal entity may engage for fire fighting. The environment suffered great-
another legal entity which obtained a licence for est consequences. However, in recent years, fires
performing such activities from the Ministry of in hospitality facilities inflicted casualties apart
the Interior of the Republic of Serbia. from material damage and therefore the research
According to the aforementioned Regulation, in this paper is focused precisely on this type of
hospitality facilities are categorized as II category crisis situations. In two fires which occurred in
facilities with increased vulnerability to fire, and 2008 and 2012 in Novi Sad, administrative center
they belong to a group of public and business facili- of the northern Serbian province, the total number
ties which accommodate from 200 to 1000 people. of 13 young people lost their lives.

The events presented in this paper as charac- The number of filed criminal charges in 2008
teristic and in relation to which data analysis was amounted to 189 which was by 18.18% lower than
conducted and created statistical review of activi- in 2007 (231 in total). The number of filed misde-
ties of Department for Prevention of the Sector meanour charges in 2008 amounted to 21 and in re-
for Emergency Situations are as follows: 1) Fire lation to 2007 it was also lower, namely by 41.67%.
in “Lounge” café on 17 February 2008 when 7 In 2012, data analysis and statistical indicators
young people died from fire and 2) Fire in “Con- of inspections and filed charges were conducted in
trast” nightclub on 1 April 2012 when 6 young relation to the data from April 2012 which repre-
people died from fire and 4 were injured. sented the constant in information processing. On
The data presented in this part of the paper repre- 1 April 2012, fire broke out in Contrast nightclub
sent official data of the Ministry of the Interior of the in which 6 young people lost their lives. Since the
Republic of Serbia. We statistically processed the fire occurred on the first day of April, it can be
data provided by the Ministry of the Interior which considered with certainty that it affected the activ-
are related to the two previously mentioned extraor- ities performed throughout the whole month. The
dinary events, which in temporal and numerical number of regular inspections in 2012 processed
sense represented reference points for further analy- by month amounts to: 1) In January 1.654, 2) In
sis and information processing. In 2008, the total February 2.120, 3) In March 3.079, 4) In April
number of regularly inspected facilities by inspec- 2.487, 5) In May 2.583 and &) In June 2.909.
tion bodies amounted to 39,515 which is by 12.76% The presented data indicate that there were no
more than in 2007 (when 35,044 regular inspec- significant fluctuations in the frequency of regu-
tions were performed). The following data should lar inspections. However, the data related to the
indicate the frequency and efficiency of activities number of extraordinary inspections show com-
performed by inspection organs, and the statistics pletely different activity. In the period from Janu-
and data analysis were determined in relation to the ary to March 2012, a total of 411 extraordinary
data from February 2008 as a month in which the inspections were performed, while in April 2012
described tragic accident in Lounge café occurred. that number amounted to 3.451. This piece of in-
In February 2008, a total of 2,758 regular information indicates that the activity of competent
spections were performed. In the period follow- services multiplied in relation to monitoring com-
ing the said fire that number was higher, namely: pliance with the Regulation on Fire Protection,
in March by 39.81%, in April by 62.62% and in however, such extensive inspections started only
May by 35.06%. It is interesting that the number after the fire with tragic consequences.
of inspections during the summer months (when
hospitality facilities accommodate more visitors Cost-benefit analysis
due to tourist season, holidays and school holidays)
was lower. In relation to February 2008 and previ- This study uses the Rational Polluter Theory as
ously mentioned percentages, 22.04% more inspec- a theoretical framework for the preparation of ba-
tions were performed in June, 17.15% in July and sic cost–benefit analysis in case of compliance with
8.38% more in August. The analysis of the number fire protection measures. This theory is founded on
of extraordinary inspections of facilities indicates various economic theories of business operations
that the activities of government bodies multiplied [9] . Every employer or producer tends to minimize
in the month following the said fire. In February the costs of their products and maximize profits.
2008, the number of extraordinary inspections [10] According to this theory, temporal application
amounted to 253, whereas in March 2008 that num- of penalties brings a note of vagueness, but the con-
ber amounted to 2349, which is by 828.46% higher. ditions for violating the law are defined through this
This information may indicate that the activities of widely accepted mathematical formula:
competent services were intensified as a result of
the unfortunate event. However, as early as in April E(NC) = [S – p • F]
2008, the number of extraordinary inspections was
Where:
by 55.73% lower than in February 2008.

E(NC) – represents total expected value (ben- EUR 29,178.50. This amount represents a value
efit) from violating the law; – S – in the previously described formula.
S – represents economic benefit; This study has the objective to comprehensively
p•F – represents expected costs incurred by analyze cost-benefit concept. To this end, profes-
violating the law (whereas p represents the prob- sional assessment was previously performed in
ability of uncovering misdemeanours, and F is the relation to legal liabilities and costs necessary for
expected amount of fine). If the final value of the furnishing a hospitality facility in accordance with
equation is negative, a rational polluter will com- the Law on Fire Protection. The second part of the
ply with the law. However, positive final value of formula representing fines which a legal entity may
the equation is a signal for a rational polluter that face, shall apply maximum penalties in accordance
they may break the law. with the Law on Fire Protection. For economic vi-
olations the fine amounts to EUR 16,500.00, and
For the purpose of preparing cost-benefit analy- for the offences committed by legal entities EUR
sis of compliance with the law and the installation 8,500.00. Maximum penalty amounts to EUR
of legally prescribed fire protection equipment, a 25,000.00. This amount is represented by p•F in
model facility was designed – a nightclub of an the described formula. When previously calculated
area of 1,500 square metres. Single level model values are entered into the formula
facility is made of hard material. The facility is
equipped with basic catering equipment, electric E(NC) = [S – p • F],
cupboards, as well as technical equipment for cre- the following values are reached
ating sound and visual effects (light and smoke ef-
fects). The maximum capacity for guests in this E(NC) = [29,178.50 EUR – 25,000.00 EUR],
facility is 300. Taking into account the purpose
and the number of people, this facility is classified where the expected total benefit from violating
according to previously mentioned Regulation as the Law amounts to EUR 4,178.50. The aforemen-
II category facility – facility with increased vul- tioned facts imply that the difference in finances in
nerability to fire. This model facility with its size favour of violating the Law may be greater. In
and characteristics represents a model of a smaller other words, responsible persons for hospitality
space capacity nightclub. In this way, we intend facilities may count on lower fines in the process
to analyze on a simple model, the liabilities, costs of furnishing and starting operations in a facil-
and possible penalties related to the responsible ity. Also, cost assessment of the implementation
person of a hospitality facility. of fire protection measures was conducted for the
Previously described model hospitality facility, model nightclub – a facility of a relatively small
according to the Law on Fire Protection and ac- area, which indicates that basic costs of fire pro-
companying bylaws, must possess at a minimum tection may be significantly higher.
the following systems and equipment: a) Sprinkler
valve installation, the price of its elements and as- Analysis of results of questionnaire
sembly amounts to EUR 20,933.50; b) 15 pieces completed by professional staff of ministry
of portable fire extinguishers, model S9, whose of the interior
total price amounts to EUR 525.00; c) 2 pieces of
CO2 portable fire extinguishers, whose total price The questionnaire completed by the employ-
amounts to EUR 120.00; d) Fire alarm and defum- ees of the Ministry of the Interior in charge of fire
ing system, whose average price on the market protection contained 7 questions, and the structure
amounts to EUR 7,000.00; e) A document - Main and method of answering the questions represent
fire protection project, approved by the Ministry a combination of open-ended, dichotomous and
of the Interior, the price of its preparation amounts polytomous types of questions. Three questions
to EUR 600.000. The total costs of documentation of the Questionnaire are open-ended, i.e. the ex-
preparation and the implementation of previous- aminees had the opportunity to answer questions
ly mentioned systems and equipment amount to independently, provide their professional opinions

or attitudes. The questionnaire was completed by However, different methods, data and interviews
11 employees of the Ministry of the Interior hold- applied in this study pointed out to a significant
ing various positions in the field of fire protection. probability and intent of responsible natural entities
Out of 11 examinees, 8 answered that legal in commercial facilities to consciously avoid com-
regulations in the field of fire protection were pliance with the Law on Fire Prevention and the
„partially satisfactory“, whereas 3 examinees an- accompanying bylaws. Multi-method research in
swered with „unsatisfactory“. As many as 10 ex- this paper pointed out to the following reasons for
aminees consider that the Sector for Emergency noncompliance with the regulations: 1) Insufficient
Situations of the Ministry of the Interior has lim- manpower and material resources in inspection
ited manpower and material resources at its dis- bodies; 2) Insufficient coordination of the Ministry
posal for accomplishing all entrusted tasks. The of the Interior, the prosecution and the judiciary, as
question „Does the existing legislation in the field well as passing mild sentences for violators of the
of fire protection enable legal and natural entities Law; 3) Financial calculation (cost-benefit analy-
to avoid complying with all provisions of these sis) which motivates responsible persons in facili-
acts?“, 8 examinees answered „Yes“. ties not to comply with prescribed measures related
The results of the questions in which the exam- to fire protection completely or partially.
inees were requested to assess the performance of All of the above mentioned facts indicate that
the prosecution and the judiciary in the field of fire the competent bodies of the Republic of Serbia
protection show the following: 1) 9 examinees co- have professional staff who can countionuously
sider the performance of the prosecution patrially perfect legal regulations, but reducing the possi-
satisfactory, whereas 2 examinees consider the bility of noncompliance with the laws demands
performance partially unsatisfactory; 2) 8 examin- above all the increase in manpower in inspection
ees consider the performance of the judiciary par- services, stricter penal policy, quicker and stricter
tially satisfactory, wheras 3 examinees consider prosecution and judicial authorities. It is necessary
the performance partially unsatisfactory. to establish inspection and legal system which will
The question “What are the reasons behind the neutralize cost-benefit result currently in favour of
fact that the number of performed regular and ex- violating the Law.
traordinary inspections of facilities in 2012 (by
month) is lower by 6-30% in relation to 2010 and References
2011?“, the greatest number of answers, rephrased,
read that the increased workload, tasks and facili- 1. Yoder J., Playing with Fire: Endogenous Risk in Re-
source Management. American Journal of Agricul-
ties to be inspected are not accompanied by the in-
tural Economics 2004; 68: 933-948
crease in manpower and material resources.
2. Carle D., Burning Questions: America’s Fight with
Nature’s Fire. Westport CT: Praeger. 2002.
Conclusion
3. Cooper C. F., Changes in Vegetation, Structure, and
In the past five years, the Republic of Serbia Growth of Southwestern Pine Forests Since White
devoted considerable effort to create comprehen- Setlement. Ecological Monographs, 1960; 30:
sive and adequate legislation in the field of fire 129-163.
protection. Within that period, the processes of
reorganization of the existing sectors for protec- 4. Shpilberg D. C., The Probability Distribution of Fire
Loss Amount. The Journal of Risk and Insurance
tion, rescue and fire brigade were underway, as 1977; 44 :103-115.
well as the establishment of a unitary Sector for
Emergency Situations within the Ministry of the 5. McCarty T. A., and Yaisawarng S., Technical effi-
Interior. Legislation and the establishment of a ciency in New Jersey school districts. In H. O. Fried,
unitary subsystem within the Ministry of the In- C. A. K, Lovell, S. S. Schmidt (Eds.), The Measure-
ment of productive efficiency: Techniques and ap-
terior enabled defining duties, entities, prevention plications. New York: Oxford University Press 1993:
measures and passing recommended sentences on 271–287.
legal and natural entities.

6. Grosskopf S., and Yaisawarng S., Economies of

scope in the provision of local public services. Na-
tional Tax Journal 1990;43: 61–74.
7. Official Gazette of the Republic of Serbia No. 111/09
8. Official Gazette of the Republic of Serbia No. 92/11
9. Boskovic M., Izazovi industrijskog društva: nove

tehnologije i ekološka bezbednost. Fakultet bezbed-
nosti, Beograd. 2010.
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vironmental crime. Managerial Auditing Journal
2004; 19: pp.741 – 759.
Boskovic Milica,
Faculty of Security Studies,
University of Serbia,
Belgrade,
Serbia,
E-mail: mboskovic@fb.bg.ac.rs

Numerical representation of information

technologies audit results by means of risk
assessment metrics
Zoran Ciric1, Jelica Eremic2, Otilija Sedlak1, Mirela Kljajic-Dervic3
1
University of Novi Sad, Faculty of Economics Subotica, Serbia,
2
Elektrovojvodina d.o.o. Novi Sad,Serbia,
3
Faculty of Economics, University of Bihać, Bosnia and Herzegovina.
Abstract is one of the roles of internal control information

system. Therefore, the role of information and ICT
There are numerous methodologies for carry-
(Information and Communication Technologies) in
ing out IT (Information Technologies) audits, as
everyday life has been growing constantly in the
well as creating numerical representations of the
last decades. Computers and computerized infor-
audit assessments. The numerical representations
mation systems are used more and more every day.
always have to rely on the personal assessment
The change has been even more radical in business
and somewhat subjective views of the auditors,
applications. Computerized information systems
thus cannot become totally objective. On the other
became widely used for information processing and
hand, the uncertainty in the accumulation pro-
storage and most organizations in these days use
cess – the numerical representation of the audit
computer systems for their business information
observations – can be diminished. In the research
needs [1]. As most business data are now stored in
a modified correlation matrix of the risk factors
computer systems it has become clear that although
has been created, to better represent the effects on
ICT is an enabler for effective company business,
the overall risk level. By considering the additive
it also presents new types of risks. Therefore, se-
and subtractive effects of co-existing risk factors
curity of the computer information systems and
on overall risk level, new risk assessment metrics
more precise ways to assess their risks has become
are being created. With the help of a more objec-
highly important. The fear of corporate accounting
tive risk assessment method, IT-management de-
scandals, terrorism, climate change and biological
cisions and the allocation of resources concerning
threats has also raised the level of alertness and con-
information systems can become more effective.
cludes in a need for more efficient risk measures.
Key words: IT auditing, risk metrics, numeri-
The common way to certify the risk level of
cal representation
business information systems is IS or IT auditing.
The information systems (IS) audit is a process dur-
1. Introduction ing which data and facts are collected to assess the
protection of information assets, data security and
Without timely and accurate internal control in-
to check whether the computer systems enable ef-
formation system, management will not be able to
fective ways to obtain the goals of the company and
regularly direct the enterprise. If we don’t realize
efficient use of its resources [2]. One of the main
the advantages of internal control information sys-
goals of IS to identify the risks threatening the com-
tem on time, there is no other option but to stumble
pany’s computer information systems, Audit re-
on it. Information, practice and knowledge must be
ports also contain a usually limited risk evaluation,
coherent all the time to avoid gaps between them or
based on the data collected during the audit process.
their obsolescence. Therefore, executives in well-
Most of the times these evaluations are based on the
conducted enterprises tend to maintain their skills
auditor’s perceptions, and represent a point of view
and knowledge and to ensure information flow, and
on the risk factors and their measures.
management tries to support them so that the en-
The corporate accounting scandals resulted in
terprises could function as better as possible. That
the Sarbanes-Oxley Act (SOX) in the United States

in 2002 and the revision of EU Directive 8 dur- IT management and set increased requirements of
ing the last years. Both regulations have the same the internal control, in particular of the IS control.
goal: to restore the trust of investors for corporate Successful business management practice is im-
accounting reports. Integration of information tech- possible without the existence of internal controls
nologies (IT) and business processes imposes the system, and the key part of the internal controls
necessity for assurance in the reliability of IS [3]. system are the IS controls that should be continu-
Increased requirements for control over informa- ously evaluated. Thus, IS internal control obtains
tion are understood as enterprise management key an important place in management structures, and
components. These results supplement the internal the corporate risk management becomes a priority
control framework which provides required infor- for modern business.
mation for the enterprise to achieve its goals. Ac- Risk management is the process that guarantees
cordingly, information system needs to be brought that the strategic objectives of the company are not
under control. It means that IS internal control endangered by the failures of IT in the organiza-
goal represents the reduction of operational errors. tion. The impact of an IT failure can be catastrophic
In such a way financial reports are more reliable, whether it results in an operational crash, a security
enterprise risk management is more likely, and the leak, a project collapse or other management issues.
enterprise equity is safer. This situation contributes Executives have to understand that IT risks are not
to the synergy of internal control and enterprise only a question of technology, but also a factor that
management places it under solid framework. They can endanger investments and projects. A common
contain strict regulations on responsibilities for mistake is to overestimate security risks and not to
audit reports, the personal involvement of stake- take effective measures against IT-related manage-
holders, the total independency of audits and other ment or project risks. It is important to understand
sensitive issues. Many of the companies’ processes that: Risk is as much about failing to grasp an op-
must be revised and the responsibilities for audits portunity as it is about doing something badly or in-
are more precisely defined [4]. These efforts show correctly [6] Although in some of the literature the
the growing need for reliable audit data; and the definitions are different – like in IRM’s model [7]
importance of auditing in general and especially IT most sources agree that the risk management pro-
auditing seems to be growing rapidly. cess is made up of three major steps: risk identifica-
tion, risk assessment and risk treatment.
2. The risk management process There are many methods to identify risks, e.g.
objective-based or scenario-based identification.
Internal control for the enterprise is same as By the use of these methods a more or less com-
self control for the individual. In contemporary prehensive catalogue of relevant risk factors can
business conditions, management agrees that each be obtained.
enterprise entails risks to be controlled through
policies, instruments, personal responsibilities. It
is necessary to establish IS internal control stan-
dards; define and develop detailed policies; estab-
lish levels of risk tolerance and ensure that enter-
prise has identification, measurement, monitoring
and reporting system for all types of exposure [5].
For many, enterprises, information and tech-
nology that support operation of the company rep-
resent the most valuable asset. Consequently, suc-
cessful enterprises recognize advantages of infor-
mation technology and understand its association Figure 1. The risk management process
with risks management as a critical dependence of
many business processes in relation to informa- During the assessment phase the previously
tion technologies. They understood the value of identified risks have to be assessed by their sever-

ity, impact, potential caused loss, probability etc. In To obtain these goals a proper measurement
most cases risk assessment is a great challenge as it system, metrics is needed. Establishing risk met-
has to be made depending on limited information. rics would help organizations by giving a basis for
These risks must be treated according to as- risk analysis and assessment that „...would enable
sessment. The treatment can be either transfer, them to make business decision about managing
avoidance, reduction or acceptance [8]. security risks“. [10]
In the research IS risk assessment has been in the
focal point as this is the most critical step in the pro- 3.1. Challenges of IT risk assessment
cess. Risk assessment has to deal with many uncer-
tainties and its final assumptions have an important The efforts of the past decades to create a stan-
role in making the decisions on risk treatment [9]. dard measurement system for information security
risk show that creating a risk assessment method-
3. The need for assessment metrics ology and metrics is a huge challenge [11].
Risk assessments can be qualitative or quanti-
Skepticism about the value of e-business and tative and both approaches have their advantages
information technology (IT) has been renewed re- and shortcomings. Naturally, the goal of risk assess-
cently, in part due to the gap between substantial ments is to provide a precise and reliable measure-
firm spending on IT-particularly on Internet-related ment of risks. Therefore the quantitative approach
technologies-and the widespread perception about would be ideal. On the other hand many of the
the lack of value of value from e-business [4]. methods presume that correct numerical representa-
There has always been a need from the man- tions of the measurements cannot be given, so they
agement of the companies that were investigated use subjective scales. Usually these are rankings of
that the results of the audits should be represented the extent of risks (e.g. low risk, medium risk, high
in numerical ways. The precise measurement of risk) based on subjective assumptions.
IT-related risk would have multiple benefits for The benefit of the quantitative methods is that
most companies. they naturally create numerical representations
IT-management decisions concerning the allo- of the risk assessment and therefore can be easily
cation of company assets and efforts can be put used to support IT-management decisions [12]. The
on a reliable basis. If the risk factors are identified main difficulty is to collect the necessary data. In
and their levels are precisely measured, it becomes many cases it is impossible to measure the level of
much easier to focus on the most important issues risks, the probability of occurrences or the potential
and to concentrate company spending on the se- impact of the threats. All that can result in forced
lected subjects. Company assets are always lim- numerical representations for the basic data and the
ited, and the amount of money that can be spent final outcome based on these data can be deceptive.
on risk defense is usually restricted. A method that Although the assessment report can contain detailed
could identify the main risk factors and measure numerical data on the level of risks the usability of
their possible impacts would allow the allocation assessment is questionable. It might be even worse
of these resources in the best possible way, and to have an assessment report with precise-looking
it would make the optimization of spending pos- numerical risk levels that are misleading than to
sible. Companies are always interested in compar- admit that some parts of the assessment cannot be
ing themselves to other organizations in the same characterized with numerical values.
industry. It is beneficial also from a promotional Even if the numbers are correct it is extremely
point of view to have certificates of the effective- difficult to compare the effects of a highly unlikely
ness of the company’s risk management. For this event with a great impact factor with a very likely
purpose benchmarking can be used. To establish a but not too serious event. Another problem is the
reliable benchmarking system, and unbiased risk comparison of data on different scales. Especial-
assessment method is needed to allow the inter- ly, it is extremely hard to compare management
change between different assessments, carried out risks with the risks of technical failures. Therefore
by different auditors in various circumstances. quantitative methods usually concentrate more on

the technical aspects that are more or less measur- mentation of audit procedures and results analysis
able and pay less attention to management issues. of the audit tests conducted. This way information
A further obstacle is that most assessment meth- system internal controls evaluation enables the ad-
ods do not cover every aspect of the IT-related con- justment of enterprise to risk environment. By us-
trol issues. To create a comprehensive assessment ing COBIT (The Control Objectives for Informa-
many methods have to be used and the comparison tion and Related Technology) framework the gap
of the results of different topics can be questionable. between business risks, control requirements and
Furthermore most of the assessment metrics do technical issues will be bridged.
not take into account the interactions of the different To make an assessment against control objec-
risk factors. Simply adding the different risk levels tives, the most comprehensive set of IT audit best
can be misleading even during a limited survey. practices, COBIT is a methodology that has be-
Due to the problems mentioned above a com- come a de facto standard covering all possible as-
bination of the qualitative and quantitative ap- pects of IT governance.
proaches is needed. According to the ITGI survey
the most popular risk assessment techniques are Aim of the research
still the business impact and vulnerability-based
approaches, but companies are beginning to real- During auditing projects users face the problems
ize the importance of a broader toolset. Assess- mentioned above. Although clients would expect a
ment against control objectives and best practices precise and well-interpretable result of the risk as-
is becoming more popular [6]. This Means that sessment process, it is extremely hard to create one.
management is beginning to realize that a com- Most of these problems are yet to be solved. There
prehensive risk assessment can only be carried out have been initiatives to unify the different approach-
if all the aspects of IT-related risks are taken into es to risk assessment [14] and hopefully the conver-
account. This goal can be obtained by combining gence of risk management methods has begun.
assessment against best practices and assessments The goal of the research is to diminish assess-
of business impact and likelihood [13]. ment errors in the calculation phase. Therefore
There is no unique way which defines infor- data collection or the method by which the input
mation systems control organizational structures. data are created has not been targeted. It has been
Each enterprise should use the most appropriate assumed that the necessary data for the assessment
components of these frameworks to categorize is available and had been created during an IS au-
and assess IS controls. In the modern environment dit process by the auditor. The goal is to create a
is not possible to imagine any audit form (financial tool for IT auditors that helps in making the as-
reports audit, internal audit and public sector au- sessment and enables better usability. The result
dit) without considering internal controls that are of the assessment method is a unified risk level in-
embedded in an information system which is au- dicator that is based on the results of the IT audit.
dited. Auditing procedures for the internal control The different risk issues are dealt with as additive
evaluation cannot be based on intuition, already or subtractive factors.
certain methodological rules must be followed. During the research COBIT control objectives
Therefore, there is a need to develop internal have been used as a basis to create the necessary risk
control audit methodologies that are performed factors. As COBIT covers all possible areas of IT
through the information system based on the level governance it is a sensible assumption that the risk
evaluation in which those internal controls meet factors identified using COBIT methodology are
predefined control objectives. Beside considering representing the most comprehensive set of aspects.
client’s information, methodology development COBIT offers a Maturity Model to assess the
itself includes audit content planning along with maturity or the level of development of each of
selection of processes that will be subject of audit. the control objectives. This is based on the com-
That represents input values for risk assessment, monly known CMMI (Capability Maturity Model
control objectives and existing controls whose Integration) method developed by the Carnegie
performance needs to be verified through imple- Mellon Software Engineering Institute. Although

maturity levels are subjective as it is a personal re-

sponsibility to make the assessment probably this AI 1
is the best way to avoid suggestion of a precision + -
that is not justifiable [15] COBIT contains Matu- PO 4 + + 0
rity Models for all of the 34 IT processes to cover - + -
all aspects of IT-related governance [16]. Figure 2. Example for the cell contents
The application of the method is rather simple
as the main goal was to provide a tool for self- The most critical part is the diagonals of each
assessment. The levels of maturity – or how well- segment as the simultaneous effect of two risk fac-
formed the respective processes are – can be grade tors on overall risk level can be different depend-
on a scale of 0 (non-existent) to 5 (optimized). ing on the types of risk and their interaction. To
Generally this method is a qualitative approach co-effects in the modified correlation matrix are
but can be used to create well-established numeri- results of previous experiences and professional
cal results. Naturally, as the maturity levels are estimates. It offers a simplified representation of
measured on an ordinal scale the results cannot be first-order relationships between different control
interpreted directly. objectives, thus the risk factors as well. In this
The maturity levels can be used to make a dis- early version the relationships are only mapped
tinction whether a risk in the organization linked between high level control objectives and the as-
to the control objective adds to the overall risk sumption has been made that detailed control ob-
of the IT-related issues or decreases it. Based on jectives relate to each other analogically to their
the maturity levels an assessment method can be parent (see Figure 3.).
developed. The obtained results can be used for
benchmarking purposes, as a standard for unbi- 4. The risk assessment method
ased comparison and as a helpful tool to establish
good IT-management decisions. Based on the correlations detected in the earlier
The research is focused on the interaction be- stages a risk assessment method can be set up. The
tween different risk factors. This is the aspect that overall risk level of the organization can be mea-
can be improved as most methodologies do not sured in the following way:
concentrate on simultaneous effects. It is impor-
tant to realize that the simultaneous effect of two R
= w12 r12 + w13 r13 + w23 r23 +  + w( n −1) n r( n −1) n
or more risk factors can be different than the ef-
fects added together.
where R is the overall risk level, w12,..., w(n-1)n
In the assessment process it can be decided
are the weights of the respective risk factors and
whether the maturity of a control objective will
r12,..., r(n-1)n are the first-order correlative effects of
raise or lower the overall risk. Then it would be
the risk factors (+1, 0 or -1).
comparatively easy to calculate the overall risk
The weights of the correlative effects are cre-
level. But the interactions have to be taken into ac-
ated from the weights of individual risk factors
count as well. During the research the interactions
given by the auditor or the person making the
of risk factors – according to COBIT Control Ob-
assessment. The weights should add up to 1 and
jectives – has been mapped. A correlation matrix
should represent the same distribution as the origi-
has been set up to determine the co-effects of the
nal weights of individual risk factors. This can
risk factors on overall risk level.
be guaranteed by a simple calculation in the first
The matrix shows the simultaneous effects of
phase of the assessment [17].
two risk factors on overall risk level – or security
This method creates a risk level index in the
level as „+“ stands for more security and „-„ for less
range of -1 to +1. The aggregation can be made
security. The top left cell in each segment shows the
for the whole of the risk factors or only certain
simultaneous effect if both factors are considered to
control objectives; therefore it is possible to create
perform well, the bottom right is to sign the effects
risk indicators for different territories as well. By
of both factors underperforming see Figure 2.).

domain id id PO PO PO PO PO PO PO PO PO PO PO AI
1 2 3 4 5 6 7 8 9 10 11 1
PO 1 + - + - + + + - + + + + + 0 + - + - + + + 0
+ - + - + - + - - - + - + - + - + - + - 0 -
PO 2 + + + 0 + + + - + - + 0 + - + + + - + +
- - 0 - - - - - 0 - - - 0 - - - 0 - 0 -
PO 3 + - + + + 0 + 0 + - + - + 0 + - + -
+ - - - 0 - 0 - + - + - 0 - 0 - + -
PO 4 + + + 0 + 0 + 0 + - + - + 0 + 0
- - - - - - - - + - 0 - 0 - + -
PO 5 + - + - + 0 + - + - + - + -
+ - 0 - 0 - + - + - + - 0 -
PO 6 + - + - + - + 0 + - + -
- - + - + - - - - - + -
PO 7 + 0 + - + 0 + 0 + -
- - + - - - 0 - 0 -
PO 8 + - + - + - + -
+ - 0 - + - + -
PO 9 + + + + + 0
- - - - - -
PO 10 + - + -
0 - 0 -
PO 11 + 0
-- - -
AI 1
Figure 3. Part of the modified risk correlation matrix
creating a well-defined index of the overall risk to read the paper. Every column needs to have
level, it is possible to make comparison between title, every measuring unit (SI) has to be clearly
different companies or different functional territo- marked, preferably in footnotes below the table, in
ries within the organization. Arabian numbers or symbols.
Naturally, this method is not the ultimate solu-
tion to risk assessment. By taking into the account 5. Conclusion
the interactions of risk factors it is possible to make
more precise assessments and create metrics for A well-formed risk assessment technique can
comparable results. In this method only the first-or- have multiple benefits to many of the stakeholders
der correlations are taken into account. The effects of IT-related risk management. The metrics that re-
of multiple correlations on the result must not be sults in numerical representation of the risk levels
underestimated but the secondary, tertiary etc. cor- of company IT can serve as a basis for benchmark-
relations are expected to have less effect on overall ing. Therefore it is possible to make comparisons to
risk levels. other companies’ risk measurement can be used in
The method does not solve the problem of certifying the level of risk-readiness. The value of a
data collection. It is designed to rely on the matu- proper certification of the level of risk the company
rity levels defined by the auditor. The goal of this holds is very high. The certificate can be presented
method is to lessen the effects of errors made dur- to the clients as an instrument to assure confidence.
ing the aggregation process. A reliable assessment of the information risks
Tables have to be numbered and appear by is an especially powerful tool in the hand of the
order, so they can be understood without having IT-management to establish their decisions. The

assets of companies are always limited; therefore correlations have only been checked at a
a method that enables the best allocation of money higher level. The assumption has been made
and attention is always welcome. By identifying that the detailed control objectives inherit the
the most problematic areas and offering a precise correlations of their parent-objectives. This
measurement system of the level to which the area hypothesis has to be checked and the model
is exposed to threats it is possible to make well- has to be revised according to the results.
founded decisions on expenditure and risk-related Individual checking of control objectives
actions in the organization. would mean almost 100 000 relations which
Taken as a whole, risk assessment metrics can is an enormous task.
help in drawing the attention of the stakeholders to – Creating a software-framework to help the
the problematic areas and also to take countermea- actual usage of the method in real-life situa-
sures in the most effective and cost-efficient way. tions and help auditors apply the findings.
The research development aimed to create a
more reliable assessment method to process the Although the first steps to establish risk assess-
statements of the IT audit report. For this purpose ment metrics and create more reliable methods for
the effects of simultaneous existence of risk fac- IT risk assessment have been made there are still
tors have been taken into account. several difficult problems to be solved. Large effort
Several challenges still lie ahead in creating is needed to solve some of these, but the expected
a common method for IT audit risk assessment. results compensate for the endeavor: Reliable IT
A common approach is needed to assure that the risk assessment metrics would raise the precision
different organizations using different standards of the evaluation of IT risks, the reliability of IT
can cooperate and the results are interchangeable. audit findings, the validity of IT-management de-
The efforts of the main organizations undoubtedly cisions and the effectiveness of the allocation of
show the determination to create common meth- IT-related assets.
ods. The largest challenge is to collect the neces-
sary data for a reliable risk assessment. In most References
cases this appears to be beyond possibility. The
problems mentioned earlier – e.g. comparing dif- 1. Dorfman M.S. Introduction to Risk Management and
Insurance (6th ed.), Prentice Hall, 1997.
ferent scales and diverging events – might prove
to be overwhelming. Nevertheless efforts can be 2. ITGI: Information Risks – Whose Business Are
made to create a basis for assessments. They?, IT Governance Institute, Rolling Meadows,
Another type of challenge is the handling of the 2005.
assessment process itself. A common mistake is to
3. ISO IEC 17799-2000, International Organization for
add the different risk elements and calculate an over- Standardization (ISO), Code of Practice for Informa-
all risk level by simply totaling the individual rates. tion Security Management, Switzerland, 2000.
This results in misleading numerical representations
and unjustified outcomes. During the research this 4. Sedlak O, Grubor A, Ćirić Z, Cariša B. Measure-
kind of error has been targeted. The mapping of the ment Model for Assessing the Diffusion of e-Business
and e-Marketing, Technics Technologies Education
first-order correlations between control objectives Management,Vol. 6, No. 3, 2011; pp. 651-657.
has been done. The tasks lying ahead are:
– Mapping multiple correlations (co-existence 5. IRM A Risk Management Standard, AIR-MIC,
of several factors) and their effects on overall ALARM, IRM, 2002.
risk. The simultaneous effects of more than 6. IT Infrastructure Library (ITIL), British Office of
two factors have not been targeted yet. The Government Commerce (OCG), Central Computer
consequences can be significant but are and Telecommunications Agency (CCTA), London,
expected to add up to less than the first- 1989.
order correlations.
7. Haimes Y. Risk Modeling, Assessment and Manage-
– Discovering the correlations between detailed ment, Wiley & Sons, New York, 1998.
control objectives. During the research

8. Ćirić Z, Sedlak O. Quantitative Modeling Extreme

Financial Risk’, in Conference of the International
Federation of OR Societies (IFORS), South Africa,
July, 2008; pp. 73.
9. ISSA Press Release, ISSA, ASIS and ISACA Unite

to Address Enterprise Security Risks, 17th February
2005.
10. Ozier W. Risk metrics Needed for IT Security, IT

Audit Forum, April 1, 2003; 6.
11. AS/NZS 4360-2004, Risk management, Standards

Australia/Standards New Zealand, 2004.
12. Gallegos F. Information Technology Control and

Audit (2nd ed.), Auerbach, 1999.
13. National Institute of Standards and Technology

(NIST), An Introduction to Computer Security: The
NIST Handbook, Special Publication 800-12, USA,
1996.
14. ISO TR 133341996-2001, International orga-

nization for Standardization (ISO), Information
Technology-Guidelines for the Management of IT
Security Switzerland, 2001.
15. COBIT 8th Edition, Management Guidelines, IT

Governance Institute, Rolling Meadows, 2008.
16. Turley J.S. Get Ready for the EU’s 8th Directive in:
Directorship, 2004.
17. Straub D, Hoffmann B, Weber C. Toward new met-

rics for Net-enhanced organizations. Inform Sys-
tems Res., 2002; 13(3): pp. 227-238.
Otilija Sedlak,
Faculty of Economics Subotica,
Serbia,
E-mail: otilijas@ef.uns.ac.rs

The end of political state and necessity of

introducing an economic state
Zivota Radosavljevic¹, Milan Radosavljevic², Carisa Besic2, Dragana Djuric1, Dusan Vasic1
¹ Faculty of Business Economics and Law, Belgrade, Alfa University, Belgrade, Serbia,
² Faculty for strategic and operative management, Belgrade, Serbia.
Abstract tions, but also in relations with other constituents

of a national community i.e. at the global level.
The paper deals with the problems and stereo-
Regarding this, the U.S. president during the crisis
types that are used by the contemporary states in
in 2008 said, “The way out of the crisis is in the
managing economic trends, regardless of the level
changes, the changes that we believe in. U.S. Presi-
of development, socio-political organization, cul-
dent’s programs of reform are contained in the five
tural-sociological, and other features in order to
key points such as overcoming the economic crisis,
highlight the unsustainability of certain concepts
sustainable development, nuclear disarmament, in-
and the necessity of introducing new approaches
ternational understanding, social responsibility of
so the state could effective and effectively respond
the state, especially health insurance.”[1]
to new challenges and complexities at the national
Detailed analyzes show that the model of public
i.e. the global level. Especially attention is paid
administration has long been applied in managing
to the problems in the Republic of Serbia and the
business and other organizations. It was felt that
need to restore forgotten, host economy as the only
the state i.e. its ministries are designed on modern
objective source of progress and prosperity of the
concepts and that the same way of modeling can
state. Legality and conclusions from this study can
be successfully implemented in business organi-
be adequately applied to other countries, regard-
zations. In modern terms, a number of states take
less of their development; which give this paper
over the practice of designing and managing mul-
provides a universal and applicative meaning.
tinational and transnational companies. This solu-
Key words: government, host economy, public
tion is acceptable because business organizations
sector, new challenges and concepts
are successful fighting for survival, growth and
development in the turbulent and complex mar-
1. The end of political and necessity of kets, and that matrix could be true for any country.
introducing an economic state The request for the introduction of an econom-
ic state is natural, because it shows that even in the
About the state as a political institution, many
most developed country in the world the state is
things are written. Classics of Marxism pointed out
not able to solve the economic problems, because
that the state is a transient institution that appear at
the real economic problems are very resistant to
a certain stage of human civilization development
traditional economic remedies, such as lower in-
and that it will eventually disappear. This is a long-
terest rates, higher public spending. Political in-
term forecast, which is certain because it is natural
struments cannot tackle economic problems, even
that everything that was created is going to disap-
though they have a huge impact on successful
pear; it is just a matter of time when it will hap-
solving. Regarding to this, it should bear in mind
pen. Without going into further discussion on this
following, “There is nothing that the U.S. govern-
issue, it is more objective to highlight the need of
ment, the Federal Reserve or taxpayers can do so
changing the classical state and its transformation,
the illness of our economy disappears overnight.
according to the principle of reengineering. There-
There is no such powerful, omniscient superhero
fore, it is necessary to mark the end of a political
that can save the economy. If we look rationally
state, as an institution that exists for several centu-
and not politically, we will see that Washington
ries and to introduce an economic state, as a new
has less power over the economy and a lot less
quality in the performance of government func-
room to maneuver than most people think.” [2]

The concept of the economic state is going in panies in the field of armaments, military equip-
the direction that each country must be viewed ment and military hardware overhaul, which for
like any other company, i.e. every household, be- decades operated under the “veil of secrecy” and
cause it carried almost all the features found in was controlled by the state. Private companies in
any enterprise, namely, technical, economic, so- the field of defense are now internationalized to
cial, developmental, etc. The state has to satisfy such an extent that the production of some weap-
the citizenship through the provision of services ons works thousands of collaborators from differ-
and to charge for that, which is why it is necessary ent countries of the world.
to pre-define number, type and scope of services Detailed analyzes show that the state is now
that the state has to offer. In principle, these are considered a political rather than an economic sys-
unattractive and unprofitable activities for which tem. State and public administration is more con-
the private sector is not interested or are sectors cerned the political and legal rather than economic
that are sensitive and risky to life, health and gen- science, which except for macroeconomics, public
eral security of the country. Everything else can be finance, almost nothing else is researching in higher
privatized and separated from the jurisdiction of education institutions in the field of economy. This
the state and thus reduce the number of “leeches” is the result of stereotyping, which long existed in
who suck budgetary stance. other areas of life and work, i.e. the perception that
Of course, a state like any other company may the state formed a political party and it is natural
be in a position to go bankrupt, and it will happen, that political leaders who get the most votes are the
if the outputs are smaller than inputs. In this case, presidents and governments to lead the most impor-
provision shall be made as with any other compa- tant sectors of the state. It is forgotten that the end of
ny, but the state cannot be liquidated because there the political state is near, because information tech-
are common or general interest for which there nology marginalized the traditional political parties
must be a central authority to articulate them. In and their means of action. J. Trippie said, “Two oth-
other words, inefficient state must be restructured er reasons for the existence of political parties is to
by the depth and breadth of the society, dismissed support the candidates and donors to provide fund-
the government that has failed to meet the goals ing for the campaign are more questionable. Can-
and expectations of citizens, and so on. didates are now able to gather more volunteers and
If the state is viewed in this manner, i.e. as a organizers of the campaign using the Internet and
complex social and economic organism requiring social networks, rather than any political party can
high quality management, it may be concluded gather through its principal committees and party
that the state needs to work on economic princi- networks.” [4] Therefore, new technology and high
ples, i.e. those principles on which it operates any turbulence imposed the need to react quickly to
business organization. specific problems, but much more on removing the
This approach points to the need that the public causes that produce certain problems. This is even
sector in transition countries must be more exposed more as the state as an institution apparently is the
to market forces and the abolition of the classical largest generator of crisis. It turns out that in the
management that existed in the second half of the past period, business organizations largely assumed
last century, since those are outdated paradigms the governance principles in their strategies, and to-
that no longer works and are not able to respond to day many corporations have become economically
contemporary problems. [3] The practical opera- stronger than the individual states. Consequently, it
tionalization of this idea is in greater privatization is necessary to take effective principle of managing
of traditional government institutions, just like de- corporate organizations and apply them in the man-
veloped market countries in the West did, through agement of the state and its subsystems.
the liberalization of the energy sector, railways, The state in contemporary understanding has to
education, health, culture, defense, etc. Experi- be understood as any other organization i.e. com-
ence and research show that the private sector in pany. It has a goal, like any other company, and that
the developed countries took many activities of is creating a favorable business environment for
the public sector as well as traditional public com- the successful operation of business organizations

by providing services. This and other objectives, 2. The necessity of restoring traditional
the state must exercise with the smallest economic (host) economy
sacrifices, i.e. with the smallest expenditure of ma-
It is already known that the Americans are re-
terial, human, financial, information and other re-
turning to their traditional dishes and “grandma’s
sources. Thus, the state in carrying out its role must
cookies”, which are largely forgotten, and that to-
take into account the economic dimension, which
day is a special treat. They, like other developed
is the final and inevitable in every organization. It is
countries are returning to the suburbs and Mother
shown that any goal can be realized today and that
Nature. In numerous UN declarations, a request
this something like that is not a major problem, but
for further ruralization of the villages and de-
a problem arises when the goal must be achieved
urbanization of the cities is pointed out. Instead
with the highest level of business economics.
of mass, a rural tourism is developing, life on the
Of course, the state is anatomically identical
farm, and so on. Growing plants in the traditional
or similar to other interested organizations. It has
way is becoming a lucrative business. Alterna-
its inputs, transformation processes and outputs in
tive and traditional medicine is gaining the right
the end. Its resources are public property managed
of citizenship and it is in conjunction with official
by public enterprises; the budget is formed from
medicine. Many other areas are returning to tra-
taxes and other revenues (donations, extraordinary
ditional value systems. Of course, it is forgotten
gains, etc.). Each state, just like the companies,
that “the current model of capitalism is inefficient,
shall endeavor to “fertilize” the public property
they are now looking for a new one, but no one
as much as possible, and on the other side to take
yet knows to say what it should be, there is still no
minimal interventions in the economy in order to
solution. No new Keynes to find a new solution, as
achieve defined objectives.
it was after the great depression”. [5]
Through the transformation process, the state or
Detailed analyzes show that the host economic
government as its executive body should design the
is largely abandoned by the state and its institu-
best mix of business, in order to achieve the great-
tions. The host economy is largely abandoned
est impact. Poorly designed government or public
by modern economic science, although it is the
administration and public enterprises, increase the
healthiest basis for the management of state, and
entropy of its functioning, which multiplies the
even the global economy. The host economy is the
problems at the enterprise level organizations.
source of all kinds of economy and by restoring
Finally, the state has outputs that can be ex-
traditional values in
this economy, to a large extent
pressed by the quality of service and products
could provide the chance to avoid the problems of
i.e. the standard of citizens. In other words, if the
modern economy and the state. Great Greek phi-
general public does not have a satisfactory quality
losopher Socrates said, “We should not underesti-
of life, state does not do enough to provide it and
mate those who know how to manage the house-
must step up its activities, such as the introduc-
hold. Because, the one who knows how to manage
tion of management in improving the quality of
a household, knows how to lead a country. You
products and services, in order to obtain or retain
only should be a host.”
customers i.e. clients.
The host economy does not become obsolete.
In order to achieve this, it is necessary to bring
However, it may disappear if a man does not be-
more economic elements in political and legal
have as a host. This is what happened in the new
theory of the state, which is prerequisite for devel-
economy, i.e. in mod e rn terms characterized by
opment of political component. Therefore, this is
the crisis. It turns out that a man like plants and
not about the abolition of the political, legal and
animals are natural b eing, and nature can never
social role of the state, but the balance of these
become obsolete, because it is an objective source
roles with the economic, social and developmental
of life. The bee does not become obsolete, but for
functions, which is also a prerequisite for the real-
126 million years, t h ey are producing the same
ization of the traditional role of the state.
product, but create t he conditions for flowering
and fertilize the pl a nts. What do become obso-

lete those are the beehives, feeding and care tech- weak economy, fragile democracy, high levels of
niques, tools and honey processing techniques. A corruption, misuse or insufficient quality of priva-
man produces, spend, and tries to facilitate their tization, large debt, and so on. It turned out that a
own life and work using new techniques and tools. weak economy cannot have a strong currency and
What does change and become obsolete are tech- short-term mechanisms cannot ensure the mainte-
nologies, concepts and philosophy of life. [6] nance of monetary stability in the long run.
Exact figures show today there are a number These and other data and observations warn us
of world class statesmen, people who have com- to the need to return to the roots of the host or the
pleted an elite management school of business, traditional economy that was largely abandoned.
but there are few statesmen hosts, i.e. those who It seems that the only traditional economy is still
“take from barn as much as there is in a barn,” and relevant and that its fundamentals will never go
lead a country like they are running a household. away, because it is based on a sound and sustain-
To make matters worse, a large number of control able basis. This is significant, because it shows that
and statesmen in countries in transition and their traditional mechanisms, concepts and technolo-
ministries are not encountered problems with the gies in the implementation of the host economy
management of a household or small business, so today are unacceptable. Thus, traditional or home
it is often the state became the first place that were economy and its concept of realizing must be con-
taught management and dealing. temporary i.e. adjusted in any new time dimension
That also leads to many problems at the nation- to suit a specific situation and the country.
al or at the global level. Thus, during the economic Traditional or home economy is based on sev-
crisis in 2008, was stated that the American nation eral important features, including:
has suffered huge financial trauma of tens of tril- – That each generation leaves more wealth
lions of dollars. It will take many years to avert than what it does inherited from the previous
these consequences. Politicians and government, generation. With some exceptions, this
however, does not want to admit to the public this was practiced and thanks to this principle,
indisputable fact. According to the U.S. National humanity in every new time dimension
Bureau of Economic Research, about 8 million exercised greater success, better living
people in 2007-2008 lost their job. In the econ- standards, longer lives, and so on.
omy, so-called “speculative transactions” gained – The second principle is linked to the
importance, even though they are not supposed to first, and is based on the principle that
receive a legal form. Who needed production and each generation should live of their own
savings when the stock market could earn more labor, and that does not live on the burden
than 20% annually in the period 1982-2000, i.e. of future generations. The basis of this
when the interest on loans for real estate grew at principle is that borrowing goes to the limits
a double-digit number, and the cache could be of indebtedness. Therefore, host state, like
quickly and easily get by refinancing and putting common household will try not to borrow,
a second mortgage and thus get another loan. The especially not to leave the burden of debt
state is in an economic crisis in 2009 opt for print- repayment to future heirs. If that were to
ing the money in order to calm down the panic happen in the household, members would
just caused due to big disproportions between pro- oppose such system and management is
duction and consumption, while consumption was likely to be took some of the members who
several tens of times greater than the possibili- managed on a sustainable basis holdings.
ties. Many analysts pointed out that the crisis was That the practice of borrowing has taken
resolved, and the individuals said it is necessary hold at the end of the last century shows
to draw some benefits out of the crisis. All of the Manfred Perlick with his statement,
above is the result of the actions of classical states “America lives on credit.” [8]Today, the
and its effect on obsolete or inadequate way. [7] situation is much worse. Accordingly, the
The problems of transition countries are even debt is not only economic but also a moral
greater. There is a great discrepancy between the issue, because the assessment of such

behavior cannot and should not give those n which it is realistic to expect an even worse
who take, but those who repay loans, etc. state of the economy, because: [9]
In this context, it is necessary to take into ○ Owners of real estate and homes will
account debt of a country as a component of have less capital and fewer opportunities
the sustainability of a country, and evaluate for loans,
the social responsibility of the state. ○ Shareholders will have a lower dividend
– The fear regarding the transition is circulating and less confidence,
through developing countries; a key point of ○ The number of available jobs will
this transformation is the qualitative change decrease,
of state or public property into private or ○ Modern industry is dismissing rather
combined ownership. The number of sold than employ workers
enterprises and the amount of the gained
money usually measures the success of the From the above it can be concluded that any
transitional government, which is contrary indebtedness in the present, with the assumption
to the sound science of the host economy. there will be better times in the future is unreal-
Each host in the foreground will emphasize istic, especially when it comes to spending, i.e.
what he bought, i.e. with which he increased filling the budget deficit. In these circumstances,
his wealth, and will not brag with the sale, it is pointless to introduce rescheduling of loans
since real hosts do not do that, and when because in poor business conditions such as ex-
they do, it should serve to increase rather pected, it is difficult to maintain business and pay
than decrease assets or improvements of the out the old loans.
property.
– Each host during the sale first trying to get 3. The prime minister in each state should
rid of what it does not need more. Therefore, be the chief executive (CEO)
it clears the orchard that does not bring
satisfactory yield or crop, livestock that does If a state is understood as a company, then
not provide for breeding, etc. Therefore, many things from the public administration can
the real host will never sell what may be applied to business organizations, as well as
be a relatively easy sell, but what is most many good solutions for business organizations
difficult to sell. Practice in the management may apply to the state organization and manage-
of the state economy, especially in transition ment. This analogy in the past has gone from the
countries, including Serbia, shows that state toward the companies, where decisions were
here is first sold what is valuable, and then often taken over from the state administration and
what does not make a profit and thus a the management of large business systems. Under
great damage to the success of the national present conditions, the direction is reversed, and
economy is making. now the state administration often takes the ex-
– The households do not spend beyond its perience of transnational and multinational com-
possibilities. In this context, it is not possible panies and implements it in its organizational and
to use the credits and loans for tourist trips, management practices.
purchase of consumer goods, and so on. A In this context, it is evident that the need for
concept that has existed in the seventies and professional managers is top priority and that spe-
is still largely advocated that production can cialization, professionalism and high competence
be started by increased consumption, today never were needed in public sector than it is to-
crashed, especially when it comes to the day. This is a real statement, because we are in the
budget deficit i.e. the budget expenditures. turbulent conditions of life and work, where de-
Thus, no loan or loans, even if it is free is not cisions must be made quickly and efficiently. Of
justified if it is used for consumption. This is course, quick decisions are generally of poor qual-
true because we shouldn’t except even more ity, and good decisions are often delayed. To adopt
favorable conditions, but rather more brutal fast, but good decisions, we need a high level of

professionalism of all members of the manage- desires and interests should be met with the least
ment team, and all stakeholders involved in the expenditure and other economic sacrifices. If this
creation of joint effects. does not happen, the citizenry as a consumer of
However, research shows that up to the present public products will not provide satisfactory re-
days, the management science is not enough pro- sults for its stakeholders.
moted professionalism in public sector manage- Therefore, the government is a representative
ment. The reasons for the above should be sought of the public sector and is similar to the top man-
in the objective facts, because the public sector is agement of business organizations. It is like the top
complex, extensive and according to its anatomy management because the state has a responsibility
belongs to state, as a traditional institution that to create a favorable business environment in which
is slowly changing, especially in the economic “business will flourish.” The government should
sphere. Therefore, the greatest management gurus set an example in the introduction of efficient tech-
have failed to create new ideas and concepts aimed nologies and organizational management concepts
at increasing the efficiency of the public sector. A in their system or its parts. If the concept proved
renowned consultant T. Peters initially denied the successful, it would be endorsed by the business
importance and influence of management on the organizations, which, in turn, will be good for the
performance of the public sector, but after research- state, as the more successful economy will be filling
ing documents on the public sector changed its at- the budget faster, which could be used to improve
titude. In this way, he joined other famous names people’s welfare. In this way, the government will
who justified management in the public sector, so gain trust for leading the state, as it proved on the
today there is no significant management guru that parliamentary and local elections.
doesn’t realize management as a factor of business Accordingly, the prime minister of each state
and new production work force. must be the manager i.e. the person who has the
Porter’s colleague from Harvard, Rosabeth knowledge, skills and ability to organize the man-
Moss Kanter, recently examined the relationship agement process. Its main task is based on the
between public policy and “a business commu- electives they voted for to formulate a strategy to
nity” from the opposite perspective. Transnational transform the electoral promises into reality and to
and multinational corporations are globally orient- realize its promises.
ed, and provide their expansion through the strat- In Serbia, all the above facts are unreasonably
egy of internationalization, especially in countries neglected or not enough importance is given to
with cheaper labor. In this context, it is necessary them. Instead of professionalism and requires that
to consider the policy led by a country’s political the president be a government manager, i.e. a busi-
stability and acceptability of companies in a par- nessman that has proven its skills in managing its
ticular region. [10] She insists that the best way own business or as a manager in a large business
for a region to make progress and become an ex- systems, in recent electoral mandate as prime min-
cellent leader in one of three activities: thinking, ister political leaders were elected, as a rule, from
production or trade. According to Moss Kanter, it the party that had the best election result. This is
is pointless to fight against globalization in order undoubtedly a strategic mistake. In that way, from
to safeguard local or regional community. Nativ- good or successful political leaders typically cre-
ism, or the perception that natives have the advan- ate bad prime ministers or heads of certain gov-
tage of its territory is a stereotype, which if it is ernment departments. Appointment political fig-
accepted, leads to the disintegration of indigenous ures for prime minister, conditions are created
i.e. local populations, particularly when it comes that members of the government can be appointed
to their needs and interests. by the same criteria, and these elect people from
The above statements apply to public adminis- their political options for their structures, which
tration. The public administration, as any business are loyal to their political opinion, often without
organization must have in mind that the citizens the knowledge, skills and abilities in the sphere of
of a city, village, or other socio-political commu- management. In that way the governance in tran-
nity actually represents consumers whose needs, sition countries and Serbia politicize and idealize,

and thus prevents the professionalization of gover- present, even in the most developed countries. Tom
nance and public sector. Peters at first was for the introduction of manage-
Bearing this in mind, the ministers should be ment in the public sector, and later accepted it. The
functional managers, who manage specific depart- third management guru Mintzberg was against
ments, based on policies and strategies formulated the introduction of management in the public sec-
at the state level i.e. the government. They must tor, which by itself tells us there are disagreements
have the knowledge and experience to manage according to this issue, even between people who
functional sectors and to permanently improving dedicate their life to management issues.
them. Bearing this in mind, in the eighties and On the other hand, for the lack of application
nineties, a number of political leaders, i.e. the management in the public sector, the only respon-
Prime Ministers (Britain, the U.S. and other coun- sibility bears management, who weren’t debated
tries), demanded that government members attend their need for the introduction of the science and
courses or training at the prestigious management profession in the public sector in the best way. Ac-
schools, so the members of the government were countability bears political leaders and diplomats
able to manage their sectors. Therefore, govern- too who didn’t recognized concepts that could be
ment should first of all supposed to be profession- aimed at increasing national success in some coun-
als to manage their own functional areas. tries.
In Serbia, it is known that prime minister was Notwithstanding the foregoing, in the theory
not appointed the members of the government, and practice of public management, there are two
but the leaders of the ruling parties. In this way, opposing aspects regarding the place and the role
for members of government political incompetent of management in public administration. [11]
and mostly functional managers are elected. Be- The first aspect refers to the fact that the state
cause of this practice, members of the government is, according to Singler’s law, slow, inefficient and
works for the interest of the party that appointed generally bad host, i.e. it is not interested in increas-
them, rather than working as a team to achieve ing performance. On the other hand, the state has
as much success as possible at the national level. specific sectors such as education, health, cultural
Thus, partial i.e. partisan interests become prima- and other institutions, which by their nature do not
ry, and the interests of the state as a whole sec- correspond with the management, because the pres-
ondary, which leads to an increase in entropy at ence of the managerialism in them would question
the national level that produces inefficiency and the morality, the Hippocratic Oath, and so on.
stagnation of the economy and society. According to this view, there is no room for the
Presidents of local (self) government are low- economy, i.e. management, in the state, that is the
level managers that in scope of defined policy and public sector.
strategy of the government are working on the The second aspect is based on the fact that each
implementation. Moreover, this structure must organization has interest and that in the broader
have the knowledge, skills and operational man- context there are no organizations without inter-
agement capabilities to create high-quality opera- est. According to this opinion, educational, health
tional strategy, i.e. tactics for successful managing systems, and even the American Red Cross, which
local governments. This creates conditions for the is considered one of the largest humanitarian or-
introduction of competent governing elite, who ganization in the world, is the interest organiza-
will be able to respond to the increasing complex- tion. In other words, each of these and other or-
ity and uncertainty in the economy and society. ganizations is forced to achieve greater economic
effects with limited resources, which creates the
4. PROS and CONS of managerization of need for the introduction of management science
the state and the government and profession. Therefore, managerism needs to
manage scarce resources, which in the future will
P. Drucker more than half a century claimed that be smaller and smaller, and that with limited re-
management is most needed in the public sector, but sources (natural, financial, information and other)
that in this part of the national economy is weakly achieve better effects.

In order to remove any possible doubt about – Its legitimacy and legality the government
the need for management in the public sector, it is pulls out of the ruling party, which is why
useful to compare the functioning of management employed in the public administration are
in the public and private sectors. Comparing pub- by nature loyal to the party and its policies,
lic and private sector, may provide conclusions since the with the change of government
and arguments pros and cons of management in comes supporters of the party that won
the public sector in general and managerization of the election, and it uses the privileges in
the governments, both at the level of countries in changed circumstances, which previous
transition, and in the public sector in the EU. [12] government had.
Renowned authorities in the world of manage- – The government and its ministries i.e.
ment dealt with this problem during the eighties public corporations and government
and nineties, but prime ministers too, who were administration in general often live in “a
more or less successful in their attempt to imple- forest of regulations” which are often run
ment management in the public sector. by the people outside of the context, instead
Pros and cons of the government manageriza- people managing regulations.
tion could be summarized as follows: – Finally, the fundamentals of the functioning
– Between the public and private sectors there are of the public and private sectors are different.
fundamental differences, so that management The public sector often opts for linear steps
of one can never be applied to other sectors, in solving the problem, which is not the
as a governance rules apply to one, and other, case in the private sector. For example,
even completely, or in other sectors. governments often find that the dismissing
– Citizens are not customers of the Government, of public administration is costly due to
as is the case in the private sector. Citizens severance payments that need to be paid to
behave in one way when they use public older workers, or counterproductive, since in
services, which are often forced to (such the linear reduction of public administration
as military service), but in a different way often leave young and talented workers, as can
when it comes to the commercial sphere that be seen from the American practice. When
depends on their will. the U.S. Department of construction reduced
– Citizens in the use of public services often personnel from its computer department by
do not have a choice, as is the case with the 20%, it was forced to lay off their youngest
private sector, so the public sector is not and most promising workers, i.e. those who
interested to win the buyers of their services, know the most about computers.
because they haven’t the right to choose, as It is clear there are no such approaches to
a great democratic and market creation. solve problems in the private sector, because
– Government is responsible for all, which in they are not required to be precise and to
practical terms means that does not fit anyone. strictly abide laws and regulations, since in
In business organizations, management many cases they aren’t legally responsible
responds to the owners, which means the for their actions.
responsible subjects in either way known. – To negative attitudes on the application of
– The government is secured from bankruptcy management in the public sector some events
because in the case of bad decisions it has in developed countries also contributed,
on its disposal mechanism of coercion especially in G. Britain, where the number
such as increasing taxes for charging and of managers, during the nineties, in health
balancing the budget and expenditures or systems has increased drastically, and thus
raising taxes, customs duties, and in the end their payments. On the other hand, the number
printing money. The management is subject of nurses and their wages have declined in the
to permanent threat of bankruptcy that under overall cost structure. Namely, the “number
conditions of high competition is becoming of health managers in G. Britain in the period
more intense. 1989-1999 increased by 18,000 while the

number of nurses fell to 27,000. The average speed of small companies insert into the body of
annual salary of hospital manager was about the state, as a large company. This is the reality,
65,000 pounds and grew twice as fast as because in the future, there will be only two types
the average salary of nurses. The total wage of states and organizations such as quick and the
bill for the management in the period 1989- dead.” [13]
1994 was 160 million pounds, while the fund Although there are many pros and cons of the
during the period 1994-1999 was about 720 managerization of the state, the fact is that the
million pounds. complexity of the public sector and the new chal-
lenges it carries, show and prove the necessity of
Previous data show that managers in this im- the introduction of professionalism in public sector
portant sector were overpaid, and nurses were un- management. The privatization wave that swept
derpaid, which was not acceptable to the majority the country in transition favors this, so you will
of employees in the health system. Increasing the find many of the public sectors in private hands,
number of managers has led to inertia in respond- and thus the implementation of management phi-
ing to urgent and priority cases, which reduced the losophies and technologies in these industries will
quality of health services. be enabled. It is therefore logical to advocate for
Previous comparison of the data indicated that the introduction of managerism in all segments
there are differences between the public and pri- of the economy and society, including the public
vate sectors, so it is logical there are differences sector, because the management of the profession,
between philosophy and technology management which can best to economize and manage limited
and other part. However, this does not mean that in resources to achieve defined goals.
the government sector professionalism and mana- Introducing managerism in public administra-
gerialism should be eliminated, however, they tion, i.e. the public sector would restore confi-
need to be adjusted according to the principles of dence in government at the global level. On the
“creative imitation” in relation to specific activity, other hand, the rating of political parties and lead-
time and situation. This is all because of the exis- ers who will have the primary duty to define ob-
tence of worldwide fear of professionalism. Prac- jectives would raise, could pave roads that should
tice shows that individuals and organizations that be taken in creating a favorable business environ-
have professional knowledge, skills and abilities ment for the accomplishment of the mission that
have greater potential and opportunity to succeed resulted from application of election promises. |It
in a turbulent and uncertain business conditions. should be kept what it is not important the way we
In other words, educated managers in public sec- go, but what kind of shoes we wear. Many would
tor management, usually give better results than like to remove the obstacles on the road instead to
the politicians who do not have sufficient knowl- provide appropriate solutions to be ready for un-
edge in the field of management, but appear as a certainties in the modern business.
professional amateur.
This statement is valid for any organization, in- 5. The necessity of redesigning the state as
cluding the public sector. Therefore, even though an institution and managing the govern-
there are some differences between public and pri- ment and the public sector in Serbia
vate sectors, management as a universal science
has its general principles that are applicable to all Modern state institutions are outdated and as
organizations, and for their specificities special- such are not able to respond to contemporary chal-
ized management were formed, as well as public lenges. A. Toffler, one of the largest futurologists
and political management that needs to take care said, “Take two hundred geniuses and select them
of the problem of managing public sector. Ac- in the U.S. Senate, or any institution of govern-
cordingly, like all other, this sector must adapt to ment. Their decisions will be even more stupid,
the users of the public services and recognize the because their institutions are stupid. Many deci-
changes that occur in the market of these services. sions about many things must be made quickly.
The best solution would be “if the soul and the Political technologies, the process of decision-

making dates back to the industrial age, when economic and social life. A wave of professional-
the problems were simple and partial in time and ism did not pound the largest part of the Serbian
space. [14]The transition countries in particular, public sector, which encompass public enterprises
but also developed market countries are in big and public (non-profit) institutions, public ad-
trouble when it comes to their survival. Lack of ministration, public organizations, etc. Under this
financial resources measured by several hundred term, we should understood public sector manage-
billion Euros, prevents the functioning of the state ment by professional managers and experts who
and its institutions. It turns out that some vital have completed high business schools and who
functions, such as health, education and public ad- have the knowledge, skills and experience to deal
ministration are being questioned. Most countries with any management tasks.
fill “gaps” in the budget with the new borrowing Amateur caught the public sector by the depth
from the International Monetary Fund, the World and breadth of the organization i.e. governing
Bank and the governments, which are reportedly boards, top management, middle and lower lev-
ready to help. The reason for this is in non-host els of control. Party officials who are loyal to their
economy and neglecting or denial of the basic political opinion, as a rule, get top positions in the
principles of a healthy economy in the past. public sector. They need to provide the privileges to
The practice of host economies shows that host the party that appoints them as directors, executive
takes loans to build a house, start with a business directors, managers, chiefs, rather than fulfill their
or expands, existing one, and so on. Irresponsible primary goal of achieving certain economic effects.
hosts are arrogant, spend without taking into ac- On the contrary, in terms of monopolization of cer-
count their abilities and when desires overcome the tain sectors, most public companies loosed millions,
possibilities, seek credits and other types of loans. and the current political oligarchy tolerated that, hid
In these situations, the government was helpful, es- and waited for “the time to erase the damage”.
pecially through the concept that the crisis can be One more alpha plus should be add to this, and
eliminated by forcing spending and that saving is it’s low quality organizational structure, both the
unacceptable. When it is time to pay off old loans, state and the public sector. It turns out that this is so-
taking a new one, often under less favorable condi- called “deep” organizational structure, with many
tions, leads to a more difficult situation. levels of hierarchy in which each higher level has
Serbia shared the fate of other countries in tran- higher quantum of power as compared to the lower
sition. The money from the loan is wrong, i.e. it is levels and where there are interpersonal i.e. rigid
invested in personal consumption, a large portion and strictly controlled and formalized relations both
of borrowings and cash generated through privati- between individuals and between different organi-
zation has flowed into private hands. Loans have zational groups and teams. The above design of or-
come due; debts in the country are so vast and the ganization suits more to the organization from the
cash register is empty. The new responsibilities fifties i.e. industrial than modern organization based
follow, so in the next few years, instead of the cur- on the information technology and knowledge as
rent 3 billion, the amount coming due will double. the most valuable asset. In other words, while the
It is clear that the above situation touches, espe- modern states and the public sector leave the hi-
cially future generations, because they will have erarchy and introduce entrepreneurial philosophy,
to pay back what others spend. Therefore, the debt countries in transition and Serbia still foster a spirit
problem must be considered above all from the of deep hierarchies, which inevitably produces leth-
moral, then from a political and economic point of argy, sluggishness and inability to quickly and ef-
view. In this context, we need a radical change in ficiently respond to the new challenges posed to the
the design and management of the state and state modern world. [15]
institutions in Serbia. The recovery and strengthening of the Serbian
On the other hand, it shows that the managing economy, the transition process, privatization, mar-
public sector in Serbia is accompanied by a high ket linking and integration in the EU certainly indi-
degree of ideologization that goes up to politicking cate the need to define the most appropriate ways to
and the amateurism that is spread over all areas of respond to the challenges that these processes bring

along. [16] Therefore, the Serbian state, i.e. its local authorities. An example of the state organiza-
government and state institutions should be reorga- tion through cantons is Bosnia and Herzegovina,
nized according to the principle of re-engineering, and it is actually non-functional design in which
i.e. introducing radical and fundamental changes in the country has one more mini-governments,
all its institutions. Reorganization of government which are often independent and where there is
that took place in early 2011 was of poor quality beno strong, central authority (the government) that
cause elementary criteria for structuring individual would act integrated and that will connect and ar-
state sector where not obey. Heterogeneous sectors ticulate the interests of all the cantons.
and activities were joined, such as agriculture and Professionalization of state i.e. public sector
trade, spatial planning and the ecology, culture and management, the hottest theme in Serbia, is not
information sector, while on the other side, merging going in the right direction. The election of direc-
some sectors too big and dysfunctional structures tors through an open competition for all public
were created. The reason for the reconstruction of companies was proposed, i.e. other parts of the
the Government was insufficient performance of public administration and here we can see the ba-
the government as a whole or of individual min- sic mechanism for eliminating ideologisation of
istries. Merging, i.e. redesign created even more management. This solution is necessary, but it is
dysfunction that will lead to bigger problems, than not enough, because the control over the choice
it was in earlier organizational setting. Negative re- of CEOs of public companies continue to be the
sults that were recorded over the last few months responsibility of the party committees, i.e. other
have been partly the result of inadequate organiza- authorities, directly or indirectly.
tional restructuring. On the other hand, this issue cannot be solved
A similar situation exists with the structuring partially, but systematically, so it would include re-
of the administration of state government in 2012. defining too, up to the abolition of the administra-
Excessive and dysfunctional ministries were cre- tive boards or other so-called management bodies,
ated, under the guise of saving and reducing the as the U.S. economy did as the most competent in
number of ministries, and has the number of em- the world. It turns out that professional manage-
ployees has not been reduced. It is clear this will ment in American corporations for more than 60
lead to new problems, especially in the administra- years marginalize the role of the board of directors,
tion of the state and its institutions. The outcome reducing their power and independence.[17]
of these solutions will be inefficiency, laziness, In this context, the organizational redesign of
and ultimately new problems in the functioning of the public sector in Serbia and its benchmarking
the economy and society. at internationally level is necessary. Thus, in the
It seems that salvation is in the abandonment growing complexity of business, in which it is
of centralism, which is more or less been practi- necessary to provide a high level of competitive-
cally implemented in the state organization, and ness and deliver high quality products, at a low
the acceptance of integrated decentralization, as price, it becomes important that the most important
the most efficient model of the modern organiza- functions and the roles of the traditional manag-
tion. This means it is necessary to retain the most ing boards in corporative organizations take over
vital functions of government at the level of the professional managers, and that boards become
Government, and other delegated to the local lev- professionalized experts from different fields who
el, which would be authorized, but also respon- have the knowledge, skills and experience to meet
sible for solving local problems. Regionalization the new challenges of the business world. [18]
that is advocated by some political leaders is not
a good solution, because it is only a dislocation or 6. Resume
duplication of authority to more regions. Instead
of a political and economic center that has existed Research has shown that managing the state and
and exists in Serbia, more centers with increased its institutions is the dark side of the modern world.
administration will be created, which will not be It turns out that in the world of high competence,
effective and will be a huge burden for individual the public sector management did not get the place

it deserves, even though the management as the of lower level of complexity, while at the top man-
profession provided the leading position in management positions are political or people from the
agement of private business organization systems. political options to which they belong. This is one
It is evident that the professionalization of public of the main reasons for lack of the success of the
administration is not a need but a necessity. With public sector, which has a negative effect on the
its introduction, the traditional organizational struc- performance of other organizations, including the
ture of the state change and the classic concepts are state as a whole.
abandoned, especially those that were based on the Responsibility for the low quality design of
politicization, amateurism and inefficiency. Lack public sector, particularly in transition countries,
of competent management is best expressed in the bears the scientific establishment engaged in
famous dictum by “the father” of management P. management science and profession, which did
Drucker that the public sector is craving for the pro- not promote sufficiently the idea of introducing a
fessional management and developed infrastructure high quality organizational design and the need of
that could serve to increase the success of the state, training managers for professional management of
public companies, and all those things that carry the the state, its institutions and the public sector and
prefix “state”. The introduction of professionalism because they didn’t fight for the implementation
in the administration of the state and the public sec- of this idea into social and economic flows.
tor in countries in transition does not mean that all
problems will be solved, but no problem cannot be References
resolved without it.
In this context, legal and economic science 1. Obama B.: „Change we can Believe in“, Three Riv-
ers Press, New York, 2008; p. 2.
must restore some traditional business principles,
especially those relating to host economy, as the 2. Sloan A., Newmyer T.: Why cant washington magi-
source of all types of economies. The host or tra- cally fix the economy, Fortune, Novembar, 2010.
ditional economy is efficient and effective, be-
cause it is based on the natural and logical rules 3. Adižes I., Professional Business News, Hesperia-edu,
jun, 2012; p. 3.
that can hardly be questioned. The host thinks of
his generation and tends to increase the inheri- 4. Bakingem Dž., Vard T.: Whats next - The experts
tance. Thanks to this, civilization has survived and guide, Harper Collins, 2008; p. 251.
thrived. States, more or less has to take into ac-
5. Adižes I., intervju, Business magazin, 23. Marta
count the very principles of traditional econom-
2011.
ics, especially when it comes to attitude towards
sustainable economic development and the fate of 6. Bosanac K. I grupa autora: Domaćinsko staranje,
the generations to come. Istraživačka grupa Sinergon, Beograd, 2000; p. 17.
Transition countries, including Serbia regard-
7. Radosavljević M.: Management and Leadership
ing this are far behind. Here, the management as Government in times of Crisis“, International Con-
a science and profession has not received the im- ference, LEMIMA. Serbia, 2009; p. 52-53.
portance it deserves. The public sector in Serbia
is ideologically and politicized to such an extent 8. Perlic M.: Ekonomska politika, N0 2507. Maj, 2000.
that it is difficult for professional managers to be p. 29.
appointed to leading positions. It also has to have 9. Sloan A., Newmyer T.: Why cant washington magi-
all the characteristics of corporate management, cally fix the economy“, Fortune, Novembar, 2010;
whose results will be measured, the successes will p. 47.
be rewarded and failures sanctioned. Certainly,
10. Mos Kanter R.: World Class: Thriving Locally in
Serbia has trained business people in the spheres the Global Economy, 1995.
of business with management diplomas, and the
faculties engaged in public management. Analyses 11. Ozborn S. D., Gebler T.: Reinventing Government:
show that graduate managers and experts in public How the Entrepreneurial Spirit Transforming the
sector management perform other duties usually Public Sector, Boston, 1999.

12. Anđelković M.: Internacional benchmarking as

success factor of EU, 1. International Conference
„Law, Economy and Management in Modern Ambi-
ence“, Fakultaty for Education of the Executives,
Serbia, September 2009; p. 135.
13. Peters T.: Luda vremena zahtevaju lude organizaci-

je“, New York, 1999.
14. Tofler A.: Prorok novog doba, Izbor, Zagreb br. 9,

1980; p. 62-63.
15. Collins E., Devanna M.: The new portable MBA,

John Wiley MBA“, 2004; p. 355.
16. Grandov Z., Djokic M., Jovanovic V.: Transition

process and foreign direct investment flows in Ser-
bia. TTEM- Technics Technologies Education Man-
agement, 2012; 7(1): p 28.
17. Collins E., Devanna M.: The new portable MBA,

Massachusetts, 1999; p. 407-408.
18. Robert C. Pozen: „The big idea – The case for

Profesional Boards“, Harvard Business Review,
decembar 2010; p. 52-58.
Carisa Besic,
Faculty for strategic and operative management,
ALFA University
Belgrade,
Serbia,
E-mail: carisa.besic@sbb.rs

Risk management and insurance in the coal

industry of the Federation of Bosnia and
Herzegovina
Safet Kozarevic1, Emira Kozarevic1, Adil Kurtic1, Edina Siljegovic2
1
University of Tuzla, Faculty of Economics, Bosnia and Herzegovina,
2
Thermal Power Plant Tuzla, Bosnia and Herzegovina.
Abstract Despite the fact that the coal industry repre-

sents a very important economic activity in Bos-
Changing business environment and the related
nia and Herzegovina (BiH), its coal mines are
increased exposure to a wide spectrum of risks re-
currently in a difficult financial situation (some of
quire large companies to treat their risk manage-
them operate with losses, the investment cycle is
ment as a particular business function, especially
not going according to the plan, problems with the
in the activities whose exposure to risks is signifi-
human resources management are evident, etc.).
cant and where risk management represents one
It is expected that the process of ownership trans-
of the key areas of business governance. Typical
formation (the government still has a share of the
examples of such companies are companies in
ownership) results in positive changes and contin-
coal industry, where the management needs to be
uous generating of gains. Also, a special place in
greatly concerned about protection against risks,
that process goes to the issue of risk management,
in particular pure risks. If you add emerging risks,
which is becoming an unavoidable area of man-
which are still unknown even to experts, it is clear
agement interest. Therefore, the basic research hy-
that management of the companies have to take
pothesis is: “Based on the analysis of the current
care of risk management culture development and
state of risk management and insurance in the coal
seek for adequate organizational solutions. The
industry, it is possible to identify the key factors
objective of this paper, therefore, is the analysis
determining the level of development of risk man-
and determination of the risk management strat-
agement and economic protection in the compa-
egy of companies in the coal industry of the Fed-
nies within this industry”.
eration of Bosnia and Herzegovina.
According to our knowledge, the research is
Key words: risk management, insurance, coal
the first of this kind in BiH, in which the issue of
industry, large companies, Federation of Bosnia
risk management is considered from the manage-
and Herzegovina (Federation BiH)
ment (business governance) perspective, and for
that reason its basic objective is: “To affirm issue
Introduction of unpreparedness of the large companies regard-
Coal is located on every continent and in over ing their risk exposure (especially pure risk expo-
70 different countries, with the largest reserves in sure), and use the results of the research in order
the United States (28% of the world’s supply), Rus- to initiate activities necessary for the improvement
sia (19%), China (14%), Australia (9%), and India of this business aspect in the coal industry, with a
(7%). There are approximately 984 billion tons of focus on the coal mining companies in the Federa-
proven recoverable coal reserves worldwide, which tion BiH”.
could sustain the world’s energy needs for the next
190 years. The great majority of coal, as the sec- 1. Literature review
ond consumed energy source in the world, is used
by electric utilities and industrial consumers. Other Considering the referential literature, it seems
uses of coal include conversion into other liquid fu- that the risk management and insurance in the coal
els and individual consumption [1]. industry has been the subject of research of many

scientists from all over the world only in the last of a loss from a nonzero reference state because
two decades or less despite the fact that the risks in mining operations one normally starts from a
are as old as coal operations. zero reference state that is zero ore or metal. The
Tweedale and Joy’s Risk Management Hand- interesting question was: ”Under what conditions
book for the Mining Industry provides information will a decision maker in the mining industry take
which may help mine management, departmental risks?“. In that sense, the risk management is risk
personnel, and associated industries in the process seeking or, more properly, risk taking. The mining
of risk reduction and risk management. Because of industry (especially mining exploration) was gen-
the inherent hazards of mining as an activity and erally tolerant of financial risks (otherwise, very
the complexity of mining machinery and equip- little would be discovered) but essentially intoler-
ment and the associated systems, procedures, and ant of risks involving safety [4].
methods, it is not possible to be inherently safe. According to Grayson et al., during the period
Therefore, it is not possible for any external agency 1993-1999, no underground coal miners died from
to ensure the safety of an organization such as a fires and explosions in the USA. A record low
mining company, nor of the machinery or methods number of fatalities occurred in the coal industry
it uses. The principal responsibility for the safety of in 2005 and the industry was poised to continue
any particular mine and the manner in which it is to make significant improvements. However, in
operated rest with the management of that mine [2]. January 2006 and since then, three mine tragedies
Lind considered Analysis of Pillar Extraction rocked the industry and coal industry fatalities rose
Potential (A-PEP) as a user-friendly, intelligent to 37 through July of 2006 as compared to 22 in
tool which could be used as a preliminary output all 2005. As did many constituencies and Congress,
indicator in consideration of the secondary extrac- the National Mining Association called for closer,
tion support pillars in the Witbank and Highveld independent scrutiny of the causes behind the fatal-
coalfields of South Africa. Pillar extraction prac- ities and how the causes could be addressed and the
tices in South Africa have consumed a significant fatalities prevented. The Association established a
proportion of safety and fatality statistics in rela- multipartite commission to independently study the
tion to its relative output (i.e. less than 5% of the causes of events and fundamental issues that must
total South Africa coal production) and as a result be addressed in order to move the USA coal indus-
the research was undertaken in local pillar extrac- try back into a global mine safety leadership role.
tion operations and extended to similar operation Since its creation in March 2006, the Mine Safety
in New South Wales (Australia) to asses a way for- Technology and Training Commission has stud-
ward for pillar extraction in South Africa. The A- ied the important events and issues, while think-
PEP tool was based on certain physical, risk, and ing broadly and innovatively about what should be
economic factors that are combined to be indica- done to achieve the objective of zero fatalities and
tors of operational success in terms of economic, zero injuries in the USA underground coal industry.
health, and safety attributes [3]. The study rang a clarion call for a new paradigm
In 2007 Dunbar conducted a survey whose for ensuring safety in underground coal mines, one
main purpose was to review three concepts of the that focused on systematic and comprehensive risk
descriptive viewpoint that would appear important management as the foundation from which all life-
to, generally, decision-making under uncertainty, safety efforts emanate [5].
and, especially, risk assessment, management, and As far as safety and health in mining operations
communication in the mining industry (framing are concerned, Komljenovic and Kecojevic illus-
of decisions, ambiguity aversion/preference, and trated historical data on number of fatalities and
affect heuristic). In terms of those concepts, the injuries in surface coal, metal, and non-metal min-
scientist gave interpretations of four cases and ing operations in the USA and described a system-
other situations in mining and mineral process- atic risk analysis process for occupational safety
ing (Exploration decision case, Dig deeper case, and health in the field. Accordingly, a review of
Asian disease experiment, etc.). It was difficult published risk management and assessment appli-
to frame a problem in mining operations in terms cations for various industries (mining, petrochem-

ical, nuclear, etc.) was presented and a generalized when dealing with the typical engineering insur-
approach to risk management for occupational ance coverages for the mining industry. For in-
safety and health in surface mining was proposed. stance, excluding internal costs and cost of capital,
The approach consisted of six phases, as follows: the 10 year view (1997 to 2007) from the Swiss
(1) development of a systematic risk analysis pro- Re perspective revealed a technical loss ratio of
cess; (2) establishment of guidelines for selection above 100%. And in 2008 the market was shocked
and implementation of risk assessment methods, by initial reported losses of USD 3.5 billion and
and provision of models (templates) for selected only some USD 600 million in premium income,
methods; (3) characterization of hazards (e.g. fre- although some of these losses have settled at low-
quency, likelihood) and creation of a occupational er amounts. For that reason the question we ought
safety and health hazard database for surface min- to pose is whether insurance models used for the
ing; (4) creation of a generic risk matrix for oc- industry and the manner in which risk was shared
cupational safety and health; (5) development of a between insured and insurer have kept pace with
structured database for calculation of risk profiles the scale, complexity, and volatility of industry
and for facilitation of access and distribution of growth and the changing risk environment [7].
information, and (6) establishment of criteria for
determining the acceptability of residual risks and 2. Theoretical background
for identifying unacceptable risks [6].
Underground coal mining has continually 2.1 Risk management process, with focus on
posed significant risks to worker safety and health large companies
throughout history. Looking back at the coal min-
ing disasters across the world (collapses, explo- There are different views of certain authors in
sions, suffocations, fires, etc.), Mischner and Roth- respect of definition of risk management. Differ-
feld claimed it was clear that uniform global safety ences are mainly related to specification of risks
and health standards for coal mining are imperative. which are the subject of risk management. Vaughan
The coal mining was regulated regionally such as E. and T. emphasize that the risk management is “a
within the United States (The Federal Mine Safety scientific approach to problem of pure risks faced
and Health Act of 1977, ”MSHA“), the European by individuals and companies”. We will accept this
Union (The European Coal and Steel Community definition because on the one hand it emphasizes
of 1951/52, ”ECSC“ or “Community”), Australia ”scientific approach“, and on the other hand “pure
(The Coal Mining Safety and Health Act of 1999, risks faced by [large] companies ”, and this is ex-
“CMSHA”), and China (Labour Law of 1994/95). actly the subject of our interest [8].
However, these regional regulatory schemes are not A scientifically based approach sees the risk
equally effective or enforced and they have limited management as a process with several stages.
scope and numerous gaps. The authors asserted that As far as the number and content of the stages
the right of coal miners to safety and health protec- are concerned, there are different views. For in-
tion is universal. Accordingly, they concluded that stance, Tweedale and Joy suggest six stages of a
unless a coal mine safety and health international risk management process, as follows: (a) establish
agency is established, coal miners around the world the context (including defining the objectives and
(approximately 7 million people worldwide, 90% scope of the risk management task); (b) identify
of whom in developing countries) would continue the risks; (c) analyse the risks, so as to understand
to have their universal right to safety and health vio- their causes, likelihood, and possible consequenc-
lated [1]. es; (d) assess the risks, to determine the need and
Cazzaniga et al. described the various types priority for attention; (e) treat the risks by plan-
and activities of the mining industry and also the ning and undertaking the initiatives in operation,
main specialized machinery and equipment. They engineering or management, and (f) monitor and
suggested that the industry is exposed to specific review progress and performance [2]. Evans,
high hazards and risks and these were highlighted Brereton, and Joy recommend the same number
in detail for insurance underwriters’ appreciation of stages but with their slightly different contents,

as follows: (1) scoping, (2) information gather- and methods for risk financing. In the phase, it is
ing, (3) identify risks, (4) analyse and evaluate, (5) necessary to select one or combination of several
treat risks, and (6) reporting and review [9]. How- methods. Selection of the method depends on funds
ever, generally we can single out summarized key available for coverage of potential losses. Finally,
stages shown at Figure 1. we start with the implementation of program of
measures which need to be undertaken and evalua-
tion of results. With that goal, we first need to give
authority to the risk officers so they can implement
the program without being disturbed. Also, it is
important to inform all the company’s employees
Figure 1. The risk management process [10] who will participate in the program on their obliga-
tions as well as to conduct periodical controls and
Risk management process starts with identifica- evaluations of program results (due to changes of
tion of risks, i.e. potential losses. For that purpose circumstances taken into consideration in the prep-
it is necessary to research the exposure to property aration of the program, and possible mistakes in the
risks, liability risks, loss of income risks, loss of implementation of the program) [10].
work capability risks, etc. For the identification, risk Specially, large companies usually have within
officers have at their disposal several sources such the organizational structure specialized depart-
as various types of questionnaires for risk analysis, ments whose main task is to collect information
financial reports, conducted physical inspections, and make decisions in domain of risk manage-
etc. There is no single method which is the only ment. Managers of these departments, chief risk
correct one for any particular situation. There are, officers, are responsible to define risk management
however, a number of important principles which policy by means of preparation of rulebooks from
should be adopted, for example “don’t expect one this business field as well as for the making of risk
person to identify risks, use a team with a range of management information system. However, in
experience and expertise”, or ”use a systematic ap- order for them to successfully perform their duty,
proach in sufficient detail to match the objectives chief risk officers should not act alone, i.e. they
and scope of the study“ [2]. After identification of need to have full coordination with other business
risks, their evaluation is done. This stage implies the functions. In order for risk management depart-
establishing of loss occurrence frequency, i.e. prob- ments in the company to contribute to reaching the
ability of its occurrence in a specific time period. company goals, it is necessary to have full cooper-
Besides this, for each potential loss it is necessary ation with production, finance, and other business
to determine its severity, i.e. to estimate the possible functions. In doing so, chief risk officers have to
size of loss. On the basis of established frequency provide necessary information to other company
and severity of potential losses, they are ranked ac- departments, not just about pure, but also about
cording to the importance for the risk management other risks the company is exposed to. Existence
program. The biggest attention is given, of course, of specialized risk management departments cer-
to those risks where potential losses have the high- tainly contributes to a better negotiating position
est financial consequences and which can lead to of the company in the process of concluding con-
a financial disaster. In contrast, some losses occur tracts, for instance, with insurers.
regularly and they can be predicted quite accurately
so they can be covered from the current incomes. 2.2 Insurance as a risk management method
Moreover, a comprehensive risk management ap-
proach requires not only quantitative risk measures As the method of transferring risk on an insurer
but qualitative evaluation of risk as well. Further- for the purpose of financing potential losses of an
more, based on probability and level of identified insured, who has a duty to pay an insurance pre-
potential loses, selection of the method for risk mium, insurance is particularly applicable to risks
management is done. Methods for risk management with serious consequences and a low likelihood of
are basically divided into methods for risk control loss occurrence. There are many insurance prod-

ucts that guarantee hedging personal, property, 2.3 Risk taxonomy in coal mining industry
and liability risks. Throughout the transfer, the in-
surer usually provides the insured with consulting Considering risk and uncertainty in the min-
about risk management. ing industry, Rendu revealed several key fields of
Besides the function of economic protection, the mining business that generate risks (i.e. their
insurance contributes much to a greater use of resources), as follows:
sources as well as a greater investment activity via – management (i.e. operational, exploration,
its financial-accumulative function. By buying an financial, and management of public
insurance policy, risk is transferred on an insur- relations);
ance company that will be responsible to indemni- – geology and resource estimation (geological
fy the loss if the insured event occurs. On the other conditions under which a mine will operate);
hand, an insured avoids the need to hold reserve – engineering design (design of mine plans,
funds and, consequently, has an opportunity for mining and processing facilities, and
investing the available assets in other business ar- infrastructure);
eas. Insurers invest the reserves accumulated from – cost estimation;
collected insurance premiums and thus stimulate – environmental impact;
economic development. Therefore, in developed – revenue estimation and metal price (usually
countries insurance companies represent one of because of the lack of knowledge of the price
the most important sort of institutional investors. at which the product of mining operation
will be sold);
Table 1. The risk taxonomy in coal mining industry
Ord. no. Risk category Risk subcategories
- Risks related to the company’s mission, vision, and business goals
- Risks generated by the business lines selection
1. Strategic risks
- Risks streamed from the company’s capital investments
- Reputational (name) risks
- Risks linked with organizational structure, culture, and communication
within the company
2. Managerial risks - The leadership style risks
- Risks involving motivation and rewarding the company’s staff
- The control system risks
- Risks of the new value creation chains
- Risks involving safety of the work place
- Environmental protection and mining damages
3. Operational risks - The human resources selection risks
- IT risks
- Influences of weather and climate changes
- Risks generated by the strikes and working operations interruptions
- Risks related to real estates
- Risks related to different sorts of stocks
4. Financial risks - Risks related to other assets
- Risks related to revenues
- Risks related to investment and financing
- Technology development risks
- Risks linked with market position of the company
5. Market risks
- Risks generated by the demand
- Risks generated by the supply
Political, legal, and - Changes of political and legal environment
6.
social risks - Social trends

– exploration (i.e. exploration decisions), and ing companies within the research sample. All rel-
– political risk/factor (e.g. currency conver- evant employees within each mining organisation
sion, expropriation, political violence, and/or were invited to participate in the survey. Depend-
unilateral change of laws and regulations) [11]. ing on the size and organisational structure, the
list of surveyed employees included management,
In the mining industry there are many factors af- quality control, auditors, and supervision staff, en-
fecting the likelihood and the consequences which suring the overall quality of the research sample.
cannot be expressed by numbers, and which need
to be expressed by words. For instance, the conse- 3.2 Results and discussion
quences of risks can be estimated in terms as fol-
lows: (a) risks to people, i.e. the numbers of inju- There were 121 valid survey responses in total.
ries of different severities; (b) risks to property and The survey questions were sent to all mining com-
production, i.e. the monetary value of the damage panies but one smaller organisation decided not to
or production lost; and (c) risks to the environment, participate, which did not affect the quality of the
the extent of public reaction. Likelihood can be ex- data sample. The survey was analysed using sta-
pressed in terms of the frequency per year, or the ex- tistical methods and relied on respondents’ subjec-
pected time between occurrences, e.g. 10 years [2]. tive perception of the risk management processes.
Regarding detailed types of risks to which the Table 2 shows the summary of the analysis related
coal mining industry is exposed, we suggest the to questions that expected scaled answers. The an-
taxonomy which is contained in Table 1. swers to the remaining questions are not presented
The taxonomy above does not have an inten- in the Table 2 as they did not deviate from the re-
tion to summarize absolutely all sorts of coal sults derived through statistical analysis.
mining risks. On the contrary, it contains those The data reduction was conducted through the
we usually meet in the practice, especially within factor analysis (Principal component analysis),
large companies. It is very important to emphasize with the goal of establishing the key factors that in-
that existence of a set of risks requires a holistic fluence risk management development in mining
approach, which indicates that there is a need to companies. The analysis excluded the variables
take into consideration even correlations between that were related to questions that did not receive
different risk (sub)categories and their impacts. sufficient number of answers. Using the automat-
ed analytical tools for multivariate statistical anal-
3. Methodology and empirical analysis ysis, Kaiser-Meyer-Olkin Measure of Sampling
Adequacy of 0.893 (KMO>0.6) and Bartlett’s
3.1 Sample selection Test of Sphericity of 0.000 (p<0.05) were estab-
lished, confirming the sample correlation matrix
In order to perceive the accurate situation re- adequacy for the factorisation. Figure 2 shows the
lated to the risk management processes in ten coal scree plot where the first six factors, with the Ei-
mines in the Federation BiH, a primary research genvalue greater than one, were extracted. Results
was conducted. A combination of research meth- achieved through orthogonal factor rotation using
ods such as interview and survey was used, with a Varimax criteria are shown in Tables 3 and 4.
set of prepared questions.
The survey covered a series of questions related
to various aspects of risk management. Most of sur-
vey questions were structured so that the answers
are scaled from 1 (the worst) to 5 (the best world
practice). Also, some questions expected one or
more offered answers. Each question allowed for
additional comments, observations or suggestions.
The analysis of the strategic risk management Figure 2. The scree plot
documentation was conducted for each of the min-

Table 2. Basic statistics for the risk management questionnaire

Standard
Variables Mean
deviation
VAR001 Risk avoidance 3.60 0.98
VAR002 Prevention 3.93 1.04
VAR003 Use of other methods for risks physical control 3.76 1.05
VAR004 Risk retention 3.42 1.07
VAR005 Use of insurance for personal risks of employees 3.97 0.99
VAR006 Defined responsibilities linked to risks for supervisory board and management 3.82 0.87
VAR007 Reliability of the Risk strategy 3.54 0.96
VAR008 Usability of the Risk strategy for strategic decisions making 3.42 1.29
VAR009 The Risk strategy based on adequate analyses 3.37 1.20
VAR010 Adaptibility of the organizational structure for efficient risk management 3.51 0.83
Communication between management and employees regarding information related
VAR011 3.50 0.86
to risks
VAR012 Control system in a risk management process 3.20 1.00
VAR013 Procedures and protocols related to work safety and protection 3.89 0.77
VAR014 Continuity of identification and evaluation of work safety risks 4.03 0.82
VAR015 Reporting about finished work safety risk identification and evaluation activities 3.94 1.04
VAR016 Evaluation of risks of company’s environmental impacts 3.46 0.84
VAR017 Continuous training and improvement of the rescue tim 4.08 0.98
VAR018 Information system that supports risk management 3.17 1.16
VAR019 Adequacy and protection of database created for risks information archive 2.89 1.17
Procedures for reduction of strike and working operation interruption effects in order
VAR020 3.01 1.21
to maintain business continuity in crisis situations
VAR021 Capability of business operating in conditions of weather disasters 3.97 0.77
Procedures that can guarantee quick response to business irregularities generating
VAR022 3.53 0.85
financial losses
VAR023 Identification of a wide spectrum of financial risks 3.34 0.95
VAR024 Risk analysis in investment projects planing 3.35 1.04
VAR025 Reaction to competitors’ new technologies 3.04 1.07
VAR026 Identification of risks related to sales function 3.45 1.09
VAR027 Timely identification of risks in the supply market 3.27 0.93
VAR028 Expansion to the new markets based on the product improvement 3.14 1.00
VAR029 Resources for mitigation of the effects of disruption in the economy 2.50 1.00
VAR030 Identification of political environment changes which directly influence the business 3.05 1.18
VAR031 Preparedness for adequate reaction to social environment changes 2.86 1.08
VAR032 Capability for acceptance and adaptation to legal environment changes 3.52 0.96
VAR033 Adequacy of the budget for risk management projects 1.95 1.08
VAR034 Risk management integration into business process 2.66 1.00
VAR035 Permanent research staff for risk management 2.34 1.08
VAR036 Implementation and introduction of risk management pilot projects 2.39 1.00
Awareness of employees about risk management and their attitudes towards the
VAR037 2.82 1.05
implementation of new techniques
VAR038 Investing in technology that supports risk management 2.74 1.10
Understanding of benefits brought by the costs related to risk management system
VAR039 3.03 1.04
development
VAR040 Informing employees about risk management importance and the Risk strategy 3.00 1.11
Continuous staff training via its participation in seminars and workshops (e.g.
VAR001 2.83 1.15
training for the ISO 31000:2009 standard )
VAR002 Engagement of external (independent) experts’ services for the risk management 2.74 1.12
VAR003 A level of satisfaction with risk management process efectiveness 3.02 0.84

The data presented in Tables 3 and 4 show that the
Cumulative %
analysis highlighted six factors that explain 66.48%
of the overall variation that influences the current
16.642
32.397
45.785
54.303
61.778
66.477
Rotation sums of squared loadings
level of risk management development. They are:
1. strategic approach that includes all types of
risk;
2. resources and implementation of risk
% of variance
management processes, including education;
3. organisational solution;
16.642
15.755
13.388
8.518
7.475
4.699
4. application of various methods for risk
management;
5. information technology and systems, and
6. the overall culture of risk management.
6.657
6.302
5.355
3.407
2.990
1.879
Total
Based on the survey results and identified fac-
tors, the following actions can be outlined as the
Cumulative %
recommendation for improvement of the system-
Extraction sums of squared loadings
41.746
49.286
54.551
59.690
63.602
66.477
atic approach to risk management processes in
mining companies:
One of the key activities for the improvement
of risk management process is the development
of the appropriate strategy and its effective imple-
% of variance
mentation. Each company should develop a “Risk

41.746
7.540
5.265
5.139
3.912
2.875
Strategy” that would identify all the fields of the
business activity that are exposed to risks, ensur-
ing coverage of financial, commercial, political,
legal, and social risks.
Risk management should be based on the fol-
16.698
3.016
2.106
2.056
1.565
1.150
Total
lowing principles: contribution in creating surplus

value, management decisions, addressing risk is-
sues in systematic, structured and timely and in-
Cumulative %
formed manner, organisational adaptability, etc. In

41.746
49.286
54.551
59.690
63.602
66.477
order to implement this, it is necessary to provide

necessary resources as well as primary and contin-
uous education of employees, with the goal of in-
Initial Eigenvalues
creasing individual and organisational responsibil-

ity and awareness of risks. This includes occasional
% of variance
engagement of external experts, which would im-

41.746
7.540
5.265
5.139
3.912
2.875
Table 3. Total variance explained
prove overall conditions in mining companies.

Reorganise mining companies in such a way
that a separate organisational division is formed
with the focus on risk management, as well as
16.698
3.016
2.106
2.056
1.565
1.150
Total
collaboration with internal audit and quality con-

trol efforts towards the compliance with ISO
9001:2008 requirements. As an interim solution,
Component
a special team could be formed to focus on risk

management, consisting of the existing employees
1
2
3
4
5
6
with relevant skills set (mining, economics, engi-

neering, etc.). The solution within organisations

Table 4. Rotated Component Matrix (absolute values less than 0.3 are not shown)
Component
Variable
1 2 3 4 5 6
VAR024 0.786
VAR025 0.782
VAR020 0.760
VAR022 0.676
VAR023 0.666 0.343
VAR026 0.633 0.408
VAR021 0.621 0.314 0.318
VAR028 0.614 0.314 0.388
VAR019 0.554 0.433
VAR029 0.517 0.333
VAR033 0.348 0.747
VAR035 0.734 0.344
VAR036 0.719
VAR037 0.690 0.357
VAR034 0.385 0.673
VAR038 0.664 0.353
VAR032 0.376 0.620 -0.399
VAR031 0.609 0.388
VAR039 0.563 0.404
VAR027 0.526 0.560
VAR040 0.314 0.502 0.350 0.313
VAR030 0.376 0.465 0.355 -0.349
VAR014 0.416 0.406 0.339
VAR012 0.809
VAR011 0.780
VAR010 0.727
VAR009 0.650 0.334
VAR006 0.309 0.615
VAR008 0.560 0.401
VAR007 0.537 0.367
VAR018 0.401 0.445
VAR017 0.382 0.435 0.301 -0.314
VAR013 0.322 0.405 0.318
VAR002 0.792
VAR003 0.774
VAR001 0.640
VAR005 0.323 0.330 0.481 0.430
VAR015 0.326 0.799
VAR016 0.315 0.729
VAR004 0.551

should be such that it supports and enables inter- velopment. One of the main obstacles is the lack
nal control in mines that are both regular and com- of insurance and risk management culture – both
prehensive. Additionally, it is necessary to prevent within business and private population. This is
internal irregularities through proper supervision. confirmed by the data from the mining companies
Conduct a comprehensive risk management that shows that the overall annual insurance pre-
process across mining sites, starting with identifi- mium over all mining companies does not exceed
cation of risk and application of appropriate meth- BAM 1 million, which is very poor in comparison
ods for control and financing of risk. For the risks to the overall value of the resources that would
where likelihood of loss is low and loss severity need to be insured. A half of the overall insur-
high – the use of insurance options and services ance premium covers individual accident insur-
should be maximised. ance, which shows that mining companies at least
All organisational components should be con- recognised some value of insurance in day-to-day
nected with an integrated computer system, to en- processes. In addition to accident insurance, as
sure proper communication and management of mandatory the motor third party liability insur-
data, as well as risk identification, evaluation, and ance covers about 20% of the overall premium,
management. with the remaining 30% covering property insur-
In order to maximise business efficiency, it is ance of equipment, mainly vehicles.
necessary to ensure quality of risk management There are many reasons for insufficient use of
process within mining organisation. This means insurance in risk management in mining compa-
that the formal risk management should become nies. First of all, the specific mining risk in these
an equal part of organisational culture. Responsi- companies makes them less attractive to insurance
bilities at every organizational level must be clearly companies. Out-dated and unreliable equipment
defined and appropriately delegated. Maintaining largely plays the role in the level of risk associ-
an open-end and straightforward communication ated with the mining business, making insurers
throughout the organization hierarchy is the prima- less comfortable to provide attractive product of-
ry prerequisite for risk officers to perceive the over- fers for this part of industry. Also, specific work-
all risk exposure profile of the company. It is neces- ing conditions and environment associated with
sary to conduct frequent data analysis and continu- mining activities limits the insurance products to
ous investigation of possible risk elements in order basic personal injury with low insurance sums, es-
to prevent problems where possible and prepare the pecially for miners. At the same time, the mining
coal mining companies for unexpected situations. company tends to avoid insurance of equipment
Before presenting the results of the survey re- they believe is relatively safe, as the insurance is
lated to the application of insurance as a method seen as unnecessary cost. The insurance of assets
for risk management, it is necessary to note that is limited to mortgaged components of the assets
the insurance industry within BiH faces a number that are used as guaranty for loans and credits, at
of challenges that limit its development. BiH in- the request of creditors.
surance industry is one of the least developed in Regardless of insurance challenges and the fact
Europe despite great potential for growth and de- that the paid indemnification hardly exceeds 1/3 of
Table 5. Basic statistics for the insurance questionnaire
Questions Mean Standard deviation
The insurance company presented the contract elements correctly 4.63 0.74
The insurance company supported the risk identification and evaluation 3.67 1.63
The insurance company suggested measures of prevention, reduction, and other
3.67 1.63
methods of risks physical control
The insurance premium is appropriate regarding the transfered risk 4.33 1.03
Terms of the insurance premium payments are favorable 5.00 0.00
Indemnification provided by the insurance company is correctly calculated 4.43 0.79
The claims are settled timely 4.43 0.79

the paid premiums, the overall assessment of satis- The level of importance of proper risk man-
faction with the insurance business is high, as shown agement procedures within mining companies is
in the analysis of the collected data in Table 5. evident through the fact that most of the surveyed
Therefore, the main recommendation for the companies did not even have a formal process or
utilisation of insurance as a risk management documentation related to risk management or risk
method is to raise the overall level of risk manage- strategy. In those companies that have a formal risk
ment activities and culture across mining organ- strategy document in existence, their quality and ef-
isations. This will provide conditions for higher fectiveness is highly questionable. The current struc-
utilisation of insurance method for risk transfer ture of mining organisations is not adapted to risk
that will raise more confidence among insurers management, which makes it harder to control and
and motivate them for development of attractive manage risks. This is especially evident in limited
mining insurance products. vertical communication within companies, where
control and quality of procedures and processes are
Conclusion not developed or communicated effectively.
The positive side of the current risk manage-
In general, the culture of risk management in ment within mining companies is that most efforts
BiH organisations is at a very low level. The key are focused on operational risks. Quality of pro-
reasons for this can be found in the overall devel- cedures related to occupational health and safety
opment level of industry as well as in practices of employees was rated as relatively high. These
inherited from the past centralised planning econ- procedures are usually related to training of rescue
omy, where responsibilities for loss were treated teams, prevention of accidents, identification and
differently than in market economic conditions. measure of associated risks, and exchange of rele-
Much is needed before BiH companies develop vant information. A slightly lower quality rate was
the necessary level of industrial and economic attributed to environmental procedures and infor-
consciousness and understand the climate of free mation systems, their security and effectiveness.
economy, competition, and conditions for success. Management of financial risk in mining companies
This is confirmed by the research data. is based on classical financial control techniques
Mining companies should lead by example in that are outdated and no longer reliable. Contem-
this process. Their size and risk profile provide porary tools and techniques are required in order
strong reasons and motivation for development and to provide fast reaction and full control over the
application of best methods for overall risk man- financial aspect of the organisation, but they are
agement. Surely, the mining companies do focus on not utilised due to limited understanding and lack
risk; however the current efforts are far away from of available information, and limited identification
systematic, planned, and organised risk manage- of financial risks (such as changes in interest rates,
ment. This is best observed in risk identification position of suppliers on the market, etc.).
and evaluation phases, which are largely based on Some level of financial analysis is conducted
analysis of financial reports, past experiences, etc. with new investment projects, but it is focused
The most prominent risk management techniques only on a small primary set of risks, as the min-
are related to prevention of accidents, which is ing companies do not consider the risks associ-
understandable based on the nature of the mining ated with sales of products on the market (due to
business. However, when it comes to risk financ- high demand for coal). However, risk of competi-
ing, the main downside of the currently utilised tion (especially utilisation of superior technology
techniques is excessive exposure to risk without by competitors) requires a more significant effort
preparation of reserve funds for this purpose. It is and focus on risk management and the methods to
evident that the insurance is seriously underutilised mitigate associated risk factors. This also relates
option. Specific problems are related to implemen- to political, legal, and social risks.
tation of risk management programs, as the profile The current management practices are the main
and organisations of such programs within mining obstacle in modernisation of overall risk manage-
companies are not at the desired levels. ment in mining companies and require significant

changes in order to recognise and apply high stan- References

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sessment and Decision Making: The Mining Indus-
This paper is the result of a wider project, Risk try Perspective“, International Journal of Surface
Mining, Reclamation, and Environment, 2002,
Management and Insurance in Large Companies in 16(2): pp. 122-133.
the Federation BiH – Case of the Companies in the
Coal Mining Industry, supported by the Ministry of
Education and Science of the Federation BiH. The Corresponding author
authors wish to thank the coal mining companies in Safet Kozarevic,
University of Tuzla,
the Federation BiH for their collaboration. Faculty of Economics,
E-mail: safet.kozarevic@untz.ba

Reusable components design of optimal

decision tree algorithms for classification of
securities holders
Ljiljana Kascelan, Vladimir Kascelan,
Faculty of Economics, University of Montenegro, Podgorica, Montenegro
Abstract plexity of the tree and execution time on given data

In this paper we have proposed RC design of op- set. This goal is implemented through following
timal decision tree (DT) for classification of securi- steps: generating all possible combinations of stan-
ties holders on the Montenegrin capital market. We dardized RC components, i.e. appropriate DT algo-
have designed 80 different algorithms which were rithms on given data set, testing of performances of
tested on 2 sets of data on securities holders (natural the generated algorithms, analysis of performances
persons and organizations). For each of the algo- and selection of best algorithms, determining the
rithms we have determined its performances and existence of statistically significant differences in
found optimal combination of reusable components accuracy of prediction, between the algorithms
for these two data sets. We have determined statis- obtained with RC design, selection of optimal al-
tical significance of optimal algorithms. We have gorithm for given data set and analysis of results
also provided the results of classification obtained obtained with optimal algorithms.
with optimal algorithm for both data sets.
Key words: data mining, decision tree, reus- 3. Related work
able components, classification, securities holders Known DT algorithms are usually implement-
ed with „black-box“ approach, and this means that
1. Introduction the user is specifying input data and parameters on
The subject of research in this paper is design of basis of which algorithm defines appropriate mod-
optimal DT algorithms for classification of securities el by hiding the induction procedure from the user.
holders, based on RCs. Two data sets on securities One of the first „black box“ algorithms is ID3
holders were used in this paper. First set is comprised [1]. Algorithm C4.5 is improvement of ID3 algo-
of natural persons, while in the second set we have rithm [2]. CHAID algorithm was proposed by [3].
organizations as owners of securities on the Monte- QUEST algorithm was proposed by [4].
negrin capital market. They are divided on two sets The method we used in the paper is „white
because they have different predictive attributes. The box“, i.e. RC design of algorithms for DT induc-
data are taken from database of Central Depository tion. „White box“ approach enables the user to de-
Agency of Montenegro, and with status from March fine „building blocks“, i.e. RCs out of which the
2012. Since these are confidential data, they are tak- algorithm is consisted. This approach to defining
en with predefined values for category variables and algorithms which generate classification DT, is
without identification data on real owners. For both proposed by [5], and they have proved the advan-
data sets, with the RC design we have defined opti- tages of this approach with experiments.
mal algorithms and analyzed their results.
4. RC design of decision tree algorithms
2. The goal of the research RC design implies split of processes of DT
The goal of this research is RC design of optimal induction on following sub-problems: remove in-
decision tree for classification of securities holders. significant attributes (RIA), create split categori-
Results provided by the optimal algorithm are best cal (CSC), create split numerical (CSN), evaluate
possible in respect of classification accuracy, com- split (ES), stop criteria (SC) and prune tree (PT).

For each of the sub-problems, several RCs were Data sets we used in this paper represent data
isolated from original popular algorithms, which on on positions of accounts of the individual securi-
a specific way solve the specific sub-problem. The ties holders. Data are divided on natural personal
Table 1 shows isolated RCs for sub-problems which and legal persons as owners, because they have
we used for design of algorithms in this paper. different predictive attributes.
We have used symbols in brackets for marking Data set ind referring to natural persons has four
of algorithms composed of certain RCs. So, for categorical attributes, three classes, and number of
example, algorithm CART we present as !-B-G-!. records in the set is 64341. The class of owners with
This symbol means that the RIA was omitted, the „high“ total market value of securities includes nat-
split is bin, split evaluation is gin and PT is omitted. ural persons with amounts over 50000 Euros, „mid“
In all algorithms SC is mtd, so we omitted it from value is between 10000 and 50000 Euros, while
symbols. the values under 10000 Euros are „low“. CFI code
The advantages of designing algorithms with serves for classification of financial instruments ac-
help of such identified RCs are seen in the fact that cording to international standard ISO 10962, [9].
the method from one algorithm we can use within Dataset org has three categorical attributes, two
some other algorithm and test how it influences per- classes and 3538 records. In this data set, the class
formances of algorithm on specific set. Thanks to „low“ is consisted of owners whose total market
RC design we can make an optimal combination of value of securities is under one million Euros, and
RCs for specific data set, in respect of classification class „high“ includes all others.
accuracy and complexity of obtained DT. We have tested performances for 80 designed
DT algorithms over data sets ind and org. For test-
5. Design and testing of performances of ing of performances we have used 5X2-fold cross-
RC based DT algorithms on data sets of validation test with stratified sampling.
securities holders
6. Analysis of performances and selection
We have used WhiBo data mining platform [8], of best algorithms
for implementation of RC design of DT algorithms
in this paper. Out of components from Table 1 we In this paragraph we have analyzed perfor-
have created 80 different algorithms. These algo- mances of 80 algorithms obtained with RC design
rithms generate different DTs, even though they for both data sets.
are different in only one component.
Table 1. Sub-problems and isolated RCs

Sub-problem Reusable component Symbol Original algorithm
Chi-square test chs (C)
RIA QUEST
None none* (!)
Binary bin (B) CART
Multiway mul (M) ID3, C4.5
CSC
Significant sig (S) CHAID
All all (A) Delibasic et al. 2010
Information gain inf (I) ID3
Gain ratio gai (GR) C4.5
ES Gini index gin (G) CART
Distance measure dis (D) Mantaras 1991 [6]
Chi square test chs (C) CHAID
SC Maximum tree depth mtd Rokach and Maimon 2008 [7]
Pessimistic error pruning pep (P)
PT C4.5
None none (!)
The option „none“ implies omission of corresponding sub-problem.
*

Table 2. Differences in performances of 80 algorithms over data set ind

Performances Average Max Min Max-Min
Accuracy 66,98% 67,11% 66,73% 0,38%
Max tree depth 5,35 10 5 5
Weighted avg tree depth 3,52 8,1 2,37 5,73
Total nodes 102,97 289 13 276
Total leaves 67,95 196,3 7 189,3
Execution time 03:12 10:43,3 00:05,2 10:38,1
For data set ind, the results of performance component in combination with GR and D, while
analysis have shown the following. Eighty de- all others have approximately same, better accura-
signed algorithms have manifested different per- cy. If neither chs nor pep components are included,
formances on this data set. The Table 2 shows the situation is very similar. If chs is not included
these differences. We have provided average, and pep is, worst accuracy is in algorithms with
maximal and minimal values as well as the dif- component GR and then with component D and C,
ference between maximal and minimal value for while all others have approximately the same, bet-
corresponding performance. ter accuracy. So, it can be concluded that in respect
If we observe the average values of perfor- of classification accuracy, algorithms C-M-I,G,D-
mances for all four CSC components (Figure 1), P,! , C,!-S-I,C-P,! and C,!-A-I,G,C-P are the best.
we can conclude that best accuracy in classifica- Algorithms which have chs component, in average
tion is with algorithms with mul split and worst have better accuracy. Out of popular algorithms
with bin split. Regarding the number of nodes ID3 (!-M-I-!), C4.5 (!-M-GR-P, !-M-GR-!), CART
and leaves in resulting DT model, we can see (!-B-G-!) i CHAID(!-S-C-!), only CHAID falls into
that the situation is opposite, algorithms with mul category of the best, in respect of accuracy.
split have highest complexity of generated model, If the chs component is included, number of
while bin have the lowest. Depth of DT is highest nodes and leaves of resulting DT models is lowest
for bin split, and execution time is best for mul for bin split, then for all in combination with GR or
split and worst for all component. D, and then for sig split. The situation is similar if
both chs and pep components are not included. In
case that chs is not included and that pep is, low-
est number of nodes and leaves is in algorithms
with components all with GR, then all with D, and
bin with GR and at the end sig with GR, G, and C.
These algorithms belong to the category of the best,
in sense of complexity of resulting DT model.
In purpose of analysis of complexity of the re-
sulting DT models, we have observed two more
measures, maximal tree depth (MTD) and weight-
ed average tree depth (WATD), which is calculat-
ed as average product of depth of leaves and num-
ber of cases corresponding to them. WATD in fact
represents average length of distance in the tree
Figure 1. Average performances of CSC compo- which is needed for classification of one sample.
nents for data set ind MTD was 5 for majority of algorithms, except
for algorithms without chs component and with
Accuracy of classification varies depending if bin component, as well as with sig component in
the components chs and pep are included. If the chs combination with I, for which it was around 10.
component is included, worst accuracy is in algo- WATD was the lowest (around 2,5) for algorithms
rithms with bin split, as well as algorithm with all with pep component, with the exception of algo-

rithms which have omitted chs component togeth- If on a certain data set we determine existence
er with bin component, whose WATD was around of statistically significant differences in predic-
6. For algorithms which do not have pep compo- tion accuracy between algorithms, this means that
nent, WATD was around 4. RC design can significantly increase the accuracy
If we intersect the set of algorithms determined of classification. This will also confirm statistical
with previous complexity criteria of resulting DT significance of optimal algorithms which we will
models, we get the best algorithms in respect of finally determine in this chapter.
complexity: C-B,S-GR,I,G,D,C-P , C-A-GR-P , The testing was done with help of WhiBo op-
!-S-GR,G,D,C-P and !-A-GR,I,G,D,C-P. Neither erators in Rapid Miner[12]. environment. For both
one of the popular algorithms is included in cat- data sets, we have done 3160 pair-wise compari-
egory of the best, in respect of complexity. sons, looking for pairs which are significantly sta-
Execution time is the best for algorithms with tistically different in prediction accuracy.
mul and then sig components : C,!-M-GR,I,G,D,C- For data set ind the results have shown the ex-
P,! and C,!-M-GR,I,G,D,C-P,!. Concerning the existence of statistically significant differences in
ecution time, in category of best algorithms, only 42% of cases. Existence of statistically significant
CHAID(!-S-C-!) is included, out of the popular differences on this data set confirms that the used
ones. method of RC design can significantly increase
If we now intersect all above obtained sets the accuracy of classification in comparison to
of algorithms, we get the best algorithms for all popular data mining algorithms. Best algorithm in
reviewed performances, and those are: C-S-I-P, C- respect of performances C-S-C-P, which we have
S-C-P and !-S-C-P. In category of best algorithms found in previous chapter, showed statistically
in respect to all performances, neither one popular significant differences in relation to 44% of other
algorithm is included. algorithms. Figure 2 shows the part of results of
In respect of accuracy and execution time C-S- F-test for this algorithm.
I-P algorithm is the worst, and in respect of com- By observing the algorithms with lowest com-
plexity of DT it is !-S-C-P. For all performances plexity, we have determined that algorithms C-B-
algorithm C-S-C-P was in the middle, so it is the GR-P and C-A-GR-P have the lowest complexity
best algorithm in respect to all reviewed perfor- (11 nodes and 6 leaves). On the other side, F-test
mances, for data set ind. showed that in respect of accuracy these algorithms
Similar, the best algorithm, for dataset org, in are not significantly statistically different from best
respect of all six performances is !-S-I-P. In this algorithm C-S-C-P (Figure 2). However, complex-
data set, neither of the popular algorithms falls into ity of best algorithm is significantly higher (47,9
category of the best, in respect to all performances. nodes and 31,7 leaves). Execution time of the al-
gorithm C-B-GR-P is shorter (around 7 minutes)
7. Selection of optimal algorithms and form the execution time of the algorithm C-A-GR-
determining their statistical significance P (around 10 minutes). Taking into consideration
these facts, we can finally declare C-B-GR-P algo-
For determining of existence of statistically rithm as optimal algorithm, for data set ind.
significant differences in predictions accuracy, be- For data set org we have determined 31 % pairs
tween RC designed algorithms, we have used 5X2 of algorithms with statistically significant differ-
cv F-test. ences in prediction accuracy. This means that al-
Significance 5X2 F-test is the best significance gorithms obtained with RC design can provide
tester for classification algorithms, according to better prediction accuracy in comparison to popu-
[10]. This test for measuring significance of the lar algorithms. The best algorithm !-S-I-P, which
performance difference between two different was determined in previous chapter, is significant-
classifiers is proposed in [11]. It showed good ly statistically different in respect of prediction ac-
statistical power while keeping the first type error curacy, from 30,4 % of other algorithms.
low. We have used the probability threshold 5% We have determined that there are no algo-
and stratified sampling. rithms with lower complexity than !-S-I-P, and

Significance 5X2 F-test

Alg1 Alg2 F-value df1 df2 Prob. Alpha Stat Sign Diff
C-S-C-P C-M-GR-P 3,56 5 10 0,041 0,05 1
C-S-C-P C-M-I-P 4,64 5 10 0,018 0,05 1
C-S-C-P C-M-G-P 6,207 5 10 0,007 0,05 1
C-S-C-P C-M-D-P 3,95 5 10 0,03 0,05 1
C-S-C-P C-M-C-P 4,021 5 10 0,029 0,05 1
C-S-C-P C-B-GR-P 3,01 5 10 0,064 0,05 0
C-S-C-P C-B-I-P 6,886 5 10 0,005 0,05 1
C-S-C-P C-B-G-P 5,957 5 10 0,008 0,05 1
C-S-C-P C-B-D-P 6,886 5 10 0,005 0,05 1
C-S-C-P C-B-C-P 6,886 5 10 0,005 0,05 1
C-S-C-P C-S-GR-P 2,374 5 10 0,112 0,05 0
C-S-C-P C-S-I-P 0,935 5 10 0,509 0,05 0
C-S-C-P C-S-G-P 0,935 5 10 0,509 0,05 0
C-S-C-P C-S-D-P 0,935 5 10 0,509 0,05 0
C-S-C-P C-A-GR-P 3,01 5 10 0,064 0,05 0
C-S-C-P C-A-I-P 4,049 5 10 0,028 0,05 1
Figure 2. Part of the results of F-test related to best algorithm over data set ind
that statistically they have the same accuracy as al- Classification rule for class „low“ of securities
gorithm !-S-I-P. On basis of this, we can conclude holders is: natural persons from Montenegro, Ex
that !-S-I-P algorithm is optimal algorithm, for YU region, Europe, Australia, Canada, New Zea-
data set org. land and China and they are owners of ESVUFR
and ESVTPR shares, DBZTFR bonds and ordi-
8. Analysis of classification results obtained nary shares with voting right, without restrictions
from optimal algorithms in ownership and transfer, partly paid and regis-
tered (ESVUPR).
For data set ind we have determined that opti-
mal algorithm is C-B-GR-P. From the DT model
obtained with this algorithm (Figure 3), it can be
determined that „high“ securities holders on the
Montenegrin capital market ( with high total mar-
ket value of securities), are natural persons from
U.S.A. and they are owners of ordinary shares
with voting right, with restriction in ownership
and transfer, which are partly paid, and registered
(CFI code-ESVTPR) or they are owners of zero-
coupon bonds with government guarantees and
fixed maturity date, registered (DBZTRF bonds)
and ordinary shares with voting right, without re-
strictions in ownership and transfer, fully paid and
registered (ESVUFR ), and their sex is female. Se-
curities holders of „mid“ class are natural persons
from Montenegro, Ex YU region, Europe, Austra-
Figure 3. DT model for classification of natural
lia, Canada, New Zealand and China, and they are
persons, securities holders, generated with opti-
owners of preferred shares, without voting right,
mal algorithm
extendible, cumulative and registered (EPNECR).

For data set org, optimal combination of RC is ecution time, tree depth, weighted average tree
algorithm !-S-I-P. From the DT model obtained depth (WATD), number of nodes and number of
with this algorithm, it can be determined that class leaves of resulting tree. With intersection of sets
of organizations with „high“ securities holders on of best algorithms for all 6 performances, we got
the Montenegrin capital market , is consisted of: optimal algorithms in respect of all performances.
financial organizations from central Montenegro Also, we have showed that there are statisti-
and custody registrants from central Montenegro, cally significant differences in prediction accuracy
who are owners of ESVUFR, ESVTPR, ESVUPR, between 80 RC designed algorithms. Optimal al-
EPNECR shares; state organizations from central gorithms have shown statistically significant dif-
region of Montenegro; joint stock companies and ferences in prediction accuracy in relation to sig-
partnerships from southern region of Montenegro, nificant number of the others.
who are owners of DBZTFR bonds; organiza- With help of optimal algorithms we have gen-
tions from Europe, owners of preferential shares erated DT models for classification of securities
EPNECR; investment funds from Ex Yu region holders. We have defined classification rules for
and central part of Montenegro, who are owners classes of natural persons with high, medium and
of ESVTPR shares and investment funds, limited low total market value of securities on the Monte-
partnerships from Japan and Cayman Islands. The negrin capital market. We have also defined clas-
class of „low“ securities holders includes the fol- sification rules for classes of organizations with
lowing organizations: joint stock companies and high and low total market value of securities on
partnerships form central part of Montenegro, who the same market.
are owners of ESVUFR, ESVTPR and ESVUPR Research conducted in this paper has shown
shares, as well as the variable coupon and guar- that with RC design we can get algorithms which
antee bonds, with fixed maturity date and which exceed the performances of existing DT algo-
are registered (DBVGFR); financial organizations rithms over given data sets.
and custody registrants from EX Yu regions and For data set ind it turned out that, out of the
southern Montenegro; limited liability companies popular DT algorithms, only CHAID is included
from central and northern region of Montenegro, in the best, in respect of accuracy and execution
owners of ESVUFR, ESVTPR and ESVUPR time. In respect of complexity of the generated
shares, as well as of DBZTFR bonds; public and tree, neither of the popular algorithms falls into
state owned companies and insurance companies; category of the best. For data set org, only C4.5
investment funds, limited partnerships or some algorithm is in category of the best, in respect of
other types of organizations (designated in data- accuracy and execution time. Regarding the com-
base as others) from southern and northern part of plexity of resulting tree, neither of the known algo-
Montenegro, U.S.A., Virgin Islands and Panama, rithms falls into category of the best. Optimal DT
and investment funds from Europe. algorithms which we have found are not among
popular ones, and this proves that RC design can
9. Conclusion and argument provide algorithms with better performances than
the popular ones, over certain data set.
In this paper, with method of RC design, we With analysis of performances of algorithms
have designed 80 different DT algorithms for data obtained with RC design, for both data sets, it can
sets ind and org, which represent natural persons be concluded that: „Remove insignificant attri-
and organizations who are securities holders. butes“ RC in average increases execution time;
Among them, we have found optimal DT algo- RCs mul and sig are best alternative in relation to
rithms for both data sets, and that was the goal of execution time; RCs mul and sig together with inf,
this paper. are best alternative in relation to accuracy and ex-
First, for each data set individually, we have ecution time; RCs bin and gai are best alternative
found sets of best algorithms. We have chosen in respect of number of nodes and leaves of result-
best algorithms in relation to six performances ing tree and RC „Prune tree“ reduces complexity
which we considered: classification accuracy, ex- of resulting tree.

Conclusions from research of RC design over 10. Salzberg S., On comparing classifiers: A critique
these two data sets can be entirely applied over of current research and methods, Data Mining and
Knowledge Discovery 1999; 1: 1-12.
some other data sets.
The question which remains open is why cer- 11. Alpaydin E., Combined 5X2 cv F test for comparing
tain RC provides better performances over one supervised classification learning algorithms, Neu-
data set, and bad over the other. For example, RC ral Computation 1999; 11: 1885-1892.
RIA with data set ind in average increases accu-
12. Rapid Miner User Manual, www.rapidminer.com
racy, while with data set org it reduces it. It would
be interesting to see which characteristics of data
set org caused that the removal of insignificant at- Corresponding author
tributes leads to decrease of accuracy, in average. Ljiljana Kascelan,
Since the RC design implies possibility of add- Faculty of Economics,
ing of new RCs, number of possible algorithms Podgorica,
can become very high. Finding optimal algorithm, Montenegro,
in that case, would be very demanding job. Be- E-mail: ljiljak@ac.me
cause of that, future researches could be oriented
on determining on what way some specific data
set influences performances of certain RC, and if
on basis of those characteristics we can predict op-
timal combination of RCs, for that data set.
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Socio-economic aspects of educational

benefits in socio-economic development of
countries in transition
Slavko Karavidic, Marija Cukanovic Karavidic, Dragica Jovancevic, Milos Stanojevic, Katarina Radosavljevic
High School for Business Economy and Entrepreneurship, Belgrade, Serbia
Abstract measure of progress of individual social commu-

This paper will be an attempt to highlight the nities“ [1].
issues of constantly expanding and growing edu- Economic development rates are to a signifi-
cational needs and their corresponding trends and cant extent defined by the available offer of edu-
changes. We will also make an effort to point out cated work force.
the influence of education on the socio-economic Answers to many challenges of time we are
development of transition countries, which is pri- living in areinevitably unavoidably comprised of
marily determined by the general level of educa- dealing with the basic questions, such as the fol-
tion. The desired outcome of implementing sci- lowing:
entific research results to educational uses is the – Possible contribution that the education
change in individuals, as well as the acquisition of with its institutions may provide to the
practical skills and abilities, as well as characteris- socio-economic changes and its assistance
tics of general applicability. in development strengthening;
Key words: education, science, socio-econom- – Potential contribution of education, and
ic development, management especially of teaching and research, to the
organization of modern society and their
greater involvement in actions aimed at
Introduction
poverty reduction, strengthening of the basic
Research work, analysis and interpretation principles of civil society and development
of the results of the research, as well as of other of other levels and forms of education;
similar research work, contributed to the recogni- – Answer that the education can provide to the
tion, definition and understanding of the indisput- changes in the area of work and civil culture
able contribution and influence of the science and (which implies strengthening of academic
education on the positive socio-economic changes and professional qualifications, as well as of
and overall development of the state. the civil and personal qualities).
Generally speaking, the entire world is chang-
ing, and science and education are the key factor The following can be concluded from the above
of this change. New discoveries help discover new questions: What is and what should be the role of
horizons and demands, new engagement in the education in the society today and the society in
implementation of change. the future?
Successful socio-economic development is To dig into theideas about education means to
achieved through knowledge, and knowledge perceive origins of problems that are nowadays im-
is acquired through education. Thus, numerous portant issues in the development of education and
questions are opened that need to be answered in its contribution to the socio-economic development.
the process of the educationdevelopment, and ed- Usefulness of management in education and
ucation thus acquires attributesof one of the main achievement of educational development goals
factorsof social development. are reflected in abandoning of principles of tradi-
“The education is a sound basis and safe foun- tional static-functional principle of business activ-
dation of each properly organized state and it is a ities of educational institutions and their focus on

changeable and flexible organization of education system become more rational and economical,
that assumes different shapes with the changing since it does not allow the less capable ones to
demands of the socio-economic development. De- waste our time.
velopment that strides towards the present, which Modernization of society and state and focus
implies harmonization of economic and overall on the modern economic and technological devel-
social growth and development on one hand, and opment imply innovations in global goals of sci-
the quality of life, i.e. of the acceptable standard ence and education.
of living, on the other. Development that does not In order to set the development of society in
jeopardize the potentials of the future generations motion towards a learning society, in addition to
for satisfying their needs, i.e. the survival of the the formal education it is necessary to also develop
future generations. readiness and capacity for continuous profession-
Development implies innovation as a process al improvementand lifetime learning as a whole.
in which new technologies are to be generated, a In addition to a well structured formal system of
new way to do business, etc., and from the aspect education, it is also necessary to have an adequate
of sociology, it implies that the great social and system of institutions, organizational forms and
structural changes will additionally be created in programs that are not included in the formal sys-
the process of institutional transformation as well. tem of education, through which the capacity for
Successful development requires adequate continuous, lifetime learning will be realized and
knowledge, innovativeness, accountability, initia- nurtured, based on the premisethat:
tive and innovation, and a great deal of work. In – The manifestation of lifetime learning is an
addition to this, the new market reality demands integral part of holisticeducation;
flexibility and fast changes in education in compli- – A correctiveof the regular educational
ance with the developmental needs. system;
Education level of the general population is an – An innovative mechanism of the educational
indispensable indicator of the achieved level of system;
social development in each society. Higher level – A strong factor of economic development;
of education implies a higher level of ability to – It increases professional mobility.
perform complex tasks that involve responsibility
in a society and it also exert influence on all the This is based on facts that the mental abilities
areas of social life – economy, politics, culture, must be maintained, enriched and strengthened
health care culture and social security. Education through self-motivatedlearning and self-education.
provides for permanent development of values. Revealing ignorance is only a means for spread-
Economic crisis intensifies interest for the place ing knowledge.
and role of science and education that are a trea- Modern developmental tendencies in the coun-
suryof valuable experiences adaptable to the present tries with market economy have shown that sci-
stage of development in Serbia, through intensive ence and education are at the very top of priorities
research in different area of activities, generating of of the global national strategies and policies of so-
ideas, as well as through the development of meth- cio-economic and technological development and
ods and techniques for problem solving in practice, progress. It is about such social organizations that
which under the present conditions implies speed, are based on knowledge in which science and edu-
optimum costs and innovativeness. cation have the status of basic instruments of the
The necessary changes are primarilyrelated to entire socio-economic development, finding solu-
the changes in people’s attitudes (in their motiva- tions to the basic social problems and production
tion levels, knowledge, criteria, individual behav- of social, economic and technological changes.
iour and group behaviour, capabilities and other The best abstract of research into the scientific
personal characteristics. and educational benefits for socio-economic de-
The basic criterion for progress must be found- velopment lies in the change in individuals (char-
ed in the accumulation of acquired knowledge and acteristics and forms of behaviour of individuals)
education. Ability-based selection makes a social and in the changes in society. These changes can

produce far-reaching consequences for economy but also that the link between education, political
and society, and even for the course of history. By and economic development is dubious under ex-
summarizing the main findings about the influ- treme conditions (political instability, corruption,
ence of education to the socio-economic develop- violence, etc.).
ment and to the society as a whole, it has been In essence, relations among science, education,
concluded that the education: population growth and economic development are
– Significantly improves the knowledge levels, complex, and especially when directed towards
intellectual tendencies, and the similar; the socio-psychological research works through
– Helps people in finding their own identities transformation of values and attitudes that have
and in their individual choice of lifestyle; direct implications on development and economic
– To a great extent, education increases performances of the society.
people’s practical competencies, flexibility Science and education in socio-economic de-
and tolerance in their capacities of citizens, velopment contribute to the capacity to transform
workers, family members and consumers, individual attitudes and values from the “tradi-
and influences their choice of leisure-time tional” ones towards the “contemporary” ones,
activities, their health and their general and thus by strengthening the rate of structural
abilities for coping with the problems in life. modernism in a society, they increase the rates of
socio-economic development.
The main influence that the education exerts is Another contribution highlights the role of lit-
on the practical abilities, skills and generally ap- eracy and improvement of communication in de-
plicable characteristics, such as: the verbal skills, velopment. Many researchers have claimed that
essential knowledge, rational approach to prob- the written tradition is of essential importance for
lems, intellectual tolerance, future orientation, the origins of “formal rational thinking“ in every
adaptability, self-esteem, and so on. society. Others point out that if development de-
Changes in individuals that came as the result pends on efficacious dissemination of new infor-
of the influence of science and education are trans- mation, the role of science and educationin com-
ferred to their children and to future generations. plex social systems in particular lies in their influ-
It is indisputable that the educated people exert ence on costs of such information dissemination
influence on their social environments (on the pre- processes. This is above all manifested in facilita-
dominant interests, values, attitudes, behaviour, tion of communication processes that are of vital
etc.). These effects can be manifested in different importance for socio-economic development.
areas, including creativity, family planning, care Basically, the interactive relationship between
about children, quality of schools, appreciation the economic and educational dimensions is being
for arts, culture and learning, health care services, highlighted, since the opinion that the educational
political participation, understanding of social is- basis is the prerequisite for sustainable develop-
sues, acceptance of social changes, as well as the ment is broadlyaccepted throughout the world (the
sense of shared culture and social solidarity. Sci- developed countries suggest the threshold of 30 to
ence and education additionally serve to preserve 40 per cent).
cultural heritage and they enhance civilization. In this sense, an attempt was made through ap-
Despite the fact that a convincing argument propriate educational and socio-economic indica-
about the role and contribution of science and tors show the dependence of the interactive rela-
education to the socio-economic developmenthas tionship between education and socio-economic
been proposed in the economic texts, the reason development of countries in transition.
why education makes people become more pro- Investments in education, research, develop-
ductive remains relative, as well as the alleged ef- ment and innovation in the new European strategy.
fect of “spilling over” of education that can indi- Europe 2020has investment character and is the first
rectly contribute to development. priority. Special emphasis on establishing a system
It is obvious that the development process is of education that meets the needs and demands of
linked not only to the growing levels of education, a competitive economy, the establishment of strong

links between employers, institutions responsible Countries covered by the survey, ranged from
for education, scientific institutions in their respec- the lowest 14.3% in Macedonia to the highest
tive fields and the labor market. These links need to 32.8% in Poland.
be institutionalized at the national, and regional and
local level. They are necessary to ensure that edu-
cation meets the needs of employers for relevant
professional competencies that match the level of
technology development of the industry.
According to the Labour Force Survey, countries
in transition early indicator of completed education
and training is part of the population aged 18-24 years
who have completed lower education and training in
the total population aged 18-24 years. Under the less
educated to the International Classification of Edu-
cation (ISCED 1997 - 0, 1, 2 or 3c short, second)
means the uncompleted primary, primary and in-
complete secondary education. The survey covered Graph 2. The share of population with higher
countries, the data for the year 2010 ranged from education (30-34.godine)
Source: RZS (poll), Eurostat
the lowest 3.9% in Croatia to the highest 16.6% in
Romania, and 17.3% in Serbia (aged 15 - 24). The
Research and comparisons of functional liter-
average share of early completion of education and
acy (how much young people are “equipped” for
training is 14.4%. Lower rates of employment are:
life in modern society), quality and equity of edu-
Croatia 3.9%, Slovakia 4.9%, Slovenia and Poland
cation point out the factors associated with educa-
5.3%, Czech 5.4% and Hungary 11.2%. Above av-
tional attainment.
erage share: Bulgaria 14.7%, Macedonia 16.2%,
Romania 16.6%, and Serbia 17.3%.
Graph 3. The effectiveness of education-PISA tests

Source: OECD, Pisa
Graph 1. The share of population with lower

In the previous part of the article we talked
education (18-24 years)
Source: RZS (poll), Eurostat about the impact of education on birthrateof the
countries in transition. Birthrate as a positive nat-
Indicator of higher education is part of the pop- ural component has positive impact on the revi-
ulation aged 30-34 years with completed higher talization in the population and its age structure.
education in the total population of countries in Accordingly, low birthrate impacts the age struc-
transition aged 30-34 years. Under the Higher Ed- ture in a longterm manner, so that even in terms of
ucation to the International Classification of Edu- growth and reproduction for the simple regenera-
cation (ISCED 1997 to 5.6) means the first high- tion, depopulation and aging of the population for
level degree and higher education. some time continue.

Table 1. Educational differences in transition countries
Romania 50
Republic 28
Hungary 36
Bulgaria 58
Slovenia 29
Croatia 51
Norway 1
Serbia 60
Czech
State ranking, HDI
The average number of years of education25+ 12,6 12,3 9,0 11,7 10,6 9,0 9,9 9,5
Expected number of years of schooling 17,3 15,2 16,7 15,3 14,8 13,8 13,7 13,5
Source: UNDP, Human Development Report 2010
There is a low participation rate of young peo-

ple (15-24 years) in the Serbia, 28.2%, compared
to EU-27 (44.3%) and neighboring countries, and
on the other side of the participation rates of older
people (55-64 years) of 37.3% is below the EU 27
- (49.9%) exceeds the rate of participation of the
same populations in other countries in transition.
Graph 4. Total fertility rate - fertility of the coun-

tries in transition
Next, we noted a very strong influence of edu-

cation on the population of countries in transition.
Participation rate (activity) is the percentage
of active population in total population aged 15
and over. Overall participation rate, expressed as a
Graph 6. Long-term unemployment rate 2010
percentage of active people aged 15-64 (employed Source: RZS (poll), Eurostat
and unemployed) in the total working age popula-
tion aged 15-64 years, the survey covered coun- Labour productivity is a key factor in the ex-
tries, the data for 2010 ranged from the lowest pression of educational benefits.
59.0% in Serbia to the highest 71.4% in Slovenia.
Graph 7. Labor productivity according to PPP

(EU27 = 100)
Source: IMF, Eurostat, RZS, MF
Graph 5. The employment rate for the countries Educational level of employees, their work
in transition (20 - 64) productivity and other factors reflect the average
Source: RZS (poll), Eurostat level of wages in the transition countries.

Table 2. Salaries in EUR will also point out the progress indicators of the
2008 2009 2010 process of transition countries.
Bulgaria 226 237 259 Note: The maximum possible score for prog-
Romania 373 349 334 ress in transition is 4.33, and minimum 1. The val-
Hungary 447 455 486 ue of 1 represents little or no change from a rigid
Croatia 738 737 720 centrally planned economy, while 4.3 represents
Czech Republic 944 960 953 the standards of market economies. Shaded cells
Poland 838 717 812 and indicators for 0.33, two scroll arrows to 0.66
Slovakia 697 730 744
Slovenia 900 930 967 Conclusion
Bosnia and Herzegovina 408 410 412
Macedonia 260 325 336 We have ventured in “an unforgivable age”.
Albania -- 294 314 Rules are constantly changing, and the economic
Serbia 400 338 331 and social environment is changing with them.
Source: National Statistics and National Bank of the mentioned Changes in reality are faster than the spontaneous,
countries reflexthought, and this can be specifically found in
The foregoing is the impact on GDP growth in the countries in transition.Countries in transition
transition countries. face the imperative of speedy processes and con-
In today’s transitional business productiv- tradictions between goals and means, which has
ity and allocative ability are determined by us- influenced the direction and the rate of the transi-
ing modern forms of knowledge, information and tion processes in specific countries.
communication technologies. Use of the Internet The main problem of the transition countries
and other modern forms of information and com- lies in the question of whether there is a politically
munication technologies have radically changed articulated, convincing alternative to something
the way people live and work and are the basis better compared to the existing state and whether
of development of the knowledge society and sus- there are socio-cultural and political subjects that
tainable development. are sufficiently strong to achieve it. This is even
At the end of the display indicators of socio- more so since all the paradoxes of our society re-
economic development of countries in transition sult from the antagonism of the real and promised
that significantly affect the level of educationwe socio-economic development.
Table 3. Real GDP growth in transition countries
GDP, interannual growth rate in%
The deviation in relation to the EBRD
Region - country The new forecast
forecast of October 2010.
2008 2009 2010 2011 2010 2011
Croatia 2,4 -5,8 -1,3 2,0 0,2 0,1
Hungary 0,8 -6,7 1,3 2,0 0,8 0,3
Poland 5,1 1,7 3,6 3,9 0,3 0,3
Slovakia 5,8 -4,8 4,0 3,7 0,0 0,3
Slovenia 3,7 -8,1 1,0 1,7 -0,1 -0,4
Albanija 7,8 3,3 3,8 2,6 0,7 0,4
Bosnia and Herzegovina 6,0 -2,8 0,8 2,2 0,0 0,0
Bulgaria 6,2 -4,9 0,4 2,6 0,0 0,3
Macedonia 4,8 -0,9 0,8 3,2 0,0 0,9
Crna Gora 6,9 -5,7 0,2 3,1 0,8 0,5
Romania 7,3 -7,1 -1,9 1,1 0,2 0,2
Serbia 5,5 -3,1 2,0 3,0 0,4 0,1
Source: EBRD Transition Report 2010.

Table 4. Using the Internet and connection types to access the Internet in 2010
Types of connections for Internet access (multiple answers, % )
Modems Other links Wireless
Using the Internet Broadband DSL
and ISDN (cable) mobile phone
Poj Dom* Pred** Dom Pred Dom Pred Dom Pred Dom Pred Dom Pred
EU 71 70 98 88 90 11 - 40 20 58 81 9 20
Bulgaria 46 33 95 79 71 16 - 61 32 19 47 1 10
Czech Republic 69 61 99 89 90 8 - 65 55 26 57 1 19
Hungary 65 60 98 89 87 9 - 46 35 43 68 6 24
Poland 62 63 99 90 69 10 - 55 20 40 59 10 22
Romania 40 42 96 54 62 48 - 50 34 5 30 7 10
Slovenia 70 68 99 91 88 9 - 59 25 49 73 31 32
Slovakia 79 67 100 73 73 23 - 52 27 26 54 17 36
Croatia 57 56 98 87 80 7 - 22 20 71 73 4 34
Macedonia - 42 - 81 - 29 - 33 - 50 - 2 -
Serbia 44 39 97 28 - 18 14 25 17 47 74 20 12
* percentage of households that have Internet access from home,
** percentage of enterprises with internet access
Source: Regional Economic Prospects in EBRD Countries of Operations, Januay 2011
Table 5. The value of EBRD transition indicators in transition countries, 2009-2010

in mid 2010, the EBRD estimates%
The share of private sector in GDP
Financial
Company Market and trade Infrastructure
institutions
Large private companies
Small private companies
Trade and foreign sector

enterprise restructuring
Mean - total
Banking sector reform
and nonbank financial
Overall infrastructure
and liberalization of
Competition Policy
Price liberalization
Securities markets
Governance and
Country
interest rates
institutions
reform
Albania 75 3,1 3,7 4 2,3 4,3 4,3 2 3 1,7 2,3

Bosnia and
60 2,8 3 3 2 4 4 2 3 1,7 2,7
Herzegovina
Bulgaria 75 3,6 4 4 2,7 4,3 4,3 3 3,7 3 3
Croatia 70 3,5 3,3 4,3 3 4,3 4,3 3 4 3 3
Macedonia 70 3,3 3,3 4 2,7 4,3 4,3 2,3 3 2,7 2,7
Hungary 80 3,9 4 4,3 3,7 4 4,3 3,3 3,7¯ 4 3,7
Montenegro 65 2,9 3,3 3,7 2 4,3 4 2 3 1,7 2,3
Poland 75 3,8 3,7 4,3 3,7 4,3 4,3 3,3 3,7 4 3,3
Romania 70 3,5 3,7 3,7 2,7 4,3 4,3 3 3,3 3 3,3
Slovakia 80 3,7 4 4,3 3,7 4,3 4,3 3,3 3,7 2,7¯ 3,3
Slovenia 70 3,4 3 4,3 3 4 4,3 2,7 3,3 3 3
Serbia 60 2,9 2,7 3,7 2,3 4 4 2.3 3 2 2,3
Serbia’s
21-22 24-25 22-25 13-18 14-24 19-23 13-19 11-19 18-22 16-21
ranking
Source: Eurostat, RZS

The conflict and confusion among different oped, ready and qualifiedto face very rapid and
goals of changes and means of their realization is constant developmental changes.
very prominent and at the same time burdened with Education is expected to produce workforce
excess expectations for reduction of inequalities that will not simply be the people looking for a
under the present conditions of life and life chances job, but people who are capable of becoming suc-
of people [2]. cessful entrepreneurs and job creators.
There can be no socio-economic development Changes require activities within the educa-
or way out of the crisis without a road to economic tional process, that is, in everything that the edu-
freedoms (creation of new values, road to entre- cational system can make more efficient and ef-
preneurship, business, etc.) where science and fective, while at the same time liberating it from
education play a significant role. the unnecessary waste of energy.
Huge costs of inaction over a long term have Anyhow, this should be emphasized: “Big prob-
come as a result of many trends that are nowadays lems that we face cannot be solved on the level on
unsustainable, as well as of wrong choices and er- which we have created them“. (Albert Einstein)
roneous solutions in relation to production, tech-
nology, infrastructure, agriculture, use of natural References
resources etc.
Political elite and missionary intelligentsia that 1. Karavidic S., Management in Education – Socio-
economic Aspects of Development and Financing
are used to loans approved under favourable con-
Models in Education, Institute for Pedagogy and An-
ditions, donations, sponsorships, etc., and theyuse dragogy, Faculty of Philosophy, Belgrade, 2006, p. 8
the international economic crisis for their excuses.
2. Karavidić S., Management in Education – Socio-eco-
Commonsense and rationalityof comparative nomic Aspects of Development and Financing Models
experiences show that the international crisis can- in Education ,Institute for Pedagogy and Andragogy,
not be used as an excuse for new lags or failures Faculty of Philosophy, Belgrade, 2006, p. 286
in a single area, and thus in education either [3]. 3. Dušanić J., “The World Crisis is a Source of an
Trying to explain the reasons of economic Unsuccessful Politics”, an interview in the weekly
crises, John Stewart Mill states: “Panic does not magazine Pečat, January 2009, p. 22-23
destroy the capital, it actually discovers the level 4. Avramović Z. (2003), “State and Education”, ČPI,
of its previous destruction by its own deception Belgrade.
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Aimlessness, lack of one’s own road of socio-eco- day”, Serbian Association of Pedagogues Unions.
nomic development, inability to bridge the transition 6. Karavidić S. (2010), “Education Management – Socio-
and socio-economic crisis have all been transformed economic Aspects of Development and Financing Mod-
into “the only way”, regardless of whether the road els in Education”, Faculty of Philosophy, Belgrade.
to the EU is called ‘reformist’ or somewhat else. 7. Karavidić S., Čukanović-KaravidićM. (2008), “Eco-
On that road, science and education could become nomics and Financial Management in Education”,
a bridge between the “outer world” and the “inner Faculty of Organizational Sciences, Belgrade.
world”, between the world “that is somewhere over 8. Koković D. (1994), “Sociology of Education “, Na-
there” and the world “that is here exactly”. In sci- tional book, Belgrade.
ence and education, questions are as important as the 9. Education – A Hidden Treasury (1996): UNESCO –
answers themselves. It is the place where generaliza- A Report by the International Group on Education in
tions must give way to concrete actions. the 21st Century, Belgrade.
Discussion about education is a movement on
a broader social level the end goal of which is an Corresponding Author
invitation to a new understanding of the mission, Slavko Karavidic,
role and function of education. High School for Business Economy and
Entrepreneurship,
General conclusion is as follows: it is neces- Belgrade,
sary to create a vital and creative society, which Serbia,
is versatile andharmoniously and integrallydevel- E-mail: skaravidic@gmail.com

The impact of innovation on the economy

competitiveness, unemployment rate,
average salary and inflation
Branimir Pavla Inic1, Aleksandra Vucelja2, Nebojsa Zakic1, Andrej Jergovic3
1
Union University “Nikola Tesla”, Belgrade, Serbia,
2
Altios d.o.o., Belgrade, Serbia,
3
Soko inžinjering, Belgrade, Serbia.
1. Introduction completely disappeared. This analysis compared

three following criteria: stability, longevity and
According to Drucker each modern organiza-
annual turnover[4].
tion, which wants to develop itself and to grow,
These data tell us how difficult it is to ensure
must implement a change management[1]. In line
development, growth and survival of companies
with previous, Drucker argues that the organiza-
in the turbulent and changing environment. The
tion should adopt three systemic determinants.
cause of such a phenomenon is seen as a conse-
First, organization should be oriented toward con-
quence of following attitude “oriented towards
tinuous improvement in all aspects of business.
the chief, and contrary to the opportunities and
This continual process of improvement, the Jap-
threats” [5]. According to the Schumpeter [6]
anese call “Kaizen”. Second, each organization
view, there is strong relationship between a num-
must have an ability to exploit new opportunities,
ber of innovations and economy competitiveness.
and to learn from its own success. Third, each or-
In line with this argument, aim of this study is to
ganization must adopt organized process of sys-
investigate: What is the attitude of companies to-
tematic innovation. Therefore, due to rapid chang-
wards innovation in Serbia? Secondary aim of this
es in market environment, the implementation of
research is to investigate the relationship between
this philosophy is an imperative for the future[2].
the number of generated innovation, investment in
The premise for prosperity of firms is to build
research and development, the competitiveness of
the organizational structures and processes, that
the economy, GDP, unemployment rate, average
stimulates the innovation culture. This is a pro-
salary, and inflation.
spective climate for creating and implementing
Research hypotheses are defined in following
an innovation. Contrary, the firms which do not
way:
accept this paradigm will struggle to survive on
1) There is a relationship between the number of
the market. Perhaps the best example that supports
generated innovation and the competitiveness
the previous discussion is the example of Cisco
of the economy.
Systems, Inc. Its value exceeds the $ 300 billion
2) There is a relationship between investment
for the first time in the last decade, while other
in research and development and the number
successful firms, have become marginal. Recent
generated innovation (patents applied for
research shows that the average life expectancy of
and registered as a top innovation)
a multinational corporation is between forty and
3) There is a relationship between the
fifty years [3]. According to the Fortune maga-
number of generated innovation and GDP,
zine, after only thirteen years, the third of the 500
unemployment, average salary and inflation.
largest companies are no longer existed (e.g. Pan
American, Enron)
Key words: Change, environment, innovation,
Likewise, the results of the recent analysis,
development, education.
showed that from the top hundred companies
listed in 1901 only the General Electric survived.
Surprisingly, the eighty-three companies have

2. The attitude of companies towards (c) WIPO, World Intellectual Property Indi-
innovation generated in Serbia cators 2010 Edition, Geneva: World Inte-
llectual Property organizations are given
Following methods are used for data collection
in the Appendix, item 2, Table 1 [11]
in this study:
c) Data on competitiveness of the economy,
a) The survey method was employed with aim
GDP, unemployment, inflation and avaraye
to gather the primary data
sallary are given in Appendix Item 3, Tables
b) descriptive research method was based on
1, 2, 3, 4, and 5.
the collected secondary data.
2.1. Survey research based on collected

primary data
Authors conducted the survey research in col-
laboration with the University Union “Nikola
Tesla” in Belgrade, between 180 firms. The aim
of this research is to investigate the attitude of
companies toward the production of innovations.
Survey consisted of seven questions, presented in
Appendix. Authors conducted the research in four
following phases: (1) development and testing of Figure 1.
the questionnaire, (2) sample selection, (3) data I1 = The index of needs and existing innovation
I2 = The index of theoretical and existing innovation
collection, and (4) data analysis.
According to the Milas, the survey is a form
non-experimental research, in which the data is col- 3. Discussion
lected from a series of standardized questions re-
garding the respondent’s personal opinions, beliefs, 3.1. Survey’s research results indicates following:
attitudes, and behavior[7]. Survey is designed to
(a) Responses on the first question: Does
be understandable to all respondents from various
the organization have an innovative way
levels of expertise, using the direct and non leading
of thinking? Surprisingly, 94.44% of
questions on a Likert scale. The survey was con-
respondents state that their organizations
ducted among firms (N=180) of various sizes and
have an innovative way of thinking, or
age. The electronic survey was sent via e-mail to
in another word that they are prone to
the selected firms. The respondents were mainly
constant innovation. The remaining 5.56%
business owners or responsible persons.
states that are not sure of a response.
(b) Responses on the second question: Do you
2.2. Research based upon secondary data gather ideas for innovation from internal
This research investigated following data: sources, external sources or both? Majority
a) The research entitled “Research attributes of respondents (66.67%) state that the most
that determine the innovative businesses” are ideas for innovation are collected from
given in the Appendix, item 1, Figure 1, [8] internal (by employees in the organization)
b) Data on the number of patents, as well as and external sources (by engaging scientific
superior innovation, given by: and professional institutions ). Minority of
(a) WIPO, World Patent Report: A Statistical respondents (27.78%) state that they collect
Review 2008 Edition, Geneva: World ideas only through its employees, and
Intellectual Property Organization [9] 5.56% of respondents were not sure, which
(b) WIPO, World Intellectual Property answer to choose.
Indicators 2009 Edition, Geneva: World (c) Responsese on the third question: Do you
Intellectual Property Organization[10] consider the customers ides for generating

the innovations? Responses show that, prestige, power. Visibility of innovation

companies take into account customer (24.32%) and how it visually accessible
ideas in half cases (50%) always, while and communicative to the user. There are
another half considered them sometimes. those who believe (16.22%) that for the
(d) Responses on the fourth question: Which adoption of innovation is crucial the ability
numbers of ideas in your organization are to check innovation.
used for innovation of products / services
and / or process: a small, medium, or On the other hand, the respondent’s minority
large? Response show that large numbers is for expression level of innovation (8.11%) In-
of ideas are used in 38, 89%, medium novation compatibility (5.41% ) (how innovation
numbers of ideas are used in 44, 44% and is compatible with the socio-cultural values from
small numbers of ideas are used in 16, the environment in which it sells, but also how it
67% firms. On the other hand, number of is compatible with other innovations adopted) and
innovative ideas used for the majority of the complexity of the innovation (2.70% ).
firms is medium (50%), large (33,33%), Since the respondents had the opportunity to
and small (16,67%). summarize all those factors which they consider
(e) Responsese on the fifth question: What is relevant for adoption of innovation, 16.22% of them
the rate of investment in innovative activity thought that all these factors had equal importance
in comparison with firm revenue? Majority in the acceptance of innovations into the market.
with 44.44% state that it is between 5 and
10%, 16.67% of them believe that their 3.2. Research results from the secondary data
companies are investing less than 5% in collected to indicate the following:
innovation, while 11.11% respondents
believe that investments are significantly 1. Reduced number of generated innovation in
higher, from 10 to 20%. According to the Serbia in comparison with Slovenia, Croatia, Ro-
response, there are no organizations, which mania, Bulgaria and Hungary (Appendix, item 2,
invest more than 20% of income earned in Table 1) negatively influences the competitiveness
innovative ventures, and quite a few of of Serbia (Appendix, Item 3, Table 2). This sup-
them (27.78%) did not know how their ports the first hypothesis.
organizations are investing in innovative
activities. 3.3. The reasons for the reduced number of
(f) Responses on the sixth question: Is your innovations can be explained with decreased in-
organization familiar with the process of vestment in research and development in Serbia
diffusion of innovation (the process of in comparison with Slovenia, Croatia, Romania,
acceptance of products / services in the Bulgaria and Hungary (Appendix, Item 3, Tables
market?) Respondents believe that most 3 and 4) This supports the second hypothesis.
organizations are familiar with the process
of diffusion of innovation (64.71%) and the 3.4. Reduced number of generated innovation
process of acceptance of products / services strongly affect the GDP, unemployment rate, infla-
in the market. However, a lot (17.65%) of tion and average salary (Appendix, Item 4, Tables
those who said they are not familiar with 5, 6, 7, and 8). This supports the third hypothesis.
the process of diffusion of innovations, or
were unsure of 17.65%.
(g) Responsese on the seventh question:
Addoption of innovation is essential for
... The majority of 27.03% believe that for
the acceptance of innovation is crucial that
innovation has dimensions such as income,
increase comfort, save time and weight,

References
1. Drucker P.F. Management Challegens for the 21. ,
Harper Business, New York,1999.
2. Mueler J.& Srića V. Upravljanje odnosima sa klijen-

tom, Delfin, Zagreb, 2005.
3. Inić B. Menadžment 2 – Ikone svetskog biznisa,

Monografija, Beograd,2006.
4. Welch J. Winning Copyright, Harper Collins Pub-

lishers, 2005.
5. WEF ,The Global Competitiveness Report 2010-

2011, Geneva: World Economic Forum, 2011.
6. Schumpeter J. A. Entrepreneurship, Style and Vision,

Springer, 2010.
7. Milas G. Istraživačke metode u psihologiji i drugim

društvenim znanostima, Zagreb, Slap, 2006.
8. Inić B., Milutinović M., R., Jergović A., Vucelja A., In-
novations of companies in Serbia, TTEM, 2010; 3(2).
9. WIPO, World Patent Report: A Statistical Review

2008 Edition, Geneva: World Intellectual Property
Organization, 2008.
10. WIPO, World Intellectual Property Indicators 2009

Edition, Geneva: World Intellectual Property Orga-
nization, 2009.
11. WIPO, World Intellectual Property Indicators 2010

Edition, Geneva: World Intellectual Property Orga-
nization, 2010.
Branimir Inic,
Faculty for Union Beograd,
University “Nikola Tesla” Union,
Serbia,
E-mail: branimirinic@hotmail.com

Table 1. Patent grants and patents in force by origin and office (World Intellectual Property Indicators, WIPO)
2006 2007 2008
Patent grants by officePatent Patents Patent grants by office Patent Patents
Patent grants by office (%) Patent Patents
grants in force (%) grants in force (%) grants in force
by by by by by by
Non- origin Office Non- origin Office Non- origin Office
Total Resident Total Resident Total Resident
resident Total Total resident Total Total resident Total Total
Volume 8 / Number 2 / 2013

Serbia 10 278 73 205 82 1274 290 70 220 81 1277
Slovenia 228 94.3 5.7 277 7063 228 215 13 277 7073 207 195 12 317 1570
Macedonia 336 11 325 12
Croatia 183 83.5 16.5 83 1163 147 40 107 131 1326 138 41 97 108 1563
Bosnia 272 14.0 86.0 38 178 272 38 234 38 194 127 33 94 95 329
Bulgaria 317 21.8 78.2 83 328 264 65 199 103 2046 268 95 173 134 4981
Romania 787 67.0 33.0 543 8458 684 532 152 554 9263 689 593 96 622 10264
Greece 98 827 4245 355 3890 420 31896 444 425 19 520 31975
Hungary 1089 12.9 87.1 399 8408 637 112 525 365 10306 551 109 442 391 11462
Czech Republic 1324 68.2 31.8 403 10298 1203 227 976 395 10586 1280 239 1041 435 10895
Slovakia 543 13.3 86.7 114 4830 574 89 485 132 7122 566 89 477 124 8980
USA 173770 51.7 48.3 154760 1774742157283 79527 77756 146065 1815531 157772 77501 80271 146871 1872872
Appendix
China 57786 43.4 56.6 26292 18239667948 31945 36033 33410 271917 93706 46590 47116 48814 337215
Japan 141399 89.7 10.3 217364 1146871164954 145040 19914 232449 1206335 176950 151765 25185 239388 1270367
Germany 21034 73.5 26.5 56091 46065717739 12977 4762 51919 492604 17308 12639 4669 53752 509879
South Korea 120790 73.9 26.1 102633 465988123705 91645 32060 106611 566965 83523 61115 22408 79652 624419
France 13788 77.6 22.4 25688 377755 12112 9748 2364 24807 377761 10811 9236 1575 25535 439075
UK 7907 37.7 62.3 13183 383501 5930 2058 3872 12254 5360 2070 3290 12162
India 4320 32.3 67.7 2267 7539 1907 5632 2789 18230 1275
Canada 14972 10.6 89.4 7533 115639 18550 1809 16741 7754 122063 18703 1886 16817 8188 129347
Russia 23299 82.1 17.9 19641 123817 23028 18431 4597 19009 129910 28808 22260 6548 22870 147067
833
Table 2. The Global Competitiveness Index

Basic Efficiency Innovation and
Overall index
Country requirements enhancers soffistication factors
Rank Score Rank Score Rank Score Rank Score
Serbia 96 3.94 93 4.15 93 3.75 107 3.04
Slovenia 45 4.42 34 5.18 46 4.33 35 4.08
Macedonia 79 4.02 70 4.45 83 3.84 97 3.20
Croatia 77 4.04 50 4.78 76 3.97 85 3.32
Bosnia 102 3.70 98 4.05 100 3.57 120 2.93
Bulgaria 71 4.13 72 4.43 65 4.07 95 3.22
Romania 67 4.16 77 4.36 54 4.18 91 3.24
Greece 83 3.99 67 4.49 59 4.12 73 3.41
Hungary 52 4.33 59 4.65 41 4.38 51 3.71
Czech Republic 36 4.57 44 4.91 28 4.66 30 4.19
Slovakia 60 4.25 53 4.77 37 4.43 63 3.54
USA 4 5.43 32 5.21 3 5.46 4 5.53
China 27 4.94 30 5.27 29 4.63 31 4.13
Japan 6 5.37 26 5.35 11 5.17 1 5.72
Germany 5 5.39 6 5.89 13 5.11 5 5.51
South Korea 22 4.93 23 5.42 22 4.81 18 4.81
Table 3. GERD (Gross domestic expenditure on R&D) as a percentage of GDP b
2006 (a) 2007 (a) 2008 (a) 2011 (estimated) (b)
Serbia 0.47 0.35 - -
Slovenia 1.56 1.45 1.66 1.4
Macedonia 0.21 - - -
Croatia 1.24 1.10 - -
Bosnia 0.02* 0.03* - -
Bulgaria 0.48 0.48 0.49 -
Romania 0.45 0.53 0.59 0.5
Greece 0.57** 0.57** - 0.6
Hungary 1.00 0.96 - 0.9
Czech Republic 1.55 1.54 1.47 1.4
Slovakia 0.49 0.46 0.47 0.4
USA 2.65*** 2.72*** 2.82*** 2.7
China 1.34 1.42 1.44 1.4
Japan 3.42 3.40 3.44 3.3
Germany 2.53 2.54 - 2.3
South Korea 2.79 3.01 3.21 3.0
France 2.10 2.04 2.02 1.9
UK 1.76 1.82 1.88 1.7
India 0.80 0.80** 0.80** 0.9
Canada 1.97 1.90 1.84 1.8
Russia 1.07 1.12 1.03 1.0
* Undervalued or partial data
** Estimated data
*** Mostyl excluded or all capital expenditure

Table 4. GERD PPP (gross domestic expenditures on research and development purchasing power
parity) in Billions of US dollars and per capita
2007 (a) 2011 (Forecast) (b)
GERD in PPP$ thousands GERD per capita PPP$ GDP PPP Billions US$
Serbia 245276 33.3
Slovenia 935992 464.5 800000
Macedonia 32885 16.1
Croatia 703629 159.1
Bosnia 7086* 1.9*
Bulgaria 438976 57.8
Romniia 1711354 80.1 1300000
Greece 1801628** 162.1** 1700000
Hungary 1824527 181.9 90000
Czech Republic 3767938 202.5 380000
Slovakia 563470 104.4 40000
USA 398086000 1277.3 405300000
China 102428349 77.1 153700000
Japan 147938883 1161.3 144100000
Germany 72241917 877.3 69500000
South Korea 41339086 861.9 44800000
France 42892759 691.4 42200000
UK 41043072 670.3 38400000
India 24792412 21.3 36100000
Canada 23961471 720.4 24300000
Russia 23382745 165.4 23100000
* Undervalued or partial data ** Estimated data
UNESCO (2010), UNESCO Science Report 2010: The Current Status of Science around the World, Paris: United Nations Edu-
cational, Scientific and Cultural Organization
R&D Magazine (2010), 2011 Global R&D Funding Forecast, Rockaway: Advantage Business Media
Table 5. Gross domestic product (GDP) in 2010. Table 6. Uneployment rate in Serbia and countries
GDP * (Europe GDP ** (Europe in region
Country
avarage 100%) average 100%) Country 2010 2011
Luxemburg 271 - Serbia 20 22,2
Holand 133 - Turkey 9,8 8,7
Danmark 127 - Slovenia 7,8 7,9
Croatia 61 56 Croatia 13,3 17,9
Litva 57 61 Hungary 12,6 9,8
Litvania 51 - Bulgaria 10,2 7,3
Romania 46 - Greece 12,9 18,3
Bulgaria 44 - B&H 50 27,6
Turkey 49 53 Macedonia 33,2 30,9
Montenegro 41 51 Montenegro 19,5
Macedonia 36 41 Romania 7,3
Serbia 35 43
B&H 31 37
Albania 28 31
* purchasing power parity ** Actual individual consumption
Source: Eurostat 15/12/2011. (www.poslovnipuls.
com/2011/12/15)

Table 7. Inflation rate

Country Inflation rate
Serbia 10,3
Croatia 1,1
Czech Republic 1,2
Slovenia 2,1
Greece 4,7
Hungary 4,7
Estonia 2,7
Romania 6,1
Table 8. Average sallary in former republics of
SFRJ, (2010.)
Country Euro
Serbia 329
Croatia 725
Slovenia 935
Montenegro 455
B&H 395
Macedonia 330

Using Contemporary 3D WEB Technologies in

the process of CAD Model Design
Ratko Obradovic1, Otto Peter2, Milan Vidakovic1, Branislav Popkonstantinovic3, Branislav Popovic1,
Zoran Milojevic1
1
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Serbia,
2
City of Subotica, Subotica, Serbia,
3
University of Belgrade, Faculty of Mechanical Engineering, Belgrade, Serbia.
Abstract sign and its functionality become equally important

decision making factors. The product shape is one
During the last few decades, the approach to
of the decisive elements of competitiveness, which
the new product design, planning, production
depends on products placement on the market.
and marketing has essentially changed. Variety of
By placing CAD application before the public
choices is increasing the effort for product place-
(Computer Aided Design), time for the product
ment on the market, threatens the company surviv-
placement on the market is reduced. Two-dimen-
al, and creates the risk of novel and unexplored. In
sional CAD programs facilitate the development
this paper the new 3D web technology, which is
of engineering design blueprints, reduce errors
used to exhibit and manipulate 3D models created
and enable reuse of drawings. Three-dimensional
by the support of professional CAD applications is
CAD programs have now turned out to be an in-
presented. This principle is illustrated by the cre-
dispensable tool by which various visually realis-
ation of a 3D web application for the modification
tic 3D models can be obtained quickly and easily,
of the product design. Site visitors – potential cus-
even to the extent that realistic prototypes become
tomers in the future – influence the shape and de-
redundant in most cases.
sign of a new product by choosing the optimal so-
The new tool that quickly and easily provides
lution for their needs. The process of realization of
information to designers regarding which model is
the 3D web application is described, starting with
the most attractive to the customer, where to invest
selection of the appropriate standard, via choosing
and whether or when the production of a particular
the file format for the information sharing between
product should start is presented in this paper.
professional 3D CAD applications, up to the
methods for customer identification and personal
information protection, as well as the analysis of 2. Contemporary 3D web technologies,
achieved results. By applying new technologies, standards and utilization
the company future becomes more certain, invest- Using 3D web technology provides display and
ments get more secure, efficiency and reliability manipulation of three-dimensional objects in the
are increased and development costs decreased. browser window. It is known that a large number
Key words: 3D Web, 3D CAD, O3D, product of companies in the world market, such as Coca
standards, marketing, design Cola, Google, Facebook, Nokia and others, put
huge effort into development of new brands, which
1. Introduction precedes the process of aligning the product with
market requirements, including those requirements
The concept of a liberal economy is an essen- that come via online pools. Utilization of 3D Web
tial pillar of a market-oriented economy and the es- technology simplifies the process in these cases,
sence of modern industrial production. In the matter making them faster and more reliable, with imme-
of industry, this concept comprises a wide range of diately available results. 3D web technologies can
products and virtually unlimited number of varia- be described by using five key criterions:
tions intended for the end user. By the exponential 1. simplicity of installation and use,
increase of product offerings to market, product de- 2. compatibility with the operating system,

3. display quality, (camera user’s movement within the scene, colli-

4. interactivity, and sion detection, visibility and speed), user-defined
5. compliance with standards. data types, scripting, networking, and hyper linking
of objects in the scene, as well as real time work.
2.1 3D web standards WebGL (Web-based Graphics Library) [4] al-
lows the view of three-dimensional objects with-
3DMLW (3D Markup Language for Web) is in a web browser, without installing additional
one of the most common technologies for display- plug-ins, but under the condition of accomplish-
ing and manipulation of 3D objects [1]. 3DMLW ing some appropriate actions, depending on the
is now often used, open-source platform, which choice of Internet browsers. It presents a sepa-
offers unique opportunities in terms of software rate software library, by which further JavaScript
design and support for different formats of dy- programming capabilities are extended, in order
namic 3D content. It uses the XML structure (Ex- to generate interactive 3D graphics within any
tensible Markup Language); is easy to manipu- compatible Internet browser. Canvas element [5]
late and does not require knowledge of advanced is part of the HTML5 specification. It allows 2D
programming skills. A standalone editor based on shapes dynamic rendering and bitmap images by
web pages for the creation and manipulation of using scripts. HTML canvas has a very important
3DMLW files is provided. It allows the simplified role in the representation of 3D objects on the
process of creating various models, ranging from Internet and great potential for CAD support via
static structures, to advanced, interactive presenta- Internet. With a little effort, it allows creation of
tions and video games. technical drawings within a web browser.
VRML (Virtual Reality Modeling Language) is Finally, O3D [6] was designed and implement-
a standard file format for displaying 3D objects on ed as a JavaScript API (Application Programming
the Internet [2]. It is a text file in which 3D surface Interface) open source. It was created by Google
points and polygons, as well as additional features, in order to create interactive 3D graphics applica-
including color, texture, transparency, reflection, tions that run in a specific website visitor’s browser.
etc. are defined. An address can be linked to each It is protected through the BSD license (Berke-
graphical element, and the new element can be ob- ley Software Distribution), which means that it
tained by clicking on any other graphical element, can be used freely. O3D directly communicates
i.e. separate VRML file. In particular, animations, with the hardware, so that the speed of rendering
sound and lighting, and other parameters of the vir- scenes largely depends on the computer graphic
tual world can be defined by the interaction with the card where the application is running. 3D objects
user or by using time triggers. VRML files are often loading, rendering and transformation of a three-di-
compressed for faster transmission through Internet. mensional models can be done dynamically, using
Many 3D CAD programs have the option of export- AJAX (asynchronous JavaScript and XML) and/or
ing models in VRML format. It is necessary to in- Comet - methods of developing Internet applica-
stall special plug-in for the VRML files viewing. All tion which enable working in real-time. O3D API
leading operating systems, as well as the main web further maximizes performance by using of direct
browsers that exist on market, are supported. programming, which is a big advantage over the
X3D file format is the successor of VRML for- standard, pure software rendering. In this way, the
mat [3]. X3D technology is based on ISO XML software communicates directly with the graphics
standard for displaying 3D graphic objects. It uses card on the client side, i.e. PC visitor’s web page.
OpenGL (Open Graphics Library) 3D graphics JavaScript application is entirely contained within
technology. It allows use of parametric and polygo- the HTML document, which is then loaded into a
nal geometry, hierarchical transformations, use of web browser, and consequently, the development
materials, textures and lighting, hardware accelera- of O3D application requires only the appropriate
tion, timers and interpolators to display continu- plug-in and simple text editor for writing JavaScript
ous animation. In addition, it provides audio-visual code. O3D allows the creation of three-dimensional
mapping, user interaction, advanced navigation objects within the code, or import of objects from

other CAD applications using COLLADA convert- web applications. It is defined as an open standard
er, described in detail in the third section. for graphics data exchange between different soft-
ware applications based on XML schemas. COL-
2.2 3D web applications LADA files are text files, supported by a large
number of applications such as 3ds Max, Maya,
Today, 3D Web technology is increasingly LightWave 3D, SketchUp, Photoshop (versions
present on the Internet, since it allows very strong CS3 and above) and others. In order to simplify
and much more natural interaction between users the document’s importing and exporting proce-
and computers, with opportunities to display in- dures, there are several tools, namely the libraries
formation incomparably more efficiently than in based on open source. OpenCOLLADA project,
standard text format, or by using simple graphical used in this paper, provides a new generation of
elements. A virtual world is becoming more closer plug-ins for 3ds Max and Maya, as well as source
to the real world by using dynamic 3D objects code library developed for these additions.
which can be moved or modified in visual space. Since 3D models generate very large files, file
Geographic Information System is the most compression is accomplished in its conversion, for
well-known application of this kind. It provides the sake of faster loading to a web page. o3dCon-
navigation and display of three-dimensional ob- verter is used in this paper for the compression
jects in space, whether in terms of objects created of the COLLADA file to a file which JavaScript
using external 3D application and then exported Scene Loader can load and interpret. This convert-
(Google Maps application uses Google SketchUp ed 3D (scene) file, contains the complete geometry
to create 3D views of buildings), or it is a view of of three-dimensional models, including the views,
the buildings, based on rendering real objects to textures, and materials.
3D objects (for example, Microsoft’s Bing Maps Besides the exchange of files between 3D CAD
applications). By rendering real images into 3D and 3D web applications, it is equally important to
objects far more realistic pictures can be achieved. exchange files between different CAD applications.
Among other things, 3D Online shops have be- In this paper, the STL file format is used [8] for
come part of everyday life because they provide the exchange of information between professional
a realistic atmosphere of purchasing products and CAD applications. STL file format is the main for-
full interactivity inherent to the real world. De- mat for the stereo-lithographic CAD application of
pending on the type of item, the buyer can “walk” the 3D Systems company. STL file only describes
inside a virtual, three-dimensional space, which the surface geometry of three-dimensional model,
is in most cases identical to the actual department triangular surface with its normal and vertices. STL
store. This form of purchasing is primarily charac- file does not define colors, textures, or other charac-
teristically for the younger generation. teristics of three-dimensional object.
3. File sharing between 3D CAD and 3D 4. Preparation and description of 3D web

Web Applications applications for the product design
modification
Simpler 3D models can be programmed manu-
ally inside 3D web applications, as opposed to The process of making 3D web applications for
somewhat more complex models, which are pro- the product design modification starts with com-
duced using professional CAD programs, and parison of performances of existing solutions and
only then imported into a compatible file format. selection of the most appropriate tools for a particu-
COLLADA (Collaborative Design Activity) [7] lar case. The main advantages of O3D API technol-
file format is used in this paper as currently the ogy of Google company [6] include a wide range
most suitable format for sharing 3D objects be- of supported operating systems (Windows, Linux,
tween 3D CAD and 3D web applications. Max), a wide range of supported web browsers (In-
COLLADA is designed for establishing ex- ternet Explorer, Mozilla Firefox, Google Chrome,
change files between 3D CAD and 3D interactive Opera, Safari), direct communication with the

graphics card via the OpenGL or Direct3D library, that positions each shape in its coordinate system.
as well as solid documentation. In addition, O3D Effects that determine the color pixel of geometric
extends the capabilities of JavaScript applications, surfaces, as well as additional, optional conditions
by using standard JavaScript events, functions and such as diffusion and reflection, are added to ma-
methods, which is its main advantage. On the other terials. Figure 1 shows the mutual relationship of
hand, O3D requires the installation of the appropri- shapes, primitives, and effects.
ate plug-in, which can be, in a way, taken as a dis-
advantage. In this paper, O3D is used as the most
appropriate technology, taking into account its ad-
vantages and disadvantages.
4.1 Creation of 3D web applications

O3D [6] uses the scene graph, to create a graph
transformation and graph rendering. Graph trans-
formation in matrix form keeps information about
the position, shape, size, material and shading, i.e.
basic information necessary to display three-di-
mensional objects. It represents a range of hierar-
chically organized set of transformations in such a
way that transformations have a cumulative effect,
meaning that any transformation performed within Figure 2. Managing the external files using O3D
one branch of a tree is simultaneously transmitted application
to all the subsequent branches of the tree.
O3D creates a graph transformation, either via
imported 3D models created using professional
3D CAD applications, or by defining the appro-
priate code. Both ways for a graph transformation
creation can be combined. This means that the
complex 3D objects are created by using external
3D CAD applications and then imported into an
application using an O3D COLLADA file format
and the appropriate converter (Fig. 2), while the
simpler models, as well as parts of more compli-
cated 3D models are created directly within the
programming code. Rendering graph is respon-
sible for the display of rendered data on the screen
of web page visitors, i.e. it calculates applied ef-
Figure 1. Shapes, primitives, effects fects and makes decisions about which primitives
should be drawn, which objects are hidden from
One or more shapes can be attributed to each the view etc. O3D contains the support for ad-
transformation. A shape is geometrical surface, vanced rendering scenes, by using matrix of views
defined by size, located in space, and consists and matrix of projections, which are defined using
of primitives which, if it is necessary, can be as- the so-called DrawContex object. Both matrices
signed to different materials. The material can be are defined explicitly or automatically when im-
shared among large numbers of primitives since porting external 3D objects from 3D CAD applica-
each primitive contains a parameter of the mate- tions. Matrix of views is responsible for the trans-
rial. Shapes are defined independently of one an- formation that converts object’s point positions
other, and then connected using the transformation from the local coordinate system into the view

coordinate system, while the matrix of projections necessary for such a scenario, fully define page
defines the transformation that converts the ob- layout, record data about the Website visitors and
ject’s points from the coordinate system of views their selection of the designer’s parameters. They
to the so-called clip space coordinates. This means are responsible for the design of the web applica-
that every three-dimensional object that is outside tion user’s interface, as well as for the verification
of the visible area of the screen is going to be cut what the visitor had previously voted for some of
off. DrawContex object is used by DrawPass and the available options. Within these files, the up-
TreeTraversal object. TreeTraversal object is used loading of the O3D API files is performed and ren-
for reduction in terms of ejection of objects from dering and transformation charts are created, in a
a scene that are not necessary to render, while the way described in Section 4.1. By applying the ap-
DrawPass object is used in the rendering phase. propriate function, rotation, zooming, and modi-
fication of the design parameters are performed.
4.2 Principles of interaction
Design changes of the offered 3D model are
achieved using one of three possible principles
of interaction. The principle of primitives means
that the object of interaction consists of primitives
whose dimensions can be changed using JavaScrip
functions. Calling some functions is associated with
interaction of website’s visitor. Due to the fact that
complicated 3D models can be very difficult when
using primitives, and that programming is extreme-
ly complicated in this case, the principle of primi-
tives was rejected as unpractical from the start.
The principle of animations comprises of mak-
ing the animations in one of the professional 3D
CAD programs. With the help of O3D API, it is
possible to make the transition from one to anoth-
er animation image, depending on the actions of Figure 3. Application window for the design
visitors. Since the principle of animation requires product modification
making additional animations, while not obtain-
ing savings of resources in comparison to the prin- The main part of the screen is used to display
ciple of imported models, this principle was also the rendering of 3D models. Rotation is provided
rejected from the start. by using the W, S, A, and D tasters or by click-
The third principle, used in this paper, is the ing the appropriate button on the right side of the
principle of imported models. Various designs of screen. Zooming is done by the using of Z and X
new products are constructed in one of the profes- keys, or again, by clicking the appropriate button
sional 3D CAD programs, and then imported into on the right. Only one design parameter can be
O3D application [6] by the use COLLADA file [7]. controlled within a web site, which is achieved by
Web application shows only one model at any mo- applying the keys B and C, or the corresponding
ment of time. The display can be changed by using button on the right side of the screen. The selected
of O3D API and it depends on web visitor’s action. design parameters are more easily and effectively
adjusted by using of slider. In this way, only one
of seven offered variants can be visible, while the
4.3 Structure of 3D web applications
other six remain invisible. During the rotation, and
3D web applications for product design mod- “in or out” zooming in the model, all seven exist-
ification are created in PHP language, using the ing models are simultaneously rotated, magnified
Smarty Template [9]. The most important files or diminished in the background, while the screen

sees only one, the chosen model. Figure 3 shows lem more difficult, since all visitors who come to
the appearance of 3D web applications in the In- the site and use a proxy share the same IP address.
ternet browser window. This paper uses a combined testing method, so
Choosing the aesthetically most appealing so- the identification is performed by simultaneously
lution is done by selecting “Accept and send!” tracking cookies, identification Internet browser
link. By clicking on this link, the appropriate and tracking IP addresses of users. Google Analyt-
script is loaded, while the relevant information ics is a well known Google service. This free ser-
about the user and the selected model are entered vice allows everyone to generate and display web
in the MySQL database tables. site traffic. Data are collected using JavaScript code
which is inserted at the start of each page of the site.
5. Tracking web site traffic It provides information about visitors, the number
of visits, number of page viewed, country or re-
In order to draw reliable conclusions based on gion from which visitors access the site’s content,
statistics obtained by detailed monitoring Internet and many other useful information. Diagram of the
site user’s actions, it is necessary to provide a robust number of visitors created by using of Google Ana-
and efficient model to collect information about vis- lytics application is shown on Figure 4.
itors. To ensure the relevance of results, it is neces-
sary to prevent the possibility of repeated voting by
one and the same person. Although this phenome-
non is certainly not possible to eliminate completely
using the method described in this article, the pos-
sibility of abuse prevention is minimized.
In this paper, three mutually independent
sources of information are used, whose results are
compared. First, statistics are monitored by us-
ing PHP built-in functions and constants, as well
as the MySQL database. User registration is the
safest, but also the most drastic measure of elimi-
nating abuse by internet site visitors. By applying Figure 4. Diagram of visitors number of Google
this method, much of the audience is lost, since Analytics service
the registration request specifying the basic per-
sonal information, including user’s name, e-mail The third method of monitoring statistics is by
address, then setting a password, confirming the directly monitoring the Web Server using applica-
registration process via the above e-mail, and the tions like Webalizer and a Modlogan. Both pro-
like, which many users avoid doing, and some do grams generate various statistics and traffic graphs
not even know how to do. For this reason, the reg- by monitoring the content of so-called log files
istration process is not used in this paper. created by the web server. Figure 5 shows detailed
The using of cookies provides an additional view of daily visits to the website created by the
opportunity to identify web site visitor, but this using Webalizer application.
method of testing is unreliable. Cookies can be
deleted; its storage prohibited; thus, the sole ap-
plication of this method cannot be reliable.
User identification and tracking IP addresses of
Internet search engines provide extra security, but
this method of identification is not absolutely reli-
able. Today, very few people use a static IP address,
and sometimes it even happens that two different
users in a short period of time have the same IP ad-
dress. The using of proxy servers makes the prob- Figure 5. Diagram of traffic using a Webalizer

6. Analysis of results
Data about aesthetically most appealing design
solution, along with data about the user, are logged
in the MySQL database. At any moment, it is possi-
ble to obtain comprehensive, accurate and effective
visual display about which product mostly satisfied
the wide customer base, what is the distribution of
users by region, whether differences related to the
region from where the visitors came from are nota-
ble, or whether an offered solution is universally ac-
ceptable. The system keeps track of the new product
and the choices of visitors. Results obtained by the
analysis of votes are shown in Figure 6. Of course,
it is not realistic to expect more users to submit data
without adequate compensation.
Large companies adapt their products to the
market taste. Advantages of this campaign type are
numerous. At any moment, it is possible to deter- Figure 6. View Poll Results
mine the taste of a particular region or country, and
therefore adapt product design to the desired taste. By using computers in every stage of the de-
The new product is attractive, and fully customized sign and production, costs are decreased, terms of
to user’s expectations. It starts on the market with a delivery are equalized making the actual design a
fantastic advantage over other products of the same crucial factor upon which the placement of a new
kind. Unlike traditional telephone campaigns, or per- product on the market depends. There should be a
sonal agents who visit households, online campaigns tendency to involve the customer into the produc-
are inexpensive, results are immediately available, tion process, using modern CAD tools and new
minor changes are possible during the procedure, 3D web technology.
since many people can participate in the campaign. In this paper, a completely new technology for
Given the value of the campaign, the product price is displaying and manipulating three-dimensional
lower, so its starting position is far better. objects created in any professional CAD program
is presented. The site Visitors, beside having the
possibility of combining existing solutions, also
7. Conclusion
have a crucial influence on the shape and design
Modern times require modern, cost-effective, of new products. By using substantially devel-
efficient, flexible, reliable and recognized meth- oped 3D web technologies and highly profes-
ods in the development and marketing of new sional CAD applications, the ability to view and
products to market. Creativity comes to a particu- manipulate 3D objects on the Internet increases,
lar expression in a very risky and challenging pro- extending the application field of 3D web applica-
cess of new product development. Subjectivity tions into industrial production and into the deci-
must be replaced by objectivity; the risk must be sion making process related to the strategic future
transformed into a win, and any applied changes of the company.
should be a way towards a better product.
Original design solutions are often rejected by
market because they are unusual, unconditional,
premature or poorly adapted. To reduce the eco-
nomic risk of the introduction of new and original
solutions, it is necessary to examine the market by
any means necessary.

References
1. Ortiz S. „Is 3D Finaly Ready for the WEB?“, Com-
puter, IEEE Computer Society, 2010; 43(1): pp.
14-16
2. Diehl S. „Distributed Virtual Worlds: Foundations

and Implementation Techniques Using VRML, Java,
and CORBA“, Springer, March 23, 2001.
3. Geroimenko V., Chen C. „Visualizing Information

Using SVG and X3D: XML-based Technologies for
the XML-based Web“, Springer, December 13, 2010.
4. Marrin C. „WebGL Specification“, Editor’s Draft,

August 08, 2011.
5. Fulton S. „HTML 5 Canvas“, O’Reilly Media, May

13, 2011.
6. Kwang-Ho S., Yoon Sang K. „A Study on Implemen-

tation of Interactive Web 3D Virtual Environment
Using O3D“, International Conference on Informa-
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7. Arnaud R., Barnes M. „COLLADA: Sailing the Gulf

of 3D Digital Content Creation“, AK Peters, Ltd.,
August 30, 2006.
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Ratko Obradovic,
Faculty of Technical Sciences,
Serbia,
E-mail: obrad_r@uns.ac.rs

Analysis of adoption degree of wedge (V)

turn techniques over the respondent’s
anthropometrical characteristics
Rasid Hadzic1, Dusko Bjelica1, Dobrislav Vujovic1, Aldijana Muratovic1, Danilo Acimovic2
1
Faculty for Sport and Physical Education, University of Montenegro, Niksic, Montenegro,
2
Faculty for Sport and Physical Education, State University of Novi Pazar, Serbia.
Abstract is frequently used [3]. Using the V- ski position in

the learning process, either as a methodological ex-
In this study, we analyzed the technique of
ercise or as an element of ski technique, prepara-
wedge turn performance in relation to the char-
tions for the whole turnaround performing using the
acteristics of the respondents’ anthropometrical
parallel ski technique is gradually made [4].Such an
characteristics. The aim of this study was to deter-
approach in the learning process completely omits
mine the difference between the levels of wedge
elements of the plow ski technique [5].
turn techniques acquisition in reference to the an-
Therefore, it is important to identify the fac-
thropometric characteristics of the subjects. In a
tors that play a significant role in the adoption of
sample of 30 students, average age 22 years, male,
techniques of skiing, as for every novice skier to
measurement was performed using 12 anthropo-
adopt the elements of ski technique at a high level,
metric measures and a situational-motor test. Al-
through the alpine ski schools [6].
pine skiing technique is evaluated over a wedge
It can be said that the success in alpine skiing
turn, the technical element of alpine skiing that is
depends primarily on the level of the adopted spe-
present in the basic form of skiing program. Based
cific motor skills [7].
on the obtained results it can be concluded that, the
Wedge turn is one of the elements of ski carv-
differences are established and limits are clearly
ing technique, which is present in the basic form
defined for the degree of adoption of wedge turn-
of skiing. Applying the V-turn, beginner, at first
ing technique between sub-samples compared to
time he is changing direction and passes from one
the anthropometric characteristics.
to the other direction towards the stern line and
Key words: Alpine Skiing, V Turn, Anthropo-
through all time of the turn performing, while the
metric Characteristics.
edges of skis are carved in the snow surface [8].
It is because of the new approach of alpine ski
1. Introduction learning, the aim of this study was to determine
the difference between the levels of acquisition
Development and improvement of ski equip-
techniques of wedge turn in relation to anthropo-
ment, primarily skis, led to the emergence and
metric characteristics (beginner ski).
production of the first carving skis, which have en-
abled the development of new techniques of carv-
ing skiing [1], [2]. Carving skiing technique al- 2. Working methods
lows driving on the curb turn and turn performing As already presented in the introductory remarks,
without skidding the whole time. Also, the appear- the key problem, and overall challenging nature of
ance of carving ski, caused certain innovations in this study, is linked to the performance analysis of
the learning process of carving ski technique. the wedge turn in alpine skiing in relation to anthro-
In the learning process of ski technique, as a pometric characteristics of the subjects.
transitional phase between the elements of the plow Measurement of anthropometric characteristics
and parallel skiing techniques the so-called ski was carried out at the Faculty of Sport and Physical
wedge position, in which the last parts of the skis Education, just before going to the students’ prac-
are less widespread than in the pulmonary position, tical mandatory skiing training. Estimation tech-

niques were performed on the ski slopes of Kop- height, length of lower leg, arm length, upper arm
aonik realized after a seven-day program. Three skinfold, abdominal skinfold, back skinfold, knee
teachers with the identical program executed ski diameter, pelvic width, shoulder width.
teaching for seven days, a total of 42 hours. Dur- Criterion variable in this study was the V-turn.
ing the day, teaching was carried out with a fund
of 6 hours where the first three hours were applied 2.3 Methods of data processing
for learning the elements of ski technique and three
hours afternoon were applied for training purposes. In accordance with the research method, ap-
Assessors were teachers who have vast expe- propriate statistical analysis of data is chosen.
rience in this business. All three assessors from The first part presents the central and dispersion
different positions evaluated each subject. Three parameters, measures of asymmetry and flatten-
independent assessors gave an evaluation of each ing against the monitored parameters. The second
respondent for demonstration of selected elements part analyzes the differences between subjects for
of ski technique - V turn, and as the final score the the wedge turn technique in relation to anthropo-
average of the three grades was calculated. Assess- metric characteristics. Then the characteristics and
ment of acquired knowledge at the level of respon- homogeneity of each subsample in relation to the
dents was valued by the scale of 1 to 5, which re- performance technique of wedge turns were de-
lates to the conduct of a bow ski turns, speed control fined, in order to determine the distance between
based on the completion of turn, the proper attitude them. In the end, the results are shown graphically.
that ensures the focus in the middle of the foot, the To avoid losing information, finding the finest
ease and softness of demonstration. In the process- links and information on the nonparametric sizes,
ing of the data, based on the final (formed) score of scaling is performed on the data tables of contin-
performed wedge turn, the sample of respondents gency. Based on the above it can be seen that the
was divided into three subgroups named: poor, fair scaled data can be subjected to the application of
and good. The first sub-sample (poor) included multivariate analysis of variance (MANOVA),
the patients who got grade 1 for the techniques of and discriminant analysis (DISCRA).
wedge turns, the second sub-sample (fair) included By calculating the coefficient of discrimination
the patients who received grades 2 and 3 for pre- characteristics that determine the specificity and
sented method of V-turning and third subsample characteristics of the subsamples to be excluded
(good) included the patients who received grades 4 from further processing are distinguished, i.e. the
and 5 for presented method of V-turning. reduction of the observed space is performed. In
addition, the representation of the homogeneity
2.1 The sample of respondents of the subsamples, the distance between them and
Cluster analysis, is aimed to be the best possible
The sample of respondents included 30 stu- observed phenomena to be studied.
dents of the Faculty of Sports and Physical Edu- The purpose of the application of mathemati-
cation, ski beginner male, average age 22 years, cal and statistical analysis aims to determine the
divided into three subgroups with respect to the characteristics of each subsample, and homogene-
performance technique of wedge turns, as follows: ity of the distance between them in respect of de-
first sub-sample consists of 8 subjects classified as rivative features that could be performed reliably
(poor), the second consists of 14 respondents clas- and accurately predicting the prognosis of a given
sified as (fair) and the third sub-sample consists of reliability.
8 subjects classified as (good).
2.2 A sample of measuring instruments

The sample of the measuring instruments in an-
thropometric characteristics space included: Body
weight, middle chest, thigh circumference, body

3. Results and discussion Reduced value Skewness (sk) indicate that the
distribution is asymmetric positive, it means that
3.1 The main parameters of the anthropo- the curve of the distribution tends to lower values,
metric characteristics of the subjects in that has smaller values than the normal distribution.
relation to the V-turn Kurtosis (ku) indicates that the curve is elon-
Central and dispersion parameters, measures of gated, in: back skinfold (AKNL) (2. 16), shoulder
asymmetry and tracked flattening features of an- width (ASIR) (.57). Negative values of Kurtosis
thropometric characteristics represent wedge turn (houses) indicate that the curve is flattened, with:
and they are focused on the possibility of using body weight (AMAST) (-.57), the average thorax
parametric procedures. (AOGK) (-.67), thigh circumference (AONDK)
Minimum (min) and maximum (max) values (-1.11), body height (Avista) (-1.18), lower leg
of anthropometric characteristics (poor) indicate length (ADUPK) (-1.70), arm length (ADRUK)
that the values are in the expected range. Increased (-.66), forearm skin folds (AKNNL) (-1.27), ab-
values Skewness (sk) indicate that the distribution dominal skinfold (AKNTR) (-.94), knee diameter
is asymmetric negative, this means that the distri- (ADKL) (-1.12), pelvic width (ASHIKA) (-1.43).
bution of the curve tends toward higher values, Value distributions are generally moving in the
and that there are more larger value presented in normal distribution (p).
relation to the normal distribution.
Table 1. The central and dispersion parameters and measures of asymmetry and flattening - poor (8)
M SD Min Max CV Range Sk Ku p
AMAST 78.38 19.74 61.0 114.0 25.19 61.87 94.88 1.07 -.57 .231
AOGK 98.25 10.24 89.0 117.0 10.42 89.69 106.81 .92 -.67 .293
AONDK 53.75 6.67 44.0 64.0 12.41 48.17 59.33 .09 -1.11 .987
AVIST 178.50 7.87 167.0 188.0 4.41 171.91 185.09 -.35 -1.18 .977
ADUPK 66.88 17.17 51.0 89.0 25.67 52.52 81.23 .45 -1.70 .554
ADRUK 77.88 3.98 71.0 83.0 5.11 74.55 81.20 -.66 -.66 .984
AKNNL 12.90 5.63 6.0 22.0 43.67 8.19 17.61 .28 -1.27 .586
AKNTR 19.56 11.06 7.0 39.0 56.55 10.31 28.81 .67 -.94 .428
AKNL 15.10 10.97 7.9 41.0 72.64 5.93 24.27 1.89 2.16 .306
ADKL 9.27 1.26 7.5 10.9 13.60 8.22 10.33 -.38 -1.12 .974
AŠIKA 30.13 2.17 27.0 33.0 7.19 28.31 31.94 -.08 -1.43 .912
AŠIRA 39.94 3.10 33.5 44.0 7.76 37.35 42.53 -1.02 .57 .954
Note: the value of skewness and flattening in the range of - .04 to .04 are not discussed.
Table 2. The central and dispersion parameters and measures of asymmetry and flattening anthropo-
metric characteristics of subsample - fair (14)
AMAST 78.14 9.61 66.0 104.0 12.30 72.59 83.70 1.31 1.78 .776
AOGK 95.71 11.84 61.0 110.0 12.36 88.88 102.55 -1.80 3.41 .930
AONDK 54.93 3.15 50.0 62.0 5.73 53.11 56.75 .38 .23 .992
AVIST 178.50 6.94 170.0 191.0 3.89 174.49 182.51 .61 -.89 .570
ADUPK 60.79 11.36 53.0 89.0 18.68 54.23 67.34 1.90 1.93 .032
ADRUK 76.29 3.07 71.0 81.0 4.03 74.51 78.06 -.08 -1.02 .975
AKNNL 10.14 4.60 5.0 21.0 45.35 7.49 12.80 1.00 .24 .734
AKNTR 16.94 7.62 6.0 35.0 44.99 12.54 21.34 .89 .45 .879
AKNL 11.85 3.45 7.0 18.2 29.10 9.86 13.84 .47 -.61 .951
ADKL 9.71 .97 7.8 11.6 10.00 9.15 10.28 -.33 .38 .735
AŠIKA 29.89 1.51 27.5 32.0 5.05 29.02 30.76 .02 -1.07 .993
AŠIRA 41.18 2.68 36.0 46.0 6.51 39.63 42.73 -.33 -.25 .993

Minimum (min) and maximum (max) values the average thorax (AOGK) (.93), thigh circumfer-
of anthropometric characteristics (fair) indicate ence (AONDK) (.99), body height (Avista) (.57),
that the values are in the expected range. Increased arm length (ADRUK) (.98), forearm skin fold
values Skjunisa (sk) indicate that the distribution (AKNNL) (.73), abdominal skinfold (AKNTR)
is asymmetric negative, this means that the distri- (.88), skin fold back (AKNL) (.95), knee diam-
bution of the curve tends toward higher values, eter (ADKL) (.74), pelvic width (ASHIKA) (.99),
and that there are more larger value presented in shoulder width (ASIR) (.99). Value distributions
relation to the normal distribution. deviate from a normal distribution (p) in: lower
Reduced value of Skewness (sk) indicate that the leg length (ADUPK) (.03).
distribution is asymmetric positive, it means that Minimum (min) and maximum (max) values
the curve of the distribution tends to lower values, of anthropometric characteristics (good) indicate
that has smaller values than the normal distribution. that the values are in the expected range. Increased
Skewness values (sk) indicate that the distribu- values of Skewness (sk) indicate that the distribu-
tion is asymmetric with: pelvic width (ASHIKA) tion is asymmetric negative, this means that the
(. 02). Higher values of Kurtosis (houses) indicate distribution of the curve tends toward higher val-
the elongated curve, with: body weight (AMAST) ues, and that there are more larger value presented
(1.78), the average thorax (AOGK) (3.41), thigh in relation to the normal distribution.
circumference (AONDK) (.23), length of the lower Reduced value of Skewness (sk) indicate that the
leg (ADUPK) (1.93), forearm skin fold (AKNNL) distribution is asymmetric positive, it means that
(. 24), abdominal skinfold (AKNTR) (.45), knee the curve of the distribution tends to lower values,
diameter (ADKL) (.38). Negative values of Kur- that has smaller values than the normal distribution.
tosis (ku) indicate that the curve is flattened, with: Higher values of Kurtosis (ku) indicate the elongat-
body height (Avista) (-.89), arm length (ADRUK) ed curve, in: pelvic width (ASHIKA) (.75), shoul-
(-1.02), back skinfold (AKNL) (-.61), pelvic width der width (ASIR) (.23). Negative values of Kurtosis
(Asik) (-1.07), shoulder width (ASIR) (-.25). Value (houses) indicate that the curve is flattened, with:
distributions are generally moving in the normal body weight (AMAST) (-.84), the average thorax
distribution (p) in: body weight (AMAST) (.78), (AOGK) (-.86), thigh circumference (AONDK)
Table 3. The central and dispersion parameters and measures of asymmetry and flattening anthropo-
metric characteristics of subsample - good (8)
AMAST 78.75 9.42 65.0 93.0 11.97 70.87 86.63 -.28 -.84 .832
AOGK 101.50 8.59 90.0 116.0 8.46 94.32 108.68 .38 -.86 .973
AONDK 56.50 5.34 48.0 64.0 9.46 52.03 60.97 -.17 -1.11 .958
AVIST 180.00 4.96 173.0 187.0 2.75 175.85 184.15 -.08 -1.32 .981
ADUPK 55.88 3.14 51.0 61.0 5.61 53.25 58.50 .00 -.71 .993
ADRUK 77.00 4.24 72.0 82.0 5.51 73.45 80.55 -.07 -1.57 .899
AKNNL 11.20 3.01 7.0 17.0 26.83 8.69 13.71 .68 -.02 .871
AKNTR 18.92 7.57 9.0 30.0 39.98 12.60 25.25 .03 -1.34 .900
AKNL 15.04 5.16 9.0 25.0 34.33 10.72 19.35 .66 -.21 .728
ADKL 10.19 .80 9.0 11.4 7.88 9.52 10.86 .05 -1.06 .977
AŠIKA 29.44 1.37 26.5 31.0 4.67 28.29 30.59 -1.19 .75 .999
AŠIRA 42.00 2.91 39.0 48.0 6.94 39.56 44.44 1.10 .23 .768
Table 4. Statistical analyses of the respondents in the performance of wedge turn technique in relation
to anthropometric characteristics
Analisys n F p
MANOVA 12 1.158 .343
DISKRA 12 45.556 .000

(-1.11), body height (AVIST) (-1.32), length of the With the application of discriminant analysis
lower leg (ADUPK) (-.71), arm length (ADRUK) (DISKRA), discrimination coefficient (k.dsk) re-
(-1.57), abdominal skinfold (AKNTR) (-1.34), skin fers to the observation that there is a difference
fold back (AKNL) (-.21), knee diameter (ADKL) between respondents in the wedge turn technique
(-1.06). Value distributions are generally moving in and that the greatest contribution to discrimination
the normal distribution (p). between subjects in the wedge turn technique in re-
lation to anthropometric characteristics that is the
3.2 Analysis of differences between respond- biggest difference is, with the following variables:
ents based on performance of V-turn in shoulder width (.430), average thorax (.381), thigh
relation to anthropometric characteristics circumference (.70), arm length (.240), body mass
(.209), lower leg length (.204), forearm skin fold
Table 4 shows the results of multivariate analysis (.160), pelvic width (.157), skin fold back (.139),
of variance (MANOVA) and discriminant analysis body height (.101), abdominal skinfold (.099),
(DISKRA) to determine the significance of differ- knee diameter (.066).
ences between subjects in the wedge turn technique It should be noted that the latent characteris-
in relation to anthropometric characteristics. tic, the hallmark of which did not determined the
When looking at individual anthropometric difference between the respondents in the wedge
characteristics using multivariate analysis of vari- turn technique based on multivariate analysis of
ance (MANOVA), one can see from the values of variance (MANOVA), and discriminant analysis
p =.343 that there is no difference between respon- (DISCRA) included it in the structure at which
dents in the wedge turn technique. there is a significant difference between patients
However, when considering the anthropomet- in the wedge turn technique. Latent feature is the
ric characteristics of a system using discrimi- body mass (.994), average thorax (.480), thigh cir-
nant analysis (DISCRA), based on the value of p cumference (.533), body height (.866), lower leg
=.000, it is clearly shown that there is a difference length (.197), arm length (.620), forearm skin fold
between respondents in the technique wedge turn (.406), abdominal skinfold (.761), skin fold back
that manifests latent. (.425), knee diameter (.218), pelvic width (.705),
A review of Table 5, using multivariate analy- shoulder width (.359).
sis of variance (MANOVA), the resulting value of
p>.1 means that no significant differences between
subjects in the wedge turn technique in relation to
anthropometric characteristics of all 12 variables.
Table 5. Significance of differences between subjects in the wedge turn technique in relation to anthro-
pometric characteristics
F p k.dsk
AMAST .006 .994 .209
AOGK .754 .480 .381
AONDK .644 .533 .370
AVIST .145 .866 .101
ADUPK 1.725 .197 .204
ADRUK .487 .620 .240
AKNNL .933 .406 .160
AKNTR .276 .761 .099
AKNL .883 .425 .139
ADKL 1.611 .218 .066
AŠIKA .354 .705 .157
AŠIRA 1.064 .359 .430
Legend: k.dsk is the coefficient of discrimination.

3.3 Characteristics and homogeneity of the sub- and that means that 1 respondent has other fea-
samples based on performance of V-turn in tures but not the features of their group, homoge-
relation to anthropometric characteristics neity of subsamples is large, 87.5%.
Characteristics of subsamples - fair have 12 of
Patients, in accordance with the methodology 14 subjects and that means that 2 respondent has
applied, the logical sequence of the research was other features but not the features of their group,
to determine the characteristics and homogeneity homogeneity of subsamples is large, 85.7%, and
of each subsample based on technique of the V- also, characteristics of subsamples - good has 6
turn and a distance between them. of 8 subjects and that means that2 respondent has
The fact that p =.000, discriminant analysis other features but not the features of their group,
(DISKRA), means that there is a clearly defined homogeneity of subsamples is large, 75.0%.
border between subsamples on the basis of a This means that patients whose characteristics
wedge turns technique, and it is possible to de- are similar to the characteristics of sub-samples -
termine the feature of each sub-samples based on poor, but their affiliation is unknown on the basis
performance of V-turn in relation to anthropomet- of performing V-turn techniques, can be expected
ric characteristics. to belong with the reliability of 87.5% to just sub-
The status of each subsample of a technique samples - poor, it is possible to forecast with cer-
based on a wedge turn defines shoulder width be- tainty that a particular subject with such features is
cause the contribution marks 16 .82% followed to be included in subsample - poor.
by: average thorax (14.91%), thigh circumfer- Based on the anthropometric characteristics of
ence (14.48%), arm length (9.39%), body weight the respondents, it can be said that the subsamples
(8.18%), length of the lower leg (7.98%), upper have the following properties:
arm skin fold (6.26%), pelvic width (6.14%), skin Subsample - poor has less pronounced shoul-
fold back (5.44%), body height (3. 95%), abdomi- der width, thigh circumference and the knee di-
nal skinfold (3.87%) and knee diameter (2.58%). ameter. There is moderate average thorax, body
Homogeneity sub-sample - poor, 87.50% sub- weight and body height.
sample - fair, 85.71% and subsample - good is Has a more pronounced length, arm length,
75.00%. calves, the width of the pelvis, upper arm skinfold,
Based on the above it can be said that the char- skinfold back and abdominal skinfold.
acteristics of subsamples - poor has 7 of 8 subjects
Table 6. Characteristics and homogeneity of the subsamples based on performance of wedge turn in
relation to anthropometric characteristics
Poor Fair Good dpr %
AŠIRA less moderate higher 16.823
AOGK moderate less higher 14.906
AONDK less moderate higher 14.476
ADRUK higher less moderate 9.390
AMAST moderate less higher 8.177
ADUPK higher* 1 moderate less 7.981
AKNNL higher less moderate 6.260
AŠIKA higher moderate less 6.142
AKNL higher less moderate * 1 5.438
AVIST moderate less higher 3.951
AKNTR higher less moderate 3.873
ADKL less moderate higher 2.582
n/m 7/8 12/14 6/8
hmg % 87.50 85.71 75.00
Legend: hmg - homogeneity; dpr% - contributing feature characteristics.

Subsample - fair has moderately pronounced

shoulder width, thigh circumference, the length
of the lower leg, knee diameter and width of the
pelvis.
Has a less pronounced mid-chest diameter, arm
length, body mass, skin fold back, body height and
abdominal skinfold.
Subsample - good has more pronounced shoul-
der width, middle chest, thigh circumference,
body mass, body height and diameter of the knee.
There is moderate length arms, upper arm skin-
fold, skinfold back and abdominal skinfold. Has
a less pronounced calves length and width of the
pelvis.
Table 7. Distance (Mahalanobis) between su-
bsamples in the wedge turn technique in relation
to anthropometric characteristics
Poor Fair Good 3.4 Graphic of differences between the
Poor .00 2.53 2.79 subsamples in the wedge turn technique
Fair 2.53 .00 1.50 in the reference with three most
Good 2.79 1.50 .00 discriminating anthropometric
characteristics
By calculating, the Mahalanobis distance be-
tween the subsamples in the wedge turn technique
another indication of similarity or difference is Based on the graphic display ellipses (confi-
derived. Distance from Table 7 indicates that the dence interval) it may be possible to observe the
minimum distance is between subsamples of good characteristics and relative position of each of the
and fair (1. 50) and the most distant subsamples three sub-samples of respondents (poor (1) fair (2)
are good and poor (2. 79). good (3)), on the basis of a wedge turn technique
Table 8. Grouping of subsamples in the wedge in reference with the three most discriminating
turn technique in relation to anthropometric cha- (characteristics) anthropometric characteristics:
racteristics shoulder width (ASIR), average thorax (AOGK)
Level Closeness and thigh circumference (AONDK).
On the chart (1) axis (horizontal axis) is the
Fair, Good 1.50
Poor, Moderate 2.92
width of the shoulders (ASIR) and ordinate (verti-
cal axis) is the average thorax (AOGK).
Based on present dendrogram it can be seen It is possible to note that in relation to the width
that the closest sub-samples are good and fair with of the shoulder, subsample-poor (1) has the low-
distance 1.50, and the biggest difference are be- est value of the anthropometric characteristics,
tween the poor and fair subgroups, distance 2.92. and the highest value has a subsample - good (3).
Compared to the average thorax, sub-sample – fair
(2) has a minimum value of anthropometric char-
acteristics, and the highest value has a subsample
- good (3).

lowest value of the anthropometric characteristics,

and the highest value has subsample - good (3).
In relation to the volume of upper leg subsample
- poor (1) has the lowest value of the anthropo-
metric characteristics, and the highest value has
subsample - good (3).
Figure 1. Ellipses (confidence interval), V turn

of subjects with wide shoulders and middle chest
circumference
Legend: poor (1), fair (2), good (3); shoulder width (ASIR)
average thorax (AOGK).
Figure 3. Ellipses (confidence interval), V-turn

of subjects with average thorax and thigh circum-
ference
Legend: poor (1), fair (2), good (3); average tho-
rax (AOGK), thigh circumference (AONDK)
On the chart (3) axis (horizontal axis) is the

average thorax (AOGK) and the ordinate (vertical
axis) is the volume of thigh (AONDK).
It is possible to note that compared to the aver-
age thorax, sub-sample - fair (2) has a minimum
value of anthropometric characteristics, and the
highest value has subsample - good (3). In relation
to the volume of upper leg subsample - poor (1)
has the lowest value of the anthropometric char-
Figure 2. Ellipses (confidence interval), V-turn acteristics, and the highest value has subsample -
of respondents with shoulder width and thigh cir- good (3).
cumference Given the number of individual subsamples
Legend: poor (1), fair (2), good (3); shoulder width (ASIR), of respondents (poor 8, fair 12, good 8), we were
thigh circumference (AONDK). cautious in interpreting the results despite the fact
of the normal distribution of all variables of each
On the chart (2) axis (horizontal axis) is the subsamples. Small sample size contributed slight-
width of the shoulders (ASIR) and the ordinate ly more dispersed and less pronounced latent dif-
(vertical axis) is the volume of thigh (AONDK). ferences.
It is possible to note that in relation to the width
of the shoulders, the subsample - poor (1) has the

4. Conclusion References
A sample of 30 subjects, divided into 3 sub- 1. Hirano Y. & Tada N. “Numerical simulation of a
groups was analyzed based on the score obtained turning alpine ski during recreational skiing. Med
Sci Sports Exerc,” 2005; 28(9): 1209-13.
for the displayed wedge turn techniques.
In accordance with pre-determined objectives 2. Horter H.” Carving skiing. Orthopade,” 2005;
of the research, methodological approach, this re- 34(5): 426-32.
search analyzed the differences between the sub-
3. Lešnik B., Murovec S., & Gashpershic B.” Identify-
jects in the wedge turn technique in relation to the ing the types of skating and skiing. In: A. Guchek,
anthropometric characteristics. D. Videmshek, et al. Skiing Nowadays. Ljubljana:
Based on the results and their interpretation ZUTS,” 2002; 28-90.
following conclusions can be drawn:
In the anthropometric characteristics of re- 4. Cigovski V. & Matković B. “Is more effective way of
teaching alpine skiing without the use of pulmonary ski
spondents using multivariate analysis of variance technique? (In Serbian). Sportology, “ 2010; 2: 41-48.
(MANOVA. 343) and discriminant analysis (DIS-
KRA. 000), the results show that there is only 5. Murovec S. “On the edge! UPS - learning with lon-
synthesized difference between a 3 subsamples in ger skis (In Slovenian). Kranj: Format Kranj.” 2006.
the technique wedge turning with the coefficient
6. Joksimović S., Joksimović A, “Hadžić RThe load of
of discrimination: Shoulder width (.430), aver- musculature in ski carving and relaxation technique
age thorax (.381), thigh circumference (.370), arm (In Serbian). Physical culture,” 2009; 276-278.
length (.240), body mass (.209), lower leg length
(.204), forearm skin fold (.160), pelvic width 7. Kuna D. & Franjko I. “The influence of some motor
skills in the implementation of a ski slalom (In Croa-
(.157), skin fold back (.139), body height (.101), tian). Contemporary Kinesiologijy,” 2008 ; 147 -152.
abdominal skinfold (.099), knee diameter (.066).
After the differences were established and bound- 8. Hadžić R. “Techniques and methodologies of alpine
aries were clearly defined, the characteristics and skiing (In Montenegrin). Rožaje: Copyright Edition.”
homogeneity of each subsample were determined. 2008.
Based on the anthropometric characteristics of
respondents it can be concluded that: Corresponding Author
Subsample defined as - poor has less pronounced Rasid Hadzic,
shoulder width, thigh circumference and the knee Faculty for Sport and Physical Education,
diameter. There is moderate average thorax, body University of Montenegro,
Niksic,
weight and body height. Has a more pronounced Montenegro,
length, arm length, calves, the width of the pelvis, E-mail: rera@t-com.me
upper arm skinfold, skinfold back and abdominal
skinfold and homogeneity is 87.50% (7/8).
Subsample defined as - fair has moderately pro-
nounced shoulder width, thigh circumference, low-
er leg length, knee diameter and width of the pelvis.
Less pronounced middle chest, arm length, body
mass, skinfold, skinfold back, body height and ab-
dominal skinfold. Homogeneity is 85.71% (12/14).
Subsample defined as - good has more pro-
nounced, shoulder width, middle chest, thigh circum-
ference, and body mass, body height and diameter
of the knee. Has moderate pronouncement of length
arms, upper arm skinfold, skinfold back, abdominal
skinfold. Has a less pronounced calf’s length and
width of the pelvis. Homogeneity is 75.00% (6/8).

Control volume finite element method for

modeling of spur gear frictional heat
Janko Jovanovic, Esad Tombarevic, Igor Vusanovic
University of Montenegro, Faculty of Mechanical Engineering, Podgorica, Montenegro
Abstract In order to analyze the frictional heating of spur

gears Terauchi and Mori [1] have developed an an-
Friction that occurs during operation on the
alytical model, Wang and Cheng [2,3] have devel-
contact surface of the teeth of the meshed gears
oped a two-dimensional numerical models, while
causes heating of the teeth, which could lead to
Long et al. [4] have developed a three-dimensional
the fomation of surface defects, such as wear, sur-
numerical model using the finite element method,
face pitting, and lubrication breakdown. There-
Koshigoe et al. [5] have developed a model and
fore, proper evaluation of the working condition
computer program using Green’s function.
of gears can not be made without the knowledge
Numerical models for the analysis of the fri-
of the surface temperature of teeth. The control
ctional heating of spur gears were primarily deve-
volume finite element method, using three-noded
loped by using the finite element method [2,3,4].
triangular elements, has been employed to mod-
This paper deals with a new approach for nume-
el spur gear frictional heat. The results obtained
rical modeling of spur gear frictional heat based
by the developed numerical model are compared
on the control volume finite element method. A
with available literature data in order to verify the
two-dimensional control volume finite element
developed model and confirm its practical values
model of the gear tooth, using three-noded trian-
in studies of temperature distribution caused by
gular elements, is established to research tempera-
frictional heating of spur gear.
ture distributions over a range of applied loads and
Key words: control volume finite element
rotational speeds with consideration of lubrication
method - CVFEM, frictional heat, spur gear, tran-
conditions. The results obtained by the developed
sient heat transfer analysis
numerical model are compared with available lite-
rature data in order to verify the developed model
1. Introduction and confirm its practical values in studies of fricti-
onal heating of spur gears.
Frictional heat that occurs during operation at
the contact surface of teeth of the meshed gears
depends on many parameters such as geometry, 2. Methods
rotational speed, load and lubrication of gears.
The teeth profile and the dimensions of the gears 2.1. Heat equations and boundary conditions
affect the distribution of load and contact pressure, The governing equation of two-dimensional
as well as sliding velocity along pressure line of transient heat conduction is described by the fol-
the meshed teeth. Relative sliding of meshed teeth lowing equation:
causes the appearance of intense friction and leads
to heating of gear teeth and the formation of un- ∂T
even temperature field with maximum tempera- = a ⋅ ∇ 2 T ............................ (1)
∂t
tures at the meshing teeth flanks which may lead
to formation of surface defects, such as hot scor- where ∇ 2 = ∂ 2 ∂ x 2 + ∂ 2 ∂ y 2 , a is ther-
ing, wear, surface pitting, and lubrication break- mal diffusivity and T=T(x,y) is temperature chang-
down. Therefore, proper assessment of the working with time t and position x, y.
ing condition of gears can not be made without the Fricition that occurs during the meashing of
knowledge of the surface temperature of teeth. gears on the contact surface of the teeth causes

them to heat, which, in conditions of constant of an arbitrary meshing point from pitch point
load, after a certain time, i.e., number of revo- along the pressure line can be expressed as:
lutions, ends by reaching an equilibrium state.
Change of the temperature field of the teeth dur- s = r p1 sin j ± (r p1⋅ s i n j ) 2− r 2
p1 + r2
ing an equilibrium state are negligible because the
heat generated by friction is mainly taken away ......................................... (3)
by cooling lubricant. Since each gear tooth dur-
ing operation passes through the same cycle that is where r is radius of meshing point on the pin-
consisted of frictional heat, then convective cool- ion, j is pressure angle, rp1 and rp2 are pitch radii
ing and conduction, transient heat conduction of of the pinion and gear. The upper sign in the previ-
the gear can be analysed by a single-tooth model ous equation refers to the meshing points on the
shown in figure 1. addendum flank of the pinion or the dedendum
flank of the gear, while the lower sign refers to
the meshing points on the dedendum flank of the
pinion or the addendum flank of the gear. Along
the pressure line, the curvature of the meshed teeth
keeps changing at the meshing point. The radii of
curvature of the pinion and gear tooth profiles at
an arbitrary meshing point are determined by the
following equations:
R 1 = r p 1 ⋅ s i n j ± s and R 2 = r p 2 ⋅ s i n j  s
......................................... (4)
The distribution of contact pressure of tooth

flank along the pressure line, shown in figure 2,
could be determined by normal force applied on
the tooth, gear material properties and the tooth
Figure 1. Single tooth model of the gear profile. Based on Hertzian contact theory, the av-
erage compressive pressure for an arbitrary mesh-
Convective boundary conditions for different ing pair of teeth can be expressed as:
boundaries are specified as follows:
π FN ⋅ E
p= ⋅ ................ (5)
−
∂T
1− 2 =−
∂T
3− 4 = h ⋅ (T − To i l ) 4 (
2 ⋅ π ⋅ R ⋅ b ⋅ 1 −n 2 )
∂n ∂n
∂T where FN is normal force at meshing point, E
− 2 −3 = h ⋅ (T − To i l ) + q F is Young’s modulus, n is Poisson’s ratio, b is gear
∂n
width and 1 R = 1 R1 + 1 R2 is equivalent radi-
∂T
= 0 ................................ (2) us of curvature.
∂n 4 −1 The velocities in the direction of the tangent on
an arbitrary meshing point of the pinion and gear
where h is heat transfer coefficient, qF is fric-
are different and can be determined by the follow-
tional heat flux, Toil is lubricant temperature.
ing equations:
2.2. Frictional heat π ⋅ n 1⋅ (r p 1⋅ s i n j ± s )

v t1 =
The path of the meshing point of involute gears 30
is a straight line called the pressure line. Distance

π ⋅ n 2 ⋅ (r ⋅ s i n j  s) According to the model presented in the paper

vt 2 =
p2
................. (6) by Garcia [8] the dynamic viscosity of the lubri-
30
cant can be determined as follows:
h = 10 − 6⋅ r ⋅
   3 . 5 4 ⋅ l o g 1 0 (q B )  
e x p e x p  2 1. 5 4 −  
  
 l o g 1 0 (2 . 7 1 8 2 8 6 )  

 
− 0.6 
....................................... (10)
where r is lubricant density and qB is estimated

bulk temperature.
Figure 2. Distribution of the contact pressure of The heat flux generated by friction of the teeth
teeth flanks along the pressure line of the pinion and gear in an arbitrary meshing
point, according to Long et al. [5] can be deter-
where n1 and n2 are rotational speeds of the pin- mined by the following equations:
ion and gear. Therefore, teeth flanks of the meshed
gears slide one by another, due to that, the friction
q1 = b ⋅ g ⋅ m ⋅ p ⋅ vs
occurs at the meshing point that causes frictional
heating of the gears. q2 = (1 − b ) ⋅ g ⋅ m ⋅ p ⋅ vs ......................(11)
The intensity of the friction that occurs at the
contact of teeth of the meshed gears is determined The heat conversion factor g is defined to be
by the coefficient of friction which depends upon 0.95 and the partition constant of the heat between
many parameters, such as geometry, load, veloci- the contact areas of the meshing teeth b is 0.5.
ties and surface roughness of the meshed gears During each revolution every tooth of the pinion
and lubricant viscosity. Models for determining and gear is only once at the contact when receives
the friction coefficient of contact surfaces, pre- heat input which is equal to the average frictional
sented in the papers by Benedict and Kelley [6] heat flux, which can be expressed as:
and Winter and Michaelis [7], are given respec-
tivelly by the following expressions: a⋅n 1 a⋅n 2
q F1 = ⋅ q 1 and q F2 = ⋅q 2
6 0⋅vt 1 6 0 ⋅v t 2
 2 9 .6 6 ⋅ F N 
m B K = 0. 0 1 2 7 ⋅ l o g   ...................................... (12)
10
 b ⋅ h ⋅ v s ⋅ (v t 1 + v t 2 )2 
 
........................................ (7) where a is width of the teeth contact area.
0.2
 2 ⋅ FN  2.3 Heat transfer coefficient
m W M = 0. 0 0 2 ⋅  
 b ⋅ c o s j ⋅ (vt 1 + v t 2 ) ⋅ R  ..... (8)
  Lubrication and cooling of the pinion and
⋅h − 0.0 5
⋅XR gear in this research is realized by jet lubrication.
DeWinter and Blok [9] have developed a model to
where vs = vt1 − vt 2 is sliding velocity, h is dy- estimate the heat transfer coefficient on the flank
namic viscosity and XR is roughness factor that can of the gear tooth for this lubricating and cooling
be determined by the following equation: method:
0. 2 5
 S  0. 2 5
X R = 3. 8 ⋅  R  ..................... (9) n n ⋅ H 
 2⋅r  h= ⋅ k ⋅ r ⋅ c ⋅  o  ⋅ q n ........ (13)
 p1  2 ⋅π  j ⋅r 
where SR is surface roughness.

where w is angular speed, k is lubricant conduc- where Nj(x,y) are shape functions and Tj are
tivity, c is lubricant specific heat, no is lubricant ki- nodal temperature values. Then, the regions of
nematic viscosity, H is height of meshing point on support and control volumes attached to each
the tooth and qn is normalized cooling capacity. node i are identified. The domains of the integral
in (14) are associated with the regions of support.
2.4. Control volume finite element method For each node i in the mesh the region of sup-
port, shown in figure 3, is identified by counting
The governing equation of transient heat con- and listing all the neighboring nodes j that share a
duction (1) could be alternatively expressed in the common element side with node i. Using numeri-
integral form: cal integration and shape function aproximations
of temperature (15) in each element of ith support,
d
d t ∫A
T ⋅ d A = ∫ a ⋅ ∇T ⋅ n ⋅ d S, x ∈W .... (14) equation (14) is expanded in terms of nodal values
S of temperature in the region of support. On gether-
where W is arbitrary two dimensional domain. ing terms, the resulting equation for node i can be
In this research domain W is gear tooth geometry written in the discrete form:
shown in figure 3.
Nsi
a i ⋅ Ti = ∑a
j =1
i ,j ⋅ Ti , j + b i ................. (16)
where ai is coefficient associated with the un-

known nodal values of Ti and ai,j are coefficients
associated with the unknown nodal values of Ti,j
at neighboring nodes in the ith support, and the ad-
ditional coefficient bi accounts for the contribution
from sources, transients and boundaries. Equation
(16) provides an algebraic relationship between
the value of temperature at node i and the neigh-
boring nodes j in its region of support.
A fully implicit scheme has been used to solve
CVFEM equations (16) and to determine the nod-
al field values of temperature Ti:
(Vi + B C i ) ⋅ Ti t + D t = V i ⋅ T ti +
Figure 3. Gear tooth geometry with mesh of Nsi  ...... (17)
triangular elements Dt ⋅  ∑ a i , j ⋅ T t + Dt
i,j − a i ⋅T t +Dt
i
+B
 Bi
 j =1 
The key objective of CVFEM is to reduce the
integral form of equation (14) to set of discrete al- where Vi is control volume of node i, BBi and BCi
gebraic equations in the unknown nodal values of are coefficients of CVFEM boundary conditions,
temperature. First step of this procedure is mesh- Dt is time step. Determination of coefficients ai,
ing two dimensional domain into mesh of linear ai,j, bi, BBi i BCi is fully explained in [10]. Gauss-
triangular elements shown in figure 3. The contin- Seidel iterative solver has been used to find solu-
uous unknown field of temperature over triangular tion of CVFEM equations.
elements, can be expressed as the linear combina-
tion of the temperature values at nodes placed at 3. Results and discussion
the vertices of triangular elements:
3 In order to verify CVFEM model of spur gear
T ( x , y ) = ∑ N j ( x , y ) ⋅ T j ................. (15) frictional heat results of numerical simulations are
j =1
compared to results of experimental measurements

of spur gear tooth temperatures conducted by Long pitch circle, which was expected according to ob-
et al. [4]. The measurements are realized for rota- tained distribution of heat flux.
tional speeds of 2000, 4000 and 6000 r/min and the
load cases A, B, C, D, E, F and G given respectivel-
ly by values of torque 17.4 Nm, 26.0 Nm, 35.0 Nm,
43.0 Nm, 52.0 Nm, 61.0 Nm and 73.0 Nm.
Geometric properties of investigated spur gear
set are as follows: number of teeth z1=15 and
z2=16, module m=15 mm, pressure angle j=26o
and width b=4.775 mm. The material of the pi-
nion and gear is 665M17 (EN-34) steel with the
following mechanical and thermal properties: Figure 4. Temperature distribution along the
Young's modulus E=185.42 GPa, Poisson's ratio tooth meshing flank
n=0.3, thermal conductivity k=41.8 Wm-1K-1 and
thermal diffusivity a=1.077∙10-5 m2s-1. Gear set is
case-hardened and ground to a surface finish of
0.6 mm Ra. The lubricant oil, applied via spray
system, is Mobile Jet II with the following pro-
perties: density r=998 kgm-3, kinematic viscosity
no=27.6∙10-6 m2s (40 oC), no=5.1∙10-6 m2s (100 oC),
thermal conductivity k=0.1337 Wm-1K-1 (37.8 oC),
k=0.1278 Wm-1K-1 (93.3 oC), specific heat c=2000
Jkg-1K-1 (90 oC) and oil temperature TOil=90 oC.
According to given geometric properties of
spure gear set the geometry of pinion tooth and
triangular finite element mesh, shown in figure 3,
is generated. The generated finite element mesh
is consisted of 1284 triangular elements and 733
nodes. The positions of all nodes that are on each
tooth boundaries are identified. Then normal load,
contact pressure, sliding velocity, friction coeffi-
cient, heat flux and heat transfer coefficient in all
nodes that are located along meshing flank of the
pinion tooth for different combinations of rotatio-
nal speeds and load cases are determined.
Normal load distribution along meshing flank
of the pinion was slightly modified in order to avo-
id sudden changes of normal load in points C and
D along pressure line by proposal of Long et al.
[4]. Then transient heat analysis of the frictional
heating of the pinion was carried out. Obtained di-
stributions of temperature along the tooth meshing
flank and tooth temperature for Benedict-Kelley
and Winter-Michaelis models of friction coeffici-
ent, rotational speed of 6000 r/min and load case
D are shown in figure 4 and figure 5 respectivelly. Figure 5. Distributions of tooth temperature
Obtained temperature distributions show that
the maximum temperature occurs on the mesh- Figure 6 show comparative diagrams of the
ing flank of the pinion tooth in the zone below the maximum temperature obtained by transient heat

analysis using both models of friction coefficient, gear tooth which presents the confirmation of their
and the maximum temperature which Long et al. [4] practical value in studies of temperature distribution
have experimentally determined for different load caused by frictional heating of spur gears. The ob-
cases and rotational speeds. Comparative diagrams tained results of numerical simulation of frictional
in figure 6 show that results obtained for lower ro- heating of gears also show that for lower rotational
tational speed agree better with the experimental speed a better agreement of numerical and experi-
results when the friction coefficient is determined mental results is obtained if the friction coefficient
by the model of Winter-Michaelis (8). The average is determined according to the model of Winter-Mi-
deviation of numerical and experimental results for chaelis (8), while for higher rotational speed, the bet-
rotational speed of 2000 r/min is 2.5%. ter agreement of numerical and experimental results
is obtained if the friction coefficient is determined
according to the model of Benedict-Kelley (7).
References
1. Terrauchi Y., Mori H. Comparison of theories and ex-
perimental results for surface temperature of spur gear
teeth, Journal of engineering for industry, 1974; 96.
2. Wang K.L, Cheng H.S. , A numerical solution to
the dynamic load, film thickness and surface tem-
peratures in spur gears, Part I:Analysis, Journal of
mechanical design, 1981;103.
3. Wang K.L, Cheng H.S., A numerical solution
to the dynamic load, film thickness and surface
temperatures in spur gears, Part II:Results, Journal
of mechanical design, 1981; 103.
4. Long H., Lord A.A., Gethlin D.T., Roylance B.J. , Op-
erating temperatures of oil-lubricated medium-speed
gears: Numerical models and experimental results,
Proceedings of institution of mechanical engineers,
Part G: Journal of aerospace engineering, 2003; 217.
5. Koshigoe S., Murdock J.W., Akin L.S., Townsend
Figure 6. Variation of maximal temperature for D.P., A computer program for the computation of
rotational speeds of 2000/4000/6000 r/min running gear temperatures using Green's function,
NASA technical report ARL-TR-1117, USA.1996.
Comparative diagrams in figure 6 show that re- 6. Benedict G.H., Kelley B.W. , Instantaneous coefficient
of gears tooth friction, Tribology transactions, 1961; 4.
sults obtained for higher rotational speed agree bet- 7. Winter H, Michaelis K., Scored load capacity of
ter with the experimental results when the friction gears lubricated with EP-oils, AGMA technical meet-
coefficient is determined by the model of Benedict- ing, Montreal, Canada. 1983.
Kelley (7). The average deviation of numerical and 8. Garcia A.H. , Thermal effects in high speed gear
experimental results for rotational speed of 4000 r/ transmissions, MSc degree thesis, University of
Wales, Swansea, UK. 1999.
min and 6000 r/min is respectivelly 1.0% and 3.5%. 9. DeWinter A., Block H. , Fling-off cooling of gear
teeth, Journal of engineering for industry, 1974; 96.
4. Conclusion 10. Voller V.R. Basic control volume finite element
method in fluids and solids, World scientific pub-
The CVFEM models with different combina- lishing Ltd., Singapore. 2009.
tions of operating conditions are established for
evaluating the influences of load and speed on tooth Corresponding author
temperature variations. Results obtained by using Janko Jovanovic,
these models show a very high degree of agreement University of Montenegro,
Faculty of Mechanical Engineering in Podgorica,
with the results of experimental measurements of Montenegro,
the maximum temperature of meshing flank of the E-mail: janko@ac.me

Security in Electronic Payment Systems:

IDEF1X Model
Tamara Uros¹, Milan Milosevic², Zivota Radosavljevic², Vukasin Lale², Maja Andjelkovic²
¹ Belgrade Business Scholl, Belgrade, Serbia,
² Faculty for education of the executives, Alfa University, Belgrade, Serbia.
Abstract networks, to business activities between companies

Providing for the security of the data sent and individuals, on a global open network like the
through the Internet and a general acceptance of Internet. The commercial sector is the segment of
safe payment mechanisms represent the basic pre- the Internet with the fastest growth, because the
requisite for the success of transaction systems in Internet makes it possible to collect information,
electronic trade. Many companies and consortiums communicate and do business [1] - [4].
are working on the development and promotion of The increase in popularity of the Internet as a
protocols and systems that will enable safe Web business tool in general and as an advertising me-
transactions. A wide acceptance of safe payment dium in particular, results from its present size, the
mechanisms should represent a milestone in the expected future growth, its potential to improve
evolution of the Internet. global distribution of information and resources,
This paper formally describes the basic terms and its potential to provide an efficient way of ad-
that appear in electronic trade: the medium on vertising, marketing and direct distribution of spe-
which transactions are made, participants in the cific information and products.
transactions, the goods and the services, as the Electronic trade comprises not only sale and
object of the transactions. A special emphasis in purchase of goods and services by means of elec-
the paper has been laid on the payment systems tronics, but various processes within organiza-
through the Internet. Three payment models have tions supporting this aim, like on-line delivery of
been described: credit cards, electronic checks, digital contents, electronic funds transfer, com-
and digital cash. mercial biddings, direct marketing, post-sale ser-
Besides the descriptive listing of these terms vices. Thus, electronic trade comprises a group of
and payment systems, their static characteristics activities in the value chain inside and outside of
have been presented by means of IDEF1X dia- the organization by using network communication
grams, so presenting formal specification of static technologies [5].
characteristics of electronic store. In addition to The main obstacle to trade expansion through
the formal specification, the diagrams represent a the Internet is lack of widely accepted systems for
description of the database on which it is possible safe electronic payment. Although the number of
to put into effect a generic application for elec- Internet users is increasing at incredible speed,
tronic store. there is still a problem of how to encourage pro-
Key words: electronic payment, safe Web spective consumers to take part in on-line trans-
transactions, safety protocols actions. The basic problem is lack of confidence
in new commercial media concerning informa-
tion privacy in electronic network surroundings
1. Introduction
[6]. Providing for security of data sent through the
The Internet is a powerful, constantly growing Internet and overall acceptance of safe payment
medium, which is completely changing the way mechanisms represent the basic prerequisite for
in which companies interact with purchasers. An successful transaction systems in electronic trade.
accelerated growth of the Internet brings about Many companies and consortiums are working on
spreading of electronic trade from business to busi- the development and promotion of protocols and
ness transactions that were made within internal systems that will enable safe Web transactions.

2. Types of Electronic Payments safety protocols like SET (Secure Electronic Trans-
action) and SSL (Secure Sockets Layer) are used to
The methods that have been developed for
provide safer communications through the Internet.
making payments on the Internet represent an
The use of servers and browsers that support SSL
electronic version of the traditional payment sys-
protocol only protects the data from web supervi-
tems – checks, cash and credit cards. The basic
sion and spying, but it cannot guarantee data pro-
difference between electronic and traditional pay-
tection on the merchant side.
ment systems lies in the fact that electronic pay-
SSL (Secure Sockets Layer) is, unlike the SET
ment systems are completely digital [7]- [10].
protocol which was abandoned by its creators,
The electronic check represents the equivalent
still successfully used, because all participants in
of the paper check and it virtually has all the char-
transactions generate benefits greater than their
acteristics of the paper check, which essentially
expenses. SET protocol requires extra expenses
is a message to the purchaser’s bank to transfer a
from consumers to obtain a digital certificate with
funds from the purchaser’s to the merchant’s ac-
a public key, which is probably the main reason
count. The purchaser paying by means of an elec-
for the failure of this protocol. SET was an ideal
tronic check digitally signs a form that contains
solution for encryption, performing authentication
the description of the transaction, information on
of all participants and ensuring data confidentiali-
the payer and the payee, the amount and the time
ty and message integrity checking. Although it has
stamp (a combination of date and time transac-
satisfied all technical requirements in terms of in-
tion taken from the system) and sends the check
creasing the safety of all participants in electronic
directly through the net or by e-mail. The remitter
transactions, yet it failed to establish itself as the
may protect himself from trickery by encoding his
standard and to replace the SSL / TLS protocol.
account number by the bank’s public key, which
The process of its implementation is too compli-
makes the electronic check superior to the paper
cated, because it demanded the installation of digi-
check, since the account number remains undis-
tal certificate and the corresponding software on
closed to the merchant.
the customer side, as well as significant financial
Digital cash (or electronic cash) is a system best
investments on the merchant and the bank side
suited for making transactions that include small
during the SET software installation.
amounts of money. Digital cash may be issued in
As a result, Visa and MasterCard, five years af-
very small denominations (the so-called micro-
ter the publication of SET specification, tried to
cash) which can be used for paying small trans-
come up with a new solution on the basis of pre-
actions (the so-called microtransactions), e.g. for
viously acquired experience, in order to increase
software rental, on-line games, etc. Digital cash,
the security of online payments. Visa developed a
in the form of validated tokens essentially repre-
system called 3-D Secure and MasterCard devel-
sents a string of digits both issued and repurchased
oped a system called Secure Payment Application
by the bank. The bank validates each token with a
(SPA). 3-D Secure (Three-Domain Secure) model
digital stamp before issuing it to the user whose
should enable the issuer of credit cards to perform
account is then indebted by the value of the tokens
card user authentication when ordering over the
issued. When the purchaser pays in digital cash, it
Internet, reducing the possibility of fraud, and
is enough to transfer the corresponding amount of
improving the performance of the entire transac-
tokens to the shop, which then forwards them to
tion process. 3-D Secure is therefore a protocol
the bank for verification and repurchase.
for electronic commerce which is to enable se-
To enable using credit cards through the Internet
cure payment transactions over the Internet. Visa
various systems have been developed, which dif-
licensed this protocol offering it to other brands of
fer in the level of safety provided by these systems.
payment cards as a standard for global interoper-
In order to process information from credit cards,
ability in the process of authentication during the
a merchant needs to have at least the CGI script on
payment.
his server that is mostly used for information ex-
change between the server and database. However,

3. The Model of the Electronic Payment

Systems
Figures 1, 2, 3 and 4 show IDEF1X diagrams
that represent the model of the electronic payment
methods in electronic store. The diagrams repre-
sent formal specification of static characteristics
of the electronic store. This model involves the
rules from the previous chapter, with some items
described in more detail [11].
Figure 3. IDEF1X Diagram: Electronic store
Figure 1. IDEF1X Diagram: Firms involved in

electronic trade
Figure 4. IDEF1X Diagram: Electronic store
The starting point in creatin diagrams are firms

as subjects in electronic market. Common char-
Figure 2. IDEF1X Diagram: Electronic store acteristics of these subjects are set apart in entity
FIRM, which is specialized in one or more entities.
These subentites are INTERNET SERVICE PRO-
VIDER, MANUFACTURER, BANK, STORE,
and DISTRIBUTOR. Generalization, in this case,

is overlapping because one firm can be represented (association between entity VERIFIED CARD
in one or more subentities. For example, software and entity BANK).
and hardware producer can be Internet service pro- With the subentity ELECTRONIC CHECK,
vider, manufacturer, store, and distributor at the the merchant sends the electronic check that he
same time. got from the purchaser to the bank making the
This diagram shows the connection between payment, which is represented by the association
stores and banks, and the connection that de- between this subentity and entity BANK.
scribes implementation of settlements and clear- If payment is made in digital cash, depend-
ing between banks and authorizations of partici- ing on the place where it is stored, the DIGITAL
pants in electronic trade via central institution for CASH subentity gets specialized as COMPUTER
authorization, settlement and clearing (e.g. AU- AMOUNT or SMART CARD AMOUNT. Like
TOMATED CLEARING HOUSE). in the case of the PAYMENTS specialization, this
The diagrams in Figures 2, 3, 4 show semantic generalization of the subentity DIGITAL CASH is
relationships between firms from the previous dia- incomplete. This was done because of the open-
gram, goods and customers involved in electronic ness of the model, i.e. so that there would be a
trade. GOODS as a entity are shown in two emerg- possibility of including new payment methods
ing ways. This generalization is disjoint and com- into the model proposed.
plete. Particularly, there are goods that do not need
distributor as intermediary in the classic sense, and 4. Conclusion
can be downloaded from the Internet directly, e.g.
electronic books, electronic newspapers, software, The paper describes the basic terms that appear
etc. This type of goods is represented by subentity in electronic trade:
ELECTRONIC, and virtual distributor in this case – the medium in which transactions are made,
is Internet service provider. Another subentity of – participants in the transactions,
entity GOODS is MATERIAL. This commodity – goods and the services, as the object of
needs a few intermediaries for storing, packaging, transactions.
transport, delivery, etc., which are represented by
subentity DISTRIBUTOR. A special emphasis in the paper has been laid on
We also introduce categorization of goods, and description of the payment systems through the In-
implement this with dependant entity SUBCATE- ternet. Three payment systems have been described:
GORY, that is connected with entity CATEGORY. credit cards, electronic checks, and digital cash.
Entity BASKET represents virtual consumer’s bas- Apart from descriptive listing of these terms and
ket, and is made of items, expressed by type and payment systems, their static characteristics have
amount of goods that buyer orders. This entity is been presented in forms of IDEF1X, so presenting
composition of entities CUSTOMER and STORE. formal specification of static characteristics of elec-
The preparation of the conditions to perform tronic store. In addition to the formal specification,
the payment procedure itself is necessary so that the diagrams represent a description of the database
the buyer could pay for electronic expenses. In through which it is possible to put into effect a ge-
the figure, this is represented as an entity named neric application for electronic store.
PAYMENTS. Depending on the chosen way of
payment, the entity PAYMENTS is specialized
into the entities CREDIT CARD, ELECTRONIC
CHECK, or DIGITAL CASH.
If payment is carried out by means of a credit
card, it is necessary to make verification through a
credit card processor, which is represented by the
entity VERIFIED CARD. Only after that does the
bank make authorization and funds transfer from
the purchaser’s account to the merchant account

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A development methodology for Web

service based systems and vendor specific
development tools
Jelena Matkovic¹, Kresimir Fertalj²
¹ Elektroprivreda HZ-HB d.d. Mostar, Mostar, Bosnia and Herzegovina,
² Fakultet elektrotehnike i računarstva, Zagreb, Croatia.
Abstract services and their orchestrations supported by

Microsoft technology. Important details of these
Web services delivered new ways of code reuse.
products are emphasized in order to understand
They allow better adaptation of information sys-
what every of them is used for and in which phase
tems to business processes. A new approach to de-
of the development.
velopment requires new development methodolo-
Final part of the paper introduces future research
gies. Existing development methodologies are not
which is focused on more detailed elaboration of
completely suitable to Web service standards. They
presented methodology and on analyses of products
must be enriched with activities adapted to these
for the development of standalone Web services
new standards. This paper proposes main phases
and their orchestrations offered by other vendors.
of the methodology aimed for the development of
information systems based on Web services. There
is an existing development methodology “Web Ser- 2. Why web services
vice Implementation Methodology”, proposal by The term software service represents an autono-
Oasis, which gives main guidelines through each mous software entity that can be discovered, called,
phase. That methodology served as a basis for the executed and it is able to return results from its ex-
one proposed in the paper. The second part of the ecution. Today, an idea of autonomous software
paper is focused on the analysis of existing devel- services is realized using Web services which fulfil
opment tools that are used in the coding phase. all mentioned requirements using specific technolo-
Key words: Web service, Oasis, ASP.NET, gies which reside on Web. , Web services represent
Windows Workflow Foundation a final degree of evolution in the process of code
segmentation in order to increase code reusability.
1. Introduction During an era of classical procedural program-
ming, segmentation of code was performed by
This paper in its first paragraph describes sce- using methods that encapsulated a piece of code
narios of using Web service technologies. Web which could be reusable. Afterwards, segmenta-
services are identified first. Later, it is analyzed tion evolves to the idea of object oriented pro-
why they are so popular today and what their main gramming. Object oriented programming deliv-
benefits, when compared to traditional program ered more powerful ways of code reuse. Objects
entities, are. As a part of Web services analysis, can encapsulate lots of methods not just one, but
a concept of orchestration is mentioned because the most valuable contributions were polymor-
it exploits all functionalities of Web services, es- phism, aggregation and inheritance.
pecially their interoperability and reusability. This Today, final steps of this evolution are the Web
paragraph concludes with a rough proposal of a services. Unlike traditional client-server systems,
development methodology aimed for a develop- Web services are not meant for direct end-user
ment of complex information systems based on consumption [1]. They are designed to be used by
Web service technologies. other programs and to be a part of wider systems
Later paragraphs of the paper are focused on an using standards like orchestration and choreogra-
overview of products for a development of Web phy. Atomic Web services can be built on different

platforms but they can still communicate uniform- tained within several business processes. But be-
ly with each other as long as they use Web service fore starting with analysis of business processes
standards. With all these possibilities, integration and generation of business steps, it is important to
and optimal reuse can be fulfilled easily [2]. define a criterion upon which a level of functional-
ity inside of each step will be determined.
3. Development methodologies Analysis phase
Methodologies, aimed for the development of Analysis phase transforms output of the pre-
information systems built on Web services, should vious phase, i.e. steps of business processes and
extend existing development methodologies with their relationships, into standardized form which
elements specific for work with Web services. Ac- will be understood by developers and other tech-
cording to [1], a complete development methodol- nical personnel of the project team. Based on this
ogy should be based on agile methodologies and generated standardized view, Web services and
should have all standard development phases: re- messages they exchange are defined. Granularity
quirements phase, analysis phase, design phase, of each Web service is defined first. After gran-
coding phase, test phase and deployment phase. ularities are defined, their public interfaces are
Each of these phases should be iterative in order modelled and afterwards the same procedure is
to accommodate changes if they occur during any done with messages.
of them. Following analysis passes through each As already stated, potential Web services and
enumerated phase and identifies specificities re- their granularities are determined first. Granularity
lated to Web service technologies. of a Web service presents a quantity of function-
It is important to note that proposed develop- ality it encapsulates. It is important to define an
ment methodology is applied to systems that which algorithm or at least some rule upon which it is
exploit WSDL and SOAP Web service standards determined how to make mappings from defined
and WS-BPEL standard for orchestrations. UDDI business steps into Web services. If there are exist-
standard for service dynamic discovery is not used ing legacy systems that are going to be reused, it
because this approach does not use dynamic dis- is important to capture functionalities they already
covery of Web services, i.e. they are hard coded in implement in order not to make redundant ones.
WS-BPEL code. Identifying granularities of Web services is a basis
for defining their interfaces. Interfaces consist of
Requirement phase public methods exposed by Web services. Thus,
Requirement phase is pretty much the same as defining interfaces consists of defining those
with standard methodologies. Besides defining a methods and their signatures.
scope of the project, which is a standard task, it is After granularities and interfaces are complete-
important to define functional and non-functional ly identified, messages are next to be defined. As
requirements of Web services that are going to be already stated, an output of the previous require-
designed or included into the project as the exist- ment phase is a matrix of business process steps
ing resources. A matrix containing all those re- and their relationships. Those relationships, in
quirements should be an output of this task. The combination with defined Web service interfaces,
task is iteratively repeated as long as all functions represent a basis upon which messages are identi-
are not defined properly. fied. According to [3], the best practice to define
Defining functional requirements of Web ser- messages is to define their XML schemas. Con-
vices in a proposed methodology is implemented structs defined in these XML schemas must con-
by breaking business processes into smaller sets form to list of input parameters and output values
of functionalities, called business steps, with of methods defined in interfaces.
specified relationships and exchanged messages Web services offer full interoperability among
between those steps. Resulting outcomes or their different platforms. The main reasons for using
synthesis represent potential Web services. It Web services are actually to gain interoperability
should be noticed that certain steps will be con- among distributed applications that span diverse ap-

plication servers [4]. But, in order to simulate busi- usually shipped with its predefined tools, e.g., if
ness processes using information systems, there are Microsoft’s .NET framework is chosen as an archi-
standards that use Web services, compose them and tecture which is going to be used for the develop-
create business processes. That is the biggest con- ment, then Visual Studio is a tool that must be used.
tribution of Web services after their interoperability. After architecture issues are solved, design phase
Orchestration is a common standard used for Web moves its focus back to the Web services, more pre-
service compositions. After both atomic Web ser- cisely to the definition of their WSDL interfaces. In
vices and messages between them are identified, a the previous phase their granularities are defined, as
model of orchestration is specified in detail in order well as a list of their public methods and messages
to designate business processes. According to [5], they exchange. Those are sufficient prerequisites
there are three levels when modelling compositions needed to develop WSDL interfaces [6]. Accord-
of Web services: code-oriented, process-oriented ing to [3], the best way to define these interfaces
and formal-oriented. Code-oriented model of an or- manually is to use empty predefined WSDL tem-
chestration is a final goal that must be produced in plates and populate them. A sequence where XSD
order to deploy an orchestration. But, the best prac- schemas of the messages are defined first, followed
tice is to start with formal modelling and translate by WSDL interfaces and finalized with the code, is
it to code-oriented one. WS-BPEL language, which a correct and transparent way to develop Web ser-
became de-facto standard for describing orchestra- vices because no details should be overlooked [3].
tions, uses standard operators like sequence, choice However, writing WSDL interfaces manually
and parallel which are all used in formal modelling is not the only possibility. There are tools that of-
techniques. Thus formal approach is the best can- fer functionalities to generate WSDL documents
didate to describe orchestrations and to translate dynamically from code. But, when using auto-
them into WS-BPEL [4]. WS-BPEL is a low level matic generation, lots of specific details correlated
language and it is quite difficult to pick up even us- to transformation must be known if all mistakes
ing graphical editors and that is the biggest reason want to be bypassed. E.g., when using Microsoft
why use high level formal languages [4]. Formal technologies to create Web services and XML se-
languages allow verification of business steps and rialization is used to transform to XML, it is use-
detecting bottlenecks and other anomalies. Formal ful to know that only public fields are going to be
representations of orchestrations are thus defined in transformed into WSDL so a client would not see
this phase. According to [4], formal representations those private fields. This is just a simple example
allow declaring service compositions without tech- of the problems caused by using automatic gen-
nical details but with business logic. eration if this property of XML serialization is not
known in advance.
Design phase After design of WSDL interfaces is completed,
Analyses phase did lots of work, but design the end of this phase is concerned with enrichment
phase translates that work into form that can be used of Web service descriptions with details needed
as a direct input to the coding phase. The first part for writing code.
of this phase is focused on the analyses of candidate If there are reusable Web services, it is im-
architectures that satisfy all requirements identified portant to define procedures for data mappings
in previous phases. Before deciding which archi- if needed. Data mappings must be performed if
tecture is the most convenient, it is important to chosen architecture does not support data types
specify all Web service standards that are going to offered by existing reusable Web services.
be used. Candidate architectures must support all
those standards. For example, if choreography is Coding phase
going to be deployed, chosen architecture have to Coding phase is the first phase where develop-
possess choreography interpreter engine. ers do their actual work. Tasks associated to writ-
After all details about architecture are defined, ing code are done in this phase. The first task of
tools, that are going to be used for the development, this phase is related to coding internal structure
are specified. Every programming framework is of Web services. This work is done in accordance

with defined interfaces and descriptions of Web Atomic Web services

service functionalities. After process of develop- Atomic Web services are stand-alone program
ment is done, it should be tested whether each entities which offer functionalities through ex-
developed atomic Web service offers functional- posed public Web methods. A quantity of exposed
ity as it is specified within its WSDL document. functionality is known as a service granularity and
Exposed public methods must be identical to their it is determined upon needs during the analyses
WSDL interface counterparts, i.e. their names, phase. Web services can be designed using differ-
input parameters and return values must be the ent technologies and languages which support Web
same. According to [1], testing on Web services service standards for communication (SOAP), for
should also inspect whether Web services satisfy description of public interfaces (WSDL) and for
all security requirements, such as message integ- their discovery (UDDI). Atomic Web services are
rity, authentication and authorization. usually composed later into more complex units
After atomic Web services and their clients are using different tools and languages designed just
coded, it is time to model business processes, i.e. for this purpose, such as WE-BPEL language for
orchestrations. Formal definition of an orches- orchestrations, which is already mentioned.
tration was developed previously in the analysis This paragraph focuses on tools offered by Mi-
phase and now it is time to translate it into the crosoft that are used for the development of stand-
code-level form, more precisely into WS-BPEL alone Web services. Firstly, possibilities of ASP.
form, since WS-BPEL became de facto standard NET technology are described and later of Windows
for executing orchestrations. There are lots of Communication Foundation (WCF) which is a new
efforts on proposals for the development of for- Microsoft’s standard for Web service development.
mal descriptions of orchestrations and for their
automatic or semi-automatic transformation to ASP.NET technology and Web services
code-level descriptions. After WS-BPEL model is When using Visual Studio tool, there is a pos-
made, it must be tested since it presents integra- sibility to create, build and deploy Web services, as
tion model of included atomic Web services. well as to create client applications that make use
of deployed Web services. This paragraph describes
Deployment phase possibilities offered by Visual Studio 2008 and later
Deployment phase has the same scope as it has when it comes to the development of atomic Web
with traditional software products. A final goal of services and their clients using ASP.NET technol-
this phase is a system deployed in the production ogy, although Microsoft states it is a legacy tech-
environment. Details related to the process of de- nology and promotes WCF as a new part of .NET
ployment depend on chosen architecture. Atomic Framework, intended for Web service development.
Web services are firstly deployed and afterwards Web service development is not anything new
WS-BPEL model is deployed since it uses those according to perspective of a developer. Code of
atomic Web services. a class implementing a Web service is written in
files with .asmx extension, with a prescribed syntax
4. Development tools that must be added on top of those files. Code is
written using any of .NET programming languages
Previous paragraphs introduced main contri- and ASP.NET programming paradigms. Code can
butions of Web service standards and afterwards be also separated from .asmx file, so a class imple-
they proposed a basis of a methodology for de- menting a Web service can be placed into assembly
veloping systems based on Web services and their and placed inside of /bin folder. A class implement-
orchestrations. ing a Web service must have [Webservice] directive
This paragraph gives a brief overview of tools applied to it and it should be derived from System.
offered by Microsoft that are used in coding phase Web.Services.WebService class in order to gain ac-
of the development methodology. Those tools are cess to common ASP.NET objects. Public methods,
used for development of standalone Web services that are going to be offered by a Web service to its
and their orchestrations. clients, are defined inside of a Web service class

using [Webmethod] directive. Only those methods One of them is Microsoft’s wsdl.exe tool, able to
that have applied [Webmethod] directive are visible generate proxy classes from WSDL descriptions
to the outer world. of ASP.NET Web services. Resulting generated
There is also a possibility to define an interface proxy classes are generated in one of .NET avail-
with [Webservice] and [Webmethod] directives able languages and afterwards they are included
applied to it and its methods. A class implement- and used in client applications. Proxy classes gen-
ing a Web service is later derived from that inter- erated using either Add Web reference or wsdl.exe
face. This second approach is better because it al- tool use XML serialization.
lows multiple classes to implement one interface Proxy classes for ASP.NET Web services can
in different ways. Web services developed using be generated using svcutil.exe tool also. This tool is
ASP.NET technology will be referenced as ASP. primarily designed to generate proxies out of WCF
NET Web services in further text. Web services, which represent a new generation of
Deploying .asmx file is as simple as it can be. Microsoft’s Web service technology. They are de-
The only step needed to be performed is copying scribed later in the paper. If svcutil.exe tool is used
.asmx and other necessary files to virtual directory against ASP.NET Web services, generated proxy
of a Web server, configured as IIS Web applica- classes use XML serialization that is commonly
tion. If there is a need to apply changes to Web used in proxy classes of ASP.NET Web services.
service class, .asmx file must be reedited and then
copied to virtual folder again. Windows Communication Foundation
Standard description WSDL document is auto- Windows Communication Foundation is a new
matically generated when services are created us- part of .NET framework, aimed for developing,
ing ASP.NET technology, which is obtained add- building and deploying of Web services. The first
ing ‘?WSDL’ syntax to the URL of a Web service step of Web service development is creating new
in the browser. WCF service library project. Inside of it, there are
certain files that must be created in order to create
Development of clients using ASP.NET complete Web service. The first one is a contract
technology file, which is created using desired .NET program-
Client applications that call deployed ASP. ming language. It is declared as a public interface
NET Web services can be developed using any with [ServiceContract] directive. Inside of that in-
technology that can communicate with Web ser- terface, there is a list of public method signatures
vices technology. When ASP.NET 2.0 technology that are going to be exposed by a Web service. For
is used, communication with deployed Web ser- each method signature, there is a [OperationCon-
vices is created using Add Web reference wizard tract] directive applied to it. Each element of a
which is delivered with Visual Studio. This wizard contract file is mapped to WSDL matching dec-
creates a proxy class that provides access to func- larations by WCF runtime engine when needed.
tionalities of deployed ASP.NET Web services, The second file, that is created when develop-
accessible at specific URL via SOAP over HTTP. ing WCF Web service, is a data contract document
A proxy class of a Web service negotiates all com- which is created when complex data types are
munication between a Web service and its client, used as input parameters or output values of Web
i.e. it accepts inputs from a client and forwards methods defined in a contract file.
them to a Web service and backwards. Proxy After a contract file is written, an implementa-
classes perform also all necessary transformations tion of contract interface is made on a regular class
of data from XML representation to object repre- using any of .NET languages. [ServiceBehavior]
sentation in .NET and backward. This transforma- and [OperationBehavior] attributes are added in
tion is known as serialization/deserialization [7]. front of the implementation class and its methods
An alternative way of generating proxy classes if there is a need for a special behaviour to be add-
out of deployed ASP.NET Web services is by using ed to an instance of a Web service class at runtime.
tools for generation of proxy class from Web ser- One of the differences between WCF and ASP.
vice metadata, i.e. from their WSDL documents. NET Web services is that WCF Web services need

to be hosted inside of an application that man- The second way to create WCF Web service cli-
ages their instances since WCF is not able to do ents is to use Service reference tool. When using
it itself, unlike ASP.NET Web services which are this tool, proxy classes are added automatically to
standalone. Microsoft proposes ASP.NET applica- the project with all necessary bindings automati-
tions as the simplest way to host WCF Web ser- cally added to the Web.config file. Using Service
vices. The procedure of hosting is analogous to reference tool is more elegant since proxy classes
one when creating ASP.NET Web services with a are automatically added to the project and configu-
difference that implementation class is not placed ration files are automatically updated with all nec-
into .asmx file, but into .svc file. It can be placed essary binding client information. When using this
into assembly also and referenced in .svc file using tool, Visual Studio internally inputs svcutil.exe tool
proper syntax. Hosting WCF Web services inside to generate proxy class and emits output to the proj-
of ASP.NET application is not an only possibility. ect automatically as well as configuration entries
They can be also hosted inside of some other pro- that are automatically updated. But, in some certain
cess using ServiceHost class. situations there is no need to be dependent on Vi-
Binding is the second step that has to be done sual Studio in order to be sure that it will not include
after hosting. There is a prescribed syntax that any unnecessary entries. Option of updating service
must be added in the code or in the configuration references is also dangerous when Service refer-
file in order to bind contract and its implementa- ence tool is used because it updates the proxy class
tion to address where a Web service will be ac- contents to the latest version downloaded from the
cessed. Binding defines various communication service URI which might break the code if any cus-
details that Web service will use, such as commu- tomization was made to the proxy class.
nication protocol, message encoding and other de-
tails. WCF offers predefined bindings that can be ASP.NET versus WCF Web services
used, although custom ones can be made as well. ASP.NET Web services use XML serialization
Just like any other project in Visual Studio, while WCF Web services use data contract seri-
WCF Web services can be tested inside of Visual alization. The role of serialization is to convert
Studio development server. When WCF Web ser- data from object representation to XML represen-
vice is hosted inside of ASP.NET application, de- tation and vice versa. There are several differenc-
ployment is easy. .svc file is compiled and copied es between these two types of serializations even
to the Web server virtual directory as well as con- though their semantic is identical. Some of their
figuration files and compiled file that implements differences are described in further text.
a Web service. This compiled file is placed inside When using XML serialization, not all .NET
of /bin subfolder. data types can be serialized into an XML form.
Types that can be serialized must be public fields.
Consuming WCF Web Services XML serialization offers a possibility to control
Microsoft technologies are also able to create how instances of the class are represented in XML.
clients, i.e. to use deployed WCF Web services. As opposed, data contract serialization offers
These clients communicate with Web services us- very low control how the data types are going to
ing proxy classes. There are two ways to create be presented in XML. Another difference is that,
these classes. One of them is based on using previ- not just public, but all fields can be serialized into
ously mentioned Svcutil.exe tool. This tool gener- XML. There is also a support for a versioning
ates proxy classes in specified .NET language as of data contracts. It is achieved using isRequired
well as configuration file that contains binding cli- property which can be applied to new input pa-
ent information that must be added to Web.config rameters of Web methods. Object data types that
file if a client is, for example, ASP.NET applica- were not able to be serialized into XML using
tion or other WCF Web service itself. Addition- XML serialization are able to be serialized using
ally, an appropriate namespace must be added to data contract serialization. Data contract serial-
the proxy class in order to be visible in the WCF ization offers a little bit better performance over
Web service class. XML one.

Besides serialization methods, steps of Web Framework 3.0 and its newer versions. With WWF,
service development in ASP.NET versus WCF are workflow based application are easily developed
different, as shown in previous paragraphs where and they are very flexible to changes. Another ad-
they are described in detail. vantage of WWF is that asynchronous communi-
Development of client applications that use cation, which is usually used to communicate with
deployed Web services starts with proxy classes Web services, is developed easily. WWF provides
that are generated using specific tools. ASP.NET not only framework for development of workflow
and WCF technologies use different tools for gen- based applications, but it is used for their execution
eration of those proxy classes, which are wsdl.exe also. Development of WWF workflows is done in-
and svcutil.exe respectively, as shown in previous side of workflow designer, which can be hosted in-
paragraphs. Differences between these tools are side of different applications. By default, it is hosted
described in further text. inside of Visual Studio.
Wsdl.exe is primarily used to generate proxy Creation of workflows is done by arranging
code from wsdl files of ASP.NET services and it its activities. Workflows can be defined graphi-
cannot be run against WCF services. Generated cally with code added where needed, or they can
code uses XML serialization and both synchro- be completely written using code. There is also a
nous and asynchronous methods for communica- possibility to write them using WS-BPEL 2.0 lan-
tion are generated. guage because Microsoft provides a technology
Svcutil.exe can be used against ASP.NET as well called BPEL for Windows Workflow Foundation.
as against WCF services. When it is used against It allows export of XAML format (language for de-
WCF services, generated code uses data contract scribing WWF workflows) into WS-BPEL format
serialization, while it uses XML serialization when and vice versa. This paragraph used terminology
it is used using against ASP.NET services. “workflow application” because Microsoft used it
in its white papers when talked about WWF. But
Tools for Web services integration workflow application is a kind of an orchestration.
Previous subparagraphs described technolo-
gies offered by different versions of .NET frame- Base activities of WWF
work and Visual Studio and aimed for the devel- As already stated, workflow applications are
opment of atomic Web services. This subpara- made of activities. There are base activities, de-
graph explores tools used to create more complex veloped for general purposes. Those base activi-
entities that represent business processes and are ties are delivered with .NET framework as well
composed of Web services. Web services are in- as their graphical representations which are devel-
teroperable and that is a main reason why they can oped with workflow designer. Custom activities,
be composed. Interoperability enables them to be that perform specific tasks, can be developed if
exploited as loosely-coupled resources that act as there is a need for them.
a part of a global workflow process they are in- The first group of base activities is the one
volved in. In this scenario, Web services behave consisted of activities that control direction of
as atomic chunks of code which are called and workflow execution. Those are loop and condition
executed when needed. Different combinations of activities which have already been met in general
existing Web services can lead to different work- purpose programming languages, and such ac-
flow processes. tivities would be while, sequence, parallel, if-else.
Code base activities execute a piece of a code. The
Windows Workflow Foundation code is added explicitly to these activities. There is
This subparagraph is focused on the introduc- also a support for communication with ASP.NET
tion of Microsoft’s technology for creating work- as well as with WCF Web services so they can be
flow processes composed of Web services - Win- called inside of workflow when needed using base
dows Workflow Foundation (WWF in further text). activities developed just for this purpose. Anoth-
WWF is a framework for building workflow based er group of base activities are used for catching
applications on Windows. It is a component of requests from Web services. A group of base ac-

tivities control the execution of a workflow, while gine class is created, it is initialized using proper
they are listening events to happen. Terminate ac- syntax. Different hosts provide different possibili-
tivity terminates the execution of a workflow. A ties upon which it is decided which one to choose.
special base activity executes compensation logic, Decision which host should be chosen is not in the
which is executed when error occurs. scope of this paper.
Hosting WWF workflows Microsoft BizTalk server

Development of WWF workflows starts with Microsoft BizTalk server is Microsoft’s power-
including all necessary namespaces and defin- ful product that enables integration of various ap-
ing workflow class as well as those classes repre- plications included into business process, imple-
senting workflow’s activities. This can be done by mented as WS-BPEL orchestration. Thus BizTalk
adding activities inside of designer using drag and server enables integration of applications of one
drop methods. Corresponding code is created auto- organization (EAI) as well as integration of ap-
matically then. Any additional code can be added if plications of different organizations (B2B). Work-
needed. Drag and drop actions are not an only possi- flow process is defined using WS-BPEL language
bility. Workflow can be written directly from scratch in BizTalk orchestration designer. According to
using code if syntax for its writing is familiar. [9], there are three essential roles that are needed
As already mentioned, a workflow is just a for the development of BizTalk workflows. Those
class. WF runtime engine is a library that man- are business analysts, developers and administra-
ages an instance of a workflow and, in order to tors. Business analysts can be used to develop for-
run, it has to be hosted inside of some hosting ap- mal or graphical representations of business pro-
plication, such as ASP.NET application, Windows cesses. Developers create their WS-BPEL imple-
Forms Application or any other environment that mentations. Administrators deploy and maintain
is supported. When an instance of WF runtime en- BizTalk orchestrations.
Table 1. Comparison between WWF and Biztalk server [8]

Feature WWF BizTalk server
WWF is a framework for building workflows, but those
workflows must be hosted inside of custom application BizTalk workflows deployed and
Hosting
in order to run, such as ASP.NET application (i.e. it is executed on server side
client-sided)
Designer tool included inside of Visual Studio or other Designer tool included inside of
Development tools
development environment Visual Studio
Long running and atomic (ACID)
Transactions Develeoper must implement
transactions supported
Tracking infrastructure provided
Tracking Simple support
highly
Not possible, since workflows are
Runtime modification Develeoper must implement
defined at design time
WWF is used to develop workflow applications
Integration with other on Windows platform but those workflows can There are developed adapters for a
platforms communicate with Web services (which can be variety of platforms
developed using any tecnology ) using certain activities
There is a highly developed set of
Administration Developer must implement
tools for an administration
Rules engine Supported Supported
Additional custom Developer can define its own set of activities which are
Not supported
workflow activities not offered by the system

All messages are received or sent from Biz- 5. Conclusion and future work
Talk orchestrations using ports. Ports consist of
This paper presented a brief overview of a
an adapter, a pipeline and a data mapping which
methodology that can be used to develop business
transform messages from its native form into de-
information systems that are based on Web servic-
sired XML form and vice versa. When orchestra-
es. Segmentation of code into autonomous soft-
tions receive messages, they are processed and
ware entities (Web services) enables better code
if there are produced outgoing messages, those
reuse. Web services can be combined in different
messages are placed in the message box and after-
ways and thus they can produce different work-
wards picked up and sent by send ports.
flows, i.e. different business processes.
Adapters as a part of ports transform mes-
Existing methodologies that were used for the
sages from its native form into XML. There are
development of more traditional software systems
predefined adapters, shipped with BizTalk server,
must be enriched with activities that are specific
that serve for transformation of a variety of mes-
explicitly for the development of Web services.
sage forms. One of them is for example a WCF
Requirement phase thus includes analyses con-
adapter which transforms SOAP messages into
cerned with definition of all functional and non-
XML and vice versa. All adapters are developed
functional requirements of Web services. Based
using SDK just for this purpose Custom adapters
on functional requirements, analyses phase de-
can be also developed so there is no need to use
fines granularities of potential Web services and
only predefined ones. Developed adapters can be
messages they exchange. Formal descriptions of
used in any .NET application not just in BizTalk
orchestrations are also developed in this phase.
orchestrations.
Design phase answers all architecture questions.
WWF versus BizTalk server It also designs WSDL interfaces of previously de-
It is important to point out that WWF and Biz- fined Web services. Code phase constructs code
Talk server are not concurrent but complementary of Web services as well as WS-BPEL form of or-
technologies. They provide some identical possi- chestrations.
bilities, but some of them are different. Following This summary explained a brief overview of
analyses summarizes similarities and differences each development phase with activities that are
between WWF and BizTalk server. According to associated to Web services and that were not pres-
[8], WWF is a framework for defining workflows ent in the development of non Web service based
within applications while BizTalk server defines systems. Future work associated to development
workflows that span application boundaries, i.e. will be focused on more detailed analyses of each
it defines workflows across applications. WWF phase and its comparison with existing develop-
is used to build workflow based applications, i.e. ment methodologies.
applications that implement one business pro- This paper also introduced Microsoft tools
cesses, while BizTalk is used for integration of that are used for the development of Web ser-
different applications into one business process. vices and their compositions. Appliance of these
These technologies can be combined since they tools will be elaborated in more detail and they
are complementary. WWF workflow can call Bi- will be compared will equivalent ones offered by
zTalk workflow if it is exposed as a Web service other vendors.
and BizTalk workflow can call WWF workflow
via Web service call. Table I summarizes differ-
ences between WWF and BizTalk server.

References
1. Haines M., Chan L. P., Web Service Implementa-
tion Methodology, OASIS Public Review Draft, July
2005., Available at: http://www.oasis-open.org/com-
mittees/download.php/13420/fwsi-im-1.0-guidlines-
doc-wd-publicReviewDraft.htm#_Toc105485358J.
Clerk Maxwell, A Treatise on Electricity and Mag-
netism, 3rd ed., vol. 2. Oxford: Clarendon, 1892;
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ASP.NET: Example Google Web Service. Retrieved
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known,” unpublished. 2003.
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Schema Planning to Improve Web Service Interop-
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tion driven by formal specification. The 2nd Interna-
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Service Development. MIPRO 2011 Conference,
Opatija, Croatia. 2011.
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Contract-First Web Services in spring Web Services -
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munication Foundation Services. In MSDN. Re-
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Jelena Matkovic,
Elektroprivreda HZ-HB d.d. Mostar,
Mostar,
E-mail: matkovic.jelena@gmail.com

Integration processes and technological

intensity
Davor Filipovic, Najla Podrug, Maja Darabos
Faculty of Economics and Business Zagreb, University of Zagreb, Zagreb, Croatia.
Abstract of the growth strategy, but also as a research field

Integration processes represent inherent part of of numerous scientists and consultants, represent
contemporary business world since companies try prominent phenomenon of developed capitalist
- through mergers and acquisitions - to retain and world since the end of 20th century. Growth of the
strengthen their market position as well as achieve company through integrations processes provides
their development goals. Despite the increas- access to new markets and resources, and success
ing popularity of mergers and acquisitions, it has or failure of M&A is of great importance not only
been reported that their failure rate is from 55 to for companies included that in that process, but
70 percent, so there is a need for analysis of vari- also for all participants of that process, and for the
ables that impact M&A success. Researchers usu- whole economy. It is hard to find books, journals
ally point out internal organizational variables as and scientific papers in the current literature that
the most common explanation of high failure rate do not address issues such as the impact of merg-
for M&A while little attention is given to exter- ers and acquisitions on the increase or decrease of
nal organizational variables. Therefore, this paper shareholder value, motives for M&A, realization
examines the impact of technological intensity, of planned synergies, operational efficiency of ac-
as an external organizational variable, on the suc- quired companies and the reasons due to which
cess of integration processes i.e. success of take- mergers and acquisitions fail and do not achieve the
overs. Hypothesis according to which the higher expected benefits as well as the overall impact of
the technological intensity of the target company’s mergers and acquisitions on the society.
industry, the higher is probability of more success- Despite the increasing popularity of merg-
ful target company’s performance after the take- ers and acquisitions, it has been reported that the
over is tested within empirical research. Empirical rate of M&A failure is from 55 to 70 percent, so
research is conducted on the sample of Croatian there is a need for analysis of variables that im-
companies that were taken over last twelve years. pact M&A success. Researchers usually point out
Key words: integration processes, mergers and corporate culture and other internal organizational
acquisitions, change process, technology, techno- variables as the most common explanation of high
logical intensity, takeover success, Republic of failure rate for M&A while little attention is given
Croatia to external organizational variables. Therefore,
this paper examines the impact of technological
intensity, as an external organizational variable,
1. Introduction
on the success of integration processes i.e. suc-
When integration processes are seen in the con- cess of takeovers. Long-term effects of mergers
text of today’s business world, they primarily re- and acquisitions in high-technology industries can
fer to the modalities of growth strategies and their result in new process and manufacturing technolo-
implementation, i.e. they refer to mergers, acquisi- gies for the companies that engage in M&A trans-
tions and strategic alliances. In the turbulent busi- actions. Using new technologies can lead to in-
ness environment of the 21st century, organizations creased profitability if the technologies transform
are forced to use different growth strategies in order into actual innovations, i.e. if new products and
to position themselves more successfully relative to processes are created and successfully marketed.
their competitors, and to retain and increase their Therefore, this paper tests the hypothesis accord-
profit margins. Mergers and acquisitions, as a part ing to which the higher the technological intensity

of the target company’s industry, the higher is the with the dominant firm in their industries [2]. The
probability of more successful target company’s second wave accompanied economic growth and
performance after the takeover. stock market boom. An estimated 12.000 firms dis-
appeared during this period, although the impact
2. Mergers and acquisition waves on the market structure of industries was much less
dramatic than the first wave mostly due to antimo-
Researches regarding M&A are present in nopoly legislation acts. This wave ended in 1929
economic literature for a long time period start- with the stock market crash of that year. In the fol-
ing form 1890s. It is a well-known fact that merg- lowing four years, due to the global economic de-
ers and acquisitions come in waves when firms pression, many corporations formed during second
in industries react to shocks in their operating wave collapsed into bankruptcy [3].
environments. Shocks could reflect such events After the Second World War which followed
as deregulation; the emergence of new technolo- after the worldwide economic depression, M&A
gies, distribution channels, or substitute products; activities decreased significantly. The third M&A
or a sustained rise in commodity prices [1]. Thus wave took off only in the 1950s and lasted for
far, six completed waves have been examined in nearly two decades. The beginning of this wave
the academic literature: those of the early 1900s, in the US coincided with a tightening of the anti-
the 1920s, the 1960s, the 1980s, the 1990s and trust regime in 1950. The main feature of this wave
the 2000s. Of these, the most recent waves were was a very high number of diversifying takeovers
particularly remarkable in terms of size and geo- that led to the development of large conglomerates.
graphical dispersion [2]. Compared to first and second wave, mergers in this
Beginning of the first wave at the end of 19th wave where not large and did not involve large ac-
century in the United States of America was char- quirers and their motive was growth trough unre-
acterized with huge technological changes, eco- lated diversification. The main feature of this wave
nomic expansion and innovation in industrial pro- was a very high number of diversifying takeovers
cesses. An important attribute of this wave was the that led to the development of large conglomerates.
simultaneous consolidation of producers within By building conglomerates, companies intended to
industries, thus qualifying the description “hori- benefit from growth opportunities in new product
zontal consolidation”. Nobel Prize winner George markets unrelated to their primary business. This
Stigler described the first wave as merging for mo- allowed them to enhance value, reduce their earn-
nopoly. In that time period more than 1800 firms ings volatility, and to overcome imperfections in
disappeared due to consolidation, and many of external capital markets. The third wave peaked
the US corporate giants such as General Electric, in 1968 and collapsed in 1973, when the oil crisis
Eastman Kodak, American Tobacco and DuPont pushed the world economy into a recession.
during the first wave trough such consolidation. Recovery of the stock markets in the USA at
The wave came to an end around 1903–1904 due the middle of the 1980s indicated the revival of
to the stock market crash. takeover activity and start of the fourth wave. The
M&A activity remained at a modest level until start of the fourth wave coincided with changes in
the late 1910s as a consequence of the First World anti-trust policy, the deregulation of the financial
War. The second takeover wave emerged in the late services sector, the creation of new financial instru-
1910s and continued through the 1920s. The second ments and markets (e.g. the junk bond market), as
wave was considered as a move towards oligopolies well as technological progress in the electronics in-
because, by the end of the wave, industries were dustry. Many transactions were financed with large
no longer dominated by one giant firm but by two amounts of debt, and takeovers were often conduct-
or more corporations. Most of the mergers of the ed by company’s management trough management
1920s were between small companies left outside buyouts [4]. Except of management buyouts, this
the monopolies created during the previous wave. wave was characterized the activity of private eq-
By merging, these companies intended to achieve uity funds which conducted takeovers trough lever-
economies of scale and build strength to compete age buyouts. As the main motive for this wave, the

academic literature suggests that the conglomerate 3. Integration process as a change process
structures created during the 1960s had become
Despite the increasing popularity of mergers and
inefficient by the 1980s such that companies were
acquisitions, it has been reported that, more than
forced to reorganize their businesses. The merger
two-thirds of large merger deals fail to create value
wave of the 1980s includes a number of mergers
for shareholders. Ravenshaft and Scherer found
designed either to downsize or to specialize opera-
that profitability of target companies, on average
tions. Some of these corrected excessive conglom-
declines after an acquisition [7]. Mergers and acqui-
eration, others responded to excess capacity created
sitions process should be seen as a series of largely
by the 1970s recession (following the creation of
independent events, culminating in the transfer of
the OPEC oil cartel), while yet others responded to
ownership from the seller to the buyer rather than
the important advances in information and commu-
just an independent event. In theory, thinking of a
nication technologies. The 1980s also experienced
process as discrete events facilitates the commu-
the largest number of hostile bids in U.S. history
nication and understanding of numerous activities
[5]. Like all earlier waves, the fourth one declined
required to complete the transaction. Thinking of
after the stock market crash of 1987 [2].
M&As in the context of transaction-tested process,
The fifth takeover wave started in 1993 along
while not ensuring success, increases the probabil-
with the increasing economic globalization, tech-
ity of meeting or exceeding expectations [1].
nological innovation, deregulation and privatiza-
Mergers and acquisitions are major change in
tion, as well as the economic and financial mar-
lives of corporations and those employed by them.
kets boom. This wave is important because of its
The changes occasioned by acquisitions are often
size and geographical dispersion emphasizing its
wide ranging. They may change strategies, opera-
international nature. Remarkably, the European
tions, cultures, the relationship between staff and
takeover market was about as large as its US coun-
managers, team relationships, power structures,
terpart in the 1990s, and an Asian takeover market
incentive structures and job prospects. M&A may
also emerged. Second, a substantial proportion of
require individuals to change their life styles, be-
M&As was cross-border transactions. Previously
havior, personal beliefs and value systems. Acqui-
domestically-oriented companies resorted to take-
sitions create anxiety, fear and often are traumat-
overs abroad as a means to survive the tough in-
ic events for those who might lose their jobs [8].
ternational competition created by global markets.
However, it is not just the merger that makes em-
The dominance of industry-related (both horizontal
ployees anxious, it is the perceived decline in the
and vertical) takeovers and the steady decline in the
organization before the merger takes place, the lack
relative number of divestitures during the fifth wave
of other jobs elsewhere, or other constraints that
suggests that the main takeover motive was growth
do not allow the employee to leave that create ex-
to participate in globalized markets. Compared to
cessive stress [9]. The turbulence associated with
the takeover wave of the 1980s, the 1990s wave
acquisitions may impact on career loyalty, organi-
counted fewer hostile bids in the UK and US. How-
zational loyalty, job involvement and satisfaction
ever, an unprecedented number of hostile takeovers
with job security. Employees have been known to
were launched in Continental Europe [2]. The fifth
experience the merger as a loss of a loved one, or
wave ended after the burst of the dot-com bubble
may vicariously live the situation as a personal cri-
and the consequent stock market collapse in 2000.
sis and panic. When an organization merges with
It is important to point out that terrorist attacks on
another, employees feel as though they have lost
September 11th 2001 had a significant impact on the
control over important aspects of their lives. That
decrease of the M&A activity in the world. After
creates heightened stress within the individual,
the fifth wave and subsequent terrorist attacks on
which usually leads to lower productivity and re-
USA M&A activities picked up in 2003. The sixth
duced job satisfaction. In case of underperforming
wave lasted until 2008 due to subprime mortgage
target companies, there may be dissatisfaction with
crisis in the United States of America [6]. The glob-
present and therefore greater readiness to accept the
al financial and economic crises had and still have a
imperative of change. Change is always opportuni-
major influence on integration processes.

ty for someone and threat for other. Managers may son why financial benefits anticipated from mergers
see change as an opportunity to profit out of their are often unrealized. Weber emphasizes that magni-
stock options while lower level managers may see tude of cultural differences can effectively impede
change as a threat [3]. successful integration during M&A resulting in
Given the scale of change that an acquisition poor performance [13]. It is widely acknowledged
can cause in both firms that are part of the trans- that cultural compatibility alone is not guarantee to
action, change management concepts may be M&A success, but is not wrong to say that cultural
applied to improve post-acquisition integration. heterogeneity creates tensions and affects financial
These concepts include assessing speed of change, and managerial performance [14].
establishing clear leadership, clarity of communi- Human resources tend to react negatively af-
cation, maintaining costumer focus, making tough ter being acquired. However, the strength dura-
decisions and dealing with resistance, and are tion and dysfunctional effects of such reaction
crucial for M&A success from organizational per- vary between different M&As [15]. This negative
spective [10]. The pace of implementing the post- employee reaction is often referred as a “cultur-
acquisition changes is a conflicting issue in the al clash” [16]. Cultural clash has been shown to
literature, with some researchers arguing that im- have dysfunctional consequences such as lower
mediately after the deal is closed there is a period commitment and cooperation between acquired
when employees at the acquired company expect employees, greater turnover among acquired
and even welcome change, while other research- employees, a decline in shareholder value of the
ers argue that firms should go slow and prepare buying firm, and deterioration of operating per-
employees for change and reorganization. Propo- formance of the acquired firm [17]. According to
nents of quick change, argue that since employees Carwright and Cooper, certain culture types can
anticipate reorganization in the acquired company, be disastrous and can lead to cultural ambiguity,
quick-change implementation helps reduce uncer- confusion and hopelessness [18]. Therefore, the
tainty. Some researchers argue that slow-change management of the human factor in M&A has
implementation is not a result of strategic plan- been recognized as an important source of success
ning, but a sign of ineffective management [11]. by number of researchers. Lodorfos and Boateng
However, there is an argument that employees in a conducted a research in chemical industry in pe-
state of shock after an acquisition can only accom- riod 1999-2004, and had 32 interviews with senior
modate a limited amount of change initially, and managers of 16 M&A deals. Their study identi-
therefore, are in favor of step by step approach. fies culture differences between merging firms as
The “2 + 2 = 5’’ effect between two business the key element affecting M&A success. Almost
units that will increase competitive advantage by all interviewers agreed that M&As often failed to
achieving synergies and improving overall perfor- achieve expected outcomes of the merger because
mance is usually primary purpose of merging and of lack of cultural fit or incompatible cultures [19].
acquiring new firms. Since synergies are rarely re- Mergers and acquisitions may often result in
alized M&A literature indicates that there has been the breach of implicit employee contracts such
intense interest in examining human and cultural as expectations of future benefits or benign work
aspects of M&As as traditional explanations have conditions. They consist of ‘personal compacts’,
not adequately explained the high rate of M&A fail- the mutual obligations and commitments that ex-
ures. The literature drawn on cultural differences is ist between employees and the company. Such
derived from the organizational behavior school of compacts include formal, psychological and social
thought. The effects of culture can take place in the components. Breaches of these contracts or fear of
early stages of the acquisition process but are es- such breaches may intensify hostility to change. In
pecially crucial in the post-acquisition management order to make change acceptable the acquirer must
period [12]. Systematic research indicates that the offer, to those affected, payoffs that are demonstra-
greatest danger for value creation that should come bly superior to their existing payoffs. Change must
out M&A comes after two companies try to inte- be seen to be in the interests of the affected. Such
grate operations. Incompatible culture is major rea- perception is a much a matter of substance as of

the transparency of the process delivering change. average after the takeover. Acquisitions within the
In case of underperforming target companies, there high-tech industry are motivated by the increase of
may be dissatisfaction with present and therefore the product supply rather than by product develop-
greater readiness to accept the imperative of change ment, which can be explained by the requirement
[3]. for decreasing time needed to penetrate new mar-
Considering the research evidence about the im- kets. Explicit knowledge of the target company is
portance of corporate culture and human factors in relevant for the transfer of knowledge needed to
M&A success it is crucial to assess culture compat- educate acquirers’ employees and, to efficiently use
ibility before the deal. While strategic change and the acquired products [22]. Acquisitions in high-
the consequent change in the architecture of the technology industries are often motivated by the
merging firms my result in culture change, culture expansion of the existing investment activities in
change my often be precondition for both organiza- the field of R&D in order to develop new patents
tion structure change and strategic change [6]. [23]. Ranft and Lord state that for 35% of acquirers
Behavior of acquirer is extremely important the primary motive for a merger or an acquisition
for successful acquisition. Honesty, sensitivity, lies in the specific technology of the target compa-
competence and willingness to share with target ny, while 32% of acquiring companies emphasize
employees the benefits of the acquisition are im- innovation and engineering capabilities of the tar-
portant variables for success. No matter what kind get as the main motive for the transaction [24]. Vast
of change should take place in target company its majority of research on mergers and acquisitions in
influence on employees has to be taken into con- high-technology industries is focused on increasing
sideration. Honest dealing and care for employees activities in research and development of new tech-
are indispensable to ensure a willing cooperation nologies. Some of them point out that technology
and commitment to change. related motives for mergers and acquisitions are
moderately important for all industries while the
4. Role of technological intensity in results of other studies emphasize the importance
integration processes of technology related motives for mergers and ac-
quisitions, especially in the high-tech industry [25].
Companies that have high technologies in many In the context of the companies operating in
ways differ from other competitors. Such enterpris- high-technology industries and in industries that
es are characterized by a specific mode of organi- are characterized by high investments in research
zation and management, and they usually represent and development, better business results after the
leading companies in the economy of the country in takeover imply the fact that the company’s inte-
which they operate. Companies that develop high gration process after the transaction has to support
technologies invest significantly more in research the continuous development of new technological
and development than companies operating in low- capabilities. It is expected that successful merg-
tech industries [20]. Technology mergers and acqui- ers and acquisitions will enable further develop-
sitions include transactions in which the acquiring ment of new skills, and that their use will result
company and the target company operate in indus- in better company’s performance [26]. The results
tries such as Internet equipment, software, medical of previous studies that were focused on the im-
devices, pharmaceuticals, conductors and semicon- pact of mergers and acquisitions on investments in
ductors, biotechnology, etc. [21]. research and development diverge. Part of the re-
Mergers and acquisitions between high-tech- search indicates that mergers and acquisitions have
nology companies are usually aimed to increase a negative impact on investment within the com-
the supply of products, open new markets and cre- panies engaged in a merger or a takeover, whereas
ate new capabilities. Some studies indicate that the a part of the research highlights how mergers and
acquiring company, whose goal is to take over the acquisitions, between companies that have similar
target company only to increase their customer technologies and are complementary in terms of
base and not because of the adoption of new tech- technological knowledge and skills have a posi-
nologies, usually operates worse than the industry tive impact on investments in research and de-

velopment. Decrease of investments in research integration of various research and development

and development after the takeover may result in activities leads to development of new technolo-
erosion of technological capabilities in the target gies and increases technological efficiency, Gre-
company which could have a negative impact on pott accentuates that the greater the degree of
the company’s innovation process and thus reduce technological relatedness, the more successful the
its patents and marketed products [27]. merger or acquisition will be [31]. Technological
Kallunki et al. did a survey of 1.897 mergers and relatedness is important for creating new knowl-
acquisitions in the period from 1993 to 2006 and edge through the process of research and develop-
showed that capital markets, in the period after the ment, because the process should lead to improved
merger or a takeover, react positively to increased operations and enable the acquiring and the target
investment in research and development of high company a more favorable position after the trans-
technology companies, while the capital market action, relative to their competitors. Many studies
reacts negatively to the transactions in which only suggest that the ability of the acquirer to assimilate
one of the participants comes from a high-tech in- the knowledge gained through technology merg-
dustry. The results of the aforementioned research ers and acquisitions is essential to the successful
also suggest that there is a higher chance that in- integration of R&D activities. Higgins and Ro-
creased R&D investment will reflect future profit- driguez point out that the technology mergers and
ability of the company in the situation where both acquisitions create value because the acquiring
the acquirer and the target company are high-tech, company and the target one create specific tech-
in contrast to the situation in which the acquiring nological synergies realized through the improve-
company and the targeted one are not a part of ment and complementing the acquirer’s R&D
the high-tech industry [28]. In literature that deals activities [23]. Companies that do not operate in
with technology M&As from accounting point of high-technology industries can acquire a high-
view, research can be found which indicates posi- tech company, but there is a great possibility that
tive correlation between investment in R&D and the acquirer would not have the ability to create
the future profitability of companies [29]. added value through the development of the R&D
In the case of horizontal mergers and acquisi- activities because the latter are not compatible
tions in high-tech industries, it can be expected with the target’s activities in R&D [28]. Ahuja and
that the joint or complementary programs of re- Katila research highlights a positive association
search and development will generate new tech- between technological mergers and acquisitions
nologies that are able to realize the effects of and business performance after the transaction.
economies of scale and scope along with other The research results indicate that for the success
positive effects on the business of the company of a merger or takeover it is important that firms
after the transaction. Vertical mergers and acquisi- have complementary assets. In technological con-
tions have a somewhat smaller effect on both the text it can be said that successful M&A transac-
acquirer and the target. Cost reduction, which is a tion requires favorable combination of technology
result of vertical integration (backward as well as of both acquirer and target company. Research by
forward) can generate returns that can be invested Ahuja and Katila highlights a positive correlation
in the development of new technologies. Forward between technological mergers and acquisitions
integration can help identify the market needs for and business performance after the transaction.
new technologies, while backward integration can The research results indicate that complementary
lead to new manufacturing technologies [30]. company assets are important for the overall suc-
The term technological relatedness refers to the cess of a merger or acquisition. From a technology
degree to which companies are active in specific point of view, it can be said that successful merg-
technology areas that are shared with potential ers and acquisitions require a favorable combina-
partners in a merger or acquisition. Grepott ex- tion of technology in both companies [32].
plored technological relatedness in the context of Lehto and Lethoranta have analysed the extent
successful integration of various R&D activities to which the technological intensity of the industry
after the transaction. Assuming that the successful affects the likelihood of mergers and acquisitions in

Finland. Their results suggest that it is more likely high technological intensity, in contrast to indus-
for companies that operate in high-tech industries tries of medium and low technological intensity.
to decide for a merger or acquisition in contrast to Specifically, mergers and acquisitions in the indus-
the companies operating in industries of middle or tries of high technological intensity often result in
lower technological intensity due to insecurity and the development of new technologies that enable
the large number of fast and frequent changes that companies to create competitive advantage, and
characterize the industry [33]. Blonigen and Tay- therefore operate with greater success than the
lor conducted a study on the relationship between companies that operate in industries of medium
the level of investment in research and develop- and low technological intensity.
ment and mergers and acquisitions in the industry
of electronic equipment. Their results highlight a 5. Methodology and research results
strong negative correlation. In other words, in the
electronic equipment industry companies with a Measuring instrument (questionnaire) for testing
relatively low investment in R&D are more likely the hypotheses of this research consisted of a set of
to engage in M&A activities [34]. questions that the respondents (board members and
During a research of 112 biotechnology com- company managers) answered and expressed their
panies in the USA Zahra found that acquiring tar- agreement/disagreement with proposed statements
get company’s technology is positively correlated whereat a Likert measurement scale of five degrees
with the performance of the acquirer, particularly was used. Propositions used in different measure-
relating to the increase of sales and market share ment scales are either originally developed for re-
[35]. Tsai and Wang conducted a research on a search purposes, or processed and adapted from
sample of 341 high-tech mergers and acquisitions existing measurement scales that can be found in
in the period from 1998 to 2002, and the results in- the relevant scientific literature.
dicate that introduction of new technologies per se Empirical research was conducted in Croatian
does not affect the operations of the acquirer after companies, which have been taken over or ac-
the transaction [36]. According to these authors, quired. In Bloomberg and Mergermarket databases
the positive effect of new technologies can be ex- 233 transactions in the period 1998. - 2010. were
pected if the acquirer internally invests substantial recorded. With the detailed investigation of the in-
amounts in research and development. Research formation library of the Croatian Agency for Super-
by Yan and Zhang included 500 mergers and ac- vision of Financial Services another 401 transaction
quisitions of high-tech companies, and focused during this period was recorded, which combined
on the business performance of companies after with the transactions from Bloomberg and Merger-
the acquisition. Research results show a statisti- market databases comes to a total of 634 transac-
cally significant association between the resource tions. Since this paper analyses transactions in non-
utilization and business performance of high-tech financial sector, the sample on which the empirical
companies measured through an increase in mar- research was conducted comprised of 598 compa-
ket share, profitability, and growth rates [37]. nies. In order to analyze the impact of the company
Considering previous research on mergers and size on takeover success, it was important that at
acquisitions of high-tech companies, this paper least three years have passed since the takeover. For
tests the impact of the technological intensity on this reason, the acquired companies were analyzed
the business performance of the target company in the period from 1998. – 2006.
after the acquisition. Given the fact that it was In the period of sixty days after the beginning of
found that mergers and acquisitions affect the lev- the primary research 43 completed questionnaires
el of investment in research and development after were returned representing a return rate of 7.19%.
the takeover, and that there is a positive relation- Considering the sensitivity of the analyzed phenom-
ship between the level of investment in research ena and complexity of analysis, the rate of return of
and development and corporate performance, it questionnaires was acceptable. The complexity of
can be assumed that mergers and acquisitions are the analysis is reflected in the fact that the study in-
more successful in industries characterized with cluded only companies in which at last three years

Table 1. Target company’s technological characteristics and performance after the takeover
Source: Author’s research
Table 2. Chi-Square test of target company’s technological intensity and its performance after the takeover
passed after the takeover. Additional criteria were companies were performing more successfully af-
related to the fact that the respondent (the president ter the takeover, while 50% of the companies op-
or board member or senior manager) should be in- erated worse than before. Of the 17 acquired com-
cluded in the acquisition process and familiar with panies operating in low-tech industry, all com-
the acquisition activities, and also working in the panies were more successful after the takeover.
company that was acquired at least 5 years in order Chi-square test was used to test the connection
to identify and assess the changes that have occurred between the technological intensity of industries
after acquisition. Out of the total number of received and business performance after the acquisition.
questionnaires, 30 companies that performed better Table 3. Chi-square test symmetric measures
after the takeover were identified (69.8%) and 13
that performed worse after the transaction (30.2%).
In the analysis of empirical data collected in
this study large number of statistical techniques
was used. Overall data analysis was conducted us- Source: Author’s research
ing statistical software package SPSS 17.0.
Empirical research begins by testing the hy- By this hypothesis it was assumed that the prob-
pothesis: The higher the technological intensity ability of a company’s successful performance af-
of the target company’s industry, the higher is the ter the takeover is higher, if the target company
probability of more successful target company’s operates in the high-tech industry.
performance after the takeover. Chi-square test showed that there is a statisti-
In order to test the proposed hypothesis re- cally significant correlation between the techno-
search participants were asked about the technological intensity and the overall business success
logical intensity in their industries and their per- (p <0.001), but in the opposite sense. Specifically,
formance after the takeover. Results of descriptive after the takeover all the companies that were a part
statistics are presented in Table 1. of the low-tech industry operated better, whereas
From the total number of analyzed companies, in the group of the high-tech industries 50% of the
26 operate in high-tech industries, whereas 17 accompanies operated better after the transaction.
quired companies operate in a low-tech industry. Furthermore, variance analysis tested differ-
Table 1 shows that 50% of analyzed high-tech ences in the correlation between the technological

intensity of high-tech companies and the probabil- 6. Conclusion

ity of successful performance after the takeover.
Mergers and acquisitions represent an inherent
Also, regardless of the technological intensity of
part of growth strategy that enables companies to
the industry in which their company operates, re-
strengthen their market position much faster than
search participants were asked about the correla-
is possible when they decide to grow internally.
tion between technological intensity and perfor-
Growth of the company through M&A provides
mance of the target company after the acquisition.
access to new markets and resources, and suc-
The mean score of the participants from the
cess or failure of M&A is of great importance not
high-tech companies which operated worse after
only for companies included that in that process,
the takeover was 3.69, while the mean score of
but also for all participants of that process, and for
participants from companies that operated better
the whole economy. Respecting the fact that vast
was 3.85. Variance analysis was used to determine
number of M&As do not achieve planed syner-
whether there is a statistically significant difference
gies and results and that M&A success is affected
in the mean scores of the participants whose com-
by different organizational variables this paper
panies operated worse or better after the takeover.
analyzed the impact of technological intensity on
Variance analysis showed that there was no
takeover success. Therefore, empirical research
statistically significant difference between mean
was conducted among Croatian companies that
scores of the participants from companies that
were acquired or taken over and a hypothesis ac-
were more successful and those that were oper-
cording to which the higher the technological in-
ating worse after the takeover (p = 0.515) in the
tensity of the target company’s industry, the higher
high-tech industry.
is probability of more successful target company’s
Thus, it can be concluded that participants whose
performance was tested.
companies operate in high-tech industries believe
Results of Chi-square test and the correspond-
that high technological intensity strongly affects the
ing symmetric measures showed that there is a
business performance after the takeover.
statistically significant correlation between tech-
Given the fact that the Chi-square test revealed
nological intensity and the overall business suc-
a statistically significant correlation (p <0.001)
cess (p <0.001), but in opposite direction since all
between the technological intensity (low techno-
the companies that were a part of the low-tech in-
logical intensity) and business performance after
dustry operated better, whereas in the group of the
the takeover, and taking into account the fact that
high-tech industries 50% of the companies oper-
participants who participated in the research be-
ated better after the transaction. Additionally, the
lieve that there is a moderate or strong relation-
results of variance analysis showed that there was
ship between technological intensity and business
no statistically significant difference in the assess-
performance, hypothesis which assumes that the
ment of the participants from high-tech companies
higher the technological intensity of the target
that performed better and those that performed
company’s industry, the higher is the probability
worse after the takeover (p = 0.515). Thus, it can
of more successful target company’s performance
be concluded that participants whose companies
after the takeover is rejected.
operate in high-tech industries believe that high
Table 4. Variance analysis of the correlation between target company’s technological intensity and its
performance after the takeover

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Cyber crime in the states of Western Balcan

Zaklina Spalevic1, Bozidar Banovic,2 Miroslav Vrhovsek1
1
Faculty of Law for Economy end Justice, University Business Academy, Novi Sad, Serbia,
2
Faculty of Law, University of Kragujevac, Kragujevac, Serbia.
Goal of this paper is to point out the gravity of Great technological improvement in the field
social dangerousness of the cyber crime, which of information and communication technologies
represents the union of computer, digital, e-crim- led to the occurance of the new types of criminal
inal, web criminal, criminal that involves the at- acts that could not be followed and considered as
tacks on computer networks, data theft, system computer related criminal, which points out that
attacts, copyright ainfrigement, etc. It is a kind of the cyber crime is the notion that follows the tech-
criminal where the usage of computer technologu nological decelopment and it is derived from so-
and information and communication systems and cial, ethical, legal, political and other frameworks
networks is presented as a manner of commiting that exist in a social community.
a legal offence, or where the computer is used as Cyber crime represents a totality of computer
the means or as a target performance, which causes criminal, internet criminal,e-criminal, network
some sort of relevant consequences in the criminal criminal, as a form of behavios which is against
context. Unlike the classical criminal types, cyber the law, or it will be criminalized in the near future.
crime is characterized by highly expanded area od Acts of cyber crime are always differentiated from
criminal activities that does not demand the pres- so called classical criminal acts, out of several rea-
ence of commiters at the places of criminal activi- sons. Firstly, in each case they innevitably possess
ties. In most cases, the offender is located in one the element of internationality. Then, the act of
country, the place of activity is in another country, cyber crime often incorporates other criminal acts
whereas the consequences of the criminal activ- which can be done in conventional manner, for
ity are notable in third country. Suitable area for instance fraud, forgery and similar. Finally, these
performing the criminal activities of cyber crime acts assume the use of new, electronic technolo-
are the countries where there is no, or there are a gies for their implementation, therefore, the acts
partial legal regulations regarding the fight against of cyber crime are extremely hard to define, inves-
the cyber crime. Out of this reason, the main focus tigate and prosecute [1,2,3]. It is a criminal which
of this paper will be the countries of the Western is developed within the electronic surroundings,
Balcans. Following the conceptual definition of i.e. it regards any form of criminal that can be per-
this negative notion, an overview of cyber crime in formed with computer systems and networks, in
Republic of Serbia, Bosnia and Herzegovina, Re- computer systems and networks or against com-
public of Slovenia and Republic of Croatia is given. puter systems and networks. If the computer sys-
After a comparative analysis of cyber crime in the tem means any device or group of interconnected
countries of the Western Balcans, this paper points devices, thich are used for automatic data process-
out the necessity of their organized, systematisized ing or any other function, then it is certain that
and conctinuous cooperation, and unification and without them and the computer networks, there is
charmonization of the legal regulations in order to no cyber crime too [3,4,5]. It is complex, and it
fight more effectively against this type of criminal is even considered as umbrela term that covers a
which, as the years pass, with the development of variety of criminal activities, including computer
the new information and communication technolo- data and system attacs, attacs related to compu-
gies takes new forms and appearances. ters, contents or intellectual property.The compu-
Key words: cyber crime, cyber space, legal regu- ter networks or information and communication
lation, the fight against the cyber crime, cooperation. technologies appear in multiple roles, as: goal of

attack, tool, surrounding and evidence on proved individual to whom it is hard to oppose, and it is
procedures [5,6,7,8]. more harder to stop it. He more frequently does not
Perpetrators of the criminal act of cyber crime want to be alone, but needs company, as well as the
are usually members of international network of audience. The ease of movement through the cyber
this criminal type. Considering that cyber crime space provides the sense of power and elusiveness.
originates from the western European countries, These sentiments are not without reason, because it
people from the Western Balkan states that are is extremely difficult to detect it at the moment of
involved, must be connected with the criminals performance, which is mainly the right moment for
from Western Europe. The reason for this is stated his identification and capturing. On the other hand,
in the fact that the criminal acts of cybercrime can- internet, which is so vulnerable and unsafe due to a
not be performed without enrollment of the entire large number of its users, its openness and its being
system [9]. This is the reason why it is difficult unregulated, is the ideal hideout of various types of
from cyber crime. criminals. In such environment and with such indi-
A protection from the aforementioned is harder viduals, not only attempts of various national rights,
by the fact that the criminal acts of syber crime are international organizations and associations are be-
performed in the area of interdependent network ing increasingly performed, but also the private sec-
of information and technologicas infrastructures tor and the users are also being involved, in order to
(which includes the internet, telecommunication mitigate the negative consequences and reduce the
networks, computer systems and implanted pro- losses which occur in cases of undisturbed criminal
cessors and regulators in a variety of activities), or activities. Owners and users are becoming especial-
the co called cyber space. The cyber space means ly significant group in creating the conditions for
either the types of communities made up from com- the protection of the private computer networks and
puter networks, in which the elements of traditional their connection with the public, or global networks.
society are in the form of bits and bytes, or as the The development of secure internet infrastructure
space which is created by the computer networks. cannot be imagined without joing activities of each
The term cyber space was first used by William of the mentioned acters, particularly because the
Gibson in science fiction novel Neuromancer in cyber crime is becoming a global issue [5].
1984. Cyber space is an artificial creation which The most comprehensive attempt to legally re-
demands high level of technical equipment, food gulate the fight against cyber crime at the interna-
informational infrastructure and it is nobody’s and tional level, which has an effect on the states of the
everybody’s property, where real and virtual coeg- Western Balkans, is represented by the Convention
sist on the paralel basis, and where the communica- on Cyber crime of European Council, which was
tion is collective. In such surroundings it is extre- signed by 47 countries, out of which there are some
menly difficult to talk about national scales of crime that are not the member states (4 countries, among
and social danger, at least not in the conventional which USA), it has been ratified by only 26 states.
sense. For this reason, cyber crime is classifiedin The fact that the Convention was signed by indi-
the most prominent form of transnational criminal, vidual countries that are not members of the Euro-
against which not even the fight can be conven- pean Council indicates the importance of this legal
tional, especially because the societal, social and act and the level of the expectations of making a
economic context of this criminal is not the same major breakthrough against this criminal type [8].
as the conventional transnational criminal, because
for the cyber space there are different rules, which 2. Cyber crime in Serbia
is shown in the Global studies on organized crime,
Center for Prevention of the International crime and The reaction of the Republic of Serbia on cy-
United Nations Institute for Inter-regional Crime ber crime is the introduction od new measures in
Investigation [1,4,10]. the criminal law, not only for detecting, but also
Perpetrator of the criminal act of cyber crime is proving the same, because the legal regulations
special, sophisticated, with high technical backgro- are not in compliance with contemporary forms
und, uncrupulous, obsessed, sometimes revengefull of commiting the criminal acts in the field of cy-

ber crime. Current legislative solutions should be In terms of classifications given in this defi-
aligned with the legal regulations that follow the nition, it can be noted that this type of criminal-
changes in the technical structure and in the devel- ity also involves the classical criminal activities,
opment of the informational society. and recently introduced criminal acts of computer
Until the introduction of criminal acts against criminal in the legislation of the Republic of Ser-
computer criminal in the Book od Law, the crimi- bia. Moreover, both of these groups of activities
nal legislation of the Repubic of Serbia most of are not mutually exclusive, so that the combination
the time was not able to respond to the increasing of these is also possible, similarly to the criminal
number of revealed computer abuse in Serbia. activities of identity theft, where there are fraud
To be more specific, these are criminal activi- and computer fraud.
ties against the security of computer data, com- The first category in the definition includes the
prising Chapter 27 of the Criminal Code of the newly proclaimed activities in criminal legislation
Republic of Serbia. These are [11]: of the Republic of Serbia, as computer sabotage,
– Damaging the computer data and programs; computer fraud, computer data and programs dam-
– Computer sabotage; aging, making and installing the computer viruses,
– Creation and import of computer viruses; etc. This category includes the classic criminal ac-
– Computer fraud; tivities a more severe form of which is created us-
– Unauthorized access to the protected ing the computers or sophisticated technological
computer, computer network and electronic equipment.
data processing; The second category includes the offenses such
– Prevention and limitation of the access to as unauthorized access to the protected computer,
the public computer network; computer network and electronic data processing,
– Unauthorized usage of computer or or prevention and limitation of the access to the
computer network; public computer network, hacking or cracking, at-
– Creation, procurement and sharing the tools tacks of refusal or denial of services.
for commiting the criminal acts against the The third category includes the acts that are
security of computer data; called the acts performed with computer support.
This category includes the stenography and in-
For detection, legal prosecution and trial for cryption, where the first term stands for translat-
the mentioned criminal acts, the Law on organiza- ing data into secret encripted material (it can be
tion and jurisdiction of state authorities for fight determined as the data encryption), and the second
against cyber crime special state authorities have term represents a procedure where the information
been created. is hidden and it is associated with other, seemingly
According to the forementioned law, cyber innocent data, such as photography.
crime is performance of criminal activities where Also it may be recognized that the typologies
the computers, computer networks,computer data, of criminal are in the matter, because the described
as well as their products in material and electronic categories are not mutually exclusive and the
forms occur as the goal or as a means of enforce- combination of different categories can occur in
ment of criminal acts. one activity.
Cyber crime has its own concept that implies a
certain behavior defined by the law as illegal: 3. Cyber crime in Bosnia &Herzegovina
– Which includes the usage of digital
technological achivement and technologies The presence of this notion is has increased
for performing a criminal activity; in Bosnia and Herzegovina lately. In compliance
– Which is directed to the computers and with the development of the infrastructure of in-
technological tools; formatics in Bosnia and Herzegovina, then the
– Which is incidental in performing other increase in the number of internet consumers, the
types of criminal. growth of criminal activities in the field of cyber
crime is evident.

During the past two years more than 50 reports the Criminal Police Department on the date 1.1.2010
on performed criminal activities in the field of cy- formed the special Department for prevention of cy-
ber crime is submitted to the prosecuting authori- ber crime. The Department was formed in the aim
ties. The most frequent are the acts of forgery of of efficient discovering and legal prosecuting the
credit cards and other cash cards. The people deal- perpetrators of cyber crime activities, i.e. offences
ing with illegal money transactions via internet, against citizen rights and freedom, and gender integ-
identity theft, child pornography and other illegal rity as well as the crimes against property, industry
activities are registered almost on the daily basis. and payment transactions. For each case that con-
The police undertake all necessary measures and tains the elements of criminal act this department
actions in order to prevent, i.e. identity the offend- submits a report to the prosecutors. The mentioned
ers, through regular checks of the forms of this department has successful methods of locating and
criminal in Bosnia and Herzegovina, as well as discovering the creators of offensive contents, and
through discovering the new levels of accessing to the visitors as well. In case somebody accidentally
discovering the offenders, with permanent train- accesses the server with the child pornography, he
ings in the field of informational technologies. will not be prosecuted, but if he logs in on that server
Serious threats to destroy the computer sys- for 600 times and records the content of it, there are
tems of the government institutions of Bosnia and all prerequisites that he will be legally prosecuted.
Herzegovina, a few months ago, were sent by a It is undisputable that the police may identify each
hacking group named Anonymous, which has a individual malusing the internet, cyber crime who
branch in Bosnia and Herzegovina. Openly and steals the identities to attack the bank accounts, pe-
publicly announced attacks on the informational dophiles as well as the commentators on the forums
systems of various state departments and agencies who post the threatening messages. However, in or-
lead by the examples of acts of their sympathizers der to trace each criminal, the police finds it very
over the world. The aim of such attacks may be to important that the cyber crime or hackers attack is
unable the access to those pages. Another type of reported in the shortest time possible.
attack may be that the offenders attempt to change Department for cyber crime within the Ministry
some of the data on the pages, to publish what of Internal Affairs of the Republic of Srpska, be-
they want. The third attack, which is potentially sides all forms of crime on the so called cyber space,
the most dangerous, is to reach some information or internet, covers the misuse of in the field of tele-
which is not public and to distribute such informa- communications, and deals with digital forensics.
tion further, or to do something else with it. The mentioned department is the first department
On the territory of Sarajevo in 2010, an orga- of this kind in the whole Bosnia and Herzegovina.
nized group which dealt with all forms of informa- It is an interesting fact that the Republic of Srp-
tional technology abuse was broken. They found ska and the Republic of Serbia, in their criminal
several people who were involved in credit cards laws sanctioned the crimes of cyber crime within
and other paying cards forgery, which resulted in the Chapter named The Criminal Activities aga-
finding tens of thousands of data from the bank inst the Security of Computer Data, as follows
cards of the foreign citizens. [12]: Damaging the computer data and programs;
Bosnia and Herzegovina annually loses be- computer sabotage; development and installation
tween 11 and 14 million dollars of direct taxes of computer viruses, computer fraud, unauthori-
due to software piracy, which is estimated to be 66 zed access to the protected computer, computer
percent of the total software market. Bosnia and network, communication network and electronic
Herzegovina still has neither agency nor sector for data processing, prevention and limitation of ac-
fight against cyber crime. At the State Investiga- cess to the public computer network, unauthorized
tion and Protection Agency – SIPA, a Center for usage of computers or computer network. Howe-
the fight against cyber crime was supposed to be ver, unlike the Republic of Srpska, the Republic
formed. However, this has not yet been done. of Serbia has introduced another crime – creation,
The first steps were made by the MUP RS, within procurement and providing other tools for com-
the Unit for operational and technical support within miting offences against security of computer data.

The criminal code of Bosnia and Herzegovina criminal activities regarding unauthorized use of
[13], in Chapter thirty to, the Criminal activities copyright works, infringement of copyright and
against electronic data processing are presented, as other related rights (Art. 158-160 of Criminal
follows: damage to computer data and programs, Code) [14]. It is interesting that already then in the
computer forgery, computer fraud, obstruction of Art. 309 the creation and usage of malicious pro-
the system operation and of the networ of electro- grams that can be used for unauthorized access or
nic data processing, computer sabotage. any other criminal activity related to the computer
The mechanism of defense against cyber crime use were sanctioned.
in Bosnia and Herzegovina is still at its beginning. According to some data published in the jour-
The problem in Bosnia and Herzegovina on the nal of the Association Business Software Alliance
one hand is the lack of money invested in secu- (BSA) and the Economist magazine, Slovenia, like
rity systems, and on the other hand there is a small most of the former communist countries in the early
number of educated people who can successfully nineties had a high level of piracy, about 90%. It is
fight against the cyber crime. obvious that the regulations achieved their purpose,
Regulatory agency for communications of Bos- considering that according to the report of BSA
nia and Herzegovina tried to warn about the risks for 2001 year, Slovenia has less than 60% of ille-
and threats of each network connection, through gal software’s, while the great part of this number
the public campaign. They started the promotion goes to the so called soft piracy, i.e. use of official
of media literacy and protection of children from licenses on more computers than allowed.
the potentially harmful contents on the internet in
2010. Within this campaign, on over 100 radio and 5. Cyber criminal in Croatia
TV stations the videos that point out at the pos-
sible threats, such as violence and pornographic According to most experts, the changes in legal
contents, and contacts with pedophiles and radi- system should be evolutionary, not revolutionary.
cal groups in the society were broadcasted. On The internet in technical sense is definitely a revo-
that occasion they pointed out to the necessity of lution, and in the legal, especially regarding the
higher involvement and cooperation between the cyber crime, it is still evolutional change.
relevant ministries and every other segment of For this reason it is not surprising that when it
the society, which should be actively involved in is being discussed about the responsibility of inter-
creating the legal regulations aiming to combat all net providers in Croatia, it is considered within the
the negative notions evident in the so called cyber regulations of general nature, such as the criminal
space of Bosnia and Herzegovina. code of 1998 with the changes and amendments,
so leges speciales, depending on which offence
4. Cyber criminal in Slovenia is considered, Law on Copyright and the Law in
Obligatory Relations.
The process of adopting the legal standards of The members of the Criminal Code incriminate
punishing the forms of cyber crime was passed the behaviors qualified as the criminal activities
in the first reforms in 1995, when the new Law in the Articles 2 to 6. of the Convention on cyber
on Copyright was adopted. In 1999 with the new crime. The criminal activity named damage, use
reform of the system in Slovenian criminal Law- of data belonging to others (Art. 223 [15] ) covers
book a criminal act of unauthorized acces to the the criminal acts of unauthorized access and Dam-
computer system as well as the criminal act of age, alterations and destructions of data contained
unauthorized changing in content, distruction or in Art. 2 and 4 of the Convention.
harming the data was entered. Regarding the Article 3 of the Convention on
In the same year the Law on Copyright is cyber crime and criminal activity Unauthorized
changed, and then the criminal law with the crimi- interception of data (Illegal interception), in the-
nal acts regarding the violations of Copyright and ory it is considered that although the Art. 223 of
similar rights are included. After the mentioned the Criminal Code does not contain the determi-
changes, in the criminal-legislative system the nations on computer espionage there is enough

of existing incriminations which may be used to years. In case of disabling or hinder the operation
sanction such behavior in all forms, as for instance or use of computer systems, computer data or pro-
the incriminations on publication and unauthor- grams or computer communication, he will be pun-
ized acquiring of business secrets (Art. 295 CC), ished by fine or imprizonment up to three years.
disclosure of company secrets (Art.132 CC), or If the mentioned crimes are commited in rela-
state secret disclosure (Art. 144 CC). Following tion to the computer system, data or program of
this, the offence of the unauthorized use of per- government bodies, public institution or a com-
sonal data (Art 133 CC) covers only collection, pany of special public interest, or has caused
processing and use of personal data of the citizens, substantial damage, the perperator shall be pun-
as well as their use opposing the legally prescribed ished by imprisonment from three months to five
purposes of their collection. years. A fine or imprisonment that does not exceed
Following this, the chapter on criminal activi- three years will be imposed in cases the offender
ties against the property is complemented by in- manufactures, procures, sells, possesses or makes
criminations which may also serve for sanctioning the special devices, tools, computer programs or
some misuses of the internet. Thus the following computer data created and adjusted to making
activities are: such criminal activities, to the other unauthorized
– Violation of Copyright of authors or performers peope, whereas those special devices, tools, com-
– Unauthorized use od the copyrighted work puter programs and data created, used or adjusted
or performance; for commiting the criminal activities will be taken.
– Damage and use of other’s data; The Croatian criminal law incriminates the
offence of child pornography.The example of the
The latter offense is particulary interesting be- Republic of Croatia in terms of legal regulation of
cause it is a completely new criminal act which en- the offence of child pornography on a computer
ables the protection of the automatically processed system or network, should be followed by all the
data or computer programs, and incriminates the other countries of the Western Balkans. The law
very own access to them under the condition that on amendments to the criminal law (NN 71/06)
they are protected by special measures or codes. which regards the Criminal Law of the Repub-
Considering that the mentioned incriminations lic of Croatia (NN 110/97), as well as the law on
cover a great number of abuses of the internet and Amendments of the Criminal Law (NN 129/00)
computer, the legislative authorities could and define a new form of criminal activity – child por-
should have found the space for sanctioning the nography on the computer system or network.
activities of malicious programs, which could di- Articles 196 and 197a of the Criminal Law re-
rectly assist the formation of legal framework for gard this criminal activity.
investigation of producers’ responsibilities. According to the Art. 197a, those who use the
At the beginning of July 2003, the Criminal computer system or network to produce, offer, dis-
Code was amended and this has been applied tribute, obtain for himself or another, or who in
since December 2003. their computer system or storage media possesses
With the mentioned change the Art. 223 under- pornographic content showing children or minors
went a big change, and now it is called the name in sexually explicity conduct, or who are focused
Violation of confidentiality, integrity and avail- on their sexual organs, will be punished by impris-
ability of computer data, programs and systems, in onment from one to ten years. According to the
other words it covers all sections of the Convention point 2 of the same article, who, through a com-
on confidentiality, integrity and availability of data puter system, netwok or storage media for com-
stored on computers and the computers themselves. puter data makes the images or audiovisuel con-
Every attempt of these criminal acts is punishable. tent or other items of pornographic content more
According to the Article 223, the offender who accessible, he shall be punished by fine or impris-
despite the protective measures attempts the unau- onment up to three years. Special devices, means,
thorized access to computer data or programs, will computer programs or the data used or adapted for
be punished by fine or imprisonment up to three performing such criminal act will be taken away.

It is necessary to point out that the art. 197a is cializes authorities, as well as the adoption of ap-
connected with Art. 196, which is essentially the propriate legislation, primarily of material nature,
basis of the criminal activity described in Art. 197a. which are the basis for the effective prosecution of
According to the Art. 197 the one who records a offenders in the area of cyber crime.
child or minor for production of pictures, audiovi- The forms of cyber crime in the legislation of
sual material or other items of pornographic con- the Republic of Slovenia are concentrated in the
tent, or sells or distributes, or shows such material, Slovenian criminal code (Kazenski code). This
or makes a child to partivipate in pornographic apparently accieves its purpose, considering that
performance, shall be punished from one to five the number of the criminal acts of cyber criminal
years of imprisonment. The objects and tools of (in percentage) is decreasing. Republic of Slove-
criminal act are taken away. nia fulfills almost all requirements of the Conven-
While the Art. 197 of preventive nature, the tion on cyber crime. What is left is to meet the
Art. 196 is repressive, and according to this, the criminal-legal sanctioning of the criminal acts
punishment is higher. aimed at obstructing the normal operation of com-
Only one thing is more dangerous than child puter systems and authorized interception of data.
pornography, and this is the unawareness of its In the Republic of Croatia the forms of cyber
availabilty and hense it dangerousness. The most crime are contained in the Criminal code. It should
of the people still think that the child pornography be noted that the Croatian legal system continu-
on the internet is hard to find, and that it is availa- ously monitors and analyzes the changes in the
ble to a small circle of people and costly. The truth legal systems in the countries of the same type of
is, unfortunately completely opposite, and it is in- legal framework.
evitable to point oit to the need of incrimination of As for Bosnia and Herzegovina it is signatory
this criminal activity and in the criminal law of the to the International Convention on Cyber Crime.
Republic of Serbia, Bosnia and Herzegovina and However, until now the criminal code did not in-
Republic of Slovenia. corporate certain criminal activities regarding cy-
ber crime, and which are defined in the Conven-
6. Comparative overview and proposal of tion, which indicates the necessity of the Criminal
fight against cyber criminal in the states Code amending related to the cyber crime.
of Western Balcans All the mentioned Western Balcan countries
belong to the group of countries which, in the ab-
Based on the analysis of cyber criminal in the sence of specific solution, rely on their general
areas of Republic of Serbia, Bosnia and Herzegov- criminal standards. Considering that in the field of
ina, Republic of Slovenia and Republic of Croatia, cyber criminal it is the matter of legally technical
brings to the conclusion that there is no harmonized problems of high complexity, it is better to define
legislation on the issue of this type of crime. if firmly by the law, than to leave it to the court and
In the Republic of Serbia the rapid develop- general regulations to do so. After all, the principle
ment on the fight against cyber crime began with of legal certainty requires it.
the adoption of amendments to the Criminal Code On the other hand, in all the states of the West-
of the Republic of Serbia, and the Lae on organiza- ern Balkans it is necessary to analyze the the com-
tion and jurisdiction of the Government authorities ments and recommendations from the officials
in the fight against cyber crime. This law for the engaged on the businesses of discovering and
first time in the criminal legislation of the Republic prosecuting the cyber criminal, and to bring or
of Serbia defines the notion of cyber criminal as the perform the correction and amendment of mate-
performance of criminal activities where the means rial and processing legislation, that could enable
or goal of performing the criminal act are comput- the aquiring the optimal results in the fight against
ers, computer networks, computer data, as well as increased presence of cyber crime.
their products in material and electronic form. It is concerning that the fact that the perpetra-
The Republic of Serbia has taken a significant tors of cyber crime in our countries in the region
and decisive step towards the constitution of spe- are not limited by the state borders, but use them

as a protection. There are the situations in which Ministries of internal affairs and justice of
many of the perpetrators are the citizens of two, the states of the Western Balkans have already
three or four states of the former Jugoslavia at achieved significant results in establishing mu-
the same time, and therefore illegally pass the tual cooperation. In order to fight against cyber
state border and illegaly stay on a certain teritory criminal more effectively, it would be logical to
in unregistered homes. Out of those reasons and form new common force which could be effec-
adequate cooperation between the states of the tive in opposing the cyber criminals in this area.
Western Balkans is necessary inorder to prevent Theregore we suggest the creation of the new au-
such situations. Having in mind the aforemen- thorities, as follows:
tioned it can be concluded that, regardless of po- 1. Special, highly specialized police units
litical differences that burden the relation between which could closely cooperate:
the countries of Western Balkans, it is necessary ○ In collection, creation and analytical
to establish an organized, systematized and con- processing of information on cyber;
tinuous cooperation of the competent services of ○ In operative support to the operations
the Western Balkans countries, i.e. removal of the that are implemented;
borders in the fight against cyber criminal. This is ○ In forming, maintaining and
primarily because the important characteristic of development of informational system
the cyber space is global and transnational scope, which would enable the import, use
beyonf the teritorial control of national states. and analysis of the data on the people
The first tep towards the more successful fight convicted or suspected as perpetrators
agains the undesirable notion in the form of cy- of criminal activities of cyber criminal,
ber criminal is the adoption of the Declaration on as well as on the deeds;
enhancing the cooperation in the fight against the ○ In securing the technical support to the
cyber crime.Then it is necessary to implement the criminalistics investigations of the police
European normative standards in the national laws and the aid in highly specialized experts
of the states of the Western Balkans in the unique in other countries, the contractors
manner, so that they will be able to effectively op- ○ In planning the mutual actions at the
pose this type of criminal. Further on, the coopera- operating level
tion of the all levels of the police services in the re- ○ In establishing close cooperation with
gion is necessary.This would mean that the police EUROPOL through the states that are
departments from the region should intensify, to already the members of EUROPOL.
strengthen and enhanse their further cooperation
in the different areas of cyber criminal, taking into In order to achieve its goals, such police
consiferation the state legislation and international units could collect, modify and use the data
legal instruments, but also to proceed with their from other files that are intended for special
communication through regular consultations analyses, which relate to:
(e.g. on the monthly basis). ○ Persons convicted for cyber crime, as
In the further development the moduls of com- well as the persons who are reasonably
mon trainings for the members of the judicary and suspected to have committed the crimes.
representatives of the law enforcement agencies in ○ Persons who could be invited to testify
the area of cyber criminal. These should be held in investigations of cyber crime offenses.
on the regular basis. ○ Persons who have been the victim of an
Having in mind the positive experience of the act that is subject to processing or those
Europol’s activities in the fight against organized that are trustworthy based on the facts to
crime and terrorism,which is the dominant form be the victims of such criminal act.
of cooperation of national police services of the ○ Informers, collaborators and persons
Member States of the European Union, we pro- who can provide the information on
pose the similar forms of the joint fight against cy- cyber crime offenses that are subjects of
ber criminal in the Western Balkan states. criminalistics processing.

○ collection, processing, and storing the 7. Conclusion

data revealing racial origin, political
It is indisputable that without dealing with cy-
opinions or religious freedom, as well
ber crime as a real and widespread phenomenon,
as the personal information on health
and without takinf the coordinated actions of the
or sex life of an individual, and cannot
legal authorities and the judiciary authorities on
be subject to automatic processing (in
the one hand, and the experts in computer techno-
the sense of Art. 6 Convention of the
logies on the other hand, there is no other way for
European Council on protection of the
their suppression.
individual with regard to automatic
The cooperation of experts for computer tech-
processing of personal data of 28 January
nologies is necessary because the cyber crime re-
1981, VE No. 108) and unless such data
presents an illegal use of informational and com-
supplements the personal information
municaiton technologies, where with the misusage
that was already entered into such file.
of contemporaru technologies a material and other
benefit is illegally acquired.
2. Special departments for transnational
With the development of the new technologies,
cooperation within the national prosecutors
the forms of cyber criminal are more and more so-
specialized for the fight against the cyber
phisticated. The danger of the cyber criminal act
criminal, which would have for a goal:
rises out of its own characteristics. Most often it is
○ Establishing a case based on evidence of
the criminal activity whose performer is located in
actions that are collected together at the
one country, the server na the place of performance
national prosecutor’s offices;
are in the second country, and the consequences of
○ Prosecution of the suspected for cyber
the criminal act occur in the third country, which
crime according to the papers of the
points out to the inevitability of the cooperation
signatory states.
between the states of the Western Balkans in the
fight against the cyber crime, having in mind the
3. Joint workgroup at the level of the Ministry
fact that in the recent years the criminal acts of
of Justice that would have the task to
cyber crime are carried out in the large number in
harmonize the national legislation in order to
the Western Balkans countries.
single criminalizing offenses and sanctions
Since the cyber space is unique, modern cyber
in the area of cyber crime.
criminal and teroristic organizations use exactly
those states which have not yeu regulated (in to-
Establishment of an independent Joint super-
tal or partially) on the legal basis the criminal acts
visory body for the verification and monitoring of
of the cyber crime, as the place from where they
the activities of the Ministries of internal affairs
could perform the criminal activities.
and the Ministry of justice of the member states,
Out of these reasonsm and considering the high
in order to assure that the rights of the individuals
growth rate of potential possibilities of cyber crimi-
are not undermined by the work of the national
nal in the states of the Western Balkans, the coop-
authorities in the fight against the cyber crime.
eration between the Republic of Serbia, Bosnia and
Specifically, each person would be able to ask
Herzegovina, the Republic of Slovenia and the Re-
from the Joint supervisory body to ensure a legiti-
public of Croatia, as well as the unification and har-
mate way of collection, processing and storage of
nomization of their legislation, in the aim of more
the personal data, in case they are considered as
successful fight against this form of crime.
endangered. Joing supervisory body would pre-
Given that there are significant differences
pare the reports on their activities and it would
among the Western Balkan countries, as well as
submit them to the authorized national ministries
the documents od the international organizationa
and authorized supreme or constitutional courts.
and associations, to a small baricade on the behav-
iour, which shall be incriminated in the short pe-
riod of time, represents the precedent for reducing

the consewuences of unsynchronization and non- 10. Spalevic Z, Bjelajac Z, Pocuca M. „Terrorist Ac-
compliances of the regulations. tivities and Internet Government with Focus on
Importance of Prevention within a Family”, TTEM
Unification and harmonizatin, as well as the ef-
journal, ISSN 1840-1503, 2013; Vol.8. No.1: pp.
fective international cooperation is the direction in 50-62.
which it has to go in combating the cyber crime,
because if the crime crosses all the boundaries, 11. Criminal Code of The Republic Serbia, Official
this must be done by the law and order, according Gazette of The Republic of Serbia, No. 58/4, 85/05,
115/05, 46/06, 49/07, 85/ 2005, 88/2005 - ch.,
to the Kofi Atta Annann, former secretary general 72/2009 and 111/2009.
of the United Nations, as the only effective way of
fighting against this negative phenomenon. 12. Criminal Code of The Republic Srpska, Official
Gazette of The Republic Srpska, No. 49/03, 108/04,
37/06,70/06, 73/10.
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Issue): pp. 699-712.
4. Swire P, “Elephants and Mice Revisited : Law and
Zaklina Spalevic,
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Faculty of Law for Economy and Justice,
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810.

Statistical evaluation of nitrates in

precipitation and karst springflow: The
Petnica spring in Western Serbia
Ristic Vakanjac V.¹, Papic P.¹, Golubovic R.² and Damnjanovic V.¹
1
University of Belgrade, Faculty of Mining and Geology, Belgrade, Serbia,
2
Petnica Science Center. Valjevo, Serbia.
Abstract that are extremely harmful to human health. It is

for this reason that monitoring of their presence in
This paper presents the results of groundwater
soil, water and food has recently become a highly
and meteorological monitoring conducted at Petnica
topical issue in developed European countries.
(western Serbia). Since the beginning of 1991, daily
Monitoring of nitrates in water is necessary be-
observations, measurements and detailed chemical
cause pollution originating in one country affects
analyses have been conducted to determine daily
the water quality in other countries as well. Due to
springflow and total daily precipitation, as well as
recent unfortunate economic and political condi-
the quality of karst groundwater and precipitation
tions, Serbia is one of the few European countries
[1]. These parameters: daily springflow, total daily
where monitoring of nitrate compound concentra-
precipitation and daily concentrations of nitrate ions
tions in soil and water has not been developed in
in the springflow and precipitation, were then statis-
accordance with the European Council Directive
tically evaluated to determine average monthly and
91/676/ECC of 12 December 1991, concerning
average annual levels. The nitrate ion concentra-
the protection of waters against pollution caused
tion database is comprised of results obtained from
by nitrates from agricultural sources. [Official
chemical analyses of 3650 samples of karst ground-
Journal L 375 of 31.12.1991].
water and 1219 samples of precipitation. Daily, av-
The data we wish to present in this paper origi-
erage monthly, and average annual concentrations
nate from a small community called Petnica (Fig-
of nitrate ions in the Petnica Spring and in precipita-
ure 1), which is located 7 km from the City of
tion show a sudden decline in 1992 and a sudden in-
Valjevo, a major agricultural and industrial center
crease in 1997. These two distinct periods have been
of western Serbia. The data were obtained from a
analyzed in detail. Normal (Gaus) Distribution Z [2]
research station located in Petnica, near the Banja
and Fisher’s F Distribution methods were used to
Spring [3]. However, they reflect only a small por-
establish whether the samples did or did not belong
tion of the quantitative status of nitrate ions in Ser-
to the same population, as well to determine the ho-
bia’s waters [4]. Nevertheless, we have decided to
mogeneity of nitrate ion concentration series.
present these data for the following reasons:
Key words: karst groundwater, groundwater
Voluminous data collected over a relatively
monitoring, rainfall/karst runoff, nitrates, statisti-
long period of time are available to us. Name-
cal analysis
ly, occasional monitoring of precipitation and
groundwater chemistry began back in 1976, and
Introduction daily monitoring was initiated in 1991.
Rapid population growth and industrial/agri- During this period, we were able to monitor an
cultural development result in increasing pollution „unscheduled environmental experiment“ of sorts,
of the soil, atmosphere, surface water, and ground- which was the result of a considerable reduction
water. Nitrogen compounds, which generally origin the number of significant nitrate-ion polluters.
inate from fertilization of farmland (to enhance Namely, during the period of water chemistry
crop growth), industrial activity, and exhaust gas- monitoring, a trade embargo was imposed against
es from motor vehicles, are classified as pollutants a portion of the former Yugoslavia, including the

investigated area in Serbia. Due to a lack of raw portion of the catchment area (Figure 2). Links
materials and the inability to import them, the ap- between these swallow holes and the spring have
plication of agricultural fertilizer was reduced, been identified and confirmed on several occa-
several industries all but ceased to operate, and sions (Figure 2) [5].
there was a considerable decrease in the use of all
types of vehicles due to a shortage of motor fuel.
Geographical location and geological char-

acteristics of the investigated area
The Petnica Spring is a karstic spring which
drains Triassic limestones whose lower portion is
covered with Miocene-Pliocene sediments (Figure
1). The catchment area of the spring is about 20 km2.
Figure 2. Hydrogeological map of the catch-

ment area of the Petnica Spring
1. Karst sediments, 2. Neogene sedimants, 3. surface run-off,
4. Sinkhole, 5. Cave,
Figure 1. Geographic location of the Petnica
Spring
Nitrate ion concentrations of the Petnica
The catchment area of the spring is generally Spring and results of statistical evaluation
comprised of Upper Middle Triassic sediments Daily nitrate ion (NO3-) concentrations in the
(Ladinian stage T22). The composition of the lime- springflow are shown in Figure 3 for the 1991-
stones is mostly micritic and highly karstified, 2000 period. Figure 3 indicates that there was a
with calcium carbonate content in excess of 90%. sudden drop in NO3- concentrations in the spring
The ground surfaces features numerous sinkholes water in 1992, and that there was a gradual in-
and swallow holes and, along the vertical, there crease in NO3- concentrations in 1997.
are many fissures, caverns and caves. Morpholog-
ical forms at the highest elevations are generally
filled with clayey material (terra rossa).
Neogene sediments make up the so-called
Valjevo-Mionica Basin (Figure 2), which is com-
prised of Middle and Upper Miocene freshwater
and brackish water sediments. Lithologically, the
Neogene sediments are generally represented by
clayey-marly series, with subordinate clayey-
gravelly deposits. The thickness of these sedi-
ments is roughly 230 m [5].
There are two swallow holes within the catch-
Figure 3. Daily nitrate concentration in the
ment area of the Petnica Spring: the Pećurine
Petnica Spring
swallow hole and a sinking zone in the central

The maximum, minimum and average annual The number of rainy days during the year (N),
NO3- concentrations in the springflow, recorded the total annual precipitation (P), and the mean
from 1991 to 2002, are shown in Table 1. Aver- and maximum NO3- concentrations in precipita-
age annual NO3- concentrations are also shown by tion by year are shown in Table 2. Mean annual
means of histograms in Figure 4. NO3- concentrations are also shown by means of a
histogram in Figure 5.
Figure 4. Mean annual nitrate ion concentrations

in the Petnica Spring Figure 5. Nitrate ion concentrations in precipita-
tion by year during the investigated period
Since occasional hydro-meteorological obser-
vations at Petnica actually began back in 1976, we The values shown in Tables 1 and 2, the graph
have also singled out the data collected in 1976 and shown in Figure 3, and the histograms shown in
1988; at that time, according to the data available to Figs. 4 and 5 suggested that two samples were re-
us, the maximum NO3- concentrations in the spring quired for ongoing analyses of NO3- concentrations:
were 6 mg/dm3 and 27 mg/dm3, respectively [6,7]. one relating to the time periods from 1 January 1991
to 7 August 1992 and from 1 November 1997 to 31
December 2000, and the other relating to the time
Nitrate ion concentrations in precipitation at period from 8 August 1992 to 31 October 1997.
Petnica and results of statistical evaluation To confirm the existence of two samples attrib-
Since certain drivers of surface water and utable to these periods of time, the data on NO3-
groundwater chemistry originate from the atmo- concentrations in precipitation were statistically
sphere, analyses of certain NO3- concentrations in evaluated for the first rainy days. Figures 6 and 7
precipitation were also performed [7]. The analy- contain histograms of average values and standard
ses were conducted using the same procedure as deviations of NO3- concentrations in precipitation
for NO3- concentrations in karst springflow. on the first rainy day of rainfall events for both
samples. The figures show the number of rain-
Table 1. Annual nitrate concentrations in the Petnica Spring

NO3-[mg/dm3] 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Max. 35.4 38.65 25.1 24.8 39.4 40.68 30.15 45.3 46.9 41.29
Min. 12.3 3.9 6.44 3.4 4.6 4.25 4.2 5.65 4.5 5.45
Mean 22.89 17.3 16.0 15.11 17.73 18.37 16.42 25.02 26.99 24.87
Table 2. Nitrate concentrations in precipitation
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Precipitation P [mm] 821.0 736.7 675.8 734.1 1025.2 970.3 914.6 789.2 994.0 548.5
Number of rainy days N 120 107 102 110 144 142 132 134 133 95
NO -
3 max
[mg/dm ] 3
58.3 55.45 40.8 27 46.2 23.1 56.46 65.58 31.38 61.74
NO -
3 average
[mg/dm3] 12.77 7.29 5.06 5.50 6.64 8.44 7.63 7.72 5.59 10.28

free days between two rainfall events: t ³ 1; t ³ 2; x 1− x 2

… t ³ 5 (t – number of rain-free days). The av- z= ............................... (1)
sx
erage NO3- concentrations of the second sample 1− x 2
are roughly 67% of the nitrate concentrations of where: x1 is the average value of Sample 1, and
the first sample, or 1/3 lower, while the standard
deviation of the second sample is approximately x2 is the average value of Sample 2
1/3 lower than that of the first sample. There was
also a considerable decline in NO3- concentrations s x2 s x2
sx −x = 1
+ 2
...................... (2)
after 8 August 1992 (second sample). Addition- 1 2
n1 n2
ally, the longer the rain-free period between two
rainfall events (looking at t ³ 5 relative to t ³ 1), the s x 1 is the standard deviation of Sample 1; s x 2
more likely the NO3- concentration in precipitation is the standard deviation of Sample 2; n1 is the to-
on the first rainy day is to grow - by 20% (first tal number of data points for Sample 1; and n2 is
sample) and 16% (second sample). The variation the total number of data points for Sample 2.
in standard deviation is similar. The standardized variable z has a normal dis-
tribution N(0.1). With the zero hypothesis H0 we
assume that the average values of the selected
samples are approximately equal:
H 0 : x 1 ≈ x 2 .............................. (3)
The condition for acceptance of the zero hy-

pothesis is
z a < z < z a .............................. (4)
1−
2 2
Figure 6. Bar graph of nitrate concentrations in where z is the standardized variable and a is
precipitation (average values) the significance threshold.
Where a = 5% , it follows that the zero hypoth-
esis H0 is acceptable if
− 1. 9 6 < z < 1. 9 6 ......................... (5)
Fisher’s F-test was used to analyze the same

samples via standard deviation. The condition for
applying this test is that the distribution of the two
samples is normal and that the parameters of the
population are unknown. With the zero hypothesis
H0 we assume that the standard deviations of the
Figure 7. Bar graph of nitrate concentrations in selected samples are approximately equal:
precipitation (standard deviation)
H 0 : s 12 ≈ s 22 .............................. (6)
Theoretical background for homogenity
analysis of the series The F-test criterion for dispersion equality is:
The normal distribution Z-test [8,9] was used to s 12
analyze the homogeneity of the series of NO3- ion F= .................................. (7)
s 22
concentrations in the Petnica Spring and in pre-
cipitation (discharged volume of water and total provided that s 1 > s 2 , and that Fisher’s distri-
precipitation). The Z-test criterion was: bution is

n 1 = n1 − 1 Table 4. Statistical parameters of nitrate ion con-

centrations in the Petnica Spring
and
First period Second period
n 2 = n2 − 1 ,
where n 1 and n 2 are the degrees of freedom. N O 3 = 2 4.6 30 N O 3 = 1 5.9 2 7
In this case, the zero hypothesis is accepted if: mg/dm 3 mg/dm3
s = 5.825 mg/dm3 s = 5.330 mg/dm3
F < F1−a .................................. (8)
Cv = 0.236 Cv = 0.335
Analysis of homogenity and uniformity of C s = −0.016 C s = 0.341

the series of nitrate ion concentrations in n = 1742 n = 1911
the petnica spring
s x −x = 0.185
The statistical parameters required for the anal- 1 2
ysis of the homogeneity of the series of discharged − 1 .9 6 < z = 4 6 . 9 6 2 < 1. 9 6 (unacceptable)

volumes of water and nitrate ion concentrations
F = 1.194 < F1−a = 1.100 (unacceptable)
in the springflow, such as: the average value x ,
standard deviation s , coefficient of variation
We have concluded from the above that the
s groundwater outflow homogeneity analysis us-
Cv =
x ing standard deviation shows that the population
and coefficient of asymmetry is the same. However, the homogeneity analysis
performed using the average value suggests that it
3
n n
x −x , is not the same population.
Cs = ⋅ ∑ i 
(n − 1) ⋅ (n − 2) i=1  s  This is the result of higher precipitation levels
(by 10% on average) during the second period.
Since rainfall usually propagates very quickly in
are shown in Tables 3 and 4, which also in-
karst springs, the volumes of discharged karst wa-
clude acceptability results for the respective zero
ter during the second period are higher.
hypotheses, obtained by applying Eqs. (1), (2) and
Both statistical analyses of nitrate ion concen-
(4) in the average value analysis, and Eqs. (7) and
trations in the karst spring, via average values and
(8) in the standard deviation analysis.
standard deviation, showed that the samples do
Table 3. Statistical parameters of the Petnica
not belong to the same population. This confirmed
springflow
the assumption that significant changes in nitrate
First period Second period ion concentrations occurred in mid-1992 and that
the altered concentrations lasted until mid-1997.
Q = 155.365 dm3/s Q = 188.311 l/s
s = 115.151 l/s s = 115 . 6 2 l/s Analysis of homogeneity and uniformity of
Cv = 0.741 Cv = 0.611 the series of nitrate ion concentrations in
precipitation
C s = 3.179 C s = 2.276
n = 1742 n = 1911 The analytical approach to precipitation was the
same as that followed for the discharged volumes
of water. Average precipitation levels and average
s x −x = 3.812
1 2
nitrate concentrations in precipitation were tested.
− 1. 9 6 < z = −8 . 9 < 1. 9 6 (unacceptable) The statistical parameters of these two series for
both samples, and the acceptability statistics for
F = 1.003 < F1−a = 1.100 (acceptable) the given tests, are shown in Tables 5 and 6.

Table 5. Statistical parameters of average preci- Table 7. Statistical parameters and results of ni-
pitation levels trate ion concentration homogeneity tests for the
First period Second period first rainy day, where the rain-free interval betwe-
en two rainfall events was one or more days
P = 6.4 mm P = 7.0 mm First period Second period
s = 8.2 mm s = 7.7 mm
Cv = 1.271 Cv = 1.242 N O 3 = 1 0 . 315 N O 3 = 6 .9 2 9
mg/dm3 mg/dm3
C s = 2.848 C s = 3.253 s = 7.430 mg/dm3
s = 1 1. 5 31 mg/dm3
n = 572 n = 647
n = 294 n = 325
s x −x = 0.513
1 2 s x −x = 0.789
1 2
− 1. 9 6 < z = −1.131 < 1. 9 6 (acceptable) − 1. 9 6 < z = 4 . 2 9 3 < 1. 9 6 (unacceptable)

F = 1.125 < F1−a = 1.100 (unacceptable) F = 2.408 < F1−a = 1.100 (unacceptable)
Table 6. Statistical parameters of average nitrate Table 8. Statistical parameters and results of ni-
concentrations in precipitation trate ion concentration homogeneity tests for the
First period Second period first rainy day, where the rain-free interval betwe-
en two rainfall events was two or more days
N O 3 = 8 .9 8 3 mg/dm3 N O 3 = 6 .4 9 8 mg/dm3 First period Second period
s = 1 0 . 2 7 4 mg/dm3 s = 6.772 mg/dm3
Cv = 1.144 Cv = 1.042 N O 3 = 1 0 .4 0 7 mg/dm3 N O 3 = 7 .1 4 8 mg/dm3
C s = 2.243 C s = 2.512 s = 1 1.800 mg/dm3 s = 7.806 mg/dm3
n = 572 n = 647 n = 249 n = 271
s x −x = 0.505 s x −x = 0.885
1 2
1 2
− 1. 9 6 < z = 4. 9 1 7 < 1. 9 6 (unacceptable) − 1. 9 6 < z = 3 . 6 81 < 1. 9 6 (unacceptable)

F = 2.301 < F1−a = 1.100 (unacceptable) F = 2.285 < F1−a = 1.100 (unacceptable)
Analyses of average precipitation levels Table 9. Statistical parameters and results of ni-
showed that the population is the same, while trate ion concentration homogeneity tests for the
Fisher’s test was on the borderline of unacceptable first rainy day, where the rain-free interval betwe-
variance uniformity. en two rainfall events was three or more days
The test of average nitrate ion concentrations First period Second period
in precipitation indicated a high variance non-uni-
formity. N O 3 = 1 1.19 5 mg/dm3 N O 3 = 7 . 3 6 3 mg/dm3
The homogeneity of the time periods was also
s = 1 2 . 5 8 7 mg/dm3 s = 8.137 mg/dm3
analyzed, using samples with marked nitrate ion
concentrations on the first day of rainfall, where n = 211 n = 231
the rain-free interval between two rainfall events
s x −x = 1.019
was 1 day or more, 2 days or more, and 3, 4 and 1 2
5 days or more. The results of these analyses are − 1.9 6 < z = 3 7 6 2 < 1.9 6 (not acceptable)
shown in Tables 7, 8, 9, 10 and 11.
F = 2.393 < F1−a = 1.100 (not acceptable)

Table 10. Statistical parameters and results of ni- absorb airborne nitrogen oxides originating from
trate ion concentration homogeneity tests for the nearby agricultural and industrial centers. When
first rainy day, where the rain-free interval betwe- infiltrated into the ground, they additionally dis-
en two rainfall events was four days or more solve nitrate ions from the ground.
First period Second period The statistical evaluation of a database gener-
ated over one decade of observations and measure-
ments conducted at Petnica (western Serbia) clearly
N O 3 = 1 1. 5 31 mg/dm3 N O 3 = 7 . 7 7 7 mg/dm3
shows that there was a significant decline in nitrate
s = 13. 013 mg/dm3 s = 8.660 mg/dm3 ion concentrations in groundwater and atmospheric
n = 159 n = 184 precipitation in mid-1992. This was certainly the
result of an unintended environmental experiment,
s x −x = 1.214
1 2 occasioned by a trade embargo imposed against a
portion of the former Yugoslavia which included
− 1. 9 6 < z = 2 . 9 8 5 < 1. 9 6 (unacceptable)
the investigated area in Serbia. The period of time
F = 2.258 < F1−a = 1.100 (unacceptable) during which lower nitrate ion concentrations were
recorded lasted until the end of 1997.
Table 11. Statistical parameters and results of ni- The homogeneity and uniformity analyses of
trate ion concentration homogeneity tests for the karst springflow and precipitation series indicated
first rainy day, where the rain-free interval betwe- that they belong to the same population, and that
en two rainfall events was five days or more the series of nitrate ion concentrations in precipi-
First period Second period tation and groundwater do not belong to the same
population.
N O 3 = 1 2 . 4 6 3 mg/dm3 N O 3 = 8 .0 6 7 mg/dm3 The homogeneity of the time periods was also
analyzed, using samples with marked nitrate ion
s = 13.793 mg/dm3 s = 8.851 mg/dm3
concentrations on the first day of rainfall, where
n = 126 n = 145 the rain-free interval between two rainfall events
was 1 day or more, 2 days or more, and 3, 4 and
s x −x = 1.432
1 2 5 days or more. The results of these analyses are
− 1. 9 6 < z = 3. 0 7 0 < 1. 9 6 (unacceptable) shown in Tables 7, 8, 9, 10 and 11.
F = 2.428 < F1−a = 1.100 (unacceptable)

Acknowledgement
The statistical homogeneity analyses, applying We would like to thank the personnel of the
the normalized Z-test and Fisher’s F-test, showed Petnica Research Station and Miss Snežana Savić
that the two distinct periods do not belong to the for providing excellent experimental facilities.
same population, or that that there is a statistically
significant difference between the average values References
and standard deviations of the first and second pe-
riods. 1. Papić P., Ristić V., Golubović R., Damnjanović V.”
The Influence of the Physico-chemical properties of
rainfall on karst groundwater quality, Theoretical
Conclusion and Applied karstology”, Banja Herkulana, Rumen-
ia, 1998; 11-12 : pp. 145-148.
The chemical composition of water begins to
form in the atmosphere and, as a result, it is pos- 2. http://mathworld.wofram.com/NormalDistribution.
html
sible for groundwater in karst areas to become
contaminated by precipitation. This is a frequent 3. Papic P., Golubovic R.” Project for hydrochemical
occurrence near towns and large industrial cen- investigations of precipitation and groundwater of
ters, where anthropogenous factors influence the the karst spring in Petnica, Valjevo, Unpublished re-
chemical composition of groundwater. Raindrops port, Funds of RS Petnica”, Valjevo, 1992; 25 pp.

4. Papić P., Ristić V., Golubović R.” Karst Ground

water pollution by nitrate, Petnica Spring (Serbia)
Journal od Mining and Geological sciences”, Fac-
ulty of Mining and Geology, Belgrade, 1998; 37: pp
65-74.
5. Simic M.” Multipurpose utilization of karst ground-

water in the Valjevo-Mionica area, PhD thesis,
University of Belgrade, Faculty of Mining and Geol-
ogy”, Belgrade,1990.
6. Kresic N., Papic P., Golubovic R.” The influence of

precipitation on the quality of karst groundwater in
industrial zones, Int. Symp. on Groundwater Man-
agement”, Benidorm, Spain, 1989.
7. Papic P., Kresic N., Golubovic R.” Acid rains and

their influence on the quality of groundwater of the
Petnica Karstic Spring near the Town of Valjevo”,
Editions spec. de 1’Academie Serbe, 1991; 67.
8. Davis J.”Statistics and Data Analysis in Geology.-

John Wiley and Sons”, New York, 1986; 660 pp.
9. Prohaska S. & Ristic V.” Hydrology through theory

and practice.- University of Belgrade, Faculty of
Mining and Geology”, Belgrade, 2002; pp 580.
Petar Papic,
Faculty of Mining and Geology,
Belgrade,
Serbia,
E-mail: ppapic@rgf.bg.ac.rs

Improving performance management by

integrating formal and informal management
control systems
Darja Peljhan
1
University of Ljubljana, Faculty of Economics, Ljubljana, Slovenia
Abstract the dynamics of information needed by employ-

ees to perform their work. Both environmental
The purpose of this paper is to investigate im-
and organizational changes imply changes in the
plications of management control systems (MCS)
type of information and the use of information for
for performance management using the case-
decision-making [1]. This also implies changes in
based research method. We intend to identify ele-
MCS, as such being the focus of this research.
ments of MCS in the process of performance man-
We use the term management control systems
agement and examine how contemporary MCS
when referring to the set of procedures and pro-
provide a blend of tight controls with more open,
cesses that managers and other organizational
informal and subjective information to influence
participants use to help ensure the achievement
managers’ decision-making. Our overall objective
of their goals and the goals of their organizations
is to combine empirical findings with theoretical
[2] and it encompasses formal control systems as
ones to expand the current knowledge of MCS
well as informal personal and social controls [3],
and their implications for performance manage-
[4]. MCS thus have two main purposes: providing
ment. The important contribution of this study is
information useful to management and helping to
that it upgrades the existing theory in that it does
ensure viable patterns of employee behaviour to
not only establish a relationship between strategy
achieve organizational objectives [2], [5]. In this
and MCS, but also considers how this relationship
paper, MCS are defined by how managers use
impacts on performance. The second contribu-
these systems for decision-making in the process
tion is that the study incorporates a wider range
of performance management.
of controls, including informal controls as being
We study management control from the Simons’
equally important as formal controls to provide a
[6] four levers of control framework point of view.
more comprehensive analysis, as opposed to the
The four levers of control consist of: diagnostic
majority of prior studies focusing on a more lim-
control systems; interactive control systems; beliefs
ited range of controls.
systems and boundary systems. The Simons’ levers
Key words: case study, formal control, infor-
of control combine a focus on strategy with a wider
mal control, levers of control, management con-
view of the control mechanisms that can be utilized
trol systems, performance management
to implement strategy. Control of business strategy
is achieved by integrating these four levers of con-
1. Introduction trol. The essence of MCS is to manage the tension
The research subject of this paper refers to im- between predictable goal achievement and creative
plications of management control systems (MCS) innovation, and to balance the basic organizational
for organizational performance management. dilemma between control and flexibility [6]. Tradi-
MCS have attracted growing attention in the prac- tionally, MCS were considered to be formal control
tical and theoretical spheres in recent years. We and feedback systems used to monitor organiza-
argue that implications of MCS for performance tional outcomes and correct deviations from preset
management became more evident as a conse- standards of performance [7]. Now, the role of MCS
quence of changing business environment issues. to foster flexibility and support change, innovation,
The emergence of different changes has changed and learning is also recognized [8]. Performance

management is assured by properly designed and 2. Literature review: Evolution of MCS

used MCS. models
The purpose of this paper is to investigate im-
Conventionally, MCS are perceived as passive
plications of MCS for performance management in
tools providing information to assist managers in
an internationally successful Slovenian company
decision-making. However, approaches following
using the case-based research method. Our goal is
a sociological orientation see MCS as more active,
to determine which (and under what circumstances)
furnishing individuals with power to achieve their
existing or emerging managerial accounting tech-
own ends [1]. The definition of MCS has evolved
niques actually work in practice (i.e. their use cre-
over the years from one focusing on the provision
ates value for various stakeholders of the compa-
of more formal, financially quantifiable information
ny). The main hypothesis is as follows. Formal and
to assist managerial decision making to one that em-
informal MCS influence the implementation and
braces a much broader scope of information. This
monitoring of strategies, providing feedback for
includes [1]: external information related to mar-
learning and information to be used interactively to
kets, customers, competitors; non-financial infor-
formulate strategy further. That means that organi-
mation related to production processes; predictive
zations have to integrate all partial control systems
information and a broad array of decision support
in the complete MCS framework that assures per-
mechanisms; informal personal and social controls.
formance increase (considering all stakeholders),
Formal MCS consist of purposefully designed,
stimulates employees’ innovativeness and ensures
information based and explicit sets of structures,
competitive advantages to be attained.
routines, procedures and processes that help man-
The case study company is a large Slovenian
agers ensure that their company’s strategies and
manufacturing company, Trimo Trebnje, d.d. (here-
plans are carried out or, if conditions warrant, that
after Trimo) which was investigated during the pe-
they are modified [9]. In order to get familiar with
riod 1992 – 2004. Trimo has been, for many years,
the evolution of MCS models, the aim of the fol-
the leading Slovenian company for the production
lowing section is to profile the evolution of MCS
and assembly of pre-fabricated steel constructions
models from a cybernetic to a holistic view. The
and one of the most important European manufac-
concept of MCS has evolved from the planning
turers of pre-fabricated buildings and living con-
and control systems relying on financial informa-
tainers. Trimo is a Slovenia-based company and
tion (i.e. cybernetic view) to an independent pro-
has achieved its business vision of becoming the
cess used as signaling and learning devices for
leading European company offering complete so-
strategic purposes based on multiple financial and
lutions in the area of steel buildings. Objectives of
non-financial measures (i.e. holistic view). The
the paper are derived from its purpose. We intend
holistic view encompasses periods of focusing on
to identify elements of MCS in the process of per-
the reduction of waste in business process and fo-
formance management and examine how contem-
cusing on value creation [10].
porary MCS provide a blend of tight controls with
It is commonly recognized that Anthony’s [7]
more open, informal and subjective information to
seminal work played a major role in the develop-
influence managers’ decision-making.
ment of the MCS literature. Nonetheless, his defini-
Our empirical research involves a longitudi-
tion of MCS led scholars to envision these systems
nal element, and studies the operation of a set of
as accounting-based controls of planning, monitor-
control systems over a period of time enabling the
ing, measuring performance and integrative mech-
inter-relationship between different control sys-
anisms [11]. The specification of control systems
tems elements and strategy to be examined and
and measures was seen as common to all strate-
explained. In this way both the antecedents and
gies, accounting measurement was stressed and
consequences of control systems choices can be
non-financial measures were neglected [12]. MCS
explored. Further, our overall objective is to com-
original purpose of providing information to facili-
bine empirical findings with theoretical ones to
tate cost control and performance measurement has
expand the current knowledge of MCS and their
been transformed to one of compiling costs from a
implications for performance management.

periodic financial statement perspective [13]. This visibility within the organization to ensure coordi-
role of short-term financial performance measure- nation, inspire action and enhance communication
ment became inadequate for the new reality of considered essential to learning [15]. By providing
companies. Kaplan [14] stressed the crucial impor- and measuring information on critical uncertainties,
tance of non- financial indicators, which are based top managers help focus attention and efforts to-
on organizational strategy, include key measures ward those uncertainties. The discussions, debates,
of success, and are perceived as immune from the action plans, ideas and tests throughout the organi-
various shortcomings of financial measures. zation foster learning that encourages the gradual
From a cybernetic perspective, the use of MCS emergence of new strategies and tactics. More than
is associated mainly with control of accomplish- just being a diagnostic system, performance mea-
ment of objectives and strategy implementation. surement also represents an interactive device [6].
The application of cybernetic concepts to control Performance measurement contributes to strat-
processes is coherent with Anthony’s [7], i.e. clas- egy formulation and implementation by reveal-
sical, approach to management control. Tradition- ing the links between goals, strategy, lag and lead
ally, control systems have emphasized objective- indicators [16] and subsequently communicates
oriented measures, and performance measurement and operationalizes strategic priorities [17]. Per-
has become associated with a negative feedback formance indicators and their creation comprise
model relying on detection of variances when the the core of debates over performance measure-
planned objectives and the measured actual results ment. Today, the perceived limitations of tradi-
are compared. The concept of MCS in cybernetic tional accounting-based measures are numerous
view is thus implicitly linked to the notion of di- and well-known [18], [19]: they are too historical
agnostic control systems [6] described as formal and “backward-looking”; they lack the predictive
feedback systems used to monitor organizational ability to explain future performance; they reward
outcomes and correct deviations from preset stan- short-term behavior; they lack timely signals;
dards of performance. Within traditional MCS, the they are too aggregated and summarized to guide
focus and resources are fully devoted to managing managerial action; they reflect functions instead
the external financial accounting information [13]. of cross-functional processes; they give inade-
The holistic view of MCS follows the exten- quate guidance to evaluate intangible assets. The
sion of the cybernetic model. Specifically, perfor- emphasis of the cybernetic view on the financial
mance measurement is seen as fostering learning. information has led to distortion in product cost-
Otley [12] introduces a performance management ing, inadequacy of control information and the
framework that is designed to go beyond the mea- absence of long-term performance measures [13].
surement of performance and clearly represents the The information developed for external users is
essence of the holistic view. The framework is basi- inadequate and insufficient for internal users.
cally grounded in a cybernetic approach where the Nonetheless, non-financial measures are also
following apply: stakeholder interests determine problematic. Ittner and Larcker [20] have identi-
the organizational key objectives; strategies and fied five primary limitations. First, time and cost
plans are adopted, and the processes and activities has been a problem for some companies. They
required are identified; performance is measured have found out that the costs of a system tracking
and rewarded; feedback is provided. However, the a large number of financial and non-financial mea-
latter step gives precedence to the learning process sures can be greater than the benefits. The second
that is enhanced by the opportunity to revise inef- drawback is that non-financial data are measured
fective strategies and foster the emergence of new in many ways, and there is no common denomina-
ones. Thus, obsolete paradigms and organizational tor. The third downside refers to the lack of causal
attempts can be uncoupled (i.e. unlearning) and links. Many companies adopt non-financial mea-
coupled in a different way (i.e. learning). sures without articulating the relations between
In order to stimulate learning and contribute to the measures. Fourth problem related to non-fi-
strategy formulation, performance measurement nancial measures is the lack of statistical reliabil-
systems focus attention on strategic priorities, create ity - whether a measure actually represents what

it purports to represent, rather than random mea- company Trimo was chosen as the subject of this
surement error (e.g., many non-financial data such research study. This company was often targeted as
as satisfaction measures are based on surveys with an excellent prospect for its manufacturing excel-
a small number of respondents and questions). lence, MCS, performance measurement, customer
Finally, although financial measures are unlikely relations, and organization of work in several pro-
to capture fully the many dimensions of perfor- fessional literatures. Further, the company and its
mance, implementing an evaluation system with Managing Director (MD) have received a lot of rec-
too many measures can lead to measurement dis- ognized awards for excellence. Trimo, as the case
integration, i.e. managers may follow a variety of study company, was drawn from Slovenia’s metal
measures simultaneously, but fail to monitor the processing industry. Trimo’s products and services
main drivers of success. are used mainly in the construction industry.
To summarize, the holistic view considers the Trimo provides a valuable research site for the
importance of both financial and non-financial following reasons. First, it is a leading player in an
measures as well as several factors and contexts industry which is highly competitive and increas-
that may affect their use and mix. Grounded in ingly globalized. Second, Trimo seeks to maintain
a contingency approach, the group of studies re- this leading position by drawing on the creativity
veals different factors or contexts that may affect and innovations of its employees. Third, initial in-
the mix and use of financial and non-financial vestigations confirmed that Trimo’s top manage-
measures (for a detailed discussion of contingency ment seeks to control strategic activity within the
factors see [1]). This paper focuses on the interac- company through a range of MCS.
tive use of MCS as defined by Simons [6] in his Data were collected through direct observation,
levers of control framework that corresponds to semi-structured and informal interviews with key
the holistic view of MCS. players (informants), and a review of internal and
external documents and articles (as suggested by
3. Methodology [23], [24]). This enabled us a systematic and com-
prehensive analysis. An initial interview protocol
We conducted a case study to investigate im- was developed to ensure that evidence would be
plications of MCS for performance management. collected on participants’ views related to their
We decided to use a case study as the strength of experiences and opinions on the MCS. Interview-
this method is the likelihood of it resulting in a ees were allowed to freely explore issues that they
new or upgraded theory [21]. In Otley’s [22] view, believed were important. Interviews were tape-re-
intensive, field-based methods are much more corded and transcribed to ensure accuracy. Where
likely to pick up on the wide variety of control this was not permitted we took detailed notes dur-
mechanisms deployed by organizations in practice ing the interview which we wrote up on the same
and to ground theoretical development firmly in day. In a number of cases, we did follow-up inter-
empirically observed practice. Ittner and Larcker views with managers to develop further insights
[20] argue that field-based research may be the into how employees and the organization respond-
only way to truly understand the antecedents and ed to the changes that were occurring in the period
consequences of management accounting practic- from 1992 to 2004. We supplemented data from
es. What practice-oriented research can contribute these interviews with informal conversations,
is the ability to refine the theories and empirical e-mail correspondence, and extensive archival
tests based on acquired knowledge. records (including access to internal MCS docu-
The criteria for selection of the industry and ments covering budgets, performance measure-
the research site included a dynamic competitive ment documents, reports related to performance
environment, an advanced technology base, the evaluation, Trimo’s code of conduct and mission
adoption of a TQM philosophy and its operation- statements, and publicity material). Additionally
alization through continuous improvement process we examined publicly-available data including in-
(CIP), strategy and MCS change, and management formation from the organization’s web site, other
commitment for an in-depth field study. Slovenian promotional material and evidence from second-

ary sources including newspaper articles and oth- multiple sources of evidence were used, establish-
er media information. During visits to the organi- ing a chain of evidence. Also, the draft case study
zation we were able to directly observe facilities, report was reviewed by key informants to increase
working conditions and to some extent the way in construct validity [27]. The use of multiple sources
which interviewees conducted their work. It was of evidence enabled verification through triangula-
mutually agreed upon with the MD and other top tion, which is the strength of case research [28]. A
managers which detailed company information is major concern of the present study was to triangu-
allowed to be included in the research results. Top late managers’ views and opinions with “harder”
managers as key respondents agreed to assume re- evidence, such as that obtained from documents
sponsibility for the review of the final draft of the and archival records. An interview protocol ensured
research results for accuracy and completeness. that the same themes were covered with each inter-
Consistent with Ahrens and Chapman [3] and viewee. Interview data were continually cross-ref-
Free [25], we employed Eisenhardt’s [21] methods erenced with other data sources and cross-checked
to conduct case research. This involved arranging with the chronology of activities and events that
the data chronologically and identifying common took place during the course of the study. This form
themes and unique insights and also areas of dis- of triangulation enhanced the internal validity and
agreement or conflict. We also used archival re- reliability of the case study material.
cords, particularly mission statements, program The notion of external validity for case method-
documentation and internal MCS documents, to ology relates to the generalizability of the results to
elaborate and refine our understanding of impor- the underlying theory. Case studies are generaliz-
tant issues that arose in interview discussions. We able to theoretical propositions and not to popula-
then re-organized the original transcripts around tions. Therefore, this paper’s goal is to expand and
key events and issues; and compared emerging generalize theories (i.e. analytical generalization)
findings from our study with existing research. and not to enumerate frequencies (i.e. statistical
Emerging findings and themes were noted, par- generalization). The generalization in this study
ticularly for further discussion and clarification is to the underlying theory of MCS implications
as part of our follow-up interviews with managers for performance management. Therefore, the in-
and a number of operational employees. depth explanatory case study method enables gen-
The quality of this research is established using eration of exhaustive data on the use of MCS to
four tests common to all social science methods yield much more insightful theories to be further
[26]: construct validity, internal validity, external the basis for the learning of other companies. The
validity, and reliability. Construct validity refers goal is to build a new theory or to upgrade the ex-
to establishing correct operational measures for isting one based on the empirical findings.
the concepts being studied. The major threats to With reliability of this study it is demonstrated
construct validity are those created by bias either that the operations of a study (e.g. data collection
through the process of observing itself or bias in- procedures) can be repeated, with the same results.
troduced by the observation method. The ques- We recorded accurately what interviewees said as
tionnaire used and the semi-structured interviews the interviews were recorded when allowed and
were carefully constructed and contained ques- then transcribed before being finally reviewed
tions to elicit information required to investigate again using both digital records and transcripts.
research question and as such, it is assumed that
construct validity is high. 4. Results
To avoid possible misunderstandings, respon-
dents were provided with descriptions of four le- Trimo’s history begun in 1961 when the com-
vers of control from Simons’ [6] definitions, trans- pany “Kovinsko podjetje Trebnje” was founded, as
lated into Slovene. A particular control system was socially-owned enterprise. The next year saw the
deemed to exert a particular influence only if this beginning of another new company, this one called
effect could be traced to at least three-quarters of “Kovinooprema”. In 1971, both companies and
respondents. When undertaking our case study, some smaller companies merged to form “Trimo

Trebnje”. The main activity of the new company Trimo builds its strategy of long-term growth of the
was production of metal elements and equipment company on internationalization [31]. As a result of
made of stainless steel. In the following years, the a successfully implemented turnaround, Trimo has
former Yugoslavia and third world countries had made significant improvements in the way it runs
many infrastructure and other projects, creating its business that results in the performance increas-
a high demand for Trimo’s products. The 1980s, ing year by year. In the period from 1992 to 2004
however, brought crises in the export markets and revenues and value added per employee grew seven
the company faced its first major challenge. It re- times, export grew eight times and the number of
sponded with the modernization of the production employees decreased by 21 per cent [32].
line and the introduction of new fireproof products. There was a huge effect of strategic change from
Before modernization, Trimo used polyurethane as defender to prospector [33] on the decision con-
the filling for the building panels. After modern- text in Trimo. The change process created a con-
ization, they have used environmentally friendlier text where decision-making by top management
fireproof mineral wool that enables them to pen- became increasingly complex and unpredictable
etrate to more demanding markets. For a short time as new opportunities altered strategic objectives.
it seemed that the company overcame its problems This created a level of uncertainty for subordinates
but in 1991 Slovenia became independent and the as to the priorities on which to focus their atten-
former multiethnic state of Yugoslavia fell apart. As tion. In addition, the technological and production
Trimo lost the majority of its domestic (former fed- changes associated with changes in product mix
eral) market it had to suddenly re-orientate towards and with new product development, required that
more competitive foreign markets, especially in new routines be learnt. The basic business concepts
the European Union, and the emerging Central and of continuous improvement, quality, and customer
Eastern European markets. satisfaction were the key strategies’ components for
As Trimo encountered many problems at the be- the company’s turnaround. The drivers of change
ginning of the 1990s, a true company turnaround for renewal from 1992 on were manufacturing
was needed and that also meant the need for a new excellence, responsive product development, and
vision and a different approach to developing and extensive “building” of sales network. Trimo’s
implementing business strategy. The major turn- turnaround is a result of the following [31], [34]:
around of the company was achieved in 1992 when dedication of each employee to the continuous
new top management was appointed. Today, Trimo improvement of the business; development of the
is a joint-stock company with € 42,222 value added highest quality product possible; the improvement
per employee, internationally-oriented with almost of both internal and external relationships to main-
65 per cent of exports, mainly in Europe, operating in tain customer satisfaction.
48 countries [29]. Their main products include pre- In Table 1 we show the chronological devel-
fabricated steel buildings, steel structures, façades, opment of elements that have influenced MCS in
roofs, containers and sound-isolating systems. Tri- Trimo. Key elements of the transformation pro-
mo’s main product is called “complete solutions” cess from 1992 on were the clear vision and busi-
and includes a mix of all the products and services ness strategy set at the beginning. This vision and
Trimo offers, from an idea and draft to the finished strategy have been successfully communicated to
building. When looking into Trimo’s production all employees. Cleary defined values and norms as
program, there is no similar company in Slovenia. building blocks of Trimo’s culture helped to shape
Trimo is the market leader in the area of roofs and employee behaviour to fit the new business phi-
façades from mineral wool panels in west and cen- losophy of customer orientation, continuous im-
tral Europe and in the area of steel constructions in provements and TQM. The formalised processes
Slovenia. With its business orientation towards of- of continuous improvements, TQM key files, and
fering complete solutions and with a broad produc- care for company property gave employees clear
tion program, Trimo cannot be directly compared tasks and responsibilities. Top management has
to any of its competitors that are all manufacturers managed to spread the need to change through
with relatively focused production programs [30]. constant communication and employee training.

Table 1. The chronological development of elements that have influenced MCS in Trimo in the resear-
ched period (1992 – 2004)
Year / Period Description of the particular element influencing the development of MCS in Trimo
Trimo pursued a defender strategy. It was a company with a relatively narrow production-oriented
business scope. They paid primary attention to improving the efficiency of their existing operations
and offered more limited products than competitors, and competed especially through costs. They
Early 1990s
engaged in little product and market development. At the beginning of the turnaround, the company
looked at the fundamental question: “What are we really about? – the essence of Trimo”, as they
strived to set up their vision, mission and strategy in 1993.
Trimo has begun to pursue a prospector strategy, continually searching for market opportunities,
and regularly experimenting with potential responses to emerging environmental trends. They
have become strongly focused on product and market development, but still considering costs as
prices of their inputs, especially raw materials, vary a lot. Trimo’s strategy can be characterized as
Since 1998
differentiation strategy focusing on creating a product or service that is perceived by customers as
something unique. When Trimo was in defender stage, it used control systems less intensively than
in prospector stage, when they attach a great deal of importance to forecast data in control systems,
setting tight budget goals, and monitoring outputs carefully.
Trimo achieved the breakthrough in its internationalization causing the business to expand. They
1998 stated a new vision in 1998 very ambitiously: “To become the leading producer of pre-fabricated
buildings in Europe by 2010”.
Trimo redefined its vision even more ambitiously to “…become the leading European company
offering complete solutions in the area of steel buildings”. From 2001, the product that differentiates
2001 Trimo from its competitors has been called “complete solutions” that Trimo provides to its customers.
Although Trimo is a manufacturing company, services (design, projecting, technical service) play
very important part in providing the complete solution to their customers.
Trimo’s decision to transform itself from a simple (production) company to the highly technological
and engineering company began to show results. The share of low-educated employees has been
falling, while the share of the highly educated people has been rising. In 2002, each employee had
around 50 hours of education and training.
2002
Trimo started to implement Balanced Scorecard (BSC) and upgraded Total Quality Management
(TQM) program, which has been the important part of strategic directions of the company from
1992 on. The main novelty was introduction of “Key Files”* as the tool they use for facilitating
process improvements.
Trimo launched a new production line for fireproof façade panels to expand the existing selection
2003
of façade panels with a new environmentally-friendly product.
European Foundation for Quality Management (EFQM) recognized Trimo for excellence.
2004 Production capacities were increased and production flexibility improved to accommodate the
enormous product range, which prompted the construction of a new warehouse for raw materials.
The emphasis is on the learning organization. Mission of the company is to facilitate original
and complete solutions in the area of steel buildings. The mission reflects itself in the following
stakeholder approach directions: To assure customers an increase in effectiveness by successful
From 2004
accomplishment of solutions; To develop the potentials of each individual within the company;
on
To build a financially strong company that delivers adequate ROE growth of the company to the
shareholders; To be sensitive to the environment and aware of the need to protect it for future
generations and to support different social and environmental activities.
Notes: * TQM program has been the important part of strategic directions of the company from 1992 on. “Key Files” is the tool
they use for facilitating process improvements. They are facilitated by 28 TQM promoters, who are usually prospective young
employees. Promoter motivates other employees in improving the processes. Each process improvement is monitored and eva-
luated through a “key file” with preset targets and savings estimations. The achieved results with regard to key files are monito-
red monthly by TQM promoters team and are presented quarterly at the Management board meeting.
Sources: [30], [35].

In Trimo, they monitor the achievement of stra- heading. They use BSC from 2002, although they
tegic goals every six months, while the implementa- have measured their performance from financial
tion of annual plans is controlled weekly. Corrective and non-financial perspective before. At the mo-
measures are taken as soon as negative deviations are ment, they are striving to form efficient functional
reported. Employees are informed about the com- BSCs. They want to focus especially on reducing
pany’s results in weekly or bi-weekly departmental the number of measures they are currently using.
meetings, in weekly newsletter (on one page), in Although the system is well organized, it hasn’t
quarterly company’s magazine, and at annual edu- yet received the full “buy-in” of some managers as
cation days where the MD presents last years’ re- they are still using parallel systems designed in the
sults and future plans. Trimo modifies its strategy past. As this is maybe allowed in “transition” pe-
according to the changes in its environment. They riod of applying new performance measurement
have very good experience with flexible actions as systems, it must not be tolerated when new ERP
they managed to continually reach or even exceed system will be completely implemented.
short- and long-term goals in the last decade. They One of the major conclusions with regard to
remain focused on their customers’ needs. Critical Trimo’s strategy is that MD’s leadership style is
success factors that have to be addressed for achiev- a very important determinant of Trimo’s success-
ing competitive advantage are people, customers, ful implementation of the strategy. She is very
value added, and environment [36]. charismatic and capable of mobilizing employees
Trimo began implementing strategic perfor- towards achieving common goals. When looking
mance management in the prospector period when into the classification that distinguishes transac-
it realized the importance of aligning all levers tional and transformational leadership styles [38],
of control [6] in the company, so what is critical we conclude that she is a true transformational
to the company’s success is regularly evaluated leader with the following characteristics:
and rewarded by using key performance indica- – She is a leader of innovation.
tors (KPIs). KPIs are used by top management – She motivates people to create change.
to monitor performance in key strategic areas, as She uses authority and power to inspire
defined by key processes in the company. There and motivate people to trust and follow her
are 62 KPIs [35]. 28 of them are included in BSC. example.
In Trimo, managers consider KPIs once a week at – She formulates an inspiring vision,
the Management board meeting.In diagnostic con- facilitates the vision, encourages short-term
trol, managers use management-by-exception ap- sacrifices, and makes pursuing the vision a
proach when discussing the reports at the weekly fulfilling venture.
Management board meetings. As Quality Assur-
ance Director [37] says: “Reports contain explana- MD’s characteristics of transformational leader
tions for KPIs variances and whether they present were essential in the period of strategic change
problems or not”. Only problems (i.e. deviations) from defender to prospector strategy. She as a
are discussed and appropriate actions taken. That transformational leader (and of course by the help
the changes trigger revised action plans is reflected of whole top management team) managed to alter
in the following Quality Assurance Director state- the existing structure of early 1990s and influenced
ment [37]: “In the weekly meetings in which we people to buy into a new vision and new possibili-
discuss KPI for each organizational unit (sector) ties. Based on observations it is concluded that her
specific decisions are made about what actions we primary focus since 1992, when she took a manag-
have to take in case of deviations”. Trimo’s main ing director position, has been to create a change
performance indicator is value added per employ- process continually causing people within the or-
ee. This clearly shows that Trimo is focused on its ganization to learn and grow. She builds shared
future development and growth. vision and goals and implements them through
Trimo uses balanced measurement systems teamwork and high commitment. Trimo’s man-
as a means of communicating to their employ- agement believes that fast and open flow of infor-
ees what is important and where the business is mation, ideas and efficient problem-solving are of

key importance to follow new trends in business by upgrading it to ERP system enabling them to
and for implementing all the necessary changes. monitor key performance information in real time.
Most of the Trimo’s practices are congruent Performance measurement systems assist manag-
with those usually described at prevailing best ers in tracking the implementation of business
practices: extensive training and communication, strategy by comparing actual results against stra-
decentralized decision making, teamwork and tegic goals and objectives [40].
employee involvement in problem-solving. These In the following paragraphs, the basic compo-
practices help Trimo to build their competitiveness nents of the refinement of the existing theory on
through people which is also the underlying prin- implications of MCS for performance manage-
ciple of Trimo’s culture. As such, their approach is ment are presented (see: Figure 2). Considering
difficult to imitate and thus presents a true sustain- the diffusion of the use of MCS in Trimo, the con-
able source of competitive advantage. clusion is drawn that this company does not fit in
the frames of recent research results in Slovenian
5. Discussion companies that traditional management tools are
dominating the more recently developed and more
When looking the whole 1992-2004 period, strategic-oriented practices [41]. Also, when con-
the study’s results suggest that Trimo’s change sidering the 1992-2004 period, the trend seems to
from the cybernetic to holistic view of MCS (see: be towards increasing use of the latter type. The
Figure 1) resulted in improved outcomes, as they findings of the study indicate that Trimo system-
responded to changed business conditions by al- atically uses comprehensive MCS information
tering structural arrangements within the organi- and practices. Trimo began implementing strate-
zation. The change from the cybernetic to holistic gic performance management in the prospector
view of MCS corresponds to the strategic change period when it realized the importance of align-
as Trimo moved from the defender to become the ing all levers of control in the company, so what
prospector [39]. Strategy change had a positive is critical to the company’s success is regularly
relation to Trimo’s performance. and also to the evaluated and rewarded by using KPIs. Hence, in
increasing use of comprehensive MCS. the discussion of theory refinement proposals we
focus on companies pursuing prospector strategy
orientation, operating in uncertain environment,
producing innovative customized products with
advanced technologies; all these characterize to-
day’s complex business environment.
First, this study upgrades the existing theory in
that it not just establishes a relationship between
contextual and MCS variables, but also consid-
ers how this relationship impacts on performance.
It is argued that managers and other employees
need to display performance-driven behavior for
efficient and effective management control to be
achieved. This research shows that the combina-
Figure 1. Change from cybernetic to holistic tion of performance-driven behavior and regular
view of MCS in Trimo use of MCS leads to improved results. We identi-
fied the following factors that positively influence
Trimo measures its performance with respect performance-driven behavior and can be used by
to the key elements of its strategy. Therefore, it other companies:
uses strategic performance management system – Employees understand the performance
[40]. They have been using such a system quite management and the meaning of KPIs.
systematically from 2002 on. Furthermore, they – Employees have a positive attitude towards
have enhanced the capabilities of their system performance management: they recognize

and acknowledge the need for performance

management, which makes them willing to
cooperate during its implementation.
– Performance management matches the
employees’ responsibilities: KPI-sets are
aligned with responsibility areas, so they can
be used for steering and control of those areas.
– Culture is aimed at using performance
management to continuously improve: KPIs
results are openly communicated; employees
trust the performance information.
– Performance management has a clear
management control focus: employees find
performance management relevant because
only those areas that are important to the
company’s success are considered.
Second, prior research has paid much attention

to the role of MCS to emphasize control and, to a
lesser extent, to stress flexibility. To date, most of
the empirical research has focused on issues re-
lated to the use of broad set of financial and non-
financial measures and has overlooked the use of
MCS as a whole. Therefore, this study fills this
void as it considers the importance of holistic use
of formal and informal MCS that make cause-and-
effect relationships transparent and keep managers
from sub-optimizing by improving one measure at
the expense of others.
Third, one of our important research conclu- Figure 2. Implications of MCS for organizational
sions for further refinement of the theory is that performance management in Trimo
organizational culture has been overlooked in re-
cent MCS studies. We would like to emphasize 6. Conclusion
that elements of culture are considered as infor-
mal controls which act as a starting point for the This study’s conclusion is that formal and in-
design and use of formal control systems. Control formal MCS influence the implementation and
systems are material artifacts or pattern behavior monitoring of strategies, providing feedback for
influenced by the underlying value structure that learning and information to be used interactively
creates meaning in the organization. Therefore, to formulate strategy further. The contribution of
this study argues, that current MCS theory has to this study is that it upgrades the existing theory
be refined in considering more informal controls, in that it does not only establish a relationship be-
like culture and leadership style, as catalysts of ef- tween strategy and MCS, but also considers how
ficient formal controls. this relationship impacts on performance. The
study shows that the combination of performance-
driven behavior and regular use of MCS leads to
improved results. The second contribution of the
study is that it incorporates a wider range of con-
trols, including informal controls (e.g. culture,
leadership style) as being equally important as for-

mal controls (e.g. accounting systems, BSC, profit 6. Simons R. “Levers of Control: How Managers Use
plans, internal controls), to provide a more com- Innovative Control Systems to Drive Strategic Re-
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prehensive analysis, as opposed to the majority of
1995b.
prior studies focusing on a more limited range of
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The scope of this research is limited in the 8. Henri J. “Management control systems and strat-
following respects. First, only one company was egy: A resource-based perspective”, Accounting, Or-
studied due to depth and breadth of the research ganizations and Society, 2006a; 31(6): pp. 529-558.
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9. Merchant K.A. “Modern Management Control Sys-
selected based on the preset criteria for selection.
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Directions for future research stem from the Hall. 1998.
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It would be worthwhile to conduct a longitudinal research in managerial accounting: A value-based
management perspective”, Journal of Accounting
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their decision-making, actions and performance 11. Langfield-Smith K. “Management control systems
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13. Johnson H.T., Kaplan, R.S. “Relevance Lost: The
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EDITORIAL BOARD

Editor Dzafer Kudumovic Table of Contents

Security printing with colorant control in the

Abstract The second assertion in respect to the efficiency

480 Volume 8 / Number 2 / 2013

Volume 8 / Number 2 / 2013 481

estimating the CMY value in the range from zero

DC=C0/M0 +C0/Y0 ........................................ (6)

482 Volume 8 / Number 2 / 2013

Figure 4. Channels C, M, and Y with the IR picture subtraction according to models 1 to 6

Figure 5. F-UV (365 nm)

3. Ultraviolet and infrared recognition

Volume 8 / Number 2 / 2013 483

The brown UV color appears in the visual

4. The relation of changing the UV fluores-

484 Volume 8 / Number 2 / 2013

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Effects on the traffic safety – effects by the

Abstract Key words: professional staff, a|TEST, video

486 Volume 8 / Number 2 / 2013

Volume 8 / Number 2 / 2013 487

Constantly monitoring and analysing the work

Figure 3. Certificate standard ISO/IEC

3. Application of video surveillance at the

488 Volume 8 / Number 2 / 2013

inspections of vehicle in the areas of FB&H and

Volume 8 / Number 2 / 2013 489

4. Indicators on the conducted technical On the basis of obtained data on inspections in

490 Volume 8 / Number 2 / 2013

As for the fleet in the Federation of B&H (year

Volume 8 / Number 2 / 2013 491

492 Volume 8 / Number 2 / 2013

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7. Barut M., Klisura F., Hrapo S., Kulović M. ,

8. Brdarević, S.; Jašarević, S.; Klisura, F.: Significan-

9. Jašarević S.,Klisura F., Barut M., Brdarević

494 Volume 8 / Number 2 / 2013

Experimental testing of reinforced concrete

Abstract When fracture of concrete beams appeared,

Volume 8 / Number 2 / 2013 495

As a rule, in the large number of beams, the first

Figure 6. Occurrence of cracks and scissures in

In 60% of cases, the first cracks appeared under

496 Volume 8 / Number 2 / 2013

Table 2. Numerical and measured tension values

16ф12 uф8/e=10,7 6ф12 u=ф8/e=7

Volume 8 / Number 2 / 2013 497

really needed (additional percentage of transversal

498 Volume 8 / Number 2 / 2013

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of cracking. By increasing the load, the

500 Volume 8 / Number 2 / 2013

Application of fuzzy logic in the process of

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V - Index set of all vehicles, where V = {1, 2,..., K } . { ( ) }

yijk = 1 if vehicle k serves customer j ;

otherwise, yijk = 0 . l kj ≤ Ck , j ∈ J , k ∈ V ........................ (9)

s j - The service duration time of customer j . j∈J i∈J ....................................... (13)

504 Volume 8 / Number 2 / 2013

Volume 8 / Number 2 / 2013 505

506 Volume 8 / Number 2 / 2013