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Understanding Management Control Functions

Controlling is a key management function that involves comparing actual performance to standards, evaluating results, and taking corrective actions. It occurs at all levels of management and features like establishing standards, measuring performance, determining if standards are met, and taking corrective actions when needed. Traditional control techniques include budgetary control, standard costing, financial ratio analysis, internal auditing, break-even analysis, statistical control, and critical path/network methods. Modern techniques also aid in effective controlling.
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0% found this document useful (0 votes)
14 views8 pages

Understanding Management Control Functions

Controlling is a key management function that involves comparing actual performance to standards, evaluating results, and taking corrective actions. It occurs at all levels of management and features like establishing standards, measuring performance, determining if standards are met, and taking corrective actions when needed. Traditional control techniques include budgetary control, standard costing, financial ratio analysis, internal auditing, break-even analysis, statistical control, and critical path/network methods. Modern techniques also aid in effective controlling.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Controlling is a primary goal-oriented function of management in an

organisation. It is a process of comparing the actual performance with the set


standards of the company to ensure that activities are performed according
to the plans and if not then taking corrective action. Every manager needs to
monitor and evaluate the activities of his subordinates. It helps in taking
corrective actions by the manager in the given timeline to avoid contingency
or company’s loss. Controlling is performed at the lower, middle and upper
levels of the management.

Features of Controlling

 An effective control system has the following features:


 It helps in achieving organizational goals.
 Facilitates optimum utilization of resources.
 It evaluates the accuracy of the standard.
 It also sets discipline and order.
 Motivates the employees and boosts employee morale.
 Ensures future planning by revising standards.
 Improves overall performance of an organization.
 It also minimises errors.
Controlling and planning are interrelated for controlling gives an important
input into the next planning cycle. Controlling is a backwards-looking
function which brings the management cycle back to the planning function.
Planning is a forward-looking process as it deals with the forecasts about the
future conditions.
The four steps in the control process are : Establishing Standards and
Methods for Measuring Performance; Measuring the Performance; Determination of
Whether the Performance Matches the Standard, and Taking Corrective Action.
Concerning the Establishment of Standards and Methods for Measuring Performance, Budgetary Control- Budgeting simply means showcasing plans and expected results
a company must develop, document and explain clear standards and methods for using numerical information. As a corollary to this, budgetary control means controlling
measuring particular performances. These must be specific and understood so regular operations of an organization for executing budgets. A budget basically helps in
effective measuring of tasks and responsibilities can take place. In this way, an understanding and expressing expected results of projects and tasks in numerical form.
enterprise can gain a good understanding of who is performing according to company For example, the amounts of sales, production output, machine hours, etc. can be seen in
objectives. Proper standards and methods for measuring performance helps a budgets. There can be several types of budgets depending on the kind of data they aim to
company tweak their processes as required for better results. Performance project. For example, a sale budget explains selling and distribution targets. Similarly,
measurement helps them see where their processes and procedures need improvement. there can also be budgets for purchase, production, capital expenditure, cash, [Link] main
aim of budgetary control is to regulate the activity of an organization using budgeting.
This process firstly requires managers to determine what objectives they wish to achieve
Concerning Measuring the Performance, this must be done in a consistent, regular from a particular activity. After that, they have to lay down the exact course of action that
manner to facilitate proper data acquisition to make informed decisions concerning they will follow for weeks and months. Next, they will translate these expected results into
performance. This regular measuring gives management substantial information so monetary and numerical terms, i.e. under a budget. Finally, managers will compare actual
they can again make adjustments as necessary to their protocols. performances with their budgets and take corrective measures if necessary. This is exactly
how the process of budgetary control works.
Pertaining to Determining Whether the Performance Matches the Standard, company
management compares measured results with the standards they previously
established. Therefore, they can determine if performance is up to their expectations - Standard Costing -Standard costing is similar to budgeting in the way that it relies on
or not. With this comparing, they can decide to abandon certain policies, procedures numerical figures. The difference between the two, however, is that standard costing relies
or tasks, modify them, or leave them in place. on standard and regular/recurring [Link] this technique, managers record their costs
and expenses for every activity and compare them with standard costs. This controlling
technique basically helps in realizing which activity is profitable and which one is not.
As concerns Taking Corrective Action, a company must use the information gathered
from the control process. Not taking action based on revealed information (which
shows inefficiencies and/or poor employee performance) means they wasted their Financial Ratio Analysis -Every business organization has to depict its financial
time and resources instituting the control process. They must take action that gives performances using reports like balance sheets and profit & loss statements. Financial
solutions to problems. They must then measure these corrective actions some time ratio analysis basically compares these financial reports to show the financial performance
down the road to see if they are performing up to corporate expectations. of a business in numerical [Link] studies of financial statements
Consequently, the control process is something that is ongoing in organizations to showcase standards like changes in assets, liabilities, capital, profits, etc. Financial ratio
make sure that the business is performing optimally. analysis also helps in understanding the liquidity and solvency status of a business.

Internal Audit- Another popular traditional type of control technique is internal auditing.
This process requires internal auditors to appraise themselves of the operations of an
[Link], the scope of an internal audit is narrow and it relates to financial
Traditional Types of Control Techniques and accounting activities. In modern times, however, managers use it to regulate several
other [Link] example, it can also cover policies, procedures, methods, and management
Despite the emergence of modern techniques, traditional practices are still widely in use of an organization. Results of such audits can, consequently, help managers take
these days. Let us discuss them one by one. corrective action for controlling.
Break-Even Analysis- Break-even analysis shows the point at which a business neither 1. Critical path method
earns profits nor incurs losses. This can be in the form of sale output, production volume,
the price of products, etc. Managers often use break-even analysis to determine the
Under this technique, managers break down tasks into smaller factions and define the
minimum level of results they must achieve for an activity. Any number that goes below
relationships between them. Next, they mark these relationships on a “network diagram”
the break-even point triggers corrective measures for control.
using flowcharts and mapping techniques.

Statistical Control- The use of statistical tools is a great way to understand an


organization’s tasks effectively and efficiently. They help in showing averages,
Changes in one faction, in turn, helps them determine how other factions will change as
percentages, and ratios using comprehensible graphs and [Link] often use pie
well. This process, thus, makes controlling and planning easier and effective.
charts and graphs to depict their sales, production, profits, productivity, etc. Such tools
have always been popular traditional control techniques.

2. Programme evaluation and review technique


Modern Control Techniques

Managers generally deploy this technique for planning and controlling individual projects.
Zero-Base Budgeting It basically includes tasks like planning schedules, budgeting, forecasting requirement of
resources and developing alternative plans. Furthermore, this technique uses probability
and linear programming to assist in control management. Probability estimates the
American business executive and management expert Peter Phyrr first introduced zero-
chances of success and failure of each part of a project. On the other hand, linear
base budgeting in the 1970s. This process requires a manager to prepare and justify his
programming helps in maximizing the objectives of each individual action.
budget from scratch (hence the name zero-base). The burden of proving the importance of
each facet of budgeting lies on managers here. Under this process, managers first have to
define the objectives of each activity they propose to supervise. Next, they should prepare
alternative spending plans relating to smaller facets of each activity. These plans relate to
minimum expenditure levels, the requirement of resources, targets achievable with
additional expenditure, etc. After preparing these alternative plans, managers have to rank
them in priorities. Furthermore, they need to keep evaluating these plans routinely after
implementing them. This technique of controlling allows effective budgeting as well as
sound planning.

Organizational Control Systems


Network Analysis

Organizational control is important to know how well the organization is


A network is basically a system of interconnected things and plans. Network analysis, performing, identifying areas of concern, and then taking an appropriate action.
thus, is a technique of planning and controlling complex relationships between business There are three basic types of control systems available to executives: (1) output
activities. These network techniques may be of the following two types: control, (2) behavioral control, and (3) clan control. Different companies opt
different types of control, but many organizations use a mix of all of these three
types. and others. The expected results included enlightened workers and a far more mutual
understanding, and a better teamwork.
Output Control
Output control zeroes in on measurable outcomes within an organization. In output
control, executives must decide the acceptable level of performance, communicate Controlling is an important function of management. Its importance
the general expectations to the employees, track whether the performance values becomes apparent when we find that it is needed in all the functions of management.
meet the expectations, and then make any needed changes. Controlling checks mistakes and tells us how new challenges can be met or faced. The
success of the organisation thus hinges on the effective controlling.
Behavioral Control
Behavioral control generally focuses on controlling the actions unlike the results in Controlling is the last function of the management process which is
case of output control. In particular, specific rules and processes are used to structure performed after planning, organising, staffing and directing. On the other hand,
or to dictate behavior. For example, firms having a rule that requires checks to be management control means the process to be adopted in order to complete the
signed by two people to try to prevent employee theft. function of controlling. The following steps are included in it:

Clan Control
Clan control is a non-standardized type of control. It depends on shared traditions,
expectations, values, and norms. Clan control is common in industries where
creativity is vital, such as many high-tech businesses.

Management Fads
There are many management fads that have been closely tied to organizational
control systems. Management by objectives (MBO) is a procedure wherein
managers and employees work together to create and attain goals. These goals help
the firm guide employee behavior and serve as benchmarks for measuring their
performance.

A quality circle is a formal employee group that often meets regularly to brainstorm
various solutions for organizational problems. As the name “quality circle” suggests, Bridge Construction Management
finding out behaviors that would help to improve the quality of products and/or the
operations management procedures that create the products was the formal charge of
this circle. Success of any project depends upon how best the activities are managed
from conception till completion. There are various steps which add to in overall
Sensitivity training groups (or T-groups) were used in many organizations in the completion of the project viz. timely decision, timely approval of design, & drawings
1960s. It involved approximately eight to fifteen people coming together to openly
and financial management. There is a saying that “stitch in time saves nine.” In case
discuss their emotions, feelings, beliefs, and biases about workplace issues. It did not
have the rigid nature of MBO, but the T-group involved free-flowing conversations. of bridges also final completion depends upon how best the critical issues/are
These discussions lead individuals to nurture a greater understanding of themselves managed/ decided during the process of construction. To get the project completed in
time most important point is selection of right contractor for executing the work, utilized meticulously to have optimum usage. Decision making during the process of
pragmatic time schedule and efficient management of the contract. All the bottlenecks execution plays a vital role in overall completion. This may be technical,
be attended to as a joint effort of the project. The management should be fully administrative and other related matters. For repeated type of problems we must lay
conversant with the growth of activities in a bridge project in advance. Various down the schedule for decision and should not delay beyond certain period. Timely
aspects for effective construction management of bridge activities have been decision pays its dividends but the delayed action has multidimensional effect on the
discussed in this paper. particular job. Any committee or Board of Officers formed to take decision/ review
certain technical details based on actual construction problems vis-à-vis problem
anticipated before the start of work be reviewed to stick the time schedule. No
Management Requirement
extension to such Board/Committee be considered. This will provide smooth flow of
With large amount of infrastructure development activities around us, specially for activities at site and bridge can be completed in time.
four laning and other highway work, sizable funds are dedicated for construction for
road project, it would be prudent to have these projects completed well in time rather Bridge Construction Overview
than having delayed completion. Accordingly project preparation and process of
giving the work to the suitable contractor is judiciously decided. Planning and monitoring is basically what is to be done in due course of time, and
how it is to be executed in the planned/allotted period for the particular bridge. All the
pros and cons of the likely problems in the anticipated period need to be examined.
Also the records of important points are made available at site with executives as
The necessity of efficient management is actually felt due to: follows:

 Works are to be completed in time as per schedule of work as funds are  Why the particular site was selected for the bridge.
fully dedicated.  Why particular type of bridge is proposed. (structural arrangement)
 Requirement of quality and advanced techniques of design to give slender  Site data
structural members and impart optimization.  Proposal for preparation drawing.
 Increase in size of projects involving large quantities of construction  Soil strata in the form of bore log.
materials to be handled and innovative designs for bridges are being  Model study detail if already done for scour assessment.
finalized viz cable stayed bridges or other long span bridges.  Salient features of the bridge and quantities of each items involved.
 Increase in complexity of project involving high grade materials.  Upto date approved structural drawings.
 Shortage of skilled manpower specially in case bridge projects are located  Details of all meetings and up to date decision if at all taken.
in remote area.  Decision making mechanism in case of any dispute i.e. Dispute Review
Borad (DRB) be already finalized.
Due to the above requirements, the construction equipment is required to be carefully
identified and assessed so that full advantage can be taken of the productive potential
during its use at site. This requirement can be finalized based on type of design of
foundation or superstructure and ground strata and the proposed period of completion
of the particular project. The costly equipment cannot be left idle and should be
Bridge Foundation and Substructure Superstructure

For particular site there are numerous structural arrangements possible. Final proposal
Foundation construction for any large bridge takes time. Problems encountered during be made based on the greater examination of site condition may be technical, aesthetic
construction of foundation depend upon type of foundation, soil strata encountered, and construction methodology. Special care need to be taken in case of deep gorge
equipment/plant deployed and logistic problems. Construction difficulties anticipated where there is sizable difference between soffit level and bed level. This may pose
during the execution be kept in view while planning the works/ period for the job. difficulties for staging and shuttering. Proposal recommended for site should be well
Foundation can be opened foundation, pile foundation, well foundation or any other read in advance. After the proposal has been finalized for particular bridge, the
types of foundation. In case of well foundation, the various type of soil are construction can be planned. The quantities of each items involved and execution
encountered and it becomes difficult to give any clear time schedule about the sinking method be listed. Basically method statement should be kept ready for overall
of wells unless the soil details are very clear and the anticipated profile matched with execution including job estimate. This data will be kept to ensure smooth progress of
the actual encountered. In case of bouldery and clayey soil the rate of sinking project.
schedule is likely to be slow when compared with the sandy soil. Also there may be
requirement of pneumatic sinking technique subsequent to open grabbing due to
Management of Construction Activities
difficulties in sinking of well. As the cost of pneumatic sinking is very high, this
should be deployed judiciously. In such cases, there is need to keep the details of all
the sinking difficulties in a systematic order and this can be reviewed in consultation
with decision making authority. Review of soil parameter if required be given more Management of bridge construction demands that construction manager to reorient all
attention and wherever required the details may be referred to material testing the resources in such a way that the project is completed without any time/cost over
laboratory but within the time schedule. This may be helpful to recommend revision run. Output of the work depend upon how best the activities are managed which will
in foundation level, wherever possible based on soil data report. Tough strata in the vary from site to site based on many factors. Based on the experience, various aspects
foundation stage should be considered as engineering friendly be identified for efficient construction management. Schedule of construction based
Critical Path Method (CPM) be prepared along with major milestone and Bar Charts.
Latest software management tool can be used for this in case of a major bridge
project. Design of Bridge is a post sanction in case of departmental construction and
after tendering action in case of bridges throughout contract. It is necessary that
design must be preceded by at least six to eight months or say 50% ahead of execution
of concerned event. It has to be ensured that this should be completed well in time.
Reviseddesign if any should be updated and clarified without delay. Observation on
the approved design drawing if any be passed to design office immediately to make
the changes. This is most important in case of foundation where design soil parameter
needs to be adhered to. These may vary on actual execution and require review of
design. To keep details with design office it is necessary that progress of foundation
work be well informed to the design office.
Plant Management Finance Management

Requirement of equipment/plant be assessed systematically and accordingly action No project or project management can be meaningful without this. In case of
may be taken to arrange this for a particular job. Government work the manager should get his budget fixed on monthly basis, on the
basis of work done or minimum to be fed at site, on the decision of higher authorities.
Key to measure financial planning lies in taking all above action and taking suitable
 Quantum of work covering all the items with specifications
measures at appropriate times to ensure that individual inputs are achieved to the
 Time available for work excution
maximum and capital investment kept at the lowest level.
 Details of equipment and also minimum requirement as per job position.
 Rated capacity of equipment/ plant
 Assessed capacity Quality Management
 Schedule of maintenance
 Inventory of spare parts required Quality of work at site is most important activity and manager should always grapple
 Repair cover to equipment/plant to improve the same. Training to staff should be provided to update the quality control
measure and it should become part of the work culture. At site laboratory be
established to check the quality of concrete.
The layout should ensure minimum movement of material, equipment and personnel
of the area is an essential condition, for operation of some equipment for example
Tests be analysed at site based on the size of job. Mix design should be prepared
tower crane operation not possible at heavy winds speed. Stone crusher if required for
based on the latest code and to produce the concrete of desirable strength. Compaction
site should be suitably located. Supporting facilities such as generator, office, stores
of concrete be given more attention before final setting. Latest guidelines issued by
should not be located in the path of dust, flow. The service road should be properly
IRC and MORT&H be followed for systematic quality assurance. Quality assurance
maintained. Receipt and despatch of equipment be kept in proper format to keep of
on ground improve the aesthetic of structures.
details of its utilisation at site.

After staff has reported at site necessary action should be taken to utilise all the Safety Management
equipment. The required facilities for servicing and repair must be established to meet
requirements. Safety of employees at site should be observed very seriously. All the workers be
given briefing about the safety requirements based on the site hazards. Specially when
the simply supported structure is attempted on deep gorge, suitable arrangement
Material Management should be made to avoid any accident at site during insitu casting of superstructure.
Also in case of foundation if the deep excavation is involved, the quality of
Material management is a parallel activity along with start of the Project. This cover
surrounded soil be kept in view. There are incidents where few workers got buried in
procurement of camp material, office equipment, major purchased items, such as
deep excavation due to sudden slide, this should be taken care. In case the well
aggregates, sand, cement, steel, structural steel, shuttering consumables, electrical
foundation is being attempted using double drum winch care need to be taken during
fittings. Forecasting of quantities and cost of various items on monthly basis must be
grabbing process. During the diving process the proper coordination needs to be made
done at least three to six months in advance which should be regularly reviewed.
between the diver and attendant to intimate about the problems if any, for which local
signaling arrangements used, this can be finalised at site based on convenience. In
case the pneumatic sinking is being used for well foundation, following safety
measures, may be observed:  Proposal and Bid Estimates – These documents describe how the
contractor envisioned the construction of the project and his plan to
accomplish the work. It includes information about costs and schedule as
well as construction methods.
 Project Schedule - This is one of the most overlooked project records and
 Accelerate circulation of air
it can provide the best documentation in a claim situation. The original
 Slow decompression
baseline schedule sets the mark for monitoring the effects of any delays or
 Duplicate and spare equipment unforeseen project disruptions.
 Illumination inside working chamber  Project Change orders – Any variances from the original contractual
 Signaling arrangement requirements must be documented and separated from the original scope of
 Caution about incidental loading work requirements. Daily reports, time sheets, letters of correspondence
and meeting minutes or any other documentation discussing agreements
These precautions should be seriously followed to avoid any catastrophes at site. made between parties should be readily available.
Safety management is also important in case on staging shuttering for superstructure.
There are cases in the past where the collapse of shuttering/staging has led to loss of Personnel Management
life. This needs check in before casting the superstructure. In case steel truss is being
used as a staging arrangement, design and launching arrangement be thoroughly Manager should put the engineers, to activities they can perform better. Individual
checked. differences should be studied in detail to assign the suitable job to engineers,
administration and account staff. Manager should be a good Psychologist to assign the
work based on the inclination of the people at work. A considerable free hand be
Documentation Management
given to see what an individual can produce. He should be guided from time to time
Document management during the contract is an art in itself. Proper and systematic and work be kept on progress.
management of documents is utmost requirement for department as well as contractor. Decision making circulated, critical activities be cleared by manager after proper
All the details should be property vetted by both the parties. Better documentation deliberations. Also care must be taken to select a new entrant suiting to the job for
will avoid any disputes during the currency and after completion of contract (i.e requirement. With the changing scenario—there is urgent need to manage the bridge
arbitration cases areavoided). This needs special attention of the managers of both project effectively. Construction management basically is a tool to complete the
sides. Most of the cases being dealt by the arbitrator in our country, due to lack of project effectively within fixed amount but in less time. Manager should have
understanding between two parties which, are further affected by improper knowledge sequence of all the activities. Decision making for both sides the
documentation. In fact better documentation reflect the system of management in any contractor and the client needs to be fast and time bound otherwise the project will get
project. Control estimate is required to be prepared annually to assess the job position. delayed which will have cost overrun. Control in form of reviewing monitoring has a
This should include work done till date and balance work in terms of money. This will catalyst effect to boost the progress.
be a guiding principle to progress the job in later period till completion. This practice
is a must in all major bridge under construction. As project management has evolved,
documentation has become a key skill particularly as projects become more complex
and difficult. Organised documentation is the best defence against claims.
Documentation that every project manager must have at their disposal are as under:

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