Control techniques


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Control techniques

  1. 1. CONTROL TECHNIQUESThere are 2 types of control techniques.1-Old control technique2-New control techniqueOLD CONTROL TECHNIQUE:These are those which have long been used by managers. Some of the important techniques underwhich this category are,1-Budgeting2-Cost accounting3-Break even analysis4-Financial statement and ratio analysis5-Auditing6-Report7-Rules8-Personal observationA Budget is a statement of anticipated results during a designated time period expressed in financial andnon financial terms.ADVANTAGES:Improved co ordination and communicationBoost motivation and moralIncrease learning from past experience
  2. 2. DISADVANTAGE:RigidInflexibleExpensiveCurb the initiative of a good managerNEW CONTROL TECHNIQUES:These techniques which are of recent origin do not markedly overlap the traditional control devices butprovide the kind of information not readily available with the traditional method .It includePERT (Program Evaluation and Review Techniques)CPM (Critical Path Method)Human resources accountingPERT:PERT is method to analyses the involved tasks in completing a given project, specially the time neededto complete each task and to identify the minimum time needed to complete the total project .This project model was the first of its kind, a revival for scientific management, founded byFrederick Taylor (Taylorism) and later refined by Henry Ford (Fordism). DuPonts critical pathmethod was invented at roughly the same time as PERT. A PERT chart is a tool that facilitates decision making. The first draft of a PERT chart will number its events sequentially in 10s (10, 20, 30, etc.) to allow the later insertion of additional events. Two consecutive events in a PERT chart are linked by activities, which are conventionally represented as arrows (see the diagram above). The events are presented in a logical sequence and no activity can commence until its immediately preceding event is completed. The planner decides which milestones should be PERT events and also decides their “proper” sequence. A PERT chart may have multiple pages with many sub-tasks.PERT is valuable to manage where multiple tasks are occurring simultaneously to reduceredundancy.
  3. 3. STEPS INVOLVED IN PERT:PERT planning involves the following steps: 1. Identify the specific activities and milestones. 2. Determine the proper sequence of the activities. 3. Construct a network diagram. 4. Estimate the time required for each activity. 5. Determine the critical path. 6. Update the PERT chart as the project progresses.ADVANTAGES: PERT chart explicitly defines and makes visible dependencies (precedence relationships) between the WBS elements PERT facilitates identification of the critical path and makes this visible PERT facilitates identification of early start, late start, and slack for each activity, PERT provides for potentially reduced project duration due to better understanding of dependencies leading to improved overlapping of activities and tasks where feasible. The large amount of project data can be organized & presented in diagram for use in decision making. DISADVANTAGES: There can be potentially hundreds or thousands of activities and individual dependency relationships PERT is not easily scalable for smaller projects The network charts tend to be large and unwieldy requiring several pages to print and requiring special size paper The lack of a timeframe on most PERT/CPM charts makes it harder to show status although colours can help (e.g., specific colour for completed nodes)
  4. 4. CPM (Critical path method):The Critical Path Method (CPM) is one of several related techniques for doing project planning.CPM is for projects that are made up of a number of individual "activities." If some of theactivities require other activities to finish before they can start, then the project becomes acomplex web of activities.Steps CPM SummaryCPM helps you identify a complex projects critical paths. You can find how long a project will take andwhich activities must be on time. If you also have information about costs and crash costs and times,CPM helps you determine how long the project should take, and which activities should be sped up("crashed"). As we are doing it in this class, the steps are: 1. Have a list of the activities. 2. Draw the network diagram. 3. Put activity names, node numbers, times, and costs in a spreadsheet. 4. Use Pathfind to generate code for the paths. 5. Put the path information into the spreadsheet. 6. Calculate the paths times. 7. Identify the critical paths, and the activities in each path. 8. Set up the formula to calculate the projects total cost. 9. Fill in the Tools | Solver... form. 10. Solve, and fix errors, if any. 11. For an economic analysis, change the maximum time constraint and solve again. Repeat until costs, including penalties and bonuses, start to go up. ADVANTAGE: Makes dependencies visible between the project activities; this is done by constructing project network diagrams or precedence diagrams
  5. 5. Organizes large and complex projects, hence allowing a more systematic approach toproject planning and scheduling, project execution, and risk managementEnables the calculation of the float (slack) of each activity.The float tells you exactlyhow long an activity can come in late without it impacting the project schedule.Encourages the Project Manager to reduce the project duration by optimizing thecritical path and using compression techniques as applicableIncreases visibility of impact of schedule revisions, which are usually necessary whenmajor milestones have been missed or when the risk of missing a major milestone loomslargeEnables the Project Manager to optimize efficiency by allocating resourcesappropriately, consequently the overall cost can be reducedProvides opportunities to respond to the negative risk going over-schedule byidentifying the activities that are most criticalDISADVANTAGES:For large and complex projects, there’ll be thousands of activities and dependencyrelationships. Without software it can be mighty difficult managing this. To makematters worse, if the plan changes during project execution then the precedence diagramwill have to be redrawn. Fortunately, we do have relatively cheap software that canhandle this with ease.One of the advantages of drawing a project precedence diagram is that you can print andstick in the project area. The precedence diagram enables the team to stay focused onproject activities. Project team members are always cognizant of the critical path since itis visible everyday. However, for large projects with thousands of activities, it may bedifficult to print the project network diagram. You would most definitely need aplotter.