CONTROL TECHNIQUES

OLD CONTROL TECHNIQUES

• Control techniques are used to control the activities in their
organisations. They are classified as old and new
• Old control techniques are those which have long been used
by managers.
• Important techniques under this are
• Budgeting
• Cost accounting
• Break even analysis
• Financial statements and ratio analysis
• Auditing , reports, rules and personal observation
 NEW CONTROL TECHNIQUES
PERT and CPM
These techniques which are of recent origin do not markedly overlap the
traditional control devices , but provide the kind of information not readily
available with the traditional methods.
1. PERT and CPM are the two major techniques under this (Programme
Evaluation and Review Technique) and CPM(Critical Path Method). Both
techniques were developed independently, although virtually at the same
time, around 1957- 58.
2. PERT was first developed for the US navy in connection with the polaris
weapons system and is credited with reducing the completion time of the
programme by two years. CPM was developed jointly by Du Pont and
Remington Rand of USA in order to faciliate the control of large, complex
industrial projects.
3. Both PERT and CPM are primarily oriented towards achieving better
managerial control of time spent in completing a project. Under both the
techniques, a project is decomposed into the activities and all the
activities are integrated in a highly logical sequence to find the shortest
time required to complete the entire project
4.The main difference between PERT and CPM lies in the treatment of time
estimates . PERT was created primarily to handle research and development
projects in which time spans are hard to estimate with any degree of accuracy.
5. Consequently, PERT time spans are based on probabilistic estimates. CPM
on other hand, is usually concerned with the projects that the organisation
has had some experience with.
6. The use of both PERT and CPM has spread rapidly today in controlling time-
critical projects such as reinforcing a weak dam, constructing a building at an
olympic site or completing contracts that include penalty payment clauses.
Many companies , make use of these techniques for working out the cost
estimates of a project also.
• STEPS INVOLVED IN DEVELOPING THE NETWORK
Both under PERT and CPM, the purpose is to divide the project into a number of
operations and then draw of the order in which and of the time when these
operations should be started and completed. This picture is known as the Project
Graph or Arrow Diagram.
1. The first step is to break down the whole project into a number clearly
identifiable activities and events. An activity is the actual performance of a
task. An event is that particular instant of time at which some specific part of
a plan has been achieved. Any two activities are always joined by some
activity .The preceding event is called the “ tail event” and the following is
called the “head event”.
2. Once the list of various activities is ready, we have to examine each activity in
relation to the other activity and task ourselves the following questions:
What other activity must be completed before this activity can start
What activity cannot start until after this activity is done?
What other activity can be done while this activity is being done?
3. The next step is to draw the diagram portraying the precedence, concurrence
and subsequence of all activities and events. On this diagram, all activities are
shown by arrows and events will be shown by the circles. This diagram also tells us
the time required for the completion of each activity. In CPM diagrams, a single
time estimate is written against each activity. In PERT, however each activity is
assigned three – times estimates plus a fourth which is based on the other three.
Generally the three time estimates for each activity are combined into a weighted
average, called expected activity time.
4.Finally , the critical path is determined. The critical path is the longest path
through the network in terms of the amount of time the entire project will take. It
is critical because the time spent on the activities that lie along this path must be
shortened if the total time of project is to be shortened. For example, if in a project
three activities A,B and c are to be completed of which activities A and B (requiring
6 days and 3 days, respectively) can be simultaneously be carried out but the
activity C (requiring 2 days) can start only on the completion of the first two
activities , then the critical path would be along A and C. paths other than critical
are sub critical. The difference in length between the critical and sub critical is
known as slack or float.
 USES OF PERT and CPM

1. It ensures actual planning. In PERT , a manager is forced to plan. He is

required to identify all the key events and activities and their sequencing and
inter- relationships. He is also required to probe all possibilities. Therefore if
he is non planner he cannot hide his incompetence for long.
2. It makes every manager fully aware of his responsibilities. Every manager
comes to know the precise start time for his work its cost requirements and its
relationships with other works.
3. It ensures improved decision making. Management can stimulate the effects
of alternative decisions on paper or on a computer instead of tampering with
expensive operations.
4. It facilitates future oriented control. The network needs are constantly
reviewed and updated on the basis of feedback from lower levels of
management. This ensures advance action and management by exception at
upper levels.
5. It ensures simultaneous performance of different parts of the work. This
shortens the total time required for the project.
 Limitations of PERT and CPM

1. They are suitable mainly in cases where time is the essence of a program
or where cost band time are so related that by controlling time, cost is
controlled.
2. Estimates of time, cost and events are seldom available with the precision
required for effective control through PERT.
3. Errors in estimates of the numerous interlocking points of the chart may
add up to a situation to make the PERT chart erratic and unreliable as
control technique.
4. PERT has a limited application to one time non repetitive projects. It does
not help control in continuous processing and production because once a
recurring sequence of events is clearly established a continuing control
becomes necessary. Used with very complex projects, it is claimed that
PERT is expensive.
 DIFFERENCES B/W PERT and CPM
PERT
• It stands for Project Evaluation
Review Technique.
• It emphasizes more on events.
• It is probabilistic in nature.
• Its is used in repetitive jobs.
• Its application is in R&D.
• It can be applied only for big
projects.
• It is three time estimate,
optimistic time, most likely
time.
CPM
• It stands for Critical Path
Method.
• It emphasizes more on
activities.
• It is deterministic in nature.
• It is used in non repetitive.
• It application is in business and
construction of projects.
• It can be applied for both small
as well as big projects.
• It is a single time estimate
only.