ENGINEERING MANAGEMENT
CONTROLLING
GROUP 6
GIRON,�MIRACLE�
CASUPANAN,�KATRINA�ELISHAH
LAYUG,�ANNA�JANINA�
BONETE,�CYNTHIA
GROUP 6
CONTROLLING
GIRON
REFERS TO THE “PROCESS OF ASCERTAINING WHETHER
ORGANIZATIONAL OBJECTIVES HAVE BEEN ACHIEVED; IF NOT, WHY
NOT; AND DETERMINING WHAT ACTIVITIES SHOULD THEN BE TAKEN
TO ACHIEVE OBJECTIVES BETTER IN THE FUTURE.”
Control
refers to the actions made to ensure that activities performed match the desired activities
and goals that have been set.
GROUP 6
GIRON
IMPORTANCE OF CONTROLLING
When controlling is properly
implemented, it will help organization
achieve its goal in the most efficient
and effective manner possible.
GROUP 6
STEPS IN CONTROL
PROCESS
1
ESTABLISHING PERFORMANCE
OBJECTIVES AND STANDARDS
2
MEASURING ACTUAL
PERFORMANCE
3
COMPARING ACTUAL
PERFORMANCE TO OBJECTIVES
AND STANDARDS
4
TAKING NECESSARY
ACTION
GROUP 6
ESTABLISHING PERFORMANCE
OBJECTIVES AND STANDARDS
CASUPANAN
• In�controlling,�what�has�to�be�achieved�must�first�be�determined.�
1. Sales targets – which are expressed in quantity or monetary terms;
2. Production targets – which are expressed in quantity or quality
3. Worker attendance – which are expressed in terms of rate of absences;
4. Safety record – which is expressed in number of accidents for given periods.
5. Supplies used- which are expressed in quantity or monetary terms for given periods.
GROUP 6
MEASURING ACTUAL PERFORMANCE
LAYUG
There is a need to measure actual performance so that when shortcomings occur, adjustments could be
made. The adjustments will depend on the actual findings.
The measuring tools will differ from organization to organization, as each have their own unique objectives.
Some firms, for instance, will use annual growth rate as standard basis, while other firms will use some
other tools like the market share approach and position in the industry.
GROUP 6
BONETE
COMPARING ACTUAL PERFORMANCE TO
OBJECTIVES AND STANDARDS
Once actual performance has been determined, this will be compared with what the
organization seeks to achieve. Actual production output, for instance, will be compared with
the target output.
Example: A construction firm entered into a contract with the government to construct a 100
km roadwithin ten months. It would, then, reasonable for management to expect at least
10kms to be constructed every month. As such, this must be verified every month, or if
possible, every week.
GROUP 6
3 TYPES OF CONTROL
1
FEEDFORWARD CONTROL
WHEN MANAGEMENT ANTICIPATES POTENTIAL
PROBLEMS AND PREVENTS THEIR OCCURRENCE.
EXAMPLE:
The manager of a chemical manufacturing firm makes sure that the best people are
selected and hired to fill jobs. Materials required in the production process are
carefully checked to detect defects. The foregoing control measures are designed to
prevent wasting valuable resources. If these measures are not undertaken, the
likelihood that problems will occur is always present.
CASUPANAN
GROUP 6
GIRON
TAKING NECESSARY ACTION
The purpose of comparing actual performance with the desired result is to provide
management with the opportunity to take corrective action when necessary.
Citing the previous example if the management of the construction firm found out that
only 15kms were finished after 2 months, then any of the following actions may be
undertaken:
1. Hire additional personnel;
2. Use more equipment; or
3. Require overtime.
GROUP 6
3 TYPES OF CONTROL
2
CASUPANAN
CONCURRENT CONTROL
UNDERTAKEN WHEN OPERATIONS ARE ALREADY ON GOING
AND ACTIVITIES TO DETECT VARIANCES ARE MADE.
EXAMPLE:
THE�MANAGER�OF�A�CONSTRUCTION�FIRM�CONSTANTLY�MONITORS�THE�
PROGRESS�OF�THE�COMPANY'S�PROJECT.�When�construction�is�behind�
schedule,�corrective�measures�like�the�hiring�of�additional�manpower�are�
made.
GROUP 6
3 TYPES OF CONTROL
3
CASUPANAN
FEEDBACK CONTROL
• UNDERTAKEN WHEN
INFORMATION IS GATHERED
ABOUT A COMPLETED ACTIVITY IN
ORDER THAT EVALUATION AND
STEPS FOR IMPROVEMENT ARE
DERIVED. CORRECTIVE ACTIONS
AIMED AT IMPROVING FUTURE
ACTIVITIES ARE FEATURES OF
FEEDBACK CONTROL.
EXAMPLE:
THE�SUPERVISOR�WHO�DISCOVERS�
THAT�CONTINUOUS�OVERTIME�WORK�
FOR�FACTORY�WORKERS�LOWERS�THE�
QUALITY�OF�OUTPUT.�THE�FEEDBACK�
INFORMATION�OBTAINED�LEADS�TO�
SOME�ADJUSTMENT�IN�THE�
OVERTIME�SCHEDULE.
GROUP 6
TYPES OF CONTROL AND THEIR RELATION TO OPERATIONS
PRE-OPERATIONS
PHASE
FEEDFORWARD
CONTROL
ACTUAL
OPERATIONS
PHASE
CONCURRENT
CONTROL
POST
OPERATIONS
PHASE
FEEDBACK
CONTROL
CASUPANAN
GROUP 6
COMPONENTS OF ORGANIZATIONAL
CONTROL SYSTEMS
1
THE LONG-RANGE FINANCIAL
PLAN
4
PERFORMANCE APPRAISALS
2
STRATEGIC PLAN
5
STATISTICAL REPORTS
3
MEASURINGBUDGET
ACTUAL
THE OPERATING
PERFORMANCE
6
POLICIES
MEASURING
AND PROCEDURES
ACTUAL
TAKING
NECESSARY
ACTION
PERFORMANCE
2
24
GROUP 6
LAYUG
1
THE LONG-RANGE FINANCIAL PLAN
The planning horizon differs from company to company. Most firms will
be satisfied with one year. Engineering firms, however, will require long
term financial plans. This is because of the long lead times needed for
capital projects.
EXAMPLE:
AN�ENGINEERING�FIRM�ASSIGNED�TO�CONSTRUCT�THE�LIGHT�RAILWAY�
TRANSIT�(LRT)�WITHIN�THREE�YEARS.�AS�SUCH�THE�3-YEAR�FINANCIAL�
PLAN�WILL�BE�VERY�USEFUL.�
GROUP 6
2
STRATEGIC PLAN
The output of strategic planning which spells out “the decision about
long- range goals and the course of action to achieve these goals.” It
provides the basic control mechanism for the organization.
When there are indications that activities do not facilitate the
accomplishment of strategic goals, these activities are either set
aside, modified or expanded. These corrective measures are made
possible with the adoption of strategic plans.
LAYUG
GROUP 6
3
THE OPERATING BUDGET
INDICATES THE EXPENDITURES, REVENUES, OR PROFIT
PLANNED FOR SOME FUTURE PERIOD REGARDING
OPERATIONS.
THE FIGURES APPEARING IN THE BUDGET ARE USED AS
STANDARD MEASUREMENTS FOR PERFORMANCE.
LAYUG
GROUP 6
4
PERFORMANCE APPRAISALS
BONETE
MEASURES EMPLOYEE PERFORMANCE. AS SUCH, IT PROVIDES
EMPLOYEES WITH A GUIDE ON HOW TO DO THEIR JOBS BETTER
IN THE FUTURE.IT ALSO FUNCTIONS AS EFFECTIVE CHECKS ON
NEW POLICIES AND PROGRAMS.
EXAMPLE:
IF�A�NEW�EQUIPMENT�HAS�BEEN�ACQUIRED�FOR�THE�USE�OF�AN�
EMPLOYEE,�IT�WOULD�BE�USEFUL�TO�FIND�OUT�IF�IT�HAD�A�POSITIVE�
EFFECT�ON�HIS�PERFORMANCE�
GROUP 6
5
STATISTICAL REPORTS
STATISTICAL REPORTS PERTAIN TO THOSE THAT CONTAIN DATA ON
VARIOUS DEVELOPMENTS WITHIN THE FIRM.
1. Labor efficiency rates
2. Quality control rejects
3. Accounts receivable
4. Accounts payable
5. Sales reports
6. Accident reports
7. Power consumption report
BONETE
GROUP 6
6
POLICIES AND PROCEDURES
BONETE
POLICIES�REFER�TO�“THE�FRAMEWORK�WITHIN�WHICH�THE�
OBJECTIVES�MUST�BE�PURSUED.”�
Procedure�is�“a�plan�that�describes�the�exact�series�of�actions�to�
be�taken�in�a�given�situation.”
It�is�expected�that�policies�and�procedures�laid�down�by�
management�will�be�followed.�When�they�are�breached�once�in�
a�while,�management�is�provided�with�a�way�to�directly�inquire�
on�the�deviations.
STRATEGIC CONTROL
SYSTEM
To�be�able�to�assure�the�accomplishment�of�the�strategic�
objectives�of�the�company,�strategic�control�systems,�become�
necessary.�
1.�Financial�analysis�
2.�Financial�ration�analysis
GROUP 6
FINANCIAL
ANALYSIS
CASUPANAN
The success of most organization depends heavily its financial
performance. It is just fitting that certain measurements of financial
performance be made so that whatever deviations from standards are
found out, corrective action may be introduced.
GROUP 6
FINANCIAL RATIO
ANALYSIS
LAYUG
Financial ratio analysis is a more elaborate approach used in controlling
activities.
Under this method, one account appearing in the financial statement is paired
with another to constitute a ratio.The result will be compared with a required
norm which is usually related to what other companies in the industry have
achieved, or what the company has achieved in the past. When deviations
occur, explanations are sought in preparation for whatever action is necessary.
GROUP 6
CATEGORIES OF
FINANCIAL RATIO
LAYUG
1.� Liquidity� Ratios-� assess� the� ability� of� a� company� to� meet� its� current�
obligations�
2.� Efficiency� Ratios-�show� how� effectively�certain� assets� or� liabilities�are�
being�used�in�the�production�of�goods�and�services.�
3.� Financial�Leverage�Ratios-�designed� to� assess� the� balance� of� financing�
obtained�through�debt�and�equity�sources.�
4.�Profitability�Ratios-�measure�how�much�operating�income�or�net�income�a�
company� is� able� to� generate� in� relation� to� its� assets,� owner’s� equity,�and�
sales.
GROUP 6
IDENTIFYING CONTROL
PROBLEMS
RECOGNIZING�THE�NEED�FOR�CONTROL�IS�ONE�THING,�ACTUALLY�
IMPLEMENTING�IT�IS�ANOTHER.�WHEN�OPERATIONS�BECOME�COMPLEX,�
THE�ENGINEER�MANAGER�MUST�CONSIDER�USEFUL�STEPS�IN�
CONTROLLING.
• EXECUTIVE REALITY CHECK
• COMPREHENSIVE INTERNAL AUDIT
• SYMPTOMS OF INADEQUATE CONTROL
GROUP 6
1
EXECUTIVE REALITY CHECK
LAYUG
Top managers periodically work at lower-level jobs
to become more aware of operations.
EXAMPLE:
THE�ENGINEER�MANAGER�OF�A�CONSTRUCTION�FIRM�COULD,�ONCE�IN�A�WHILE,�
PERFORM�THE�WORK�OF�ONE�OF�HIS�LABORERS.�IN�DOING�SO,�HE�WILL�BE�ABLE�TO�
SEE�THINGS�THAT�HE�NEVER�SEES�INSIDE�THE�CONFINES�OF�HIS�AIR-CONDITIONED�
OFFICE.�BECAUSE�THE�SAID�ACTION�EXPOSES�THE�ENGINEER�MANAGER�TO�CERTAIN�
REALITIES,�THE�TERM�"EXECUTIVE�REALITY�CHECK"�IS�VERY�APPROPRIATE.
GROUP 6
2
COMPREHENSIVE INTERNAL AUDIT
CASUPANAN
An internal audit is one undertaken to determine the efficiency and effectively of the
activities of an organization. Efficiency and effectivity of the activities of an organization.
Among the many aspects of operations within the organization, a small activity that is
not done right may continue to be unnoticed until it snowballs into a full blown problem.
EXAMPLE:
THE�RESIGNATION�OF�AN�EMPLOYEE�AFTER�SERVING�THE�COMPANY�FOR�15�YEARS.�AFTER�ONE�
WEEK,�ANOTHER�EMPLOYEE�WITH�TEN�YEARS�OF�SERVICE�ALSO�RESIGNED.�BOTH�WERE�FROM�THE�
SAME�DEPARTMENT.�IF�AFTER�ANOTHER�WEEK,�A�THIRD�EMPLOYEE�IS�RESIGNING,�A�FULL�
INVESTIGATION�IS�IN�ORDER.�EVEN�IF�THE�SOURCE�OF�THE�PROBLEM�IS�IDENTIFIED,�IT�MAY�
ALREADY�HAVE�CAUSED�CONSIDERABLE�LOSSES�TO�THE�ORGANIZATION.�A�COMPREHENSIVE�
INTERNAL�AUDIT�AIMS�TO�DETECT�DYSFUNCTIONS�IN�THE�ORGANIZATION�BEFORE�THEY�BRING�
BIGGER�TROUBLES�TO�MANAGEMENT.
GROUP 6
3
SYMPTOMS OF INADEQUATE CONTROL
(KREITNER)
BONETE
If a comprehensive internal audit cannot be availed of for some reason, the
use of a checklist for symptoms of inadequate control may be used.
•
•
•
•
AN�UNEXPLAINED�DECLINE�IN�REVENUES�AND�PROFITS�
A�degradation�of�service�(customer�complaints)�
Employee�dissatisfaction�(complaints,�grievances,�turnover)�
Cash�shartages�caused�by�bloated�inventories�or�deliquent�
accounts�receivable.
GROUP 6
3
SYMPTOMS OF INADEQUATE CONTROL
(KREITNER)
5.�Idle�facilities�or�personnel.�
6.�Disorganized�operations�(workflow�bottlenecks,�
excessive�paperwork).�
7.�Excessive�costs.�
8.�Evidence�of�waste�and�inefficiency�(scrap,�rework).
BONETE
CASE STUDY
GROUP 6
Savita�has� been�assigned�the�job�of�quantity�controller.�She�knows�this�is�a� tough�
job�but�she�also�realizes�the�importance�of�it.�Her�daily�routine�is�to�send�alarm�to�
the� manufacturing� department� about� the� deviations� in� the� number� of� units�
produced� so� that� the� target� of� the� day� could� be� achieved.�This� helps� the� whole�
department�to�focus�towards�its�main�plan�of�action.�However�one�day�she�realizes�
that� the� number�of� units�which� are�to� be� produced�is� 500� which� is� very�high�and�
creates� chaos� at� the� shop� floor.�She� discusses� it� with� the� management� and� the�
target� is� reduced� to� 450.� This� has� helped� the� manufacturing� department� in�
maintaining�quality�of�the�work�done.�There�are�10�workers�at�the�shop�floor�where�
Savita�does�inspection.�She�divided�the�task�into�45�units�for�each�worker�so�that�by�
the�end�of�the�day�the�target�of�the�department�is�completed.
• Which�benefits�of�controlling�have�been�highlighted�in�the�above�case?
• Name� one� department� where� controlling� should� be� applied� in� proper�
coordination
• with� the� manufacturing� department� for� proper� quality� control� of� the�
manufactured�products.
GIRON
CASE STUDY
GROUP 6
• The�benefits�of�controlling�highlighted�in�the�above�case�are:
⚬ Controlling�helps�in�accomplishing�organisational�goals.�Her�daily�routine�is�
to� send� alarm�to� the�manufacturing�department�about� the�deviations�in�the�
number�of�units�produced�so�that�the�target�of�the�day�could�be�achieved.
⚬ Controlling�helps�in�judging�accuracy�of�set�standards.�However�one�day�she�
realises�that� the� number�of� units�which� are�to� be� produced�is� 500�which� is�
very� high� and� creates� chaos� at� the� shop� floor,�she� discusses� it� with� the�
management�and�the�target�is�reduced�to�450.
⚬ Controlling�helps� in� facilitating�coordination� in� action.� She� has� divided� the�
task�into�45�units�for�each�worker�so�that�by�the�end�of�the�day�the�target�of�
the�department�is�completed.
• One�department�where�controlling�should�be�applied�in�proper�coordination�with�
the� manufacturing� department� for� proper� quality� control� of� the� manufactured�
products�is�purchase�department.�Unless�and�until�input�is�good�output�can�never�
be� good.� For� high� quality�manufactured�product� the� raw� material�should� be� of�
high�quality�and�this�is�the�area�of�concern�of�the�purchase�department.
GIRON
GROUP 6
REFERENCE
Engineering Management by Roberto G. Medina, 1999
GROUP 6
THANK YOU
REPORTERS:
GIRON, MIRACLE
CASUPANAN, KATRINA ELISHAH
LAYUG, ANNA JANINA
BONETE, CYNTHIA