IE 113 – ENGINEERING

MANAGEMENT
JOHN CARLO R. TABIJE, CE
Instructor

COLLEGE OF ENGINEERING Department of Civil Engineering

Unit IX. CONTROLING
a. Control system
b. Control process
c. Types of organizational control system

COLLEGE OF ENGINEERING Department of Civil Engineering

What is Controlling?
 Controlling
Controlling 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. (Higgins)
Importance of Controlling
When controlling is properly implemented, it will help the
organization achieve its goal in the most efficient and effective
manner possible. Proper control measures minimize the ill effects
of such negative occurrences (Deviations, mistakes, and
shortcomings)
a. Control System
CONTROL SYSTEM
In Engineering Management, Control Systems refer to
the methods and tools used to monitor, evaluate, and
adjust processes or performance to ensure that
organizational goals are met.

"A control system ensures that a process behaves in a desired

manner."
TYPES OF CONTROL

1. FEED FORWARD CONTROL – when anticipates problems and

prevents the
occurrences
2. CONCURRENT CONTROL – when operations are already
ongoing and activities to
detect variances are made
3. FEEDBACK CONTROL- when information is gathered about a
completed activity, and
in order that evaluation and steps for improvement are derived.
b. Control Process
The Controlling Process
It is a systematic approach that ensures that all activities and tasks in an
organization or project are performed according to the planned goals
and objectives. It involves monitoring, measuring, comparing, and
taking corrective actions when deviations from the plan occur.
The Controlling Process
The controlling process in engineering management typically involves
four major steps:
• Establishing Standards
• Measuring Performance
• Comparing Performance with Standards
• Taking Corrective Action
The Controlling Process
1. Establishing Standards
-is to set clear, measurable, and achievable performance standards.
These standards act as a benchmark or target that employees or
processes must achieve.

Types of Standards:
1. Quantitative Standards
2. Qualitative Standards
The Controlling Process
2. Measuring Actual Performance
-to collect accurate data about ongoing operations

Methods of Measuring Performances

1. Observation
2. Performance Reports
3. Key Performance Indicators
4. Audits and Inspections
The Controlling Process
3. Comparing Performance with Standards
-helps to identify if there are deviations or differences between the
planned and actual results.

Possible Outcomes of Comparison

1. Performance Meets Standard
2. Performance Below Standard
3. Performance Exceed Standard
The Controlling Process
4. Taking Corrective Action
-this aims to bring performance back on track

Types of Corrective Action

1. Operational Changes
2. Training and Development
3. Equipment or Material Adjustment
4. Employee Discipline
c. Types of organizational
control system
Types of organizational control
There are three main types of organizational control:
• Output control
• Behavioral control
• Clan control
Output Control
Output control is any measure of organizational control that focuses
on things that you can directly measure, such as the number of sales,
the number of customers you help or how many hours you work. This
type of control specializes in the final product or results of an action.
Some examples of output control are sales quotas, potential customers
you contact in a specific time period and the number of unused
ingredients you have at the end of the week.
Behavioral Control
While output control relates to the results of a particular action,
behavioral control describes policies or systems that manage those
actions. Behavioral control can provide instructions for how to
perform specific tasks or detail guidelines on appropriate conduct in
the workplace. Some examples of behavioral control include dress
codes, safety procedures and attendance policies.
Clan Contol
Clan control is an indirect form of control that uses shared
expectations, values and social norms to encourage people to work
toward a company's goals. This form of control often links to
company culture and helps the organization reach its goals by
motivating the people who work there. Policies that may influence clan
control include company retreats, group meetings and company
newsletters and opportunities for people to give suggestions about the
organization.
 Component of
Organizational Control
System
Component of Organizational Control
System
Organizational control systems consists of the following:
• Strategic Plan
• The long-range financial Plan
• The Operating Budget
• Performance Appraisals
• Statistical Reports
Strategic Plan
A strategic plan 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.
The Long-Range Financial Plan
The planning horizon differs from company to company. Most firms
will be satisfied with one year. Engineering firms, will require longer
term financial plans. This is because of the long head times needed for
capital projects.
Performance Appraisals
• Performance appraisals measures employee performance.
Performance appraisals also function as effective checks on new
policies and programs.
• Provides employees with a guide on how to do their jobs better
in the future
Statistical Reports
Statistical Reports pertain to those that contain data on various
developments within the firm.
Labor efficiency rates
Quality control rejects
Accounts receivable
Accounts payable
Sales reports
Accident reports
Power consumption reports
Policies and Procedures
Policies refer to the “ the framework within which the objectives must
be pursued”. A procedures is a “ plan that describes the exact series of
actions to be taken in a given situations”.
Strategic Control System
Strategic Control System
To be able to assure the accomplishment of the strategic objectives of
the company, strategic control systems become necessary. These
systems consists of the following :
1. Financial Analysis
2. Financial ratio analysis
Financial Analysis
• The success of most organizations depend heavily on 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 actions may be introduced.
• A review of the financial statements will reveal important details
about the company’s performance.
• Income statement contains information about gross income,
expenses, and profits
Financial Ratio Analysis
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.
Financial Ratio Analysis
When deviations, explanations are sought in preparation for whatever
action is necessary.
Categories:
• Liquidity
• Efficiency
• Financial leverage
• Profitability
Liquidity Ratio assess the ability of a company to meet its current obligations.
e.g. Current Ratio and Acid Test Ratio

Efficiency Ratio shows how effectively certain assets or liabilities are being used in the production
of goods and services.
e.g. Inventory Turnover Ratio and Fixed Asset Turnover

Financial Leverage Ratio a group of ratios designed to assess the balance of financing obtained through
debt and equity sources
e.g. Dept Total Asset Ratio and Time Interest Earned Ratio
Profitability Ratio measure how much operating income or net income is able to generate in
relation to its assets, owner’s equity, and sale
e.g. Profit Margin Ratio, Return in Asset Ratio and Return Equity Ratio
Identifying Control
Problems
Identifying Control Problems
Recognition the need for the control is one thing, implementing it is
another. When operations become complex, the engineer manager
must consider useful steps in controlling. Kreitner mentions three
approaches in identifying control problems.
1. Executive reality check
2. Comprehensive internal audit
3. General checklist of symptoms of inadequate control
Identifying Control Problems
Employees at the frontline often complains that management imposes
certain requirements that are not realistic. In a certain state college, for
instance, requests for purchase of classroom materials ad supplies take
last priority. This is irregular because requests of such kind must be of
the highest priority considering that the organization is an educational
institution.
Executive Reality Check
Employees at the frontline often complains that management imposes
certain requirements that are not realistic. In a certain state college, for instance,
requests for purchase of classroom materials ad supplies take last priority. This is
irregular because requests of such kind must be of the highest priority
considering that the organization is an educational institution.
Comprehensive Internal Audit
An internal audit is one undertaken to determine the efficiency and
affectivity of the activities of an organization.
Symptoms of Inadequate Control
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.
Common Symptoms of Inadequate Control
• An unexplained decline in revenues and profits

• A degradation of services

• Employee dissatisfaction

• Cash shortages caused by bloated inventories or delinquent accounts receivable

• Idle facilities or personnel

• Excessive cost

• Evidence of waste and inefficiency

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