Controlling Implementation

A part of Lecture Note for Hospital Management By

Dr. Fahmy Radhi, MBA

Controlling

• Control – the process of ensuring that actual activities conform to planning activities

• Why Control is needed:– To cope with changes internally and externally– To faced more organizational complexity– To facilitate delegation and teamwork– To create better quality– To create faster cycles– To add value

Steps in Control Process• Establish standards:

– Physical standard – products quantities – Monetary standard – Income, cost and profit– Time standard – production time

• Establish methods for measuring performance by determining: how often and what form in measuring, and who are involved

• Measure the performance through observations, reporting analysis, inspection and automatically methods

• Determine whether performance matches the standard• Take correction actions

CONTROLLING METHODS

1. Qualitative methods used by management to control overall organization performance and employees’ performance through:

• Management by Exception (MBE), • Management by Objective (MBO)

2. Quantitative methods used by management to control functional department, revenue and const center by using some quantitative techniques, such as financial controls, budgetary controls, auditing, time and activity control

Controlling Techniques

1. Qualitative Techniques:• Control by observation• Regular control and spot inspection• Control by oral and writing repots• Result evaluation• Discussion

2. Quantitative Techniques:• Financial control• Budgetary control• Time and Activity control

Financial Controls

• Financial statement – monetary analysis by monitoring major financial conditions from balance sheet and income statement, including: – Liquidity– Solvability – Profitability

• Cash flow analysis – summary of an organization’s financial performance applied in a period time, including:– Cash inflow – Cash outflow

Budgetary Control Techniques

• Responsibility center• Revenue center• Cost center• Profit center • Investment center

Variable versus Fixed Budget

• Fixed cost – the expenses that are unaffected by the amount of work accumulated in the responsible center, e.g. monthly salaries, insurance payment, rent and R&D expenditures

• Variable cost – the expenses that vary directly with the amount of the works proportionally way, e.g. raw material cost, the more goods produced, the grater the quantity of raw material needed

• Semi-variable cost – the expenses that vary directly with the amount of the works but not proportionally way, e.g. labor cost, overhead cost

Auditing Control Techniques

• External auditing – the verification process involving the independent appraisal of finance account and statement or accountant public

• Internal auditing - audit performance by the organization to ensure that its assets are properly used and its financials record reliability kept

Time and Activity Control Techniques

• Gantt Chart

• Program Evaluation and Review Technique (PERT)

• Critical Path Methods

Gantt Chart

Program Evaluation and Review Technique (PERT)

Critical Path Methods

Characteristics of the effective

control 1. Using accurate and objective information2. Focusing on strategic control3. Good coordination4. Accepted by organization members5. Realistic, measurable and flexible