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PLANNING AND DECISION AIDS-II:Budgeting, Scheduling, Project Management

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Principles of Management ­ MGT503
VU
Lesson 7.21
PLANNING AND DECISION AIDS-II
1.
TECHNIQUES FOR ALLOCATING RESOURCES.
Resources are the assets of the organization and include financial, physical, human, intangible, and
structural.
1.1
Budgeting
A budget is a numerical plan for allocating resources to specific activities. Budgets are popular
because they're applicable to a wide variety of organizations and units within an organization.
1.
There are four different types of budgets.
a.
A revenue budget is a budget that projects future sales.
b.
An expense budget is a budget that lists the primary activities undertaken by a unit and allocates a
dollar amount to each.
c.
A profit budget is a budget used by separate units of an organization that combines revenue and
expense budgets to determine the unit's profit contribution.
d.
A cash budget is a budget that forecasts how much cash an organization will have on hand and
how much it will need to meet expenses.
2.
These budgets are based on the assumption of a single specified volume--fixed budgets.
However, volume can't be predicted exactly. Therefore, a variable budget is a budget that takes into
account the costs that vary with volume.
1.2
Scheduling
Scheduling involves a list of necessary activities, their order of completion, which is to do each,
and time needed to complete them. Some useful scheduling tools include the following.
1.2.1.  The Gantt chart, named after Henry Gantt, is a scheduling chart that visually shows actual and
planned output over a period of time.
A Gantt chart is a specialized bar chart that shows the current progress on each major project activity
relative to necessary completion dates.
1.
A project is broken down into separate main activities listed on the left side of the
chart.
2.
The time frame is listed at the top or the bottom of the chart.
3.
The duration and scheduling of activities is shown by a bar.
4.
Gantt charts do not show interrelationships among activities.
5.
Software packages for creating and using Gantt charts (and many other decision
tools) on computer are becoming widely available.
1.2.2
PERT, or Program Evaluation and Review Technique
PERT is a network planning method for managing and controlling large one-time projects. It is a
technique for scheduling complicated projects comprising many activities, some of which are
interdependent.
A PERT network is a flowchart like diagram that depicts the sequence of activities needed to complete a
project and the time or costs associated with each activity.
1.
All of the major activities in the project are specified.
2.
The sequences of these activities are determined
3.
A network diagram a graphic depiction of the interrelationships among activities,
is constructed.
a.
An activity is a work component to be accomplished, and is represented
by an arrow on the network diagram.
b.
An event (or node) represents a single point in time that is the beginning
or the ending of an activity.
4.
Three time estimates for each activity are determined and an expected time is
calculated for each activity.
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Principles of Management ­ MGT503
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5.
The critical path is the path of activities and events in the network that will take
the longest time to complete
a.
Delays on any activities on the critical path mean that the project will be
delayed.
b.
Slack is the degree of latitude about when various activities can be started
without endangering the completion date of the entire project.
6.
After the project has begun, actual times for completion of each activity are
collected and recorded on the PERT network so that any rescheduling and
adjustments can be made as quickly as possible.
Please remember in PERT charts the followings:
1)
Events are end points that represent the completion of major activities in a PERT network.
2)
Activities, which are the time or resources required to progress from one event to another in a
PERT network.
3)
Slack time is the amount of time an individual activity can be delayed without delaying the whole
project.
4)
Critical path is the longest or most time-consuming sequence of events or activities in a PERT
network.
1.3
Breakeven Analysis
Breakeven analysis is a technique for identifying the point at which total revenue is just sufficient
to cover total costs.
1.4
Linear Programming
Linear programming is a mathematical technique that can be used to solve resource allocation
problems. Linear programming (LP) is a quantitative tool for planning how to allocate limited or scarce
resources so that a single criterion or goal (often profits) is optimized.
1.
It is the most widely used quantitative planning tools in business.
2.
There are optimal conditions for using linear programming.
a.
A single objective must be achieved.
b.
Attainable constraints exist.
c.
Variables are linearly related to the objective, i.e., and increase (or
decrease) in the variable leads to a proportional increase (or decrease) in
the objective.
2.
CONTEMPORARY PLANNING TECHNIQUES.
Two planning techniques that are appropriate for planning in an environment that's both dynamic and
complex are project management and scenario planning.
2.1
Project Management
A project is a one-time-only set of activities that has a definite beginning and ending point in time.
Project management is the task of getting a project's activities done on time, within budget, and according
to specifications.
Project Management Process.
There are seven steps in the project planning process.
a.
Define objectives.
b.
Identify activities and resources.
c.
Establish sequences.
d.
Estimate time for activities.
e.
Determine project completion date.
f.
Compare with objectives.
g.
Determine additional human resource requirements.
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Principles of Management ­ MGT503
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The role of the project manager
a.
The only real influence project managers have is their communication skills and their power of
persuasion.
b.
Team members seldom work on just one project; they're usually assigned to two or three at any
given time.
2.2
Scenario planning
A scenario is a consistent view of what the future is likely to be.
1.
Developing scenarios also can be described as contingency planning.
2.
The intent of scenario planning is not to try to predict the future but to reduce uncertainty by
playing out potential situations under different specified conditions.
3.
Scenario planning is difficult to use when forecasting random events
3.
Other Planning Techniques:
3.1
Queuing or waiting-line models are mathematical models that describe the operating
characteristics of queuing situations.
1.
Queuing situations can be any combination of single-server or multiple-server
queues.
a.
Single-server queues involved service provided at a single point.
b.
Multiple-server queues occur when a number of stations draw from a
single line.
2.
Queuing models allow managers to vary the parameters of a situation to determine
the probable effects.
3.2
Simulation Models
Simulation is a mathematical imitation of reality. It is used when the situation is too complex for
linear programming or queuing theory.
3.3
Decision Trees
Trees are graphic models displaying structures of a sequence of alternative course of action and
usually showing payoffs associated with various paths and probabilities associated with potential
future conditions.
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Table of Contents:
  1. HISTORICAL OVERVIEW OF MANAGEMENT:The Egyptian Pyramid, Great China Wall
  2. MANAGEMENT AND MANAGERS:Why Study Management?
  3. MANAGERIAL ROLES IN ORGANIZATIONS:Informational roles, Decisional roles
  4. MANAGERIAL FUNCTIONS I.E. POLCA:Management Process, Mistakes Managers Make
  5. MANAGERIAL LEVELS AND SKILLS:Middle-level managers, Top managers
  6. MANAGEMENT IDEAS: YESTERDAY AND TODAY, Anthropology, Economics
  7. CLASSICAL VIEW OF MANAGEMENT:Scientific management
  8. ADMINISTRATIVE VIEW OF MANAGEMENT:Division of work, Authority
  9. BEHAVIORAL THEORIES OF MANAGEMENT:The Hawthorne Studies
  10. QUANTITATIVE, CONTEMPORARY AND EMERGING VIEWS OF MANAGEMENT
  11. SYSTEM’S VIEW OF MANAGEMENT AND ORGANIZATION:Managing Systems
  12. ANALYZING ORGANIZATIONAL ENVIRONMENT AND UNDERSTANDING ORGANIZATIONAL CULTURE
  13. 21ST CENTURY MANAGEMENT TRENDS:Organizational social Responsibility
  14. UNDERSTANDING GLOBAL ENVIRONMENT WTO AND SAARC
  15. DECISION MAKING AND DECISION TAKING
  16. RATIONAL DECISION MAKING:Models of Decision Making
  17. NATURE AND TYPES OF MANAGERIAL DECISIONS:Decision-Making Styles
  18. NON RATIONAL DECISION MAKING:Group Decision making
  19. GROUP DECISION MAKING AND CREATIVITY:Delphi Method, Scenario Analysis
  20. PLANNING AND DECISION AIDS-I:Methods of Forecasting, Benchmarking
  21. PLANNING AND DECISION AIDS-II:Budgeting, Scheduling, Project Management
  22. PLANNING: FUNCTIONS & BENEFITS:HOW DO MANAGERS PLAN?
  23. PLANNING PROCESS AND GOAL LEVELS:Types of Plans
  24. MANAGEMENT BY OBJECTIVE (MBO):Developing Plans
  25. STRATEGIC MANAGEMENT -1:THE IMPORTANCE OF STRATEGIC MANAGEMENT
  26. STRATEGIC MANAGEMENT - 2:THE STRATEGIC MANAGEMENT PROCESS
  27. LEVELS OF STRATEGIES, PORTER’S MODEL AND STRATEGY DEVELOPMENT (BCG) AND IMPLEMENTATION
  28. ENTREPRENEURSHIP MANAGEMENT:Why Is Entrepreneurship Important?
  29. ORGANIZING
  30. JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION
  31. SPAN OF COMMAND, CENTRALIZATION VS DE-CENTRALIZATION AND LINE VS STAFF AUTHORITY
  32. ORGANIZATIONAL DESIGN AND ORGANIC VS MECHANISTIC VS VIRTUAL STRUCTURES
  33. LEADING AND LEADERSHIP MOTIVATING SELF AND OTHERS
  34. MASLOW’S NEEDS THEORY AND ITS ANALYSIS
  35. OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
  36. EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
  37. MOTIVATING KNOWLEDGE PROFESSIONALS LEADERSHIP TRAIT THEORIES
  38. BEHAVIORAL AND SITUATIONAL MODELS OF LEADERSHIP
  39. STRATEGIC LEADERSHIP MODELS
  40. UNDERSTANDING GROUP DYNAMICS IN ORGANIZATIONS
  41. GROUP CONCEPTS, STAGES OF GROUP DEVELOPMENT AND TEAM EFFECTIVENESS
  42. UNDERSTANDING MANAGERIAL COMMUNICATION
  43. COMMUNICATION NETWORKS AND CHANNELS EFFECT OF ICT ON MANAGERIAL COMMUNICATION
  44. CONTROLLING AS A MANAGEMENT FUNCTION:The control process
  45. CONTROLLING ORGANIZATIONAL PERFORMANCE THROUGH PRODUCTIVITY AND QUALITY