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75 MCQs 50 Flashcards Unit 8 · 6 marks weightage Updated April 2026
Ch 8 · Unit 8 · Part A

Chapter 8: Controlling

Master Controlling — the 5-step controlling process, Critical Point Control and Management by Exception, the planning–controlling relationship, budgetary control, and the PERT vs CPM comparison. The final, application-rich chapter of Part A.

▶ Practice Test — Ch 8 All BST Chapters

What is Controlling?

Controlling is the management function of ensuring that actual performance conforms to planned performance. It measures progress against standards, identifies deviations, analyses their causes, and takes corrective action so that organisational goals are achieved. It is a continuous and pervasive function carried out at every level of management.

Planning and controlling are called 'inseparable twins' — planning sets the standards and goals, and controlling measures actual results against them and feeds the insights back into future plans. Without planning there is nothing to control; without controlling, plans remain mere intentions.

What You'll Practise in This Chapter

The Controlling Process — 5 Steps

  1. Setting performance standards — quantitative (output, cost, time) and qualitative (goodwill, customer satisfaction) benchmarks.
  2. Measurement of actual performance — personal observation, statistical, oral and written reports; objective and timely.
  3. Comparison of actual with standards — identify deviations, both positive (exceeding) and negative (falling short).
  4. Analysis of deviations — apply Critical Point Control and Management by Exception, and find the root cause.
  5. Taking corrective action — revise unrealistic standards, or change inputs/methods to bring performance back in line.

Key Concepts at a Glance

Process
Controlling Process 5-step closed loop: Set standards → Measure → Compare → Analyse deviations → Take corrective action. Continuous, pervasive, goal- and action-oriented.
Focus
Critical Point Control Concentrate control on the Key Result Areas (KRAs) most critical to success — you cannot control everything, so monitor what matters most.
Principle
Management by Exception Only significant deviations are escalated to management; minor routine variations are ignored. Saves time and focuses energy on real problems.
Technique
PERT & CPM PERT: uncertain/novel projects, 3 time estimates, probabilistic. CPM: known/repetitive projects, 1 time estimate, cost-time trade-offs. Both use network analysis.
Technique
Budgetary Control A budget is a numerical plan of expected results — it works as both a planning tool (sets targets) and a controlling tool (benchmark for comparison).
Techniques
Modern Control Techniques ROI, ratio analysis, responsibility accounting, management audit, PERT/CPM and MIS — each serves a specific control purpose at different levels.

Sample MCQs — Chapter 8: Controlling

1. A factory sets a daily production target of 800 units. At the end of the day, actual production is found to be 650 units. The manager investigates and discovers that 2 machines were non-functional. Which corrective action is MOST appropriate?
  1. Reduce the production standard to 650 units
  2. Dismiss the workers for underperformance
  3. Repair the machines (change inputs) so future production meets the 800-unit standard ✓
  4. Ignore the deviation as it was caused by equipment, not workers
Correct answer: C — The standard of 800 units is realistic (it was met before the machines broke down). The root cause is equipment failure, so the corrective action is to fix/replace the machines — changing inputs — not to revise the standard or blame workers.
2. A company is developing a new satellite launch vehicle — a highly complex project with many activities whose durations depend on testing outcomes. Which project management technique should they use?
  1. PERT — because activity durations are uncertain and probabilistic, requiring three time estimates ✓
  2. CPM — because the critical path needs to be identified
  3. Budgetary control — because it is a large financial project
  4. Ratio analysis — to compare project costs with industry benchmarks
Correct answer: A — PERT is designed for novel, complex projects with uncertain durations. Its three time estimates (optimistic, most likely, pessimistic) handle the uncertainty inherent in first-of-kind R&D and defence projects. CPM would apply only if durations were deterministically known.
3. Planning and Controlling are called 'inseparable twins' because:
  1. Both are performed only by top management
  2. Both require large financial investment to implement
  3. Plans provide the standards for controlling; controlling measurements feed back into future plans — each gives meaning and effectiveness to the other ✓
  4. Both were developed at the same time in management theory
Correct answer: C — Planning and controlling are mutually dependent: without plans, there are no standards to measure against (controlling is blind); without controlling, plans remain mere intentions with no mechanism to ensure achievement. The feedback loop between them makes both functions effective.
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