ENGMAN 303

CHAPTER 1: Introduction to Engineering Management

The Field of Engineering Management Functions of engineering encompass the following
 Engineers are expected to perform a variety of areas.
tasks depending on their specialization and 1. Research - where the engineer is engaged
job level. in the process of learning about nature and
 It is important to the engineer that he knows codifying this knowledge into usable
what is expected of him so that he may be theories.
able to perform his job effectively and 2. Design and Development -where the
efficiently. engineer under takes the activity of turning
 His next concern will be to identify the skills a productor concept to a finished physical
required but which he does not have. As item.
engineers are not trained directly to deal with 3. Testing - where the engineer works in a
people, it is expected that their weaknesses unit where new products or parts are
will most often be on people-based skills. tested for workability.
4. Manufacturing - where the engineer is
The Functions of the Engineer directly in charge of production personnel
Since prehistoric times, mankind has benefited or assumes responsibility for the product.
from the various tools, equipment, and projects 5. Construction- where the engineer is either
developed by the engineers. Among these are the directly in charge of the construction
following: personnel or may have responsibility for
1. The stone bladed axe which was a very the quality of the construction process.
useful tool; and the irrigation system used 6. Sales- where the engineer assists the
to promote crop growth - 6000 to3000 B.C. company’s customers especially those that
2. The pyramids of Egypt- 3000 B.C. to 600 require technical expertise.
B.C. 7. Consulting - where the engineer works as
3. Road building by the Romans - 600 B.C. to consultant of any individual or
A.D. 400 organization requiring his services.
4. The production of paper and gunpowder 8. Government - where the engineer may find
by the Chinese - 100 [Link] 1600 A.D. employment in the government performing
5. The production of steam engine and the any various tasks.
spinning and weaving machinery- 1601 A.D 9. Teaching - where the engineer gets
to 1799 A.D. employment in a school and is assigned as a
6. The manufacture of cars and household teacher of engineering courses.
appliances – modern times. 10. Management - where the engineer is
assigned to manage groups of people
The outputs of the engineers, new or improvement performing specific tasks.
of old ones, are very much needed in the following
specific problem concerns: The Engineer in Various Types of
Organization
1. The production of more food for a fast-
growing world population; Organization is a group of individuals who are
2. The elimination of air and water pollution; cooperating willingly and effectively for a common
3. Solid waste disposal and materials goal. To be specific, organization seeks to know
recycling; who is to do and what is to be done.
4. The reduction of noise in various forms; Structural Organization is the formal
5. Supplying the increasing demand for arrangements that are established to coordinate all
energy; activities in order to implement a given strategy.
6. Supplying the increasing demand for
mobility;
7. Preventing and solving crimes; and
8. Meeting the increasing demand for
communication facilities.
ENGMAN 303
CHAPTER 1: Introduction to Engineering Management
From the viewpoint of the engineer, organizations evaluate the performance of
may be classified according to the degree of subordinate work units and
engineering jobs performed: their managers
 Provide and integrating and
LEVEL 1: Those with minimal engineering jobs like coordinating functions so
retailing firms. that the short-range
LEVEL 2: Those with a moderate degree of decisions and activities of
first-line supervisory group
engineering jobs like transportation companies. can be orchestrated toward
LEVEL 3: Those with a high degree of engineering achievement of long-range
jobs like construction firms. goals of the enterprise
 Responsible for defining the
Types of Organization and the character, mission and
Management Skills Required of Engineers objectives of the enterprise
 Establish criteria for and
review long-range plan
Top  Evaluate the performance of
Management major departments, and
they evaluate leading
management personnel to
gauge their readiness for
promotion to key executive
positions

Management Skills Required at Various

Levels

(President, Executive VP) 01 02 03

Among the
types of
(Chief Engineer, Division
Head) organizations,
the engineer
(Foreman, Supervisor, will have a Provide
Section Chief)
slim chance of the biggest
becoming the opportunity
LEVEL TYPE of JOB general for
The
 Directly supervise non- manager or an engineer
engineer may
managers president of to become
be assigned
 Carry out the plans and level one,
to head the
the
objectives of higher unless of president or
engineering
management using the course, general
division. The
Personnel and other he owns the manager. In
need for
resources assigned to them firm. this case, the
First Line management
 Short-range operating plans engineer
Manager skills will
governing what will be The engineer manager
now be felt
done tomorrow or next manager may cannot
by the
week, assigned task to their be assigned to function
engineer
workers, supervise the head a small effectively
manager.
work that is done, and engineering without
evaluate the performance of unit of the adequate
individual workers. firm, management
 Make plans of intermediate but there will skills.
range to achieve the long- not be too
Middle many firms
range goals set by top
Management which will
management, establish
departmental policies, and have this unit.
ENGMAN 303
CHAPTER 1: Introduction to Engineering Management
B. Management must be scientific to be
successful.
- Experimenting and analyzing different factors
affecting the work will develop better
methods of increasing production without
increasing work time and operating cost.
C. Management must be humanistic.
- The application of good human relations
“pays off” through cooperation and
coordination leading towards greater
accomplishment.

Management Process
1. PLANNING
What is Engineering Management? - Refers to the management function that
Engineering Management involves anticipating future trends and
- is a specialized form of management required determining the best strategies and tactics to
to successfully lead engineering or technical achieve organizational objectives.
personnel and projects and applies to either - The engineer manager, regardless of his
functional management or project management level, will have to devote some of
management. Engineering managers use their his time to planning. The higher the
training and experience to coach, mentor and management level the engineer manager is in,
motivate technical professionals. the more sophisticated his planning activity
- It refers to the activity combining "technical becomes.
knowledge with the ability to organize and 2. ORGANIZING
coordinate worker power, materials, - Refers to the structuring of resources and
machinery, and money." activities to accomplish objectives in an
- When the engineer is assigned to supervise efficient and effective manner.
the work of even a few people, he is already - In effective organizing, steps are undertaken
engaged in the first phase or engineering to breakdown the total job into more
management. His main responsibility is to manageable man-size jobs.
lead his group into producing a certain 3. DIRECTING
output consistent with the required - Part of the process in which the managers
specifications. instruct, guide and oversee the performance of
the workers to achieve predetermined goals.
Directing is said to be the heart of
Management Defined
management process.
Management - It initiates actions, its ingrates efforts, means
- defined as the “creative problem solving- of motivation, it provides stability, helps
process of planning, organizing, leading, and coping up with the changes, and aids in
controlling an organization’s resources to efficient utilization of resources.
achieve its mission and objectives. 4. CONTROLLING
- is a process consisting of planning, - Process of ascertaining whether
organizing, directing (or leading), and organizational objectives have been achieved;
controlling. if not, why not, and determining what
activities should then be taken to achieve
A. Management must be systematic to be objectives better in the future.
effective. - Proper control measures minimize the ill
- A step-by-step outline could produce better effects of negative occurrences.
outcomes. Good decisions and actions are
based on systematic application of sound
principles of complete and reliable facts, and
of good practices.
ENGMAN 303
CHAPTER 1: Introduction to Engineering Management
Requirements for Engineer Managers Job 1. Favorable attitude toward those in
1. Degree positions of authority, such as superiors.
A bachelor’s degree in engineering from a 2. Desire to engage in games or sports
reputable school is required. In some cases, a competitions with peers.
master’s degree in engineering or business 3. Desire to engage in occupational or work-
management is required. related with peers.
2. Experience 4. Desire to assert oneself and take charge
Another requirement for the engineer 5. Desire to exercise power and authority
managers job is a few years’ experience in over others
pure engineering job. 6. Desire to behave in a distinctive way,
3. Supervision Training which includes standing out from the
One of the important skills in being an crowd.
Engineer Manager is supervision, thus a 7. Sense of responsibility in carrying out the
training in supervision is one of the routine duties associated with managerial
requirements of the job. work.
4. Engineering Management Training C. OPPORTUNITY
Aside from the supervision training, a training - Successful managers only become possible if
specified for the job is essential for this job. those having the ability and motivation are
Therefore, being an engineer manager require given the opportunity to manage.
a special training in engineering management. - The opportunity for successful management
has two requirements:
Three General Preconditions for Achieving 1. Obtaining a suitable managerial job
2. Finding a supportive climate once on the
Lasting Success as a Manager
job
(ACCORDING TO KREITNER)

A. ABILITY Things That Successful Engineering

- Capacity of an engineer manager to achieve Managers Consider
organizational objectives effectively and
efficiently.
- According to Higgins:
 Effectiveness – refers to a description of
“whether objectives are accomplished”
 Efficiency – “relative number of resources
used in obtaining effectiveness”.
- Example:
 If a Civil Engineer was asked by his The Mindset to Take:
superiors to finish a 100-kilometer road MEETING THE GOALS OF THE BUSINESS IS
cementing project within eight months, he THEOVERALL OBJECTIVE
said to be effective if he finished the - A manager’s ultimate job is to help ensure the
project/job within the required period. On success of the business. Companies want to
the other hand, his efficiency is measured minimize costs while maximizing results.
by the inputs 9labor and materials he Teams working on projects, however, require
poured into the project in relation to the resources to complete their objectives.
actual output (the 100 km road). Managers are in the middle, trying to keep
B. MOTIVATION TO MANAGE leadership teams happy while ensuring their
- A management researcher, John B. Miner, own teams get the support they need.
developed a psychometric instrument to - A good engineering manager understands the
measure objectively an individual’s motivation needs of both sides and how to maintain the
to manage. balance between them. This means keeping
- The test is anchored to the following the team on task and within budgets and
dimensions: deadlines.
ENGMAN 303
CHAPTER 2: Decision-Making
What is Decision-making? be undertaken.
Decision-making
- process of identifying and choosing The objective of environmental analysis is the
alternative courses of action in a manner identification of constraints, which may be spelled
appropriate to the demands of the situation out as either internal or external limitations.

The engineer manager must adapt a certain Example of internal limitations:

procedure designed to determine the best option 1. Limited funds available for the purchase of
available to solve certain problems equipment.
2. Limited training on the part of employees.
Decisions are made at various management levels: 3. Ill – designed facilities.
 Top Level Example of external limitations:
 Middle Level 1. Patents are controlled by other
 Lower Level organizations.
and various management functions:
2. A very limited market for the company’s
 Planning
 Organizing products and services exists.
 Directing 3. Strict enforcement of local zoning
 Controlling regulations.

According to Nickels (and others), decision – When decisions are to be made, the internal
making is the heart of all the management functions. and external limitations must be considered. It may
be costly, later on, to alter a decision because of a
The Decision-making Process constraint that has not been previously identified.
Rational decision – making, according to David H.
Holt, is a process involving the following steps: Components of the Environment
1. Diagnose problem The environment is consisting of two major
concerns:
2. Analyze environment
1. Internal Environment - refers to
3. Articulate problem or opportunity organizational activities within a firm that
4. Develop viable alternatives surrounds decision – making.
5. Evaluate alternatives 2. External Environment - refers to variables
6. Make a choice that are outside the organization and not
typically within the short-run control of top
7. Implement decision management.
8. Evaluate and adapt decision results
Develop Viable Alternatives
Diagnose Problem Oftentimes, problems may be solved by any of
If a manager wants to make an intelligent the solutions offered. The best among these
decision, his first move must be to identify the alternative solutions must be considered by
problem. If the manager fails in this aspect, it is management. This is made possible by using a
almost impossible to succeed in the subsequent procedure with the following steps:
steps. An expert once said, “identification of the 1. Prepare a list of alternative solutions.
problem is tantamount to having the problem 2. Determine the viability of each solution.
half – solved”. 3. Revise the list by striking out those which
are not visible.
What is a problem?
- A problem exists when there is a difference
between an actual situation and a desired
situation.

Analyze the Environment

The environment where the organization is
situated plays a very significant role in the success
or failure of such an organization. It is, therefore,
very important that an analysis of the environment
ENGMAN 303
CHAPTER 2: Decision-Making
The Engineering Firm and the Internal Souder suggested that “each alternative must be
Environment in Decision Making analyzed and evaluated in terms of value, cost,
and risk characteristics”.

Value of alternatives
- refers to the benefits that can be expected.
- An example may be described as follows: a
net profit of ₱10 million per year if the
alternative is chosen.

Cost of the Alternative

- refers to out-of-pocket costs (like ₱100 million
for construction of facilities), opportunity costs
(like the opportunity to earn interest of 22
million per year if money is invested elsewhere),
and follow-on-costs (like ₱3 million per year for
maintenance of facilities constructed).

Risk Characteristics
The Engineering Firm and its External - refer to the likelihood of achieving the goals of
Environment the alternatives.
- If the probability of a net profit of ₱10 million is
only 10 percent, then the decision – maker may
opt to consider an alternative with a 5 million
profit but with an 80 percent probability of
success.

Make a Choice
This is the point where he must be convinced
that all the previous steps were correctly
undertaken.

Choice – making
- refers to the process of selecting among
The list of solutions prepared by the alternatives representing potential solutions to
engineering manager shows the following a problem.
alternative courses of action:
Webner advises that “… particular effort should
1. Improve the capacity of the firm by hiring be made to identify all significant consequences
more workers and building additional of each choice”
facilities;
2. Secure the services of subcontractors; To make the selection process easier, the
3. Buy the needed additional output from alternatives can be ranked from best to worst on the
another firm; basis of some factors like benefit, cost, or risk.
4. Stop serving some of the company’s
customers; and Implement Decision
5. Delay servicing some clients. This is necessary, or decision – making will be an
exercise in futility.
The list was revised and only the three were
deemed to be viable. The last two were deleted Implementation
because of adverse effects in the long-run - refers to carrying out the decision so that the
profitability of the firm. objectives sought will be achieved.
 To make implementation effective, a plan
Evaluate Alternatives must be devised.
How the alternatives will be evaluated will
depend on the nature of the problem, the objectives
of the firm, and the nature of alternatives presented.
ENGMAN 303
CHAPTER 2: Decision-Making
At this stage, the resources must be made Qualitative Evaluation
available so that the decision may be properly - refers to evaluation of alternatives using
implemented. Those who will be involved in intuition and subjective judgment.
implementation, according to Aldag and Stearns,
“must understand and accept the solution”. Stevenson states that managers tend to use the
qualitative approach when:
Evaluate and adapt Decision Results 1. The problem is fairly simple.
It is important for the manager to use control 2. The problem is familiar.
and feedback mechanism to ensure results and to
provide information for the future decisions. 3. The costs involved are not great. (Low cost)
4. Immediate decisions are needed.
Feedback
- refers to the process which requires checking Quantitative Evaluation
at each stage of the process to assure that the - refers to the evaluation of alternatives using
alternatives generated, the criteria used in the technique in a group classified as rational and
evaluation, and the solution selected for the analytical.’
implementation are in keeping with the goals
and objectives originally specified. Quantitative Models for Decision Making
The types of quantitative techniques which
Control may be useful in decision – making are as follows:
- refers to actions made to ensure that the 1. Inventory models
activities performed match the desired 2. Queuing theory
activities or goals that have been set 3. Network models
4. Forecasting
Feedback as a Control Mechanism in the 5. Regression analysis
Decision-Making Process 6. Simulation
7. Linear programming
8. Sampling theory
9. Statistical decision theory

Inventory Models
Inventory models consist of several types all
designed to help the engineer manager make
decisions regarding inventory. They are as follows:
1. Economic order quantity model
- this one is used to calculate the number of items
that should be ordered at one time to minimize
the total yearly cost of placing orders and
carrying the items in inventory.
2. Production order quantity model
- this is an economic order quantity technique
applied to production orders.
3. Back-order inventory model
- this is an inventory model used for planned
shortages.
4. Quantity discount model
- an inventory model used to minimize the total
cost when quantity discounts are offered by
Approaches in Solving Problems suppliers.
In decision – making, the engineer manager is
faced with problems which may either be simple or Queuing Theory
complex. To provide him with some guide, he must Queuing Theory
be familiar with the following approaches: - describes how to determine the number of
1. Qualitative evaluation; and service units that will minimize both customers
2. Quantitative evaluation waiting time and cost of service.
- applicable to companies where waiting lines are
common situation.
ENGMAN 303
CHAPTER 2: Decision-Making
Network Models - does not guarantee an optimum solution, but it
These are models where large complex tasks are can evaluate the alternatives fed into the
broken into smaller segments that can be managed process by decision – maker
independently. Linear Programming
- is a quantitative technique that is used to
The two most prominent network models are: produce an optimum solution within the
1. The Program Evaluation Review Technique bounds imposed by constraints upon the
(PERT) decision.
- a technique which enables engineer managers - is very useful as a decision – making tool when
to schedule, monitor, and control large and supply and demand limitations at plants,
complex projects by employing three time warehouse, or market areas are constraints
estimates for each activity. upon the system.
2. The Critical Path Method (CPM) Sampling Theory
- this is a network technique using only one time Sampling Theory
factor per activity that enables engineer - is a quantitative technique where samples of
managers to schedule, monitor, and control populations are statistically determined to be
large and complex projects. used for a number of processes, such as quality
control and marketing strategy.
Forecasting
These are instances when engineer managers When data gathering is expensive, sampling
make decisions that will have implications in the provides an alternative. Sampling, in effect, saves
future. To make decisions on capacity more time and money.
effective, the engineer manager must be provided
with data on demand requirements for the next 12 Statistical Decision Theory
months. This type of information may be derived Decision theory
through forecasting. - refers to the “rational way to conceptualize,
analyze, and solve problems in situations
Forecasting involving limited, or partial information about
- the collection of past and current information the decision environment.
to make predictions about the future.
A more elaborate explanation of decision
Regression Analysis theory - is the decision – making process presented
Regression Model at the beginning of this chapter.
- is a forecasting method that examines the
association between two or more variables. What has not been included in the discussion
- It uses data from previous periods to predict on the evaluation of alternatives, but is very
future events. important, is subjecting the alternatives to
Bayesian analysis.
Regression Analysis
- May be simple or multiple depending on the Purpose of Bayesian Analysis
number of independent variables present. - to revise and update the initial assessments of
the event probabilities generated by the
 Simple Regression - when one independent alternative solutions.
variable is involved. - achieved by the use of additional information.
 Multiple Regression - when two or more
independent variables are involved. When the decision – maker is able to assign
probabilities to the various events, the use of
Simulation probabilistic decision rule, called Bayes criterion,
Simulation becomes possible.
- is a model constructed to represent reality, on
which conclusions about real-life problems can Bayes Criterion
be used. - selects the decision alternative having the
- it is a highly sophisticated tool by means of maximum expected payoff, or the minimum
which the decision maker develops a expected loss if he is working with a loss table.
mathematical model of the system under
consideration.
ENGMAN 303
CHAPTER 3: Planning Technical Activities
Planning Technical Activities Planning at Various Management Level
The engineer manager, regardless of his Planning activities undertaken at various levels are
management level, will have to devote some of his as follows:
time to planning. The higher the management level 1. Top management level
the engineer manager is in, the more sophisticated - Strategic planning
his planning activity becomes. 2. Middle management level
- Intermediate planning
The Nature of Planning 3. Lower management level
To minimize mistakes in decision – making, - Operational planning
planning is undertaken.
Strategic Planning
Plan Strategic Planning
- is the output of planning - refers to the process of determining the major goals of
- provides a methodical way of achieving desired the organization and the policies and strategies for
results obtaining and using resources to achieve those goals.
- the top management of any firm is involved in this type
of planning.
In the implementation of activities, the plan
serves as a useful guide. Without the plan, some - the whole company is considered, specifically its
objectives and current resources.
mirror tasks may be afforded major attention which
may, later on, hinder the accomplishment of
Strategic Plan
objectives.
- the output of strategic planning
- “The decision about long-range goals and
Planning Defined the course of action to achieve these goals.
Planning
 According to Nickel and others, Intermediate Planning
- refers to the management function that Intermediate Planning
involves anticipating future trends and - refers to “the process of determining the
determining the best strategies and tactics contributions that subunits can make with
to achieve organizational objectives. allocated resources”.
- this definition is useful because it relates the - undertaken by middle management.
future to what could be decided now. - the goals of a subunit are determined and a
plan is prepared to provide a guide to the
 According to Aldag and Stearns, realization of the goals.
- the selection and sequential ordering of - is designed to support the strategic plan.
tasks required to achieve an organizational
goal. Operational Planning
- this definition centers on the activity Operational Planning
required to accomplish the goals. - refers to “the process of determining how
specific tasks can best be accomplished on
 According to Cole and Hamilton, time with available resources”.
- “Deciding what will be done, who will do - is a responsibility of lower management.
it, where, when and how it will be done, - must be performed in support of the
and the standards to which it will be done”. strategic plan and intermediate plan.
- their definition provides a better guide on
how to effectively perform this vital Types of Planning
activity.

For our purpose, it will suffice to define planning as,

- selecting the best course of action so that
the desired result may be achieved. It must
be stressed that the desired result takes
first priority and the course of action
chosen is the means to realize the goal.
ENGMAN 303
CHAPTER 3: Planning Technical Activities
The Organization and Types of Planning Tactic
Undertaken - is a short-term action taken by management
to adjust to negative internal or external
influences.
- are formulated and implemented in support
of the firm’s strategies

Tactical Plan
- where the decision about short-term goals
and the courses of action are indicated

Determining resources needed

When particular sets of strategies or tactics
have been devised, the engineer manager will, then,
determine the human and nonhuman resources
required by such strategies or tactics.
The Planning Process The quality and quantity of resources
Planning involves the ff: needed must be correctly determined. Too much
1. Setting organizational, divisional, or unit goals resources in terms of either quality or quantity will
2. Developing strategies or tactics to reach those be wasteful. Too little will mean loss of
goals opportunities for maximizing income.
3. Determining resources needed To satisfy strategic requirements, a general
4. Setting standards statement of needed resources will suffice. The
specific requirements will be determined by the
Setting organizational, divisional, or unit goals different units of the company.
The first task of the engineer manager is to
provide a sense of direction to his firm (if he is the Setting Standard
chief executive), to his division (if he heads a The standards for measuring performance
division), or to his unit (if he is a supervisor). The may be set at the planning stage. When actual
setting of goals provides an answer to the said performance does not match with the planned
concern. If everybody in the firm (or division or unit, performance, corrections may be made, or
as the case may be) is aware of the goals, there is a reinforcements given.
big chance that everybody will contribute his share
in the realization of such goals. Standard
- a quantitative or qualitative measuring
Goals device designed to help monitor the
- the precise statement of results sought, performance of people, capital goods, or
quantified in time and magnitude, where processes
possible
Types of Plans
Developing strategies or tactics to reach those Plans are of different types. They may be classified
goals in terms of:
After determining the goals, the next task is to 1. Functional Area
devise some means to realize them. 2. Time Horizon
3. Frequency of Use
Strategies
- the ways to realize the goals Functional Area Plans
- concern of top management. Plans may be prepared according to the needs of the
different functional areas. Among the types of
The middle and lower management will adapt their functional area plans are the following:
own tactics to implement their plans. 1. Marketing Plan
- this is the written document or blueprint
Strategy for implementing and controlling an
- a course of action aimed at ensuring that the organization’s marketing activities related
organization will achieve its objectives to a particular marketing strategy.
ENGMAN 303
CHAPTER 3: Planning Technical Activities
2. Production Plan Single-use plans may be further classified as
- this is a written document that states the follows:
quantity of output a company must produce a. Budget
in broad terms and by product family. - according to Weston and Brigham, is “a
3. Financial Plan plan which sets forth the projected
- it is a document that summarizes the expenditure for a certain activity and
current financial situation of the firm, explains where the required funds will
analyzes financial needs, and recommends a come from”.
direction for financial activities. b. Program
4. Human Resource Management Plan - is a single-use plan designed to coordinate a
- it is a document that indicates the human large set of activities.
resource needs of a company detailed in c. Project
terms of quantity and quality and based on - is a single-use plan that is usually more
the requirements of the company’s strategic limited in scope than a program and is
plan. sometimes prepared to support a program.

Plans with Time Horizon Parts of the Various Functional Area Plans
Plans with time horizon consist of the following: The Contents of the Marketing Plan
1. Short-range Plans Willian Cohen maintains that the following must
- these are plans intended to cover a period of be included in the marketing plan:
less than one year. - first-line supervisors are 1. The Executive Summary
mostly concerned with these plans. - which presents an overall view of the
2. Long-range Plans marketing project and its potential.
- these are plans covering a time span of more 2. Table of Contents
than one year. - these are mostly undertaken 3. Situational Analysis and Target Market
by middle and top management. 4. Marketing Objectives and Goals
5. Marketing Strategies
Plans According to Frequency of Use 6. Marketing Tactics
According to frequency of use, plans may be 7. Schedules and Budgets
classified as: 8. Financial Data and Control
1. Standing Plans
- these are plans that are used again and again, The Contents of the Production Plan
and they focus on managerial situations that The production plan must contain the following:
recur repeatedly. 1. The amount of capacity the company must
have
Standing plans may be further classified as 2. How many employees are required
follows: 3. How much material must be purchased
a. Policies
- they are broad guidelines to aid managers at The Contents of the Financial Plan
every level in making decisions about The components of the financial plan are as follows:
recurring situations or functions. 1. An analysis of the firm’s current financial
b. Procedures condition as indicated by an analysis of
- they are plans that describe the exact series most recent statements.
of actions to be taken in a given situation. 2. A sales forecast
c. Rules 3. The capital budgets
- they are statements that either require or 4. The cash budget
forbid a certain action. 5. A set of pro forma (or projected) financial
statements
2. Single-use Plans 6. The external financing plans
- these plans are specifically developed to
implement courses of action that are The Contents of the Human Resources Plan
relatively unique and are unlikely to be The human resources plan must contain the
repeated. following:
1. Personnel requirements of the company
2. Plans for recruitment and selection
3. Training plan
4. Retirement plan
ENGMAN 303
CHAPTER 3: Planning Technical Activities
Parts of the Strategic Plan
The strategic plan must contain the following:
1. Company or corporate mission
- strategic statement that identifies why an
organization exists, its philosophy of
management, and its purpose as
distinguished from other similar
organizations in terms of products, services,
and markets
2. Objectives or goals
3. Strategies

Making Planning Effective

Planning is done so that some desired results may
be achieved. At times, however, failure in planning
occurs.

Planning may be made successful if the following

are observed:
1. Recognize the planning barriers
2. Use of aids to planning

The planning barriers, according to Plunkett and

Attner, are as follows:
1. Manager’s inability to plan
2. Improper planning process
3. Lack of commitment to the planning
process
4. Improper information
5. Focusing on the present at the expense of
the future
6. Too much reliance on the planning
department
7. Concentrating on only the controllable
variables

Among the aids to planning that may be used are:

1. Gather as much information as possible
2. Develop multiple sources of information
3. Involve others in the planning process
ENGMAN 303
CHAPTER 4: Organizing Technical Activities
Reasons for Organizing Described by management through:
 To facilitate implementation of plans. 1. Organizational chart
 Effective organizing – breaking down a job. - diagram of the organization’s official
positions and formal lines of authority.
2. Organizational manual
Organizing Defined
- provides written descriptions of authority
Organizing relationships, details the functions of major
- management function which refers to “the authority relationships, and described job
structuring of resources and activities to procedures.
accomplish objectives in an efficient and 3. Policy manuals
effective manner.” - describes personnel activities and company
Structure policies.
- arrangement or relationship of positions
within an organization.
Informal Group
- result of organizing process
Informal Group
- members of an organization form a group
Purpose of the Structure
with a friendship as a reason for belonging
1. Defines the relationships between tasks and - vulnerable to expediency, manipulation,
authority. and opportunism
2. Defines formal reporting relationships, number
of levels in the hierarchy of the organization, According to Valentine, its low visibility makes it
and span of control. difficult for management to detect these
3. Defines groupings of individuals into perversions and considerable harm can be done
departments and departments into programs.
to the company.
4. Defines the system to effect coordination of
effort in both vertical (authority) and
Reasons or Factors for Joining or Forming a
horizontal (tasks) directions.
Group
1. Friendship
An engineer manager must be concerned with the
2. Common Interest
following when structuring an organization:
3. Proximity
1. Division of Labor – scope of work and how it is 4. Need Satisfaction
combined in a job. 5. Collective Goals/Power
2. Delegation of Authority – assigning various 6. Group Goals
degrees of decision-making authority to
subordinates. Types of Organizational Structures
3. Departmentalization – groupings of related 1. Functional Organization
jobs, activities, or processes into major 2. Product or Market Organization
organizational subunits. 3. Matrix Organization
4. Span of Control – number of people who report
directly to a given manager. Functional Organization
5. Coordination – linking of activities in the Functional Organization
organization that serves to achieve a common - everyone is engaged in one functional
goal or objectives. activity, such as engineering or marketing,
is group is grouped into one unit.
- effective in smaller firms, especially single-
Formal Organization
business firms where key activities revolve
Formal Organization around well-defined skills and areas of
- structure that details lines of specialization.
responsibilities, authority, and position
- planned structure ADVANTAGES:
- represents the deliberate attempt to 1. Grouping of employees who perform a
establish patterned relationships among common task permit economies of scale and
components that will meet the objectives efficient resource use.
effectively
2. Decision making is centralized.
ENGMAN 303
CHAPTER 4: Organizing Technical Activities
3. Communication and coordination among Matrix Organization
employees with each department are Matrix Organization
excellent. - each employee reports to both a functional
4. Promotes high-quality technical problem- or division manager and to a project or
solving. group manager.
5. Org is provided with in depth skill - a structure with two or more channels of
specialization and development. command, two lines of budget authority,
and two sources of performance and reward
6. Employees are provided with career
progress.
ADVANTAGES:
1. More efficient use of resources than the
DISADVANTAGES: divisional structure.
1. Communication and coordination between
2. Flexible and adaptable to changing
the departments are poor.
environment.
2. Decisions involving more than one
3. Development of both general and functional
department pile up at the top management
management.
level and are often delayed.
4. Interdisciplinary cooperation and any
3. Work specialization and division of labor
expertise are available to all divisions.
produce routine.
5. Enlarged tasks for employees which
4. Difficult to identify which section is
motivate them better.
responsible for certain problems.
5. Limited view of goals by employees.
DISADVANTAGES:
6. Limited general management training for 1. There is frustration and confusion from dual
employees. chain of command.
2. High conflict between divisional and
Product or Market Organization functional interests.
Product or Market Organization
3. Many meetings and more discussion than
- organization of a company by divisions that
action.
brings together all those involved with a
certain type of product or customer. 4. Need for human relations training for key
- appropriate for a large corporation with employees and managers.
many product lines in several related 5. Tendency for power dominance by one side
industries of the matrix.

ADVANTAGES: TYPES OF AUTHORITY

1. Flexible and responsive to change. 1. Line Authority
2. Provides high concern for customer’s needs. - a manager’s right to tell subordinates what
3. Provides excellent coordination across to do and then see that they do it.
functional departments. 2. Staff Authority
4. Easy pinpointing of responsibility for - a staff’s specialist’s right to give advice to a
product problems. superior.
5. Emphasis on product and division goals. 3. Functional Authority
6. Opportunity for the development of general - a specialist’s right to oversee lower-level
management skills is provided. personnel involved in that specialty,
regardless of where the personnel are in the
DISADVANTAGES: organization.
1. High possibility of duplication of resources
across divisions.  Line Departments
2. Less technical depth and specialization in
- perform tasks that reflect the organization’s
divisions.
primary goal and mission.
3. Poor coordination across divisions.
 Staff Departments
4. Less top management control.
- include those that provide specialized skills
5. Competition for corporate resources.
in support of line departments.
ENGMAN 303
CHAPTER 4: Organizing Technical Activities
Classification of Staff Officers:
 Personal Staff
- assigned to a specific manager to provide
needed staff services.
 Specialized Staff
- individuals providing needed staff services
for the whole organization.

 Functional Authority
- given to a person or a work group to make
decisions related to their expertise even if
these decisions concern other departments.

THE PURPOSE OF COMMITTEES

 Harnessed to achieve organizational goals
when formal groups are inappropriate to meet
expectations.

Committee
- formal group of persons formed for a
specific purpose.

Product Planning Committee

(described by Millevo)
- often staffed by top executives from
marketing, production, research,
engineering, and finance
- work part-time to evaluate and approve
product ideas

Classification of Committees
 Ad hoc committee
- created for a short-term purpose and have a
limited life.
 Committee created to manage the
anniversary festivities of a certain firm.

 Standing committee
- relatively permanent committee that deals
with issues on an ongoing basis.
 Grievance committee set up to handle
initially complaints from employees of the
organization.
ENGMAN 303
CHAPTER 5: Staffing the Engineering Organization
WHAT IS STAFFING?  Complex - involves special skills
Staffing Ways of Determining Qualifications of a Job
- determines human resource needs, recruits, Candidate
selects, trains, develop human resource  Application blanks - provides info about
- Match people w/ jobs person’s characteristics
- References - written by previous employers,
STAFFING PROCEDURE co-workers, etc., providing some vital info on
1. Human Resource Planning the character of the applicant
Human Resource Planning  Interviews - ask series of relevant questions
- planned output of any organizations will  Testing - evaluation of future behavior
require a systematic development of human Types of Tests
resources various levels  Psychological tests - objective, standard
3 Activities of HR Planning measure of a sample behavior
 Forecasting - assessment of future HR needs  Aptitude test - measure person’s
 Time series methods - use historical data capacity/potential ability to learn
 Explanatory/causal models - attempt to  Performance test - measure person’s
identify major variables current knowledge
o Regression models - examines the  Personality test - measure personality
association between two or more traits as dominance, sociability and
variables conformity
o Econometric models - estimated from  Interest test - measure person’s interest
past time-series  Physical examination - assess physical health;
o Leading indicators - anticipate assure health of applicants is adequate to meet
business cycle turns the job requirements
 Monitoring methods - provide early
warning signals 4. Induction and Orientation
 Programming - translating forecasted HR Induction
needs - provided with necessary info about the
 Evaluation and control - monitor HR action company (duties and responsibilities,
plans and evaluating their success personnel and health forms, benefits)
Orientation
2. Recruitment - introduced to immediate working environment
Recruitment and co-workers (rules, locations, performance
- attracting qualified persons to apply for vacant expectations)
positions o Socialization process - pairing w/ experienced
Source of Applicants employee and one-on-one discussion with the
For entry-level personnels; manager
✓ Newspaper advertising
✓ Schools 5. Tranining and Development
✓ Referrals from employees Training
For recruiting managers; - learning provided to improve performance
✓ The organization’s current employees Two General Types
✓ Recruitment firms A. Training Program for Non-Managers
✓ Competitors - directed to nonmanagers for specific increase
in skills and knowledge
3. Selection Four methods
Selection  On-the-job training - trainer is placed in actual
- act of choosing the available individuals most work situation
likely to succeed in a job  Vestibule school - trainee is placed where
 Preparation of list - requisite for selection machines, materials, and time constraint are
 Purpose: evaluate each candidate and pick the present; sufficient attention
most suited for position  Apprenticeship program - OJT and classroom
Selection Procedures instructions are provided
 Simple - picks wrong person and has negligible  Special courses - provide more emphasis on
effect on the org
education rather than training (e.g., CAD)
ENGMAN 303
CHAPTER 5: Staffing the Engineering Organization
B. Training Programs for Managers  Work standards method - standards set for
Four areas realistic worker output
1. Decision-Making Skills  Ranking method - arrange employees in rank
a. In-basket - provided with set of notes,
 Critical incident method - recall and write
messages, handle situation w/in 1-2 hours
down specific incidents
b. Management games - trainers faced with
simulated situations 7. Employment Decisions
c. Case studies - presents actual situation in Consists of;
org; emphasizes manager’s world  Monetary rewards - employees performance is
2. Interpersonal Skills at par
a. Role-playing - assigned roles to play;  Promotion - movement to position of higher
script provided; improve human relations pay; reward for competence and ambition
skills  Transfer - movement to different job at same
b. Behavior modeling - showing model level; provide growth opportunities
persons; adapt behavior of models  Demotion - movement of position with less pay;
c. Sensitivity training - awareness and punishment/temporary measure
sensitivity
d. Transactional analysis - improve their 8. Separation
interpersonal communication skills Separation
3. Job Knowledge - either voluntary or involuntary termination of
a. On-the-job experience - learn various an employee.
skills while engaged in performance  Voluntary separation - find out reason to apply
b. Coaching - senior manager assist lower corrective action
level  Involuntary separation (termination) -
c. Understudy - manager as assistant to employee has poor performance or violated
higher level rules & regulations; training efforts failed
4. Organizational Knowledge
a. Position rotation - manager is given
assignment in variety of dep’t to expose to
different functions of the org
b. Multiple management - junior executives
to prepare for higher management

6. Performance Appraisal
Performance Appraisal
- measurement of employee’s performance
Purpose
✓ Influence (positive manner) employee
performance and development
✓ Determine merit pay increases
✓ Plan for future performance goals
✓ Determine training and development needs
✓ Assess promotional potential of employees
Ways of Appraising Performance
 Rating scale method - trait/characteristic is
rated
 Essay method - evaluator composes statements
 Management by objectives method - specific
goals are set collectively
 Assessment center method - evaluated by
persons; evaluate managers
 Checklist method - check statement on the list
ENGMAN 303
CHAPTER 6: Communicating
What is Communication? Barriers to Communication
Communication 1. Personal barriers
- process of sharing info through symbols - from communicator’s characteristics as a
including words and messages (Morris Philip person (emotions, values, poor listening habits,
Wolf and Shirley Kuiper) etc.)
- may happen between superior and subordinate,  Emotions - cloud the ability to judge correctly
between peers, between a manager and a client the real meaning of message
or customer, between an employee and a 2. Physical barriers
government representative. - Occurs in the environment where
communication is undertaken
Functions of Communication - Includes distance between people, overloaded
1. Informative function - used for decision communication channel
making at various work levels 3. Semantic barriers
2. Motivation function – used to motivates - interference with the reception of a message
employees to commit to org’s objectives - occurs when the message is misunderstood
3. Control function – define roles and clarify though it is received as exactly transmitted
duties, authorities, and responsibilities  Semantics - study of meaning expressed in
4. Emotive function - employees are affected symbols
when feelings are repressed which affects
performance Overcoming Barriers to Communication
✓ Use feedback to facilitate understanding and
The Communication Process increase potential for appropriate action
1. Develop an idea - most important; idea must be ✓ Repeat messages in order to provide assurance
useful that they are properly received
2. Encode - encode idea into words or symbols; ✓ Use multiple channels so accuracy of the
conform w/ specific requirements message is enhanced
3. Transmit - through use of communication ✓ Use simplified language that is easily
channels (spoken word, body movements, understandable and eliminates possibility of
written) people getting mixed-up w/ meanings
 Noise (interference) - barriers
4. Receive - receiver ready to receive Techniques for Communicating in Organizations
5. Decode - translate message from sender 1. Downward Communication
6. Accept - accept/ reject sometimes is partial - Flows from higher to lower level
Factors affecting acceptance  Purpose:
a) Accuracy of message  Give instructions
b) Whether or not sender has authority to  Provide info about policies & procedures
send message or require action  Give feedback about performance
c) Behavioral implications for the receiver  Indoctrinate/motivate
7. Use - store/retrieve
 Used in;
8. Provide feedback - last step
 Letters - directives are complex
 Meetings, telephones - simple orders
Forms of Communication
 Manuals - policy, procedures, org
1. Verbal Communication
- transmitted through hearing/sight  Handbooks - more specific info on duties
 Oral communication - hearing words of  Newsletter - personal, social, work info
senders, sometimes sensed
2. Upward Communication
 Written communication - through written
- from low-level to high-level
word; preferred due to time and cost
2. Non-verbal Communication - provide info on work progress, problems,
suggestions
- convey message through body language, time,
space, etc.
 Some are:
 Body language - gestures, bodily movements,
mannerisms  Formal grievance procedures
o Grievance - concern over a perceived
 Non-verbal expressions - convey shades of
violation (Holley & Jennings)
meaning
ENGMAN 303
CHAPTER 6: Communicating
 Employee attitude and opinion surveys -  Personnel
what they think about the company  Research & Development
o Benefit-cost analysis - deciding factor
 Suggestion system - cost-saving, Purpose of MIS
production enhancing ideas 1. Provide basis for analysis of early warning
 Open door policy - opportunity to act on signals that can originate both internally and
difficulties externally
 Informal gripe sessions - employees are 2. Automate routine clerical operations like
free to talk w/o getting penalized payroll and inventory reports
 Task forces - deal w/ problem/issues 3. Assist managers in making routine decisions
 Exit interviews - know the real reason why like scheduling orders, assigning orders to
they leave an organization machines, and reordering supplies
4. Provide info necessary for management to make
3. Horizontal Communication strategic or non-programmed decisions
- Message from the same organizational
level/position
 Purpose:
 Coordinate activities between dept’s
 Persuade others at the same level of org
 pass on info about activities/feelings
 Memos, meetings, telephones, picnics, dinners,
social affairs

Message Flows and Areas of Concern

Upward Communication
✓ Problems and exceptions
✓ Suggestions for improvement
✓ Performance reports
✓ Grievances and disputes
✓ Financial and accounting info
Downward Communication
✓ Implementation of goals, strategies, objectives
✓ Job instructions and rationale
✓ Procedures and practices
✓ Performance feedback
✓ Indoctrination
Horizontal Communication
✓ Interdepartmental coordination
✓ Intradepartmental problem-solving
✓ Staff advice to the departments

Management Information System

Management Information System
- Organized method of providing past, present,
and projected info on internal operations and
external intelligence for decision making
(Boone and Kurtz)
- Written and electronically based systems (used
by corporate firms)

MIS and Relation to Different Departments

 Manufacturing
 Finance
 Engineering
 Marketing