PART I: CONSTRUCTION PROJECT MANAGEMENT

WHAT IS MANAGEMENT?
Management as a Process
It is the process of combining the efforts & resources of individuals with a common
interest to achieve a desired objective.
Management as a Function
It is the application of authority and the assumption of the responsibility. It is an art, the
art of handling people.

PLANNING
Planning is an art, and the art of arranging activities towards a certain goal. For a good
planning, intelligence and experience are necessary. And for a plan to be successful, it must be
prepared by those were trained and qualified for certain period of time.
Four Basic Rules for a Sound Construction Pre-Planning:
1. The construction superintendent should be included in the consultation at the very start
of the of the planning stage.
2. Make a job breakdown into components. This will simplify the whole program.
3. Prepare a construction plan that will be consulted constantly.
4. Take advantage of new tools, which have demonstrated in saving time, money or
confusion…, Project Management, Primavera (software)
For Whom and What are We Planning for?
1. We are planning for the owners of the company when we plan to achieve a profit by
operating at the minimum expenses, utilizing the available and immediate resources.
2. We are planning for the employees when we plan to create or maintain jobs.

PLANNING AND SCHEDULING WITH GANTT CHART

The Gantt chart is a tool used for planning and scheduling simple projects. With the
chart, the project engineer can initially schedule project activities, and to monitor progress over
time by comparing planned progress to actual progress.

GANTT CHART FOR CONSTRUCTION

The advantage of the Gantt chart is its simplicity, making it very popular. Gantt chart
however, fails to reveal certain relationship among activities that can be crucial to effective
project management. If anyone of the early activities would have to be delayed, it is because
they could not start until that activity was completed. Some activities may be delayed without
affecting the overall project schedule.
A Gantt chart does not directly reveal this information. Gantt charts are useful for simple
projects where activities are simultaneously or where a string of sequential activities involved.
On a more complex project planning, which then gives way to the use of networks called PERT
and CPM.
 PERT AND CPM
What is PERT and what is CPM?
PERT is a Program Evaluation and Review Technique
CPM is the Critical Path Method
PERT was developed as a result of looking for an improved method of planning and
evaluating progress of a large-scale research and development program. It was designed to
provide the management a periodic reporting of current status and an outlook for the future on
meeting approved plans and schedules.
CPM was designed as a tool for planning, scheduling and control of construction work.
Its emphasis was on the work or activities to be managed. The network diagram defined and
focused attention on the job to be accomplished. The schedule drives the earliest and the latest
times for their start and finish.
PERT/CPM is a control tool for defining the parts of construction job and then putting
them together in a network form. It serves as an aid to the construction manager but it does not
make decision for him does it guarantee good management. PERT/CPM only serves the project
manager to see the whole picture of the entire job. It encourages periodic re-evaluation and
providing an accurate measure of progress.
PERT/CPM PROJECT REQUIREMENTS
Today, either of the two techniques can be used with deterministic or probabilities of
time. In all major projects of the government, PERT and CPM network is a
mandatoryrequirement.
Under Presidential Decree (PD) 1594, Prescribing Policies, Guidelines, Rules and
Regulations for government infrastructure contracts provides that:

“The program of work shall include, among other things, estimates of the work items,
quantities, cost and a PERT/CPM network of the project activities…in the preparation of the
bidding documents, the government shall make and estimate of the actual number of working
days required to complete the project through PERT/CPM analysis of the project activities and
corrected for holidays and weekends.”
On January 27, 1968, President Ferdinand E. Marcos issued Memorandum Circular No.
153 which provides that:
“In order that the performance discipline on the field could be controlled and easy
reporting system could be made to facilitate the monitoring, evaluation, inspection completion of
infrastructure projects, all heads of departments and chief of bureaus and offices concerned are
hereby required to change the old system of preparing the work programs of said projects from
the Gantt Chart (Bar Type) to the PERT/CPM network. Strict compliance herewith is enjoined.”
With the use of PERT/CPM, the project manager can easily obtain the following information:
1. The graphical display of project activities
2. An estimate of how long will the project last
3. Determine which activities are the most critical to timely project completion.
4. Determined how long any activity can be delayed without lengthening the project

THREE PHASES OF PERT / CPM

1. Planning
is defined as determining the relationship between the work operation and the sequence
in which they are to be performed.
2. Scheduling
is define as the process of translating the arrow diagram into timetable of calendar days.
This is done by the date table converting working days into calendar days which permits
the inclusion of weekends, holidays, weather and other time lost.
3. Controlling and Monitoring
 Flexibility and updated re-computations brought about by changing conditions is the key
to a successful network programming.

CONTROLLING AND MONITORING

Planning Phase

 there are five inputs that can be obtain:

1. A network diagram defining the activities in the project.
2. The duration of the activities
3. Cost estimates of the activities for monitoring cost, cash flow requirements
4. Resource estimates
5. Trade indicators (responsibility) for activity grouping.
Schedule Phase

 there are four output that can be obtain:

1. The schedule of activities in the network showing the following:
a. The Critical Activities
b. The Earliest Start date for each activity
c. The Earliest Finish date for each activity
d. The Latest Start date for each activity
e. The Latest Finish date for each activity
f. The Float which refers to the amount of extra time available for an activity.
2. A Bar Chart or a Time Scaled Network (arrow diagram network for the project).
3. A Resource Analysis showing the number & kind of resources, man power, equipment
and others that are required for each day of the project.
4. A Cash Requirement prediction indicating how much cash to be disbursed for the job
and the amount of money that will be collected as a result of work accomplishment.
The Control Monitor Phase

 uses actual data which includes:

1. Addition to the project – This refers to the new activities.
2. Deletion from the project
3. Changes as to duration, description, trade indicators, cost estimates or resource
estimates.
4. Actual starting date.
5. Actual finishing date.
The Output Phase

 consist of the following:

1. Time status report
2. Revised schedules
3. Revised Bar Charts / Arrow Diagram or Network
4. Revised resource analysis
5. Revised cash flow predictions
6. Cost status reports

THREE MAJOR REASONS FOR CONSTRUCTION FAILURE

1. Unbalanced organization due to lack of planning and scheduling.
2. Lack of financial planning
3. Poor cost control
 PART II: APPLICATION ON ACTUAL CONSTRUCTION

PERIOD OF ACTION ON PROCUMENT ACTIVITIES

Project title:
CONSTRUCTION OF FOUR (4) STOREY BUILDING OF ARAULLO HIGH
SCHOOL (PHASE I)
Location: Taft cor. U.N. Avenue, Ermita, Manila
Contract amount: seventy-three million four hundred thirty-nine thousand three hundred
pesos (p 73,439,300.00)

REQUIRED DOCUMENTS
Scope of Work
Detailed Cost Estimate

Program of Work
Approved Budget for the Contract

PROJECT SCHEDULING
 PROJECT PLANNING
Project Planning Schedule

PERT / CPM

123 5 72 10 12 11
141143 215254 227266

3 15 72 29 22 4
1 2 3 125 4 9 12 13 14
215215 244244 266266 270270
00 33 1818 143143

55

6 64 7 55 8
73160 137224 157244

1-2-3-4-9-12-13-14 = 270 CRITICAL PATH

PROJECT ENDED AHEAD OF 1.5 MONTHS (MAY 2009)

PROJECT STARTED LATER THAN SCHEDULED DATE
(AUGUST 2008

123 5 72 10 12 11
141143 215254 227266

3 15 125 72 29 22 4
1 2 3 4 9 12 13 14
215215 244244 266266 270270
00 33 1818 143143

55

6 64 7 55 8
73160 137224 157244

1-2-3-4-9-12-13-14 = 270 days CRITICAL PATH

BUT??
?
Problem Encountered during Implementation

Implementing Rules and Regulations of Republic Act No. 9184

ANNEX “E”
CONTRACT IMPLEMENTATION GUIDELINES FOR THE PROCUREMENT OF
INFRASTRUCTURE PROJECT
9. SUSPENSION OF WORK
1. The procuring entity shall have the authority to suspend the work wholly or partly by
written order for such period as may be deemed necessary, due to force majeure or any
fortuitous events or for failure on the part of the contractor to correct bad conditions
which are unsafe for workers or for the general public, to carry out valid orders given by
the procuring entity or to perform m any provision of the contract, or due to adjustment of
plans to suit field conditions as found necessary during construction. The contractor shall
immediately comply with such order to suspend the work wholly or partly.
2. In case of total suspension, or suspension of activities along the critical path, which is
not due to any fault of the contractor, the elapsed time between the effective order of the
suspending operation and the order to resume work shall be allowed the contractor by
adjusting the contract time accordingly.
Work Suspension Order

Solution on the Problem

ANNEX “E”
CONTRACT IMPLEMENTATION GUIDELINES FOR THE PROCUREMENT OF
INFRASTRUCTURE PROJECT
9. EXTENSION OF CONTRACT TIME
3. Extension on contract time may be granted only when the affected activities fall within
the critical path of the PERT/CPM network.
4. …Shortage of construction materials, general labor strikes, and peace and order
problems that disrupt construction operations though no fault on the contractor may be
considered as additional grounds for extension of contract time provided they are
publicly felt and certified by appropriate government agencies such as DTI, DOLE, DILG,
and DNA, among others. The written consent of bondsmen must be attached to any
request of the contractor for extension of contract time and submitted to the procuring
 entity for consideration and the validity of the performance security shall be
correspondingly extended.

Work Resumption Order

Solution to the Problem

 DECISION MAKING

Decision-Making as a Management Responsibility

 Decision-making is a responsibility of the engineer manager.

 It is understandable for managers to make wrong decisions at times.
 The bigger issue is the manager who cannot or do not want to make decisions.
 Delaney concludes that this type of managers are dangerous and “should be removed
from their position as soon as possible”.
 The higher the management level is, the bigger and the more complicated decision-
making becomes.

What is Decision-Making?

 Decision-making may be defined as “the process of identifying and choosing alternative

courses of action in the manner appropriate to the demands of the situation”
 Decision-making, according to Nickels and others, “is the heart of all the management
functions”

THE DECISION-MAKING PROCESS

According to David H. Holt, rational decision-making is a process involving the following
steps;

 Diagnose problem
 Analyze environment
 Articulate problem or opportunity
 Develop viable alternatives
 Evaluate alternatives
 Make a choice
 Implement decision
 Evaluate and adapt decision results

Diagnose Problem

 An expert once said, “identification of the problem is tantamount to having the problem
half-solved”.
 What is a Problem? A problem exists when there is a difference between an actual
situation and a desired situation.

Analyze the Environment

 The objective of environmental analysis is the identification of constraints, which may be

spelled out as either internal or external limitations.
Example of Internal Limitations:
1. Limited Funds
2. Limited Training
3. Ill-designed Facilities
4. Patents
5. Limited Market
6. Street enforcement of local zoning regulations.

Components of Environment

 The environment consists of two major concerns:

 1. Internal Environment
This refers to organizational activities within a firm that surrounds decision-making.
2. External Environment
This refers to variables that are outside the organization and not typically within the
short-run control of top management.

Develop Viable Alternatives:

1. Prepare a list of alternative solutions.
2. Determine the viability of each solutions.
3. Revise the list by striking out those which are not viable
Evaluate Alternatives

 Proper evaluation makes choosing the right solution less difficult.

 Souder suggests that “each alternative must be analyzed and evaluated in terms of its
value, cost and risk characteristics.”
 The value of the alternatives refers to the benefits that can be expected.
 The cost of the alternatives refer to out-of-pocket costs, opportunity costs, and follow-on
costs.
 The risks characteristics refer to the likelihood of achieving the goals of the alternatives.

Make a Choice

 Choice-making refers to the process of selecting among alternatives representing

potential solutions to a problem.
 Webber advises that “…..particular effort should be made to identify all significant
consequences of each choice”

Implement Decision

 Implementation refers to carrying out the decision so that the objectives sought will be
achieved.
 Thus, a plan must be devised
 Resources must be available

Evaluate and Adapt Decision Results

 It is important for the manager to use control and feedback mechanisms to ensure
results and to provide information for future decisions
  Feedback refers to the process which requires checking at each stage of the process to
ensure that the alternatives generated, the criteria used in evaluation, and the solution
selected for implementation are in keeping with the goals and objectives originally
specified.
 Control refers to actions made to ensure that activities performed match the desired
activities or goals that have been set.

APPROACHES IN SOLVING PROBLEMS:

1. Qualitative Evaluation
This term refers to evaluation of alternatives using intuition and subjective judgment.
Stevenson states that managers tend to use the qualitative approach when:

 The problem is fairly simple

 The problem is familiar
 The costs involved are not great
 Immediate decisions are neglected

2. Quantitative Evaluation
This term refers to the evaluation of alternatives using any technique in a group
classified as rational and analytical.

Quantitative Models for Decision-Making:

1. Inventory Models
A. Economic order quantity model
 Used to calculate the number of items that should be ordered at one time to
minimize the total yearly cost
B. Production order quantity model
 An economic order quantity technique applied to production orders
C. Back order inventory model
 An inventory model used for planned shortages
D. Quality discount model
 Used to minimize the total cost when quantity discounts are offered by suppliers

2. Queuing Theory
This describes how to determine the number of service units that will minimize both
the customer waiting time and cost of service.
3. Network Models
These are models where large complex tasks are broken into smaller segments that
can be managed independently.
The 2 most prominent network models are:
1. The Program Evaluation Review Technique (PERT)
A technique which enables engineer managers to schedule, monitor, and control
large and complex projects by employing three time estimates for each activity.
2. The Critical Path Method (CPM)
A network technique using only one time factor per activity.
 4. Forecasting
This may be defined as “the collection of past and current information to make
predictions about the future.”

 Qualitative Technique - when a product is unique to the market, it uses human

judgement and rating schemes to turn qualitative information into quantitative
estimates
 Time-Series Analysis - used when the trend are both clear and stable in terms of
data about the product.
 Causal Model - knowing the dynamic flow of the system and utilizes predictions
of related events

5. Regression Analysis
 A forecasting model that examines the association between two or more
variables.
 It uses data from previous periods to predict future events.
1. Simple Regression – involves one independent variable
2. Multiple Regression – involves two or more independent variables

6. Simulation
 A model constructed to represent reality on which conclusions about real-life
problems can be used.
 It does not guarantee an optimum solution, but it can evaluate the alternatives
fed into the process by the decision-maker.

7. Linear Programming
 It is used to produce an optimum solution within the bounds imposed by the
constraints upon the decision.
 This is very useful as decision-making tool when supply and demand limitations
are constraints upon the system.

8. Sampling Theory
 A quantitative technique where samples of populations are statistically
determined to be used for a number of processes.

9. Statistical Decision-Theory
 It refers to the “rational way to conceptualize, analyze, and solve problems in
situations involving limited, or partial information about the decision environment”

Subjecting Alternatives to Bayesian Analysis:

The purpose of this analysis is to revise and update the initial assessments of the event
probabilities generated by the alternative solutions.

Bayes Criterion:
This selects the decision alternative having the maximum expected payoff, or the minimum
expected loss if he is working with a loss table.
“Decision-making is a very important function of the engineer manager. His organization will rise
or fall depending on the outcomes of his decisions.”
 PLANNING TECHNICAL ACTIVITIES

PLANNING TECHNICAL ACTIVITIES

 In managing an organization or a project, planning will come up as the most important

activity.
 Managers that plan are given the opportunity to carefully analyze situations which
directly contribute to effective decision-making.

NATURE OF PLANNING
Plan

 Generally, a plan provides a methodical way of achieving desired results.

 In the implementation of activities, the plan serves as a useful guide
 Without the plan, some minor tasks may be overlooked.
According to Nickels and others
Planning refers to “the management function that involves anticipating future trends and
determining the best strategies and tactics to achieve organizational objectives.”
According to Aldag and Stearns
Planning refers to “the selection and sequential ordering of tasks required to achieve and
organizational goal.”
According to Cole and Hamilton
Planning refers to “deciding what will be done, who will do it, where, when, and how it
will be done, and standards to which it will be done.”
Planning - Selecting the best course of action so that the desired result may be achieved.

PARTS OF VARIOUS FUNCTIONAL AREA PLANS

THE PLANNING PROCESS

 It consists of various steps depending on the management level that performs the
planning task.
 Planning includes the following:
1. Setting organizational, divisional, or unit goals.
2. Developing strategies or tactics to reach those goals.
3. Determine resources needed
4. Setting standards

Setting organizational, divisional, or unit goals.

 the first task of the engineer manager is to provide a sense of direction to his firm, to his
division, or to his unit.
 the setting of goals give an answer to the said concern.
 if everybody in the firm is aware of the goals, there is a possibility that everyone will
contribute to their specific job or work.
Goals

 precise statement of results sought, quantified in time and magnitude, where possible.

DEVELOPING STRATEGIES TACTICS TO REACH THOSE GOALS.

 Developing the strategies are done after the goals had been determined.
 The strategy is the only way to realize the goal and these will also the concern of the
management.
 The middle and lower management will adapt their tactics to implement their plans.
 It is a short-term action taken by management to adjust to negative internal or external
influences called TACTICS.
 The decision about short-term goals and the courses of action are indicated in the
TACTICAL PLAN.

STRATEGY
 Is a course of action aimed at ensuring that the organization will achieve its objectives?

DETERMINE RESOURCES NEEDED

 When the particular sets of tactics or strategies have been plan or invent, the engineer
manager will determine the human and nonhuman resources.
 The resources must be correctly determined by its quality and quantity.
  A general statement of needed resources will suffice in order to satisfy the strategic
requirement.

SETTING STANDARDS
 The standards for measuring the performance may be done at the planning stage.
 Corrections may be made, and reinforcements will occur if the actual performance goes
not match with the planned performance.

STANDARD
 A quantitative or qualitative measuring device designed to help monitor the performance
of the people, capital goods or processes

EXAMPLES OF STANDARDS

 The minimum number of units that must be produced by a worker per day in each work
situation

.
PLANNING LEVELS
PARTS OF STRATEGIC PLAN AND PLAN MAKING EFFECTIVE

PARTS OF STRATEGIC PLAN

 COMPANY MISSION
 OBJECTIVE/S OR GOAL/S
 STRATEGIES

COMPANY OR CORPORATE MISSION

 WHY CORPORATION OR ORGANIZATION EXISTS?

 COMPANY’S FUNCTION
 SHORT STATEMENT OF AN ORGANIZATION

o SCOPE OF OPERATION

o PRODUCTS OR SERVICES

o INTENDED AUDIENCE

 WAY TO DIRECT A BUSINESS IN THE RIGHT DIRECTION

OBJECTIVES/GOALS

 DESIRED POSITION IN THE FUTURE

 SETTING GOALS AFFECT OUR BEHAVIORS, FOCUS, MOMENTUM TO SUSTAIN IN
LIFE

STRATEGIES

 MOVEMENT
 WAYS OF EXECUTION OF THE PLAN TO ACHIEVE OBJECTIVES/GOALS
 STRENGTH AND WEAKNESSES
 EFFECTIVE STRATEGIES WILL HELP YOU TO DECIDE WHERE YOUR EFFORTS
AND RESOURCES ARE BEST SPENT.

MAKING PLANNING EFFECTIVE

 RECOGNIZE THE PLANNING BARRIERS

PLANNING BARRIERS
BY PLUNKETT & ATTNER
1. MANAGER’S INABILITY TO PLAN
 MANAGER’S ARE NOT BORN WITH THE ABILITY TO PLAN

 SOME ARE LACK OF BACKGROUND EDUCATION, AND/OR ABILITY

 OTHERS MAY NEVER BEEN TAUGHT HOW TO PLAN

2. IMPROPER PLANNING PROCESS

 SCHEDULE THAT THE TEAM MEMBERS ARE SUPPOSED TO FOLLOW IS NOT SET
OUT

 THE MEMBERS WILL HAVE NO CLEAR PICTURE OF WHAT IS EXPECTED OF

THEM AS THEY WORK ON THE PROJECTS
  THERE WILL BE NO DEADLINES TO MEET HENCE CREATING A LAZY
ATMOSPHERE AMONG THE TEAM MEMBERS

3. LACK OF COMMITMENT TO THE PLANNING PROCESS

 FEAR OF FAILURE = MANAGERS MAY CHOOSE TO DO LITTLE OR NOTHING TO
HELP IN THE PLANNING PROCESS

4. IMPROPER INFORMATION
 OUTDATED + POOR-QUALITY = FAILURE

5. FOCUSING ON THE PRESENT AT THE EXPENSE OF THE FUTURE

 FAILURE TO CONSIDER THE LONG‐TERM EFFECTS OF A PLAN BECAUSE OF
EMPHASIS ON SHORT‐TERM PROBLEMS

6. TOO MUCH RELIANCE ON THE ORGANIZATION'S PLANNING DEPARTMENT

 MANY COMPANIES HAVE A PLANNING DEPARTMENT OR A PLANNING AND
DEVELOPMENT TEAM

 PLANNING DEPARTMENT RESULTS ARE AIDS IN PLANNING AND SHOULD BE

USED ONLY AS SUCH. FORMULATING THE PLAN IS STILL THE MANAGER'S
RESPONSIBILITY.

7. CONCENTRATING ON CONTROLLABLE VARIABLES

 MANAGERS CAN FIND THEMSELVES CONCENTRATING ON THE THINGS AND
EVENTS THAT THEY CAN CONTROL

 BUT THEN FAIL TO CONSIDER OUTSIDE FACTORS, SUCH AS A POOR

ECONOMY. ONE REASON MAY BE THAT MANAGERS DEMONSTRATE A DECIDED
PREFERENCE FOR THE KNOWN AND AN AVERSION TO THE UNKNOWN

AIDS IN PLANNING
 GATHER AS MUCH INFORMATION AS POSSIBLE

 DEVELOP MULTIPLE SOURCES OF INFORMATION

 INVOLVE OTHERS IN THE PLANNING PROCESS

ADVANTAGES OF HAVING MORE INFORMATION / SOURCES OF INFORMATION

 INFORMED WITH THE CURRENT ADVANCEMENTS

 ACCURATE RESULT
 CLEAR INSIGHT TO THE PLAN

ADVANTAGES OF INVOLVING OTHERS TO PLANNING PROCESS

 ENHANCE CREATIVITY AND GAIN FRESH PERSPECTIVE

 ENHANCE RELATIONSHIP TO WORK MATES (TEAM CHEMISTRY)
 MINIMIZE MISUNDERSTANDING
 MOST OF ALL, IT WILL HAVE A HIGH PROBABILITY OF SUCCESS
 ORGANIZING TECHNICAL ACTIVITIES

ORGANIZING TECHNICAL ACTIVITIES

 Engineer manager needs to acquire various skills in management

 Skills in organizing contribute largely to the accomplishment of the objectives of many
organization

REASONS FOR ORGANIZING

Organizing is undertaken to facilitate the implementation of plans. In effective organizing,
steps are undertaken to breakdown the total job into more manageable man-size jobs. Doing
these will make it possible to assign particular tasks to particular persons. In turn, these will help
facilitate the assignment of authority, responsibility, and accountability for certain functions and
tasks.

ORGANIZING DEFINED
Organizing is a management function which refers to the “structuring of resources and activities
to accomplish objectives in an efficient and effective manner.”
The arrangement or relationship of positions within an organization is called the
structure. The result of the organizing process is the structure.

THE PURPOSE OF THE STRUCTURE

The structure serves some very useful purposes. They are the following:
• 1. It defines the relationships between tasks and authority for individuals and
departments.
• 2. It defines formal reporting relationships, the number of levels in the hierarchy of the
organization, and the span of control.
• 3. It defines the groupings of individuals into departments and departments into
organization.
• 4. It defines the system to effect coordination of effort in both vertical (authority) and
horizontal (tasks) directions.
When structuring an organization, the engineer manager must be concerned with the
following:
• 1. Division of labor – determining the scope of work and how it is combined in a job.
• 2. Delegation of authority – the process of assigning various degrees of decision-making
authority to subordinates.
• 3. Departmentation – the grouping of related jobs, activities, or processes into major
organizational subunits.
• 4. Span of control – the number of people who report directly to a given manager.
• 5. Coordination – the linking of activities in the organization that serves to achieve a
common goal or objective.

THE FORMAL ORGANIZATION

• The structure that details lines of responsibilities, authority and position.
• “The planned structure”
The formal structure is described by management through:
• ORGANIZATION CHART - A diagram of the organization’s official positions and formal
lines of authority.
 • ORGANIZATIONAL MANUAL - Provides written descriptions of authority relationships,
details the functions of the major organizational units, and describes job procedure.
• POLICY MANUAL - describes personnel activities and company policies.

INFORMAL GROUPS
• Instances that member of organization form a group with friendship as a principal reason
for belonging.
• “It’s low visibility makes it difficult for management to detect these perversions, and
considerable harm can be done to the company.”
- Valentine

TYPES OF ORGANIZATIONAL STRUCTURES

Three Types of Organizational Structures
• Functional Organization - Form of departmentalization in which everyone engaged in
one functional activity is grouped into one unit.
• Product or Market Organization - Organization of a company by divisions that brings
together all those involved with a certain type of product or customer.
• Matrix Organization - Organizational Structure in which each employee reports to both a
functional or division manager and to a project or group manager.

Functional Organization
• Effective in smaller firms where key activities revolve around well-defined skills and
areas of specialization.
Advantages
• The grouping of employees who perform a common task permit economies of scale and
efficient resource use.
• Since the chain of command converges at the top of the organization, decision-making is
centralized, providing a unified direction from the top.
• Communication and coordination among employees within each department are
excellent
• The structure promotes high-quality technical problem-solving
• The organization is provided with in depth skill specialization and development.
• Employees are provided with career progress within functional departments.
Disadvantages
• Communication and coordination between departments are often poor.
• Decisions involving more than one department pile up at the top management level and
are often delayed.
• Work specialization and division of labor, which are stressed in a functional organization,
produce routine, nonmotivating employee tasks.
• It is difficult to identify which section or group is responsible for certain problems.
• There is limited view of organizational goals buy employees.
• There is limited general management training for employees.
Product or Market Organization
• Appropriate for a large corporation with many product lines
• Its function is for organizations operating by divisions
Advantages
• The organization is flexible and responsive to change
• The organization provides a high concern for customer’s needs
• The organization provides excellent coordination across functional departments
• There is easy pinpointing of responsibility for product problems.
• There is emphasis on overall product and division goals.
• The opportunity for the development of general management skills is provided.
Disadvantages
• There is a high possibility of duplication oof resources across divisions.
• There is less technical depth and specializations in divisions.
• There is poor coordination across divisions.
• There is less top management control.
• There is competition for corporate resources

Matrix Organization
• “Structure with two or more channels of command, two lines of budget authority, and two
sources of performance and reward”
• “designed to keep employees in a central pool and to allocate them to various projects in
the firm”
Advantages
• There is more efficient use of resources than the divisional structure
• There is flexibility and adaptability to changing environment
• The development of both general and functional management skills are present.
• There is interdisciplinary cooperation and any expertise is available to all divisions
• There are enlarged tasks for employees which motive them better
Disadvantages
• There is frustration and confusion from dual chain of command
• There is high conflict between divisional and functional interest
• There are many meetings and more discussion than action
• There is a need for human relations training for key employees and managers
• There is a tendency for power dominance by one side of the matrix

TYPES OF AUTHORITY
 • A manager’s right to tell subordinates what to do and then see that they do it
• LINE DEPARTMENTS perform task that reflect the organization’s goal and mission.
STAFF AUTHORITY
• A staff specialist’s right to give advice to a superior
• STAFF DEPARTMENTS include all those that provide specialized skills in support of line
departments.
• Strategic planning, labor relations, research, accounting, and personnel
STAFF OFFICERS may be classified:
1. PERSONAL STAFF – those individuals assigned to a specific manager to provide
needed staff manager
2. SPECIALIZED STAFF – those individuals providing needed staff services for the whole
organization.

FUNCTIONAL AUTHORITY
• A specialist’s right to oversee lower level personnel involved in that specialty.
• Given to a person that is related to their expertise even if these decisions concern other
departments.

THE PURPOSE OF COMMITTEES

COMMITTEE
• - is a formal group of persons formed for a specific purpose.
• - is often staffed by top executives from marketing, production, research, engineering,
and finance, who work part-time to evaluate and approve product ideas.
Committees may be classified as follows:
• 1. Ad hoc committee – one created for a short-term purpose and have limited life.
• 2. Standing committee – it is a relatively permanents committee that deals with issue
on an ongoing basis.
1. Ad hoc committee – one created for a short-term purpose and have limited life.
2. Standing committee – it is a relatively permanents committee that deals with issue on an
ongoing basis.
 STAFFING THE ORGANIZATION

After setting up the organizational structure, the next move is to fill up the identified
positions with the most qualified persons available. Engineering organizations are very
sensitive to whatever staffing errors are made. Placing the wrong person in a highly specialized
position, may bring untold damages to the firm.
An example of the ill-effects was the collapse of the whole sixth floor of the Film Center
(at the Cultural Complex in Manila) in November 1981 which cause death of many workers and
an engineer. In an interview they found out that a former construction worker with no training in
masonry was hired to do the masonry job.

What is STAFFING?
Staffing is “the management function that determines human resource needs,
recruits, selects, trains, and develops human resources for jobs created by an
organization.”
STAFFING PROCEDURE
1. human resource planning
2. recruitment
3. selection
4. induction and orientation
5. training and development
6. performance appraisal
7. employment decisions
8. separations

HUMAN RESOURCE PLANNING

The planned output of any organization will require a systematic deployment of
human resources at various levels. To be able to do this, the engineer manager will have
to involve himself with human resource planning.
Human Resource Planning may involve three activities
1. Forecasting – an assessment of future human resource needs in relation to the
current capabilities of the organization.
2. Programming – translating the forecasted human resource needs to personal
objectives and goals.
3. Evaluation and control – monitoring human resource action plans and
evaluating their success.
Methods of Forecasting
1. Time series method – which use historical data to develop forecast of the future.
2. Explanatory or Casual models – attempts to identify the major variables that are
related to or have caused particular past conditions and then use current
methods of these variables to predict future conditions.
Types:
1. Regression model
2. Econometric model – a system of regression equations estimated from past
time-series data and used to show the effect of various dependent variables.
3. Leading indicators – refers to time series that anticipate business cycle
returns.

3. Monitoring methods – are those that provide early warning signals of significant
changes in established patterns and relationship so that the engineer manager
can assess the likely impact and plan responses if required.

RECRUITMENT
Recruitment refers to attracting qualified persons to apply for vacant
positions in the company so that those who are best suited to serve the company may
be selected.
Sources of Applicants
1. The organization’s current employee
 2. Newspaper advertising
3. Schools
4. Referrals from employees
5. Recruitment Firms
6. Competitors
For entry level personnel, the engineer manager will likely rely on newspaper
advertising, schools, and referrals. When recruiting managers, the reliable sources are
current employees, recruitment firms, and competitors.

SELECTION
Selection refers to the act of choosing from those that are available the
individual most likely to succeed on the job. A requisite for effective selection is the
preparation of a list indicating that an adequate pool of candidates is available.
The purpose of selection is to evaluate each candidate and to pick the most
suited for the position available. Selection procedures may be simple or complex
depending on the costs of a wrong decision.
Ways of Determining the Qualifications of a Job Candidate
1. Application Blanks - it provides information about a person’s characteristics
such as age, marital status, address, educational background, experience, and
special interests. After reading it, the evaluator will have some basis on whether or
not to proceed further in evaluating the applicant.
2. References –written by previous employers, co-workers, teachers, club
officers, etc. Their statements may provide some vital information on the
character of the applicant.
3. Interviews – information may be gathered in an interview by asking a series of
relevant questions to the job candidate.
4. Testing– evaluation of the future behavior of performance of an individual.
Types of Tests
1. Psychological tests – “an objective standard measure of a sample
behavior”
a) Aptitude test – measure person’s capacity or potential ability to
learn
b) Performance test – measure person’s current knowledge of a
subject
c) Personality test – measure personality traits as dominance,
sociability, conformity
d) Interest test – measure a person’s interest in various fields of
work
2. Physical examination – test given to assess the physical health of an
applicant.

INDUCTION and ORIENTATION

In induction, the new employee is provided with the necessary information about
the company. His duties, responsibilities and benefits are relayed to him. Personnel and
health forms are filled up, and passes are issued. The company history, its products and
services, and the organization structure are explained to the new employee.
In orientation, the new employee is introduced to the immediate working
environment and co-workers. The following are discussed: location, rules, equipment,
procedures, and training plans. Performance expectations are also discussed. The new
employee also undergoes the “socialization process” by pairing him with an experienced
employee and having one-on-one discussion with the manager.

TRAINING and DEVELOPMENT

If the newly-hired (or newly promoted) employee is assessed to be lacking the
necessary skills required by the job, training becomes a necessity.
 Training refers to the learning that is provided in order to improve performance in
the present job. Training programs consist of two general types, namely:
1. Training programs for nonmanagers, and
2. Training and educational programs for executives. (Manager)
Training Program for Nonmanagers
This type of training is directed to nonmanagers for specific increase in skill and
knowledge to perform a particular job. The four methods under this type are:
1. On the job training – trainee is placed in an actual work situation under the
direction of his immediate supervisor, who acts as a trainer
2. Vestibule school – trainee is placed in a situation almost exactly the same as the
workplace where machines, materials, and time constraints are present
3. Apprenticeship Program – combination of on-the-job training and experiences
with classroom instruction in particular subjects are provided to trainees
4. Special Courses – provide more emphasis on education rather than training
Training Program for Managers
The training need of managers may be classified into four areas: decision-
making skills, interpersonal skills, job knowledge and organizational knowledge.
1. In-basket – provided with a set of notes, message, telephone calls, letters, and
reports, all pertaining to a certain company situation. He is expected to handle
the situation with a given period of 1 to 2 hours.
2. Management games – “trainees are faced with a simulated situation and are
required to make an ongoing series of decisions about the situation”
3. Case studies – presents actual situations in organiations and enable one to
examine successful and unsuccessful operations. It emphasizes “the manager’s
world, improves communication skills, possesses the quality of illustration and
establishes concrete reference points for connecting theory with practice”.

DEVELOPMENT
The interpersonal competence of the manager may be developed through any of
the following methods:
1. Role-playing – trainees are assigned roles to play in a given case incident
2. Behavior modeling – showing model persons behaving effectively in problem
situation
3. Sensitivity training – awareness and sensitivity to behavioral patterns of oneself
and others are developed
4. Transactional analysis – help individuals not only to understand themselves and
others but also improve their interpersonal skills
In acquiring knowledge about the actual job, the manager is currently holding, the
following methods are useful:
1. On-the-job experience – provides valuable opportunities for the trainee to learn
various skills while actually engaged in the performance of a job
2. Coaching – requires a senior manager to assist a lower-level manager by
teaching him the needed skills and generally providing directions, advice, and
helpful criticism. The senior manager must be skilled himself and have the ability
to educate, otherwise the method will be ineffective.
3. Understudy – a manager works as assistant to a higher-level manager and
participates in planning and other managerial functions until he is ready to
assume such position himself.
In this attempt to increase the trainee’s knowledge of the total organization,
exposure to information and events outside of his immediate job is made. In this regard,
the following methods are useful:
1. Position rotation – manager is given assignments in a variety of departments to
expose him to different functions of the organization
2. Multiple management – junior executives must be provided with the means to
prepare him for higher management positions. A junior board of directors is
created and the board is given the authority to discuss problems that the senior
board could discuss. The members are encouraged to take a broad business
outlook rather than concentrating on their specialized lines of work.

PERFORMANCE APPRAISAL
 Performance appraisal is the measurement of employee performance.
Purpose of Performance Appraisal
1. To influence, in a positive manner, employee performance and development
2. To determine merit pay increases
3. To plan for future performance goals
4. To determine training and development needs
5. To assess the promotional potential of employees
Ways of Appraising Performance
1. Rating Scale Method - where each trait or characteristic to be rated.
2. Essay Method - the evaluator composes statements that describe the employee to
be evaluated.
3. Management by Objective Method - specific goals are set for the organization as a
whole and evaluated how well they have achieved the results.
4. Assessment Center Method - one is evaluated by another person.
5. Checklist Method - evaluator checks statements on a list the characteristics of the
employee to be evaluated.
6. Work Standards Method - standards are set for the realistic worker output and then
later on used for evaluating performance.
7. Ranking Method - evaluator arranges employees from the best to poorest
8. Critical-incident Method - evaluator recalls and write down specific incidents that
indicates the employee's performance
Employment Decisions
1. Monetary Rewards - it is given to employee's whose performance is above the
standard requirements.
2. Promotion - movement from one position to another which has higher pay and
responsibility.
3. Transfer - movement of a person to a different job at the same level of responsibility
in the organization.
4. Demotion - movement from one position to another which has less pay or
responsibility.

SEPARATION
Voluntary Separation
The organization's management must find out the real reason. Corrective action is
necessary.
Involuntary Separation
When an employee's performance is poor or when he/she committed an act
violating the company rules/regulations.
 COMMUNICATION

“Process of sharing information through symbols including words and message”

- Morris Philip Wolf & Shirley Kuiper

FUNCTIONS OF COMMUNICATION
1. Information Function
2. Motivation Function
3. Control Function
4. Emotive Function

COMMUNICATION PROCES
1. Develop an idea – most important step in effective communication
2. Encode – encode into words, illustrations, figures, etc.
3. Transmit – channels (spoken or written word, body movements, television, telephone,
etc.)
4. Receive – may be initially received by person or machine
5. Decode – translating the message
6. Accept or reject – involves the accuracy of the message, authority of the sender, and
the behavioral implications for the receiver
7. Use -
8. Provide feedback

FORMS OF COMMUNICATION
1. VERBAL – hearing or sight, has two classes; oral and written
2. NON – VERBAL – interpretation and understanding body language, time, space,
touch, clothing, appearance, etc.

BARRIERS OF COMMUNICATION
1. PERSONAL BARRIER – affected by emotions, values, poor listening habits, sex, age,
race, socioeconomic status, religion, education
2. PHYSICAL BARRIERS – affected by loud sounds, distances between people,
overloaded communication
3. SEMANTIC BARRIERS – wrong meanings lead to misunderstanding

OVERCOMING COMMUNICATION BARRIERS

1. Use feedback to facilitate understanding and increase the potential for appropriate
action.
2. Repeat messages in order to provide assurance that they are properly received.
3. Use multiple channels so that the accuracy of the information may be enhanced.
4. Use simplified language that is easily understandable and which eliminates the
possibility of people getting mixed-up with meanings.

TECHNIQUES FOR COMMUNICATING IN ORGANIZATIONS

1. DOWNWARD COMMUNICATION - message flows from higher level of authority to
lower levels.
PURPOSE
i. to give instructions
ii. to provide information about policies and procedures
 iii. to give feedback about performance
iv. to indoctrinate or motivate
TECHNIQUES
i. letters
ii. meetings
iii. telephones
iv. manuals
v. handbooks
vi. newsletters

2. UPWARD COMMUNICATION - messages from persons in lower level positions to

persons in higher position.
PURPOSE
i. to provide employees with all necessary material and non-material
ii. to know the specific needs of the employees
iii. to provide information about work

TECHNIQUES
i. formal grievance procedures
ii. employee attitude & opinion surveys
iii. suggestions systems
iv. open-door policy
v. informal gripe sessions
vi. task forces
vii. exit interview

viii. HORIZONTAL COMMUNICATION - message sent to individuals or groups from

another of the same organization level or position.
PURPOSE
i. to coordinate activities between departments
ii. to persuade others at the same level of organization
iii. to pass on information about activities or feelings

TECHNIQUES
i. memos
ii. meetings
iii. telephones
iv. picnics
v. dinners
vi. other social affairs

MANAGEMANT INFORMATION SYSTEM (MIS)

“Management information system (MIS) is an organized method providing past, present, and
projected information on internal operations and external intelligence for use in decision-
making.”
- Boone and Kurtz

The MIS currently used by corporate firms consists of “written and electronically based
systems for sending reports, memos, bulletins, and the like.”
The system allows managers of the different departments within the firm to communicate with
each other.
THE PURPOSE OF MIS
1. To provide a basis for the analysis of early warning signals that can originate both externally
and internally.
2. To automate routine clerical operations like payroll and inventory reports.
3. To assist managers in making routine decision like scheduling orders, assigning orders to
machines, and reordering supplies.
4. To provide the information necessary for management to make strategic or nonprogrammed
decisions.
 MOTIVATING

Motivating
Act of "giving employees reasons or incentives...to work to achieve organizational objectives"
Motivation
"process of activating behavior, sustaining it, and directing it toward a particular goal."

FACTORS CONTRIBUTING TO MOTIVATION

1. Willingness to do a job – People who like what they are doing are highly motivated to
produce the expected output.
2. Self-confidence in carrying out a task – When employees feel that they have the
required skill and training to perform a task, the more motivated they become.
3. Need satisfaction – People will do their jobs well if they feel that by doing so, their
needs will be satisfied.

THEORIES OF MOTIVATION
1. Maslow's needs hierchy theory
2. Hezberg's two-factor theory
3. Expectancy theory
4. Goal setting theory

THE PROCESS OF MOTIVATION

MASLOW'S NEEDS HIERARCHY THEORY

 A. Physiological Needs- these are biological requirements for human survival, e.g. air,
food, drink, shelter, clothing, warmth, reproduction, sleep.
B. Safety Needs- Once an individual’s physiological needs are satisfied, the needs for
security and safety become salient. People want to experience order, predictability and
control in their lives. Example: financial security which may be affected by the loss of job
or the breadwinner in the family etc.
C. Love and belonging/ Social Needs- after physiological and safety needs have been
fulfilled, the third level of human needs is social and involves feelings of belongingness.
The need for interpersonal relationships motivates behavior
D. Esteem Needs-Maslow indicated that the need for respect or reputation is most
important for children and adolescents and precedes real self-esteem or dignity.
E. Self-actualization Needs- are the highest level in Maslow's hierarchy, and refer to the
realization of a person's potential, self-fulfillment, seeking personal growth and peak
experiences. 

HERZBERG’S TWO-FACTOR THEORY

 Two Factor Theory - A motivation theory that indicates that a satisfied employee is
motivated from within to work harder and that a dissatisfied employee is not self-
motivated.
 Satisfiers or Motivation Factors - A factor from the Two-Factor theory that is
responsible for job satisfaction.
 Dissatisfiers or Hygiene Factors - A factor from the Two-Factor theory that is
associated with job dissatisfaction.
 Expectancy Theory - A motivation theory based on assumption that one will work
depending on his expectations.

EXPECTANCY THEORY

 poses the idea that motivation is determined by expectancies and valences

 




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Expectancy - Belief about the likelihood or probability that a particular behavioral act will
lead to a particular outcome
Valence - The value an individual places on the expected outcomes or rewards

GOAL SETTING THEORY

According to Kreitner, it refers to process of “improving performance with objectives, deadlines

or quality standard.”

When individuals or groups are assigned specific goals, a clear direction is provided, and which
later motivates them to achieve these goals.

The Goal setting model drawn by Edwin A locke and his associates consists of the following
components



Goal content
Goal commitment
Work behavior
Feedback aspects

GOAL CONTENT

Goals must be attainable if they are to be set. If they are not, then workers will only be
discouraged to perform, if at all.

Goals must be stated in quantitative terms whenever possible. When exact figures to be met are
set, understanding is facilitated, and workers are motivated to perform.

There must be a time-limit set for goals to be accomplished

The more relevant the goals are to the company’s mission, the more support it can generate
from various levels of employment in the organization.

GOAL COMMITMENT
When individuals or groups are committed to the goals they are supposed to achieve, there is a
chance that they will be able to achieve them

WORK BEHAVIOR

Goals influence behavior in terms of direction, effort, persistence, and planning. When an
individual is provided with direction, performance is facilitated. In trying to attain goals that are
already indicated, the individual is provided with a direction to exert more effort. The
identification of goals provides a reason for an individual to persist in his efforts until the goals is
attained.

Once goals are set, the first important input to planning is already in place.

FEEDBACK ASPECTS

Feedback provide the individuals with a way of knowing how far they have gone in achieving
objectives. Feedback also facilitate the introduction o f corrective measure whenever they are
found to be necessary.

TECHNIQUES OF MOTIVATION

Individual or groups of individuals may be motivated to perform using various techniques. These
techniques may be classified as follows

1. Motivation through job design

2. Motivation through rewards
3. Motivation through employee participation
4. Other motivation technique for the diverse work force

MOTIVATION THROUGH JOB DESIGN

A person will be highly motivated if he is assigned to a job he likes. In motivating through job
design, two approached may be used:
1. Fitting People to Jobs
2. Fitting Jobs to People
A. Fitting People to Jobs
a. Realistic Job Previews – where management provides honest explanations of
what a job actually entails
b. Job rotation – where people are moved periodically from one specialized job
to another
c. Limited exposure – where a worker’s exposure to a highly fragmented and
tedious job is limited
B. Fitting Jobs to People
a. Job enlargement – where two or more specialized tasks in a work flow
sequence is combined into a single job
b. Job enrichment – where efforts are made to make jobs more interesting,
challenging and rewarding.

MOTIVATION THROUGH REWARDS

Rewards consist of material and psychological benefits to employees for performing tasks in the
workplace and may be classified into two categories:
 1. Extrinsic - Those which refer to payoffs granted to the individual by another party.
Examples: money, employee benefits, promotions, recognition, status symbols,
2. Intrinsic - Those which are internally experienced payoffs which are self-granted.
Examples: sense of accomplishment, self-esteem and self actualization

MOTIVATION THROUGH EMPLOYEE PARTICIPATION

The specific activities identified where employees may participate as follows:
1. Setting goals
2. Making Decisions
3. Solving Problems
4. Designing and implementing organizational changes

The more popular approaches to participation include the following:

1. Quality Control Circles (QCC)
- A method of direct employee participation.
- The objective of the QCC is to increase productivity and quality of output.
2. Self-managed teams
- When workers have reached certain degree of discipline, they may be ripe for forming
self-managed teams.
- Also known “ Autonomous work groups or high performance teams”
- “ take on traditional managerial tasks as part of their normal work routine.”

The Quality Control Circle Process

Step 1: Quality circle members brainstorm, gather data, and establish cause and effect.
Step 2: Quality circle members prepare solutions and recommendations.
Step 3:Management considers quality circle recommendations and makes decisions.
Step 4:Results are measured and feedback, recognition and rewards given to QCC
members

Requisites to Successful Employee Participation Program

To succeed, an employee participation program will require the following:
1. A profit-sharing or gain sharing plan
2. A long-term employment relationship with good job security.
3. A concerted effort to build and maintain group cohesiveness.
4. Protection of the individual employee’s right.

OTHER MOTIVATION TECHNIQUES

1. Flexible Work Schedules
- There is an arrangement , called flextime, which allows employees to determined
their own arrival and departure times within specified limits
2. Family Support Services
- Employees are oftentimes burdened by family obligations like caring for children.
Progressive companies provide day care facilities for children of employees.
3. Sabbaticals
- A sabbatical leave is one given to an employee after a certain number of years of
service. The employee is allowed to go on leave for two months to one year with
pay to give him time for family, recreations, and travel.
 LEADING

There are times when in spite of great difficulties, jobs are needed to be done, projects
are needed to be finished on time, and services are needed to be provided.

 Employees in the production line complaining about delayed resources.

 Workers complain about hard jobs and tasks.
 Wage hike for workers needed in response of a calamity.
These are scenarios that require effective leadership.

Companies that have leadership skill requirements are:

 Warner-Lambert Philippines
 Shell
 Fuji-Xerox
 Daewoo

What is Leading?
Leading is that management function which involves influencing others to engage in the work
behaviors necessary to reach organizational goals.

How Leaders Influence Others?

Engineer Managers are required to perform leadership roles. Leaders are said to be able to
influence others because of the power they possess
Power refers to the ability of a leader to exert force on another.

Bases of Power:

 Legitimate Power
A person who occupies a higher position has legitimate power over persons in lower
positions within the organization.

 Reward Power
When a person can give rewards to anybody who follows orders or requests, he is said to
have reward power.

a. Material Rewards- tangible materials

b. Psychic Rewards- recognition, praises
 Coercive Power
When a person compels another to comply with orders through threats or punishment, he is
said to possess coercive power.

Punishment – demotion, dismissal, withholding of promotion etc.

 Referent Power
When a person can get compliance from another because the latter would want to be
identified with the former, that person is said to have referent power

 Expert Power
Experts provide specialized information regarding their specific lines of expertise. This
influence, called expert power, is possessed by people with great skills in technology.
Nature of Leadership
Leadership may be referred to as:
“The process of influencing and supporting others to work enthusiastically toward achieving
objectives”
One cannot expect a unit or division to achieve objectives in the absence of effective leadership.
Even if a leader Is present, but if he is not functioning properly, no unit or division objectives can
be expected to be achieved.

Traits of Effective Leaders

1. Personal Drive
Persons with drive are those identified as willing to accept responsibility, possess vigor,
initiative, persistence, and health.

If a chosen way to reach a goal is not successful, a leader finds another way to reach it, even
if it precedes a succession of failed attempts.

Polo Medriatico
Plant director of Polo plant of San Miguel Corporation between 1992 and 1994.
He was instrumental in radically changing the problem-riddled Polo plant to a world-class
brewery with modern technology and a work force with a new attitude.

2. Desire to Lead
Leaders with a desire to lead will always have a reservoir of extra efforts which can be used
whenever needed.
3. Personal Integrity
Integrity means and includes honesty, honor, incorruptibility, rectitude, righteousness,
uprightness, and similar virtues.

4. Self-Confidence
The activities of leaders require moves that will produce the needed outputs. The steps of
conceptualizing, organizing, and implementing will be completed if sustained efforts are
made. For the moves to be continuous and precise, self-confidence is necessary.

According to Wess Roberts:

“A chieftain cannot win if he loses his nerve. He should be self-confident and self-reliant and
even if he does not win, he will know he has done his best.”

5. Analytical Ability
The ability to analyze is one desirable trait that a leader can use to tide him over many
challenging aspects of leadership.

A leader with sufficient skill to determine the root cause of the problem may be able to help
the subordinate to improve his production.

6. Knowledge of the Company, Industry or Technology

A leader who is well-informed about his company, the industry where the company belongs,
and the technology utilized by the industry, will be in a better position to provide directions to
his unit.

7. Charisma
When a person has a sufficient personal magnetism that leads people to follow his
directives, this person is said to have charisma.
When used properly, charisma will help the leader in achieving his goals.

Persons who Possess Charisma:

 Napoleon Bonaparte
 Julius Caesar
  Adolf Hitler
 George Washington
 Elvis Presley

8. Creativity
Creativity is the ability to combine existing data, experience, and preconditions from various
sources in such a way that the results will be subjectively regarded as new, valuable, and
innovative, and as a direct solution to an identified problem situation.

9. Flexibility
People differ in the way they do their work. One will adapt a different method from another
person's method. A leader who allows this situation as long as the required outputs are
produced, is said to be flexible.
Leadership Skills
1. Technical Skills
 To understand and make decisions about work processes, activities, and technology
 Specialized knowledge needed to perform a job
 Leader can be more confident in performing his functions
 To maintain a motivated work force

2. Human Skills
 Ability of a leader to deal with people, both inside and outside the organization.
 Good leaders must know how to get along with people, motivate them, and inspire them.
 Human skills also include coaching, communicating, morale building, training and
development, help and supportiveness, and delegating.

3. Conceptual Skills
 Ability to think in abstract terms, to see how parts fit together to form the whole.
 A clear and well-expressed presentation of what must be done.

Leadership Skills and Their Use at Various Management Levels

Behavioral Approaches to Leadership Styles

Leadership Style - a pattern of behavior exhibit by leaders that is unique and different from
other patterns

Approaches used in classifying leadership styles:

 According to the ways leaders approach people to motivate them.
 According to the way the leader uses power.
 According to the leader's orientation towards task and people.

Ways Leaders Approach Members to Motivate Them

1. Positive Leadership
 Leadership approach emphasizes rewards.

Rewards may be:

 Economic like an increase in monthly salary
 Noneconomic like membership in an advisory community

2. Negative Leadership
Leader’s approach emphasizes punishment. The punishment may take the form of:

 Reprimand, suspension, or dismissal

Leaders, sometimes, alternately use positive and negative leadership depending on the
characteristics of the individual subordinates.

Ways Leaders Using Power

1. Autocratic
This leadership occurs when only the leader makes all the decisions by themselves, without
consulting their subordinates.

Advantages:
 This leadership is effective in emergencies.
 Some workers need strong directions.
Disadvantages:
 Subordinates may feel demotivated.
 The leader receives minimal ideas from their subordinates.

2. Participative
This leadership happens when the leader openly encourage their people to cooperate in the
decision-making.

Advantages:
 Collects huge sum of good ideas.
 Subordinates perform well even when the leader is absent.
 Team feels engaged in the process of making the decision
Disadvantages:
 Time consuming.

3. Free-Rein
In this type of leadership, the leader set a certain objective and lets it subordinate do
whatever they see fit to do the job efficiently.
Advantages:
 Results in optimum utilization of time and resources.
 High level motivation
Disadvantages:
 Lacks managerial control.
 Difficulty in cooperation.
 High degree of risk.

Leader’s Orientation Toward Tasks and People

1. Employee Oriented
When the leader considers employees as human being of “Intrinsic importance and with
individual and personal needs” to satisfy.

2. Task Oriented
 When the leader places stress on production and the technical aspects of the job, and the
employees are viewed as means of getting the work done.

Contingency Approach to Leadership Style

An effort to determine through research which managerial practices and techniques are
appropriate in specific situations.
1. Fiedler Contingency Model
Leadership is effective when the leader style is appropriate to the situation

Three Principal Factors:

 The relations between leaders and followers.
 The structure of the task
 The power inherent in the leader’s position.

If the leader is not fit on the situation, the following may be tried:
 Change the leader’s trait or behavior.
 Select leaders who have traits or behaviors fitting the situation.
 More leaders around in the organization until they are in position that fit them.
 Change the situation.

2. Hersey And Blanchard Situational Leadership Model

Maturity has two Components:

 Job skills and knowledge
 Psychological Maturity

Development Stage of Subordinates and Recommended Leadership Style

DEVELOPMENT STAGE RECOMMENDED STYLE

1. Low ability + low willingness Style 1 – DIRECTING – Structure,

Control, and supervise.

2. Low ability + high willingness Style 2 – COACHING – Direct and

Support

3. High ability + low willingness Style 3 – SUPPORTING – Praise,

Listen, and Facilitate

4. High ability + High Style 4 – DELEGATING – Turn over

willingness responsibility for day-to-day
decision-making

3. Path-Goal Model of Leadership

Leadership can be made effective because leaders can influence subordinate’s perceptions
of their work goals, personal goals and paths to goals attainment.

Effective leaders can enhance subordinate motivation by:

 Clarifying the subordinate’s perception of work goals.
 Linking meaningful rewards with goal attainment.
 Explaining how goals and desired rewards can be achieved.
Path-Goal Process

Leadership Styles:
1. Directive Leadership
Leader focuses on clear task assignments, standards of successful performance, and work
schedules.

2. Supportive Leadership
Subordinates are treated as equals in a friendly manner while striving to improve their well-
being.

3. Participative Leadership
Leader consults with subordinates to seek their suggestions and then considers those
suggestions when making decisions.

4. Achievement-Oriented Leadership
Leaders set challenging goals, emphasize excellence, and seek continuous improvement
while maintaining a high degree of confidence that subordinates will meet difficult challenges
in a responsible manner.

Vroom’s Decision Making Model

One that prescribes the proper leadership style for various situations, focusing on the
appropriate degrees of delegation of decision-making authority.

Alternative Decision Making Styles in the Vroom Model

SYMBO DECISION-MAKING STYLE DEGREE OF

 SUBORDINATE
L
PARTICIPATION
AUTHOCRATIC LEADER

Leader solves the problem or makes the decision

A-1 None
himself using available information

Leader obtains necessary information from

A-2 Low
subordinates, then decides.

CONSULTATIVE LEADER

Leader approaches subordinates individually getting

C-1 Moderate
their ideas then makes decisions.

Leader shares the problem with subordinates as a

C-2 group, obtaining their collective ideas and Moderate
suggestions, then decides.
GROUP DIRECTED
Leader shares the problem with subordinates as a
G-2 group. Let the group generate alternative solutions, High
then decides.
 CONTROLLING

What is Controlling?
• refers to the “process of ascertaining whether organizational objectives have been
achieved and determining what activities should then be taken to achieve objectives
better in the future.”
• it completes the cycle of management functions.
Importance of Controlling
• Helps the organization achieve its goal in the most efficient and effective manner
possible;
• Making efficient use of resources;
• Improving employee motivation;
• Ensures order and discipline;
• Helps in minimising errors;
• Judging accuracy of standards;
• Taking remedial actions, etc.

Steps in the Control Process

Establishing Performance Objectives and Standards

1. Sales targets – which are expressed in quantity or monetary terms;
2. Production targets – which are expressed in quantity or quality;
3. Worker attendance – which are expressed in terms of rate of absences;
4. Safety record – which is expressed in number of accidents for given periods;
5. Supplies used – which are expressed in quantity or monetary terms for given periods.
Measuring Actual Performance
There is a need to measure actual performance so that when shortcomings occur,
adjustments could be made. The adjustments will depend on the actual findings.
Comparing Actual Performance to Objectives and Standards
 Once actual performance has been determined, this will be compared with what the
organization seeks to achieve. Actual production output, for instance, will be compared with the
target output.
Taking Necessary Action
The purpose of comparing actual performance with the desired result is to provide
management with the opportunity to take corrective action when necessary.

TYPES OF CONTROL
Feedforward Control
• This is the type of control measure undertaken when management anticipates problems
and prevents their occurrence
• This provides the assurance that the required human and nonhuman resources are in
place before operations begin
• Pre-operations Phase

Concurrent Control
• This is undertaken when operations are already ongoing and activities to detect variance
are made.
• When deviation occurs, adjustments are made to ensure compliance with requirements.
• Pre-Operations Phase and Actual Operations Phase

Feedback Control
• When information is gathered about a completed activity, and in order that evaluation
and steps for improvement are derived, feedback control is undertaken.
• Feedback control validates objectives and standards.
• Pre-Operations Phase and Post Operations Phase

COMPONENTS OF ORGANIZATIONAL CONTROL SYSTEMS

Organizational Control Systems
These allow executives to track how well the organization is performing, identify areas of
concern, and then take action to address the concerns.
01. Strategic Plan
It provides the basic control mechanism for the organization
02. The long-range financial plan
It recommends a direction for financial activities.
03. The operating budget
It indicates the expenditures, revenues, or profits planned for some future period regarding
operations.
04. Performance appraisal
It measures employee performance. Also, it functions as effective checks on new policies and
programs.
05. Statistical reports
Pertain to those that contain data on various developments within the firm. Listed are samples
of statistical reports:
1. Labor efficiency rates

2. Quality control rejects

3. Accounts receivable

4. Accounts payable

5. Sales reports

6. Accidents reports

7. Power consumption reports

06. Policies and procedures

Policies refer to the “the framework within which the objectives must be pursued.”
Example:
“Whenever two or more activities compete for the company’s attention, the client takes priority.”

Procedure is a plan that describes the exact series of actions to be taken in a given situation.
Example:
1. The concerned manager forwards a request for purchase to the purchasing officer;

2. The purchasing officer forwards the request to the top management for approval;

3. When approved, the purchasing officer makes a canvass of the requested item.

STRATEGIC CONTROL SYSTEMS

Systems that provide managers the tools to regulate and govern their activities. In strategic control,
managers first select strategy and organization structure and then create control systems to evaluate
and monitor the progress of activities directed towards implementing strategies.

Consists of the ff:

1. Financial Analysis

2. Financial Ratio Analysis

1. Financial Analysis

- is the process of evaluating businesses, projects, budgets, and other finance-related

transactions to determine their performance and suitability.

- A review of financial statements wherein it will reveal important details about the company’s
performance.

2. Financial Ratio Analysis

- it is a more elaborated approach in controlling activities. The account appearing in financial

statements is paired with other company’s financial statements with a required norm to constitute a
ratio.
Types of Financial Ratios:

a. Liquidity Ratio

b. Efficiency Ratio

c. Financial Leverage Ratio

d. Profitability Ratio

a. Liquidity Ratio – These ratios assess the ability of a company to meet its current obligations.

Important indicators of Liquidity:

a1. Current ratio – This shows the extent to which current assets of the company can cover its current
liabilities.

Current Assets
Current Ratio=
Current Liabilities
a2. Acid-test Ratio – This is a measure of the firm’s ability to pay off short-term obligations with the use
of current assets without relying on the sale inventories.

Current Assets−Inventories
Aci d−test Ratio=
Current Liabilities
b. Efficiency Ratios – These ratios show how effectively certain assets or liabilities are being used in the
production of goods and services.

b1. Inventory Turnover Ratio – This ratio measures the number of times an inventory is turned over or
sold each year.

Cost of goods
Inventory Turnover Ratio=
Inventory
b2. Fixed Asset Turnover – This ratio is used to measure utilization of the company’s investment in its
fixed assets, such as its plant and equipment.

Net sales
¿ Asset Turnover = assets ¿
Net ¿
c. Financial Leverage Ratio – This is a group of ratios designed to asses the balance of financing obtained
through debt and equity sources.

c1. Debt to total assets ratio – This ratio shows how much of the firm’s assets are financed by debt.

Total debt
Debt ¿ total assets ratio=
Total assets
c2. Time interest earned ratio – This ratio measures the number of times that earnings before interest
and taxes cover the company’s interest expense.

Profit before tax+ Interest expense

Time interest earned ratio=
Interest expense
d. Profitability Ratio – This ratio measures how much net income a company can generate in relation to
its assets, equity and sales.

d1. Profit Margin Ratio – This ratio compares the net profit to the level of sales.

Net profit
Profit Margin Ratio=
Net sales
d2. Return on Assets Ratio – This ratio shows how much income the company produces for every peso
invested in assets.
 Net income
Returnon Assets Ratio=
Assets
d3. Return on Equity Ratio – This ratio measures the returns on the owner’s investments.

Net income
Return on Equity Ratio=
Equity

IDENTIFYING CONTROL PROBLEMS

According to Robert Kreitner, there are three approaches that an engineer manager can consider as
useful steps in controlling.

1. Executive Reality Check

2. Comprehensive Internal Audit
3. General Checklist of Symptoms of Inadequate Control

Executive Reality Check

Employees at the front line often complain that management imposes certain requirements that
are not realistic. It is the exposure to know what can really happen with work.
Example:
The engineer manager of a construction firm could, once in a while, perform the work of his
laborers. In doing so, he will be able to see things that he never sees inside the confines of his
air-conditioned office.

Comprehensive Internal Audit

It is undertaken to determine the efficiency and effectivity of activities of an organization. Among
the many aspects of operations within the organization, a small activity that is not done right
may continue to be unnoticed until it snowballs into a full-blown problem. It aims to detect
dysfunctions in the organization before they bring bigger troubles to management.
Example:
The resignation of an employee after serving the company for 15 years. After one week, another
employee with ten years of service also resigned. Both were from the same department. If
another week, a third employee is resigning, a full investigation is in order.

Symptoms of Inadequate Control

If comprehensive internal audit cannot be availed of for some reason, the use of the checklist for
symptoms of inadequate control may be used. Kreitner has listed some of the common
symptoms as follows:
1. An unexplained decline in revenue and profits
2. A degradation of service
3. Employee dissatisfaction
4. Cash shortages caused by bloated inventories or delinquent account receivable
5. Idle facilities or personnel
6. Disorganized operations
7. Excessive costs
8. Evidence of waste and efficiency
 MANAGING PRODUCTION AND SERVICE OPERATIONS

Managing Production and Service Operations

Organizations are designed mainly to produce products or services. If these organizations
must survive and grow, the operations function must be undertaken in the most economical
manner possible. As most companies are expected to make profits, any activity, including those
for operations must be managed to contribute to the accomplishment of such objectives.

WHAT OPERATION IS?

Operations refers to “any process that accepts inputs and uses resources to change
those inputs in useful ways.” The inputs include land, labor, capital, and entrepreneurship. The
transformation process converts the inputs into final goods or services.

EXAMPLE OF FINAL GOODS AND SERVICES ARE AS FOLLOWS:

1. Industrial chemicals like methylene chloride, borax powder, phosphorics acid, etc., which are
produced by constructions firms;

2. Services like those for the construction of the ports, high-rise buildings, roads, bridges, etc.,
which are produced by construction firms;

3. Electrical products like transformers, circuit breakers, switch gears, power capacitors, etc.,
which are produced by electrical manufacturing firms;

4. Electronic products like oscilloscope, mircowave test systems, transistors, cable testers, etc.,
which are produced by electronics manufacturing firms;
5. Mechanical devices like forklifts, trucks, loaders, etc., which are produced by manufacturing
firms.

6. Engineering consultancy services liket those for construction management and supervision,
project management services, etc., which are produced by engineering consultancy firms.

PRODUCTION PROCESS
INPUTS TRANSFORMATION OUTPUTS
Land Process Products
Labor Equipment Services
Capital Procedures
Entrepreneurship Technology

WHAT OPERATIONAL MANAGEMENT IS?

Operations is an activity that needs to be managed by competent persons.

WHAT OPERATIONAL MANAGEMENT IS?

“The process of “planning”, “organizing”, and “controlling” to reach objectives efficiently and
effectively”
-Aldag and Stearns

WHAT OPERATIONAL MANAGEMENT IS

EFFECTIVENESS
Refers to the goal accomplishment. When one is able to reach his objectives, say
produce 10,000 units in one month, he said to be effective.

EFFICIENCY
Is related to “the cost of doing something, or the resource utilization involved.” When a
person performs a job at lesser cost than when another person performs the same job, he is
more efficient than the other person.
OPERATIONS AND THE ENGINEER MANAGERS

Engineer Manager
The engineer manager is expected to produce some output at whatever management
level he/she is.
ENGINEER IN CHARGE OF OPERATIONS IN A CONSTRUCTION FIRM
 Responsible for actual construction
 Produce the least expensive and the easiest method

ORGANIZATION CHART OF A MANUFACTURING FIRM

ORGANIZATION CHART OF A CONSTRUCTION FIRM

TYPES OF TRANSFORMATION PROCESS

 Manufacturing Processes
 Service Processes

MANUFACTURING PROCESSES
Making of products by hand or with machinery

TYPES OF MANUFACTURING PROCESS

 Job Shop
 Batch Flow
 Worker-Paced Line Flow
 Machine-Paced Line Flow
  Continuous Flow
 Batch/Continuous Flow Hybrid

JOB SHOP
Produce custom products. It may be manufactured within a short notice. The equipment
used are the general-purpose type.
Depending upon the customer’s need, a Job Shop may produce a lot consisting of 20 to
200 or more similar parts.

BATCH FLOW
Batch flow process is where lots of generally own designed products are manufactures.
Examples of factories using the large flow are wineries, scrap-metal reduction plants, and
road-repair contractors.

CHARACTERISTICS OF BATCH FLOW

- There is flexibility to produce either low or high volumes.
- Not all procedure is performed on all products.
- The type of equipment used are mostly for general purpose.
- The process layout is used
- The operation is labor intensive, although there is less machine idleness
- The size of operation is generally medium-sized

WORKER-PACED LINE FLOW

 An assembly line refers to a production layout arranged in a sequence to accommodate
processing of large volumes of standardized products or services.

CHARACTERISTICS OF WORKER-PACED LINE FLOW

- The products manufactured are mostly standardized.
- There is a clear process pattern.
- Specialized equipment is used.
- The size of operation is variable.
- The process is work-paced.
- The type of layout used is the line flow.
- Labor is still a big cost item.

MACHINE-PACED LINE FLOW

This type of production process produces mostly standard products with machines
playing a significant role. Example of machine-paced assembly line are automobile
manufacturers like general motors and ford motors.

CHARACTERISTICS OF MACHINE-PACED LINE FLOW

 The process is of clear, rigid pattern.
 Specialized type of equipment is used.
 Specialized equipment is used.
 The line flow layout is used.
 Capital equipment is a bigger cost item than labor.
 Operation is large.
 The process is machine-paced.

CONTINUOUS FLOW
This processing method is very appropriate for producing highly standardized products
like calculators, typewriters, automobiles, televisions, cellular phones, etc.

CHARACTERISTICS OF CONTINUOUS FLOW

 There is economy of scale in production, resulting to low per unit cost of production.
 The process is clear and very rigid.
 Specialized equipment is used.
 The line flow layout is used.
 Operations are highly capital intensive.
 The size of operations is very large.
 Processing is fast.

BATCH/CONTINUOUS FLOW HYBRID

This method processing is a combination of the batch and the continuous flow. Two distinct
layouts are used.Example of companies using the batch/continuous flow hybrid are breweries,
gelatin producers, and tobacco manufacturers

SERVICE PROCESSES
Service processes are those that prefer to the provision of services to persons by hand or
with machinery.

SERVICE PROCESS MATRIX

VERTICAL AXIS
The degree of labor intensity

HORIZONTAL AXIS
The degree of interaction & Customization
PROCESS FLOW OF A CAR REPAIR SERVICE SHOP
PROCESS FLOW FOR MATERIAL RECEIPT AND SALES TRANSACTIONS IN A MASS
SERVICE RETAILING INSTITUTION
EXAMPLES:
 Engineering or Management consulting services which help in improving the plan
layout or the efficiency of a company
 Design services which supply designs for a physical plant, products, and promotion
materials
 Advertising agencies which helps promote a firm’s products

STRATEGIES
 The use of staggered work-shift schedule.
 The hiring of part-time staff.
 Providing the customer with opportunity to select the level of service.
 Installing auxiliary capacity or hiring subcontractors.
 Using multiskilled floating staff
 Installing customer self-service

IMPORTANT PARTS OF PRODUCTIVE SYSTEMS

Productive systems consist of six important activities as follows:

1. Product Design
2. Production Planning and Scheduling
3. Purchasing and Materials Management
4. Inventory Control
5. Workflow Layout
6. Quality Control
PRODUCT DESIGN
 “the process of creating a set of product specifications appropriate to the demands of
the situation”
 Customers expect products to perform according to their assigned functions.
 A product with poor product design fails to do this.

PRODUCT DESIGN TEAM MEMBERS

 Engineers
 Manufacturing
 Marketing specialists

PRODUCTION PLANNING AND SCHEDULING

PRODUCTION PLANNING
  “forecasting the future sales of a given product, translating this forecast into the
demand it generates for various production facilities and arranging for the
procurement of these facilities”
 Production planning is a very important activity because it helps management to
make decisions regarding capacity
 When the right decisions are made, there will be less opportunities for wastages.

SCHEDULING
 It is the phase of production control involved in developing timetables that specify
how long each operation in the production process takes.
 Efficient scheduling assures the optimization of the use of human and nonhuman
resources.

PURCHASING AND MATERIALS MANAGEMENT

MATERIALS MANAGEMENT
 “the approach that seeks efficiency of operation through integration of all material
acquisition, movement, and storage activities in the firm”
 Management of purchasing and materials should be very efficient and effective
especially in high-production firms.
 More supplies & materials = stricter management

INVENTORY CONTROL
 “the process of establishing and maintaining appropriate levels of reserve stocks of
goods.
 Too much reserve of stocks leads to more storage cost.
 Too little reserve of stocks leads to lost income.

WORKFLOW LAYOUT
 “the process of determining the physical arrangement of the production system”
 The job of the operations manager is to assure that a cost-effective work-flow layout
is installed.

BENEFITS OF A GOOD WORKFLOW LAYOUT

 Minimize investment in equipment
 Minimize overall production time
Use existing space most effectively
 Provide for employee convenience, safety, and comfort
 Maintain flexibility of arrangement and operation
 Minimize material handling cost
 Minimize variation in types of material-handling equipment
 Facilitate the manufacturing (or service) process
 Facilitate the organizational structure

QUALITY CONTROL
 “the measurement of products or services against standards set by the company.”
 Certain standard requirements are maintained by the management to facilitate
production and to keep customers satisfied.
 Poor quality control = Poor quality products
 Poor quality products = customer complaints, returned products, etc.