a 2 INDEX ‘TABLE OF CONTENTS Planning Technical Activities Organizing Technical Activities... Staffing tho Enginooring Organization. Communicating. Motivating... Lending... Controlling Managing Production and Service Operations oe non Managing the Marketing Function . Managing the Financs Function.Case u 2 LIST OF CASES Page Alma Electronics: I Dream of You 18 RE. Construction: Itt Now or Never a. 41 Motorbus Company: Que Sera Sera 64 Hits ane Pieces Intornational Corp: Little Things Mean a Lat Kraan Commanieatins Corporation: Me. Lan ely nnn 107 Northern Container Cerporstion: Tine to Cry. 130 Baum Plyecinis Cllr: The Morning Aer 158 Buenavista Wlctrie Cooperative, ines Manquerade oe nnnen is Good Mic Bronasting Corporation Ebb Tide. Pretty Dove Development norton TH Follow the Hoya Bugtog Chemical Corporati 235 UEP nan 255 Four Aces Construction and Hardware Supply: Here, There, and Everywhere 252 ‘THE FIELD OF ENGINEERING * MANAGEMENT “The Functions of the Engineer | The Engineer in Management Skills Required at Various Levels What Is Engineering Management? Management Defined The Pros Requirements for the Engineer Manager's Job How One May Become a Successtul En: ManagerTHE FIELD OF ENC NES Engineers urv expected to porform a variety of tasks depending on their specialization and job level. [t ix important totho engineer that he knows what is expected ‘of him s3 that he riay be able to perform hinjab effectively lund efficiently. Hin next emcern will be to identify the lila required but which he does not have, As enginesra are not trained todirectly deal with people, it isexpected that their weakness will most ahen be on people-based skills, This difficulty will be more apparent ance they are ‘ssigned to occupy managemient positions. It follows that if the engineer manager would want to do his job wel some exposure to engineering management activities becomes necessary. THE FUNCTIONS OF THE ENGINEER Sinco prehistoric times, mankind has benafited from the various tools, equipment, and projects developed by engineers," Among these are tho following: 1. the stone bladed axe which was a very useful tol; fond the irrigation aystem used to promote crop growing — 6000 to 3000 B.C; 2. the pyramids of Egypt — 3000 to 600 B.C; 3, rondbuilding by the Romans — 600 B.C. toAD. 400; 4. the production of paper and gunpowder by the Chinewe — 100 AD, to 1600.A.D3 Profoion Fi hin New York Machen blab, 1986) pp 3.31. 8, the production of rteam engine and the spinning ‘and weaving machinery — 1601 AD, to 1799 AD; and 6. the manuficture of earn and household appli- ‘ances — modern mes A listing ofall useful tools, equipment, and projects developed and produced by engineers will be sufficient to produce volumos bf books, These contributions indicate that engineers have become an indispensable segment of ‘the:world’s professions. Thin expectation will continue for 1 long time. Even as enginesrs are currently producing solutions la many ofthe difficulties faced by mankind, much ie still expected of them. Their outputs, new or improvements of old ones, ae very much neaded inthe following specific problem concers:* 1. the production of more feod fer a faut growing ‘orld population; the elimination of air and water pollution; ‘solid waste disposal and materials reeyeling; the reluction of noise in various fermn supplying tho increasing demand for energy, ‘supplying the increasing demand for mobility, preventing and solving eximes; and meeting the increasing demand for communi ‘ation facilities. Specifically, the functions of engincering encompass the following areas? 1. Research — where the engineerin engaged in the Tp ct. vp. 2008 Ps atin Reman fmt the Boing Profmon ee York i, Rcehat tod Win, 18 pp 231(Bonu Ayn procens of leamisg about nature and codifing this knowledge into usable theories, 2, Design and development — where the engineer undertakes the activity of turning a product concept to Aaised physical item* Design for manufacturablity ond value engineering tecms (a feature of seme companies) are charged with improvementof designs and specifications atthe roscureh, dovslopment, design, ard production stages of product develepment?* 3. Toating — where the engineer works in a unit srhoro new productacr parts are tasted for werk ability 4. Manufacturing — where the engineer is directly in charge of production personnel or assumen responsibilty for the product 5. Construction — this is where the construction engineer (a civil engineer) in either directly in charge of the eenstruction personnel or may have respensibility forthe quality ef the construction process. 6. Salos—winere the engincor assists the cenpaay/a fustemers to meet their needs, expecially those that require technical expertise 7. Consulting — where the engineer works consultant of ony individual or organization requiring his services 8. Government —where the engineer may find em- ployment in the government performing any of the various tasks in regulating, monitoring, and contzlling the activities of various institutiens, public o private 3 Na Crore Products Mangement, Til Etna Memema, ‘gas Rcd B Irwin Ine WO 9 BE sae ‘ wo, THE ‘Teaching — where the engineer rots employ- ‘ment in a school and ia atsigned ax teacher of ‘engineering courses, Some of them later becoma deans, viee presidents, and presidenta. ‘Management — where the engineer ts aasigned {o manage groupe of people performing apecic as ENGINEER IN VARIOUS TYPES OF ORGANIZATION From the viewpoint of the engineer, organizations may be classified according to the degree of engineering Jobs performed: 1 Level One— these with minimal engineering jobs ‘ike retailing firms. 2. Level Two — those with a moderate degree of 3. Lave! Three ‘engineering jobs like transportation companies, those with a high degree of ‘enginoering jobs like construction firma Figuie 1.1 Types of Organization and the Management Skits Rloquired of Engineers gener management this requied specialized Tart Tevet lover + 2 3 “The Firm's Quantity of Engineering Jobs ‘Management Skills Required at Various Levels Among the types of organizations, the engineer will Ihave a slim chanco of becoming the general manager or president of level one, unless of course, he owns the firm, ‘The ongincor manager may be nasigued to head a stnall ‘engineering unit ofthe firm, but there wall not be too many firms which will have thie unit. In level two firms, the engincer may be assigned to hhoad the engincering division. The need for management skills will now be felt by the engineer manager Level three firms provide the biggest opportunity for fn engineer to become the president or general manager, In this case, the engineer manager cannot function effectively without adequate management skills WHAT IS ENGINEERING MANAGEMENT? Engineering management refers tothe activity com- bining “technical knowledge with the ability to organize and coordinate worker power, materials, machinery, and money ‘When the engineer is assigned to supervise the work. of even a few people, he is already engazed in the fit phase of engineering management. Hin main respenaibil- ity is to lend hia group into producing a certain output consistent with the required specifications. ‘The top position nn engineer manager may hope to cccupy is the general managership or presidency of ‘ny frm, large or small. As he sexles the management Iadder, He finds that the higher he goes up, the less fechnigal activities he performs, and the more manage ‘ment tasks he accepts. In this ease, itis but proper that ‘the managment functions taught ia pure management eournen be well understood by the enginoer manager. gee Ua ie chit Port erie Sn in Figure 1.2 & Typleal Advertisement for a Pure Engheering dob (without management responsibilities) or ‘THE NAME THE WORLD TRUSTS IIAS PLACED E73 ‘TRUST IN US FUILHAYA ELECTRIC An affiiate ef Ful letie Co, Lad of Japan For immediste ining LICENSED ELECTRICAL ENGINEERS Design Enaingers (2) “The eaconleaaddat wll harlot sig and ecorination Fer eetchgoars manutctrieg tnd ahtation inntalation -ppllesion Engineea (2) + With adspute understanding ofan atual operating eile IAD and siadae stare + With efetive Engl Freel communication sills wad inter- yw ver ese Avplicanta are requested a apply in pra wit het omprehensie ‘Sunes, 1] pots ed colegetmacrpes othe Bad Fle Mane Bide, 2174 Pasong tum St, Makst Cy Por ngues, seam call, Dain Pargnntan a 892-8506. ‘RML-12 00/81, Monday toSaturay, Deals for appcation teFigure 1.3 A Typical Advertisement for an Engineer Maneger 0 a Lower Level Executive (Supervies)) ONE OF THE COUNTRYS LEADING STRUCTURE SPECIALISTS NEEDS THE FOLLOWING Por IT3 EXPANSION FABRICATION SUPERVISOR (1) — Mate, RSCEBSMI graduate, nit mone than 35 years old = Atleast 9 yoars experience in stot farention = Willing to work om ai ing schedule STRUCTURAL DETAILERS (6) = MP, BS. in Engineering, below 38 gear old = Knowlndge in steel sonmestions at rication (shop drawings ord end see) fb PROJECT ENGINEERS — Malo, licensed Civil Engineer, with at least 5 yea ‘experience on stoel ereetin and willing te be seatenod outside Btetru Manila WELDING FOREMAN = Mato, at lout high teoo! graduate and wits at oust 8 years experience as Welding, Foremae Apply at STEEL CENTRE PHILS, INC. ‘Amang Rodriguez Ave, Bo, Manceahan, Pasig City Or send eumprehensive resume to: FO, BOX 3702, MANILA From an advertisement, Manila Bulletin, February 25, 1996, p. Fae Fioue 1.4 ATyplcal Advertisement for an Engloeer Manager Middle Lavel Execuilve — ‘A PROGRESSIVE INDUSTRIAL COMPANY IS LOOK- ING FOR TALENTED AND DYNAMIC INDIVIDUALS. \WIto ARE WILLING TO FILL UP THE FOLLOWING POSITIONS: PRODUCTION MANAGER = Wale, 35-45 years of age — Mechanical Engincering/Industeal Brgineering graduate ‘or any related course = With 4 to 6 years working prodection preferably in a ated fence in handling ste — Extensive experience in maintenance program — Costecutting oriented perm, Tnterested parties, please apply in person with biodata and renume, 2% 2 pleture and other credential uF cEDisco TOWER 534 Asuncion St, Binondo, Manila Tel, BLL oe “From an advertisement, Manila Bulletin, Pebroary 25, 1996, p. PB,Figure 1.9 TyploatAdvertinemants tor Engineer Managers ae Top Brecutions SPAN A FA GHW IYO GROUP OF COMPANIES INNEED AWA QUAL ATIETY AND IMGHILY NOSTIVATED HMEHAL MANAGER 4 x uvolnte af tute op Mechanical Engineer Way ato the Ge 0 general management ul Huwat thoy un writ Ena ayant will eeivean wtacti¥ecompecsationpknge treated applicants may ned their restos with latest plato ‘0 tho PERSONNEL DEPARTMENT. OK 181 Mast 9 ‘00 MANILA MULLEN n advortiacnent, Manda Buletn, Apa 2, 1098, p E. GENERAL MANAGER Avery progreasvechumical mansctorine corny seks a nature fd highly qualed exnidute ta nmune the tne pot Diretly eporting to the View Provident, he idl ean mut be: = Mate, 8545 year td — Graduate f Chenicol Esxiovering in a pretigious cllgs oF niverliy = Agzresnive and met erontad — With feaernhip sod taanacesient stl — Encellont cemmuisicativn nit fos competitive aslary and excellent benefits, Interesied ‘spplianta we requested ta send thee reine witha ect hota tt ‘We HRD DEPARTMENT POX 192 — MAIN "96 fe ANIL BULL “Fram an advertinement, Nanila Blain, Ape 2 Oh, p EB, 10 Figure 1.6 An Advertisement for an Engineering Manager a FOR IMMEDIATE HIRING p ENGINEERING MANAGER “This persin will be responsible for the effective management of the engineering and maintenanes department ‘We are locking fora licensed Mechanical Engineer, preferably with an MBA or graduate school degree, Met iy in wa rer ein ne eee teres Sea ee We offer a very competitive compensation package and a ear plan to the qualified eandidate Tntererted parties, may send their comprehenaiveresume, applisation letter and & passport wined ID to: BOX NO. 159 CUBAG ‘95 ‘ob MANILA BULLETIN Manila Bulletin, August 25, 1996, *Proman advertisemet penMANAGEMENT DEFINED Since the engineer manager ia presumed to be technically competent in his specialization, ane may now Proceed to describe more thoroughly the remaining portion of his job, which i management. Management may be defined tha “creative problem solving-process of planning, organizing, leading, and controlling an organization's resources to achieve its ‘mission and objectiven”™ THE PROCESS OF MANAGEMENT Management ia a procoss consisting of planning, orgmnizing, directing (or lending), and controlling. Explained ina simple manner, management must ‘seek to find out the objectives of the organization, think ‘of ways on hew to achieve them, decide on the ways to ‘be adapted ard the material resources to be used, deter- mine the human requirements of the total job, amsign specific task to specific persons, motivate them, and Provide means to make sure that the activities are in the Fight direction. ‘The specific activities in the management proceasare discussed more thoroughly in the succeeding chapters. REQUIREMENTS FOR THE ENGINEER MANAGER'S JOB Depending on the type of producta or services a firm produces, the engineer manager must have the folowing qualifications: 1. a bnchelor’s degree in engincering from a repu- table school; In tome cases, a master's degree pte M:Mlaie, The Mngt Chatonge ne Yr: Mactan Pasting Ca, Ibo ps 10. management in 2. afew yearsexperienco in « pure engineering j 3. training in supervision; 4. special training in engineering management, ‘These qualifications will be of great help to the engineer manager in the performance of the various ‘management functions HOW ONE MAY BECOME A SUCCESSFUL ENGINEER MANAGER Successful engineer managers do not happen an a matter of chance, although luck is a contributory factor. If fa very important for tho engineer manager te know the various factors lending to successful management. Kreitner indicates atleastthree general proconditions for achieving losting success as a manager. They are an follows 1. abitity 2, motivation to manage, and 3. opportunity “Ability Managerial ability rofers to the capacity of an ‘engineer manager to achieve ergenizational objectives effectively and efficiently Effectiveness, according to Higgins, refers to a description of “whether objectives remplished”, ‘hile efficiency is a description of the relative amount of resources used in obtaining effectiveness,” Tiber Miner Management ith Ben Boas: ghlan Miia cn, tom 8 Henny 5 3‘To illustrate: {fa civil engineer was asked by hin superiors to Anish a 100-kilomoter road cementing project, ‘within eight months, he is said to be effective if he finished the job within the required period, On the other hand, his efficiency is mensured by the inputs Gabor and materials) he poured into the project in relationto tho actusl output (the 100 kilometer read), {Ifthe sume ovtput in made with tess inputs, the more ffficiont the civil engincer bocomes, Motivation to Manage Many people have the desire to wark and finish apevifc toake assigned by superiors, but not many are ‘motivated to manage ether people so that they may con- (ibute to the realization of the erganization’s objectives, Amanagoment researchor, John B, Miner, developed psychometric instrument to measure objectively an individual's motivation to manage. The testis anchored to the folowing dimensions: 1, Favorable attitude toward thaso in positions of futhority, such as superiors, 2. Desire toengage in games or sports competition with peers ‘8. Desire toengage in occupational or work-related ‘competition with peers 4. Desire ta ansert oneself and take charge. Desire to exercise power and authority over others 6. Desire to behave in w distinctive way, which Includes standing eut from the crowd, THe Mine, lb Hein Mamet, pp 1.2 " 7. Sense of reaponxbility in carrying out the rou- tine duties associated with managerial work. High scores in the foregoing dimensions are ansc- ciated with high motivation te manage. Opportunity Successful managers become possible only if those having the ability and motivation aregiven theepportunity to manage. The opportunity for successful management has two requirements: 1, Obtaining @ muitablo managerial job, and 2, Finding a supportive climate once on the Job. ‘Newspaper advertinements abound with needs for fongineer managers, [tina little dimicult to determine if the firms requiring their services provide a supportive climate for effactive and efficient management. A sup- portive climate is characterized by the recognition of managerial talent through financial and nonfinancial rewards é ‘SUMMARY Enginsers are known for their great contributions ta the development of the world's civilization. There are many areax where their preaonce is necessary like research, design and development, testing, manufne- taring, construction, sales, consulting, government, taaching, end management. Engincera may be found contributing thelr abare in the various levela of organization, Engineering activities need to be managed and ccaginters are somctimas placed in positions whera they have to learn management skills ‘Management is concerned with planing organizing, 15and controlling an organization's resources to (aunts wisn unt dete: in qualifications required of the ‘There aro cert engineer manager. One may become a successful engineer manager if the procenditions of ability, motivation ta mansge, end QUESTIONS FOR REVIEW AND DISCUSSION 1. Why areengineers considered an important segment of the society? 2 What are expected of engineers in general? 3 fe what current concerns are engineering outpute needed? 4 In what aress are engineer currently involved? 5. How may organizations be classified according to the engineering jobs performed? 6. Which organization tevel requires the highest man- agoment akills for engineer managers? 7. What is engineering management? How may one define management? 9% What qualifications must an engineer manager have? 10. How mayone become a successful enginoor manager? SUGGESTED ITEM FOR RESEARCH 2. Prepare alist often engineers whobecame president for general manager of « large company, "7Case 1. ALWA ELECTRONICS: II! Dream of You ‘Mr. Andy Mallar! opened « small shop selling tran- ststor radios in 1979, Hin store was located at one carne? (General Luna St) ofthe entire streteh of Burges Avenue, {he main thoroughfare of Cabanatuan City ‘The demand for sleetronie parts made him carry a wide assortment of parta that aro used in the assembly and maintananco of radion, tape recorders, amplifiers, and various related eppliances By 1990, Mr. Mallari was able tosaveenough money for the purchase ofa 300 square meter lot along Del Pilar Street, He constructed a 10moters x 15 meters two-storey building on the lot. The ground Moor is sid as his store where sales are made to customers which grew in number month after month, The second floor is used as hia residence, ‘Mr Mailari thinks that he ean duplicate his feat in the other big tawns of San Jose City, Gapan, and Guimba Hehas already startedoperatinghix storesin thase towns fond sales are already picking up, His current operations cover sales and repair, There are five salesladien in Cabanatuan attending to the various needs af the customers. Those who bring their appliances for repair are served by one of the six tocknicians, The parte ased come from the stocks maintained at the store ‘Those who parehase parts from the storo consist of technicians from the various tawns of Nueva Eeij Sometines, the technicians send somebody to do the purchasing of parts, Mr. Mallarit perspective hus changed drastically afer he met his former classmate Estelito Chan in a lass reunion at Araullo University. Mr. Chan has a woll-eatablished appliance assembly plant in Mai He indicated that he did not start big but rather subcontractor for m large essembly plant. Slovly, Chan's business picked up until ho wae able to establish his own factory. ‘Mr. Mallari thinks that he can fellow the footsteps: of his friend. As heis already 47 years old and his oldest child ia about ready to enter colloge, he thinks this isthe best time for him to consider sending his sen to an ‘engineering school. His docision will center on which school and which engineering courso, He feels that his children, aro keenly interested in whatevéreareer he will ask them, to take, Mr. Mallari has three sons, all belonging te the top, ten in their respective classes. He thinks all three have the potential to help him realize his dream of establishing ‘his own assembly plant, His immediate concern now ia to identify the right college courses for his children.DECISION-MAKIN¢ Daclalon Making asa Nanagemert Responsibility What fe Decison aking? ‘The Declalon Maklag Process Approaches In SoWing Problems Quantitative Models for Decision Making Chapter 2 Managers of all kinds and types, ineluding the engineer manager, are primarily tasked to provide lead- trahip in the ques forthe attainment of the organization's objectives. Che in to become effective, ke must learn the intricacies of decision-making. Many limes, bo will be confronted by situations where he will have tochoose frem among various options. Whatever his choice it will have effects, immediate or otherwise, in the aporations of this organization, ‘The engineer manager's deeiston-making skills will be very erucial to his success as a professional, A major blunder in decision-making may be sufficient to cause the destruction af any organization, Good decisions, on the ether hane, will provide the right environment for fontinuous growth and succesn of any organized effort. DECISION-MAKING AS A MANAGEMENT RESPONSIBILITY Decisions must be made at various levels in the workplace They are also made at the yarious stages in the mangement process. If certain resources must bo used, someon must make a decision authorizing certain persons te appropriate such resources Decision-making is a responsibility of the engincer manager. It i underntandable for managers to make ‘wrong decisions at times, ‘The wise manager will correct em as soon as they are identified. The bigger issue is the manager whe cannot or do not want ta make doci- sions. Delaney concludes that this type of managers aredangerous and “should be removed fram their position a8 ‘on as possible.") ‘Management must strive to choose a decision option as correctly as possible. Since they have that power, they fre responsible for whatever outcome thoir decisions bring Thehigher tho management level is, the bigger and. the mare complicated desision-making becomes. An example may be provided as follows ‘Tho production manager of a certain company has received a written reques: from a soction head regording the purchase of an airconditioning unit. ‘Almost simultaneously, another request from another section was forwarded to hisn requiring the purchase fa forklif. Tho production manager was informed by his superior that he can only buy one of tie two requested items due to budgetary constraints. ‘The prodvetion manager must now make decision, His choice, howerer, must be based on sound ‘urguments for he will bo held responsible, later on, Ithe had made the wroeg choice. WHAT IS DECISION-MAKING? Decision-making may be defined as *the process of identifying and choosing alternative courses of action in {manner appropriate to the demands ef the situation”? ‘Tho definition indicates that the engineer manager mustadapt a certain procedure designed to determine the bost option available to solve certain problems. Decisions are made at various management levels Ge, lop, middie, and lower levels) and at various man- agement functions fi.e., planning, organizing, direet Wiliam A. Delite, The 20 ut Canon Problems x Management end urns The ee ake AMALIA, BH) Mire» 03. fand controlling), Decisien-makine, according to Nickela and ethers, "isthe heart fall the management functions."* THE DECISION-MAKING PROCESS Rational decision-making, according to David HE. Holt ix 2 procons involving the fellowing steps ingnose, problem analyze environment articulate problem or opportunity develop visble alternatives ‘evaluate alternatives make a choice ‘implement decision evaluate and ar pt decision routs Diagnose Problem Ifa manager wants to make an intelligent decision, ia first move must be to identify the problem, If the manager fails in this aspect, it is almost impossible to suceeed in the subsequent steps. An expert once acid “dentifiation of the pre tantamount to having the problem half-soived, What is a Problem? A problem exists when there is 4 difference between an actual situation and a desired situation *For instance, the management ofa construction company entered into a contract with another party for the construction of « 25.storey building on a certain site, “Wile Nica wd tr. Undrdanine Rainn, Seed Editon Yew Jerry. ret seine, 1 ite Starmerborn dr Monngrment fe Product, Soar Eaton (New We din Wey an Bonn, 88). 600‘The actual situation of the firm ia that it has not yet con- structed the building, The desired situation is the finished 25-storey building. In this ease, tho actual situation ix different from the desired situation. The company, there- fore, has a problem snd that is, the construction of tho B-storey building. ‘Analyze the Environment ‘The environment where the organization iy situated, playa a very significant role in the sucesns or failure of ‘auch an organization. Iti, therefore, very important that fan analysis of the eavireament bo undertaken, ‘The objective of environmental analysis is the iden tification of constraints, which may be spelled out either internal er external limitations. Examsle of inter- tal Linitations are as follows 1, Limited funds available for tho purchase of equipment. 2 Limited training on the part of employes. 3, Madesigned facilities, Examples of extcrnal limitations: are as follows 1. Patents are controlled by other organizations. 2. Averylimited market for the company's products ‘and gervices exists 3, Strict enforcement of local zoning regulations. When decisions are to bo mde, the internal and external limitations musthe considered. It may be cont, later on, to alter a decision because of a constraint that thas not been previously identified ‘An illusteation ef failure to analyze the environment is as follows: ‘The prosident ofa new chemical manufacturi 4 company made a decision to locate his factory in a place adjacent to a thickly populated area. Con- struction ofthe building wax mado with precision and was finished in a short period, When the clearance for tho commencement of eparation was sought from. local authorities, this could not be given, It turned ‘out that the residents opposed the eperation of the firm and mado sure that no clearance is given, ‘The president decided torelocate the factory but not aftor much tims and money hax ban font, This n'a clear example of the cost associated with rman agement disregarding the environment when decisions are made In this ease, the president did not consider what the rosidente’ could do, Components of the Environment. The environment consists of two major concerns: 1. internal and 2. extorn ‘The internal environment refern to organizational activities within a firm that surrounds decision-making.* Shown in Figure 21 are the important aspects of the internal environment. The external environment refers to variables that aare outsice the organization and not typically within the short-run control of top management.’ Figure 2.2 shows the forces comprising theexternal environment ofthe firm, Develop Viable Alternatives Oftentimes, problem may be solved by any of the solutions offered” The best among the alternative solutions SEW Park at Geral tna ryan Pros, 1957p nai Peey ow York Abdi Woley Fabohing Co, 10D. IZ Marin Management (ngs Temust be considered by management. Thi In made pose Figure 22 The Engheerng Fl and its External ble by uring c procedure with the following atepe Envronment 1. Prepare a list of alternative slutions \ 2 Detarnine the viability of enc: soltions 8. Revise the lt by atikg out those which are Government anvil | eile: : nonean _ ‘An engineering firm has a problns of inere aber Unig sing its output by 30%, This ie the result ofa new N\ 4 tereement between tho frm end ase of tx clients Figure 2.1 The Engineering Firm and the Interral ENGINEERING Environment In Decision-Making tients ———> | Fin | Suppers ‘THE ENGINEERING FIRM. 4 \ INTERNAL ENVIRONMENT Competitors Banke CganzatinatAspots ite ory ectire polos procedures, te, ably el mmanagerer, EXTERNAL Pubic asetng hepace ENVIRONMENT to redoc srtey, T promoton Steg, et renal gt The recrulmen prnccas, t incntra systems. Production Agpests ENVIRON {ike plant facility layout, scl Invemery eon, ee. Farcial Aspects tka tatty profi.‘The list of polutions prepared by the engineering rmunager shows the fallowing alternative courses of action 1 improve the eapacity of the firm by hiring more workers and build'ng additional facilities 2 secure the servires of subcontractors; 3. buy the needed additional output from another firm; 4. stop serving some of the company’s customers; and . 5, dalay servicing some clients "The lint wos rovinod and only the first three were deemed to be viable, The last two were deleted bocause cfadverse effocta in the long-ren praGitablity ofthe firm. Evaluate Alternatives ‘After determining the viability of tho alternatives ‘and a revised list has been made, an evaluation of the rumaining alternatives is necessary. This is important Decause the nett step involves malcing a cheice. Proper evaluation makes choosing therightaolution less difficult. How tho alternatives will be evaluated will depend on the nature ef the problem, the objectives of the firm, and the nature of slternatives presented. Souder sug- ests that “each alternative must be analyzed and ev uated in termsofitavaluy, cost, and riskecharacteriatica™ ‘The value of the alternatives refers to benefits that can be expected. An example may bs described as follows: t net profit of P10 million par year if the alternative in chosen. ‘The cost ofthe slternativerefors to out of pocket costs (like P100 million for construction offaciities), opportunity Managment Dc iho Manag of Eiening wok Ya Nir Rd Cx 1980) costs (like the opportunity toearn interest of P22 million per year if money is invested elsewhere), and follow-on costa like PS million peryonr for maintenance of facilities constructed), ‘The risk characteristics refer to the likelihood of achieving the gouls of the alternatives, Ifthe probability ‘ofa net profit of P10 million is only 10 pereent, then the decision-inaker may opt to eensider an alternative with, PS million profit but with an 80 percent probability of Another example of an evaluation of alternatives is shown below: An engineer manager is faced with 1 problem of choosing between threo applicants tofill up a lone vacancy for n junior engineer He will have to at up certain criteria for evaluating the applicants, Ifthe evaluation is not dene by professional human resources officer, then the engincer manager will be forced to une a predetermined criteria, pcb tupical evaluation of jb applicants will appear EVALUATION SHEET ‘Title of Vacant Position: JUNIOR ENGINEER Date of Evaluation: Decombor 28, 1006 Applicuat Education Trasing Expersnce Ae Total Points 1 dow Sitoymn, de 5k 2 Mend filo 0-35 1 Dantedele Crt Rt Bralusion Edyarto J. Vlorin Manager Engineering Division 1| Make a Choice After the alternatives have been evaluated, the decision-maker must now be wady to make a choice. This Je the point whore he must be convinced that all the previous steps were correctly undertaken, Choice-making refera to the process of selecting among alternatives representing potential solutions to 8 problem.*At ths point, Webber advises that... particular Effort should he made to identify all significant conse- ‘quences ef endh choice.” ‘To make the selection process easier, the altern ean be ranked from best to worst on the basia of some factora like benefit, cost, or risk. Implement Decision ‘After a decision has been mads, implementation. follos. This is necessary, oF decision-making wil be an fexercine in futility Implementation refers to carrying out the decision fo that the objectives sought will be achieved. To make implementation effective, a plan must be devised, [At this stage, the resoureos must be made avail- able t0 that the decision mey be properly implemented, ‘Those who will be invelved in implomentation, accord- ing to Allag and Stearns, must underatend and accept the solution" Evaluate and Adapt Decision Results In implementing the decision, the results expected may o¢ may not happen. Thi, therefore, important for the Rana Weloer, Tolle a Manager Esentatof Management tirmewond, nia Rud tea, Ine, 941 9 ee Shag co Toy Sear Management Suth- ‘Wwe Palace Oo 190) pT 30 manager to use control and feedback mechani tnaure rents nad to provide information for future eeisione Feedback refers to the process which requires ‘checking at each rtage of the process to assure that the alternatives generated, the criteria used in evaluation, ‘and the solution selected for implementation are in kee ing with the foals and objectives originally specified.”® Control refers to actiony made to ensure that activi tion prfrmed match the dened atv gol that ave been set. In this Inst ntago ofthe decision-making process, the ‘engineer manager will ind out whether or not thedosired result is achieved. [the desired result is achieved, one may assume that the decitian mada was good, If it waa ‘not achieved, Ferrelland Hirt suggest that further analysia in necessery' Figure 2.3 presents an elaboration of thia last step, APPROACHES IN SOLVING PROBLEMS, In decision-making, the engineer manager is faced with protloma which my eilher be simple er compen ‘To provide him with some guide, he must be familiar with, the flowing approaches: 1 qualitative evaluation, and 2 quantitative evaluntion, Qualitative Evaluation. This term refers to evaluation of allernatives using intuition and subjective judgment. ‘Stevenson states that managers tend to use the qualitative hppraach when: furthermore Mom, WED pO ae ™ Pe a ty ei en HC, aFigure 23 Fesback ‘The problem in fairly simple 1 Moking Proce: 2. The problem in familiar, 4. The conts involved are net grent. How cout sien [am] 4. Immediate decisions are needed T An example of an evaluation using the qualita approach ix ax follows: 2 Janae al A factory operates on three shifa with the . j following echedute 3s HEE First shift - 6:00 AM. to 2:00 PM. aaa Second shit 2.00 PM, 19 1000 FAM. epporunty ‘Third shi ~ 10.00 PM. to 6:00 AM. t Each shift consists of 200 workers manning 200 « [een rnachinen. On September 16, 1996, te operations vite ‘went smoothly until the fictory manager, an indus- Moraivon triol engineer, was notified at 1:00 PM. that five of T the warkers assigned to the second shit could nat report for work beste of juris sustained in a 5 [eau 4 trafic accident while they were on their way to the - factory Because oftime constraints, the manager made | fn instant decision on whoamong the firs shi. work- ‘would work over:ime to man the five mactines, 6. [maa choes T Quantitative Fvaluetion. This term refers to the 7 [agora ‘valuation of allernaivesusing any technique ina group e Testis Bar saan QUANTITATIVE MODELS FOR DECISION [achieved |] stops wera MAKING a ‘Tho types of quantitative techniques which may be swoful in decinion-making are aa fellows adapt docizon Lest = lin Sea, Intfarton Mange inc onan, ton ew, i)inventory models queuing theory network models forecasting regression anal simulation linear programming sumpling theory 1 decision theory" erpsemeepe Inventory Models Inventory models consist of several types all designed to help the engineer manager make decisions regarding inventors. They ars as follows:!* 1, Economic erderquantity model—this ono ia used to cakulate the number of items that should be ordered atone Lime to minimize the total yearly fost of placing orders and carrying the items in inventory" 2 Production order quantity madel — thin is an ‘economic order quantiy technique applied to production orders 3. Wack order inventory model — this is an. inventory model used for planned shortages. 4. Quantity discount model — an invontory model ‘ined ta minimize tho total cont when quantity diseounta are effored by suppliers. Queuing Theory ‘The queuing theory is one that describes how to Tien. at, "mor hrech diuasin perso Hear an ond, p68 Ferrel an in,» , determine the number of service units that will minimize both customer waiting time and cost of service. ‘The quewing theory i applicable te companiea where ‘waiting lines ere a common situation. Examples are cars weaiting for service stn ear service center, igs and bargos waiting at the hartor or loading and unloading by dock- workers, programs to be run in a computer aystem that processes jobs, ete. Network Models ‘These are models where large complex tasks are broken into smaller segments that can be managed independently, ‘The two most prominent network models are 1. The Program Evaluation Review Technique (PERT) — a technique which enables enginser managers to schedule, monitor, and eontrol large and complex projects by employing three time estimates for each activity 2. Tho Critical Path Method (CPM) — this in a not- work technique using only one time factor per activity that cnables engineer managers to schedule, monitor, and control largeand complex project, Forecasting ‘There are instancea when engineer mat decisions that will have implications in the future. A manufaetorine firm, for example, munt put up a capacity which is sufficient to produce the demand requirements of customers within the next 12 montha. Ax auch, man- power and facilities must be procured before the start of operstions, To make decisions on expacity more effective, the engineer manager must be provided with data on domond requirements for the next 12 months, This type of information may be derived through forecasting. 8Forocanting may be defined asthe clliction of past and current information to make predictions about tho future Regression Analysis The regression model isd forecasting method that ‘examines the association between two er more variables. It uses data from previous periods to predict future eversa® Rogression analyxi iba simple or multiple depen- ding on the number of indopendent variables present. When one independent variable is invalved, itt called simple regression; when two or more indepenilent var- iablet are invelved, itis called multiplo regression” Simul tion Simulation iv a model constructed torepresentreality, fon which conclusions about reallife problems can be tuned * Tt isa highly sophisticated tool by means of which the decision maker develops a mathematical model of the system under consideration Simulation does not guarantee an optimum solution, ‘but i can evaluate the slternatives fed into the process by the decision-maker. Linear Programming Linear programming is a quantitative technique that is used to produce an optimum solution withia the bounds imposed by constraints upon thedecision.* Linear Phy Kater ike Monsen, Seen Blin Engh ew dine. Petar Ines fly (Prantl Magen Sood Eta New 6 programing is very useful asa decision-making tool when ‘rupply and demand limitations at plants, warehouse, or Market areas are constraints upon the aystem. ‘Sampling Theory Sampling thecry is a quantitative technique where samples of populations are statintically determined to be ‘Used for a number of processes, such ax quality control ‘and marketing research, ‘When data gathering is expensive, sampling provides san alternative Sampling, in effect, saves time and money. Statistical Decision-Theory Decision theory refers tothe “rational way to concept walize, analyte, und solve problems in situations in- volving limited, or partial information about the decision environment,” ‘A mare elaborate explanation of decision theory is the decision making process prosnted at tho beginning of this chapter, What has not been included in the diseus- rion on the evaluation of alternativae, but a very impor- tant, is subjecting the alternatives to Bayesian analysis. ‘The purpose of Bayesion analysis is to revise and. ‘update the initial assessments of the event probabilities generated by the slternative solutions, Thin is achieved by the use of additionst information. When the decision-maker is able to assign probabil- ities to the various events, the use of probabilistic deci- sion rule called the Bayes criterion, becomes possible. The Bayes eriterion selects the decision alternative having the maximum expected payoff, or the minimum expected loas if he ia working with a Joss table.** Fercenne, Quartitatee Deion Mabing Belmont, ‘cain Went Pang Go. 2986 pa "hho! Oder apd, evan, Quaraatie Managed An Anirtnton ent et Pablaing Co, 180) p47. a‘SUMMARY Decision-making is a very important function of the “engineer manager. His organization will rise or fall depending on the outcomes of his decisions. It is, therefore, necessary forthe engineer manager todevelop some skills in decision-making. The process of identifying and choosing alternative ‘courses of action in a manner appropriate to the demands of the situation is called decision-making, It is done at various management levels and functions ‘The decision-making process consists of various steps, namely: diagnose problem, anslyze environment, articulate preblem or epportunity, develop viable alter” natives, evaluate alternatives, make a choice, implement decision, and evaluate and adapt decision results, ‘There are twa approachox in solving problems, vamely: qualitative eveluation and quantitative evalu: tion. Qualitative avaluation is used for solving fairly m= le robles, while quantittive evaluation is applied to complex ones QUESTIONS FOR REVIEW AND DISCUSSION 1 Can the engineer manager evoid making manage iment decision? Why or why not? ‘When a problom bacoma: apparent and the engineer manager chooses toignore it, is he making a decision? Explain your answer, Why is proper dingnosis of the problem important? What are the components of the environment from the point of view ofthe decision-maker? What do they consist off How may one develop viable alternatives in problem. solving? How may alternative rolutions be evslunted? 17. Why is it important for those who will be involved 10. in implementation to understard ard accept the solution to the problem? What are the approaches in solving problems? What quantitative tochsiques are useful in decision ‘making? ‘What is the purpose of Bayesian analysis? SUGGESTED ITEM FOR RESEARCH |. Provide an illustration of how Bayesian analysis in ‘used.Case 2, RE CONSTRUCTION: i's How oF Ne: ‘When Engineer Romeo Extabillo finished his Civil Engineering course at Mapua Inatitute of Technology, he took thebonrd examination and passedit in 1981. Wanting to start independently, he went back te fis hometewn (Santiago City) to organize his own construction firm. In hha first few years of operation, he accepted contracts for the construction of residential houses, As he gained experience, hin clienta grew in number, andeven the mont prominent persons in the province of Isabela availed of his services, At tho atart, he hired two assistants (o hep him in hin daily routine as. contractor. One ofthe two assistants, ‘Mfr. Silyino Santingo, was a third year civil engineering student who had stopped schooling due to financial difficulties, His main task was as draftsman. His duty was to produce ail documents relating to the physical requirements of the various contracts entered into by hi boss, Among these documents are the building. plan, specifications, bill of materials, building permit, ete. His additional duty was to stint Engineer Estabille in supervising the foremen and workers at the various construction sites, ‘The secend assistant, Mr. Romulo Namaril, was ‘assigned to coordinate purchasing, bookkeeping, ond other related sdministrative activities, AL the third year of operations, Engineer Estatillo wasalroady dirceting operations in hisnewly constructed, fie inside his residential compound. By this time, two ‘more female employees were hired to assist in the various tasks performed in the office By 1994, Engineer Estabillo reviewed bis company's, payroll It indicated that he has in his employ sie fall- Lime civil engineers, two droftsmen, ten administrative personnel, one messenger and one security guard. The ° foremen itor working the various rojo were fence one 1996, Engineer Estab le ha nine wan continously fon he wl hve to rece the fervce ur ado eer on ame tants Ashe wr dee supersung operations, bo tanh tate nny nl to pera funclina Sicony tel psthronh ithe pa rant {rakes dedron tut he apprehonsee He Gk Mao et or man che the darken hing ibealievefnfe Wi haahouhts, be pandeed tnltow bio ta ang the poem a