ENGR 510

Engineering Project
Management
LECTURE 3 – ORGANIZATIONS AND ORGANIZING
PART 2
Structures and Links
 In small organizations, people often tackle a wide variety of tasks.
 As the organization grows, people tend to deal with a limited number of the available tasks.
 This leads to problems in communications and focusing which organizational structures
attempt to deal with.
 Links and relationships now extend from inside the organization outwards towards its
suppliers and customers.

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Internal Structures
 Most organizations start with two basic functions:
 Selling the products and/or service.
 Making the products and/or providing the service.

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Internal Structures (Cont’d)
 From within these functions grows a multitude of other functions:

 Cash management  Recruitment

 Purchasing  Disputes
 Stock keeping  Training
 Product design and development  Maintenance
 Estimation of cost and prices  Transportation
 Process development  Information technology
 Quality  Legal

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Vendor Assessment
 This assessment can be an initial stage prior to investigatory visits to suppliers to examine
their processing facilities and audit their quality procedures. When examining suppliers, one
should take into account all the factors which are of importance to the company, namely:
 QUALITY, i.e. the level of rejected batches.
 PRICE per item, relative to other suppliers.
 DELIVERY, i.e. deliveries made on time.
 SERVICE, i.e. amount of back-up and flexibility demonstrated.
 Vendor assessment is a simple rating of different suppliers against each other under
headings so that their overall value to the company can be assessed.
 It is a matter of selecting the particular factors, such as these above, which are considered
important and applying a weighting to them in relation to their agreed impact on the
company.

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Vetted Suppliers
 Once suppliers have been selected to be the main, or sole, supplier and we are convinced
that the quality of their supply consistently meets our requirements, it should be possible to
reduce the need to inspect their incoming goods.
 It will still be necessary to monitor their quality which can be partially from occasional
quality audits and partially from records of their material/components service within the
plant and in service with our customers.
 To ensure that this can take place it is important to ensure that full traceability of all
materials used is possible and maintained.

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Examining A Potential Supplier:
Management
 Organization structure and responsibilities.
 Human resource management (HRM) policies on recruitment, training, promotion, health
and safety. Can be judged on number of disputes, stability/turnover, absenteeism and
accidents.
 Customer satisfaction statistics.

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Examining A Potential Supplier:
Delivery
 Delivery system integration with processing.
 On-time manufacturing systems – percentage of orders late, average days late statistics.
 Packaging, shipping and receiving operations.

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Examining A Potential Supplier:
Technology
 Process development, e.g. age of plant, skill level of employees.
 Product design process.
 Manufacturing and test equipment.

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Examining A Potential Supplier:
Quality
 Quality policy and procedures.
 Process control, e.g. measuring automation and use of statistical quality control.
 Problem prevention, detection and correction procedures.
 Supplier quality process and audit statistics.

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Examining A Potential Supplier:
Cost
 Rates used for accounting.
 Processes for estimating costs on proposal and pricing policy.
 Financial condition of the organization.

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Examining A Potential Supplier:
Technical Support
 Organization.
 Logistics support development.
 Field maintenance support.

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Improving The Organization’s
Performance
 All organizations need to be continually improving themselves, especially when they are
exposed to keen competition in their markets.
 To achieve this is no easy task and this section looks at two methodologies that exist which
attempt to integrate all aspects of an organization towards it becoming fully effective.
 It also examines the modification to ISO 9004 introducing Quality Management Principles.

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The Business
Excellence
Model
The model comprises nine
criteria covering all aspects
of the organization. It can be
applied to the organization
as a whole, or to parts of it.
The first sector is concerned
with inputs and contains five
enablers. The second sector
is concerned with criteria
outputs and contains the
remaining four results
criteria.

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The Business Excellence Model
(Cont’d)
 The organization is assessed under each criterion and given a score for that criterion.
 The individual criterion scores are then summated, using weighting indicating the criterion’s
contribution, to give an overall score for the organization.
 The individual criterion score and the overall score can then be used to determine the
organization’s present standing using a process of comparison, i.e. benchmarking, against
known organizations.

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The Enabler Criteria
 Leadership. How the leader develops visions and values and forms a role model.
 Policy and Strategy. Here we are looking at what data is used to establish needs and
expectations of all possible stakeholders.
 People Management. This looks at how the staff are developed and motivated to effectively
perform towards the business goals.
 Partnerships and Resources. Here we look at how the organization adds to its results through
effectively using partners and its available resources.
 Processes. If the people are to deliver the main objectives, the key processes must support
them in their roles in satisfying customers and other stakeholders.

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The Results Criteria
 Customer satisfaction. What the organization is doing in relation to the complete chain of its
external customers. We must ensure that the measures used are of real importance to the
customer.
 People satisfaction. Here we are looking at how the organization’s actions are perceived by
their own staff.
 Society satisfaction. What the organization is doing in relation to the local, national and
international communities – especially in environmental matters and with authorities which
affect or regulate its business.
 Key performance results. These are the normal business measures which organizations use
to denote their performance.

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END OF PART 2

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