Republic of the Philippines

DON HONORIO VENTURA STATE UNIVERSITY

Cabambangan, Villa de Bacolor, Pampanga

COLLEGE OF ENGINEERING AND ARCHITECTURE

Department of Civil Engineering

A. Course Code / Title : ME212 – Engineering Management

B. Module Number : Module 4 - Organizing

C. Time Frame : 3rd to 4th week of November 2020 (2 hours per week)

D. Description : This module explains the reasons for Organizing and its connection
to management and the organization.

E. Objectives : At the end of this module, the learner should be able to:
1. Develop a concept on how to discuss the reasons for
organizing, identify the formal organization, structures and
their values.
2. Be familiar about the types of organizations and their
hierarchies.

F. Contents : I. Reasons for Organizing

A. Organizing Defined
B. The Purpose of the Structure
II. The Purpose of the Structure
A. The Value of Formal Organization
III. Informal Groups
IV. Hierarchies in an Organization
A. Types of Authority
B. Purpose of Committees
V. Types of Organizational Structures
A. Functional Organization
B. Product or Market Organization
C. Matrix Organization

The engineer manager needs to acquire various skills in management, including those for organizing technical
activities. In this highly competitive environment, the unskilled manager will not be able to bring his unit, or his company,
as the case may be, to success.
Even today, skills in organizing contribute largely to the accomplishment of the objectives of many
organizations, whether they are private businesses or otherwise. The opportunities offered by skillful organizing are
too important for the engineer manager to ignore. This chapter is intended to provide him with some background and
insights in organizing.

I. REASONS FOR ORGANIZING

Organizing is undertaken:
 to facilitate the implementation of plans.
 to breakdown the total job into more manageable man size jobs.
 to facilitate the assignment of authority, responsibility and accountability for certain functions and tasks.

A. 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.

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B. 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 level 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 job
2. Delegation of authority - the process of assigning various degrees of decision making authority subordinates.
3. Departmentation - the grouping related jobs, activities, or processes into major organizational subunits.
4. Span of control - the number of people who report directly to given manager.
5. Coordination - the linking of activities in the organization that serves to achieve a common goal or objective.

II. THE FORMAL ORGANIZATION

After a plan is adapted, management will proceed to form an organization to carry out the activities indicated
in the plan.
The formal organization is “structure that details lines of responsibilities, authority, and position”. What is
depicted in the organization chart is the formal organization. It is “the planned structure” and it “represents the deliberate
attempt to established patterned relationships among components that will meet the objectives effectively”.
The formal structure is described by management through:
1. Organization chart - a diagram of the organization’s official positions and formal lines of authority.
2. Organizational manual - provides written descriptions of authority relationships, details the functions of major
organizational units and describes job procedures.
3. Policy manuals - describes personnel activities and company policies.

A. The Value of Formal Organization

Following are the advantages of formal organization:
1. Easy to Fix Accountability
Since the authority and responsibility of all the employees have been already fixed, inefficient employees can
easily be apprehended and in this way their accountability can be fixed.
2. No Overlapping of Work
Everything moves in an orderly manner. Therefore, there is no possibility of any work being left out or
unnecessarily duplicated.
3. Unity of Command Possible
It is possible to observe the principle of unity of command in view of the presence of scalar chain of authority.
4. Easy to Get Goals
It is easy to achieve the goals of the organization because there is an optimum use of all the material and
human resources.
5. Stability in Organization
All the people work by observing rules and remain confined within the domain of their authority. This leads
to the establishment of good relationship which, in turn, leads to stability to the organization.

III. INFORMAL GROUPS

Formal organizations require the formation of formal groups which will be assigned to perform specific tasks
aimed at achieving organizational objectives. The formal group is a part of the organization structure.
There are instances when members of an organization spontaneously form a group with friendship as a
principal reason for belonging. This group is called an informal group. It is not a part of the formal organization and it
does not have a formal performance purpose.
Informal groups are oftentimes very useful in the accomplishment of major tasks, especially if these tasks
conform to the expectations of the members of the informal group.
The informal organization, useful as it is, is “vulnerable to expediency, manipulation and opportunism,”
according to Valentine. Its low visibility, Valentine added, makes it “difficult for management to detect these perversions
and considerable harm can be done to the company.”

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 The engineer manager is, therefore, warned that he must be on the lookout for the possible difficulties that
the informal groups may do to the organization. It will be to his best interest if he could make the informal groups work
for the organization.

IV. HIERARCHIES IN AN ORGANIZATION

A. Types of Authority
The delegation of authority is a requisite for effective organizing. It consists of three types. They are as follows:
 Line Authority- a manager’s right to tell subordinates what to do and then see that they do it.
 Staff Authority- a staff specialist’s right to give advice to a superior.
 Functional Authority- a specialist’s right to oversee lower level personnel involved in that specialty, regardless
of where the personnel are in the organization.
Line department perform tasks that reflect the organizations primary goal and mission. In a construction firm, the
department that negotiates and secures contracts for the firm is a line department. The construction division is also a
line function.
Staff departments include all those that provide specialized skills in support of line departments. Examples of staff
departments include those which perform strategic planning, labor relations, research, accounting, and personnel.
Staff officers may be classified into the following:
 Personnel Staff- those individuals assigned to a specific manager to provide needed staff services.
 Specialized Staff- those individuals providing needed staff services for the whole organization.
Functional authority is one given to a person or a work group to make decisions related to their expertise even if
these decisions concern other departments. This authority is given to most budget officers of organizations, as well as
other officers.

B. Purpose of Committees
When certain formal groups are deemed inappropriate to meet expectations, committees are oftentimes
harnessed to achieve organizational goals. Many organizations, large or small, make use of committees.
A committee is a formal group of persons formed for a specific purpose. For instance, the product planning
committee, as described by Millevo, is “often staffed by top executives from marketing, production, research,
engineering, and finance, who work part-time to evaluate and approve product ideas.”
Committees are very useful most especially to engineering and manufacturing firms. When a certain concern,
like product development, is under consideration, a committee is usually formed to provide the necessary line-up of
expertise needed to achieve certain objectives.
Committees may be classified as follows:
 Ad Hoc Committee- one created for short-term purpose and has a limited life. An example is the committee
created to manage the anniversary festivities of a certain firm.
 Standing Committee- it is a relatively permanent committee that deals with issues on an ongoing basis. An
example is the grievance committee set up to handle initially complaints from employees of the organization.
Committees may not work properly, however, if they are not correctly managed. Delany suggests that “it might be
useful to set up some procedures to make the committee a more effective tool to accomplish our goals.”

V. TYPES OF ORGANIZATIONAL STRUCTURES

There are three types of organizations. They are the following:
1. Functional organization—this is a form of departmentalization in which everyone engaged in one functional activity,
such as engineering or marketing, is grouped into one unit.
2. Product or market organization— this refers to the organization of a company by divisions that brings together all
those involved with a certain type of product or costumer.
3. Matrix organization—an organizational structure in which each employee reports to both a functional or division.

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Figure 4.1 Reasons or Factors for Joining or Forming a Group Functional Organization

FRIENDSHIP

COMMON INTEREST

Like: concern for

environment or
love for classical
music

PROXIMITY

Which gives people

the chance to share
ideas, opinions and
feelings
FORM

NEED SATISFACTION ALL

OR INFORMAL
Which are derived GROUPS
from unions, cultural
societies, fraternities, JOIN
etc.

COLLECTIVE POWER

Which are derived

from unions,
fraternities, etc.

GROUP GOALS

Which attract
individuals like:
consumer society,
sports club, etc.

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Figure 4.2 A Typical Functional Organization Chart of a Construction Company

PRESIDENT

Vice President Vice President Vice President Vice President

Marketing Construction Finance Human Resources

A. Functional Organization
Functional organizational structures are very effective in smaller firms, especially “single-business firms where
key activities revolve around well-defined skills ad areas of specialization.”
Functional organizations have certain advantages. They are the following:
1. The grouping of employees who perform a common task permit economies of scale and efficient resource use.
2. Since the chain of command converges at the top of the organization, decision-making is centralized, providing a
unified direction from the top.
3. Communication and coordination among employees within each department are excellent.
4. The structure promotes high quality technical problem-solving.
5. The organization is provided with in depth skill specialization and development.
6. Employees are provided with career progress within functional departments.
The disadvantages of the functional organizational are the following:
1. Communication and coordination between the departments are often poor.
2. Decisions involving more than one department pile up at the top management level and are often delayed.
3. Work specialization and division of labor, which are stressed in a functional organization, produce routine, no
motivating employee tasks.
4. It is difficult to identify which section or group is responsible for certain problems.
5. There is limited organizational goals by view of employees.
6. There is limited general management training for employees.

B. Product or Market Organization

The Product or market organization, with its feature of operation by divisions, is “appropriate for a large
corporation with many product lines in several related industries.”
The advantages of a product or market organization are as follows:
1. The organization is flexible and responsive to change.
2. The organization provides a high concern for customer’s needs.
3. The organization provides excellent coordination across functional departments.
4. There is easy pinpointing of responsibility for product problems.
5. There is emphasis on overall product and division goals.
6. The opportunity for the development of general management skills is provided.
The disadvantages of the product or market organization are as follows:
1. There is a high possibility of duplication of resources across divisions.
2. There is less technical depth and specialization in divisions.
3. There is poor coordination across divisions.
4. There is less top management control.
5. There is competition for corporate resources.

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Figure 4.3 A Typical Product/Market Organization for a Construction Company

PRESIDENT

Vice President Vice President Vice President

Government Industrial Residential
Accounts Accounts Acounts

Marketing Marketing Marketing

Construction Construction Construction

Finance Finance Finance

Human Human Human

Resources Resources Resources

C. Matrix Organization
Matrix organization, according to Thompson and Strickland, “is a structure with two (or more) channels of
command, two lines of budget authority, and two sources of performance and reward.” Higgins declared that “the matrix
structure was designed to keep employees in a central pool and to allocate them to various projects in the firm according
to the length of time they were needed.”
The matrix organization is afforded with the following advantages:
1. There is more efficient use of resources than the divisional structure.
2. There is flexibility and adaptability to changing environment.
3. The development of both general and functional management skills are present.
4. There is interdisciplinary cooperation and any expertise is available to all divisions.
5. There are enlarged tasks for employees which motivate them better.
The matrix organization has some disadvantages, however. They are the following:
1. There is frustration and confusion from dual chain of command.
2. There is high conflict between divisional and functional interests.
3. There are many meetings and more discussion than action.
4. There is a need for human relations training for key employees and managers.
5. There is a tendency for power dominance by one side of the matrix.

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Figure 4.4 A Typical Matrix Organization of a Construction Company

PRESIDENT

Vice President for Vice President for Vice President for

Finance Construction Human Resources

Contract
Projects Manager Construction Manager Purchasing Manager Administration
Manager
Engineer

Project Z Manager Purchasing Specialist Contract Negotiator

Engineer

Project X Manager Purchasing Specialist Contract Negotiator

Engineer

Project Y Manager Purchasing Specialist Contract Negotiator

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Figure 4.5 A Line and Staff Organization

PRESIDENT

Corporate
Legal Counsel
Planning

Director of
Director of Director of Director of Director of
Reaserch and
Marketing Manufacturing Finance Personnel
Development

Industrial
Quality Control
Engineering Factory Manager Manager
Major

First Shift
Supervisor

Second Shift
Supervisor

Third Shift
Supervisor

Reference:
 Engineering Management by Roberto G. Medina

8|Page
 Republic of the Philippines
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor, Pampanga

COLLEGE OF ENGINEERING AND ARCHITECTURE

Department of Civil Engineering

A. Course Code / Title : ME212 – Engineering Management

B. Module Number : Module 3 - Planning

C. Time Frame : 1st to 2nd week of November 2020 (2 hours per week)

D. Description : This module describes the importance of Planning to management

and the different types of plans used in organizations.

E. Objectives : At the end of this module, the learner should be able to:
1. Be familiar on how planning can minimize mistakes in decision
making.
2. Know the aspects of planning in various levels of
organizations.
3. Learn on how to make plans effective.

F. Contents : I. The Importance and Nature of Planning

II. Planning and the Management Process
III. Planning at Various Management Levels
IV. Types of Plans
A. Functional Are Plans
B. Plans with Time Horizon
C. Plans according to Frequency of Use
V. Parts of the Various Functional Are Plans
VI. Making Planning Effective

If managing an organization is to be pursued vigorously, planning will constitute the most important activity.
Managers who plan are afforded with the opportunity to carefully analyze the situations which directly contribute to
effective decision-making. The engineer manager, regardless of his management level, will have to devote some of his
planning. The higher the management level the engineer manager is in, the more sophisticated his planning activity
becomes.

I. THE IMPORTANCE AND NATURE OF PLANNING

There are many instances when managers are overwhelmed by various activities which at times becloud his
judgment. This must be expected since anybody who is confronted by several situations happening simultaneously will
lose sight of the more important concerns. To minimize mistakes in decision making, planning is undertaken.
A plan, which is the output of planning, 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 afforded
major attention which may later on hinder the accomplishment of objectives.
The planning function has received increased attention as organizations have grown and management theory
has developed. The need for planning becomes more obvious as persons and organizations develop an awareness of
the precise nature of their objectives. Therefore, the first stage of any type of planning is the conscious and explicit
statement of the ultimate objectives.
Planning pervades management. Plans from the view of the top levels of an organization may be overall and
broad or they may be the day-to-day type, important to the individual employee. Planning at all levels of an organization
is desirable.
Planning not only involves predetermining a course of action to be taken, relative to a known event, but
includes mentally searching for possibilities of future problem that might appear. Plans becomes premises for decisions
to be made in the future. Planning provides frames of reference for decisions and actions, depend upon the deliberate
planning of future possibilities.

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 The modern manager must anticipate changes which will require discarding old ways and adopting new ones.
Thus, the need for planning results from various changes in the environment.
The aspects of this changing environment are:
1. Changes in Technology
2. Changes in Government Policy
3. Changes in all overall economic activity
4. Changes in the nature of competition
5. Changes in social norms and attitudes

Planning Defined
Planning is a function of management in which a conscious choice of patterns of influence is determined for
decision makers so that many decisions will be coordinated for some period of time and will be directed toward the
chosen broad goals.
A plan is a predetermined course of action. Plans may be tailored to a specific project, or they may be
established as a standing plans for any future actions. Checklists, developed after considerable detailed study of a
routine set of actions, can serve as a predetermined pattern, which will ensure correct future action with a maximum of
rethinking on the part of the operator.

Various experts define planning in various ways, all of which are designed to suit specific purposes.
 Planning according to Nickels and others refers to” the management function that involves anticipating future
trends and determining the best strategies and tactics to achieve organizational objectives.” This definition is
useful because it relates the future to what could be decided now.
 Aldag and Stearns, on the other hand, define planning as “the selection and sequential ordering of tasks
required to achieve an organization goal. “ The definition centers on the activity to accomplish the goals.
 The definition of Cole and Hamilton provides a better guide on how effectively perform this vital activity.
Planning according to them is “deciding what will be done, who will do it, where, when, and how it will be done
and the standards to which it will be done.
For our purpose, it will suffice to define planning as selecting the best course of action so that the desired
result may be achieved. It must be stressed that the desired result takes first priority and the course of action chosen
is the means to realize the goal.

II. PLANNING AND THE MANAGEMENT PROCESS

The process of planning consists of various steps depending on the management level that performs the
planning task. Generally, however, planning involves the following:

1. Setting organizational, divisional, or unit goals

2. Developing strategies or tactics to reach those goals
3. Determining resources needed and
4. Setting standard

1. Setting Organizational, Divisional, Or Unit Goals

The first task of the engineer manager is to provide a sense of direction to his firm (if he is the chief executive),
to his division (if he heads a division), or to his unit (if he is a supervisor). The setting of goals provides an answer to
the said concern. If everybody in the firm (or division or unit, as the case may be) is aware of the goals, there is a big
chance that everybody will contribute his share in the realization of such goals.
Goals may be defined as the “precise statement of the results sought, quantified in the time and magnitude,
where possible”. Examples of goals are provided in Figure3.3

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Figure 3.3 Examples of Goals, By Organization Level

Organizational Level Example of Goal

To attain a return on investment

COMPANY
of 25%

Buena Vista Construction

Corporation

DIVISION To increase the number of projects

undertaken by the company

Project Management
Division

UNIT To increase the number of

project Engineers
Personnel services unit

2. Developing Strategies or Tactics to Reach Those Goals

After determining the goals, the next task is to devise some means to realize them. The ways to realize the
goals are called strategies and these will be the concern of top management. The middle and lower management will
adapt their own tactics to implement their plans.
A strategy may be defined as “a course of action aimed at ensuring that the organization will achieve its
objectives.”
A tactic is a short-term action taken by management to adjust to negative internal or external influences. They
are formulated and implemented in support of the firm’s strategies. The decision about the short-term goals and the
courses of action are indicated in the tactical plan.

Components of Strategic Management

 Goals of Organizations – goals of the organizations are the general and ultimate ends toward which
they are aimed. Different organizations have different goals.
 Mission of Organizations – the mission of an organization is the specific and well defined roles and
activities on which the organization elects to concentrate its efforts.
 Strategy of Organizations – Strategies must be tailored to the specific situation in which an
organization find itself. A strategy that has been successful for one company may not be good for
another.

3. Determining Resources Needed

When particular sets of strategies or tactics have been devised, the engineer manager will, then, determine
the human and non-human resources requires by such strategies or tactics. Even if the resource requirements are
currently available, they must be specified.
The quantity and quality of resources needed must be correctly determined. Too much in terms of either
quality or quantity will be wasteful. Too little will mean loss of opportunities for maximum income.
To satisfy strategic requirements, a general statement of needed resources will suffice. The specific
requirements will be determined by the different units of the company.

4. Setting Standards
The standards for measuring performance may be set at the planning stage. When actual performance does
not match with the planned performance, corrections may be made or reinforcement given.
A standard may be defined as “a quantitative or qualitative measuring device designed to help monitor the
performances of people, capital goods or processes.

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III. PLANNING AT VARIOUS MANAGEMENT LEVELS
Since engineer managers could be occupying positions in any of the various management levels, it will be the
useful for them to know some aspects of planning undertaken at the different management levels.
Planning activities undertaken at various levels are as flows:
1. Top management level- strategic planning
2. Middle management level- intermediate planning
3. Lower management level- operational planning

1. Strategic Planning
The term strategic planning refers to the process of determining the major goals of the organization and the
policies and the strategies for obtaining and using resources to achieve those goals. The top management of any firm
is involved in this type of planning.
In strategic planning the whole company is considered, specially its objectives and current resources.
The output of strategic planning is the strategic plan which spells out “the decision about long-range goals and the
course of action to achieve the goals.”

2. Intermediate Planning
Intermediate planning refers to “the process determining the contributions that subunits can make with
allocated resources.” This type of planning is undertaken by middle management.
Under intermediate planning, the goals of a subunit are determined and a plan is prepared to provide a guide
to the realizations of the goals. The intermediate plan is design to support the strategic plan.

3. Operational Planning
The term operational planning refers to “the process of determining how specific task can best be
accomplished on time with available resources.” This type of planning is a responsibility of lower management. It must
be performed in support of strategic plan and intermediate plan.

Figure 3.1 Types of Planning

Management Level Planning Horizon

Strategic planning
Top Management Chief Executive officer,
President, Vice (one to ten years)
Presidents, General
Manager, Division Heads

Intermediate Planning
Middle Management
Functional Managers, (six Months to two years)
Product Line Managers,
Department Heads

Unit Managers Operational planning

Lower Management
First Line Supervisors (One week to one year)

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Figure 3.2.The organization and types of planning undertaken

President/General -Responsible for

Manager STRATEGIC PLANNING

Marketing Manager Production Finance Personnel Manager

Manager Manager

-Responsible for -Responsible for -Responsible for -Responsible for

INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE
PLANNING PLANNING PLANNING PLANNING

Industrial Factory Quality

Engineering Manager Control
Manager Manager

-Responsible for -Responsible for -Responsible for

OPERATIONAL OPERATIONAL OPERATIONAL
PLANNING PLANNING PLANNING

Useful Generalizations of Planning

1. A plan should be directed toward well-defined objectives.
2. Plans made by different specialists should be coordinated through adequate communication among specialists.
3. Planning is a prerequisite to other functions of management.
4. Planning pervades the hierarchy of an organization.
5. A manager should relate the degree of commitment of his resources to the need of definite plans.
6. Plans should retain flexibility.

IV. TYPES OF PLANS

Plans are different types. They may be classified in terms of functional areas, time horizon and frequency of
use.

A. Functional Area Plans

Plans may be prepared according to the needs of the different functional areas. Among the types of functional
area plans are the following:
1. Marketing plan- this is the written document or blueprint for implementing and controlling an organization’s
marketing activities related to particular marketing strategy.
2. Production plan- this is the written document that states the quantity of output of a company must be
produced in broad terms and by product family.
3. Financial plan- it is a document that summarizes the current financial situation of the firm, analyzes financial
needs and recommends a directions for financial activities.
4. Human resource management plan-it is a document that indicates the human resource needs of a company
detailed in terms of quantity and quality and based on the requirements of the company’s strategic plan.

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B. Plans with Time Horizon
Plans with time horizon consist of the following:
1. Short-range Plan- these are plans intended to cover a period of less than one year. First-line supervisors are mostly
concerned with these plans.
2. Long-range plan- these are plans covering a time span of more than one year. These are mostly undertaken by
middle and top management.

C. Plans According to Frequency of Use

According to frequency of use, plans may be classified as:
1. Standing Plans - These are plans that are used again and again, and they focus on managerial situations that recur
repeatedly.
Standing plans may be further classified as follows:
1. Policies- They are broad guidelines to aid managers at every level in making decisions about recurring
situations or functions.
2. Procedures- they are plans that describe the exact series of actions to be taken in a given situation.
3. Rules- they are statements that either require or forbid a certain action.
2. Single-Use Plan- these plans are specifically developed to implement courses of action that are relatively unique
and are unlikely to be repeated.
Single-use plans may be further classified as follows:
1. Budgets - according to Weston and Brigham, is “a plan which sets forth the projected expenditure for a
certain activity and explains where the required funds will come from.”
2. Program - a single-use plan designed to coordinate a large set of activities.
3. Project - is a single-use plans that is usually more limited in scope than a program and is sometimes
prepared to support a program.

V. PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS

The engineer manager may be familiar with engineering plans, knowing the details from beginning to end.
However, the ever present possibility of moving from one management level to the next and from one functional area
to another presses the engineer manager to be familiar as well with other functional area plans.

The Contents of Marketing Plan

The structure and content of marketing plans vary depending on the nature of the organizations adapting
them.
William Cohen maintains that the following must be included in the marketing plan:
1. The Executive Summary- which presents an overall view of the marketing project and its potential.
2. Table of Contents
3. Situational Analysis and Target Market
4. Marketing Objectives and Goals
5. Marketing Strategies
6. Marketing Tactics
7. Schedules and Budgets
8. Financial Data and Control

The Contents of the Production Plan

The production plan must contain the following:
1. The amount of capacity the company must have
2. How many Employees are required?
3. How much material must be purchased?

The Content of Financial Plan

The components of the financial plan are follows:
1. An analysis of the firm’s current financial condition as indicated by an analysis of the most recent statements
2. A sales forecast
3. The Capital Budget
4. The cash budget
5. A set of pro Forma (or Projected) financial statements
6. The external financing plan

Contents of the Human Resources Plan

The human resources plan must contain the following:
1. Personnel requirements of the company

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2. Plans for recruitment and selection
3. Training plan
4. Retirement plan

Parts of the Strategic Plan

The strategic plan must contain the following:
1. Company or corporate mission - refers to the “strategic statement that identifies why an organization exists, its
philosophy of management, and its purpose as distinguished from other similar organizations in terms of products,
services, and markets.
2. Objectives or Goals
3. Strategies

Figure 3.4 Types of Plan

Types of plans

Functional Plans with Time Plans with varied

Area Plans Horizon frequency of use

Marketing Short-range
Plan Plan

Production Long-range
Plan Plan

Financial Plan

Human Standing Single-use

Resources Plan Plan
Plan

Policies Procedures Rules

Budget Program Project

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VI. MAKING PLANNING EFFECTIVE
Planning is done so that some desired results may be achieved. At times, however failure in planning occurs.
Planning may be successful if the following are observed:
1. Recognize the planning barriers
2. Use of aids to planning

The planning barriers, according to Plunkett and Attner, are follows:

1. Managers inability to plan
2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information’
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating on only the controllable variables
Among the aids to planning that may be used are:
1. Gather as much information as possible
2. Develop multiple sources of information
3. Involve others in the planning Process

Reference:
 Engineering Management by Roberto G. Medina

8|Page
 Republic of the Philippines
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor, Pampanga

COLLEGE OF ENGINEERING AND ARCHITECTURE

Department of Civil Engineering

A. Course Code / Title : ME212 – Engineering Management

B. Module Number : Module 2 – Decision Making

C. Time Frame : 3rd to 4th week of October 2020 (2 hours per week)

D. Description : This module explains the role and responsibility of the Engineer
Manager when it comes to decision making and its process.

E. Objectives : At the end of this module, the learner should be able to:
1. Know the intricacies of decision-making.
2. Be able to identify problems and alternative courses of an
action which will be appropriate to the demands of the situation.

F. Contents : I. Decision Making as a Management Responsibility

II. The Decision-Making Process
III. Approaches in Solving Problem

Managers of all kinds and types, including the engineer manager, are primarily tasked to provide leadership
in the quest for the attainment of the organization’s objectives. If he is to become effective, he must learn the intricacies
of decision making. Many times, he will be confronted by situations where he will have to choose from among various
options. Whatever his choice, it will have effects, immediate or otherwise, in the operations of this organization.
The engineer manager’s decision making skills will be very crucial to his success as a professional. A major
blunder in decision making may be sufficient to cause the destruction of any organization. Good decisions on the other
hand, will provide the right environment for continuous growth and success of any organized effort.

I. DECISION MAKING AS A MANAGEMENT RESPONSIBILITY

Decisions must be made at various levels in the workplace. They are also made at the various stages in the
management process. If certain resources must be used, someone must make a decision authorizing certain persons
to appropriate such resources.
Decision making is a responsibility of the engineer manager. It is understandable for managers to make wrong
decisions at times. The wise manager will correct them as soon as they are identified. The bigger issue is the manager
who cannot or don’t want to make decisions. Delaney concludes that this type of managers are dangerous and “should
be removed from their position as soon as possible.”
Management must strive to choose a decision option as correctly as possible. Since they have that power, they
are responsible for whatever outcome their decisions bring. 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 a
manner appropriate to the demands of the situation.
The definition indicates that the engineer manager must adapt a certain procedure designed to determine the
best option available to solve certain problems.
Decisions are made at various management levels (i.e. top, middle, and lower levels) and at various
management functions (i.e. planning, organizing, directing, and controlling). Decision making, according to Nickels and
others, “is the heart of all the management functions. “

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II. THE DECISION-MAKING PROCESS
Rational decision making according to David H. Holt, is a process involving the following steps:
1. Diagnose problem 5. Evaluate alternatives
2. Analyze environment 6. Make a choice
3. Articulate problem or opportunity 7. Implement decision
4. Develop viable alternatives 8. Evaluate and adapt decision results

1. Diagnose Problem
If a manager wants to make an intelligent decision, his first move must be to identify the problem. If the
manager fails in this aspect, it is almost impossible to succeed in the subsequent steps. 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.

2. Analyze the Environment

The environment where the organizations is situated plays a very significant role in the success or failure of
such an organization. It is, therefore, very important that an analysis of the environment be undertaken.
The objective of environmental analysis is the identification of constraints, which may be spelled out as either
internal or external limitations.
Examples of internal limitations are as follows:
1. Limited funds available for the purchase of Examples of external limitations are as follows:
equipment. 1. Patents are controlled by other organizations.
2. Limited training on the part of employees. 2. A very limited market for the company’s products
3. Ill designed facilities. 3. Strict enforcement of local zoning regulations.

When decisions are to be made, the internal and external limitations must be considered. It may be costly,
later on to alter a decision because of a constraint that has not been previously identified.

Components of the Environment.

The environment consists of two major concerns:
1. External
2. Internal
The external environment refers to variables that are outside the organization and not typically within the
short-run control of top management.
The internal environment refers to organizational activities within a firm that surrounds decision-making.

3. Articulate Problem or Opportunity

Before a strategy can be explored, a clear articulation of the problem has to happen. Getting clarity is
becoming increasingly high in value to leaders because the world and its complexity clouds our thinking. Part of bringing
in experts and outsiders is not necessarily to solve a problem, but identifying the problem and articulating exactly what
is wrong. Once the engineer could articulate the problem for themselves they feel empowered to make the decisions
and take action to getting a resolution. Getting clear on what the problem is in any given situation can mean the
difference between spending needless amounts of time and money or putting energy into the right areas of focus to
get real results.

4. Develop Viable Alternatives

Oftentimes, problems may be solved by any of the solutions offered. The best among the alternative solutions
may be considered by management. This is made possible by using a procedure with the following steps:
1. Prepare a list of alternatives solutions.
2. Determine the viability of each solutions.
3. Revise the list by striking out those which are not viable.

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 Figure 2.1. The Engineering Firm and the Internal Environment in Decision Making

THE ENGINEERING FIRM

INTERNAL ENVIRONMENT

Organizational Aspects
Like org. structure, policies, procedures,
rules, ability of management, etc. EXTERNAL
ENVIRONMENT
Marketing Aspects
Like product strategy, promotion strategy.
Etc.
DECISION
Personnel Aspects
Like recruitment practices, incentive
systems, etc.

Production Aspects EXTERNAL

Like plant facility layout, inventory control,
ENVIRONMENT
etc.

Financial Aspects
Like liquidity, probability, etc.

Figure 2.2. The Engineering Firm and its External Environment

GOVERNMENT
ENGINEERS LABOR UNION

CLIENTS ENGINEERING FIRM SUPPLIERS

COMPETITORS BANKS
PUBLIC

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5. Evaluate Alternatives
After determining the viability of the alternatives and a revised list has been made, an evaluation of the
remaining alternatives is necessary. This is important because the next step involves making a choice. Proper
evaluation makes choosing the right solution less difficult.
How the alternatives will be evaluated will depend on the nature of the problem, the objectives of the firm, and
the nature of alternative presented. Souder suggested that “each alternative must be analyzed and evaluated in terms
of its value, cost and risk characteristics”.
The value of alternatives refers to benefits that can be expected.

6. Make a Choice
After the alternatives have been evaluated, the decision-maker must now be ready to make a choice. This is
the point where he must be convinced that all the previous steps were correctly undertaken.
Choice-making refers to the process of selecting among alternatives representing potential solutions to a
problem. At this point, Webber advises that “…particular effort should be made to identify all significant consequences
of each choice”.

7. Implement Decision
After a decision has been made, implementation follows. This is necessary or decision making will be an
exercise in futility.
Implementation refers to carrying out the decision so that the objectives sought will be achieved. To make
implementations effective, a plan must be devised. At this stage, the resources must be made available so that the
decision may be properly implemented.

8. Evaluate and Adapt Decision Results

In implementing the decision, the results expected may or may not happen. It is, therefore, 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 assure 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 the activities performed match the desired activities or goals that
have been set.
In this last stage of the decision making process, the engineering management will find whether or not the
desired result is achieved. If the desired result is achieved, one may assume that the decision made was good. If it
was not achieved Ferreil and Hirt suggest that further analysis is necessary. Figure 2.3 presents an elaboration of this
last step.

III. APPROACHES IN SOLVING PROBLEM

In decision making the engineer manager is faced with problems which may either be simple or complex. To
provide him with some guide, he must be familiar with the following approaches.
1. Qualitative Evaluation and
2. Quantitative Evaluation

Qualitative Evaluation – this term refers to evaluation of alternatives using intuition and subjective judgment. Stevenson
states that manager tends to use the qualitative approach when:
1. The problem is fairly simple.
2. The problem is familiar.
3. The costs involved are not great. (Low cost)
4. Immediate decisions are needed.

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

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Figure 2.3 Feedback as a Control Mechanism in Decision-making-process.

Step 1 Diagnose problem

2 Analyze Environment

3 Articulate Problem or

Opportunity

4 Develop Viable

Alternatives

5 Evaluate Alternatives

6 Make a Choice

7 Implement a decision

8 Evaluate Results Results not achieved Determine steps

where error was made

Results Achieved Adapt decision

results

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 QUANTITATIVE MODELS FOR DECISION MAKING
The types of quantitative techniques which may be useful in decision making are as follows:
1. Inventory models 6. Simulation
2. Queuing theory 7. Linear programming
3. Network models 8. Sampling theory
4. Forecasting 9. Statistical decision theory
5. Regression analysis

Inventory Models
Inventory models consist of several types all designed to help the engineer manager make decisions regarding
inventory. They are as follows:
1. Economic order quantity model – this one is used to calculate the number of items that should be ordered at
one time to minimize the total yearly cost of placing orders and carrying the items in inventory.
2. Production order quantity model – this is an economic order quantity technique applied to production order.
3. Back order inventory model – this is an inventory model used for planned shortages.
4. Quantity discount model – an inventory model used to minimize the total cost when quantity discounts are
offered be suppliers.

Queuing Theory
The queuing theory is one that describe how to determine the number of service units that will minimize both
costumers waiting time and cost of service.
The queuing theory is applicable to companies where waiting lines are a common situation. Examples are cars
waiting for service at a car service center, ships and barges waiting at the harbor for loading and unloading by
dockworkers, programs to be run in a computer system that processes jobs and etc.

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 techniques 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) – this is a network technique using only one time factor per activity that enables
engineer managers to schedule, monitor, and control large and complex projects.

Forecasting
There are instances when engineer managers makes decisions that will have implications in the future. A
manufacturing firm, for example, must put up a capacity which is sufficient to produce the demands requirements of
customers within the next 12 months. As such, man power and facilities must be produced before the start of
operations. To make decisions on capacity more effective, the engineer manager must be provided with data on
demand requirements for the next 12 months. This type of information may be derived through forecasting.
Forecasting may be defined as “the collection of past and current information to make predictions about the future.”

Regression Analysis
The regression model is a forecasting method that examines the association between two or more variables.
It uses data from previous periods to predict future events.

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Regression analysis may be simple or multiple depending on the number of independent variables present. When one
independent variable is involved, it is called simple regression; when two or more independent variables are involved,
it is called multiple regression.

Simulation
Simulation is a model constructed to present reality, on which conclusions about real life problems can be
used. It is a highly sophisticated tool by means of which the decision marker develops a mathematical model of the
system under consideration.
Simulation does not guarantee on optimum solution, but it can evaluate the alternatives fed into the process by the
decision-maker.

Linear Programming
Linear programming is a quantitative technique that is used to produce an optimum solution within the bounds
imposed by constraints upon the decision. Linear programming is very useful as a decision-making tool when supply
and demand limitations at plants, warehouse, or market areas are constraints upon the system.

Sampling Theory
Sampling theory is a quantitative technique where samples of populations are statistically determined to be used for
a number of processes, such as quality control and marketing research.

Statistical Decision-Theory
Decision theory refers to the “rational way to conceptualize, analyze, and solve problems in situations involving
limited, or partial information about the decision environment”.
A more elaborate explanation of decision theory is the decision making process presented at the beginning of this
chapter. What has not been included in the discussion on the evaluation of alternatives, but is very important, is
subjecting the alternatives to Bayesian Analysis.
The purpose of Bayesian analysis is to revise and update the initial assessments of the event probabilities generated
by the alternative solutions. This is achieved by the use of additional information.

Reference:
 Engineering Management by Roberto G. Medina

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 Republic of the Philippines
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor, Pampanga

COLLEGE OF ENGINEERING AND ARCHITECTURE

Department of Civil Engineering

A. Course Code / Title : ME212 – Engineering Management

B. Module Number : Module 1 - Field of Engineering Management

C. Time Frame : 1st to 2nd week of October 2020 (2 hours per week)

D. Description : This module explains the field of Engineering Management, from its
origin and development to the definition and importance to Civil
Engineers.

E. Objectives : At the end of this module, the learner should be able to:
1. Know the origin and development of Engineering Management
and its relation to the CE profession.
2. Familiarize about the variety of tasks depending on the
engineer’s specialization.
3. Be able to describe the function, skills, and qualifications of
an engineer manager.

F. Contents : I. Manager and Development

A. Definition of Management
B. Process of Management
C. The Engineer in the Various Types of Organization
II. Origin of Modern Management
III. Engineers as Manager
A. Function of an Engineer Manager
B. Skills of an Engineer Manager
C. Qualifications of an Engineer Manager

I. MANAGER AND DEVELOPMENT

Management is universal in the modern industrial world. Every organization requires the making of decisions,
the coordinating of activities, handling of people, and the evaluation of performance directed toward group objectives.
Numerous managerial activities have their own particular approach to specific types of problems and are discussed
under such headings. Management has become more specialized as the scale of operations has increased. The
dynamics of management, therefore, should be characteristic of any study of its theory and practice.

A. Definition of Management
Since the engineer manager is presumed to be technically competent in his specialization, one may now
proceed to describe more thoroughly the remaining portion of his job, which is management.
Management may be defined as “the creative problem solving process of planning, organizing, leading, and
controlling an organization’s resources to achieve its mission and objectives.”
But what is Engineering Management?
Engineering management refers to “the activity combining 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 engaged in the first
phase of engineering management. His main responsibility is to lead his group into producing a certain output
consistent with the required specifications.
The top position an engineer manager may hope to occupy is the general managership or presidency of any
firm, large or small. As he scales the management ladder, he finds that the higher he goes up, the less technical
activities he performs, and the more management tasks he accepts. In this case, it is but proper that the management
functions taught in pure management courses be well understood by the engineer manager.

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B. Process of Management
Management is a process consisting of planning, organizing, directing (or leading), and controlling.
Explained in a simple manner, management must seek to find out the following:
 objectives of organization
 think of ways on how to achieve these objectives
 decide on the ways to be adapted and the material resources to be used
 determine the human requirements of the total job
 assign specific tasks to specific persons
 motivate these people, and
 Provide means to make sure that the activities are in the right direction.

C. The 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 – those with minimal engineering jobs like retailing firms
2. Level Two – those with moderate degree of engineering jobs like transportation companies
3. Level Three – those with a high degree of engineering jobs like construction firms.
Among the types of organizations, the engineer will have a slim chance of becoming the general manager or
president of level one, unless of course, he owns the firm. The engineer manager may be assigned to head a small
engineering unit of the firm, but there will not be too many firms which will have this unit.
In level two firms, the engineer may be assigned to head the engineering division. The need for management
skills will now be felt by the engineer manager.
Level three firms provide the biggest opportunity for an engineer to become the president or general manager.
In this case, the engineer manager cannot function effectively without adequate management skills.

II. ORIGIN OF MODERN MANAGEMENT

Although great feats of human achievement such as the Egyptian pyramids, the Great Wall of China, the
Coliseums of Rome and the Taj Mahal in India all bear testimony to skilled management in ancient times, the formal
study of management only began later in the 19th century. One of the early pioneers of management theory was
Frederick W. Taylor (1856-1915), a mechanical engineer who believed that it was management’s task to design jobs
properly and to provide incentives to motivate workers to achieve higher productivity.
Stevens Institute of Technology is believed to have the oldest engineering management department,
established as the School of Business Engineering in 1908. This was later called the Bachelor of Engineering in
Engineering Management (BEEM) program and moved into the School of Systems and Enterprises.
Outside the US, in Germany the first department concentrating on Engineering Management was established
1927 in Berlin. In Turkey the Istanbul Technical University has a Management Engineering Department established in
1982, offering a number of graduate and undergraduate programs in Management Engineering. In UK the University
of Warwick has a specialized department WMG (previously known as Warwick Manufacturing Group) established in
1980, which offers a graduate programme in MSc Engineering Business Management.
Michigan Technological University began an Engineering Management program in the School of Business &
Economics in the Fall of 2012. In Canada, Memorial University of Newfoundland has started a complete master's
degree Program in Engineering Management. In Denmark, the Technical University of Denmark offers a MSc program
in Engineering Management (in English). In Russia, since 2014 the Faculty of Engineering Management of The Russian
Presidential Academy of National Economy and Public Administration (RANEPA) offers bachelor's and master's
degrees in Engineering Management.

Frederick Winslow Taylor (1856-1915)

Principles of Scientific Management (1911)
 Replace the rule-of-thumb work methods with methods based on scientific study of tasks.
 Scientifically select, train and develop each worker rather than passively leaving them to train themselves
 Cooperate with workers to ensure that the scientifically developed methods are being followed
 Divide work nearly equally between managers and workers, so that the managers apply scientific
management principles to planning the work and the workers actually perform the tasks.

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Jules Henri Fayol (1841-1925)
According to him, specialization promotes efficiency of the workforce and increases productivity. In addition, the
specialization of the workforce increases their accuracy and speed.

Max Weber
He was a German sociologist who approached management by focusing on organizational structures, dividing
organizations into hierarchies with clear lines of authority and control. He believed that an ideal bureaucracy consists
of six specific characteristics: hierarchy of command, impersonality, written rules of conduct, advancement based on
achievement, specialized division of labor and efficiency.

Elthon Mayo (1880-1949)

He was a Harvard professor who proposed that managers should become more “people oriented”. Conducting
experiments on conditions in the workplace and incorporating the well-published findings of hawthorne studies, Mayo
declared that logical factors were far less important than emotional factors in determining productive efficiency”. He
concluded that participation in social groups and group pressure as proposed to organizational structures or demands
from management had the strongest impact on worker productivity.

Peter Greenleaf (1904-1990)

He explained that becoming a servant-leader begins with the natural feeling that one wants to serve followed by the
aspiration to lead. Although the concept of servant leader is found in the bible and might even date further back into
antiquity, it was first proposed as a management by him.

III. ENGINEERS AS MANAGERS

Engineers are expected to perform variety of tasks depending on their specialization and job level. It is
important to the engineer that he knows what is expected of him so that he may be able to perform his job effectively
and efficiently. His next concern will be to identify the skills required but which he does not have. As engineers are not
trained to directly deal with people, it is expected that their weakness will mostly often be on people-based skills. This
difficulty will be more apparent once they are assigned to occupy management positions. It follows that if the engineer
manager would want to do his job well, some exposure to engineering management activities becomes necessary.

A. Function of an Engineer Manager

Specifically, the functions of engineering encompass the following areas.
1. Research - where the engineers is engaged in the process of learning about nature and codifying this knowledge
into usable theories.
2. Design and Development – where the engineer undertakes the activity of turning a product concept to a finished
physical item.
3. Testing – where the engineer works in a unit where new products or part are tested for work ability.
4. Manufacturing – where the engineer is directly in charge of production personnel or assumes responsibility for the
product.
5. Construction – this is where the construction engineer is either directly in charge of the construction personnel or
may have responsibility for the quality of the construction process.
6. Sales – where the engineer assists the company’s customers to meet their needs, especially those that require
technical expertise.
7. Consulting ¬– where the engineer works as consultant of any individual or organization requiring his services.
8. Government – where the engineer may find employment in the government performing any of the various tasks in
regulating, monitoring, and controlling the activities of various institutions, public or private
9. Teaching – where the engineer gets employment in a school and is assigned as a teacher of engineering courses.
Some of them later become deans, vice presidents and presidents.
10. Management –where the engineer is assigned to manage groups of people performing specific tasks

B. Skills of an Engineer Manager

Successful engineer managers do not happen as a matter of chance, although luck is a contributory factor. It
is very important for the engineer manager to know the various factors leading to successful management.

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 Kreitner indicates at least three general preconditions for achieving lasting success as a manager. They are
as follows:
1. Ability
2. Motivation to manage, and
3. Opportunity

Ability
Managerial ability refers to the capacity of an engineer manager to achieve organizational objectives
effectively and efficiently.
Effectiveness according to Higgins, refers to a description of “whether objectives are accomplished”, while
efficiency is a description of the “relative amount of resources used in obtaining effectiveness.”

Motivation to Manage
Many people have the desire to work and finish specific tasks assigned by superiors, but not many are
motivated to manage other people so that they may contribute to the realization of the organization’s objectives.
A management researcher, John B. Miner, developed a psychometric instrument to measure objectively an
individual’s motivation to manage. The test is anchored to the following dimensions:
1. Favorable attitude toward those in positions of authority, such as superiors.
2. Desire to engage in games or sports competitions with peers.
3. Desire to engage in occupational or work-related competition with peers.
4. Desire to assert one self and take charge.
5. Desire to exercise power and authority over others.
6. Desire to behave in a distinctive way, which includes standing out from the crowd.
7. Sense of responsibility in carrying out the routine duties associated with managerial work.
High scores in the foregoing dimensions are associated with high motivation to manage.

Opportunity
Successful managers become possible only if those having the ability and motivation are given the opportunity
to manage. The opportunity for successful management has two requirements:
1. Obtaining a suitable managerial job, and
2. Finding a supportive climate once on the job.
Newspaper advertisements abound with needs for engineer manager. It is a little difficult to determine if the
firms requiring their services provide a supportive climate for effective and efficient management. A supportive climate
is characterized by the recognition of managerial talent through financial and nonfinancial rewards.

C. Qualifications of an Engineer Manager

Depending on the type of products or services a firm produce, the engineer manager must have the following
qualifications:
1. A bachelor’s degree in engineering from a reputable school; In some cases, a master’s degree in
engineering or business management is required;
2. A few years’ experience in a pure engineering job;
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.

Reference:
 Engineering Management by Roberto G. Medina

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