CHAPTER IV ORGANIZATIONAL PLANNING & CONTROL
- It is used as a very general road map for
INTRODUCTION TO PLANNING PROCESS
 The planning process is concerned with defining
a company's goals and determining the
resources necessary to achieve those goals.
 Achieving a vision requires coordinated efforts
that adhere to a broader organizational plan.
This is enabled through consistent strategies
that are supported by staff at all levels.
VISION STATEMENT
 A vision statement is the anchor point of any
strategic plan. It outlines what an organization
would like to ultimately achieve and gives
purpose to the existence of the organization.
o Soul of the goal
Levels of “Vision”
 Corporate
 Departmental
 Project
ESTABLISHING A PROJECT VISION
- A project vision statement is a description or
declaration of what an organization/project
team wants to obtain or accomplish upon the
completion of a project.
o Make a strategic planning
projects, pinpointing where it should be
heading and what the ultimate goal and
objectives are.
o General road map – some of the
guidelines in a certain project we have
- The purpose of a project vision statement is to
show the direction of the project and define the
criteria of success
CORPORATE VISION
- A "corporate vision" concretely describes how a
company sees itself in the future, and therefore
must be realistic and attainable.
o Top and middle manager
- In the current age of rapid change, a corporate
vision is of a more medium-term nature.
o A vision is “a goal with a soul.”
VISION STATEMENT OF DMCI CONSTRUCTION
- We are the leading integrated engineering and
management conglomerate in the Philippines.
Through our investments, we are able to do the
following:
o Deliver exceptional shareholder value
o Motivate and provide employees with
opportunities and just rewards to
achieve their full potential
o Cultivate progress in remote areas,
unserved markets and growth
industries
o Integrate sustainable development with
superior business results through
principled contracting and innovative
engineering
MISSION STATEMENT
- A mission statement is a concise explanation of
the organization's reason for existence. It
describes the organization's purpose and its
overall intention.
- It supports the vision and serves to
communicate purpose and direction to
employees, customers, vendors and other
stakeholders.
MISSION STATEMENT VS. VISION STATEMENT
- A Mission Statement defines the company's
business, its objectives and its approach to
reach those objectives while a
o Predictors of a company
 - Vision Statement describes the desired future
position of the company
o The output of company after 3 to 5
years
MISSION STATEMENT OF FREYSINNET INTERNATIONAL-
MANILA
- We are a team of skilled men and professionals
always ready to provide quality work and
services in the field of construction as well as
other related services required by clients.
SWOT ANALYSIS
- SWOT (strengths, weaknesses, opportunities,
and threats) analysis is a framework used to
evaluate a company's competitive position and
to develop strategic planning.
o For strategic planning
- SWOT analysis assesses internal and external
factors, as well as current and future potential.
AREAS OF SWOT ANALYSIS
Strengths (Internal Factors)
- Strengths describe what an organization excels
at and what separates it from the competition:
a strong brand, loyal customer base, a strong
balance sheet, unique technology, and so on.
o Hedge fund
- For example, a hedge fund may have developed
a proprietary trading strategy that returns
market beating results. It must then decide how
to use those results to attract new investors.
Weaknesses (Internal Factors)
- They are areas where the business needs to
improve to remain competitive: a weak brand,
higher-than average turnover, high levels of
debt, an inadequate supply chain, or lack of
capital.
Opportunities (External Factors)
- Opportunities refer to favorable external
factors that could give an organization a
competitive advantage. For example, if a
country cuts tariffs, a car manufacturer can
export its cars into a new market, increasing
sales and market share.
Threats (External Factors)
- Threats refer to factors that have the potential
to harm an organization. For example, a
drought is a threat to a wheat-producing
company, as it may destroy or reduce the crop
yield.
- Other common threats include things like rising
costs for materials, increasing competition, tight
labor supply. and so on.
INTERNAL FACTORS
INTERNAL
- What occurs within the company serves as a
great source of information for the strengths
and weaknesses categories of the SWOT
analysis.
o Examples of internal factors include
financial and human resources, tangible
and intangible (brand name) assets, and
operational efficiencies
Potential questions to list internal factors are:
 (Strength) What are we doing well?
 (Strength) What is our strongest asset?
 (Weakness) What are our detractors?
 (Weakness) What are our lowest-performing
product lines?
EXTERNAL FACTORS
External
- What happens outside of the company is
equally as important to the success of a
company as internal factors.
o External influences, such as monetary
policies, market changes, and access to
suppliers, are categories to pull from to
create a list of opportunities and
threats
 Monetary policy (money)
 Market changes – trends
Potential questions to list external factors are:
 (Opportunity) What trends are evident in the
marketplace?
 (Opportunity) What demographics are we not
targeting?
 (Threat) How many competitors exist, and what
is their market share?
 (Threat) Are there new regulations that
potentially could harm our operations or
products?
 FLOWCHART
- It is a type of diagram that represents a
workflow or process. A flowchart can also be
defined as a diagrammatic representation of an
algorithm, a step-by-step approach to solving a
task

PROBLEM SOLVING TOOLS & TECHNIQUES

FISHBONE DIAGRAM
- It is also called an Ishikawa diagram or cause
and effect diagram. This is a visual management
tool used to document all the potential causes
of a problem to uncover the root cause.
- In terms of the Diagram, the problem is placed
as the fish's head (facing right) and the causes
extend to the left as the bones of the skeleton;
the ribs branch off the back and denote major
causes, while sub-branches branch off of the
causes and denote root causes. MIND MAPPING
- It is a diagram that allows to visualize how
related ideas and concepts are connected to
one another.
- It feature one main idea as the central point of
the diagram, with subtopics branching out and
connecting to supporting ideas

PARETO CHART
- It is a histogram or bar chart combined with a
line graph that groups the frequency or cost of
different problems to show their relative
significance
 - A Pareto analysis is a tool to help business
leaders improve their companies by identifying
key problems and opportunities
- The Pareto analysis, or Pareto principle, is also
known as the 80/20 rule because it is based on
the idea that 80% of a project's benefit can
come from doing 20% of the work. Conversely,
80% of a situation's problems can be traced to
20% of the causes
Primary Types of Organizational Control
i. Strategic control-the process of evaluating
strategy, is practiced both after the strategy is
formulated and after it is implemented.
ii. Management control- focuses on the
accomplishment of the objectives of the various
sub-strategies comprising the master strategy
and the accomplishment of the objectives of
the intermediate plans
iii. Operational control -is concerned individual and
group performance as compared with the
individual and group role prescriptions required
by organizational plans ( for example, "are
individual sales quotes being met?").

ORGANIZATIONAL CONTROL
- refers to processes by which agents are able to
establish and maintain control over an
organization. It comprises the strategic planning
process as well as methods and devices that
make other agents’ behaviors consistent with
objectives.
- When properly designed, such controls should
lead to better performance because an
organization is able to execute its strategy
better

Organizational control typically involves four steps:

(a) establish standards,
o request to PCAB for guidelines for the
standards
o make a standard but beyond the
accredited standards
(b) measure performance,
o people making the product
o technology
o product we produce – quality of the
product
(c) compare performance to standards, and then
o aligned or not aligned
(d) Take corrective action as needed.
- Corrective action can include changes made to
the performance standards—setting them
higher or lower or identifying new or additional
standards.
CHAPTER V-LEADING BY INFLUENCE
LEADER VS MANAGER
 Leaders create a vision, managers create goals.
 Leaders are change agents, managers maintain
the status quo
o Status quo – current situation
 Leaders are unique, managers copy
o Leaders has a own style but it will come
up with the same output
o Art of thinking
 Leaders take risks, managers control risk
o Risk management
 Leaders are in it for the long haul, managers
think short-term.
 Leaders grow personally, managers rely on
existing, proven skills
o Leaders test their decision-making
o Managers based on books
 Leaders build relationships, managers build
systems and processes
o Leaders
 Internal – you can influence
your subordinates
 External – public relation is also
needed to teach other people
to buy your product
o Managers
 Effective procedures
 Leaders coach, managers direct
o Leaders will teach on the lapses of his
subordinates
o Managers – only gives orders
 Leaders create fans, managers have employees
o Leaders – create people who adore him
o Managers – people must follow his
orders
Definition of Leadership
- It is referred to as the process of influencing
and supporting others to work enthusiastically
toward achieving objectives.
o Influence people on good moral
character
o Influencing aligned on the objective on
the company
The Five Practices of Exemplary Leadership
A. Model the way
 Build and affirm shared values.
 Lead by example
 Choose your words carefully.
i. How you will give constructive
criticism
 Develop your own competence.
i. Own style
B. Inspire a Shared Vision
 Build your vision from your past and
your emotions.
 Create a compelling picture of the
future
i. Next plan for 5 or 10 years
 Enlist others in the vision.
i. Researching of other vision of
the company
ii. Or being own vision
 Take pride in being unique.
C. Challenge the Process
 Encourage initiative in others
 Work incrementally — look for small
wins.
 Treat mistakes and failures as learning
opportunities.
D. Enable Others to Act
 Foster collaboration and teamwork
 Create an atmosphere of trust and
dignity
 Help each member of the team to feel
capable and valuable.
E. Encourage the Heart
 Be positive; be a friend.
 Personalize recognition
 Celebrate team accomplishments
LEADING
- Leading consists of motivating employees and
influencing their behavior to achieve
organizational objectives.
- Leading focuses on managing people, such as
individual employees, teams and groups rather
than tasks
INFLUENCE & INFLUENCING SKILLS
 - Influence is the ability of an individual to
transform and shape the opinions of others.
Influencing at the workplace is a process of
transforming the behaviors of employees.
- For example, a team leader can influence
subordinates through his communication,
policies and actions.

TEN KEY INFLUENCING SKILLS

A. Observation
- paying attention to non-verbal behavior
- what is not said, how a person may be feeling,
paying attention to own thoughts, feelings, and
intuitions
B. Active Listening – to hear what is said and to
hear what is implied or not said as well as being
able to communicate in own words.
C. Feedback – offer feedback to the other person
about what has been seen, interpret, hear as
well as what has been feel and intuit.
D. Awareness – be aware of oneself, moment by
moment, particularly of behavior patterns
which are counterproductive, one limiting
thoughts, beliefs and reactions.
E. Choices – recognize at any moment that, if how
oneself are behaving is unproductive, one can
change his/her own thoughts, feelings and
behaviors.
F. Self-confidence – to feel confident about
oneself in the face of resistance or conflict.
G. Timing – be able to get the timing right such as
when to give feedback and when not to, when
to use choice ‘A’ or ‘B’, when to retreat or be
persistent and when to let go completely.
H. Interpretation – to understand and respond to
non-verbal behavior – what do particular body
signs, changes in skin color, breathing, etc.
I. Intuition – trust own feelings or hunches about
the likely patterns of the other person’s
behavior, to listen to own positive, inner voice.
J. Other’s Viewpoint – to look at own objectives
from the other person’s point of view.
CHAPTER Vl-MOTIVATION, COMMUNICATION & TEAM
BUILDING
6.1 Understanding Motivation
 The bad leader, the people hate. The good
leader, the people love. The great leader, the
people say “we did it ourselves.” - Lao-tzu
6.2 Definition of Motivation
 This refers to the act of giving employees
reasons or incentives to work to achieve
organizational objectives.
 This refers to the process of activating behavior,
sustaining it, and directing it toward a particular
goal.
6.3 FACTORS CONTRIBUTING TO MOTIVATION
a. Willingness to do a job.
b. Self confidence in carrying out a task.
c. Needs satisfaction
6.4 THEORY OF MOTIVATION
 Motivation theory is the study of understanding
what drives a person to work towards a
particular goal or outcome. That's because a
motivated employee is more productive, and a
more productive employee is more profitable
o Maslow’s needs hierarchy theory
o Herzberg’s two factor theory
o Alderfer's ERG theory
o McClelland's achievement motivation
theory
6.4.1 MASLOW’S NEED HIERARCHY THEORY
 Abraham, Maslow, a psychologist, theorized
that human beings have five basic needs which
are as follows:
a) food, shelter and clothing;
b) Security & safety;
c) Socialization;
d) Recognition;
e) Self-actualization
Maslow's View of Motivation
6.4.2 HERZBERG’S TWO FACTOR THEORY
 This is developed by Frederick Herzberg’s
indicating the factors that lead employees of an
organization either towards job satisfaction or
dissatisfaction.
 It consists of both the hygiene as well as
motivator factors. Motivator factor increases
job satisfaction while improving the hygiene
factors may decrease the chance of employees
being dissatisfied about their jobs.
6.4.3 ALDERFER'S ERG THEORY
 An American psychologist Clayton Paul Alderfer
suggests that there are three groups of core
needs: existence (E), relatedness (R), and
growth (G)—hence the acronym ERG.
 Alderfer proposed that when a certain category
of needs isn't being met, people will redouble
their efforts to fulfill needs in a lower category.
A. Existence Needs: The existence needs
comprises of all those needs that relate to the
physiological and safety aspects of human
beings and are a prerequisite for the survival.
B. Relatedness Needs: The relatedness needs refer
to the social needs, that an individual seeks to
establish relationships with those for whom he
cares
C. Growth Needs: The growth needs cover
Maslow’s self-actualization needs as well as a
part of esteem needs which are internal to the
individual, such as a feeling of being unique,
personnel growth, etc. Thus, growth needs are
those needs that influence an individual to
explore his maximum potential in the existing
environment.
6.4.4 McCLELLAND'S ACHIEVEMENT MOTIVATION
THEORY
  An American psychologist David C. McClelland
suggests that there are three needs that
motivates human behavior. These are a) power,
b). affiliation and c). Achievement.
 McClelland believes that each person has a
need for all three and other needs but that
people differs in the degree to which the
various needs motivate their behavior.
6.5 DEFINITION OF COMMUNICATION
 A process of sharing information through
symbols , including words and messages.
 Communication affects teamwork in positive
and negative ways. The quantity and quality of
communication within a team and from
leadership affects teamwork.
6.6 ORGANIZATIONAL COMMUNICATION FLOWS
 Information can flow in four directions in an
organization: downward, upward, horizontally,
and diagonally. The size, nature, and structure
of the organization dictate which direction most
of the information flows.
6.6.1 UPWARD COMMUNICATION FLOWS
 This refers to messages flows from lower
positions to persons in higher positions. (also
sometimes called vertical communication).
 For example, upward communication occurs
when workers report to a supervisor or when
team leaders report to a department manager
Among the purposes of upward communication are:
a. Provide information on work progress
b. Problems encountered.
c. Suggestions for improving output.
d. Personal feelings about work and non-work
activities.
6.6.2 DOWNWARD COMMUNICATION FLOWS
 Downward communication is when company
leaders and managers share information with
lower-level employees. An example may be an
announcement of a new CEO or notice of a
merger with a former competitor.
Among the purposes of downward communication are:
1. To give instructions
2. To provide information about policies and
procedures.
3. To give feedback about performance.
4. To motivate.
6.6.3 HORIZONTAL COMMUNICATION FLOWS
 Horizontal communication involves the
exchange of information across departments at
the same level in an organization (i.e., peer-
topeer communication).
Among the purposes of horizontal communication are:
a. To coordinate activities between departments
b. To persuade others at the same level of
organization
c. To pass on information about activities or
feelings.
6.6.4 DIAGONAL COMMUNICATION FLOWS
 Diagonal communication is cross-functional
communication between employees at
different levels of the organization.
 For example, if the vice president of sales sends
an e-mail to the vice president of manufacturing
asking when a product will be available for
shipping, this is an example of horizontal
communication.
 But if a sales representative e-mails the vice
president of marketing, then diagonal
communication has occurred.
Among the purposes of diagonal communication are:
a. To create a healthy environment and
relationship.
 b. To build better coordination among staff
members.
c. To help in solving problems easily as different
ideas are brought together

6.7 PROJECT TEAM BUILDING

 Team building is a project focused process that
builds and develops shared goals,
interdependence, trust, commitment and
accountability among team members
 Every team must balance three variables —
individual autonomy, hierarchical control, and
cooperation. Different teams require different
blends.

6.7.1 DEFINITION OF TEAM

 A team is a collection of individuals working
together toward a common goal.

6.7.2 TEAM DEVELOPMENT STAGES

A. FORMING
 This is where team members first meet. It’s
important for team leaders to facilitate the
introductions and highlight each person’s
skills and background.
 Team members are also given project
details and the opportunity to organize
their responsibilities.
B. STORMING
 At this stage, team members openly share
ideas and use this as an opportunity to
stand out and be accepted by their peers
C. NORMING
 Teams have figured out how to work
together. There’s no more internal
competition, and responsibilities and goals
are clear.
D. PERFORMING
 Teams are functioning at peak efficiency
with less oversight from team leaders.
Issues still come up, but at this point, teams
have strategies for resolving problems
without compromising timelines and
progress
E. ADJOURNING
 Teams complete their project and debrief
on what went well and what could be
improved for future projects. Afterwards,
team members move on to new projects
MODULE Vll-STAFFING THE ENGINEERING
ORGANIZATION & MANPOWER PLANNING
DEFINITION OF STAFFING
- It is defined as the management function that
determines human resource needs, recruits,
selects, trains, and develops human resources
for jobs created by an organization
HUMAN RESOURCE PLANNING
Human Resource Planning Activities
 Forecasting- which is an assessment of future
human resource needs in relation to the current
capabilities of the organization.
 Programming-which means translating the
forecasted human resource needs to personnel
objectives and goals.
 Evaluation and control-which refers to
monitoring human resource action plans and
evaluating their success
Human Resource Method of Forecasting
 Time series method- which use historical data
to develop forecast of the future
 Explanatory, or casual models- which are
attempts to identify the major variables that are
related to or have caused particular past
conditions and then use current measures of
these variables to predict future condition
RECRUITMENT
- Recruitment refers to attracting qualified
persons to apply for vacant positions in the
company so that those who are best suited to
serves the company may be selected.
Sources of Applicants
a) The organizations current employees.
b) Newspaper advertising
c) Schools.
d) Referrals from employees
e) Recruitment firms
f) Competitors.
SELECTION
- Selection refers to the act of choosing from
those that are available the individuals most
likely to succeed on the job.
Ways of Determining the Qualifications of a Job
Candidate
 The application blank provides information
about a persons characteristics such as age,
marital status, address, educational
background, experience and special interests.
After reading the application blank, the
evaluator will have some basis whether to
proceed further in evaluating the applicant
 References are those written by previous
employers, co workers, teachers, club officers ,
etc. Their statements may provide some vital
information on the character of the applicant.
 Interviews. Information may be gathered in an
interview by asking a series of relevant
questions to the job candidate.
 Testing. This involves an evaluation of the
future behavior or performance of an individual
Types of Tests for Applicants
 Psychological tests- which is an “an objective”
standard measure of a sample behavior”. It is
classified into:
o Aptitude test- one used to measure a
persons capacity or potential ability to
learn
o Performance test- one used to measure
a persons current knowledge of a
subject.
o Personality test- one used to measure
personality traits as dominance,
sociability, and conformity
 Physical examination- a type of test given to
assess the physical health of an applicant. It is
given to assure that the health of the applicant
is adequate to meet the job requirements
INDUCTION AND ORIENTATION
- In induction, the new staff is provided with the
necessary information about the company. His
duties and responsibilities, and benefits are
filled up, and passes are issued. The company
history, its products and services , and the
organization structure are explained to the new
employee.
- In orientation, the new staff, is introduced to
the immediate working environment and co-
workers. The following are discussed: location,
rules, equipment, procedures, training plans
and performance expectations.
TRAINING AND DEVELOPMENT
Training – This refers to the learning that is provided in
order to improve performance on the present job.
Two Types of general Training Programs
 a. Training programs for non managers
b. Training and educational programs for
executive
Training Program for Non Managers
- This type of training is directed to non
managers for specific increases in skill and
knowledge to perform a particular job.
 To influence, in a positive manner, staff
performance and development.
 To determine merit pay increases
 To plan for future performance goals.
 To determine training and development needs.
 To assess the promotional potential of staff.
Ways of Appraising Performance

a) Rating scale method- where each trait or

Four methods Training Program for Non Managers
characteristic to be rated is represented by a
 On the Job training- where the trainer is placed
line or scale on which the rater indicates the
in an actual work situation under the direction
degree to which the individual possesses the
of his immediate supervisor.
trait or characteristic.
 Vestibule school- where the trainer is placed in
b) Essay method- where the evaluator composes
a situation almost exactly the same as the
statements that best describe the person
workplace where machines, materials, and time
evaluated.
constraints are present.
c) Management by objectives method- Individuals
 Apprenticeship program- where a combination
are evaluated on the basis of how well they
of on the job training and experiences with
have achieved the results specified by the goals.
classroom instruction in particular subjects are
d) Assessment center method- where one is
provided to trainees
evaluated by persons other than the immediate
 Special Courses- are those taken which provide
superior. This method is used for evaluating
more emphasis on education rather than
managers.
training.
e) Checklist method- where the evaluator checks
statements on a list that are deemed to
Training Programs for Managers
characterize an employees behavior or
- The training needs of managers may be
performance.
classified into four areas: decision making skills,
f) Work standards method- where standards are
interpersonal skills, job knowledge and
set for the realistic worker output and later on
organizational knowledge
used in evaluating the performance of non
o In basket- where the trainee is provided
managerial employees.
with a set of notes, messages,
g) Ranking method- where each evaluator
telephone calls, letters, and reports, all
arranges employees in rank order from the best
pertaining to a certain company
to the poorest.
situation. He is expected to handle the
h) Critical incident method- where the evaluator
situation within a given period of 1 or 2
recalls and writes down specific (but critical)
hours.
incidents that indicate the employees
o Management games- is a training
performance. A critical incident occurs when
method where “trainees are faced with
employees behavior results in an unusual
a simulated situation and are required
success or failure on some parts of the job
to make an on going series of decisions
about that situation EMPLOYMENT DECISION
o Case studies- this method presents
actual situations in organizations and After evaluating the performance of employees
enable one to examine successful and (managerial or otherwise), the management will now be
unsuccessful operations. ready to make employment decision. These may consist
of the following

PERFORMANCE APPRAISAL - This is the measurement of a. Monetary rewards- these are given to
employee performance employees whose performance is at par or
above standard requirements.
Purpose b. Promotion- this refers to a movement by a
person into a position of higher pay and greater
 responsibilities and which is given as a reward ensuring that they incorporate additional
for competence and ambition. training programs in order to alleviate the labor
c. Transfer- this is the movement of a person to a turnover rate of the company
different job at the same or similar level of  Planning –This is done for recruiting candidates
responsibility in the organization. Transfers are if there is shortage of staff in the organization
made to provide growth opportunities for the
persons involved or to get rid of a poor
performing employee.
d. Demotion-this is a movement from one position
to another which has less pay or responsibility
attached to it. Demotion is used as a form of
punishment or as a temporary measure to keep
an employee until he is offered a higher
position

Separation

This is either voluntary or involuntary termination of

staff. When made voluntarily, the organization’s
management must find out the real reason. If the
presence of a defect in the organization is determine,
corrective action is necessary.

Involuntary separation (or termination) is the last

option that the management exercises when a staff
performance is poor or when he/she committed an act
violating the company rules and regulations.

MANPOWER & MANPOWER PLANNING

 Manpower planning is the process of estimating

the optimum number of people required for
completing a project, task or a goal within time.
 It includes parameters like number of
personnel, different types of skills, time period,
demand and supply trends, organizational
strategy etc.
 Manpower is proportional to productivity
 Manpower in construction industry is the
working force that committed to building
constructions, such as planning, erecting and
modelling the buildings.
 Manpower development is an act of updating
present manpower for performing future work
in the changing environment by increasing
knowledge, skills and capacities of the
employee

MANPOWER PLANNING PROCESS

 Need identification – Each department has to

identify its targets and get resources allocated
accordingly.
 Succession plan –This plan must be formulated
by the personnel managers of each department
CHAPTER VIII-CAPACITY PLANNING AND FACILITY
LOCATION

8.1 CAPACITY PLANNING

Capacity is the maximum output rate of a production or
service facility.

Capacity planning is the process of establishing the
output rate that may be needed at a facility:
 Capacity is usually purchased in “chunks”
 Strategic issues: how much and when to spend
capital for additional facility & equipment
 Tactical issues: workforce & inventory levels, &
day-to-day use of equipment
8.2.1 MEASURING CAPACITY
 When measuring capacity, the unit of measure
can be either an input or an output to the
process.
 The input is more complicated to measure, such
as machine hours on a process layout, then
output is a more suitable measure and the unit
of time could be a minute, an hour, a day or a
week, or whatever time scale fits the operation,
but the unit of output and time scale needs to
be consistent.
8.2.1 INPUT MEASURES OF CAPACITY
 When using input measures of capacity, the
measure selected is defined by the key input
into the process where the provision of capacity
is fixed, it is often easier to measure capacity by
inputs.
A simple formula for capacity can be:
Capacity = Time available/Time of task
8.2.4 WORKED EXAMPLE FOR CAPACITY
A service provider works an eight hour day, takes two
fifteen minute coffee breaks and has a half hour lunch
break. The time available for work is seven hours per
worker per day.
If this particular worker was fitness instructor and he
spends 70 minutes with each customer (10 minutes for
the consultation and booking and 1 hour for the gym
session), how many clients could the instructor process
during a five day week?
Solution
((7 hours per day x 60 minutes per hour) x 5)/ 70
minutes per client = 30 client per week
30 clients per week can be expressed as the capacity of
the fitness operation
8.2.5 CAPACITY INFORMATION NEEDED

 It is the maximum output that an operation can

 For example; rooms available in a hotel or seats
at a conference venue. Input measures are
most appropriate for small processes or where
capacity is relatively fixed.
8.2.2 OUTPUT MEASURES OF CAPACITY
 The output measures count the finished units
from the process such as mobile phones
produced in a day or cars manufactured per
week.
 This measure is best used where there is low
variety in the product mix or limited
customization.
8.2.3 MEASURING CAPACITY EXAMPLES
produce continuously, without stopping for any
shift changeovers, maintenance or any other
delays under ideal conditions.
 For example, A bakery can make 30 custom
cakes per day when pushed at holiday time
 In some cases this might be interpreted as
maximum capacity.
Effective Capacity
This is the maximum output rate under normal
(realistic) conditions For example, on the average this
bakery can make 20 custom cakes per day
Actual capacity
This is the same as effective capacity but contains
unplanned losses as well as planned ones. These could
include poor work rate, absenteeism or new staff
training for example.
8.2.6 PROPORTIONS OF CAPACITY MEASURES
b. When the existing business unit has outgrown
its original facilities and expansion is not
possible
c. When the volume of business or the extent of
market necessitates the establishment of
branches.
d. When the lease expires and the landlord does
not renew the lease.
e. Other social or economic reasons.

8.3.1 FACILITY LAYOUT & ITS OBJECTIVES

Facility layout may be defined as the arrangement of

machinery, equipment, and other amenities in a facility,
which should ensure a smooth movement of materials

Actual output plus unplanned losses is the same as Objectives of Facility Layout
effective capacity. Therefore the operation which is
working its assets efficiently is minimizing unplanned a. Minimum Material Handling
losses. b. Elimination of Bottlenecks
c. Shorter Production Cycles
8.2.7 WORKED EXAMPLE FOR CAPACITY UTILIZATION d. Reduction in Production Delays
e. Improved Quality Control
In the bakery, the design capacity is 30 custom cakes
f. Efficient Utilization of Labor
per day. Currently the bakery is producing 28 cakes per
g. Improved Employee Morale
day. What is the bakery’s capacity utilization relative to
both design and effective capacity?

Solution 8.3.2 TYPES OF FACILITY LAYOUT

A. Process layout, also called functional layout or batch

production layout, is characterized by the grouping
together of similar machines, based upon their
operational characteristics.

The current utilization is only slightly below its design

capacity and considerably above its effective capacity.
The bakery can only operate at this level for a short
period of time

8.3 FACILITY LOCATION

Facility location may be defined as a place where the

facility will be set up for producing goods or services
The need for location selection may arise under any of
the following conditions:
a. When a business is newly started.
B. Product layout: This is also called straight line layout
where machinery is arranged in one line as per the
sequence of production operations. Materials are fed
into the first machine and finished products come out
of the last machine.
C. Cellular manufacturing layout: In this layout,
machines are grouped into cells, which function
somewhat like a product layout in a larger shop or a
process layout. Each cell in the CM layout is formed to
produce a single part family, that is, a few parts with
common characteristics.

D. Fixed position layout: This type of facility layout is

used to assemble products that are too large, heavy or
fragile to move to a location for completion. In the fixed
position layout, machinery, men, as well as other pieces
of material, are brought to the location where the
product is to be assembled.
MODULE IX-QUALITY MANAGEMENT
9.1 QUALITY
 Quality means many things to many people
 Quality ISO 8402: “the totality of features and
characteristics of a product or service that bear
on its ability to satisfy started or implied needs”
 Fitness for use + Conformance to specifications.
 Features they want + Problems they don’t want.
 Customer value + Zero defects.
9.1.1 QUALITY VS. GRADE
 Grade — a category or rank given to entities
having the same functional use but different
requirements for quality
o Ford Escort vs. BMW 635i
9.1.2 COST OF QUALITY
 Cost of conformance:
o Prevention costs
o Appraisal (inspection) costs
 Cost of non-conformance:
o Internal failure costs — fixes prior to
delivery
o External failure costs — fixes after
delivery
9.2 QUALITY PLAN
This plan details :
i. Quality Assurance (QA)
- Quality Assurance (QA) analyzes the processes
and systems that are producing the outputs.
- It is any systematic process of determining
whether a product or service meets specified
requirements.
- Many companies use ISO 9000 to ensure that
their quality assurance system is in place and
effective.
- Auditing is an important part of the quality
assurance function–particularly quality auditing,
which examines an organization’s entire Quality
Management System (QMS).
Quality assurance has two key principles:
a. Fit for purpose – the product should be
suitable for its intended purpose
b. Right first time – all defects or mistakes should
be eliminated.
Quality Assurance methodology has a defined cycle
called PDCA cycle or Deming cycle. The phases of this
cycle are:
 Plan
 Do
 Check
 Act
Quality Assurance methodology
 Plan – Organization should plan and establish
the process related objectives and determine
the processes that are required to deliver a
high-Quality end product.
 Do – Development and testing of Processes and
also “do” changes in the processes
 Check – Monitoring of processes, modify the
processes, and check whether it meets the
predetermined objectives
 Act – A Quality Assurance tester should
implement actions that are necessary to
achieve improvements in the processes
ii. Quality planning
- It is a structured process for developing
products that ensures that customer needs are
met by the final result
- The tools and methods of quality planning are
incorporated along with the technological tools
for the particular product being developed and
delivered
The Juran Trilogy
 Conversion of goals into results (making quality
happen) is done through managerial
processes—sequences of activities that produce
the intended results
 Managing for quality makes extensive use of
three such managerial processes:
 These processes are now known as the “Juran
trilogy”
The Quality Planning Solution
- Quality planning provides the process, methods,
tools, and techniques for closing each of the
component gaps and thereby ensuring that the
final quality gap is at a minimum.
The Steps involved are:

iii. Quality Control (QC)
- Quality Control (QC) is the measurement of
outputs to determine whether they meet the
accepted criteria
- QC is concerned with the identification of
defects—as such, it is regarded as the
“inspection” element of quality management.
- Compliance with quality standards—such as
those enshrined in ISO 9001—is a key part of
quality control
Types of Quality Control Process
The quality control process is divided into 3 separate
processes, which are IQC (incoming quality control),
IPQC (in-process quality control), and OQC (outgoing
quality control).
- IQC is the process of inspecting the raw and
component materials from suppliers upon
arrival.
- IPQC refers to quality control during the
assembly process. It is crucial because you can
detect and handle the problem that occurs
ahead of time.
- OQA is the inspection of products before
shipping. It's a crucial step in ensuring the
shipment is defect-free.
iv. Quality Management
- Quality management is the act of overseeing all
activities and tasks which are necessary to
maintain or achieve a certain level of excellence
in an organization.
- It consists of four key processes: quality
planning, quality assurance, quality control and
continual improvement.
a. Quality planning – devising a quality
management plan that describes the processes
and metrics that are to be used.
b. Quality assurance - assuring, validating and
exhibiting to the organization that you have
the abilities, skills, knowledge and attitude to
achieve the desired outcome.
c. Quality control – inspection, testing and
measurement of project deliverables.
d. Continual improvement – examining how the
three elements above will drive further
improvements in efficiency and effectiveness.
9.3 PROCESS-BASED QUALITY
9.4 QUALITY ASSURANCE AND STANDARDS
 Standards are the key to effective quality
management
 They may be international, national,
organizational or project standards.
 Product standards are specifications and criteria
for the characteristics of products
 Process standards are criteria for the way the
products are made
9.5 Total Quality Management (TQM)
- It is a theory of management the purpose of
which is to improve an organization’s ability to
deliver quality to its customers on a
continuously improving basis.
- TQM is a process-oriented as opposed to a
result oriented approach, and priorities quality,
flexibility and services rather than cost and
technical efficiency.
- TQM involves a more horizontal organizational
structure rather than the traditional vertical
management structure. TQM presumes that
profits follow quality and not vice versa.
9.5.1 TOTAL QUALITY MANAGEMENT TECHNIQUES
Total Quality Management Techniques to manage team
performance
i. Benchmarking DMADV (used predominantly when designing a new
- Benchmarking is the process of taking process):
performance metrics from the team and - Define design standards and process goals
comparing these results to industry leaders. - Measure and identify metrics with which
Problems and inefficiencies can be identified process performance will be defined
and acted upon. Targets for performance - Analyze the data and identify defect variations
improvement can be devised, planned and in the process
implemented - Design changes that will mitigate defects and
errors
ii. Continuous Improvement Process - Verify that the process design will meet
- Continuous improvement process, or continual performance requirements
improvement, concerns the ongoing
improvement of services, products and
processing using the metrics of ‘incremental’
and ‘breakthrough’.
- The most widely used tool in the continuous
improvement process is the PDCA cycle - The
Plan-Do-Check-Act. You can read more about it
here.

iii. Statistical Process Control

- Statistical process control is a method of quality
control which uses statistical methods to
control, monitor and manage a process.
- Quality data is in the form of product or process
measurements which are obtained in real-time.
Control limits are set

iv. Variation Risk Management

- Variation risk management is a tool for
identifying, assessing and, if needed, nullifying
unwanted variation in a process. It is a process
geared toward the most effective reduction of
negative process variation, given limited
resources.

v. Business Process Re-engineering

- The process of business re-engineering involves
discovering the business operations and
processes, determining the frailties and
inefficiencies, redesigning these processes to
eliminate redundancies, and finally
implementing these redesigned processes.

vi. Six Sigma

- Six sigma is a data-driven approach for
removing defects in any process from
manufacturing to engineering, product and
service.
- Six sigma approaches uses two main basic
principles: DMAIC and DMADV.