ENGINEERING MANAGEMENT economically, the materials and forces of nature

for the benefit of mankind.

The Dynamics of People & Organizations
Engineer: A person applying his/her mathematical
Introduction
and science knowledge properly to solve practical
• Engineers are expected to perform a variety of problems
tasks depending on their specialization and job What is Engineering Management?
level.
• It is important to the engineer that he knows what • Engineering management is a process of leading
is expected of him so that he may be able to and controlling a technical function/enterprise.
perform his job effectively and efficiently. • Engineering management is similar to other
definitions of management, but with a slant
Since prehistoric times, mankind has benefited from
toward technical issues
the various tools, equipment, and projects
• Engineering management refers to the activity
developed by engineers. Among these are the
combining “technical knowledge with the ability
following:
to organize worker power, materials, machinery,
1. The stone bladed axe which was a very useful and money.”
tool; and the irrigation system used to promote
When the engineer is assigned to supervise the work
crop growing – 6000 to 3000 B.C.
of even a few people, he is already engaged in the
2. The pyramids of Egypt – 3000 to 600 B.C.
first phase of engineering management. His main
3. Roadbuilding by the Romans – 600 B.C. to A.D.
responsibility is to lead his group into producing a
400
certain output consistent with the required
4. The production of paper and gunpowder by the
specifications.
Chinese – 100 A.D. to 1600 A.D.
5. The production of steam engine and the spinning Management Functions
and weaving machinery – 1601 A.D. to 1799 A.D.
6. The manufacture of cars and household
appliances – modern times
What is Management?

• Generally, management is getting work done

through others.
• Requires a set of activities (including planning
and decision making, organizing, leading, and
controlling) directed at an organization’s
resources (human, financial, physical, and
information), with the aim of achieving
organizational goals in an effective and efficient
manner Management Levels and Areas

What is Engineering?

• The profession in which a knowledge of the

mathematical and natural sciences gained by
study, experience, and practice is applied with
judgment to develop ways to utilize,
Organizational Behavior
“Organizational behavior is directly concerned with
the understanding, prediction, and control of human
behavior in organizations.” — Fred Luthans
• Organizational Behavior (OB) is the study of
human behavior in organizational settings, the
interface between human behavior and the
organization, and the organization itself.
• One of the main goals of organizational behavior
is to revitalize organizational theory and develop
a better conceptualization of organizational life.
• This area of study examines human behavior in
a work environment and determines its impact
on job structure, performance, communication,
motivation, leadership, etc.
• The organizations in which people work
influence their thoughts, feelings, and actions.
These thoughts, feelings, and actions, in turn,
affect the organization itself.
• Organizational behavior studies the mechanisms
governing these interactions, seeking to identify
and foster behaviors conducive to the survival
and effectiveness of the organization.
Main objective of OB:
a. Job satisfaction
b. Finding the right people
c. Organizational culture
d. Leadership and conflict resolution
e. Understanding employees better
f. Understand how to develop good leaders
g. Develop a good team
h. Higher productivity
Types of Models in Organizational Behavior
1. Autocratic Model
2. Custodial Model
3. Supportive Model
4. Collegial Model
Fundamental Concepts
Autocratic Model
• The root level of this model is power with a
managerial orientation of authority. The
employees in this model are oriented towards
obedience and discipline. They are dependent
on their boss. The employee requirement that is
met is subsistence. The performance result is
less.
• The major drawbacks of this model are people
are easily frustrated, insecurity, dependency on
the superiors, minimum performance because of
minimum wage.
Custodial Model
• The root level of this model is economic
resources with a managerial orientation of
money. The employees in this model are
oriented towards security and benefits provided
to them. They are dependent on the
organization. The employee requirement that is
met is security.
• This model is adapted by firms having high
resources as the name suggest. It is dependent
on economic resources. This approach directs to
depend on firm rather than on manager or boss.
They give passive cooperation as they are
satisfied but not strongly encouraged.
Supportive Model
• The root level of this model is leadership with a
managerial orientation of support. The
employees in this model are oriented towards
their job performance and participation. The
employee requirement that is met is status and
recognition. The performance result is awakened
drives.
• This model is dependent on leadership strive. It
gives a climate to help employees grow and
accomplish the job in the interest of the
organization. Management job is to assist the
employee’s job performance. Employees feel a
sense of participation.
Collegial Model
• The root level of this model is partnership with a
managerial orientation of teamwork. The
employees in this model are oriented towards
responsible behavior and self-discipline. The
employee requirement that is met is self-
actualization. The performance result is
moderate zeal.
• This is an extension of supportive model. The
team work approach is adapted for this model.
Self-discipline is maintained. Workers feel an
 obligation to uphold quality standard for the
better image of the company. A sense of “accept”
and “respect” is seen.
Fundamental Concepts of Organizational Behavior
Organization behavior is based on a few
fundamental concepts which revolve around the
nature of people and organizations.
• Individual differences
• Perception
• A whole person
• Motivated behavior
• The desire for involvement
• The value of the person
Organization behavior is based on a few
fundamental concepts which revolve around the
nature of people and organizations.
• Organizations are social system
• Human dignity
• Mutuality of interest
• Holistic concept
Individual Differences
• Every individual in the world is different from
others. Science supports this idea.
• The idea of the individual difference comes
originally from psychology. From the day of birth,
each person is unique, and personal
experiences after birth tend to make people even
more different.
Perception
• Peoples’ perceptions are also different when
they see an object. Two people can differently
present the same object. And this is occurring for
their experiences.
• A person always organizes and interprets what
he sees according to his lifetime of experience
and accumulated value.
• Employees also see work differently for differ in
their personalities, needs, demographics factors,
past experiences, and social surroundings.
A whole person
• An employee’s personal life is not detached from
his working life.
• As an example: A women who attend the office
at 9:00 AM is always anxious for her children’s
school time (if her kids can participate in the
school or not). As a result, its impact falls on her
concentration that means her working life.
• For this reason, we cannot separate it. So the
manager should treat an employee as a whole
person.
Motivated Behavior
• An employee has so many needs inside him.
• So, they want to fulfill those needs. That’s why;
they had to perform well in the organization.
• Some motivations are necessary to enrich the
quality of work. A path toward increased need
fulfillment is the better way to enhances the
quality of work.
Desire for Involvement
• Every employee is actively seeking opportunities
to work to involve in decision-making problems.
They hunger for the chance to share what they
know and to learn from the experience.
• So, the organization should provide them a
chance to express their opinions, ideas, and
suggestions for the decision-making problem.
• A meaningful involvement can bring mutual
benefit to both parties.
Value of the Person
• An employee wants to be treated separately
from another factor of production, (land, capital,
labor).
• They refuse to accept the old idea that they are
just treated as economic tools because they are
the best creation of the Almighty.
• For this, reason, they want to be treated with
carrying respect, dignity and other things from
their employers and society.
Human Dignity
• This concept is very philosophical. Every person
needs to be treated with dignity and respect,
whether it’s the CEO of the company or labor.
• It confirms that people are to be treated
differently from other factors of production
because they are of a higher order in the
universe.
• It recognizes human dignity because people are
of a higher order; they want to be treated with
respect and dignity and should be treated this
way.
Organizations are Social System
• From sociology, we learn that organizations are
social systems; consequently, activities therein
are governed by social laws as well as
psychological laws. Just as people have
psychological needs, they also have social roles
and status.
• Their behavior is influenced by their group as
well as by their drives.
• In fact, two types of social systems exist side by
side in organizations. One is a formal system,
and the other is the informal social system.
Mutuality of Interest
• Mutual interest is represented by the statement
that organizations need people and people also
need organizations.
• Organizations have a human purpose. They are
formed and maintained by some mutuality of
interest among their participants.
• People see organizations as a means to help
them reach their goals, while at the same time,
organizations need people to help achieve
organizational objectives.
• If mutuality is lacking, it makes no sense to try to
assemble a group and develop cooperation,
because there is no common base on which to
build.
• Mutual interest provides a super-ordinate goal
that unites the variety of needs that people bring
to organizations.
• The result is that people are encouraged to
attack organizational problems rather than each
other.
Holistic Concept
• When the fundamental concepts of OB are
placed together, a holistic concept emerges.
• This concept interprets people-organization
relationships regarding the whole person, the
whole group, whole organization, and the whole
social system.
• It takes across the board view of people in
organizations to understand as many as possible
of the factors that influence their behavior.
• Issues are analyzed in terms of the total situation
affecting them rather than in terms of an isolated
event or problems.
Limitations of Organizational Behavior
1. Limitations of OB
2. Behavioral Bias
3. The Law of Diminishing Returns
4. Unethical Manipulation of People
Behavioral Bias
• Behavioral Bias is a condition that is a reflection
of tunnel vision, in which people have narrow
viewpoints as if they were looking through a
tunnel.
• They see only the tiny view at the other end of
the tunnel while missing the broader landscape.
• Following the behavioral bias, people who lack
system understanding may develop a behavioral
bias, which leads them to develop a narrow
viewpoint that emphasizes employee
satisfaction while overlooking the broader
system of the organization about all its
stakeholders.
• It should be clear that the concern for employees
can be so greatly overdone that the original
purpose of bringing people together, which is
“productivity organizational outputs for society”
could be lost.
• An effective organizational behavior should help
accomplish organizational purposes. It should
not replace them.
• The person who does not consider the needs of
people as consumers of organizational output
while fighting for employee needs is not applying
the ideas of organizational behavior correctly
The Law of Diminishing Returns
• Overemphasis on organizational behavior, the
practice may produce negative results, as
indicated by the law of diminishing returns.
• It places an overemphasis on an OB practice that
may produce negative results. It is a limiting
factor in organizational behavior in the same way
that it is in economics.
• In economics, the law of diminishing return refers
to a declining amount of extra outputs when
more of a desirable input is added to an
economic situation.
• After a certain point, the output from each unit of
added input tends to become smaller. The added
output eventually may reach zero and even
continue to decline when more units of input are
added.
• The law of diminishing returns in organizational
behavior works similarly.
• More of a good thing is not necessarily good. The
concept means that for any situation there is an
 optimum level of a desirable practice, such as
recognition or participation.
• When that point is exceeded, there is a decline
in returns realized. To put it differently, the fact
that a practice is desirable does not necessarily
imply that more of the same practice is more
desirable
Unethical Manipulation of People
• A significant concern about organizational
behavior is that its knowledge and techniques
can be used to manipulate people unethically as
well as to help them develop their potential.
• People who lack respect for the basic dignity of
the human being could learn organizational
behavior ideas and use them for selfish ends.
• They could use what they know about motivation
or communication in the manipulation of people
without regard for human welfare. People who
lack ethical values could use people in unethical
ways.
Important Reminders in Limitations of OB:
• The philosophy of organizational behavior is
supportive and oriented toward human
resources. It takes to improve the human
environment and help people grow toward their
potential.
• However, the knowledge and technique of this
subject may be used for negative as well as
positive consequences. This possibility is true of
knowledge in almost any field, so it is no special
limitation of organizational behavior.
Evolution of Management Theories
• Understanding the evolution of management
thought is important as it helps determine what
management principles and practices work best
for your team and your organization.
• It can help you manage your team and workplace
more effectively. So, what is the meaning of
evolution of management thought? To
understand this, we need to go back in time.
• Management theory originated with "scientific"
and "bureaucratic" management that used
measurement, procedures and routines as the
basis for operations.
• Organizations developed hierarchies to apply
standardized rules to the workplace and
punished workers for not following them.
• With the "human relations" movement,
companies started emphasizing individual
workers.
• Contemporary management theories, including
system theory, contingency theory and chaos
theory, focus on the whole organization, with
employees as a key part of the system.
• The Industrial Revolution in the early 19th
century brought monumental changes in the
workplace.
• As factories were the primary source of
employment, management theorists studied the
operations and workforce present on the factory
floors.
• There were times when the demand was high but
the lack of productivity and efficiency held
workplaces back.
• The Industrial Revolution gave birth to multiple
management theories and concepts that
developed over time and are still relevant today.
Evolution of Management Theories
1. Scientific Management Theory
2. Maslow’s Theory
3. Contingency and Dynamic Engagement Approach
Scientific Management Theory
Fredrick Winslow Taylor
• Fredrick Winslow Taylor, an engineer, proposed
and developed the Scientific Management
Theory.
• He is also known as the Father of Scientific
Management and his school of thought came to
be known as Taylorism. He introduced a
scientific approach to productivity, which meant
that an increase in efficiency can lead to higher
productivity and profits.
• He believed that research-backed and
standardized procedures were necessary for
effective management.
• If you recognize any of the following, you have
already seen his principles of scientific
management in action: organizational charts,
 performance evaluations, quality measurements
and metrics, and sales and/or production goals.
• He believed that research-backed and
standardized procedures were necessary for
effective management.
• If you recognize any of the following, you have • As a humanist, Maslow believed that people
already seen his principles of scientific have an inborn desire to be self-actualized, that
management in action: organizational charts, is, to be all they can be.
performance evaluations, quality measurements • To achieve this ultimate goal, however, several
and metrics, and sales and/or production goals. more basic needs must be met. This includes the
• Taylor first developed the idea of breaking down need for food, safety, love, and self-esteem.
each job into component parts and timing each • Maslow's hierarchy of needs is a motivational
part to determine the most efficient method of theory in psychology comprising a five-tier model
working. of human needs, often depicted as hierarchical
• Scientific management has at its heart four core levels within a pyramid.
principles that also apply to organizations today. • From the bottom of the hierarchy upwards, the
They include the following: needs are: physiological (food and clothing),
• Look at each job or task scientifically to safety (job security), love and belonging needs
determine the “one best way” to perform the job. (friendship), esteem, and self-actualization.
This is a change from the previous “rule of
thumb” method where workers devised their own
ways to do the job.
• Hire the right workers for each job, and train
them to work at maximum efficiency.
• Scientific management has at its heart four core
principles that also apply to organizations today.
They include the following:
• Monitor worker performance and provide
instruction and training when needed.
• Divide the work between management and labor
so that management can plan and train, and
workers can execute the task efficiently.
• At the time of Taylor’s publication, managers Deficiency Needs vs. Growth Needs
believed that workers were lazy and worked
slowly and inefficiently in order to protect their • This five-stage model can be divided into
jobs. Taylor identified a revolutionary solution: deficiency needs and growth needs. The first
• “The remedy for this inefficiency lies in four levels are often referred to as deficiency
systematic management, rather than in needs (D-needs), and the top level is known as
searching for some unusual or extraordinary growth or being needs (B-needs).
man.” • Deficiency needs arise due to deprivation and
are said to motivate people when they are
Maslow’s Theory unmet. Also, the motivation to fulfill such needs
will become stronger the longer the duration they
• Abraham Maslow first introduced the concept of
are denied. For example, the longer a person
a hierarchy of needs in his 1943 paper titled "A
goes without food, the more hungry they will
Theory of Human Motivation”, and again in his
become.
subsequent book, Motivation and Personality.
• This hierarchy suggests that people are
motivated to fulfill basic needs before moving on
to other, more advanced needs.

• Growth needs do not stem from a lack of
something, but rather from a desire to grow as a
person.
• Once these growth needs have been reasonably
satisfied, one may be able to reach the highest
level called self-actualization.
• Every person is capable and has the desire to
move up the hierarchy toward a level of
selfactualization.
• Progress is often disrupted by a failure to meet
lower level needs.
Physiological Needs
• biological requirement
• These most basic human survival needs include
food and water, sufficient rest, clothing and
shelter, overall health, and reproduction.
• Maslow states that these basic physiological
needs must be addressed before humans move
on to the next level of fulfillment.
• If these needs are not satisfied the human body
cannot function optimally. Maslow considered
physiological needs the most important as all the
other needs become secondary until these
needs are met.
Safety Needs
• Next among the lower-level needs is safety.
Safety needs include protection from violence
and theft, emotional stability and well-being,
health security, and financial security.
• once an individual’s physiological needs are
satisfied, the needs for security and safety
become salient. People want to experience
order, predictability and control in their lives.
These needs can be fulfilled by the family and
society (e.g. police, schools, business and
medical care).
Love and Belonging Needs
• The social needs on the third level of Maslow’s
hierarchy relate to human interaction and are the
last of the so-called lower needs.
• Among these needs are friendships and family
bonds—both with biological family (parents,
siblings, children) and chosen family (spouses
and partners).
• Physical and emotional intimacy (intimate
emotional bonds) are important to achieving a
feeling of elevated kinship.
Esteem Needs
• the fourth level in Maslow’s hierarchy and include
self-worth, accomplishment and respect.
• Maslow classified esteem needs into two
categories:
(i) esteem for oneself (dignity, achievement,
mastery, independence) and
(ii) (ii) the desire for reputation or respect
from others (e.g., status, prestige).
Additionally, membership in social
groups contributes to meeting this need,
from belonging to a team of coworkers to
forging an identity in a union, club, or
group of hobbyists.
• The higher needs, beginning with esteem, are
ego-driven needs.
• The primary elements of esteem are self-respect
(the belief that you are valuable and deserving of
dignity) and self-esteem (confidence in your
potential for personal growth and
accomplishments)
Self-actualization Needs
• the highest level in Maslow's hierarchy, and refer
to the realization of a person's potential, self-
fulfillment, seeking personal growth and peak
experiences.
• Maslow describes this level as the desire to
accomplish everything that one can, to become
the most that one can be.
• Self-actualization needs include education, skill
development—the refining of talents in areas
such as music, athletics, design, cooking, and
gardening—caring for others, and broader goals
like learning a new language, traveling to new
places, and winning awards.
• Individuals may perceive or focus on this need
very specifically.
• For example, one individual may have a strong
desire to become an ideal parent. In another, the
desire may be expressed economically,
academically or athletically. For others, it may be
expressed creatively, in paintings, pictures, or
inventions.
Criticisms of Maslow’s Theory
• While popular, Maslow's concept has not been
without criticism. Chief among the long-held
complaints are:
a. Needs don’t follow a hierarchy
b. The theory is difficult to test
Contingency and Dynamic Engagement Approach
The Contingency Approach
• Contingency theory asserts that when managers
make a decision, they must consider all aspects
of the current situation and act on those aspects
that are the key to the situation at hand.
• It’s the approach that “it depends.”
• For example: The continuing effort to identify the
best leadership or management style might now
conclude that the best style depends on the
situation.
• According to the contingency approach the
manager's task is to identify which technique will,
in a particular situation, under particular
circumstances, and at particular time, best
contribute to the attainment of management
goals.
The System Approach
• Rather than dealing separately with the various
segments of an organization, the systems
approach to management views the organization
as a unified, purposeful system composed of
interrelated parts.
• This approach gives managers a way of looking
at the organization as a whole and as a part of
the larger, external environment.
• Systems theory tells us that the activity of any
segment of an organization affects, in varying
degrees, the activity of every other segment.
The Dynamic Engagement Approach
• Dynamic - (opposite of static) implies continuous
change, growth, and activity;
• Engagement - (the opposite of detachment)
implies intense involvement with others.
• The dynamic engagement approach recognizes
that an organization's environment is not some
set of fixed, impersonal forces.
• It is a complex; dynamic web of people
interacting with each other as a result managers
must not only pay attention to their own concerns
but also understand what is important to other
managers both within their organizations and at
other organizations.
• They interact with these other managers to
create jointly the conditions under which their
organizations will prosper or struggle.
• The theory of competitive strategy, developed by
Michael Porter, focuses on how managers can
influence conditions in an industry when they
interact as rivals, buyers, suppliers and so on.
Fields of Engineering Management
Functions of Engineers
• Engineers are expected to perform a variety of
tasks depending on their specialization and job
level.
• Next concern will be to identify the skills required
but which he does not have.
• 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.
• Even as engineers are
currently producing
solutions to many of the
difficulties faced by
mankind, much is still
expected of them.
• Their outputs, new or
improvements of old ones, are very much
needed in the following specific problem
concerns:
1. The production of more food for a fast growing
world population; Managerial ability refers to the capacity of an
engineer manager to achieve organizational
2. The elimination of air and water pollution;
objectives effectively and efficiently.
3. Solid waste disposal and materials recycling;
Effectiveness refers to a description of whether
4. The reduction of noise in various forms; objectives are accomplished, while efficiency is a
description of the relative amount of resources used
5. Supplying the increasing demand for energy; in obtaining effectiveness.
6. Supplying the increasing demand for mobility; Motivation to Manage
7. Preventing and solving crimes; and Many people have the desire to work and finish
8. Meeting the increasing demand for specific tasks assigned by superiors, but not many
communication facilities. are motivated to manage other people so that they
may contribute to the realization of the organization’s
The functions of engineering encompass the objectives.
following areas:
Many people have the desire to work and finish
1. Research specific tasks assigned by superiors, but not many
2. Design and development are motivated to manage other people so that they
3. Testing may contribute to the realization of the organization’s
4. Manufacturing objectives.
5. Construction
6. Sales 1. Favorable attitude toward those in positions of
7. Consulting authority, such as superiors.
8. Government 2. Desire to engage in games or sports competition
9. Teaching with peers.
10. Management
3. Desire to engage in occupational or work-related
Engineer in Various Types of Organization competition with peers.
From the viewpoint of the engineer, organizations 4. Desire to assert oneself and take charge.
may be classified according to the degree of
engineering jobs performed: 5. Desire to exercise power and authority over
others.
a. Level One – those with minimal engineering jobs
like retailing firms 6. Desire to behave in a distinctive way, which
includes standing out from the crowd.
b. Level Two – those with a moderate degree of
engineering jobs like transportation companies 7. Sense of responsibility in carrying out the routine
duties associated with managerial work
c. Level Three – those with a high degree of
engineering jobs like construction firms **High scores in the foregoing dimensions are
associated with high motivation to manage.
How One may Become a Successful Engineer
Manager Opportunity

Kreitner indicates at least three (3) general Successful managers become possible only if those
preconditions for achieving lasting success as a having the ability and motivation are given the
manager. opportunity to manage. The opportunity for
successful management has two requirements:
1. Ability
1. Obtaining a suitable managerial job, and
2. Motivation to manage
2. Finding a supportive climate once on the job
3. Opportunity
Decision-making
Ability
The engineer manager’s decision-making skills will
be very crucial to his success as a professional.
Good decisions will provide the right environment for
continuous growth and success of any organized
effort
1. Decision-Making as a Management
Responsibility
“The higher the management level is, the bigger and
the more complicated decision-making becomes.”
2. What is 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.
3. Decision -Making Process
Rational decision-making, according to David H.
Holt, is a process involving the following steps:
a. diagnose problem
b. analyze environment
c. articulate problem or opportunity
d. develop viable alternatives
e. evaluate alternatives
f. make a choice
g. implement decision
h. evaluate and adapt decision results
4. Approaches in Solving Problems
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
2. Quantitative Evaluation
Qualitative Evaluation
This term refers to evaluation of alternatives using
intuition and subjective judgement. William J.
Stevenson states that managers tend 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
This term refers to the evaluation of alternatives
using any technique in a group classified as rational
and analytical.
5. Quantitative Models for Decision-Making
1. Inventory Models
2. Queuing Theory
3. Network Models
4. Forecasting
5. Regression Analysis
6. Simulation
7. Linear Programming
8. Sampling Theory
9. Statistical Decision Theory
Inventory Models
This 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 orders.
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 by suppliers.
Queuing Theory
• This describes how to determine the number of
service units that will minimize both customer
waiting time and cost of service.
• The queuing theory is applicable to companies
where waiting lines are a common situation.
• Example: Cars waiting for service at a service
center, ships and barges waiting at the harbor for
loading and unloading by dock-workers,
programs to be run in a computer system that
processes jobs, etc.
Network Models
These are models where large complex tasks are
broken into smaller segments that can be managed
independently.
a. The Program Evaluation Review Technique
(PERT)
b. The Critical Path Method (CPM)
PERT – a technique which enables engineer
managers to schedule, monitor, and control large
and complex projects by employing three time
estimates for each activity.
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
Defined as the collection of past and current
information to make predictions about the future.
There are instances when engineer managers make
decisions that will have implications in the future. A
manufacturing firm, for example, must put up a
capacity which is sufficient to produce the demand
requirements of customers within the next 12
months. As such, manpower and facilities must be
procured 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.
Regression Analysis
The regression model is a forecasting method that
examines the association between two or more
variables.
Uses data from previous periods to predict future
events.
This may be simple or multiple depending on the
number of independent variables present.
Simulation
Simulation is a model constructed to represent
reality, on which conclusions about real-life problems
can be used.
It is a highly sophisticated tool by means of which the
decision maker develops a mathematical model of
the system under consideration.
Simulation does not guarantee an optimum solution,
but it can evaluate the alternatives fed into the
process by the decision-maker.
Linear Programming
A quantitative technique that is used to produce an
optimum solution within the bounds imposed by
constraints upon the decision.
It 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
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.
When data gathering is expensive, sampling
provides an alternative. Sampling, in effect, saves
time and money.
Statistical Decision-Theory
Refers to the rational way to conceptualize, analyze,
and solve problems in situations involving limited, or
partial information about the decision environment.
Planning Technical Activities
1. Importance of Planning
• 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 situations which
directly contribute to effective decision-making.
• If managing an organization is to be pursued
vigorously, planning will constitute the most
important activity.
• Managers who plan are afforded with the • The whole company is considered, specifically
opportunity to carefully analyze situations which its objectives and current resources.
directly contribute to effective decision-making.
• Planning provides directions
• Decreases the chances of risk
• Decreases overlapping and wasteful activities
• Planning encourages innovative ideas
• Planning aids decision making
• It helps us to identify our goals clearly.
• It helps us make sure that we all understand our
goal and what we need to do to reach it by
involving everyone in the planning process.
2. The Nature of Planning
• To minimize mistakes in decision-making,
planning is undertaken.
• A plan, which is output of planning, provides a
methodical way of achieving desired results.
• In the implementation of activities, the plan
serves as a useful guide.
• Without a plan, some minor tasks may be
afforded major attention which may hinder the
accomplishment of objectives.
3. Planning at Various Management Levels

Planning activities undertaken at various levels are
as follows:
1. Top Management Level – strategic planning
2. Middle Management Level – intermediate
planning
• The output of strategic planning is the strategic
plan which spells out “the decision about
longrange goals and the course of action to
achieve these goals.”
Intermediate Planning

3. Lower Management Level – operational planning
• Refers to the process of 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 realization of the goals.
• The intermediate plan is designed to support the
strategic plan.
Operational Planning

Strategic Planning • Refers to the process of determining how

• The process of determining the major goals of
the organization and the policies and strategies
for obtaining and using resources to achieve
those goals.
• Top management of any firm is involved in this
type of planning.
specific tasks 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
the strategic plan and the intermediate plan.

4. The Planning Process
The process of planning consists of various steps
depending on the management level that performs
the planning tasks. Involves the following:
1. Setting organizational, divisional, or unit goals
2. Developing strategies or tactics to reach those
goals
3. Determining resources needed
4. Setting standards
Setting Org., Div., or Unit Goals
• First task of the manager is to provide a sense of
direction to his firm, to his division, or to his unit.
• The setting of goals provide an answer to the
said concern.
Developing Strategies or Tactics
• 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.
• A tactic is a short-term action taken by
management to adjust to negative internal or
external influences.
• The decision about short-term goals and the
courses of action are indicated in the tactical
plan.
Determining Resources Needed
• When sets of strategies or tactics have been
devised, the engineer will determine the human
and nonhuman resources required by such
strategies or tactics.
• Even if the resource requirements are currently
available, they must be specified.
• 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.
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 reinforcements given.
• A standard may be defined as a quantitative or
qualitative measuring device designed to help
monitor the performance of people, capital
goods, or processes.
5. Types of Plans
Plans are of different types. They may be classified
in terms of:
• Functional areas
• Time horizon
• Frequency of Use
Functional areas
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
2. Production Plan
3. Financial Plan
4. Human Resource Management Plan
1. Marketing Plan
This is written document or blueprint for
implementing and controlling an organization’s
marketing activities related to a particular marketing
strategy.
2. Production Plan
Written document that states the quantity of output a
company must produce in broad terms and by
product family.
3. Financial Plan
Document that summarizes the current financial
situation of the firm, analyzes financial needs, and
recommends a direction for financial activities.
4.Human Resource Management Plan
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.
Plans with Time Horizon
Plans with time horizon consist of the following:
1. Short-range plans
Plans intended to cover a period of less than one
year.
Ex. Loan/Credit card payment, Rent or mortgage
payment, Insurance payment, Household
appliances, wedding, travel
2. Long-range plans
Plans covering a time span of more than one year.
Ex. Paying off mortgage, College fund, Starting a
business, Retirement saving, Purchasing a home
Plans According to Frequency of Use
According to frequency of use, plans may be
classified as:
a. Standing plans
b. Single-use plans
Standing Plan
These are plans that are used again and again, and
they focus on managerial situations that recur
repeatedly.
Types of standing plans
Procedure, rules, methods, policies
1. Policies – broad guidelines to aid managers
at every level in making decisions about
recurring situations or function.
2. Procedures (Methods) – plans that describe
the exact series of actions to be taken in a
given situation.
3. Rules – statements that either require or
forbid a certain action.
Single-use plans
Plans are specifically developed to implement
courses of action that are relatively unique and are
unlikely to be repeated.
1. budget – according to Weston and Brigham, a
plan which sets forth the projected expenditure for a
certain activity and explains where the required
funds will come from.
2. programs a single-use plan designed to
coordinate a large set of activities.
3. projects – a single-use plan that is usually more
limited in scope than a program and is sometimes
prepared to support a program.
6. Making Planning Effective
Planning is done so that some desired results may
be achieved. At times, however, failure in planning
occurs.
Planning may be made 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 as follows:
1. manager’s 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 variable
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