Module 1: The Field of Engineering

Management

CE 9: Engineering Management
I. INTRODUCTION
This unit discusses the meaning and importance of engineering management, the
qualification and requirements to become an engineer manager and the key factors
leading to successful management.

 ESSENTIAL QUESTIONS
1. What is Engineering Management?
2. What is the Process of Management?
3. What are the requirements for the Engineer Manager’s job?

 INTENDED LEARNING OUTCOMES

1. Students will be familiarized with the meaning of
Engineering Management and its processes.
2. Students will know the requirements for the
Engineer Manager’s job.
 III. DISCUSSION
THE FUNCTIONS OF THE ENGINEER

Since the start of human civilization, there were engineers that built tools,
equipment and infrastructures. Among these are the following:

• The stone bladed axe which was a very useful tool; and the irrigation system used to promote crop
growing --- 6000 to 3000 B.C.

• The pyramids of Egypt --- 3000 to 600 B.C

• Road building by the Romans --- 600 B.C.; to A.D. 400.

• the production of paper and gunpowder by the Chinese --- 100 A.D to 1600 A.D.

• the production of steam engine and the spinning and weaving machinery – 1601 A.D. to 1799 A.D.
and

• the manufacture of cars and household appliances – modern times

Engineering encompasses the following areas:

1. Research –where the engineer studies a subject and from it, he

develops theories significant to progress.

2. Design and development – where the engineer materialize a

concept and looks for an opportunity to innovate.

3. Testing – where the engineer works in a unit where new products or

parts are tested for workability.

4. Manufacturing – where the engineer is responsible for the quality of

the production.

5. Construction – where the engineer is responsible for the quality of

the construction.
Engineering encompasses the following areas:

6. Sales – where the engineer assists the company’s customers to meet their
needs, especially those require technical expertise.

7. Consulting – where the engineer works as consultant of any individual or

organization requiring his services.

8. Government – where the engineer gets the authority to regulate, monitor and
control the activities of different organizations under the care of the
government.

9. Teaching – where the engineer gets the authority to teach 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.
TYPES OF ORGANIZATION AND THE MANAGEMENT SKILLS
REQUIRED OF ENGINEERS
Medina classified organizations according to the degree of engineering
jobs performed:

1. Level one – those with minimal engineering jobs like retailing firms.

2. Level two – those with a moderate degree of engineering jobs like

transportation companies.

3. Level three – those with a high degree of engineering jobs like

constructing firms
TYPES OF ORGANIZATION AND THE MANAGEMENT SKILLS
REQUIRED OF ENGINEERS
MANAGEMENT SKILLS REQUIRED AT VARIOUS LEVELS

Level one firms do not actually provide

managerial position but there are few firms
that have a small engineering unit that may
require an engineer manager.

In level two firms, the engineer may be

assigned to head the engineering division.
Management skills are quite needed by now.

The chance to become the president or

general manager is highest in level three
firms. The engineer manager should have
sufficient management skills to be effective in
this case.
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.”
MANAGEMENT DEFINED

Management may be defined as the “creative problems solving –process

of planning, organizing, leading and controlling an organization’s
resources to achieve its mission and objectives”.
THE PROCESS OF
MANAGEMENT

Management is a process
consisting of planning, organizing
(scheduling and reporting), directing
(or leading) and controlling.
REQUIREMENTS FOR THE ENGINEER MANAGER’S JOB

All firms require the engineer manager to 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 of experience in a pure engineering job.

3. training in supervision.

4. special training in engineering management.

HOW ONE MAY BECOME A SUCCESSFUL ENGINEER MANAGER

To be efficient, it is crucial for the engineer manager to be informed of the

factors necessary to achieve successful management.

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

achieved 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 are willing to carry out the task given to them, but few are ready to lead.

1. Favorable attitude toward those in positions of authority, such as superiors.

2. Desire to engage in games or sport competition with peers.
3. Desire to engage in occupational or work-related competition with peers.
4. Desire to assert oneself 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.

Engineer managers are in demand, but advertisements provide little to no

information if the companies provide a supportive climate for quality
management.

Acknowledging managerial aptitude through monetary and non-monetary

incentives is the feature of a supportive climate.
IV. ASSESSMENT
PLATE NO. 1
Answer the following:
1. How may one define engineering management?

2. In what areas are engineers currently involved?

3. Which organization level requires the highest management skills for

engineer managers? Give an example.

4. What are expected of engineers in general?

5. What qualifications must an engineer manager have?

VI. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
THANK YOU
Module 2: DECISION MAKING

CE 9: Engineering Management
I. INTRODUCTION
This unit will discuss the relevance between planning and decision-making of an
engineer manager that helps to provide the right environment for continuous growth
and success of any organized effort.

 ESSENTIAL QUESTIONS
1. What is Decision Making?
2. What are the processes of Decision Making?
3. What are the different engineering firm and internal environment in decision making?

 INTENDED LEARNING OUTCOMES

1. Students will be able to define Decision Making and its processes?

2. Students will be familiarized with the different engineering firm and internal environment in
III. DISCUSSION
DECISION-MAKING AS A MANAGEMENT RESPONSIBILITY

Decision-making is a responsibility of the engineer manager.

Mistakes are inevitable but a wise manager will fix them immediately
upon identification.

Errors must be minimized because possessing the authority to

choose gives the manager the responsibility of the outcome. Higher
level of management means more intricate decision-making.
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” (Delaney, 1982, as cited in Medina, 1999).

This declares that a systematic way of choosing the most appropriate

option must be followed to deal with a problem effectively.

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 other, “is the heart of all the management functions”.
THE DECISION-MAKING PROCESS

Rational decision-making, according to David H. Holt, is a process involving

the following steps:

1. Diagnose problem
2. Analyze environment
3. Articulate problem or opportunity
4. Develop viable alternatives
5. Evaluate alternatives
6. Make a choice
7. Implement decision
8. Evaluate and adapt decision (1987, as cited in Medina, 1999)
Diagnose Problem

To make an intelligent decision, the manager should first identify the

problem. It will be difficult to advance if the manager fails in this part. An
expert once said, “identification of the problem is tantamount to having the
problem half-solved.”
Analyze the Environment
The success of an organization largely depends on its environment;
therefore, it is crucial to examine the setting.

The objective of environmental analysis is the identification of internal and

external limitations.
Example of internal limitations area as follows:

1. Limited funds available for the purchase of equipment.

2. Limited training on the part of employees.

3. Ill-designed facilities.

Examples of external limitations are as follows:

1. Patents are controlled by other organizations

2. A very limited market for the company’s products and services exists.

3. Strict enforcement of local zoning regulations.

Develop Viable Alternatives

Problems can be usually solved by any of the possible solutions, but

the best must be chosen. This is made possible by using a procedure
with the following steps:

1. Prepare a list of alternative solutions.

2. Determine the viability of each solution.

3. Revise the list by striking out those which are not viable.
To illustrate:
An engineering firm has a problem of
increasing its output by 30%. This is
the result of a new agreement between
the firm and one of its clients.
 The list of solutions prepared by the engineering
manager shows the following alternatives
courses of action:

1. Improve the capacity of the firm by hiring

more workers and building additional
facilities.

2. secure the services of subcontractors.

3. buy the needed additional output from

another firm.

4. stop serving some of the company’s

customers; and

5. delay servicing some clients

The list was revised and only the first three were deemed to be viable. The last two were
deleted because of adverse effects in the long-run profitability of the firm.
Evaluate Alternatives

After viability inspection and list revision is the evaluation of the

remaining alternatives. Appropriate evaluation is paramount to devising
the right decision.

The method of evaluation rests on the objective of the firm and nature
of the problem and its alternatives.

Souder suggests that “each alternative must be analyzed and evaluated

in terms of its value, cost, and risk characteristics”.
Make a choice

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.”

To simplify the selection process, the alternatives can be ranked

according to a specific factor (e.g. benefit, cost, risk).
Implement Decision

Implementation simply denotes action to achieve the desired objective;

and for it to be effective, a plan must be formulated.

To properly implement the decision, the resources must be made

accessible. Those who will be necessitated, according to Aldag and
Stearns, “must understand and accept the solution”.
Evaluate and Adapt Decision Results

The implemented decision may succeed or not.

Due to this, the utilization of control and feedback mechanisms is

important to guarantee results and to aid future decisions.
V. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 2: DECISION MAKING
Answer the following:

1. What is the importance of decision-making as a future engineer?

2. Enumerate and explain the different decision-making processes.

3. Enumerate and explain nature of work of at least 20 engineering

firms.

4. Based from your engineering point of view, where do you see

yourself ten (10) years from now?
THANK YOU
Module 3: Quantitative Models for
Decision-Making

CE 9: Engineering Management
I. INTRODUCTION
This unit will discuss the relevance between planning and decision-making of an
engineer manager that helps to provide the right environment for continuous growth
and success of any organized effort.

 ESSENTIAL QUESTIONS
What are the different types of Quantitative Models for Decision Making?

 INTENDED LEARNING OUTCOMES

Students will be able to define different types of Quantitative Models for Decision-Making
III. DISCUSSION
QUANTITATIVE MODELS FOR DECISION MAKING
There are several techniques that a manager can employ while making decisions. For
example, quantitative techniques enable managers to take decisions objectively and
efficiently.

The types of quantitative techniques which may be useful in decision-making are as

follows:
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
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 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

planes shortages.

4. Quantity discount model – an inventory model used to minimize the

total cost when quantity discounts are offered by suppliers.
Queuing Theory

The queuing theory describes how to determine the number of services

units that will minimize both customers waiting time and cost of service.

It 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, etc.
Network Models

These are models where large complex tasks are broken into smaller
segments that can be managed independently.

The two prominent network models are:

1. The Program Evaluation Review Technique (PERT) – a technique

which enables engineer managers to schedule, monitor and control
large 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 factory per activity that enables engineer managers to
schedule, monitor, and control large and complex projects.
Forecasting

Engineer managers at times make decisions that will have future

implications.

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 provided with
data on demand requirements for the next 12 months.

Forecasting may be defined as “the collection of past and current

information to make predictions about the future” (Aldag and Stearns,
1991 as cited in Medina, 1999).
Regression analysis

The regression model is a forecasting method that investigates the

relationship between two or more variables. It utilizes previous data to
predict future events.

Regression analysis may be simple or multiple depending on the number

of independent variables. When one independent variable is involved, it is
called simple regression; when two or more independent variable is
involved, it is called multiple regression.
Simulation

Simulation is a tool used to represent and visualize actual problems. It

aids in formulating a mathematical model of the problem under control. It
does not provide the best solution but examines the effects of the
alternatives in the process.
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. It is most useful when supply and demand limitations at plants,
warehouse, or market areas are constraints upon by the system.
Sampling Theory

Sampling theory is a quantitative technique where samples of populations

are statistically determined to be used for several processes, such as
quality control and marketing research.

Sampling saves time and money when data gathering becomes

expensive.
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.

The decision-making process discussed at the beginning of this chapter

explains the decision theory better. In addition to the evaluation of
alternative, subjecting the alternatives to Bayesian analysis is also
important.
Statistical Decision-Theory (cont.)

Bayesian analysis revises and updates the initial assessments of the

event probabilities generated by the alternative solutions. This is
achieved using additional information.

When the decision-maker can assign

probabilities to the various events, the use
of probabilistic decision rule, called the
Bayes criterion, becomes possible. The
Bayes criterion selects the decision
alternative having the maximum expected
payoff, or the minimum expected loss of he
is working with a loss table.
V. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
THANK YOU
Module 4: PLANNING

CE 9: Engineering Management
I. INTRODUCTION

 ESSENTIAL QUESTIONS
1. What is Planning?
2. What is the importance of planning in decision making?
3. What are the parts of the functional plans?
4. What are the parts of strategic plans?
5. How to make an effective plan?

 INTENDED LEARNING OUTCOMES

1. Knows the importance of planning in decision- making.

2. Students will be familiarized to the Organization and types of planning.

II. DISCUSSION
THE NATURE OF PLANNING
Situations where various activities seem overwhelming might cloud a
manager’s judgment. This is where a plan is useful.

A plan prepares a strategy to achieve the desired outcome. Without

it, minor miscalculations might lead to major problems over time.
PLANNING DEFINED

Various experts define planning in various ways, all of which are

designed to suit specific purposes.

According to Nickels and others, planning refers to “the management

functions that involves anticipating future trends and determining the
best strategies and tactics to achieve organizational objectives”
(1987, as cited in Medina, 1999, p. 44). This definition considers the
future implications of actions.
PLANNING DEFINED

Various experts define planning in various ways, all of which are

designed to suit specific purposes.

Planning, according to Cole and Hamilton 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” (1992, as cited in Medina, 1999,
45). This definition centers on efficiency of the performance.

For our purpose, it will suffice to define planning as selecting the best
courses of action so that the desired result may be achieved. It must
be stressed that the desired result takes priority and the course of
action chosen is the means to realize the goal.
PLANNING AT VARIOUS MANAGEMENT LEVELS

Since engineer managers could be occupying positions in any of the

various management levels, it will be useful for them to know some
aspects of planning undertaken at the different management levels.

Planning activities undertaken at various levels are as follows:

Top Management Level – strategic planning

Middle management level – intermediate planning

Lower management level – operational planning

Strategic Planning

Strategic planning is the action of identifying the goal and the method
to achieve the goal. The top management of any firm is involved in
this type of planning.

In strategic planning, the objectives and current resources of the

company are taken into consideration.

Its output, the strategic plan, is “the decision about long-range goals
and the course of action to achieve these goals” (Plunkett, 1989, as
cited in Medina, 1999, p. 46).
Intermediate Planning

Intermediate planning refers to “the process of determining the

contributions that sub-units can make with allocated resources”
(Kreitner, 1987, as cited in Medina, 1999, p. 46). Middle
management handles this type of planning.

Under intermediate planning, the sub-unit prepares a plan that will

support the strategic plan.
PLANNING AT VARIOUS MANAGEMENT LEVELS
Operational Planning

The term operational planning refers to “the process of determining

how specific tasks can best be accomplished on time with available
resources” (Kreitner, 1987, as cited in Medina, 1999, p. 48).

This type of planning is responsibility of lower management. It must

be performed in support of the strategic plan and the intermediate
plan.
THE PLANNING 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 standards
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 subdivision (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 maybe) 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 result sought,

quantified in time and magnitude, where possible” (Berkewitz, 1992,
as cited in Medina, 1999, p. 48). Examples of goals are provided in
Figure. 3.3.
Developing Strategies or Tactics to Reach Goals

Devising a strategy to accomplish the goal comes next after identifying

it. The top management undertakes strategy development while 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” (Certo & Peter, 1988,
as cited in Medina, 1999, p. 50).

An example of a strategy is the decision of a construction firm’s

management to diversify its business by also engaging in the trading
of construction materials and supplies.
Developing Strategies or Tactics to Reach Goals

When the above-mentioned strategy is implemented, it may help the

construction firm realize substantial savings in the material and supply
requirements used in their construction activities. The firm will also
have greater control in the timing of deliveries of materials and
supplies.

A tactic is a temporary action taken by management to adjust to

negative internal or external influences. A tactic is a Tactical plan
focuses on short term goals and methods that support the firm’s
strategies.

An example of a tactic is the hiring of contractual workers to augment

the company’s current workforce.
Determine Resources Needed

After devising a strategy or tactic, resources required is then

determined. All information regarding the resource’s requirements
must be specified and correctly determined as too much will be
uneconomical and too little will be inefficient.

To meet strategic requirements, a general statement of needed

resources specified by different units of the company will suffice.
Determine Resources Needed

To illustrate:
Suppose the management of a construction firm has decided, in
addition to its current undertakings, to engage in the trading of
construction materials and supplies.

A general statement of required resources will be as follows: A new

business unit will be organized to deal with the buying and selling of
construction materials and supplies. The amount of P50 million shall
be set aside to finance the activity. Qualified persons shall be recruited
for the purpose.
Setting Standards

The planning stage may set a standard performance in order that

when the actual performance does not attain it, adjustments may be
applied without further ado.

A standard may be defined as "a quantitative or qualitative measuring

device designed to help monitor the performances of people, capital
goods, or processes."

An example of a standard is the minimum number of units that must be

produced by a worker per day in each work situation.
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 3: PLANNING
Answer the following:

1. Explain the importance of planning in decision making based on your

own perspective.

2. You as a student, what are your steps and plans to achieve your
goals in life?
THANK YOU
Module 4: PLANNING

CE 9: Engineering Management
I. INTRODUCTION

 ESSENTIAL QUESTIONS
1. What are the types of plans?
2. What are the parts of the functional plans?
3. What are the parts of strategic plans?
4. How to make an effective plan?

 INTENDED LEARNING OUTCOMES

1. Knows the importance of planning in decision- making.

2. Students will be familiarized to the Organization and types of planning.

TYPES OF PLANS

Plans may be classified in terms of functional areas, time horizon, and

frequency of use. Medina (1999) expounded these classifications of
Bedeian (1986) below:
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 a particular
marketing strategy" (Pride & Ferrell, 1989, as cited in Medina, 1999, p. 52).

2. Production plan - this is a written document that states the quantity of output a
company must produce 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 direction 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.
Plans with Time Horizon

Plans with time horizon consist of the following:

1. Short-range plans - 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 plans - these are plans to cover a time span of more

than one year. These are mostly undertaken by middle and top
management.
Plans According to Frequency of Use

Frequency of use may be classified into two:

1. standing plans

2. single-use plans
Plans According to Frequency of Use

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 function.

2. Procedures - they are plans that describe the exact series of

actions to be taken in each situation.

3. Rules- they are statements that either require or forbid a certain

action.
Plans According to Frequency of Use

Single-Use Plans. 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

2. programs, and

3. projects.
Plans According to Frequency of Use

A budget, 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."

A program is a single-use plan designed to coordinate a large set of

activities.

A project is a single-use plan that is usually more limited in scope than a

program and is sometimes pre- pared to support a program. (pp. 52-54)
PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS

Being familiar with the engineering plans entirely may be common to

engineer managers but moving from one management level or
functional area to another requires the engineer manager to be familiar
with its plans as well.
PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS

The Contents of the 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 Contents of the Financial Plan

The components of the financial plan are as 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 budgets

4. The cash budget

5. A set of pro forma (or projected) financial statements

6. The external financing plans

Contents of the Human Resources Plan

The human resources plan must contain the following:

1. personnel requirements of the company

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

2. Objectives or goals

3. Strategies

Company of 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.
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 plan

MAKING PLANNING EFFECTIVE

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 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
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 4: IMPORTANCE OF PLANNING

Answer the following:

1. Why is planning an important activity for engineer manager’s?

2. Explain each different barrier in planning on your own perspective.

THANK YOU
Module 5: Organizing Technical Activities

CE 9: Engineering Management
I. INTRODUCTION
This unit is intended to provide some background and insights in organizing technical activities and
staffing the engineering organization that contributes largely to the accomplishment of the objectives
of many organizations, whether they are private business or otherwise.

 ESSENTIAL QUESTIONS
1. What is Organizing?
2. What is Formal Organization?
3. What is informal Groups?
4. What are the Types of Organizational Structures?

 INTENDED LEARNING OUTCOMES

1. Students will learn the importance of being organized in various aspects as an engineer.
2. Students will know the different types of organizational structures.
3. Students will learn the difference between formal organization and informal groups.
4. Students will know the meaning and concept of Staffing
5. Students will learn the Staffing Procedure.
II. DISCUSSION
REASONS FOR ORGANIZING

To facilitate the plan implementation effectively, organization is

necessary. Breaking down the total job into specific tasks for specific
individuals will help supervise the assignment of authority,
responsibility, and accountability for certain functions and tasks.
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.
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 levels 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.
THE PURPOSE OF THE STRUCTURE

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 a job.

2. Delegation of authority- the process of assigning various degrees of decision-

making authority to subordinates.

3. Departmentation - the grouping of related jobs, activities, or processes into

major organizational subunits.

4. Span of control- the number of people who report directly to a given manager.

5. Coordination- the linking of activities in the organization that serves to achieve a

common goal or objective.
THE FORMAL ORGANIZATION
After plan adaption is forming an organization to accomplish the steps
indicated in the plan.

According to Nickels and others, formal organization is "the structure

that details lines of responsibilities, authority, and position” (1987, as
cited in Medina, 1999, p.68).

What is depicted in the organization chart is the formal organization. It

is "the planned structure" and it "represents the deliberate attempt to
establish patterned relationships among components that will meet the
objectives effectively" (Kast & Rosenzweig, 1987, as cited in Medina,
1999, p.68).
THE FORMAL ORGANIZATION

The formal structure is described by management through:

1. organization chart
2. organizational manual and
3. policy manuals

The organization chart is a diagram of the organization's official

positions and formal lines of authority.

The organizational manual provides written descriptions of authority

relationships, details the functions of major organizational units, and
describes job procedures.

The policy manual describes personnel activities and company

policies.
INFORMAL GROUPS
Formal groups are required in formal organizations. These groups are given
tasks to attain the objectives of the organization. On the other hand,
members of the organization naturally form a group based on friendship;
this is called an informal group. It has no organizational purpose, but it can
be useful in accomplishing tasks especially if they have united expectation.

However, according to Valentine, an informal group is "vulnerable to

expediency, manipulation, and opportunism"(1982, as cited in Medina,
1999, p. 69). It, being uncontrollable, makes it "difficult for management to
detect these perversions and considerable harm can be done to the
company", he added.

Therefore, the engineer manager must observe the actions of the informal
groups. It is better if he could make them work for the organization.
Figure A. Reasons or Factors for joining or Forming a Group
Adapted from Engineering Management (p. 71), by R. G. Medina, 1999, RBSI.
TYPES OF ORGANIZATIONAL STRUCTURES
Deciding on what structure of organization to follow is necessary before
starting the activities. Depending on the size and type of operations, a
certain structural type may best fit the requirements.

Organizations may be classified into three types. 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 bring together all those involved with a
certain type of product or customer.
3. Matrix organization - an organizational structure in which each
employee reports to both a functional or division manager and to a
project or group manager.
Functional Organization

According to Thompson and Strickland III, functional organization structures

are very effective in smaller firms, especially "single-business firms where
key activities revolve around well-defined skills and areas of specialization”
(1992, as cited in Medina, 1999, p. 72). Medina (1999) enumerated its
advantages and disadvantages below.
ADVANTAGES OF FUNCTIONAL ORGANIZATIONS

1. The groupings of employees who perform a common task permit economics 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. (p.
72)
DISADVANTAGES OF FUNCTIONAL ORGANIZATIONS

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, non-motivating employee tasks.

4. It is difficult to identify which section or group is responsible for certain problems.

5. There is limited view of organizational goals by employees.

6. There is limited general management training for employees. (p. 73)

Figure B. Typical Functional Organization Chart of a Construction Company
Adapted from Engineering Management (p. 72), by R. G. Medina, 1999, RBSI.
Product or Market Organization

The product or market organization, with its feature of operating by

divisions, is "appropriate for a large corporation with many product lines in
several related industries" (Daft, 1991, as cited in Medina, 1999, p. 73).
Medina (1999) enumerated its advantages and disadvantages below.
ADVANTAGES OF MARKET ORGANIZATIONS

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. (p. 73)
DISADVANTAGES OF MARKET ORGANIZATIONS

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. (p. 74)

Figure 4.3 A typical Product/Market Organization for a Construction Company
Adapted from Engineering Management (p. 75), by R. G. Medina, 1999, RBSI.
Matrix Organization

A 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” (1987, as cited in Medina, 1999, p.
74).

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" (1992, as cited in Medina,
1999, p. 74).

The matrix organization is afforded with the following advantages and

disadvantages as stated by Medina (1999):
ADVANTAGES OF MATRIX ORGANIZATIONS

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 is

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.
(p.74, 76)
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.

(p.76)
 Figure 4.4 A Typical Matrix Organization of a Construction Firm
Adapted from Engineering Management (p. 77), by R. G. Medina, 1999, RBSI.
TYPES OF AUTHORITY

To effectively organize, authority must be distributed. Magginson and others

suggested three types of authority as follows:

1. Line authority - a manager's right to tell subordinates what to do and

then see that they do it.

2. Staff authority - a staff specialist's right to give advice to a superior.

3. Functional authority - a specialist's right to oversee lower level

personnel involved in that specialty, regardless of where the personnel
are in the organization. (1985, as cited in Medina, 1999, pp. 76, 78)
Line departments carry out tasks that demonstrate the main objective and
mission of the organization.

An example of this is the construction division and the department that

negotiates and secures contracts for the firm in a construction firm.

Staff departments provide the support for line departments. It

encompasses all those that provide specialized skills such as those which
perform strategic planning, labor relations, research, accounting, and
personnel.
Medina classified staff officers into the following:

1. Personal staff those individuals assigned to a specific manager to

provide needed staff services.

2. Specialized staff those individuals providing needed staff services for

the whole organization. (1999, p. 78)

Functional authority is granted to an individual or a group to make

decisions associated to their expertise even though other departments will
be affected. This authority is given to most budget officers of organizations,
as well as other officers.
 Figure 4.5 A Line and Staff Organization
Adapted from Engineering Management (p. 79), by R. G. Medina, 1999, RBSI.
THE PURPOSE 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” (1995, as cited in Medina, 1999, p. 80).

Committees are very beneficial mostly 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.
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 5: Organizing Technical Activities
Answer the following:

1. Why is it important for an engineer manager to acquire skills in

organizing?

2. What is the purpose of the formal organization?

3. How may organizing be defined?

THANK YOU
Module 6:
Staffing the Engineering Organization

CE 9: Engineering Management
I. INTRODUCTION
This unit is intended to provide some background and insights to guarantee the efficient realization of
the organization’s objectives through ensuring that the right persons are in the right positions. It
contains also staffing procedure to avoid or minimize the staffing errors.

 ESSENTIAL QUESTIONS
1. What is Staffing?
2. What are the steps of Staffing?

 INTENDED LEARNING OUTCOMES

1. Students will know the meaning and concept of Staffing
2. Students will learn the Staffing Procedure.
II. DISCUSSION
WHAT IS STAFFING

Even though the human resource office is ensuring that people are qualified
for the responsibility given to them, an engineer manager is also
responsible in this task within his/her area of concern. It must be
ascertained that the right persons are in the right positions. This is to
guarantee the efficient realization of the organization’s objectives.

Rue and Byers defined staffing as "the management function that

determines human resource needs, recruits, selects, trains, and develops
human resources for jobs created by an organization" (n.d., as cited in
Medina, 1999, p. 90).
THE STAFFING PROCEDURE

The staffing process consists of the following series of steps

according to Plunkett and Attner (1989 as cited in Medina, 1999):

1. human resource planning

2. recruitment
3. selection
4. induction and orientation
5. training and development
6. performance appraisal
7. employment decisions (monetary rewards, transfers, promotions and
demotions) and
8. separations (p. 90)
Human Resource Planning

Any organization needs a systematic deployment of human resources to

achieve its objectives. To attain this, the engineer manager and the human
resource office need to collaborate.

Medina listed three activities for human resource planning as follows:

1. Forecasting - an assessment of future human resource needs in

relation to the current capabilities of the organization.

2. Programming - which means translating the forecasted human

resource needs to personnel objectives and goals.

3. Evaluation and control - which refers to monitoring human resource

action plans and evaluating their success. (1999, p. 91)
Methods of Forecasting
The forecasting of manpower needs may be undertaken using any of the following
quantitative methods as stated by Bartel and Martin (1991):

1. Time series methods - use historical data to develop forecasts of the future.
2. Explanatory, or causal models - endeavors to find relationship between past
decisions and outcomes and then use it to predict future conditions

The three major types of explanatory models are as follows:

o regression models (presented in Chapter 2)
o econometric models- a system of regression equations estimated from past time-
series data and used to show the effect of various independent variables on
various dependent variables.
o leading indicators that anticipate business cycle turns. refers to time series

3. Monitoring methods - provide notification of significant changes in established

patterns and relationships so that the engineer manager can assess the likely
impact and plan responses if required. (as cited in Medina, 1999, pp. 91-92)
Recruitment

When a position is deemed necessary and filling it up has been decided, the
next course of action is recruitment.

Recruitment refers to attracting qualified persons to apply for vacant

positions in the company so that those who are best suited to serve the
company may be selected.
Source of Applicants
Medina stated that to fill up certain vacancies, a management taps various sources.
They are as follows:
1. The organization's current employees. Some of the organization's current
employees may be qualified to occupy positions higher than the ones they are
occupying. They should be considered.
2. Newspaper advertising. There are at least three major daily newspapers
distributed throughout the Philippines. Readership is higher during Sundays.
3. Schools. These are good sources of applicants. Representatives of companies
may interview applicants inside campuses.
4. Referrals from employees. Current employees sometimes recommend
relatives and friends who may be qualified.
5. Recruitment firms. Some companies are specifically formed to assist client
firms in recruiting qualified persons. Examples of these companies are the SGV
Consulting and John Clements Consultants, Inc., (See Figure 5.1).
6. Competitors. These are useful sources of qualified but underutilized personnel.
(1999, pp. 92-93)
Selection

Selection is the process of evaluating and choosing the most qualified for
the job. Clearly, a list of candidates is part of the preparation for selection.

The difficulty of selecting depends on the implications of wrong decision.

Selection would be easy if picking the wrong person has negligible effect to
the organization.

For example, in the case of construction laborers where a review of their

applications is done; within a few days or even a few hours, the applicants
are informed of the decision. When the position under consideration
involves special skills, a more elaborate selection process is undertaken.
Figure 5.1 An Example of the Services Provided
by a Professional Recruitment Firm
Adapted from Engineering Management (p. 94), by R. G.
Medina, 1999, RBSI.
Ways of Determining the Qualifications of a Job Candidate

According to Medina (1999, p. 95), companies utilize the following methods

of evaluating a job candidate:

1. Application blanks. It contains necessary information about a person

(such as personal and educational background). The evaluator's decision to
continue the assessment of an applicant lies on application blank.
2. References. These are statements regarding the performance and
character of the applicant. It is usually written by the superiors from his/her
previous workplace.
3. Interviews. Asking the right questions will obtain significant information
from the applicant.
4. Testing. Subjecting the overall performance of an individual to
evaluation.
Types of Tests
Medina (1999) classified tests as follows:
1.Psychological tests - which is "an objective, standard measure of a
sample behavior". It is classified into:
a) aptitude test - one used to measure a person’s capacity or
potential ability to learn.
b) performance test- one used to measure a person's current
knowledge of a subject.
c) personality test - one used to measure personality traits as
dominance, sociability, and conformity.
d) interest test - one used to measure a person's interest in
various fields of work.

2.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." (p.95-96)
Induction and Orientation

As Medina (1999) defined it, during induction, all the necessary information
about the company and the job are explained to the new employee. It
includes the employee’s duties, responsibilities and benefits, company
history, organizational structure, products and services. Also, all the
processes are carried out in this part such as filling up forms and issuing
passes.

On the other hand, it is during orientation that the new employee is helped
to adjust in the workplace by being introduced to his/her environment and
co-workers. Details regarding location, rules, equipment, procedures,
performance expectations and training plans are discussed. The new
employee also undergoes the "socialization process" by pairing him with an
experienced employee and having a one-on-one discussion with the
manager.
Training and Development

If the newly hired (or newly promoted) employee is assessed to be lacking

the necessary skills required by the job, training becomes a necessity.

Training refers to the "learning that is provided in order to improve

performance on the present job” (Gilley & Eggland, 1989, as cited in
Medina, 1999, p. 97). Flippe (1984) mentioned two general types (as cited
in Medina, 1999):

1. training programs for non-managers, and

2. training and educational programs for executives.
Training Program for Nonmanagers
Medina listed four methods to train non-managers:
1. On-the-job training - where the trainee is placed in an actual work situation
under the direction of his immediate supervisor, who acts as trainer. This situation
strongly motivates the trainee to learn.

2. Vestibule school - where the trainee is placed in a situation almost the same as
the workplace where machines, materials, and time constraints are present. As the
trainer works full time, the trainee is assured of sufficient attention from him.

3. Apprenticeship program - where a combination of on-the-job training and

experiences with classroom instruction subjects are provided to trainees.

4. Special courses - are those taken which provide more emphasis on education
rather than training. Examples are those which concern specific uses of computer
like computer-aided design and building procedures. (1999, p. 97-98)
Training Programs for Managers
He also classified the training for managers into four areas: decision-making skills,
interpersonal skills, job knowledge, and organizational knowledge.
For the decision-making skills, he declared the following methods of training:

1. In-basket - where the trainee is provided with a set of notes, messages,

telephone calls, letters, and reports, all pertaining to a certain company situation. He
is expected to handle the situation within a given period of 1 or 2 hours.

2. Management games - is a training method where "trainees are faced with a

simulated situation and are required to make an ongoing series of decisions about
that situation” (Aldag and Stearns, 1991, as cited in Medina, 1999, p. 98).

3. Case studies - this method present actual situations in organizations and enable
one to examine successful and unsuccessful operations. It emphasizes "the
manager's world, improves communication skills, offers rewards of solving a
mystery, possesses the quality of illustration, and establishes concrete reference
points for connecting theory with practice"(Wheelen and Hunger,1992 , as cited in
Medina, 1999, p. 97). (1999, p.98)
Medina recommended the following methods to develop the interpersonal skills of a
manager:

1. Role-playing - is a method by which the trainees are assigned roles to play in

each case incident. They are provided with a script or a description of a given
problem and of the key persons they are to play. The purpose of this method is
to improve the skill of the trainees in human relations, supervision, and
leadership.

2. Behavior modelling - this method attempts to influence the trainee by "showing

model persons behaving effectively in a problem situation." The trainee is expected
to adapt the behavior of the model and use it effectively in some instances later.

3. Sensitivity training - under this method, awareness and sensitivity to behavioral

patterns of oneself and others are developed.

4. Transactional analysis - aims to improve intrapersonal and interpersonal skills of

an individual (Yoder and Standohar, 1987 as cited in Medina, 1999). (p.100)
To learn the actual responsibility of a manager, he suggested the following:

1. On-the-job experience - this method provides experience valuable

opportunities for the trainee to learn various skills while engaged in the
performance of a job.

2. Coaching - this method requires a senior manager to assist a lower-level

manager by teaching him the needed skills and generally providing
directions, advice, and helpful criticism. The senior manager must be skilled
himself and can educate; otherwise the method will be ineffective.

3. Understudy - under this method, a manager works as assistant to a

higher-level manager and participates in planning and other managerial
functions until he is ready to assume such position himself. Occasionally,
the assistant can take over. (1999, p. 101)
First-hand experience of the actual job is necessary to broaden the grasp of
a trainee. Concerning this, he proposed the following:

1. Position rotation - the manager is given assignments in a variety of

departments to expose him to different functions of the organization.

2. Multiple Management - this is premised on the idea that junior

executives must be provided with means to prepare them for higher
management positions. To achieve this, a junior board of directors is
created consisting of junior executives as members. The board is given the
authority to discuss problems that the senior board could discuss. The
members are encouraged to take a broad business outlook rather than
concentrating on their specialized lines of work. (1999, p. 101)
Performance Appraisal

Performance appraisal refers to the assessment of employee performance.

Bartel and Martin (1991 as cited in Medina, 1999) listed the purposes of
performance appraisal as follows:

1. To influence, in a positive manner, employee performance and

development.

2. To determine merit, pay increases.

3. To plan for future performance goals.

4. To determine training and development needs; and

5. To assess the promotional potential of employees. (p. 101 – 102)

Ways of Appraising Performance

Cruden and Sherman (1984) stated the following methods for performance appraisal:

1. Rating scale method - where a scale represents the trait to be assessed and the evaluator indicated the
degree to which the individual possesses the trait or characteristic.
2. Essay method - where a composition of statements that best describe the person evaluated is devised.
3. Management by objectives method - where specific goals are set collaboratively for the organization, for
various subunits, and for each individual member. Individuals are, then, evaluated based on how well they
have achieved the results specified by the goals.
4. Assessment center method - where one is evaluated by persons other than the immediate superior. This
method is used for evaluating managers.
5. Checklist method - where the evaluator checks statements on a list that are deemed to characterize an
employee's behavior or performance.
6. Work standards method - where standards are set for the realistic worker output and later used in
evaluating the performance of non- managerial employees.
7. Ranking method - where employees are ordered according to criteria.
8. Critical incident method - where the evaluator recalls and writes down specific (but critical) incidents that
indicate the employee's performance. A critical incident occurs when employee's behavior results in an
unusual success or failure on some parts of the job. (as cited in Medina, 1999, pp. 102 – 103)
Employment Decisions
After the performance evaluation, the management will make its
employment decisions. According to Medina (1999) these may include the
following:
1. Monetary rewards – given to employees who have reached or
surpassed the given standards.
2. Promotion - this refers to the advancement of a person into a position of
higher pay and greater responsibilities and which is given as a reward for
competence and ambition.
3. Transfer - this is the action of moving a person to a different task of
similar level of responsibility in the organization. This is done to help
individuals develop and grow.
4. Demotion - this is the action of moving an employee from one position to
another which offers lesser pay or responsibility. It can be used as a
punishment or as a short-term measure until the employee is offered a
higher position.
Separation

Separation has two types (Medina, 1999): voluntary and involuntary.

Voluntary separation (or termination) demands investigation from the

management to ascertain the cause; and if the problem is of the
organization, corrective action must take place.

Involuntary separation (or termination) is the last resort of a company. It

happens when an employee's performance did not improve after training
efforts or when an employee violated the company rules and regulations.
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 6: Staffing the Engineering Organization

Answer the following:

1. Why is staffing an important activity?

2. What is the purpose of the human resource planning?

3. What is the implication of the cost of the wrong decision in the

selection process?
THANK YOU
Module 7: COMMUNICATING IN
ORGANIZATIONS

CE 9: Engineering Management
I. INTRODUCTION
Organizations cannot function properly without effective communication, so that, this unit
discusses the effective use of communication in management. It also consists of different
function, process, techniques and forms of communication. In management,
communication must be made for a purpose and because it has a cost attached to it, it
must be used effectively.
 ESSENTIAL QUESTIONS
1.What is Communication?
2.What are the functions and processes of Communication?
3.What are the Forms of Communication?
4.What are the techniques in Communicating Organization?
5.What is the Management Information System? What are its purposes?

 INTENDED LEARNING OUTCOMES

1.Students will learn the importance of communication in the field of being a project
engineer or engineer manager.
2.Students will learn the techniques in communicating organization.
3.Students will learn the management information system and its purposes.
II. DISCUSSION
WHAT IS COMMUNICATION?

Morris Philip Wolf and Shirley Kuiper (1987, as cited in Medina, 1999,
p. 110) defined communication as "a process of sharing
information through symbols, including words and messages."

It is very flexible that it can be used by anyone and be done with any
medium.
FUNCTIONS OF COMMUNICATION
Scotch and Mitchell (1979) listed the uses of communication as follows:

1. Information function — Information provided through communication may be

used for decision-making at various work levels in the organization. A construction
worker, for instance, may be given instructions on the proper use of certain
equipment; this will later provide him with a guide in deciding which equipment to
use in particular circumstances.

Another concern is the manager who wants to make sure that his decision in
promoting an employee to a higher position is correct. Through communication,
the information provided will minimize if not eliminate the risk.
in Medina, 1999, p. 111 - 112)
FUNCTIONS OF COMMUNICATION
2. Motivation function — Communication is also oftentimes used as a means
to motivate employees to commit themselves to the organization's objectives.

3. Control function — when properly communicated, reports, policies, and

plans define roles; clarify duties, authorities and responsibilities. Effective
control is, then, facilitated.

4. Emotive function — When feelings are repressed in the organization,

employees are affected by anxiety, which, in turn, affects performance,
Whatever types of emotions are involved, whether satisfaction, dissatisfaction,
happiness, or bitterness, communication provides a means to decrease the
internal pressure affecting the individual. (as cited in Medina, 1999, p. 111 -
112)
COMMUNICATION PROCESS
THE COMMUNICATION PROCESS
Newstrom and Davis (1993, as cited in Medina, 1999) enumerated the eight steps
of communication process: develop an idea, encode, transmit, receive, decode,
accept, use, and provide feedback. Medina discussed these steps below.

1. Develop an Idea
The most important step in effective communication is developing an idea. It is
important that the idea to be conveyed must be useful or of some value. An
example of a useful idea is how to prevent accidents in workplaces.

2. Encode
The next step is to encode the idea into words, illustrations, figures, or other
symbols suitable for transmission. The method of transmission should be
determined in advance so that the idea may be encoded to conform to the specific
requirements of the identified method. An example of an encoded message using
telefax as a means of transmission is shown in Figure 6.2.
3. Transmit
After encoding, the message is now ready for transmission through the use of an
appropriate communication channel. Among the various channels used include the
spoken word, body movements, the written word, television, telephone, radio, an artist's
paint, electronic mail, etc.

Proper transmission is very important so the message sent will reach and hold the
attention of the receiver. To achieve this, the communication channel must be free of
barriers, or interference (sometimes referred to as noise).

4. Receive
The next step is the communication process is the actual receiving of the message by
the intended receiver. The requirement is for the receiver to be ready to receive at the
precise moment the message relayed by the sender.
The message may be initially received by a machine or by a person. In any case,
communication stops when the machine is not turned or tuned on to receive the
message, or the person assigned to receive the message does not listen or pay
attention properly.
OPPORTUNITY

Successful managers become possible only if those having the ability and
5. Decode

This step means translating the message of the sender to a form that will
make sense to the recipient. If the receiver knows the language and
terminology used in the message, successful decoding may be achieved.
Examples of various terms encoded and decoded are shown in Figure
6.3.

If the receiver understands the purpose and the background situation of

the sender, decoding will be greatly improved. In legal practice, for
instance, the declarations of a dying person have more weight.
6. Accept
The next step is for the receiver to accept or reject the message.
Sometimes, acceptance (or rejection) is partial. An example is provided as
follows:

A newly-hired employee was sent to a supervisor with a note from his

superior directing the supervisor to accept the employee into his unit and
to provide the necessary training and guidance.
As the supervisor feels that he was not consulted in the hiring process, he
thinks that his only obligation is to the employee in his unit and nothing
more.
The factors that will affect the acceptance or rejection of a message are
as follows:

the accuracy of the message;

whether or not the sender 'has the authority to send the message and/or
require action; and

the behavioral implications for the receiver.

7. Use
The next step is for the receiver to use the message. If the message provides
information of importance to a relevant activity, then the receiver could store it and
retrieve it when required. If the message requires a certain action to be made, then
he may do so. Otherwise, he discards it as soon as it is received. All of the above-
mentioned options will depend on his perception of the message.

8. Provide Feedback
The last step in the communication process is for the receiver to provide feedback
to the sender. Depending on the perception of the receiver, however, this important
step may not be made.

Even if feedback is relayed„ it may not reach the original sender of the message.
This may be attributed to the effects of any of the communication barriers. (1999,
pp. 113-116)
FORMS OF COMMUNICATION
Communication consists of two major forms;

1. Verbal

2. Nonverbal
Verbal Communication
Verbal communication has two modes of transmission: oral and written.

a. Oral communication involves the sense of hearing. The receiver will hear
the message coming from the sender. Though, usually, it involves body
language and usage of other senses such as feeling, smelling, tasting and
touching.

b. Written communication, on the other hand, involves the sense of sight. It

is helpful when there are constraints in using oral communication (e.g. time
and cost). However, it also has its own limitations. The message is limited
into visuals only. For this reason, it is combined with other means. For an
instance, Perfume companies lace their fliers and such with the scent of their
products. To add, Christmas cards are combined with Christmas tunes to
amplify its message
Nonverbal Communication

Nonverbal communication uses any means of communication except the

verbal means.

This includes body language, time, space, touch, clothing, appearance,

and aesthetic elements (Medina, 1999).

Nieremberg (1968, as cited in Medina, 1999) stated that body language

consists of the following: gestures, bodily movement, posture, facial
expression, and mannerisms. Due to its broadness, nonverbal
expressions are ambiguous. Only the sender is at advantage when using
this kind of communication.
THE BARRIERS TO COMMUNICATION
The efficiency of message transmission can be affected by different
factors. Medina (1999) classified the barriers to communication as follows:

1. Personal barriers

2. Physical barriers

3. Semantic barriers
Personal Barriers
Personal barrier includes emotions, values, poor listening habits, sex,
age, race, socioeconomic status, religion, education, and the equivalent.

Emotions blur rational thinking. People with different perspective might

misunderstand each other. The list continues.
Physical Barriers
Medina (1999) refers to physical barriers as interferences to effective
communication occurring in the environment where the communication is
undertaken. The very loud sound produced by a passing jet temporarily drowns
out the voice of a guest delivering a speech. Such distraction does not allow full
understanding of the meaning of the entire message and is an example of a
physical barrier.

Physical barriers include distances between people, walls, a noisy jukebox near a
telephone, etc. An office that is too tidy may sometimes inhibit a person from
meeting the occupant of the once face-to-face, A menacing pet dog (or secretary)
posted near the door may also prevent a person from directly communicating with
the person behind the door.

Another physical barrier to communication is wrong timing. For instances how may
one expect a person who has just lost a loved one to act on an inquiry from a
fellow employee? (pp. 118-119)
Semantic Barriers
Browman and Branchaw (1984, as cited in Medina, 1999) defined semantics as
“the study of meaning as expressed in symbols (p. 119).” All means of
communication are considered symbols and when the symbol is failed to be
understood, that is deemed as a barrier to communication.

Agee (1988) described a semantic barrier as the "interference with the reception
of a message that occurs when the message is misunderstood even though it is
'received exactly as transmitted” (as cited in Medina, 1999, p. 119).

For example, the words "wise" and "salvage" will have different meanings to an
English speaking foreigner than to an ordinary Filipino.
OVERCOMING BARRIERS TO COMMUNICATION

Before the barriers affect the efficiency of communication, a preemptive measure

must be performed. Medina (1999) recommended the following:

1. Use feedback to facilitate understanding and increase the potential for

appropriate action.

2. Repeat messages in order to provide assurance that they are properly

received.

3. Use multiple channels so that the accuracy of the information may be

enhanced.

4. Use simplified language that is easily understandable and which eliminates the
possibility of people getting mixed-up with meanings. (p. 120)
TECHNIQUES FOR COMMUNICATING IN ORGANIZATIONS
Medina (1999) classified the types of flow of communication as follows:
downward, upward, or horizontal. He discussed the purpose and
techniques of each type as stated below.

1. Downward Communication
Downward communication refers to message flows from higher levels of
authority to lower levels. 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 indoctrinate or motivate
Among the techniques used in downward communication are as
follows:

1. letters,
2. meetings,
3. telephones,
4. manuals,
5. handbooks, and
6. newsletters.

Letters are appropriate when directives are complex nod precise actions
are required. When orders are simple but the result depends largely on
employee morale, techniques that provide personal interchange like meet
and the telephone, are appropriate. Modern technology has made it
possible for people to hold meetings oven if they are thousands of
kilometers apart from each other.
Manuals are useful sources of information regarding company policy,
procedures, and organization. Unlike using persons as sources of
information, manuals are available whenever it is needed.

Handbooks provide more specific information about the duties and

privileges of the individual worker. It has also the advantage of being
available whenever needed.

Newsletters provide a mixture of personal, social, and work-related

information. Articles about new hiring, promotions; birthdays of
employees, questions and answers about work related issues are
presented.
2. Upward Communication
Upward communication refers to messages from persons in lower-level
positions to persons in higher positions. The messages sent usually
provide information on work progress, problems encountered, suggestions
for improving output, and personal feelings about work and non-work
activities

Among the techniques used in upward communication are:

1. formal grievance procedures,
2. employee attitude and opinion surveys,
3. suggestion systems,
4. door policy,
5. informal gripe sessions,
6. task forces, and
7. exit interviews.
Formal Grievance Procedures. Grievances are part of a normally
operating organization. To effectively deal with them, organizations
provide a system for employees to air their grievances,

Holley and Jennings (1991, as cited in Medina, 1999, p.122) define

grievance as "any employee’s concern over a perceived violation of the
labor agreement that is submitted to the grievance procedure for eventual
resolution." Grievances represent an open, upward communication
channel whereby employees offer suggestions to management.

Depending on the size and nature of the company, grievance procedure

may consist of a single step or number of steps. Companies with a
collective bargaining agreement with its union must refer to the grievance
procedure spelled out in the law on labor relations (Manansala, 1991, as
cited in Medina, 1999).
Employee Attitude and Opinion Surveys. Finding out what the
employees the company is very important. The exercise, however,
requires expertise and the company may not be prepared to do it. If the
organization's operation is large enough to justify such activity, then it
must be done. If the assistance of an outside research firm is considered,
a benefit-cost analysis must be used as a deciding factor.

Suggestion Systems. Suggestions from employees’ important sources

cost-saving and production ideas. Even if majority of the suggestions are
not feasible, a simple means of acknowledging to employee morale.

Open-Door Policy. An open-door policy, even on a limited basis provides

the management with an opportunity to act on difficulties before they
become full-blown problems.
Informal Gripe Sessions. Informal gripe sessions can be used positively
if management knows how to handle them. When employees feel free to
talk and they are assured of not being penalized for doing so, then
management will be spared with lots of efforts determining the real causes
of problems in the company.

Task Forces. When a specific problem or issue arises, task force may be
created and assigned to deal with the problem or issue. Since membership
of task consists of management and non-management personnel,
integration and teamwork are fostered, creativity is enhanced, and
interpersonal skills are developed.

Exit Interviews. When employees leave an organization for any reason, it

is to the advantage of management to know the real reason, If there are
negative developments in the organization that management not aware of,
exit interviews may provide some of the answers.
3. Horizontal Communication
Horizontal communication refers to messages sent to individuals or groups
from another of the same organizational level or position.

The purposes of horizontal communication are:

1. to coordinate activities between departments

2. to persuade others at the same level of organization
3. to pass on information about activities or feelings

Among the techniques appropriate for horizontal communication are:

1. memos, meetings,
2. telephone,
3. picnics,
4. dinners, and
5. other social affairs. (pp. 120-124)
MANAGEMENT INFORMATION SYSTEM
Boone and Kurtz (1979, as cited in Medina, 1999) expounded
Management Information System (MIS) as “an organized method of
providing past, present, and projected information on internal operations
and external intelligence for use in decision-making” (p. 124).

Nickels (1987) stated that the MIS utilized by corporate firms today
includes “written and electronically based systems from sending reports,
memos, bulletins, and the like” (1979 as cited in Medina, 1999). It allows
communication among the managers of different departments.
The Purposes of MIS
Wheelen and Hunger (1992) enumerated the reasons for MIS establishment as
follows:

1. To provide a basis for the analysis of early warning signals that can originate
both externally and internally.

2. To automate routine clerical operations like payroll and inventory reports.

3. To assist managers in making routine decisions like scheduling orders,

assigning orders to machines, and reordering supplies.

4. To provide the information necessary for management to make strategic or

non-programmed decisions. (as cited in Medina, 1999, p. 125 - 126)
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 7: Communicating on Organizations
Answer the following:

1. How important is communicating as a function of engineering

management?

2. Discuss the importance of communicating in your own perspective.

3. What do you think could be the effect of poor communication on every

employee of a private construction firm?
THANK YOU
Module 8: MOTIVATION,
LEADING AND CONTROLLING

CE 9: Engineering Management
MOTIVATION
II. DISCUSSION
WHAT IS MOTIVATION?

Ferrel and Hirt (1989) described motivating as the act of “giving

employees reasons or incentives... to work to achieve organizational
objectives” (as cited in Medina, 1999, p. 131).

Matlin (1992) defined motivation as the “process of activating

behavior, sustaining it, and directing it toward a particular goal” (as
cited in Medina, 1999). His definition emphasizes three parts:
activating, sustaining and directing.
FACTORS CONTRIBUTING TO MOTIVATION
One’s desire to improve work performance depends on some factors. Cole and
Hamilton defined them as follows:

1. Willingness to do a job. People who like what they are doing are highly
motivated to produce the expected output.

2. Self-confidence in carrying out a task. When employees feel that they have
the required skill and training to perform a task, the more motivated they become.

3. Needs satisfaction. People will do their jobs well if they feel that by doing so,
their needs will be satisfied. (1992, as cited in Medina, 1999, p. 132)
THORIES OF MOTIVATION
The following are the four most prominent theories of motivation suggested by
Medina:

1. Maslow’s needs hierarchy theory

2. Herzberg’s two-factor theory
3. Expectancy theory
4. Goal setting theory
 1. Maslow’s Needs Hierarchy Theory

The Psychologist Abraham

Maslow theorized that human
beings have five basic
hierarchical needs:

Adapted from Engineering Management (p. 134), by R. G. Medina, 1999, RBSI.

Process of Motivation
2. Herzberg’s Two-Factor Theory
Developed by Frederic Herzberg, this theory states that an employee’s
satisfaction or dissatisfaction depends on personal reasons (Kreitner, 1992 as
cited in Medina, 1999).
Herzberg found out two classifications of factors connected with the employee’s
contentment.

1. Satisfiers (motivation factors): achievement, recognition, the work itself,

responsibility, advancement and growth

2. Dissatisfiers (hygiene factors): company policy and administration,

supervision, relationship with supervisor, peers and subordinates, work
conditions, salary, personal life and security
2. Herzberg’s Two-Factor Theory

Adapted from Engineering Management (p. 136), by R.

G. Medina, 1999, RBSI.
3. Expectancy Theory

Medina (1999) defined expectancy theory as “a motivation model based on the

assumption that an individual will work depending on his perception of the
probability of his expectations to happen” (p. 135).

The theory suggests that one’s motivation depends on two factors: expectancies
and valences.

Medina defined expectancy as a “belief about the likelihood or probability that a

particular behavioral act will lead to a particular outcome (like a promotion)” and
valence as “the value an individual places on the expected outcomes or rewards”
(1999, p. 136).
3. Expectancy Theory

Steers (1991) stated that expectancy theory is based on the following

assumptions:

1. A combination of forces within the individual and in the environment determines

behavior.
2. People make decisions about their own behavior and that of organizations.
3. People have different types of needs, goals, and desires.
4. People make choices among alternative behaviors based on the extent to which
they think certain behavior will lead to a desired outcome. (as cited in Medina,
1999, p. 138)
4. Goal Setting Theory

Kreitner (1992, as cited in Medina, 1999, p. 138) defined goal setting as the
process of “improving performance with objectives, deadlines or quality standard.”
When individuals or groups are assigned specific goals, a clear direction is
provided, and which later motivates them to achieve these goals.

Bartel and Martin simplified Edwin Locke’s model of the theory into four
components (as cited in Medina, 1999):
1. Goal content
2. Goal commitment
3. Work behavior
4. Feedback aspects
TECHNIQUES OF MOTIVATION

People can be motivated through different methods. Kreitner (1992) classified

these techniques as follows:

1. motivation through job design

2. motivation through rewards

3. motivation through employee participation

4. other motivation techniques for the diverse work force (as cited in Medina,
1999, p. 141)
THEORIES OF MOTIVATION
An Array Monetary and Other Incentives for Employees
Adapted from Engineering Management (p. 144), by R. G. Medina, 1999, RBSI.

QQQ
Other Motivation Techniques

Engineer managers need to adapt other motivation techniques when individual

differences and the biological clock of human beings are taken into consideration.
Medina (1999) discussed the following:

1. Flexible work schedules

2. Family support services
3. Sabbaticals
LEADING
WHAT IS LEADING?

Bartel and Martin (1991, as cited in Medina, 1999) defined leading as a

management function which "involves influencing others to engage in the work
behaviors necessary to reach organizational goals” (p. 155). In short, people who
are tasked to manage other people are considered leaders.

While leading refers to the function, leadership refers to the process.

HOW LEADERS INFLUENCE OTHERS

Engineer managers are expected to maintain effective work forces. To be able to

do so, they are required to perform leadership roles. Leaders are said to be able
to influence others because of the power they possess. Power is the ability to
influence.

Bases of Power

1. Legitimate power
2. Reward power
3. Coercive power
4. Referent power
5. Expert power
THE NATURE OF LEADERSHIP

Newstrom and Davis referred to leadership as "the process of influencing and

supporting others to work enthusiastically toward achieving objectives” (1993, as
cited in Medina, 1999). It is expected of any manager to have leadership skills.
Without leadership, even if there is a leader, no unit can achieve its objectives.
Traits of Effective Leaders

Medina (1999) stated that researchers identified certain traits that are beneficial to
developing effective leaders. These traits are as follows:

1. A high level of personal drive

2. The desire to lead
3. Personal integrity
4. Self-confidence
5. Analytical ability or judgment
6. Knowledge of the company, industry or technology
7. Charisma
8. Creativity
9. Flexibility
Leadership Skills

Medina (1999) tackled the skills an effective leader must have. They are:

1. Technical skills - Technical skill is the specialized knowledge needed to

perform a job

2. Human skills - the ability of a leader to deal with people, both inside and
outside the organization. Good leaders must know how to get along with
people, motivate them, and inspire them.

3. Conceptual skills - "the ability to think in abstract terms, to see how parts fit
together to form the whole” (Ferrel and Hirt, 1989, as cited in Medina, 1999).
BEHAVIORAL APPROACHES TO LEADERSHIP STYLES

Those in positions of leadership exhibit a pattern of behavior that is unique and

different from other patterns. This total pattern of behavior is called leadership
style.

There are several approaches used in classifying leadership styles. Newstrom and
Davis (1993, as cited in Medina, 1999) classified them as follows:

1. According to the ways leaders approach people to motivate them.

2. According to the way the leader uses power.
3. According to the leader's orientation towards task and people. (p. 162)
WAYS LEADERS USES POWER
Medina also talked about leadership styles variation according to how power is
used. They are as follows:

1. Autocratic Leaders. Leaders who make decisions themselves, without

consulting subordinates are called autocratic leaders. Motivation takes the form of
threats, punishment, and intimidation of all kinds.

2. Participative Leaders. When a leader openly invites his subordinates to

participate or share in decisions, policymaking and operation methods, he is said
to be a participative leader.

3. Free-Rein Leaders. Leaders who set objectives and allow employees or

subordinates relative freedom to do whatever it takes to accomplish these
objectives, are called free-rein leaders. They are also referred to as laissez-faire
leaders.
Leaders Orientation toward Tasks and People

Leaders may be classified according to how they view tasks and people. Medina
(1999) argued that a leader may be any of the two:

1. Employee Oriented. A leader is said to be employee- oriented when he

considers employees as human beings of "intrinsic importance and with individual
and personal need (Higgins, 1992 as cited in Medina, 1999)" to satisfy.

2. Task Oriented. A leader is said to be task-oriented if he places stress on

production and the technical aspects of the job and the employees are viewed as
the means of getting the work done. (p. 165)
CONTROLLING
WHAT IS CONTROLLING?

Higgins (1992) defined controlling as the "process of ascertaining whether

organizational objectives have been achieved; if not, why not; and
determining what activities should then be taken to achieve objectives
better in the future (as cited in Medina, 1999, p. 179)."

Controlling completes the cycle of management functions. Objectives and goals

that are set at the planning stage are verified as to achievement or completion at
any given point in the organizing and implementing stages. When expectations
are not met at scheduled dates, corrective measures are usually undertaken.
STEPS IN THE CONTROL PROCESS

According to Medina (1999), the control process consists of four steps, namely:

1. Establishing performance objectives and standards

2. Measuring actual performance

3. Comparing actual performance to objectives and standards, and

4. Taking necessary action based on the results of the comparisons.

TYPES OF CONTROL
Medina (1999) distinguished three types of control, namely:

1. Feed forward control - When management anticipates problems and pre- vents their
occurrence, the type of control measure undertaken is called feedforward control. This
type of control provides the assurance that the required human and nonhuman
resources are in place before operations begin.

2. Concurrent control - When operations are already ongoing and activities to detect
variances are made, concurrent control is said to be undertaken. It is always possible that
deviations from standards will happen in the production process. When such deviations
occur, adjustments are made to ensure compliance with requirements. Information on the
adjustments are also necessary inputs in the pre-operation phase.

3. Feedback control - When information is gathered about a completed activity, and in

order that evaluation and steps for improvement are derived, feedback control is undertaken.
Corrective actions aimed at improving future activities are features of feedback control.
COMPONENTS OF ORGANIZATIONAL CONTROL
SYSTEMS
Medina enumerated the parts of an organizational control system as follows:

1. Strategic plan

2. Long-range financial plan

3. Operating budget

4. Performance appraisals

5. Statistical reports

6. Policies and procedures

STRATEGIC CONTROL SYSTEMS
To be able to assure the accomplishment of the strategic objectives of the company,
strategic control systems become necessary. According to Medina (1999), these systems
consist of the following:

1. Financial analysis - The success of most organizations depends heavily on its financial
performance. It is just fitting that certain measurements of financial performance be
made so that whatever deviations from standards are found out, corrective actions may
be introduced.

2. Financial ratio analysis - is a more elaborate approach used in controlling activities.

Under this method, one account appearing in the financial statement is paired with
another to constitute a ratio. The result will be compared with a required norm which is
usually related to what other companies in the industry have achieved, or what the
company has achieved in the past. (e.g. liquidity, efficiency, financial leverage,
profitability)
IDENTIFYING CONTROL PROBLEMS

When the operation encounters a problem, it is the duty of the engineer manager
to act. Kreitner states three approaches:

1. Executive reality check – Top management periodically work/observe at a

lower-level job to become more aware of operations

2. Comprehensive internal audit - An internal audit is one undertaken to

determine the efficiency and effectivity of the activities of an organization.

3. Symptoms of inadequate control - If a comprehensive internal audit cannot

be availed of for some reason, the use of a checklist for symptoms of
inadequate control may be used.
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 8: Motivation and Leading

Answer the following:

1. If you are an engineer manager at a large construction firm, what is

one thing that motivates you to be a consistent good and effective
leader? Explain why?

2. If you are a project engineer in a private company, what benefits do

you get from being a leader, except for your high salary?
THANK YOU
Module 9:
APPLICATIONS IN MANAGEMENT

CE 9: Engineering Management
I. INTRODUCTION
This last unit will explain some important things that a company or business should
consider: Applications in management, such as Managing Productions and Service
Operations, Managing the Marketing Function, and Managing the Finance Function.

 ESSENTIAL QUESTIONS
1. What Operation Management is?
2. What are the Types of Transformation Process
3. What are the Important Parts of Productive Systems?
4. What is the Marketing Concept?
5. What the Finance Function is?
6. What Factors must be considered for the best source of financing?

 INTENDED LEARNING OUTCOMES

1. The students will know how to apply their learned concepts and ideas in previous
topics when it comes to service operations, marketing function, and the finance function.
WHAT IS OPERATION?
Aldag and Stearns refer to operation as "any process that accepts inputs and uses
resources to change those inputs in useful ways (1991, as cited in Medina, 1999, p. 201)."
As shown in Figure, the inputs include land, labor, capital, and entrepreneurship. The
transformation process converts the inputs into final goods or services.
WHAT IS OPERATION MANAGEMENT?
Aldag and Stearns defined operations management as "the process of planning, organizing,
and controlling operations to reach objectives efficiently and effectively” (1991, as cited in
Medina, 1999, p. 201). This chapter focuses on effectiveness and efficiency.
TYPES OF TRANSFORMATION PROCESS

Schemenner (1991) elaborated the types of transformation process an engineer

manager must be familiar with. They are as follows:
1.Manufacturing processes
a) Job shop
b) Batch flow
c) Worker-paced line flow
d) Machine-paced line flow
e) Batch/continuous flow hybrid continuous flow
2.Service processes
a) Service factory
b) Service shop
c) Mass service
d) Professional service
MANUFACTURING PROCESSES
Manufacturing processes are those that refer to the making of products by hand or
with machinery

Job Shop. Schmenner defined the job shop’s kind of production which is "based
on sales orders for a variety of small lots” (1991, as cited in Medina, 1999). Job
shops are very useful components of the entire production effort, since they
manufacture products in small lots that are needed by but cannot be produced
economically by many companies.

Batch Flow. The batch flow process is where lots of generally own designed
products are manufactured.
1. There is flexibility to produce either low or high volumes.
2. Not all procedures are performed on all products.
3. The types of equipment used are mostly for general purpose.
MANUFACTURING PROCESSES
Worker-Paced Assembly Line. An assembly line refers to a production layout
arranged in a sequence to accommodate processing of large volumes of
standardized products or services.
Examples of worker-paced assembly lines are food marts like McDonalds and
Shakeys.

Machine-Paced Assembly Line. This type of production process produces mostly

standard products with machines playing a significant role.
Examples of machine-paced assembly line are auto- mobile manufacturers like
General Motors and Ford Motors.
MANUFACTURING PROCESSES
Continuous Flow. The continuous flow processing is characterized by "the rapid
rate at which items move through the system." This processing method is very
appropriate for producing highly standardized products like calculators,
typewriters, automobiles, televisions, cellular phones, etc.

Batch/Continuous Flow Hybrid. This method of processing is a combination of the

batch and the continuous flow. Two distinct layouts are used, one for batch and
one for the continuous flow. The typical size of operation is also very large giving
opportunities for economies of scale.
SERVICE PROCESSES

Service Factory. A service factory offers a limited mix of services which results to
some economies of scale in operations. This also affords the company to compete
in terms of price and speed of producing the service

Service Shop. A service shop provides a diverse mix of services. The layout used
are those for job shops or fixed position and are adaptable to various
requirements.

Mass Service. Mass Service Company provides services to many people

simultaneously unique processing method is, therefore, necessary to satisfy this
requirement. To be able to serve many people, mass service companies offer
limited mix of services
SERVICE PROCESSES

Professional Services. These are companies that provide specialized services to

other firms or individuals. Examples of such firms are as follows (McCarthy and
Perreault, 1990, as cited in Medina, 1999)

Professional service firms offer a diverse mix of services. There is a lower

utilization of capital equipment compared to the service factory and the service
shop. The process pattern used is very loose. The process layout used is identical
to the job shop.
IMPORTANT PARTS OF PRODUCTIVE SYSTEMS

Medina enumerated the six important activities of productive systems as follows:

1. product design
2. production planning and scheduling
3. purchasing and materials management
4. inventory control
5. workflow layout
6. quality control
WHAT IS THE MARKETING CONCEPT?

Medina suggested that “the engineer must try to satisfy the needs of his clients by
means of a set of coordinated activities. When clients are satisfied with what the
company offers, they continually provide business” (1999, p. 221). Continuously
supplying the demand of clients will sustain their investment.
THE ENGINEER AND THE FOUR P'S OF MARKETING

To meet the demands of the clients, Medina created the four P's of marketing
which are as follows:
1. the product (or service)
2. the price
3. the place, and
4. the promotion.
STRATEGIC MARKETING FOR ENGINEERS

Medina explained that companies, including those managed by engineer

managers, must serve markets that are best fitted to their capabilities.

To achieve this end, a very important activity called strategic marketing is

undertaken.
Under this set-up, the following steps are made:

1. selecting a target market

a. the size of the market, and
b. the number of competitors serving the market.

2. developing a marketing mix

WHAT IS THE FINANCE FUNCTION?

In his book, Business Finance, Medina emphasized that finance function is a

crucial management responsibility because it deals with the “procurement and
administration of funds with the view of achieving the objectives of business”
(1988 as cited in Medina, 1999, p. 245).

If the engineer manager is running the firm as a whole, he must be concerned with
the determination of the amount of funds required, when they are needed, how to
procure them, and how to effectively and efficiently use them.
THE DETERMINATION OF FUND REQUIREMENTS

According to Nickels and others, every organization needs fund for the following
requirements:
1. to finance daily operations
2. to finance the firm's credit services
3. to finance the purchase of inventory
4. to finance the purchase of major assets
THE SOURCES OF FUNDS
Financing activities will require engineering firms to utilize its cash inflows coming
from different sources, Medina named them as follows:
1. Cash sales. Cash is derived when the firm sells its products or services.
2. Collection of Accounts Receivables. Some engineering firms extend credit to
customers. When these are settled, cash is made available.
3. Loans and Credits. When other sources of financing are not enough, the firm
will have to resort to borrowing.
4. Sale of assets. Cash is sometimes obtained from the sale of the company's
assets.
5. Ownership contribution. When cash is not enough, the firm may tap its
owners to provide more money.
6. Advances from customers. Sometimes, customers are required to pay cash
advances on orders made. This helps the firm in financing its production activities.
(1999, p. 249)
THE BEST SOURCE OF FINANCING

As there are various fund sources, the engineer manager, or whoever is in charge,
must determine which source is the best available for the firm.
To determine the best source, Schall and Haley recommended that the following
factors must be considered (1991, as cited in Medina, 1999):

1. flexibility
2. risk
3. income
4. control
5. timing
6. other factors like collateral values, flotation costs, speed, and exposure.
THE FIRM'S FINANCIAL HEALTH

Medina enumerated the objectives of engineering firms as follows:

1. to make profits for the owners.

2. to satisfy creditors with the repayment of loans plus interest.
3. to maintain the viability of the firm so that customers will be assured of a
continuous supply of products or services, employees will be assured of
employment, suppliers will be assured of a market, etc.
INDICATORS OF FINANCIAL HEALTH

Medina suggested the use of three basic financial statements to determine the
financial health of an engineering firm. These are as follows:

1. Balance sheet - also called statement of financial position.

2. Income statement - also called statement of operations.
3. Statement of changes in financial position. (1999, p. 259)
RISK MANAGEMENT AND INSURANCE
Medina (1999) also discussed the definition of risk, its types and how it is
managed.

The engineer manager, especially those at the top level, is entrusted with the
function of making profits for the company. This would happen if losses brought by
improper management of risks are avoided.

Risk is a very important concept that the engineer manager must be familiar with.

Risks confront people every day. Companies are exposed to them. Newspapers
report daily the destruction of life and property. Companies that could not cope
with losses are forced to shut down, according to reports.

Fortunately, the engineer manager is not entirely helpless. He can use sound risk
management practices to avoid the threat of bankruptcy due to losses.
Risk Defined

Risk refers to the uncertainty concerning loss or injury. The engineering firm is
faced with a long list of exposure to risks, some of which are as follows:
1. fire
2. theft
3. floods
4. accidents
5. nonpayment of bills by customers (bad debts)
6. disability and death
7. damage claim from other parties.
Types of Risk

Risks may be classified as either pure or speculative. Pure risk is one in which
“there is only a chance of loss” (Kapoor and others, 1991, as cited in Medina,
1999, p. 261). This means that there is no way of making gains with pure risks. An
example of pure risk is the exposure to loss of the company's motor car due to
theft. Pure risks are insurable and may be covered by insurance.

Speculative risk is one in which there is a chance of either loss or gain. This type
of risk is not insurable. An example of a speculative risk is investment in common
stocks. If one wants to make gains in the common stock market, the nuances and
intricacies of investments must be learned and properly applied. Also, operating
the engineering firm is a kind of speculative risk. If profits are expected, then
proper management techniques must be used.
What is Risk Management

Risk management is "an organized strategy for protecting and conserving assets
and people” (Kapoor and others, 1991, as cited in Medina, 1999, p. 261). The
purpose of risk management is “to choose intelligently from among all the
available methods of dealing with risk in order to secure the economic survival of
the firm” (Dorfman, 1978, as cited in Medina, 1999, p. 261).

Risk management is designed to deal with pure risks, while the applications of
sound management practices are directed towards speculative risks that are
inherent and cannot be avoided.
Methods of Dealing with Risk

There are various methods of dealing with risks. They are as follows (Mehr, 1986,
as cited in Medina, 1999, p. 262):

1. the risk may be avoided

2. the risk may be retained
3. the hazard may be reduced
4. the losses may be reduced
5. the risk may be shifted
III. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)

Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture

Notes
IV. ASSESSMENT
PLATE NO. 9: Controlling

Answer the following:

1. How do strategic plans provide a basis for control?

2. When the engineer manager reviews the financial statements of the

company under his supervision, what benefits does he derive?
THANK YOU