Introduction to Engineering Management 3.

Cooperate fully with workers to ensure that they use the

proper method.
MANAGEMENT
4. Divide work and responsibility so that management is
• The act of getting people together to accomplish desired
responsible for planning work methods using scientific
goals and objectives using available resouarces efficiently and
principles and workers are responsible for executing the work
effectively.
accordingly.
• The process of achieving organizational goals

• Identifying a “force”/group of people whose job is to direct

FRANK AND LILLIAN GILBRETH
the effort and activities
Engineering Management
• The performance of conceiving and achieving desired
results by means of group effort consisting of utilizing - Refined Taylor’s work and made many improvements to the
resources methodologies of time and motion studies.

ENGINEERING MANAGEMENT -Time and motion studies

• A specialized form of management required to successfully  Breaking up each job action into its components.
lead engineering or technical personnel and projects
 Finding better ways to perform the action.
• The application of the practice of management to the
 Reorganizing each job action to be more efficient. Also
practice of engineering.
studied worker-related fatigue problems caused by lighting,
• A career that brings together the technological problem- heating, and the design of tools and machines.
solving ability of engineering

MAX WEBER - Developed the concept of bureaucracy as a

FUNCTIONS OF MANAGEMENT formal system of organization and administration designed to
ensure efficiency and effectiveness.
a. Planning & Decision-Making - Involves selecting goals and
objectives, as well as the actions to achieve them; it requires
decision-making, that is choosing the “best” from among
Weber’s Five Principles of Bureaucracy
alternatives.
1. Authority is the power to hold people accountable for their
b. Organizing - Involves establishing an intentional structure
actions.
of roles for people to fill in an organization.
2. Positions in the firm should be held based on performance,
- The process of allocating and arranging human and non-
not social contacts.
human resources so that plans can be carried out
successfully. 3. Position duties are clearly identified so that people know
what is expected of them.
c. Staffing - Involves filling, and keeping filled, the positions in
the organization structure. 4. Lines of authority should be clearly identified such that
workers know who reports to who.
- Process by which managers select, train, promotes, and
retires subordinate. 5. Rules, standard operating procedures (SOPs), and norms
guide the firm’s operations.
d. Directing/Leading - Influencing people so that they will
contribute to organizational and group goals.

e. Controlling - Measuring and correcting individual and HENRI FAYOL

organizational performance to ensure that events conform to
plans – - Synthesized various tenets or principles of organization and
management He published "The Principles of Scientific
- Facilitates the accomplishment of plans. The process of Management" in the USA in 1911
regulating organizational activities so that actual performance
conforms to expected organizational standards.
Fayol’s 14 Principles of Management

THE EVOLUTION OF MANAGEMENT 1. Division off work – divide work into specialized tasks and
assign responsibilities to specific individuals.
THEORY FREDERICK WINSLOW TAYLOR
2. Authority – delegate authority along with responsibility.
- “Father "of Scientific Management (systematic study of the
relationships between people and tasks for the purpose of 3. Discipline – make expectations clear and sanction
redesigning the work process for higher efficiency”) in the violations.
late 1800’s to replace informal rule of thumb knowledge.
4. Unity of command – each employee should be assigned
Taylor’s Four Principles of Scientific Management only to one supervisor.

1. Scientifically study each part of a task and develop the best 5. Unity of direction – employees’ efforts focused on
method for performing it. achieving organizational objectives.

2. Carefully select workers and train them to perform the task 6. Subordination of individual interest to the general
using the scientifically developed method. interest – the general interest must predominate.

7. Remuneration – systematically reward efforts that

supports the organization’s direction.
8. Centralization – determine the relative importance of resources, human resources, information resources,
superior and subordinate roles. technological resources, organization’s goodwill,
corporate culture and the like.
9. Scalar chain – keep communications within the chain of
command.
2. Elements of internal environment are;
10. Order – order jobs and material so they support the a) Owners and Shareholders. - Owners are people
organization’s direction. who invested in the company and have property
rights and claims on the organization. Owners can be
11. Equity – managers should be kind and fair to their an individual or group of persons who started the
subordinates. company; or who bought a share of the company in
the share market.
12. Stability of tenure – management should provide orderly
b) Board of Directors. - The board of directors is the
personnel planning and ensure that replacements are
governing body of the company who is elected by
available to fill vacancies.
stockholders, and they are given the responsibility
13. Initiative – employees who are allowed to originate and for overseeing a firm’s top managers such as the
carry out plans will exert high levels of effort. general manager.
c) Employees. - Employees or the workforce, the
14. “Esprit de corps” – promoting team spirit will build most important element of an organization’s internal
harmony and unity within the organization. environment, which performs the tasks of the
administration. Individual employees and also the
labor unions they join are important parts of the
Decision Making as a Management Responsibility internal environment.
d) Organizational Culture. - Organizational culture is
Decision Making is “the process of identifying and choosing
the collective behaviour of members of an
alternative courses of action in a manner appropriate to the
organization and the values, visions, beliefs, habits
demand of the situation”. It is the heart of all the
that they attach to their actions.
management functions.” – Nickels.
e) Resources of the Organization. - An organizations
resources can be discussed under five broad heads:
physical resources, human resources; financial
Decision making is the responsibility of the engineer resources, informational resources, and
manager, it is sometimes that managers make wrong technological resources. Physical resources include
decision. Wise manager correct their wrong decision as soon land and buildings, warehouses, all kinds of
as they are identified. materials, equipment and machinery. Examples are
office buildings, computers, furniture, fans, and air
conditioners. f) Organization’s image/goodwill. - The
The Decision Making Process reputation of an organization is a very valuable
intangible asset. High reputation or goodwill
Decision making is the process of making choices by
develops a favourable image of the organization in
identifying a decision, gathering information, and assessing
the minds of the public (so to say, in the minds of the
alternative resolutions.
customers). ‘No- reputation’ cannot create any
Decision making is the responsibility of the engineer positive image. A negative image destroys the
manager, it is sometimes that managers make wrong organization’s efforts to attract customers in a
decision. Wise manager correct their wrong decision as soon competitive world. The internal environment of an
as they are identified. organization consists of the conditions and forces
that exist within the organization.
David H. Holt identified eight (8) steps on rational decision
making process, these are; 3. External environment / Macro environment -
1. Diagnose Problem – if the manager fails to identify Factors outside or organization are the elements of
the problem, it is impossible to succeed in the the external environment. The organization has no
subsequent steps. control over how the external environment elements
will shape up. The external environment embraces
Identification of the problem all general environmental factors and an
A problem exists when there is a difference between organization’s specific industry-related factors. The
an actual situation and a desired situation. general environmental factors include those factors
that are common in nature and generally affect all
2. Analyse the Environment organizations.
The environment where the organization is situated The external environment can be subdivided into two:
plays a very significant role in the success or failure
of such an organization. It is, therefore, very I. General Environment - The general
important that an analysis of the environment be environment usually includes political,
undertaken. economic, sociocultural, technological, legal,
environmental (natural) and demographic
Organizations have an external and internal factors in a particular country or region. The
environment general environment consists of factors that
1. Internal environment/ Micro environment - may have an immediate direct effect on
conditions or surroundings within the boundary of operations but influences the activities of the
the organization are the elements of the internal firm.
environment of the organization. It generally
consists of those elements that exist within or inside Elements of the General External Environment
the organization such as physical resources, financial We can use the PESTLE model for the
identification and analysis of the factors in the
 general environment. PESTLE Model covers e. Substitute Products. - The producers of
political, economic, sociocultural, technological, substitute products are indirect competitors.
legal, and environmental (natural). Substitute products serve the same categories
a. Political factors. – The political factors of the of customers. They can meet the similar needs
general environment refer to the business- of customers, and therefore, emerge, as threats.
government relationship and the overall political f. Strategic Partners. - They are the organization
situation of a country. and individuals with whom the organization is to
b. Economic factors. - The economic factor of an agreement or understanding for the benefit
an organization is the overall status if the of the organization. These strategic partners in
economic system in which the organization some way influence the organization’s activities
operates. The important economic factors for in various ways.
business are inflation, interest rates, and
unemployment 3. Develop Viable Alternatives
c. Sociocultural factors. - Customs, mores, Oftentimes, problems may be solved by any of the
values and demographic characteristics of the solutions offered. The best among the alternatives
society in which the organization operates are solutions must be considered by management. This
what made up the socio-cultural factors of the is made possible by using a procedure with the
general environment. following steps:
d. Technological factors. - Technological factors a) Prepare a list of alternative solutions
include information technology, the Internet, b) Determine the viability of each solutions
biotechnology, global transfer of technology and
so forth.
e. Legal factors. - The legal environment
consists of laws and regulatory frameworks in a
country. Many laws regulate the business
operations of enterprises such as the Factories
Act, Industrial Relations Ordinance, the Contract
Act, and the Company law, just to name a few.

1. (Natural) Environmental factors. - Strategy-

makers need to analyze the trends in the natural
environment of the country where it is c) Revise the list by striking out those which are not
operating its business. viable.
2. Demographic factors. - The demographic
environment is concerned with a country’s 4. Evaluate Alternatives- After determining the
population. viability of the alternatives and a revised list has
3. International factors. - Virtually every been made, an evaluation of the remaining
organization is affected by international factors. alternatives is necessary. This is important because
It refers to the degree to which an organization the next step involve making a choice.
is involved in or affected by businesses in other
countries. 5. Make a Choice Choice- making refers to the
process of selecting among the alternatives
II. Industry Environment - A business firm’s representing potential solution to a problem. After
strategy is affected by the structural the alternatives have been evaluated, the decision
characteristics of the industry, it is thus maker must now be ready to make a choice. This is
considered essential for a firm to make an the point where he must be convinced that all the
elaborate analysis of the industry in which the previous steps were correctly undertaken.
firm operates its business.
6. Implement Decision- Refers to the carrying out
Elements of Industry Environment the decision so that the objectives sought will be
a. Suppliers. - Are the providers of production or achieved. To make implementation effective, a plan
service materials. Dealing with suppliers is an must be devised.
important task of management.
b. Customers & Buyers. - “Satisfaction of 7. Evaluate and Adapt Decision Result- In
customer”- the primary goal of every implementing the decision, the result expected may
organization. The customer is who pays money or may not happen. It is, therefore important for the
for the organization’s product or services. They manager to use control and feedback mechanism to
are the peoples who hand them the profit that ensure result and to provide information for future
the companies are targeting. decisions.
c. Competitors & New Entrants. - Policies of the
organization are often influenced by the 8. Feedback refers to the process which requires
competitors. Competitive marketplace checking at each stage of the process to ensure that
companies are always trying to stay and go the alternatives generated, the criteria used in
further ahead of their competitors. In the evaluation and the solution selected are keeping
current world economy, competition and with main goal.
competitors in all respects have increased
tremendously.
d. Regulators. - Are units in the task
environment that have the authority to control,
regulate or influence an organization’s policies
and practices.
Functions of Management At the most fundamental level, management is a
discipline that consists of a set of five general
functions: planning, organizing, staffing,
leading/directing and controlling. These five
functions are part of a body of practices and theories
on how to be a successful manager.

Planning is the process of thinking about the

activities required to achieve a desired goal or what
to do in the future. It is also considered as the most
fundamental and basic of all management function.

TYPES OF PLANS

i. Visions – a picture of the state of the desired outcome in

the future usually in the long term from current time. It
answers the question “where do we want to go?”. It may be a
plan or a goal. Like objectives a vision statement should be
SMART Specific, Measurable, Attainable, Realistic and Time
bound.

ii. Engineering Management Purposes or Missions –

identifies the basic purpose or function or tasks of the
organization or any part of it. In every social system,
enterprises have a basic function or task assigned to them by
society.

iii. Goals or Objectives – represent not only the end point of

planning, but also the end toward which organizing,
directing/leading, and controlling are aimed.

Types of objectives needed by an organization:

a. Financial Objectives – outcomes that relate to improving

firm’s financial performance. Specific financial corporate
objectives
b. Strategic Objectives – outcomes that will result in
greater competitiveness & stronger long-term market
position.

iv. Strategies – it is defined as the determination of the basic

long-term objectives of an enterprise and the adoption of
courses of action and allocation of resources necessary to
achieve these goals.

What is a “Strategy?”

- Consists of competitive moves & business approaches to

produce successful performance.

v. Policies – general statements or understandings that guide

or channel thinking in decision making. They help decide
issues before they become problems. Make it unnecessary to
analyse the same situation every time it comes up, and unify
other plans, thus permitting other managers to delegate
authority and still maintain control over what their
subordinates do

vi. Procedures – plans that establish a chronological

sequences of required actions. In handling future activities.
Details of the exact manner in which certain activities must
be accomplished. Company policies may grant employees
vacation; procedures established to implement this policy
will provide for scheduling vacancies to avoid disruptions of
work, setting rates of vacation pay and methods for
calculating them, maintaining records to ensure each
employee of a vacation, and spelling out the means for
applying for leave.

vii. Rules – spell out specific required actions or non-actions.

Usually the simplest type of plan. The essence of rule is that
it reflects a managerial decision that a certain action must –
or must not – be taken. Rules are different form policies in
the policies are meant to guide decision making by marking
off areas in which managers can use their discretion, while a. Search for and examine alternative courses of action,
rules allow no discretion in their application. especially those not apparent.

viii. Programs – a complex of goal, policies, procedures, b. The more common problem is not finding alternatives but
rules, task assignments, steps to be taken, resources to be reducing the number of alternatives so that the most
employed, and other elements necessary to carry out a given promising may be analysed.
course of action. They are ordinary supported by budgets.
c. Even with mathematical techniques and the computer,
ix. Budgets – a statement of expected results expressed in there is limit of the number of alternatives that can be
numerical terms; may be called a “quantified” plan. The thoroughly examined.
financial operating budget is often called a “profit plan”. May
be expressed in financial terms – in terms of labour-hours,
units of product, or machine-hours; or in any other 5. Evaluating alternatives courses
numerically measurable terms. May deal with operation,
may reflect capital outlays, or may show cash flow. a. Evaluate the alternatives by weighing them in the light of
premises and goals.

Examples of Budgets
6. Selecting a course
a. Business start-up budget – includes a list of all necessary
purchases including tangible assets (for example, equipment, a. This is the point at which the plan is adopted – the real
inventory) and services (e.g. remodelling, insurance), point of decision making.
(working capital), sources and collateral.
b. Occasionally, an analysis and evaluation of alternative
b. Corporate budget – a finished budget for the short-term courses will disclose that two or more are advisable, and the
future, typically one year. manager may decide to follow several courses rather than
the one best course.
c. Government budget – a summary or plan of the intended
revenues and expenditures of that government.

d. Personal or family budget – all sources of income (inflows) 7. Formulating derivative plans
are identified and expenses (outflows) are planned with the
a. When a decision is made, planning is seldom complete,
intent of matching outlaws to inflows (making ends meet).
and a seventh step is indicated.

b. Derivative or action plans are almost invariably required to

STEPS IN PLANNING support the basic plan.

1. Being aware of Opportunities

a. All managers should: 8. Quantifying plans by budgeting

i. Take at preliminary look at possible future opportunities a. Quantify decisions and plan by converting them into
and see them clearly and completely. budgets.

ii. Know where their company stands in the light of its b. The overall budget of an enterprise represents the sum
strengths and weaknesses. total of income and expenses, with resultant profit or
surplus, and the budgets of major balance sheet items such
iii. Understand what problems it has to solve and why. iv. as cash and capital expenditures.
Know what it can expect to gain.
c. If done well, budgets become a means of adding various
b. Planning requires a realistic diagnosis of the opportunity plans and set important standards against which planning
situation. progress can be measured.
2. Establishing Objectives

a. To be one of the long-term as well as for the short range.

b. Objectives specify the expected results and indicate the

end points of what is to be done, where the primary
emphasis is to be placed, and what is to be accomplished.

c. Objectives must be SMART.

3. Developing premises

a. Establish, circulate, and obtain agreement to utilize critical

planning premises such as forecasts, applicable basic policies,
and existing company plans.

b. Premises are assumptions about the environment in which

the plan is to be carried out.

4. Determining alternative courses