Engineering ManagementLecture # 2

Engr.Syeda Iffat NaqviLecturer

Department of Telecomm Engineering,University Of Engineering and Technology,

Taxila

Planning

• Deciding in advance what to do, how to do it, when to do it, and who is to do it”.

• From above definition, planning must obviously precede doing.

• Planning provides a method of identifying objectives and designing a sequence of programs and activities to achieve these objectives.

The Planning/Decision Making Process

Recognize problem or opportunity

Evaluate alternatives

Gather information

Follow up and review effectiveness

Formulate value(decision) model

Define problem,specify premises and constraints

Formulate/develop alternatives

Implement best alternative

Overall mission, long-range objectives and strategy

Feedback

Objectives: The foundation for Planning

• Vision, Purpose, Mission• A clear vision of the basic purpose or mission for

which it exists is essential to the long-term success of any enterprise

• In today’s complex and dynamic economy, however, the basic mission of the organization must be communicated clearly and repeatedly to the many managers and professionals whose actions determine whether these purposes are indeed achieved.

cont’d….

• Three components of a good “Vision Framework” are:

1. Core Values and Beliefs: a system of guiding principles and tenets: a philosophy of business and life.

2. Purpose: the fundamental reason for the organization’s existence.

3. Mission: a bold, compelling, audacious goal with a clear finish line and a specific time frame. once completed ,a new mission is set.

Goals and Objectives• Objectives need to be established in all areas on

which the organization’s survival depends. Eight such key result areas are:1. Market share: Market share is the ratio of dollar sales of an

enterprise in a particular market to the total sales of all competitive products and services in that market.

2. Innovation: Most successful companies, especially in the areas

of technology where most engineers will work, are continually searching for new products and services.

Cont’d…. Nonetheless, some successful companies

deliberately choose to be followers and to provide low-cost, high-volume products without the high expense of being first.

3. Productivity: Productivity measures an organization’s ability to

produce more goods and services per unit of input (labor, materials, and investment).

In recent years quality has been added as a related and essential area for setting objectives. Higher quality leads to greater customer satisfaction, increased productivity and profitability.

Cont’d….4. Physical and financial resources:

An enterprise needs to establish goals for the resources (plant, equipment, inventory and capital) it needs to perform effectively.

5. Manager performance and development: Effective firms plan carefully to assure that

managers will be available in the years ahead in the quality and quantity needed for the organization to prosper.

Supporting goals are then developed in areas such as recruitment, training, and evaluation.

Cont’d….

6. Worker performance and attitude:

Respect for the individual employee is the important factor affecting the worker’s performance.

7. Profitability:

The profitability of an enterprise is essential to its continuation, and the desired level should be set explicitly as an objective against which to measure enterprise success.

cont’d….

8. Social responsibility:• Every enterprise has responsibilities as a

“corporate citizen” that extend beyond the legal and economic requirements.

• These include responsibilities to customers, employees, suppliers, community, and society as a whole.

Management by Objectives

• MBO has been widely adopted to translate broad organizational goals and objectives.

• MBO can be employed between superior and subordinate at every level. The steps in MBO are generally as follows:

1. First, both superior and subordinate should have an understanding of the goals and objectives of the organization and of the superior’s group.

MBO2. Superior and subordinate then meet to establish

objectives for the subordinate’s attention over the next six months or year.

3. In agreeing to an objective proposed by the superior, the subordinate may identify specific resources or authority that need to be supplied by the superior to make it possible.

4. The subordinate then proceeds over the ensuing period (six months or a year) to carryout his or her job to achieve the objectives. In case of any problem or change in priorities, superior and subordinate can meet at any time to modify the objectives.

MBO

5. At the end of the period, superior and subordinate meet again to evaluate the subordinate’s success in meeting assigned goals.

MBO

Advantages:• Greater commitment and satisfaction on the part

of subordinates.• Enforced planning and prioritizing of future

activities on the part of both.• More rational method of performance evaluation

based on contribution to organizational objectives.

MBO

Disadvantages:• Time and paper work involved• Misuse when superiors simply assign (rather

than negotiate) objectives, and the gamesmanship of subordinates who try to negotiate easy goals.

Forecasting

• Prediction: a statement made about the future.• Estimating the likelihood of an event taking place

in the future, based on available data from the past.

• The engineering manager must be concerned with both future markets and future technology, and must therefore understand both sales and technological forecasting.

Sales Forecasting

• An estimate of the dollar or unit sales for a specified future period under a proposed marketing plan or program.

• The level of future sales is the most important premise or assumption in planning and decision making.

Cont’d….• Following are some common ways this is done:

1. Jury of executive opinion:• This is the simplest method, in that the

executives of the organization( typically, the vice presidents of the various division) provide an estimate of future volume.

• The president provides a considered average of these estimates.

• Inexpensive and quick method.

Cont’d….2. Sales force composite:• In this method, members of the sales force

estimate sales in their own territory.• Regional sales managers adjust these estimates

for their opinion of the optimism or pessimism of individual salespeople.

• General sales manager “massages” the figures to account for new products or factors of which individual sales men are unaware.

• Since the field sales force is closest to the customer, this method has much to recommend it.

Cont’d….

3. Users expectation:• When a company sells most of its product to a

few customers, the simplest method is to ask the customers to project their needs for the future period.

• As the customers depend on reliable sources of supply, so communication is in the best interest of both parties.

Technological Forecasting

• Technological forecast is a prediction, based on confidence, that certain technical developments can occur within a specified time period with a given level of resource allocation.

• Types: Normative technological forecasting Exploratory technological forecasting

Normative Technological Forecasting

• Some desired future goal is selected, and a process is developed, working backward from the future to the present, designed to achieve this goal.

Exploratory Technological Forecasting

• It begins with the present state of technology and extrapolates into the future assuming some expected rate of technical progress.

Decision Making• Managerial decision making is the process of

making a conscious choice between two or more rational alternatives in order to select the one that will produce the most desirable consequence (benefits) relative to unwanted consequences (costs).

• Decision making is an essential part of planning.• Required in designing and staffing an

organization, developing methods of motivating subordinates, and identifying corrective actions in the control process.

Types Of Decisions• Routine Decisions: Routine decisions focus on well structured

situations that: Recur frequently Involve standard decision procedures Minimum uncertaintyExample: Payroll processing Reordering standard inventory items Paying suppliers

Cont’d….

• The decision maker can rely on policies, rules, past precedents, standardized methods of processing, or computational techniques.

• 90% of management decisions are largely routine.

Cont’d….

• Non-routine Decisions: Deal with unstructured situation Non recurring nature Often involving incomplete knowledge High uncertainty

Cont’d….

• Unfortunately, almost the entire educational process of the engineer is based on the solution of highly structured problems for which there is a single “textbook solution”.

• Engineers often find themselves unable to rise in management unless they can develop the tolerance for ambiguity that is needed to tackle unstructured problems.

Decision Flow Diagram

Decision critical?

Decision routine?

Involve others?

Manager have sufficient information?

Delegate

Involve others?

yes

yes

yes

yes

No

No

No

No

Make decision