Engineering Management PDF

ENGG 1032 ENGINEERING MANAGEMENT FIRST SEMESTER | ENGR. BABYLOU G. NAVA The Field of Engineering Management 2. The pyramids of Egypt - 3000 to 600 B.C Engineers are expected to perform a...

ENGG 1032 ENGINEERING MANAGEMENT FIRST SEMESTER | ENGR. BABYLOU G. NAVA The Field of Engineering Management 2. The pyramids of Egypt - 3000 to 600 B.C Engineers are expected to perform a 3. Road Building by the Romans - 600 variety of tasks depending on their B.C to A.D 400; specialization and job level. It is important 4. The production of paper and to the engineer that he knows what is gunpowder by the Chinese - 100 A.D expected of him so that he may be able to to 1600 A.D; perform his job effectively and efficiently. 5. The production of steam engine His next concern will be to identify the and the spinning and weaving skills required but which he does not have. machinery 1601 A.D. to 1799 A.D.; and As engineers are not trained to directly 6. The manufacture of cars and deal with people, it is expected that their household appliances modern weakness will most often be on times. people-based skills. This difficulty will be more apparent once they are assigned to A listing of all useful tools, occupy management positions. It follows equipment, and projects developed and that if the engineer manager would want produced by engineers will be sufficient to to do his job well, some exposure to produce volumes of books. These engineering management activities contributions indicate that engineers have becomes necessary. become an indispensable segment of the THE FUNCTIONS OF THE ENGINEER world's professions. This expectation will continue for a long time. Since prehistoric times, mankind has Even as engineers are currently benefited from the various tools, producing solutions to many of the equipment, and projects developed by difficulties faced by mankind, much is still engineers. Among these are the following: expected of them. Their outputs, new or improvements of old ones, are very much 1. The stone bladed axe which was needed in the following specific problem very useful tool; and the irrigation concerns: system used to promote crop 1. the production of more food for a growing - 6000 to 3000 B.C fast growing world population;  2. the elimination of air and water personnel or assumes responsibility pollution; for the product. 3. solid waste disposal and materials 5. Construction - this is where the recycling; construction engineer (a civil 4. the reduction of noise in various engineer) is either directly in forms; charge of the construction 5. supplying the increasing demand personnel or may have for energy; responsibility for the quality of the 6. supplying the increasing demand construction process. for mobility; 6. Sales-where the engineer assists 7. preventing and solving crimes; and the company's customers to meet 8. meeting the increasing demand for their needs, especially those that communication facilities. require technical expertise. 7. Consulting - where the engineer Specifically, the functions of engineering works as consultant of any encompass the following areas: individual or organization requiring 1. Research - where the engineer is his services. engaged in the process of learning 8. Government-where the engineer about nature and codifying this may find employment in the knowledge into usable theories. government performing any of the 2. Design and development - where various tasks in regulating, the engineer undertakes the monitoring, and controlling the activity of turning a product activities of various institutions, concept to a finished physical item. public or private. Design for manufacturability and 9. Teaching - where the engineer value engineering teams (a feature gets employ- ment in a school and of some companies) are charged is assigned as a teacher of with improvement of designs and engineering courses. Some of them specifications at the research, later become deans, vice development, design, and presidents, and presidents. production stages of product 10. Management-where the engineer development. is assigned to manage groups of 3. Testing - where the engineer works people performing specific tasks. in a unit where new products or parts are tested for work- ability. 4. Manufacturing-where the engineer is directly in charge of production THE ENGINEER IN VARIOUS TYPES OF unit of the firm, but there will not be too ORGANIZATION many firms which will have this unit. From the viewpoint of the engineer, In level two firms, the engineer may organizations may be classified according be assigned to head the engineering to the degree of engineering jobs division. The need for management skills performed: will now be felt by the engineer manager. 1. Level One-those with minimal engineering jobs like retailing firms. Level three firms provide the biggest 2. Level Two - those with a moderate opportunity for an engineer to become degree of engineering jobs like the president or general manager. In this transportation companies. case, the engineer manager cannot 3. Level Three - those with a high function effectively without adequate degree of engineering jobs like management skills. construction firms. WHAT IS ENGINEERING MANAGEMENT? Figure 1.1 Types of Organization and the Management Skills Required of Engineers Engineering management refers to the activity combining "technical knowledge with the ability to organize and coordinate worker power, materials, machinery, and money." When the engineer is assigned to supervise the work of even a few people, he is already engaged in the first phase of engineering management. His main responsibility is to lead his group into MANAGEMENT SKILLS REQUIRED AT producing a certain output consistent with VARIOUS LEVELS the required specifications. Among the types of organizations, The top position an engineer the engineer will have a slim chance of manager may hope to occupy is the becoming the general manager or general managership or presidency of president of level one, unless of course, he any firm, large or small. As he scales the owns the firm. The engineer manager may management ladder, he finds that the be assigned to head a small engineering higher he goes up, the less technical activities he performs, and the more manage- ment tasks he accepts. In this case, it is but proper that the management functions taught in pure management courses be well understood by the engineer manager. Figure 1.2 A Typical Advertisement for a Pure Engineering Job (without management responsibilities) Figure 1.4 A Typical Advertisement for an Engineer Manager as a Middle Level Figure 1.3 A Typical Advertisement for an Engineer Manager as a Lower Level Executive (Supervisor) Figure 1.5 A Typical Advertisement for an MANAGEMENT DEFINED Engineer Manager as Top Executives Since the engineer manager is presumed to be technically competent in his specialization, one may now proceed to describe more thoroughly the remaining portion of his job, which is management. Management may be defined as the "creative problem solving process of planning, organizing, leading, and controlling an organization's resources to achieve its mission and objective." THE PROCESS OF MANAGEMENT Management is a process consisting of planning, organizing, directing (or leading), and controlling. Figure 1.6 An Advertisement for an Explained in a simple manner, Engineer Manager management must seek to find out the objectives of the organization, think of ways on how to achieve them, decide on the ways to be adapted and the material resources to be used, deter mine the human requirements of the total job, assign specific tasks to specific persons, motivate them, and provide means to make sure that the activities are in the right direction. The specific activities in the management process are discussed more thoroughly in the succeeding chapters. REQUIREMENTS FOR THE ENGINEER MANAGER'S JOB Ability Managerial ability refers to the Depending on the type of products capacity of an engineer manager to or services a firm produces, the engineer achieve organizational objectives manager must have the following effectively and efficiently. qualifications: 1. a bachelor's degree in Effectiveness, according to engineering from a reputable Higgins, refers to a description of school; In some cases, a "whether objectives are accomplished", master's degree in engineering or while efficiency is a description of the business management is required; relative amount of resources used in 2. a few years’ experience in a pure obtaining effectiveness. engineering job; 3. training in supervision; To illustrate: If a civil engineer was asked 4. special training in engineering by his superiors to finish a 100-kilometer management. road cementing project within eight months, he is said to be effective if he These qualifications will be of finished the job within the required great help to the engineer manager in period. On the other hand, his efficiency the performance of the various is measured by the inputs (labor and management functions. materials) he poured into the project in relation to the actual output (the 100 HOW ONE MAY BECOME A SUCCESSFUL kilometer road). If the same output is ENGINEER MANAGER made with less inputs, the more efficient Successful engineer managers do the civil engineer becomes. not happen as a matter of chance, although luck is a contributory factor. It is Motivation to Manage very important for the engineer manager Many people have the desire to to know the various factors leading to work and finish specific tasks assigned by successful management. superiors, but not many are motivated to Kreitner indicates at least three manage other people so that they may general preconditions for achieving contribute to the realization of the lasting success as a manager. They are organization's objectives. as follows: A management researcher, John 1. ability B. Miner developed a psychometric 2. motivation to manage, and instrument to measure objectively an 3. opportunity. individual's motivation to manage. The test is anchored to the following determine if the firms requiring their dimensions: services provide a supportive climate 1. Favorable attitude toward those for effective and efficient management. in positions of authority, such as A supportive climate is characterized by superiors. the recognition of managerial talent 2. Desire to engage in games or through financial and nonfinancial sports competition with peers rewards. 3. Desire to engage in occupational or work-related competition with SUMMARY peers. 4. Desire to assert oneself and take Engineers are known for their great charge. contributions to the development of the 5. Desire to exercise power and world's civilization. There are many areas authority over others. where their presence is necessary like 6. Desire to behave in a distinctive research, design and development, testing, manufacturing, construction, way, which includes standing out sales, consulting, government, teaching, from the crowd. and management. 7. Sense of responsibility in carrying out the routine duties associated Engineers may be found with managerial work. contributing their share in the various levels of organization. High scores in the foregoing Engineering activities need to be dimensions are associated with high managed and engineers are sometimes motivation to manage. Opportunity placed in positions where they have to Successful managers become possible learn management skills. only if those having the ability and Management is concerned with motivation are given the opportunity to planning, organizing, leading, and manage. The opportunity for successful controlling an organization's resources to achieve its mission and objectives. management has two requirements: 1. Obtaining a suitable managerial There are certain qualifications job, and required of the engineer manager. 2. Finding a supportive climate once One may become a successful on the job. engineer manager if the preconditions Newspaper advertisements of ability, motivation to manage, and abound with needs for engineer opportunity to manage are met. managers. It is a little difficult to  Decision Making issue is the manager who cannot or do not want to make decisions. Delaney Managers of all kinds and types, including concludes that this type of managers are the engineer manager, are primarily dangerous and "should be removed from tasked to provide leadership in the quest their position as soon as possible." for the attainment of the organization;s objectives. If he is to become effective, he Management must strive to choose must learn the intricacies of a decision option as correctly as possible. decision-making. Many times, he will be Since they have that power, they are confronted by situations where he will responsible for whatever outcome their have to choose from among various decisions bring. The higher the options. Whatever his choice, it will have management level is, the bigger and the effects, immediate or otherwise, in the more complicated decision-making operations of this organization. becomes. The engineer manager’s An example may be provided as follows: decision-making skills will be very crucial to his success as a professional. A major The production manager of a blunder in decision-making may be certain company has received a written sufficient to cause the destruction of any request from a section head regarding organization. Good decisions, on the other the purchase of an airconditioning unit. hand, will provide the right environment Almost simultaneously, another request for continuous growth and success of any from another section was forwarded to organized effort. him requiring the purchase of a forklift. The production manager was informed by DECISION-MAKING AS A MANAGEMENT his superior that he can only buy one of RESPONSIBILITY the two requested items due to budgetary constraints. Decisions must be made at various levels The production manager must now in the workplace. They are also made at make a decision. His choice, however, the various stages in the management must be based on sound arguments for process. If certain resources must be he will be held responsible, later on, if he used, someone must make a decision had made the wrong choice. authorizing certain persons to appropriate such resources. WHAT IS DECISION-MAKING? Decision-making is a responsibility of the Decision-making may be defined as "the engineer manager. It is understandable process of identifying and choosing for managers to make wrong decisions at alternative courses of action in a manner times. The wise manager will correct them appropriate to the demands of the as soon as they are identified. The bigger situation." The definition indicates that the engineer instance, the management of a manager must adapt a certain procedure construction company entered into a designed to determine the best option contract with another party for the available to solve certain problems. construction of a 25-storey building on a certain site. Decisions are made at various management levels (i.e., top, middle, and The actual situation of the firm is lower levels) and at various management that it has not yet constructed the functions (i.e., planning, organizing, building. The desired situation is the directing, and controlling). finished 25-storey building. In this case, Decision-making, according to Nickels the actual situation is different from the and others, "is the heart of all the desired situation. The company, there- management functions." fore, has a problem and that is, the construction of the 25-storey building. THE DECISION-MAKING PROCESS Analyze the Environment The environment where the Rational decision-making, according to organization is situated plays a very David H. Holt, is a process involving the significant role in the success or failure of following steps: such an organization. It is, therefore, very 1. diagnose problem important that an analysis of the 2. analyze environment environment be undertaken. 3. articulate problem or opportunity The objective of environmental analysis is 4. develop viable alternatives the identification of constraints, which 5. evaluate alternatives may be spelled out as either internal or 6. make a choice. external limitations. Example of internal 7. implement decision limitations are as follows: 8. evaluate and adapt decision 1. Limited funds available for the results purchase of equipment. 2. Limited training on the part of Diagnose Problem employees. If a manager wants to make an 3. Ill-designed facilities. intelligent decision, his first move must be Examples of external limitations are as to identify the problem. If the manager follows: fails in this aspect, it is almost impossible 1. Patents are controlled by other to succeed in the subsequent steps. An organizations. expert once said "identification of the 2. Avery limited market for the problem is tantamount to having the company's products and services problem half-solved." exists. 3. Strict enforcement of local zoning What is a Problem? A problem exists when regulations. there is a difference between an actual situation and a desired. situation. For  When decisions are to be made, the The external environment refers to internal and external limitations must be variables that are outside the organization considered. It may be costly, later on, to and not typically within the short-run alter a decision because of a constraint control of top management. Figure 2.2 that has not been previously identified. shows the forces comprising the external environment of the firm. An illustration of failure to analyze the environment is as follows: Develop Viable Alternatives The president of a new chemical manufacturing company made a Oftentimes, problems may be decision to locate his factory in a place solved by any of the solutions offered. The adjacent to a thickly populated area. best among the alternative solutions must Construction of the building was made be considered by management. This is with precision and was finished in a short made possible by using a procedure with period. When the clearance for the the following steps: commencement of operation was sought 1. Prepare a list of alternative from local authorities, this could not be solutions. given. It turned out that the residents 2. Determine the viability of each opposed the operation of the firm and solutions. made sure that no clearance is given. 3. Revise the list by striking out those which are not viable. The president decided to relocate the factory but not after much time and To illustrate: money has been lost. This is a clear example of the cost associated with man- An engineering firm has a problem agement disregarding the environment of increa- sing its output by 30%. This is when decisions are made. In this case, the the result of a new agreement between president did not consider what the the firm and one of its clients. residents could do. Components of the Environment. The environment consists of two major concerns: 1. internal and 2. external. The internal environment refers to organizational activities within a firm that surrounds decision-making." Shown in Figure 2.1 are the important aspects of the internal environment.  alternatives is necessary. This is important because the next step involves making a choice. Proper evaluation makes choosing the right solution less difficult. How the alternatives will be evaluated will depend on the nature of the problem, the objectives of the firm, and the nature of alternatives presented. Souder sug- gests that "each alternative must be analyzed and evaluated in terms of its value, cost, and risk characteristics." The value of the alternatives refers to benefits that can be expected. An example may be described as follows: a net profit of P10 million per year if the The list of solutions prepared by the alternative is chosen. engineering manager shows the following alternative courses of action: The cost of the alternative refers to out-of-pocket costs (like P100 million for 1. improve the capacity of the firm by construction of facilities), opportunity hiring more workers and building costs (like the opportunity to earn interest additional facilities; of P2 million per year if money is invested 2. secure the services of elsewhere), and follow-on costs (like P3 subcontractors; million per year for maintenance of 3. buy the needed additional output facilities constructed). from another firm; 4. stop serving some of the The risk characteristics refer to the company's customers; and likelihood of achieving the goals of the 5. delay servicing some clients. alternatives. If the probability of a net profit of P10 million is only 10 percent, then The list was revised and only the the decision-maker may opt to consider first three were deemed to be viable. The an alternative with a P5 million profit but last two were deleted because of adverse with an 80 percent probability of success. effects in the long-run profitability of the firm. Another example of an evaluation of alternatives is shown below: Evaluate Alternatives After determining the viability of the An engineer manager is faced with alternatives and a revised list has been a problem of choosing between three made, an evaluation of the remaining applicants to fill up a lone vacancy for a junior engineer. He will have to set up Implement Decision certain criteria for evaluating the After a decision has been made, applicants. If the evaluation is not done by implementation follows. This is necessary, a professional human resources officer, or decision-making will be an exercise in then the engineer manager will be forced futility. to use a predetermined criteria. Implementation refers to carrying out the A typical evaluation of job applicants will decision so that the objectives sought will appear as follows: be achieved. To make implementation effective, a plan must be devised. At this stage, the resources must be made avail- able so that the decision may be properly implemented. Those who will be involved in implementation, accord- ing to Aldag and Stearns, must understand and accept the solution." Evaluate and Adapt Decision Results In implementing the decision, the results expected may or may not happen. Make a Choice It is, therefore, important for the manager After the alternatives have been to use control and feedback mechanisms evaluated, the decision-maker must now to ensure results and to provide be ready to make a choice. This is the information for future decisions. point where he must be convinced that all the previous steps were correctly Feedback refers to the process undertaken. which requires checking at each stage of the process to assure that the alternatives Choice-making refers to the generated, the criteria used in evaluation, process of selecting among alternatives and the solution selected for representing potential solutions to a implementation are in keeping with the problem." At this point, Webber advises goals and objectives originally specified.12 that "... particular effort should be made to identify all significant consequences of Control refers to actions made to each choice." ensure that activi- ties performed match the desired activities or goals that have To make the selection process been set. easier, the alternatives can be ranked from best to worst on the basis of some In this last stage of the factors like benefit, cost, or risk. decision-making process, the engineer manager will find out whether or not the desired result is achieved. If the desired result is achieved, one may assume that 1. The problem is fairly simple the decision made was good. If it was not 2. The problem is familiar achieved, Ferrell and Hirt suggest that 3. The costs involved are not great further analysis is necessary. Figure 2.3 4. Immediate decisions are needed presents an elaboration of this last step. An example of an evaluation using the APPROACHES IN SOLVING PROBLEMS qualitative approach is as follows: In decision-making, the engineer A factory operates on three shift manager is faced with problems which with the following schedule: may either be simple or complex. To First shift - 6:00 AM to 2:00 PM provide him with some guide, he must be Second Shift - 2:00 P.M to 10:00 PM familiar with the following approaches: Third shift - 10:00 PM to 6:00 AM 1. qualitative evaluation, and Each shift consists of 200 workers 2. quantitative evaluation. manning 200 machines. On september 16, 1996, the operations went smoothly until Qualitative Evaluation. This term refers to the factory manager, an industrial evaluation. of alternatives using intuition engineer, was notified at 1:00 PM that give and subjective judgment. Stevenson of workers assigned to the second shift states that managers tend to use the could not report for work because of qualitative approach when: injuries sustained in a traffic accident while they were on their way to the factory Because of time constraints, the manager made an instant decision on who among the first shift workers would work overtime to man the five machines. Quantitative Evaluation. This term refers to the evaluation of alternatives using any technique in a group classified as rational and analytical QUANTITATIVE MODELS FOR DECISION MAKING The types of quantitative techniques which may be useful in decision- making are as follows: 1. inventory models 2. queuing theory  3. network models common situation. Examples are cars 4. forecasting waiting for service at an car service 5. regression analysis center, ships and barges waiting at the 6. Simulation harbor for loading and unloading by 7. linear programming dock- workers, programs to be run in a 8. sampling theory computer system that processes jobs, etc. 9. statistical decision theory Network Models Inventory Models These are models where large Inventory models consist of several types complex tasks are broken into smaller all designed to help the engineer segments that can be managed manager make decisions regarding independently. inventory. They are as follows: The two most prominent network models 1. Economic order quantity model- are: this one is used to calculate the 1. The Program Evaluation Review number of items that should be Technique (PERT)- a technique ordered at one time to minimize the which enables engineer managers total yearly cost of placing orders to schedule, monitor, and control and carrying the items in inventory, large and complex projects by employing three time estimates for 2. Production order quantity model - each activity. this is an economic order quantity 2. The Critical Path Method (CPM)-- technique applied to production this is a net- work technique using orders. only one time factor per activity 3. Back order inventory model- this is that enables engineer managers to an inventory model used for schedule, monitor, and control planned shortages. large and complex projects. 4. Quantity discount model - an inventory model used to minimize Forecasting the total cost when quantity discounts are offered by suppliers. There are instances when engineer managers make decisions that will have Queuing Theory implications in the future. A manufacturing firm, for example, must put The queuing theory is one that up a capacity which is sufficient to describes how to determine the number produce the demand requirements of of service units that will minimize both customers within the next 12 months. As customer waiting time and cost of service. such, man- power and facilities must be procured before the start of operations. To The queuing theory is applicable to make decisions on capacity more companies where waiting lines are a effective, the engineer manager must be provided with data on demand imposed by constraints upon the requirements for the next 12 months. This decision." Linear programming is very type of information may be derived useful as a decision-making tool when through forecasting. supply and demand limitations at plants, warehouses, or market areas are Forecasting may be defined as "the constraints upon the system. collection of past and current information to make predictions about the future." Sampling Theory Regression Analysis Sampling theory is a quantitative The regression model is a technique where samples of populations forecasting method that examines the are statistically determined to be used for association between two or more a number of processes, such as quality variables. It uses data from previous control and marketing research. periods to predict future events. When data gathering is expensive, Regression analysis may be simple or sampling provides an alternative. multiple depen- ding on the number of Sampling, in effect, saves time and independent variables present. When one money. independent variable is involved, it is called simple regression; when two or Statistical Decision-Theory more independent variables are involved, Decision theory refers to the "rational way it is called multiple regression.20 to conceptualize, analyze, and solve problems in situations in- volving limited, Simulation or partial information about the decision Simulation is a model constructed environment." to represent reality, on which conclusions about real-life problems can be used. It is A more elaborate explanation of decision a highly sophisticated tool by means of theory is the decision making process which the decision maker develops a presented at the beginning of this mathematical model of the system under chapter. What has not been included in consideration. the discus- sion on the evaluation of alternatives, but is very important, is Simulation does not guarantee an subjecting the alternatives to Bayesian optimum solution, but it can evaluate the analysis. alternatives fed into the process by the decision-maker. The purpose of Bayesian analysis is to revise and update the initial assessments Linear Programming of the event probabilities generated by Linear programming is a quantitative the alternative solutions. This is achieved technique that is used to produce an by the use of additional information. optimum solution within the bounds When the decision-maker is able to assign probabil- ities to the various events, the use of probabilistic deci- sion rule, called the Bayes criterion, becomes possible. The Bayes criterion selects the decision alternative having the maximum expected payoff, or the minimum expected loss if he is working with a loss table. SUMMARY Decision-making is a very important function of the engineer manager. His organization will rise of fall depending on the outcomes of his decisions. It is, therefore, necessary for the engineer manager to develop some skills in decision-making. The process of identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation is called decision-making. It is done at various management levels and functions. The decision-making process consists of various steps, namely; diagnose problem, analyze environment, articulate problem or opportunity, develop viable alternatives, evaluate alternatives, make a choice, implement decisions, and evaluate and adapt decision results. There are two approaches in solving problems, namely: qualitative evaluation and quantitative evaluation. Qualitative evaluation is used for solving fairly simple problems, while quantitative evaluation is applied to complex ones.