ENGINEERING MANAGEMENT Chapter 2:

Decision-Making
TOPIC OUTLINE
Decision making as a management responsibility
What is decision making?
The decision making process
Approaches in solving process
Quantitative models for decision making
WHAT IS DECISION-MAKING?
- Integral part of modern management.
- Primary function of management.
- a course of action purposely chosen from a set of alternatives to achieve organizational or
managerial objectives or goals.
- are made to sustain the activities of all business activities and organizational functioning
- Decisions are everywhere in the workplace.
- Very crucial for engineers where they always encounter decision making.
- Good Decisions will provide the right environment for continuous growth and success of any
organization.
- Decisions are made at various management levels (i.e., planning, organizing, directing, and
controlling).
- Nickels et al “is the heart of all management function”
DECISION-MAKING AS A MANAGEMENT
RESPONSIBILITY
- problems could arise from various level
- Decision-making is a responsibility of the engineer manager
THE DECISION-MAKING PROCESS
Rational decision-making, according to David H. Holt, is a process involving the
following steps:
1. diagnose problems
2. analyze environment
3. articulate the environment or opportunity
4. develop viable alternatives
5. evaluate alternatives
6. make a choice
7. implement decision
8. evaluate and adapt decision results
DIAGNOSE THE PROBLEM
- “identification of the problem is tantamount to having the problem half-solved”
- A problem exist when there is deviation from what was planned may be caused by
internal or external environment or perhaps natural intervention.

Target Outcome
26, 000 WMT/Day 17,000 WMT/Day
300 days construction timeline 30 days delay of completion
10, 000 has. Topo-Survey/month 8,000 has.
ANALYZE THE ENVIRONMENT
- this is the identification of constraints, which may be spelled out as either internal or external
limitations.
Example of international limitations.
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.
THE EXTERNAL ENVIRONMENT: EXAMPLE

Ford’s General Environment

THE TASK ENVIRONMENT: EXAMPLE

Ford’s Task Environment

ENVIRONMENTAL RESPONSE
DEVELOP VIABLE ALTERNATIVES
The best among the alternative solutions must be considered by management and by
having these steps:
1. Prepare a list of alternative solutions
2. Determine the viability of each solutions
3. Revise the list by striking out those which are not viable
DEVELOP VIABLE ALTERNATIVES
The list of solutions prepared by the engineering managers shows the following the
alternative course 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;
5. and delay servicing some clients.
EVALUATE ALTERNATIVES
- After determining the viability of the alternatives and a revised list has been made,
an evaluation of the remaining alternatives is necessary. This is important because the
next step involves making a choice. Proper evaluation makes choosing the right
solution less difficult.
- “ each alternative must be analyzed and evaluated in terms of its value, cost, and
risk characteristics.
EVALUATE ALTERNATIVES
Ex. An engineer manager is faced with a problem of choosing three applicants to fill
up a lone vacancy for a junior engineer. He will have to set up certain criteria for
evaluating the applicants. If the evaluation is not done by a professional human
resources officers, then the engineer manager will be forced to use a predetermined
criteria.
Evaluation Sheet
Title of vacant position: JUNIOR ENGINEER
Applicant Education Training Experience Age Total points

1. Jose Sibayan, Jr. 40 35 4 10 89

2. Menandro Rillon 40 36 5 9 90
3. Dante dela Cruz 40 38 6 7 91
MAKE A CHOICE
- when alternatives were thoroughly assessed and evaluated.
- “ … particular effort should be made to identify all significant consequences of
each choice” – Webber
- alternatives would be ranked after the evaluation on benefit, cost, or risk.
IMPLEMENT DECISION
-This is necessary, or decision-making will be an exercise in futility.
-Plan must be devised in order to implement fully or carry out objectives made.
-Resources must be acquired
-Every unit under the plan must be committed.
EVALUATE AND ADAPT DECISION RESULTS
- to devise control and feedback mechanisms to ensure results and to provide
information for future decisions.

- the engineer-manager will found out whether or not the desired results is achieved.
- If not achieved further analysis is needed to formulate plans.
FEEDBACK AS A CONTROL MECHANISM IN THE
DECISION-MAKING-PROCESS
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 results
9. results achieved, apply decision
APPROACHES IN SOLVING PROBLEMS
- Engineer manager must be familiar with the following approaches:
1. Qualitative evaluation
2. Quantitative evaluation
QUALITATIVE EVALUATION
This term refers to evaluation of alternatives using intuition and subjective judgment.
Stevenson states that managers tend to use the qualitative approach when:
1. The problem is fairly simple
2. The problem is familiar
3. The costs involved are not great
4. Immediate decisions are needed
QUANTITATIVE EVALUATION
It refers to the evaluation of alternatives using any technique in a group classified as
rational and analytical.
TASKS:
Assign students to report the following:
Reporting:
1. Inventory Models –Mine
2. Queuing Models
3. Network Models
4. Forecasting
5. Regression analysis
6. Simulation
7. Linear Programming
8. Sampling Theory
9. Statistical Decision Theory
PREPARATION OF ALTERNATIVES, SEATWORK
Identify the following:
-Nature of the problem and parameters to be used in preparing alternatives
-Create a hypothetical yet realistic objectives or targets
-Prepare schedule of activities
-Prepare cost analysis
-Assess benefits of each option
-Evaluate and compare alternatives
-Choose the best option
-Proposal