Engineering Management
Chapter 2
DECISION -MAKING
• Managers of all kinds and types including the
engineer manager are primarily tasked to
provide leadership in the quest for the
attainment of the organization’s objectives.
• Engineer manager’s decision-making skills will
be very crucial to his success as a professional.
• A major blunder in decision-making may be
sufficient to cause the destruction of any
organization. Good decisions on the other hand,
will provide the right environment for continuous
growth and success of any organized effort.
DECISION-MAKING AS A
MANAGEMENT RESPONSIBILITY
• Decision-making is a responsibility of the engineer
manager. It is understandable for managers to make
wrong decisions at times. The wise manager will correct
them as soon as they are identified. The bigger issue is the
manager who cannot or do not want to make decisions.
Delaney concludes that this type of managers are
dangerous and should be removed from their position as
soon as possible.
• Management must strive to choose a decision option as
correctly as possible. The higher the management level is,
the bigger and the more complicated decision-making
becomes.
WHAT IS DECISION-MAKING
• Decision-making may be defined as “process of identifying
and choosing alternative courses of action in a manner
appropriate to the demands of situation”
• The definition indicates that the engineer manager must
adapt a certain procedure designed to determine the best
option available to solve certain problems.
• 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 others, “is the
heart of all the management functions.
THE DECISION-MAKING
PROCESS
According to David H. Holt, rational decision-
making is a process involving the following steps:
1. diagnose problem
2. analyze environment
3. articulate problems or opportunity
4. develop viable alternative
5. evaluate alternative
6. make a choice
7. implement decision
8. evaluate and adapt decision result
1. DIAGNOSE PROBLEM
• What is a problem?
A problem exists when there is a
difference between an actual situation and
a desired situation.
2. ANALYZE THE ENVIRONMENT
The objective of environmental analysis is the identification
of constraints, which may be spelled out as either internal or
external limitations.
Examples of Internal 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:
4. Patents are controlled by other organizations
5. A very limited market for the company’s products and
service exists
6. Strict enforcement of local zoning regulations
Components of the
Environment
Two major concerns:
1. Internal – refers to the organizational
activities within a firm that surrounds
decision-making
2. External – refers to variable that are
outside the organization and not
typically within the short-run control of
top management
Internal Environment External Environment
3. DEVELOP VIABLE
ALTERNATIVES
• Oftentimes, problems may be solved by any of the
solutions offered. The best among the alternative solutions
may be considered by management. 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 solutions
3. Revise the list by striking out those which are not
viable
4. EVALUATE ALTERNATIVES
• After determining the viability of the alternative 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.
• How the alternative will be evaluated will depend on the
nature of the problem, the objectives of the firm and the
nature of alternatives presented.
• Each alternatives must be analyzed and evaluated in terms
of its value, cost and risk characteristics.
5. MAKE A CHOICE
• Choice-making refers to the process of selecting
among alternatives representing potential
solutions to a problem.
• Particular effort should be made to identify all
significant consequences of each choice.
6. IMPLEMENT DECISION
• Implementation refers to carrying out the
decision so that the objectives sought will be
achieved.
• At this stage, resources must be made available
so that the decision may be properly
implemented.
7. EVALUATE AND ADAPT
DECISION RESULTS
• It is important for the manager to use control and
feedback mechanism to ensure results and to provide
information for future decisions.
• Feedback refers to the process which requires checking at
each stage of the process to assure that the alternatives
generated, the criteria used in evaluation, and the solution
selected form implementation are keeping with the goals
and objectives originally specified.
• Control refers to the actions made to ensure that activities
performed match the desired activities or goals that have
been set.
