Module 2: DECISION MAKING
Engr. ROVIEL S. DE GUZMAN, MSCM, RMP
CE 9: Engineering Management
I. INTRODUCTION
This unit will discuss the relevance between planning and decision-making of an
engineer manager that helps to provide the right environment for continuous growth
and success of any organized effort.
ESSENTIAL QUESTIONS
1. What is Decision Making?
2. What are the processes of Decision Making?
3. What are the different engineering firm and internal environment in decision making?
INTENDED LEARNING OUTCOMES
1. Students will be able to define Decision Making and its processes.
2. Students will be familiarized with the different engineering firm and internal environment in
decision making.
III. DISCUSSION
DECISION-MAKING AS A MANAGEMENT RESPONSIBILITY
Decision-making is a responsibility of the engineer manager.
Mistakes are inevitable but a wise manager will fix them immediately
upon identification.
Errors must be minimized because possessing the authority to
choose gives the manager the responsibility of the outcome. Higher
level of management means more intricate decision-making.
WHAT IS DECISION-MAKING?
Decision-making may be defined as “the process of identifying and
choosing alternative courses of action in a manner appropriate to the
demands of the situation” (Delaney, 1982, as cited in Medina, 1999).
This declares that a systematic way of choosing the most appropriate
option must be followed to deal with a problem effectively.
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 other, “is the heart of all the management functions”.
THE DECISION-MAKING PROCESS
Rational decision-making, according to David H. Holt, is a process involving
the following steps:
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 and adapt decision (1987, as cited in Medina, 1999)
Diagnose Problem
To make an intelligent decision, the manager should first identify the
problem. It will be difficult to advance if the manager fails in this part. An
expert once said, “identification of the problem is tantamount to having the
problem half-solved.”
Analyze the Environment
The success of an organization largely depends on its environment;
therefore, it is crucial to examine the setting.
The objective of environmental analysis is the identification of internal and
external limitations.
Example of internal limitations are as follows:
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.
Develop Viable Alternatives
Problems can be usually solved by any of the possible solutions, but
the best must be chosen. 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 solution.
3. Revise the list by striking out those which are not viable.
To illustrate:
An engineering firm has a problem of
increasing its output by 30%. This is
the result of a new agreement between
the firm and one of its clients.
The list of solutions prepared by the engineering
manager shows the following alternatives
courses 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; and
5. delay servicing some clients
The list was revised and only the first three were deemed to be viable. The last two were
deleted because of adverse effects in the long-run profitability of the firm.
Evaluate Alternatives
After viability inspection and list revision is the evaluation of the
remaining alternatives. Appropriate evaluation is paramount to devising
the right decision.
The method of evaluation rests on the objective of the firm and nature
of the problem and its alternatives.
Souder suggests that “each alternative must be analyzed and evaluated
in terms of its value, cost, and risk characteristics”.
Make a choice
Choice-making refers to the process of selecting among alternatives
representing potential solutions to a problem.
At this point, Webber advises that “… particular effort should be made to
identify all significant consequences of each choice.”
To simplify the selection process, the alternatives can be ranked
according to a specific factor (e.g. benefit, cost, risk).
Implement Decision
Implementation simply denotes action to achieve the desired objective;
and for it to be effective, a plan must be formulated.
To properly implement the decision, the resources must be made
accessible. Those who will be necessitated, according to Aldag and
Stearns, “must understand and accept the solution”.
Evaluate and Adapt Decision Results
The implemented decision may succeed or not.
Due to this, the utilization of control and feedback mechanisms is important
to guarantee results and to aid future decisions.
Feedback refers to the process which requires checking stage of the
process to assure that the alternatives generated, the criteria used in
evaluation, and the solution selected for implementation are in keeping with
the goals and objectives.
V. REFERENCES
Medina, R. G. (1999). Engineering management. Rex Bookstore Inc. (2 - 16)
Dr. Nyambane Osano (2013) FCE 372 Engineering Management 1 Lecture
Notes
IV. ASSESSMENT
PLATE NO. 2: DECISION MAKING
Answer the following:
1. What is the importance of decision-making as a future engineer?
2. Enumerate and explain the different decision-making processes.
3. Enumerate and explain nature of work of at least 20 engineering
firms.
4. Based from your engineering point of view, where do you see
yourself ten (10) years from now?
IV. ASSESSMENT
QUIZ NO. 1*
Coverage:
MODULE 1: Field of Engineering Management
MODULE 2: Decision Making
*(Enumeration and Identification)
THANK YOU
