PLANNING

ENGINEERING MANAGEMENT LECTURE 3

PART 1
MANAGERS WHO PLAN ARE AFFORDED WITH THE
OPPORTUNITY TO CAREFULLY ANALYZE
SITUATIONS WHICH DIRECTLY CONTRIBUTE TO
EFFECTIVE DECISION MAKING
THE NATURE OF PLANNING
There are many instances when managers are overwhelmed
by various activities which at times becloud his judgement.
This must be expected since anybody who is confronted by
several situations happening simultaneously will loose sight of
the more important concerns. To minimize mistakes in
decision making, planning is undertaken.
A plan which is the output of planning, provides a methodical
way of achieving desired results. Without the plan, some
minor tasks maybe afforded major attention which may later
on, hinder accomplishment of objectives.
Example
The management of an engineering firm was able to identify
the need to hire additional three employees. The manager
preceeded to invite applicants, screen them, and finally hired
three of them. When the hiring expense report was analyzed,
it involved more than the double amount spent by other
firms in hiring the same number of people.
When an inquiry was made, it was found out that the
manager committed some errors of judgement. For instance,
he used an expensive advertising layout in a newspaper when
a single message will do.
Also, it was found out that the absence of a hiring plan
contribute to the high cost of hiring
PLANNING DEFINED
Planning refers to the management function that involves
anticipating future trends and determining the best strategies
and tactics to achieve organizational objectives.
It is also the selection and sequential ordering of task
required to achieve an organization goal.
It is deciding what will be done, who will do it, where,
when, and how will it be done, and the standards to which it
will be done.
PLANNING AT VARIOUS MANAGEMENT
LEVEL
Since engineer managers could be occupying positions in any of
the various management levels, it will be useful of them to
know some aspects of planning undertaken at different
management levels.
Planning activities undertaken at various level are as follows:
1. Top management level Strategic Planning
2. Middle management level intermediate planning
3. Lower management level operational planning
Strategic planning
The term strategic planning refers to the process of
determining the major goals of the organization and the
policies and strategies for obtaining and using resources to
achieve those goals.
In strategic planning, the whole company is considered,
specifically its objectives and current resources.
The output of strategic planning is the strategic plan which
spells out the decision about long range goals and the course
of action to achieve these goals.
Intermediate Planning
Intermediate planning refers to the process of determining
the contributions that subunits can make with allocated
resources.
The intermediate plan is designed to support the strategic
plan.
Operational Planning
Operational planning refers to the process of determining
how specific task can be best accomplished on time with
available resources.
The organization and types of planning
undertaken
1. Strategic Planning president, general manager
2. Intermediate planning marketing manager, production
manager, finance manager, personnel manager
3. Operational Planning industrial engineering manager,
factory manager, quality control manager
THE PLANNING PROCESS
The process of planning consists of various steps depending
on the management level that performs the planning task.
Generally, planning involves the following:
1. Setting organizational, divisional, or unit goals
2. Developing strategies or tactics to reach those goals
3. Determining resources needed and
4. Setting standard
Setting Organizational, Divisional, or
Unit Goals
The first task of engineer manager is to provide a sense of
direction to his firm, to his division, or to his unit. The
setting of goals provide an answer to the said concern. If
everybody in the firm is aware of the goals, there is a big
chance that everybody will contribute his share in the
realization of such goals.
Developing Strategies or Tactics to
Reach Goals
After determining the goals, the next task is to devise some
measures to realize them. The ways to realize the goals are
called strategies and these will be concern of top
management.
A strategy may be defined as a course of action aimed to
ensuring that the organization will achieve its objectives.
A tactic is a short term action taken by management to adjust
to negative internal or external influences.
Determining the sources needed
When particular sets of strategies or tactics have been
devised, the engineer manager will, then, determine the
human and non human resources required by such strategies
or tactics.
The quality and quantity of resources needed must be
correctly determined. Too much resources in terms of either
quality or quantity will be wasteful.
Setting Standards
When actual performance, corrections may be made or
reinforcements given.
A standard may be defined as a quantitative or qualitative
measuring device designed to help monitor the performance
of people, capital goods, or processes.
TYPES OF PLANS
Functional Area Plans
1. Marketing plan this is the written document or blueprint in
implementing and controlling the organizations marketing
activities related to particular marketing strategy.
2. Production plan this is a written document that states the
quantity of output a company must produce in broad terms and
by product family.
3. Financial plan it is a document that summarizes the current
financial situation of the firm, analyzes financial needs, and
recommends a direction for financial activities.
4. Human resource management plan indicates the human
resource needs of a company detailed in terms of quantity and
quality and based on the requirements of the companys
strategic plan.
TYPES OF PLAN
Plan with Time Horizon
1. Short range plans plans intended to cover a period of less
than one year.
2. Long range plans plans covering a time span of more than
one year
TYPES OF PLAN
Plans According to Frequency of Use
1. Standing Plans These are plans that are used again and again,
and they focus on managerial situations that recur repeatedly.
1. Policies broad guidelines to aid managers at every level in making
decisions
2. Procedures describe exact series of actions to be taken in a given situation
3. Rules statements that either require or forbid a certain action
2. Single Use Plans implement courses of action that are
relatively unique
1. Budget plan which sets forth the projected expenditure for a certain
activity and explains where the required funds will come from.
2. Program designed to coordinate large set of activities
3. Project limited in scope than a program and is prepared to suppport a
program
Parts of the Various Functional Area
Plans
The engineer manager may be familiar with engineering plans,
knowing the details from the beginning to end. However, the
ever present possibility of moving from one management
level to the next and from one functional area to another
presses the engineer manager to be familiar as well with the
other functional area plans.
The contents of a marketing plan
The following must be contained in the marketing plan
1. The executive summary - overall
2. Table of contents
3. Situational analysis and target market
4. Marketing objectives and goals
5. Marketing strategies
6. Marketing tactics
7. Schedules and budgets
8. Financial data and control
CONTENTS OF THE PRODUCTION PLAN
The production plan must contain the following
1. The amount of capacity the company must have
2. How many employees are required
3. How many materials must be purchased
CONTENTS OF THE FINANCIAL PLAN
1. An analysis of the firms current financial condition as
indicated by an analysis of the most recent statements
2. Sales forecast
3. Capital budget
4. Cash budget
5. A set of pro forma (or projected) financial statements
6. External financing plan
CONTENTS OF HUMAN RESOURCE
PLAN
1. Company or corporate mission
2. Objectives and goals
3. Strategies

Company of corporate mission refers to the strategic statement

that identifies why an organization exists, its philosophy of
management, and its purpose as distinguished from other
similar organizations in terms of products, services, and
markets.
MAKING PLANNING EFFECTIVE
Planning is done so that some desired results may be achieved. At times,
however, failure in planning occurs.
Planning may be made successful if the following are observed:
1. Recognize the planning barriers
2. Use of aids to planning
The planning Barriers are:
1. managers inability to plan
2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating only on the controllable variable