PLANNING TECHNICAL ACTIVITIES + The Nature of Planning + Planning Detined “+ Planning ot Various Management Levels + The Planning Process + Types of Plans ‘Making Planning Etfective 2 Chapter 3 PLANNING TECHNICAL Ifmanaging an organization is to be pursued vigor- ously, planning wil constitute the most important activity. ‘Managers who plan are afforded with the opportunity to carefully analyze situations which directly contribute to effective decision-making. The engineer manager, regardless of his manage- ‘ment level, will have to devote some of his time to plan- ning. The higher the management level the engineer ‘manager isin, the mare sophisticated his planning activity becomes. Why and how thi this chapter. is so shall bo discussed in THE NATURE OF PLANNING ‘There are many instances when managers are overwhelmed by various activities which at times be- cloud his judgment. This must be expected since any- body who is confronted by several situations happening simultaneously will loose sight of the more important concerns. ‘Tb minimize mistakes in decision-making, planning is undertaken. ‘A plan, which is the output of planning, provides a methodical way of achieving desired results. In the implementation of activities, the plan serves as a useful ‘guide. Without the plan, some minor tasks may be afforded major attention which may, later on, hinder the accom- -plishment of objectives. ‘An example of the difficulty of not having a plan is| ‘illustrated below. —. 4“‘The management of an engineering firm was able to identify the need to hire additional thres em- ployees, The manager’ to invite applicants, Screen them, and finally hired three of them. When the hiring expense report was analyzed, it involved more than double the amount spent by other firms jn hiring the same number of people. ‘When an inquiry was made, itwas found out that the manager committed some errors of judgment. For instance, he used an expensive advertising ayout in a newspaper when a simple message will do. ‘Also, i-was found out that the absence ofa hiring plan contributed to the high cost of hiring. PLANNING DEFINED ‘Various experts define planning in various ways, all ‘of which are designed to suit specific purposes. Planning, according to Nickels and others, refers to “the management function that involves anticipating future trends and determining the best strategies and tactics to achieve organizational objectives.”" This 4 ition is useful because itrelates the future to what could ‘be decided now. ‘Aldag and Stearns, on the other hand, define plan- ning as “the selection and sequential ordering of tasks required to achieve an organizational goal.” This defini- tion centers on the activity required to accomplish the goals, ‘The definition of Cole and Hamilton provides a better guide on how to effectively perform this vital activity Planning, according to them is “deciding what will be leeds sod thers, 3 hag and Stearns, p18 dan, wn wil dit, wor, wh here wen and oirt wil be done, td the standards o wiih wll bo done? For our purpote, it wil sfie to define planning , cto define Haining én sxe te aon tation sth th ered eat say teaches srl the eed {Ses rt airy andthe action cron PLANNING AT VARIOUS MAI ANE \NAGEMENT sion ee engineer managers could be occupying post Sona in any ofthe various management levels it willbe net sm to know some aspects of planning un- jaken at the different management levels. Planning activities unde an tannins atvitios undertaken at various lovla are, 1: (iby anager pee ct 2 Midis names} cera tng tae pe ning ihe ie eal ; Laer magn eel — prt! pln strategie Planning etcten ee eee og: eae eee ee is involved in this type of planning. Peo alg, © In stratogie planning, the whale compa Hidered, specially ta objectives and current resources, | Ki Gal nd Barbara Hain, Ofer a Ca dB Hato, Of Admininrtion and Suprin ‘Mikasa ether, p14 Le, 45‘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 deter- mining the contributions that subunits can make with allocated resourees,"* This type of planning is undertaken by middle management. ‘Under intermediate planning, the goals of a subunit ‘re determined and a plan is prepared to provide a guide to the realization of the goals. The intermediate plan is, designed to support the strategic plan. Figure 3.1 Types of Planning MANAGEMENT LEVEL PLANNING HORIZON Siieen Strategic planning ? ‘Vice Presidents, occa cele 2 code os, oe as ‘necramamoe: \ amon ety | romero \ terms te aa Eh gilli Vict sty cel |e a oor, —FWaeen #Plusket an Raymond FAtzar:ntreducton a Management, ‘Secon Eaton thosto! PWS Kent Publishing Cn, 1989) p. 572 “ireitoun, p GS. 6 Figure 9.2 The Organization and Types of Planning Undertaken PRESIDENT/ (GENERAL MANAGER ‘esponeible for STRATEGIC PLANNING uarkena] — [Prooucrion] [FINANCE PERSONNEL MANAGER MANAGER MANAGER p | MANAGER. T response ‘espera responsibe responeblo for for ter for INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE PLANNING PLANTING. PLANNING, PLANNING INDUSTRIAL FACTORY ‘quay enaeznie | |uanacer| — | contRoL MANAGER MANAGER osponsiie response responsible for foe for OPERATIONAL OPERATIONAL OPERATIONAL PLANNING PLANNING. PLANNING a7Operational Planning ‘The term operational planning refers to “the pro- cess of determining how specific tasks can best be ac- complished on time with available resources.” This type of planning is a responsibility of lower management. It rust be performed in support of the strategie plan and the intermediate plan. THE PLANNING PROCESS ‘The process of planning consists of various steps depending on the management level that performs the planning task. Generally, however, planning involves the following: 1. setting organizational, divisional, or unit goals 2. developing strategies or tactics to reach those goals 8, determining resources needed and setting standards. Setting Organizational, Divisional, or Unit Goals ‘The first task of the engineer manager is to provide ‘a sense of direction to his firm (if he is the chief execu- tive), to his division (if he heads a division), or to his unit (if he is a supervisor), The setting of goals provide an ‘answer to the said concern, If everybody in the firm (or vision or unit, as the case may be) is aware of the goals, there is a big chance that everybody will contribute his share in the realization of such goals. Goals may be defined as the “precise statement of results sought, quantified in time and magnitude, where possible.”® Examples of goals are provided in Figure. 3.3. Opa, 151 Bre N Boshewits and ethers, Marketing, Third Kain (Homewood, ‘Mga Tein, 1982 p72 48 Figure 9.3 Examples of Goals, By Organizational Level ORGANIZATIONAL, EXAMPLE OF GOAL LEVEL COMPANY. To attain a retun fn investment of 25% Buenavista Construction Corporation ‘Toincrease the numbor DIVISION of projects undertaken by the company Project Management Divsion| unit ‘Tolncrease the number of project engineers Personnel Sonvoas UniDeveloping Strategies or Tactics to Reach Goalls “After determining the goals, thenext task isto dlevise some meas to realize them. The ways to realize the goals ‘are called strategies and these will be the concern cof top ‘management. The middle and lower managementt will ‘adapt their own tactics to implement their plans.. Acstrategy may be defined as“a course of action saimed ‘at ensuring that the organization will achieve its object- ‘An example of a stratogy is as follows: ‘The decision of a construction firm's mamnage- ment to diversify ite business by engaging also in the trading of construction materials and supppliies. ‘When the above mentioned strategy is implemented, it may help the eonstruetion firm realize substantial savings in the material and supply requirements used in their construction activities. The firm will also have ‘greater control in the timing of deliveries of matterials ‘and supplies. A tactieis a short-term action taken by management toadjustto negative internal or external influences.” They are formulated and implemented in support of the firm's strategies, The decision about short-term goals and the ‘courses of action are indicated in the tactical plan. ‘An example of a tactic is the hiring of contractual workers to augment the company’s current workforce. Determining Resources Needed ‘When particular sets of strategies or tacties have "aml ©, Cerin and J, Poa Peter, Static Menapemént, Canees e ‘Aplications ie York, Randers Hose, 198) p18. ‘Sfabere A Comerfurd und Denia W.Calaghan, Strate Management, Glass or Basins Plicy Best: Kent Pushing Cn, 1886) been devised, the engineer manager will, then, determine, the human and nonhuman resources required by such strategies or tactics. Even if the resouree requirements are currently available, they must be specified. The quality and quantity of resources needed must, be correctly determined. Too much resources in terms of either quality or quantity will be wasteful. ‘Ibo little will ‘mean loss of opportunities for maximizing incoie. ‘satisfy strategic requirments, a general state- rent ofneeded resources il sufice The spocferouire ‘ents willbe determined by the different units athe company To tstrate ‘Suppose the management ofa construction firm has decided, in addition to its current undertakings, to engage in the trading of construction materials ‘and supplies. A gonoral statement of required resources will be as follows: A new business unit will be organized to deal with the buying and selling of construction ‘materials and supplies, The amount of P50 million shall be set aside to finance the activity. Qualified ppersens shall be recruited for the purpose, Setting Standards ‘he standards for measuring performance may be seta the planning stage: When acial performance foe ot match withthe planned porformance,corecions tay be mae or reafreements givens ___Astandard may be defined as‘ quantitative or qua- litative measuring device designed to help cetera performances of people, capital goods, or procensea! Opt p28 wPlnkat and Ato p52 a, 51‘An example of a standard is the minimum number of units that must be produced by a worker per day in fa given work situation. TYPES OF PLANS Plans are of different types. They may be classified in terms of functional areas, time horizon, and frequency of use." Funetional Area Plans Plans may be prepared according to the needs of the different functional areas. Among the types of functional area plans are the following: 1. Marketing plan— this is the written document or blueprint for implementing and controlling fan organization's marketing activities related to a 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 — itis a document that summa- rizes the current financial situation of the firm, analyzes financial needs, and recommends a direction for financial activities. 4, Human resource management plan — it is a document that indicates the human resource needs of a company detailed in terms of quantity ‘and quality and based on the requirements of the company’s strategic plan. “ardhar 0. Beinn, Manageme (Chicas: The Deyden Prost, 198) 108 iia M, Pride and O., Berl, Markaing Coneps and Stoel, ‘Sixth Bilton (Garon: Haughton Min Ca, 198) p. G0 "WRichard-d. Schonberger ané Edward M. Kaod, Jr, Operations Management, Tick Eaton (Pan, Teas BosinessPobiations, Tee, 198) 86 62 Plans With Time Horizon Plans with time horizon consist of the following: 1. Short-range plans — these are plans intended to cover a period of less than one year. First-line supervisors are mostly concerned with these plans. Long-range plans — these are plans covering ‘a time span of more than one year, These are ‘mostly undertaken by middle and top manage- ment Plans According to Frequency of Use According to frequency of use, plans may be classi- ae cy Pl ay be cl 1. standing plans and 2. single-use plans. ‘Standing Plans. ‘These are plans that are used again and again, and they focus on managerial situations that recur repeatedly."* ‘Standing plans may be further classified as follows: 1. Policies — they are broad guidelines to aid ‘managers at every level in making decisions about recurring situations or funetion.” 2. Procedures — they are plans that describe the exact series of actions to be taken in a given situation.” 3, Roles — they are statements that either require or forbid a certain action." rs inn, 08 Rar Pt on on “Mes p's ng sd ears pa ieSingle-Use Plans. These plans are specifically deve- ‘oped to implement coursos of action that are relatively ‘unique and are unlikely to be repeated. ‘Single-nse plans may be further classified as follows: 1. budgets 2, programs, and 3B. projects. ‘A budget, according to Weston and Brigham, is “a plan which sets forth the projected expenditure for a certain activity and explains where the required funds ‘will come from.”” ‘Aprogram i a single-use plan designed to coordinate fa large sot of activities ‘A project is a single-use plan that is usually more limited in scope than a program and is sometimes pre- pared to support a program. PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS ‘The engineer manager may be familiar with engi- neering plans, knowing the details from beginning to end. However, the ever present possibility of moving from one management level tothe next and from one func tional area to another presses the engineer manager to be familiar as well with other functional area plans. ‘The Contents of the Marketing Plan ‘The structure and content of marketing plans vary depending on the nature of the organizations adapting Maldag and Stearn, p. GT. Flee ct. Figure 2.4 Types of Plans ‘TYPES OF PLANS Functional rans with Plans wih Area Time Varied Fre- Plans Horizon avenoy of Use ‘marketing shor plan range plan production plan Tong range ‘nancial plan standing singlewse Blan lan human plan [ policies] [procedures] [rules ‘budget ] [program projectthem, William Cohen maintains that the following must be included in the marketing plan 1 1 8 ‘The Executive Summary — which presents an overall view of the marketing project and its potential. ‘Table of Contents Situational Analysis and Target Market ‘Marketing Objectives and Goals Marketing Strategies Marketing Tactics Schedules and Budgets Financial Data and Control ‘The Contents of the Production Plan ‘The production plan must contain the following: 1 a 8 the amount of capacity the company must have how many employees are required ‘how much material must be purchased ‘The Contents of the Financial Plan ‘The components of the financial plan are as follows." 1 2, ‘An analysis of the firm's current financial con- dition as indicated by an analysis of the most recent statements, ‘A sales forecast ‘iin A. Coie, The Practice of Marketing Management (New York: Mactan Puan Ca, 1888 pp. 60556, ee ilvorih; Production and Operations Management, Third ‘aio lew Yor: Random House, 1998) p12 en Brigham and Lou C. Capash, Financial Management, eee Se ton (Now ars The Dryden Pres, 1990 p92 Figure 3.5 An Example of a Marketing Plan Schedule Buenavista Manufacturing Compan Marketing Plan Schedule f For the Year Ending December 31, 1008 NIT AMOUNT PRODUCT A, January £85,000 x © 430,500 , , ere 90,000 485,500 95,000 481,500 Ti ae 270,000 1,967,500 and ater 260,000 11,317,000, Quarter 180,000 962,500 ‘th Quarter 280,000 4,418,000 Total A $4,000,000 PRODUCT B. January February March Total 1st Quarter 2nd Quarter ‘3rd Quarter 4th Quarter Total B Tolal A and B erFigure 9.6 An Example of a Production Plan Schedule a 8. The capital budget Buenavista Manufacturing Company ‘The cash budget Detailed Production Plan > B Asset of'pro forma (or For the Year Ending December 31, 1998 eee (er projected) financial stato. 6. The external financing plan ‘REQUIRED :ADD TOTAL :LESS- UNITS: zs Fe fi REOUIRED INTIAL | TOBE atest Sues aweNTORY INVENTORY. COMPLETED Contents of the Human Resources Plan (OF FINISHED. ‘OF FINISHED ‘The human resources, i r ‘goo0s soos. a plan must contain the following: So Se 1. personnel requirements of the company PRODUCT A 2. plans for recruitment and selection Janay 25000 225.000 910,000 240.000 3. training plan February 0.000 215000 905.000 225,000 e ‘March 95,000 200,000 _295,000 _215,000 See eo PARTS OF THE STRATEGIC PLAN ‘The strategic plan must contain the following:** Toa 1st Quarter 270,000 200,000 470,000 240,000 2nd Quarter 260,000 180,000,, 440,000 200,000, ‘3rd Quarter 190,000 220,000 410,000 180,000 230,000 ‘Ah Quarter 280,000 200,000 480,000 220,000 260,000, 1. Company or corporate mission Total 7,000,000 200,000 1,200,000 240,000 960,000 2 Objectives or goals PRODUCT B. 3. Strategies Company of anuary 34,000 100,000 194,000 pany of corporate mission refers to the “stra. February 441,000 95,000 186,000 togie statement that identifies why an organiation exists, ‘Maron 45,000 _ 88,000, 100 its philosophy of management, and its purpose as dis. os tinguished from other sin f Tal tt Quarter 120,000 66000. 206,000 100,000 Spied on er ilar ogni ners of 2nd Quarter 135,000 93,000 228,000 88,000 i. es, and markets. Sid Quarter 95,000, 125,000 ‘tn Quarter _ 150,000, Tolal 500,000 MAKING PLANNING EFFECTIVE Planning is done so that some desired results be achieved. At times, however, failurein planning occurs, “Arthar A. Thomyoo, J and AJ. Stiklnd I, Stree Manageme Canc and Caen, (Plan, exer Bins Fables tae snd Cae Fars in ane, sas Ds alee ‘Hal, , 702 59 i,Planning may be made suecessful if the following, are observed: 1, recognize the planning barriers 2, use of aids to planning ‘The planning barriers, according to Plunkett and Attner, are as follows: 1. manager's inability to plan improper planning process Jack of commitment to the planning process ‘improper information focusing on the present at the expense of the future 6, too much reliance on the planning department 7. concentrating on only the controllable variables ‘Among the aids to planning that may be used are: 1. Gather as much information as possible 2, Develop multiple sourees of information 3, Involve others in the planning process ‘SUMMARY ‘Technical activities, like other activities, require effective planning, ie., if objectives and goals are to be realized. ‘A plan is a methodological way of achieving results. Planningis undertaken at various managementlevels. ‘Various steps are required in the planning process depending on the management level. Phonkat and Alter pp. 122-128. 60 Plans may be classified in terms of finctional areas, time horizon, and frequency of use. : % Plans consist of various parts that the en ‘manager must be familiar with. ey Plans can be made effective by tive by recognizing the planning barriers and making use of aids to planning. aQUESTIONS FOR REVIEW AND DISCUSSION 1. Why is planning an important activity for engineer managers? 2. How may “planning” be defined? 3, What planning activities are undertaken at various management levels? 4, What are the steps in the planning process? ‘What are the types of plans? How may they be clias- sified? ‘What isa production plan? What are its componersts? What is a budget? ‘What is meant by “company mission"? |. What are the barriers to planning? 10, What may be used as aids in planning? SUGGESTED ITEM FOR RESEARCH 1. Interview the general manager of a construction firm. Inquire about the planning activities undertaken by the firm. Prepare a report about the result of the inter- Case 9. MOTORBUS COMPANY: Que Sera Sera © Engineer Hermogenes Ancheta has just received his appointment papers from his new immediate superior, the Vice President for Operations. he has beoh promoted from Assistant Manager to Manager of the Maintenance Department. After congratulating him, his boss gave him a verbal directive that he should put some order in his department and make it work in the moet effeetive and efficient manner possible. Engineer Ancheta has just passed the board exam- ination for Mechanical Engineering when he joined ‘Motorbus Company in 1993. By June 1996, he informed his former classmates at the University of Santo Toms ‘The former manager of the department, Engineer Gaudencio Inductivo, joined the company since it started operations in 1989. A total of ten buses began plying the Manila-Isabela route, A maintenance unit was put up at the Manila terminal in Sampaloc, Another unit serves the Tlagan, Isabela terminal, Bach unit has a full-time ‘mechanic and one assistant, ‘When a company bus comes in for repair, the mech- anic diagnoses the various automotive systems in the bus and later produces a list of parts needing replacement, ‘The mechanic sends the list to Engineer Inductivo, who, in turn, forwards the same to the company accountant, for approval of the purchase request. Oftentimes, Engi- neer Inductivo performs the actual purchasing himself. Later, he sends the purchased items to the mechanic who, made the request, ‘The maintenance units were operating normally until 40 new buses were procured by the company in 1993. Since then, every maintenance personnel was so busy that they threatoned to quit their jobs unless additional ‘ 63 aii,-mechanies and assistants were recruited. By the end of 1993, each unit has a personnel complement of 5 mechanics and 5 assistants, Even with current developments, the old method of purchasing was not improved. Purchase requests started to pile up. Mechanics and drivers began complaining to the VP for Operations about delays in the delivery of needed parts. ‘The VP for Operations immediately sent a note to Engineer Inductivo ordering that the problem should be resolved immediately. Engineer Inductivo was hard pressed and he could not offer an immediate solution. The next day, Engineer Inductivo informed the VP for Oper tions that he is requesting for the approval of his appli- cation for retirement as he is already 62 years old. ‘The VP forwarded the request to the President with an endorsement justifying the request. On the same day, the request for retirement was approved. The next day, Engineer Ancheta received his appointment papers promoting him to Manager. One of the first things Engineer Ancheta did was to {inspect the storage room for parts. He found out that the room was full of an uneven supply of parts. Some parts ‘were of excessive quantities, while some important ones ‘were inadequately stocked. A corner of the room contains, 1a big volume of obsolete parts. ‘Atthe end of the day, Engineer Ancheta was informed by the VP that the company will be fielding an additional 50 new buses within 30 days, This will mean that by next ‘month, about 100 buses will be servicing the various routes assigned to Motorbus Company. Engineer Ancheta is now mulling over how he will ‘make the operations of his department as efficient. and effective as possible a