Decision

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Making
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The engineer managers
decision-making skills will
be VERY CRUCIAL to his
success as a professional.
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 A major blunder in decisionmaking
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.
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DECISION-MAKING AS A
MANAGEMENT RESPONSIBILITY
Decision-making is a responsibility of the engineer
manager
Management must strive to choose a decision option
as correctly as possible . Since they have that power,
they are responsible for whatever outcome their
decisions bring. The bigger the management level is,
the bigger and more complicated decision-making
becomes.
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WHAT IS DECISION-MAKING?
Defined as the process of identifying and choosing
alternative courses of action in a manner appropriate to the
demands of the situation.
The definition indicates that the engineering manager
must adapt a certain procedure designed to determine
the best option available to solve certain problems.
Decision-making is the heart of all the management functions
-Nickel
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MODELS OF DECISION-MAKING
A. Rational decision making model
(Economic rationality model)

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B. Bounded rational making model
C. Intuitive decision making model
D. Creative decision making model

E. Social model
F. Neuroscientific
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THE DECISION-MAKING PROCESS
Rational decision-making

Diagnose problem

Analyze environment

Articulate problem or opportunity

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 Develop viable alternatives

Evaluate alternatives

Make a choice

Implement decision

Evaluate and adapt decision results

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DIAGNOSE PROBLEM
Identification of the problem is tantamount to
having the problem half-solved."

What is a Problem?
A problem exists when there is a difference between
an actual situation and a desired situation.

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ANALYZE THE ENVIRONMENT
The objective of environmental analysis is the
identification of constraint, which may be spelled out
as either internal or external limitations.
Example of internal limitations:
Limited funds available for the purchase of equipment.
Limited training on the part of employees.
Ill-designed facilities.
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Examples of external limitation
Patents are controlled by other organizations.
A very limited market for the company's products and services
exists.
Strict enforcement of local zoning regulations.

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Components of the Environment

Internal environment
refers to the organizational activities within a firm
that surrounds decision-making.

External environment
refers to the variables that are outside the
organization and not typically within the short-run
control of top management.
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 Internal Environment
INTERNAL ENVIRONMENT
Organization Aspects EXTERNAL
ENVIRONMENT
Marketing Aspects
DECISION
Personnel Aspects
Production Aspects EXTERNAL
ENVIRONMENT
Financial Aspects
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 External environment
Government
Engineers Labor Unions

Clients
ENGINEERING Banks
FIRM

Competitors Banks
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DEVELOP VIABLE ALTERNATIVES
Procedure by management:
1. Prepare a list of alternatives solutions
2. Determine the viability of each solutions.
3. Revise the list by striking out those which are not
viable.

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EVALUATE ALTERNATIVES
Proper evaluation makes choosing the right solution
less difficult.

How the alternatives be evaluated will depend on the

nature of the problem, objectives of the firm, and the
nature of alternatives presented.

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Each alternative must be analyzed and evaluated
in terms of its value, cost and risk characteristics.
- Souder
Value of alternatives
- Benefits that can be expected.
Cost of alternative
- Out of pocket cost, opportunity cost, follow on
cost
Risk characteristics
- Likelihood of achieving the goals of alternative
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MAKE A CHOICE
This the point where the decision-maker must be
convinced that all the previous steps were correctly
undertaken.
Choice-making refers to the process of selecting
among alternatives representing potential solutions to
a problem.
To make the selection processes easier, the alternative s
can be ranked from best to worst on the basis of some
factors like benefit, cost, or risk.
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IMPLEMENT DECISION
Implementation
-refers to carrying out the decision so that the
objectives sought will be achieved. To make
implementation effective, a plan must be devised.

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EVALUATE AND ADAPT DECISION RESULT
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 for implementation are in keeping
with the goals and objectives originally specified.

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Control
-refers to actions made to ensure that activities
performed match the desired activities or goals,
that have been set.

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 diagnose problem
Feedback as a Control Mechanism
analyze environment
in the Decision-Making Process
articulate problem or
opportunity
develop viable
alternatives
evaluate alternatives
make a choice
determine steps
implement decision whether error
evaluate results results not achieved was made
results achieved
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 End

Sources:
en.m.wikipedia.org/wiki/decision-making_models
2012books.lardbucket.org/books/management-principles-v1
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