Managing Engineering and Technology

Fifth Edition
Morse and Babcock

Planning and Forecasting

Chapter 3

Chapter Objectives

Explain the importance of planning

Identify missions
Explain the roles of goals and objectives
Identify strategies
Define the different types of forecasting
Describe the Delphi Method
Define different approaches to forecasts
Discuss some strategies for managing
technology

Planning and Performance

The Relationship Between Planning And
Performance
Formal planning is associated with:
Higher profits and returns on investment.
Positive financial results.

The quality of planning and implementation

affects performance more than the extent of
planning.
Formal planning must be used for several yrs
before planning begins to affect performance.

Planning
1. Provides method for identifying
objectives
2. Design sequence of programs and
activities to achieve objectives

How Do Managers Plan?

Elements of Planning
Goals (also Objectives)
Desired outcomes for individuals, groups, or entire
organizations
Provide direction and evaluation performance criteria

Plans
Documents that outline how goals are to be accomplished
Describe how resources are to be allocated and establish
activity schedules
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Types of Goals
Financial Goals
Are related to the expected internal financial
performance of the organization.

Strategic Goals
Are related to the performance of the firm
relative to factors in its external environment
(e.g., competitors).

Stated Goals from Large U.S. Companies

Financial Goals

Strategic Goals

Faster revenue growth

A bigger market share

Faster earnings growth

A higher more secure industry

rank

Higher dividends
Wider profit margins
Higher returns on invested
capital
Stronger bond and credit
ratings
Bigger cash flows
A rising stock price
Recognition as a blue chip
company
A more diversified revenue
base
Stable earnings during
recessionary periods

Higher product quality

Lower costs relative to key
competitors
Broader or more attractive
product line
A stronger reputation with
customers
Superior customer service
Recognition as a leader in
technology and/or product
innovation
Increased ability to compete in
international markets
Expanded growth opportunities

Types of Plans

79

Exhibit 7.2

Types of Plans
Strategic Plans
Apply to the entire organization.
Establish the organizations overall goals.
Seek to position the organization in terms of its
environment.
Cover extended periods of time.

Operational Plans
Specify the details of how the overall goals are to be
achieved.
Cover short time period

Types of Plans (contd)

Long-Term Plans
Plans with time frames extending beyond 3 yrs

Short-Term Plans
Plans with time frames on one year or less

Specific Plans
Clearly defined, no room for interpretation

Directional Plans
Flexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation.

Specific Versus Directional Plans

Types of Plans (contd)

Single-Use Plan
A one-time plan specifically designed to
meet the need of a unique situation.

Standing Plans
Ongoing plans that provide guidance for
activities performed repeatedly.

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Approaches to Establishing
Goals

Traditional Goal Setting

Broad goals are set at the top of organization.

Then broken into subgoals for each level.
Assumes that top management knows best because
they can see the big picture.
Goals are intended to direct, guide, and constrain
from above.
Goals lose clarity and focus as lower-level managers
attempt to interpret and define the goals for their
areas of responsibility.

Traditional Objective Setting

Approaches to Establishing
Goals (contd)
Management By Objectives (MBO)

Specific performance goals are jointly determined

by employees and managers.
Progress toward accomplishing goals is periodically
reviewed.
Rewards are allocated on the basis of progress
towards the goals.
Key elements of MBO:
Goal specificity, participative decision making, an explicit
performance/evaluation period, feedback

Steps in a Typical MBO Program

1. The organizations overall objectives and strategies are
formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their
units with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are
specified and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and
feedback is provided.
8. Successful achievement of objectives is reinforced by
performance-based rewards.

Does MBO Work?

Reason for MBO Success
Top management commitment and involvement

Potential Problems with MBO Programs

Not as effective in dynamic environments that
require constant resetting of goals.
Overemphasis on individual accomplishment
may create problems with teamwork.
Allowing the MBO program to become an
annual paperwork shuffle.

Characteristics of WellDesigned Goals

Formulated in terms of
outcomes, not actions
Focuses on the ends, not the
means.

Measurable and
quantifiable
Specifically defines how the
outcome is to be measured
and how much is expected.

Clear as to time frame

How long before measuring
accomplishment.

Challenging yet
attainable
Low goals do not motivate.
High goals motivate if they
can be achieved.

Written down
Focuses, defines, and
makes goal visible.

Communicated to all
Puts everybody on the
same page.

Steps in Goal Setting

1. Review the organizations mission statement.
1. Do goals reflect the mission?

2. Evaluate available resources.

1. Are resources sufficient to accomplish the mission?

3. Determine goals individually or with others.

1. Are goals specific, measurable, and timely?

4. Write down the goals and communicate them.

1. Is everybody on the same page?

5. Review results and whether goals are being met.

1. What changes are needed in mission, resources, or goals?

Developing Plans
Dependency Factors in a Managers Planning
Managers level in the organization
Strategic plans at higher levels
Operational plans at lower levels

Degree of environmental uncertainty

Stable environment: specific plans
Dynamic environment: specific but flexible plans

Length of future commitments

Current plans affecting future commitments must be
sufficiently long-term to meet the commitments.

Planning in the Hierarchy of Organizations

Approaches to Planning
Establishing a formal planning department
A group of planning specialists who help
managers write organizational plans.
Planning is a function of management; it should
never become the sole responsibility of planners.

Involving organizational members in the

process

Contemporary Issues in
Planning
Criticisms of Planning
Planning may create rigidity.
Plans cannot be developed for dynamic
environments.
Formal plans cannot replace intuition and
creativity.
Planning focuses managers attention on todays
competition not tomorrows survival.

Contemporary Issues in
Planning (contd)

Effective Planning in Dynamic

Environments

Develop plans that are specific but flexible.

Understand that planning is an ongoing
process.
Change plans when conditions warrant.
Persistence in planning eventually pays off.

Effective Planning
Plan to plan
People who are supposed to implement
plan should be involved in preparing
plan
Dont be reactive, be proactive

Planning

What must be done?

Who will do it?
How will it be done?
When must it be done?
How much will it cost?
What do we need to do it?

Planning
What is the Problem/Purpose?
Establish Goal/Objectives
What Client Need Is Being Satisfied
by the Project?
Identify Success Criteria

Planning process

Assignment
Write down your mission in life
OR
Assume that you own a company
and write down its mission.
It should not be more than two
lines/sentences.

Why are these statements

so essential today?
In earlier days businesses small and
usually revolving around a single
person, the entrepreneur
After Industrial Revolution, no more
the case
Analogy of requirement of Usul Fiqh
after the time of the Prophet and
Tabeeen

Strategic Planning
Vision/Mission

SWOT Analysis

Gap Analysis

Goals

Objectives

Strategies

Mission

Goal 1

Objective 1

Goal 2

Objective 2

Strategy 1

Strategy 2

Goal 3

Strategic Plan
Suggests ways (strategies) to
identify and to move toward desired
future states
Consists of the process of
developing and implementing plans
to reach goals and objectives

Vision
A vision statement describes in
graphic terms where the goal-setters
want to position themselves in the
future.
High organizational values
High aspirations for the future
Provides inspiration

Vision Example
Oxfam
A just world without poverty (5)
Save the Children
Our vision is a world in which every child
attains the right to survival, protection,
development and participation. (18)

Vision Microsoft (1980s)

"A personal computer on every desk, and
every computer running Microsoft
software."
Currently (though termed Mission
statement)
empower every person and every
organization on the planet to achieve
more. (2015)

Planning
Mission Statement
First step in planning process
What we do (primary purpose)
For whom we do it (customers,
stakeholders)
How we will get it done

What do we want to do

Mission Statement
Resembles a vision statement
Has a more immediate business
focus with a time horizon

Mission Example
Oxfam
To create lasting solutions to poverty,
hunger, and social injustice. (10)
Save the Children
To inspire breakthroughs in the way the
world treats children and to achieve
immediate and lasting change in their
lives. (20)

Strategic Planning

SWOT Analysis MAJU

Internal
Strengths
Faculty
Campus
Investor/Group
Weaknesses
Location
Not track record
No government funding

External
Opportunities
Growing population
Education focus
Threats
Competing universities
Lack of highly educated
faculty

Gap Analysis
Tool that helps companies compare actual
performance with potential performance.
At its core are two questions:
"Where are we?"
"Where do we want to be?"

Strategic Plan (cont.)

Goals
Achievable and believable
Time target
Address mission

Objectives
Specific, measurable outcomes
Help to achieve a goal
Identify projects, activities, and tasks

Planning
Goal Statement
Official vs Operative goals
Why?
What do we do?
For whom do we do it?

Planning
Goal Statement
Gives purpose and direction
Used as continual point of reference
for questions regarding scope or
purpose

Planning
Objectives

More detailed goal statement

Clarifies goal
How do we go about it?
To (action verb)
Consistent with organization

Planning
Develop Objectives

Specific
Measurable
Attainable/Achievable
Realistic
Time-limited

Objectives
Characteristics
Outcome - what is to be
accomplished
Time Frame - expected completion
date
Measure - metrics for success
Action - how the objective will be met

Goals and Objectives

Druckers Objectives for
Organizational Survival

Market Share
Innovation
Productivity
Physical and Financial Resources
Manager Performance and Development
Worker Performance and Attitude
Profitability
Social Responsibility

Agile Planning and Control

For projects with high
uncertainty
Recognize only near-term is
predictable
Adapt long-term
expectations
People (not process)
oriented

Agile Process
Clear group mission
Ground rules
Pursue the mission
Interim conditions

Periodic reviews
Short-term goals
Keep people focused
Keep customer involved

Systems of Plans
Project statement of
work
Work breakdown
structure
Project Schedule
Project budget
Specifications
Management plan
Security plan
System test plan

Production plan
Tooling plan
Make-or-buy plan
Quality assurance plan
Facilities plan
Training plan
Logistics support plan
Reliability plan
Transportation plan
Configuration plan

Behavioral Guidelines
Policies
Guides for decision-making
Room for interpretation and discretion

Procedures
How things should be done
Reviews, approvals, communications

Rules
Strict, enforceable