Engineering Management Flashcards
Engineering Council
UK Regulatory Body for Engineering Profession. Publishes UK-SPEC
UK-SPEC
defines qualifications and competencies for legally protected titles
UK Professional Bodies
may accredit degree programs for meeting academic requirements for recognised titles
International Accreditation Agreements
for recognising mutual equivalence in academic programs. Seoul Acord for Computing. Washington Acord for Engineering
Topchik’s 5 Stages of Personal Growth
Attention Getting
Flying Blind
Steadiness
On the Rise
Doing
Mono-tasking
Focus on one task in full immersion leading to sense of achievement and happiness unlike multi-tasking
Eisenhower Principle
Time management and prioritisation framework for categorisating tasks
Two Axis: Importance & Urgency
| Do now | Set Time Aside
————————————–
| Delegate It |Question why you are doing it.
Covey’s 7 Habits
Be Proactive.
Begin with the End in Mind.
Put First Things First.
Sharpen the Saw.
Think Win-Win.
Seek First to Understand, then to be Understood.
Synergise.
SMART Goals
Specific,
Measurable,
Achievable,
Realistic,
Time-bounded
Entrepreneurship Characteristics
More Control, high risk, high reward
Intrapreneurship
Less control, less risk, less reward. More Funds
Gibrat’s Law
Growth rate of a firm is independent of the size at the beginning of an observation period suggesting it is random.
Growth occurs in random shocks with no systematic determinants.
Studies find its true for larger firms but smaller firms are more volatile.
Therefore, a good approximation
Edith Penrose’s Theory of Growth
Growth is from effective management i.e. managers become more efficient with experience, taking less time to do tasks, freeing up managerial resources. Fast growing firms have higher operating costs, managers focused too much on growth divert attention from efficiency, increasing cost. Above the optimal growth rate, operating costs increase
Robin Marris’s Theory of Managerial Capitalism
An optimal growth rate is a balancing act that maximises reinvestment while still providing satisfactory dividends to shareholders
Fundamental Accounting Equation
Assets = Liabilities + Equity
Assets are what the business owns.
Liabilities are what the business owes to third parties.
Equity is what the business owes to its owners (profit is equity)
Double Entry Bookkeeping
Balance of accounting equation is kept by debiting and crediting each transaction
Going Concern
Companies will continue normal operations and financial obligations are fine
Financial Accounting
Publishing financial information to stakeholders for informed decisions
Management Accounting
Focuses on providing financial information for internal use to monitor, manage and support decision making
Top-down Budgeting
Senior managers tell lower levels what to expect and leave them to work out details
Bottom-up Budgeting
Lower levels tell senior managers what they can achieve and what they need
Participatory BudgetingApproach
Budgets are negotiated between different levels in the organisation
International Financial Reporting Standard (IFRS)
Data must be relevant and faithful. Followed in UK and EU. USA follow GAAP
Overhead
Costs required to run a business that cannot be directly attributed to any specific business activity
Traditional Costing System (TCS):
Calculates the total overheads and shares the figure proportionally with respect to a common cost driver. Prone to misallocation as only using a single parameter is not realistic for the causes of costs
Activity Based Costing (ABC)
- Suppose total labour costs are £6M and total machine costs are £10.5M. Product A uses 100k labour hours and 200k machine hours. B uses 200k and 150k. So labour costs are £20 per hour and machine costs are £30k per hour. Product A pays £2M labour costs and £6M machine costs
Manufacturing Learning Curve
Manufacturing improves with experience and scale i.e. labour efficiency increases with repetition, better equipment is available etc.
The Value Chain
Framework to analyse and understand activities and processes in a company that contribute to its overall value. Inward Logistics, Operations (manufacturing), Marketing & Sales, Distribution, Follow-up Services. Identify cost reductions and where to outsource.
Core Competency
Combination of multiple resources and skills that distinguish a firm in the marketplace. It should be difficult to imitate
Investment Appraisal
Financial analysis process to evaluate profitability and risks of an investment opportunity
Capital Investment Appraisal
Decide long-term investments to take on.
Time Dependent Monetary Value
Future Value = n × (1 + r/100)^y.
Present Value = n / (1 + r/100)^y.
Discounting
Process of translating future value of money to present value
- Payback Method:
Investment Proposal Evaluation Methods
Ignores time dependent value of money. Calculates number of years before cumulative cash for exceeds initial investment to identify short payback periods
- Net Present Value (NPV):
Calculates expected monetary gain or loss from a project by discounting all future cash flow to the present point of time. Compares to initial investment
Boston Consulting Group (BCG) product Portfolio matrix
Axis of market share and growth.
High both: Stars.
High share, low growth: cash cows.
High growth, low share:
Question marks. Low both: Dogs
Multiple Criteria Decision Making (Pareto)
Framework for selecting best option when multiple attributes to consider.
* Pareto Optimal Solution: No adjustments possible without one criterion becoming worse
Cooperative Game Theory
Used to ensure stability (no coalition of agents should want to deviate from solution) and fairness (agents are rewarded for what they contribute to the group)
Stable Allocation
Distribution of costs and benefits among agents such that all parties gain and are satisfied with the collaboration . Stability satisfies: Efficiency (summation of allocated cost equals total cost) and Rationality (Allocated costs should be less than or equal to their cost if they defect the cooperation)
Taylor
Workers should be matched to jobs responsibly based on abilities and expected output.
Hawthorne Experiments
No correlation between productivity and working conditions. Instead, belonging to a group creates status and boosts morale. Productivity increases when workers are treated with respect and given autonomy.
Statistical Quality Control
Monitor and improve quality of products and processes with statistical methods using detailed measurements.
Six Sigma Approach
Reduce manufacturing failures to 1 in a million or less by having at least six standard deviations from the mean (3 either side) occur before a process results in a defect. Standard depends on industry
Bathtub Curve
Observed failure rates, early failure. Constant rando failure. Wear out failure.
Deming’s Definition of Quality
: Non-faulty systems
Juran’s Definition of Quality
Fitness for use
Crosby’s Definition of Quality
Conformance to requirements
Feigenbaum’s Definition of Quality:
Customer satisfaction
Kaizen
Philosophy of continuous improvement through stepwise improvement
Waler Shewarts PDCA:
Plan, Do, Check, Act.
Project
A series of tasks with a specific objective, have defined start and end dates (temporary), and consume resources.
Programme
Series of project too large to constitute a single project
Project Motivations
Market demand. Customer requests. Technological advance. Legal Requirement.
Project Success
Determined by time, budget, performance, and client acceptance.
Project Issues
Commonly, little planning, unrealistic timescales ,conflicting objectives, poor cost estimation. No consideration of risks or contingency plan
Project Manager
Leads and oversees project development process
Internal Stakeholders
Top management, accounting, functional managers, team members
External Stakeholders
Clients, competitors, suppliers, intervenor groups (political, consumer, environmental
Project Scope
Everything about the project, goals, activities, resources, end product, constraints
Statement of Work (SOW):
Narrative description of work required for a project. Intro and background. Technical desc. Timeline and milestones.
Scope Statement
The Goals, The Plan, Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS):
Hierarchical decomposition of a project.
1. Project
2. Deliverable
3. Sub-deliverable
4. Work Package (Tasks)
Responsibility Assignment Matrix (RAM):
RACI Matrix identifies who is Responsible, Accountable, Consulted, and Informed about the project. Table where axis are members of the team and different project tasks
Risk Management:
Four stages:
IDENTIFICATION:Risk Identification.
ANALYSIS: Analysis of Probability and Consequences (Using Risk Breakdown Structure or Risk Impact Matrix).
MITIGATION: Risk Mitigation Strategies.
DOCUMENTATION: Control & Documentation
- Risk Breakdown Structure (RBS
): Tool to identify and categorise project risks through a hierarchy
- Risk Impact Matrix:
Two axis, Consequences and Likelihood
Project Scheduling:
Converts project goals into achievable methodology
Network Diagrams
Visual representations demonstrating relationships and dependencies between project activities
Serial Sequential Logic Diagram
: Activities follow a single sequence.
Non-Serial Sequential Logic Diagram
Activities may occur in parallel
Activity-on-Arrow (AOA)
Outdated, arrows represent activities, nodes are event markers
Activity-on-Node (AON)
Nodes represent activities, arrows are sequencing from one to another
Activity Float/Slack
Amount of time by which an activity can be delayed without affecting the projects completion date
Critical Path
Sequence of tasks that determine the overall project duration. Any delays in activities on the path directly impacts project completion date.
How to reduce Critical Path
- Reduce Critical path by eliminating tasks, re-planning for parallel tasks, shorten durations.
Maslow’s Hierarchy of Needs
Maslow suggests people are motivated to fulfil their needs in a hierarchical order:
Physiological (Survival) needs.
Safety & Security.
Social Needs.
Esteem.
Self-Actualisation (Creativity, problem-solving)
McGregor’s Theory X
Management style that assumes employees dislike work, lack ambition, dislike responsibility, avoid work where possible. Managers are more controlling and use rewards and punishment. Aligns with lower tiers of Maslow’s Hierarchy
McGregor’s Theory Y
Management style that assumes employees are driven by job satisfaction, seek work and responsibility. Managers are participative and decentralised, encouraging collaboration, opportunities for growth and trust. Aligns with higher tiers of Maslow’s hierarchy of needs
McGregor’s Theory Z:
Recognises employee need for self-fulfilment and transcendence beyond personal needs. Employees are aligned with company goals and are loyal.
Locke and Latham’s Goal Setting Theory
Goal setting is beneficial to task performance. Challenging goals has more of an affect as staff can grow skills. Goals must be achievable (SMART Goals). Large Monetary rewards improve performance. Participatory goal setting is beneficial, employees can renegotiate goals but they must commit for it to work
Drucker’s Management by Objectives:
Drucker said, what gets measured gets done.
Annual performance reviews.
Bonuses and promotions depend on achieving objectives.
Performance Appraisal Meetings
Reflect on previous meetings and objectives. Must be well-organised, at a suitable time, in a private space, and for a planned duration. If objectives are not met, employee must be allowed to explain their perspective – manager must offer support and adjust targets. Poorly run meetings (box ticking, subjective evaluation, over criticism) lead to negative employee perception. Separate setting of goals from performance reviews
360 Degree Feedback
Feedback from multiple people addresses subjective and inaccurate ratings. Anonymous feedback may be overly harsh from grudges
Scott Adams’ Dilbert Principle
Companies with effective employees and good products do well. Activities one level removed from people and products (core success criteria) will eventually fail or have little benefit
- Out at 5 (OA5) Manager
Stays out of way of good employees.
Eliminates inefficient ones.
Ensure employees learn something everyday.
Create an environment that supports curiosity and learning.
Teaches employees how to be efficient
J. Stacy Adams’ Equity Theory:
People are motivated to maintain a fair balance of what they give to their job and what they receive in return. Inequitable reward: Dissatisfaction, reduced output. Equitable reward: Continued same input. More than equitable reward: Work harder.
Green & Heywood
Performance relayed pay schemes increase productivity but also increase pay variability and lower morale for less productive workers
Judge et al
The correlation between pay level and pay satisfaction is stronger than that of pay level and job satisfaction (better paid workers are less satisfied)
Diener & Tay
Well-being is increasing globally as average income rises
Reference Dependent Preferences
Individual’s decisions and behaviours are influenced by their reference points or past experiences rather than absolute standards
Prospect Theory
The more gained, the less willing we become to take risks to gain more (Joy is diminished as more is accumulated). The more lost, the more willing we become to take risks to avoid losing more (More risk taken to avoid the pain of loss)
Herbert Simon
Individuals do not make fully rational decisions, instead using heuristics to simplify decision making. People are Satisficing agents rather than utility maximisers
Daniel Kahneman
Not only utility in prospect is important, must also consider risks. Not always a linear function of risk
Need to distinguish between when to think slow. Slow thinking results in better decisions
Dan Ariely
Linking all job aspects to money cause employees to only think about market norms, the value of their work. Non monetary rewards encourage employees to think about social norms.
Ladley et al
Agent-based simulations suggest group based reward systems outperform individual or mixed systems to produce the most cooperative behaviour and best performing groups & individuals
Team-based Rewards
Team-level incentive pay. One-off recognitions. Organisation-level profit sharing. Local gain sharing.
Multi-agent Organisations (MAO
Multi-agent systems with roles (limits actions), relationships (boss -> employee), and authority structures (hierarchies, societies)
Profit Sharing
Can be demotivating if bonus varies significantly
Employee Share Scheme
Employees can buy discounted shares, motivates employees to act in company’s best interest. To many employees granted access and shareholders lose out
Allen et al
Importance of diversity so employees see chance to grow and solve problems better.
Drucker’s Management Functions:
Managers should be leaders. Set objectives, organise resources, motivate, monitorm improve performance.
MBWA
Management by Walking About, buildings trust and understanding. Limited by inefficiency and subjectivity
John Boyd’s OODA Loop:
Observe, Orient, Decide, Act. Fast but thoughtful reactions. Not suitable for strategic decisions
Blake & Mouton’s Managerial Grid
Axis of concern for tasks and concern for staff. High concern for staff and tasks:
Team management (high productivity, positive environment).
Country club management (positive environment focus).
Task compliance management (tasks over employee satisfaction).
Middle-of-the-road (compromise of all).
Impoverished management.
Gerd Gigerenzer:
Evolution and use of heuristcis allow us to make decisions with same quality as complex models
French & Raven’s Sources of Power
Legitimate power.
Expert power.
Referent Power (trust, charisma).
Coercive Power.
Reward Power
Masterful Inactivity Leadership
: Leaders don’t intervene until absolutely necessary
Transactional Leadership
: Leading through reward and punishment
Transformational Leadership
: Leading by inspiring and motivating. Four I’s: Ideals. Inspiration. Individuality. Intellect
Charismatic Leadership
Skilled communication and connection at an emotional level
Situational Leadership
Appropriate responses based on understanding ofsituations: Delegating. Coaching. Directing. Supporting
Autocratic Leaders:
Solve problems themselves
Consultive Leaders
Share problems with the team, makes decision alone
Group Leaders
Group makes decision
S-Curve
Depicts relationship between cumulative project costs and time. Simple and easy but has no forecasting ability
Milestone Analysis
Key points in project timelines to motivate teams. Reactive system that can push project further behind
Tracking Gantt Chart
: Gantt chart for evaluating project performance. Visuals, easy to understand. But does not identify source of problem or predict project’s future
Earned Value Management (EVM):
Metrics that measures actual progress of work accomplished
Considers Cost ,Performance & Schedule
Early Project Termination
Costs exceed benefits, deadlines missed.
Termination by Extinction:
Project is stopped due to either successful or unsuccessful conclusion
Termination by Addition
Project is an addition to the parent organisation but as an external strand of business
Termination by Integration
Project merged into existing business structure.
Termination by Starvation
Project is starved of resources and funding
Agile Manifesto
- Individuals & Interactions over Processes & Tools
- Working Software over Comprehensive Documentation
- Customer Collaboration over Contract Negotiation
- Responding to Change
Invention
Creation of a new idea
Creativity
Act of turning new and imaginative ideas into reality
Innovation
Turning a new concept into a commercial success or having widespread adoption
- Product Innovation:
New goods or quality of goods
- Service Innovation
New or improved service
- System Innovation
New or improved socio-technical system
Sources of Innovation
Material Things, People, Context
Technology Readiness Levels (TRL):
Assesses maturity of a technology
Divestment
Process of selling off subsidiary business investments and interests.
Kotter’s 8 Step Process to Change Management:
- Establish a Sense of Urgency
- Create a Guiding Coalition
- Develop a Change Vision
- Communicate the Vision for Buy-in
- Empower Broad-based Action
- Generate Short-term Wins
- Never Let Up
- Incorporate Changes into Culture
Kanter’s Change Master Qualities:
- Tune Into the Environment
- Use Kaleidoscope Thinking (Look at the problem from every angle)
- Communicate Clear Vision
- Build Coalitions
- Work Through Teams
- Persist & Persevere
- Make Everyone a Hero
Professional Indemnity Insurance
covers breach of contracts, Liability Insurance does not (only covers legal expenses, repairs, compensation claims)
Nash Equilibrium:
Situation where each player has no incentive to change their strategy given the choice of the other player.
Inefficient Nash Equilibrium
nashequilibirum which isnt the best option
Likely Nash Equilibrium
In sequential games, this is the Nash equilibrium which is most likely
Corporate Social Responsibility (CSR):
Companies voluntarily integrate social and environmental concerns into their business operations.
Externalities
Consequences of production born by society i.e. externalities of an economic transaction is any impact on a party not directly involved in the transaction
Carroll’s Pyramid of CSR
Economic Responsibilities at base. Ethical & Philanthropic Responsibilities at top. Legal in middle
Baden’s Pyramid of CSR
Ethical Responsibiitlites at base. Economic responsibilities at top. Legal in middle
Stakeholder Influence
Extent to which they can affect organisation
Stakeholder Importance
: Extent to which a stakeholders interests are affected by organisation activities
Primary Stakeholders
both important and influential
Secondary Stakeholders
either important or influential
