Engineering Management
Engineering Management tests the interface where technical work meets managerial decisions: how work is planned and controlled, how capital is justified with engineering economics, how quality and risk are managed, and how a technical professional behaves ethically. Questions reward candidates who select the correct decision criterion, compute it cleanly, and can identify which cost, constraint, or baseline is actually relevant.
Management functions and project baselines
- The classic cycle is planning, organizing, leading, controlling - mirrored by Plan-Do-Check-Act improvement loops.
- The scope baseline is the scope statement plus the work breakdown structure and its dictionary. The WBS obeys the 100% rule: decomposed children must sum to exactly the parent's scope, no more and no less.
- Earned value: CV = EV − AC, SV = EV − PV, CPI = EV/AC, SPI = EV/PV. When cost variance is expected to continue, EAC = BAC/CPI. The critical path is the longest zero-float path and sets project duration.
Engineering economics: picking the criterion
- Discount all cash flows at the minimum attractive rate of return. Accept a single project when present worth ≥ 0 or IRR ≥ MARR.
- For mutually exclusive alternatives with equal service lives, use incremental analysis rather than comparing IRR values directly. With unequal lives, convert to annual worth or state an explicit replacement assumption.
- Sunk costs are irrelevant; opportunity costs are relevant; use after-tax cash flows when depreciation is given.
Worked example
A project costs $100,000 installed and returns $30,000 per year for 5 years with no salvage; MARR is 10%. The (P/A, 10%, 5) factor is 3.7908, so PW of benefits = $30,000 × 3.7908 = $113,724, and NPW = +$13,724 - economically justified. Check: simple payback is $100,000/$30,000 = 3.3 years, and IRR is about 15.2% (annuity factor 3.333 over 5 years), comfortably above MARR.
Quality, risk, systems thinking
- Cost of quality splits into prevention, appraisal, internal failure, and external failure; external failures usually dominate, so prevention is normally the highest-leverage spend.
- Risk management: identify, assess probability × impact, then plan responses - avoid, mitigate, transfer, accept - with a named owner per risk. Contingency covers known unknowns inside the baseline; management reserve covers unknown unknowns above it.
- Verification asks "did we build it right" against specifications; validation asks "did we build the right thing" against stakeholder needs.
Traps that cost marks
- Dividing EV by PV when the question asks for cost performance (CPI uses AC).
- Treating payback as a go/no-go rule; it ignores the time value of money and all cash flow after payback.
- Comparing unequal-life alternatives by present worth without a replacement assumption.
- Charging already-spent design fees to a continuation decision - that is a sunk cost.
- Confusing contingency with management reserve, or verification with validation.