2 Assignments: PAPER – Construction Management & Small Business

11 QUALITY MANAGEMENT IN CONSTRUCTION

AND SIX SIGMA A complement to lean construction

This chapter addresses several topics that relate to the improvement of quality in construction, learning from projects and using the lessons learned to make improvements. The topics discussed complement the adoption and deployment of lean construction. Built- in quality is a component of lean construction. While lean practices enable project teams to work cost effectively and with efficient hand offs from one discipline to another, quality assurance and commissioning are initiatives that ensure that completed facilities perform as expected and without deficiencies. The adoption of total quality management or other quality management systems prepares an organization for subsequent adoption of lean construction. Many of the tools and techniques that are applied to total quality management (TQM) and Six Sigma are used by practitioners of lean construction.

SPECIAL NOTE: It must be recognized that lean construction and TQM are not in competition with each other. For one, TQM is a long-term philosophy that provides a foundation for a company’s strategic plan; it may take several years to be instituted. It is difficult to implement TQM at the project level because of the many disciplines and companies that are involved in a typical construction project. While TQM aligns a company’s workers with that company’s priorities, it is much more difficult to extend that influence to the entire project team.

With lean construction it has been possible to align a team to the objectives of a project; that is a much narrower scope than is encountered with TQM. Lean has been successfully taught to project teams and deployed in a single project cycle, even without prior experience.

But Lean and TQM can be a powerful combination. It is with that thought process in mind that this chapter is provided.

Part A: Total Quality Management Overview

The term quality can mean different things to different people, but needs a common definition if the people in an organization can hope to pursue it successfully. This is especially important in the construction industry where there is much variation from one project to another. Dr. Joseph Juran’s definition has been interpreted as “fitness for use,” “fitness for intended use,” “conformance to requirements,” and “conformance to specifications.” Dr. Edwards Deming took the view that: “Quality is defined by the customer; the customer wants products and services that, throughout

their lives, meet customers’ needs and expectations at a cost that represents value.” Deming also added that the quality of a company’s output cannot be better than the quality determined at the top (i.e., by an organization’s leaders).

Total quality management (TQM) is an approach to doing business that attempts to maximize the competitiveness of an organization through the continual improvement of the quality of its products, services, people, processes, and environments (Goetsch and Davis 2016). The principles of TQM create the foundation for developing an organization’s system for planning, controlling, and improving quality.

Dr. Armand Feigenbaum played a major role in the origination of the total quality movement; his landmark text of 1951 was titled Total Quality Control and has influenced the quality movement. He defines quality systems as a method of managing organizations to achieve higher customer satisfaction, lower overall costs, higher profits, and greater employee effectiveness and satisfaction. Although organizations have adopted a wide variety of quality improvement programs, these programs are based on the concepts advocated by the total quality pioneers. In addition to Dr. Feigenbaum, the most highly acknowledged pioneers are W. Edwards Deming, Joseph M. Juran, and Philip B. Crosby. A number of Japanese experts including Kaoru Ishikawa and Shigeo Shingo were also major contributors to the quality improvement philosophy. Dr. Deming has emerged as the most influential and durable proponent of quality management in the United States and is best known for the Deming Cycle, his Fourteen Points, and the Seven Deadly Diseases.

TQM is based on involving everyone in an organization in an integrated effort toward improved performance at each level (Goetsch and Davis 2016). It integrates fundamental management techniques and improvement efforts in a disciplined approach toward continual process improvement. TQM emphasizes the understanding of variation, the importance of measurement, the role of the customer, and the commitment and involvement of employees at all levels of an organization. Total quality is driven by an organizational strategy and unity of purpose, an internal and external customer focus, obsession with quality, scientifically based decision making and problem solving, continuous process improvement, long-term commitment, teamwork, employee involvement and empowerment, and education and training.

Quality management systems The American Society For Quality (ASQ) defines a quality management system (QMS) as a mechanism for managing and continuously improving core processes to “achieve maximum customer satisfaction at the lowest possible cost to the organization.” It applies and synthesizes standards, methods, and tools to attain strategically important goals. In the construction project environment, quality management may be defined as the process required to ensure that a project’s outcome will satisfy the needs for which it was undertaken. TQM also promotes excellence in customer satisfaction through the total involvement and dedication of each individual who is in any way a part of that product/process.

History of quality in construction

Quality has always been with us since recorded history – the code of Hammurabi ensured that a builder would have to provide his clients with good quality. If a house collapsed and hurt its occupants because of inferior quality, the builder was required to be put to death. Fortunately, the twentieth century brought a kinder, gentler approach to quality.

Historically, the Japanese were among the first to apply quality improvement approaches in construction on a large scale, although they did not embrace this concept until the oil crisis of 1973. Previously, they thought that the construction industry was inappropriate for the application of total quality control (TQC), because of the inherent variability in projects, and the difficulty in defining “acceptable quality.” Takenaka Komuten Company, the sixth largest in Japan, had their formerly impeccable safety and quality image tarnished by the failure of a sheet piling system in Okinawa, in 1975, and embarked on a quality control (QC) program. They were followed by Shimizu Construction Company, the second largest in Japan, which established a QC program in 1976, and by Kajima Corporation, the third largest, in 1978. Subsequently, several US companies adopted TQC programs and the more familiar TQM programs used by US manufacturers.

In 1992, the Construction Industry Institute (CII) published Guidelines for Implementing Total Quality Management in the Engineering and Construction Industry. Their research studies confirmed that TQM resulted in improved customer satisfaction, reduced cycle times, documented cost savings, and more satisfied and productive work forces (Burati and Oswald 1992).

While total quality approaches have been highly beneficial to the manufacturing and service industries, they have had limited application in the construction environment. The construction industry has been heavily steeped in the traditional ways of executing projects, and its constituents – designers and constructors – have been reluctant to make a necessary cultural and behavioral change to adopt total quality approaches. One reason for this unwillingness has been the perception that TQM is for manufacturing only (Chase and Federle 1992). The other major factor inhibiting the implementation of TQM in the construction industry has been the notion that TQM is costly and requires a long-time period for implementation. One aspect of TQM that has frustrated the construction industry the most has been “measurement” (Hayden 1996).

Many construction companies in the United States, Singapore, UK, and other European countries have been using TQM successfully for a number of years. They have been reaping rich rewards in improved client, consultant, and supplier relations. They have also experienced a reduced “cost of quality,” on time and within budget project completions, and well-informed and highly motivated employees. On the other hand, many US companies have tried to adopt TQM programs and subsequently abandoned them. Studies indicate the failures can be attributed to a misunderstanding of TQM or to faulty implementation. In many cases top management and senior management are generally preoccupied with short-term, project by project profitability and not with long-term, quality-based strategies.

Attainment of acceptable levels of quality in the construction industry has long been a problem. Great expenditures of time, money, and resources – both human and material – are wasted each year because of inefficient or non-existent quality management procedures. The QC procedures that work effectively in a mass production industry have not been considered suitable for the construction industry. Typical explanations point to the uniqueness of construction projects and the lack of a clear and uniform standard for evaluating overall construction quality. Thus, there is great potential and challenge for quality improvement in the construction industry.

Instead, the construction industry has become increasingly reliant on burdensome specifications, which seldom say exactly what the owner intends them to say. This has led the owners to shift more of the project risks to the contractors (Ahmed and Aoieong 1998). The net outcome is that

the construction industry has been bogged down with paperwork and defensive posturing; project participants generally tend to have a hostile attitude toward each other. TQM can help to reverse this trend.

Traditionally, inspection has been one of the key components of a quality assurance/quality control system in the construction industry. Regarding inspection, Deming’s view is that “routine 100% inspection is the same thing as planning for defects – acknowledgement that the process cannot make the product correctly, or that the specifications made no sense in the first place. Quality comes not from inspection, but from improvement of the process” (1982). This does not mean that inspection ceases. Instead, it means that more effort is put into preventing errors and deficiencies.

Benefits of TQM From the viewpoint of the individual company, the strategic implications of TQM include:

• Survival in an increasingly competitive world, • Better service to its customers, • Enhancement of the organization’s “shareholder value,” • Improvement of the overall quality and safety of our facilities, • Reduced project durations and costs, and • Better utilization of the talents of its people.

Quality management is a critical component in the successful management of construction projects; critical success factors include the support of senior management, appropriate leadership styles, cultivation of employee’s enthusiasm and participation, and open communication and feedback. The most appropriate strategy for effective QMS in the construction industry is to establish effective management practices.

Quality costs In order to quantify the benefits of TQM, quality must be measurable. Although there are numerous tools for measuring quality, the “cost of quality,” or “quality costs,” as advocated by Crosby (1984) and Juran (1988) represent an important indicator. Oberlender (1993) summarized quality costs as follows:

Quality costs consist of the cost of prevention, the cost of appraisal, and the cost of failure. Prevention costs are those resulting from quality activities used to avoid deviations or errors, while appraisal costs consist of costs incurred from quality activities used to determine whether a product, process or service conforms to established requirements. Failure costs are those resulting from not meeting the requirements and can be divided into two aspects. Internal failure costs are the costs incurred on the project site due to scrap, rework, failure analysis, re-inspection, supplier error, or price reduction due to nonconformance. External failure costs are costs that are incurred once the project is in the hands of the client. These include costs for adjustments of complaints, repairs, handling and replacement of rejected material, workmanship, correction of errors, and litigation costs.

Principles of TQM As reflected in Figure 11.1, five core principles are embodied in TQM (Harris 1995). These principles can be achieved in an organization with the aid of seven basic supporting elements. These elements are embodied in the criteria of the Malcolm Baldrige National Quality Award. Since its inception in 1987, the MBNQA has promoted national competitiveness through demonstrated quality-based achievements. Several outstanding companies have won the award such as: Federal Express, Texas Instruments Inc., Ritz-Carlton Hotel Co., Xerox Corporation, and Merrill Lynch Credit Corporation. It is worthy of note that no construction organizations have yet won the Baldrige Award, although many are undoubtedly adopting quality management techniques as first steps toward that coveted goal.

Figure 11.1 Principles of total quality management

The Baldrige Criteria are built on seven categories of beliefs and behaviors that are typical of high-performance organizations:

• 1Leadership: Senior management must lead this effort by example, by applying the tools and language, by requiring the use of data, and by recognizing those who successfully apply the concepts of TQM.

• 2Strategic planning: Senior managers may require support to bring about the change necessary to implement a quality strategy.

• 3Customer and market focus. • 4Information and analysis: The use of data becomes paramount in installing a quality process.

To set the stage for the use of data, external; customer satisfaction must be measured to determine the extent to which customers perceive that their needs are being met.

• 5Human resource focus: Communications in a quality environment may need to be addressed differently in order to communicate to all employees a sincere commitment to change. Reward and recognition to teams and individuals who successfully apply the quality process so that the rest of the organization will know what is expected.

• 6Process management. • 7Organizational results.

Organizations are scored out of 1000 points on these categories. Customer and market focus and customer-focused results account for 210 points and are therefore crucial to world-class performance. These categories address how successful organizations listen and learn with customers’ key requirements and describe the methods used to satisfy customers, increase repeat business, and generate positive referrals. They evaluate complaint management, its analysis for improvement, determination of customer satisfaction/dissatisfaction, and benchmarking satisfaction with competitors.

Characteristics of the construction industry Construction work is carried out in the form of a project. Projects are becoming progressively larger and more complex in terms of physical size and cost. Currently, the execution of a project requires the management of scarce resources; manpower, material, money, and machines to be

managed throughout the life of the project – from conception to completion. The projects have six distinctive objectives to be managed: scope, organization, quality, cost, time, and safety (Figure 11.2). Construction work requires different trades and knowledge, but the management, scheduling, and control of those projects utilize the same tools and techniques, and are subject to constraints of time, cost, and quality. There are also unique characteristics of projects, which differ from routine operations.

TQM principles There are many approaches available for improving quality: Total Quality Management, ISO 9001–2000, Six Sigma, the Malcolm Baldrige Criteria, and in lean production the European Quality Award. These approaches are based to varying degrees on the principles established by many quality experts such as Dr. W. Edwards Deming, Dr. J.M. Juran, Philip Crosby, Dr. Armand Feigenbaum, Dr. Kaoru Ishikawa, and Dr. Walter Shewhart. Dr. Deming in particular, has proven to be the most enduring because of his view of quality as a societal issue. Deming is known for the contribution of 14 Points and Seven Deadly Diseases, as well as several other initiatives.

Figure 11.2 Six objectives of a construction project

A mathematical physicist by training, Deming was a major force in guiding the Japanese manufacturing effort to pre-eminence, after World War II. Humbled by their defeat, the Japanese were desperate to rise out of the economic doldrums, and eagerly grasped Dr. Deming’s philosophy. Japanese manufacturers distinguished themselves with outstanding quality products such as autos produced by Toyota. The Japanese bestowed high honors on him, recognizing him with the Deming Prize. Much later, after 1980, America finally recognized Dr. Deming’s genius, and reached out for his philosophy, in order to turn the tide against the losses in the US economy that resulted from poor quality and low productivity.

Dr. Deming formulated a management philosophy which he termed the “System of Profound Knowledge”. A very important part of his philosophy is the concept that an organization is not just comprised of components, or departments, but is a system that can be compared with a living organism. The System of Profound Knowledge is based on three purposes and four assumptions.

Explanation of the system of profound knowledge The purpose of his theory is threefold:

“To transform western leaders so they will:

• 1Improve and innovate the system over the long term to allow all people to take joy in their work. This will restore the individual’s intrinsic motivation, i.e. motivation from within, which is limitless and lends a long-lasting feeling of self -confidence and pride.

• 2Optimize the system – not just its components – so that over the long term, everybody wins. The system includes customers, suppliers, employees, stockholders, and competitors.

• 3Improve and innovate the conditions of society that impede the above purposes, such as ranking individuals, assigning grades, and MBO (management by objectives). Society includes systems at local, regional, and national levels, such as the economy, education, the environment, and public health and well-being.”

In Deming’s view there is a great need for this transformation in the prevailing western style of management as exemplified by the superior results obtained by organizations that practice Japanese methods of management. American companies have lost most of their market share especially in the automotive and electronic industries. Many American organizations have difficulty in motivating people to take joy in their work, especially with the familiar layoffs in the workplace. Many companies tend to be focused on the short term, but Deming was a strong proponent of long-term thinking.

Deming’s influence can be clearly seen in the principles and practices of lean construction: his theory of management creates a situation in which everybody wins, by means of the following assumptions: To manage by seeking to improve the process that creates results, not just managing for results only.

• 1To improve a process so that it meets an organization’s needs better, one needs to study the underlying cause and effect systems of the process, not just to observe a “snapshot” of the process at a specific point in time; that can be misleading about what actions lead to specific results.

• 2To manage by using a mixture of intrinsic and extrinsic motivation. Intrinsic motivation comes by workers’ joy in doing challenging interesting work, but human nature also responds to extrinsic motivation, such as money or recognition.

• 3To manage to facilitate cooperation, not competition. Cooperation between individuals or organizational units improves the functioning of the overall system that they comprise. Competition can become self-serving and compromise the success of the system.

• 4To optimize the system (the enterprise) for the benefit of all stakeholders. In this scenario, everyone succeeds and benefits, and therefore contributes optimally.

Deming’s 14 points The 14 Points describe the conditions that are needed to promote a quality environment. They are summarized in the context of construction as follows:

• 1Develop a program of constancy of purpose of improvement of product and service. The organization’s strategic plan should include a commitment to improving products and services. Persistence is necessary for quality initiatives to bear fruit in design or construction activities.

• 2Adopt this new program and philosophy. Quality needs to be ingrained in the organization’s strategic plan – both its mission and vision.

• 3Stop depending on inspection to achieve quality – build in quality from the start. Employees need to adopt a quality philosophy to produce to high standards, without relying on inspections.

• 4Stop awarding contracts on the basis of low bids. Quality costs may be high with suppliers that have low-initial costs. Low bid awards may lead to failed inspections, low quality, and subpar performance. Suppliers should demonstrate capable quality systems.

• 5Improve continuously and forever the system of production and service. Design and construction organizations should commit to continuous improvement.

• 6Institute training on the job. Employees at all levels need to be trained in the best methods for delivering construction-related services. This includes executives, managers, technicians, supervisors/foremen, and workers.

• 7Institute leadership. Top management has to lead with quality endeavors and set an example for their employees. Unless top management displays commitment, others will not take quality seriously.

• 8Drive out fear so everyone may work efficiently. Construction workers are unwilling to volunteer ideas for improvement in an atmosphere of intimidation. Without their input, inefficient processes are likely to persist.

• 9Eliminate barriers between departments so that people can work as a team. Reward teamwork instead of individual accomplishments.

• 10Eliminate slogans, targets, and targets for the workforce – they create adversarial relationships.

• 11Eliminate quotas and management by objectives. Institute work standards that reflect quality, cost, schedule, and safety.

• 12Remove barriers that rob people of pride of workmanship. Provide workers with needed supervision, information, and resources to enable them to do the best job possible.

• 13Establish rigorous programs of education and self-improvement. Commit the training and support systems necessary to equip everyone to develop and contribute to a quality environment.

• 14Make the transformation everyone’s job.

Deming’s seven deadly diseases These “diseases” are the antithesis of a quality environment:

• 1Lack of constancy of purpose, • 2Emphasis on short-term profits, • 3Evaluation by performance, merit rating, or annual review of performance, • 4The mobility of management, • 5Running a company on visible figures alone, • 6Excessive medical costs, and • 7Excessive costs of warranties fueled by lawyers that work on a contingency fee.

These “diseases” are considered to be the antithesis of quality.

Philip Crosby Philip H. Crosby (1928–2001) is considered one of the quality management gurus. He is recognized for creating the Zero Defects Process. This process was introduced by Crosby in 1979 and emphasizes customer satisfaction as a measure of quality control. Crosby also taught methods for eliminating the causes of defects before a defective product reached the customer. The Crosby process can help an organization by providing a quality management culture. Lean and Six Sigma can be effective “tools,” but a tool becomes more beneficial when it is put to work regularly. To do that a quality “culture” is required to encourage (or insist) that everyone participates in this important process. Among his clients were General Motors, Chrysler, Motorola, Xerox and many hospitals. Crosby’s first book, Quality is Free, has been credited with playing a large part in beginning the quality revolution in the United States and Europe. He published a total of 13 books, including The Absolutes of Leadership in 1996 and Quality and Me, an autobiography filled with lessons from life published in 1999.

Crosby’s basic principles

• – Doing It Right the First Time (DIRFT) • – Zero Defects Day • – Four Absolutes of Quality • – Prevention Process • – Quality Vaccine • – Six C’s

The absolutes of quality management

• – The First Absolute: The definition of quality is conformance to requirements • – The Second Absolute: The system of quality is prevention • – The Third Absolute: The performance standard is zero defects • – The Final Absolute: The measurement of quality is the price of non-conformance

Crosby’s 14 steps to quality improvement

• 1Management Commitment: Make it clear that management is committed to quality. • 2Quality Improvement Teams: Form Quality Improvement Teams with senior representatives

from each department. • 3Measure Processes: Measure processes to determine where current and potential quality

problems lie. • 4Cost of Quality: Evaluate the cost of quality and explain its use as a management tool. • 5Quality Awareness: Raise the quality awareness and personal concern of all employees. • 6Correct Problems: Take actions to correct problems identified through previous steps. • 7Monitor Progress: Establish progress monitoring for the improvement process.

• 8Train Supervisors: Train them to actively carry out their part of the quality improvement program.

• 9Zero Defects Day: Hold a Zero Defects Day to reaffirm management’s commitment. • 10Establish Improvement Goals: Encourage individuals to establish improvement goals for

themselves and their group. • 11Remove Fear: Encourage employees to tell management about obstacles to improving

quality. • 12Recognize: Recognize and appreciate those who participate. • 13Quality Councils: Establish Quality Councils to communicate on a regular basis. • 14Repeat the Cycle: Do it all over again to emphasize that the quality improvement process

never ends.

Crosby’s quality vaccine

• Integrity: Quality must be taken seriously throughout the entire organization, from the highest levels to the lowest. The company’s future will be judged by the quality it delivers.

• Systems: The right measures and systems are necessary for quality costs, performance, education, improvement, review, and customer satisfaction.

• Communication: Communication is a very important factor in an organization. It is required to communicate the specifications, requirements and improvement opportunities of the organization. Listening to customers and operatives intently and incorporating feedback will give the organization an edge over the competition.

• Operations: A culture of improvement should be the norm in any organization, and the process should be solid.

• Policies: Policies that are implemented should be consistent and clear throughout the organization.

Six C’s are as follows:

• Comprehension: The importance of understanding what is meant by quality • Commitment: The stage when top management establish a quality policy • Competence: Developing and education and training plan • Communication: All efforts must be documented, and success stories published • Correction: Prevention and performance • Continuance: The process must become a way of life in the organization

The “1/10/100” rule – Crosby (1979) considered that the impact of rework at different stages of a project could be defined with the “1/10/100” rule. Applied to construction, changes made during the predesign phase would have an impact of $1 to the project, $10 during the design phase, and up to $100 after the beginning of construction. If rework is deferred until after project completion, the cost to implement changes not picked up previously could be as high as $1000!

Kaoru Ishikawa The cause and effect diagram is the brainchild of Kaoru Ishikawa, who pioneered quality management processes in the Kawasaki shipyards, and in the process, became one of the founding fathers of modern management. The cause and effect diagram is used to explore all the potential or real causes (or inputs) that result in a single effect (or output). Causes are arranged according to their level of importance or detail, resulting in a depiction of relationships and hierarchy of events. This can help to search for root causes, identify areas where there may be problems, and compare the relative importance of different causes.

Armand Feigenbaum Dr. Armand Feigenbaum played a major role in the origination of the total quality movement – his landmark text of 1951 was titled “Total Quality Control” and has influenced the quality movement. He defines quality systems as a method of managing organizations to achieve higher customer satisfaction, lower overall costs, higher profits, and greater employee effectiveness and satisfaction. Although organizations have adopted a wide variety of quality improvement programs, these programs are based on the concepts advocated by the total quality pioneers.

Joseph Juran Dr. Joseph Juran is known for several quality contributions: Three Basic Steps to Progress, Ten Steps to Quality Improvement, and The Quality Trilogy. Juran’s quality trilogy has three components: namely; (1) quality planning, (2) QC, and (3) quality improvement. This trilogy of quality processes provides a successful framework for achieving quality objectives. The processes must occur in an environment of inspirational leadership and the practices must be strongly supportive of quality. A brief description of the Juran’s quality trilogy is given below.

• 1Quality planning a. Determine who the customers are b. Identify customers’ needs c. Develop products with features that respond to customer needs d. Develop systems and processes that allow the organization to produce these features e. Deploy the plans to operational levels

• 2Quality control a. Assess actual quality performance b. Compare performance with goals c. Act on differences between performance and goals

• 3Quality improvement a. Develop the infrastructure necessary to make annual quality improvements. b. Identify specific areas in need of improvement and implement improvement projects. c. Establish a project team with responsibility for completing each improvement project.

d. Provide teams with what they need to be able to diagnose problems to determine root causes, develop situations, and establish control that will maintain gains made.

Customer focus In the TQM philosophy, total customer satisfaction is the goal of an entire system, and a pervasive customer focus is what gets us there. The function of the construction industry is to provide customers with facilities that meet their needs. For a company to remain in business this service must be provided at a competitive cost. TQM is a management philosophy that effectively determines the needs of the customer and provides the framework, environment, and culture for meeting those needs at the lowest possible cost. By ensuring quality at each stage in the construction process and thereby minimizing costly rework – as well as other costs – the quality of the final products should satisfy the final customer. By definition, customers may be either internal or external. The external customer is the consumer or client; that is, the end user of the products or services being offered. An internal customer is a second process or department within the organization, which depends on the product of the first. For example, the products are plans and specifications for designers, the customers are the owner, and the contractor is responsible for the construction. For the contractor, the product is the completed facility, and the customer is the final user of the facility. There are also customers within the construction organization. These internal customers receive products and information from other groups of individuals within their organization. Thus, satisfying the needs of these internal customers is an essential part of the process of supplying the final external customer with a quality product. Every party in a process has three roles: supplier, processor, and customer. Juran defined this as the triple role concept. These three roles are carried out at every level of the construction process. The designer is a customer of the owner. The designer produces the design and supplies plans and specifications to the contractor. Thus, the contractor is the designer’s customer, who uses the designer’s plan and specifications to carry out the construction process and supplies the completed facility to the owner. The owner supplies the requirements to the designer, receives the facility from the contractor, and is responsible for the facilities operation (Burati and Oswald 1993). This clearly illustrates that construction is a process, and that TQM principles that have been applied to other processes are potentially adaptable to the construction industry (Figure 9.3).

Process improvement A process is a way of getting things done. A process consists of the tasks, procedures, and policies necessary to carry out an internal or external customer need. According to the TQM philosophy, if the process is correct so will the end result (product). Thus the organization should work to improve the process so as to improve the end product or service. Three different approaches have emerged for improving the efficiency or effectiveness of a process. Continuous improvement is an approach used on an on-going basis for incremental gains. Benchmarking should be used periodically, and reengineering can be launched occasionally to achieve dramatic breakthrough.

By focusing on a process by measurement and analysis, it can be improved by influencing five Ms of the process; namely, man (people), machine, material, method, and measurement. A sixth factor is that of the operating environment. A strong emphasis on process improvement centers on the measurement of variation, the control of variation, and the knowledge of variation to seek improvement. This analysis is referred to as statistical process control or statistical analysis. It is at the center of process improvement. The objective of measuring the variation in a process is to learn how to control the variation and also how to improve the process by viewing variation as a tool for improvement. The analysis of the positive side (good performance or quality) of the variation of process is referred to as a “breakthrough improvement” or “breakthrough management,” which is another key component of TQM.

Continuous improvement The goal of continuous improvement is common to many managerial theories; however, what differentiates TQM is that it specifies a specific step-by-step process to achieve it. The steps are as follows:

• 1Identify the process, • 2Organize a multidisciplinary team to study the process and recommend improvements, • 3Define areas where data are needed, • 4Collect data on the process, • 5Analyze the collected data and brainstorm for improvement, • 6Determine recommendations and methods of implementation, • 7Implement the recommendations outlined in step 6, • 8Collect new data on the process after the proposed changes have been implemented to verify

their effectiveness, and • 9Circle back to step five and again analyze the data and brainstorm for further improvement.

The nine-step cycle emphasizes: focusing the progress, measuring the process, brainstorming for improvement, verification, and re-measurement. These four elements are further illustrated in Deming’s Plan-Do-Check-Action (PDCA) diagram shown in Figure 9.4. The PDCA diagram stresses removing the root cause of problems and continually establishing and revising new standards or goals (Deming 1986).

Under TQM, management in the construction industry has two functions: (1) to maintain and improve current methods and procedures through process control and (2) to direct efforts to achieve, through innovation, major technological advances in construction processes. The incremental improvement of the process is achieved through process improvement and control. In every construction organization there are major processes by which all the work is accomplished. However, there are innumerable parts in the construction process. Through the use of flow diagrams, every process can be broken down into stages. Within each stage, input changes to output, and the methods and procedures directing the change of state (i.e., the construction procedures) can be constantly improved to better satisfy the customer at the next stage. During each stage the employees should communicate closely with their supplier and customer to optimize

the work process for that stage. This requires each employee to recognize their place in the process and their respective supplier and customer.

Figure 11.4 The PDCA diagram

Quality improvement techniques (Note: Chapter 14 describes some of these and other tools and techniques in greater detail)

Total quality management mainly demands a process of continued improvement aimed at reducing variability. An organization wishing to support and develop such a process needs to use quality management tools and techniques. It is prudent to start with the more simple tools and techniques: The check sheet, the checklist, the histogram, the Pareto diagram, the cause and effect diagram (Fishbone diagram), the scatter diagram, and the flowchart. They are described briefly below. Readers may refer to Chapter 14 to obtain more detailed information on the use of some of these tools as well as others.

Check sheet Used to record events, or nonevents (nonconformances). They can also include information such as the position where the event occurred and any known causes. They are usually prepared in advance and are completed by those who are carrying out the operations or monitoring their progress. The value of a check sheet can be retrospective analysis, so they help with problem identification and problem solving.

Checklists A list of things that need to be done and when completed are checked off. It can be used in the auditing of quality assurance and to follow the steps in a particular process.

Histogram Provides a graphical representation of the individual measured values in a data set according to the frequency of occurrence. It helps users to visualize the distribution of data and can display the amount of variation within a process.

Pareto analysis A technique employed to prioritize the problems so that attention is initially focused on those having the greatest effect. It was discovered by an Italian economist, named Vilfredo Pareto, who observed how the vast majority of wealth (80%) was owned by relatively few of the population (20%). As a generalized rule for considering solutions to problems, Pareto analysis aims to identify

the critical 20% of causes and to solve them as a priority. (See Chapter 14 for an example of a Pareto chart.)

Cause-and-effect diagram (fishbone diagram) The diagram, which was developed by Kaoru Ishikawa, is useful in breaking down the major causes of a particular problem. The shape of the diagram looks like the skeleton of a fish. This is because a process often has a multitude of tasks running into it, any one of which may be a cause. If a problem occurs, it will have an effect on the process, so it will be necessary to consider the whole multitude of tasks when searching for a solution.

Scatter diagram The relationship of two variables can be plotted in the scatter diagrams. They are easy to complete, and an obvious linear pattern reveals a strong correlation between the variables.

Flowcharts A chart providing a diagrammatic picture using a set of symbols. They are used to show all the steps or stages in a process project or sequence of events. A flowchart assists in documenting and describing a process so that it can be examined and improved. Analyzing the data collected on a flowchart can help to uncover irregularities and potential problem points.

Barriers to the implementation of TQM Employees generally show resistance to the introduction of TQM for a host of reasons, which include fear of the unknown, perceived loss of control, the “it may cost more” syndrome, and an unwillingness to take “ownership” and be committed to change. Other barriers include:

• Perceived threats to foreperson and project manager roles, • Disinterest at the site level, • Lack of understanding of what TQM was, particularly on-site, • Geographically dispersed sites, • Fear of job losses, • Inadequate training, • Plan not clearly defined, • Employee skepticism, and • Resistance to data collection (e.g., rework costs, nonconformances, material waste, etc.).

TQM efforts should be implemented to increase productivity of the organization (quantity of performance); increase quality (decrease error and defect rate); increase effectiveness of all efforts; increase efficiency (decrease time requirements while increasing productivity).

TQM implementation

TQM deployment structure A formal structure is necessary in order for TQM to be implemented effectively in an organization. Such a structure is even more important in the construction environment where stakeholders are preoccupied with meeting schedules and responding to daily events. TQM calls for persistent analysis, evaluation, and learning; but this may be nigh impossible to accomplish by people in their traditional roles.

The proposed structure is aligned with the principles embodied in the Malcolm Baldrige award criteria and facilitates the deployment of activities necessary to secure the high level of quality in relation to the design and construction processes. It must be pointed out that the intent of this structure is not to compete with other organizations for the award; rather the purpose is to take advantage of a well-integrated structure that connects the behaviors of stakeholders with the criteria that have proven to be successful for many years.

The proposed TQM structure (Figure 9.6) shows the relationships between the functions that are essential for its deployment. Top management is the driving force behind quality endeavors. They supervise the steering committee, and this committee supervises the project teams. A consultant provides the expertise needed to initiate an effective TQM program. This function may be temporary if its scope is limited to getting the program established. TQM facilitators performs many functions that are critical to the deployment of quality-related activities and serves as a multiskilled resource for the project teams, the steering committee, and top management. The Malcolm Baldrige Criteria gives direction to all quality-related activities.

Quality implementation There are three distinct phases to quality deployment: preparation, planning, and execution.

The process starts with a firm’s top management embracing the idea of incorporating quality as a value of the organization. They need to be committed enough to generate enthusiasm in the company’s employees; everyone should wish to produce quality workmanship, by “doing it right the first time.” top management appoints a steering committee to oversee quality efforts. The members should be advocates of quality and placed at an adequate level in the organization where they can make the decisions needed for a program to be effective.

Limitations of TQM deployment In traditional manufacturing and service industries, providers have had excellent results with TQM. They have worked closely with suppliers to deliver products and services to high levels of customer satisfaction. They are well equipped to optimize the generation of those products and services, most of which are discrete and/or transaction-driven. A manufacturer takes components and subassemblies from a number of suppliers, and can optimize the consolidation of these items to generate a finished product. A service operation such as a garage is responsible in total for the service delivered and can optimize service delivery as well.

Figure 11.5 Proposed TQM deployment structure Construction, on the other hand, is a protracted process that involves interaction between many

providers. While a single provider can optimize its portion of the work by improving its internal operations, project-wide optimization requires the close collaboration of other providers. The difficulty in establishing that collaboration is the Achilles heel of most traditional project delivery methods. The effect the entire team of top management leadership, therefore, may be limited to a specific firm that wishes to improve quality. It may have limited impact on the desires of another provider of construction (or design) services that is a member of the project delivery team. For example, a general contractor may embrace the TQM philosophy, but cannot reasonably expect a mechanical subcontractor to embrace these concepts and demonstrate genuine commitment to its employees with the degree of credibility needed to engage them. It is for these reasons that lean construction is able to engage the project team to “global optimization” where the entire team excels, as opposed to the “local optimization” experienced by subcontractors or work units that seek to maximize their individual performance.

Quality improvement concepts A mission statement should exemplify an organization’s focus on exceeding customers’ expectations with products of high value and quality, and motivating/empowering its employees.

The organizations that have won the Malcolm Baldrige award have all shared the common attribute of having leaders that were committed to quality and demonstrated it by example through their daily activities. Such leaders were active participants or members of quality councils that were set up to promote quality endeavors. They guided and led quality improvement efforts, established and reviewed performance measures, kept quality as a major topic of all meetings and/or on-going reviews.

Measurement is critical to ensuring that an organization is meeting its goals and expectations. These goals/expectations should be delineated in a strategic plan developed with the participation of all stakeholders to ensure that they are an integral part of the quality endeavor. For quality performance to be achieved there must be specific, meaningful measures of performance based on key drivers. The strategic plan should also delineate the responsibilities of specific individuals and assign time frames for accomplishment.

Key drivers include customer satisfaction, operational performance, financial performance, employee satisfaction, and community service. By way of an example, the indicators of customer satisfaction are: customer satisfaction index, referral rates, percentage of on-time delivery, defects detected by the builder at delivery, defects determined by homeowner inspection, warranty call rates, warranty costs, and response time on warranty calls.

Quality strategies

• 1Establish top management priorities • Visionary • Set aggressive goals, and

• Walk the talk.

First, top management of the organization must establish that total quality is the highest priority of the organization. Executives must provide a clear and reasonable vision, set aggressive goals for the organization and each unit, and most importantly demonstrate their commitment to TQM through their actions.

• 2Initiate cultural change • Paradigm change, • Credibility development, and • Time.

Second, the culture of the organization must be changed so that everyone and every process embrace the concept of TQM. The organization must change its paradigm to adapt to a customer focus emphasis where everything done in the organization is aligned with exceeding customer expectations. This becomes an ongoing way of life for the organization, continually improving and adapting. As part of the culture change, credibility among the employees must be built through rewarding positive steps toward the vision of TQM. The organization must also allow time for the change to occur and be indoctrinated into the everyday aspects of the organization.

• 3Establish small teams – provide overall goals • Define quality, • Identify customers wants, and • Measure and change.

Third, small teams need to be developed throughout the organization to define quality, identify customer wants, and measure progress and quality. These teams will be responsible for creating their own goals, given the organization’s overall goals.

• 4Execute change and continuous improvement • Fourth, change and continuous improvement must be implemented, monitored, and adjusted

based on an analysis of the measurements.

A study of TQM in the United States (Florida) construction industry Syed M. Ahmed and Salman Azhar conducted a 2002 study of the Florida construction industry; the study observations are presented as guidelines for successful TQM implementation in the industry. The main objectives of this study were to (1) investigate the adoption and implementation of TQM in the construction industry; (2) determine the processes (“what to measure”) that are most suitable and appropriate for measurement during the construction project life-cycle; and (3) develop a model (“how to measure”) for the measurement and evaluation of the quality performances of the construction processes identified in step 2 above as a tool for continuous improvement. When it comes to measuring work processes, the construction industry does not enjoy a good reputation. The problem, however, can be attributed to the nature of the industry, which lacks solid data gathering and experiences wide fluctuations in productivity.

Phase I The first stage of this study identified the prevailing implementation and adoption of TQM principles in the construction industry through an in-depth questionnaire. The questionnaire was divided into six parts; namely, their knowledge of TQM, their perception of quality, the data acquisition methods used by them, quality in their organization, the degree of training provided to their employees toward TQM, and the obstacles faced by them in implementing TQM in their businesses. The conclusions from these six sections are briefly discussed below. (Observations are reported in real time, for the sake of convenience)

Knowledge of TQM The results show that the majority of the contractors agreed that if a contractor satisfies clients, the profits would increase in the long run. They feel that TQM will work very well in their organizations, and that it will be beneficial to all stakeholders. They are, however, not aware of any implementation programs. Most of them feel that TQM is a philosophy used to improve cost estimating and warranty claims. This shows their lack of knowledge about the TQM and the potential benefits in implementing it in their organizations.

Perception of quality The analysis indicates that the majority of the contractors perceive quality as a competitive advantage next to elimination of defects. They feel that product/service quality is very important for them in gaining customer satisfaction because it ultimately translates to higher profits. They feel that customer satisfaction is their main goal. Interestingly however, when asked to rank quality, safety, time, cost, and scope in the order of importance, they ranked scope and cost as the more important considerations followed by timeliness, safety, and quality.

Data acquisition method The results suggest that most of the companies in the study collect data to measure performance. They address problems by assigning an individual to solve them. On the other hand, 52% of the companies have a system for capturing customer suggestions, but only 28% measure customer satisfaction through questionnaires. Customer suggestions are gathered by the number of complaints or other methods in 20% of the companies. In most cases, the suppliers and the subcontractor are rated (52%) and when defects in services are identified, they are required to pay for or correct them.

Quality in their organization Although only about 50% of the contractors surveyed have a clear definition of quality in their organizations, 86% are aware of the importance of quality. A majority of the respondents say that they do not have a formal quality improvement program (QIP) in place. Those that do, however, have the full support of their top management. They use a mix of QC, TQM, and ISO 9000

principles in their QIP. Demanding customers, CEO commitment, and competitive pressures are identified as the key reasons for implementing the quality improvement programs. The main objectives of the QIP are employee involvement followed by increasing productivity and cost reduction. There were 40% of the contractors that felt the quality of their products and services improved after implementing such a program.

Training In the majority of the companies, employees are not given formal training in TQM or other quality improvement programs. Of these companies, 44% reported that managerial/supervisory staff had undergone quality improvement training while 29% of the companies provided training on quality management philosophies to non-managerial and non-technical staff. Training programs mostly emphasize customer satisfaction as a primary goal followed by teamwork and communication.

Barriers to implementing total quality management The following list gives a breakdown from the most important obstacle to the least important one.

• 1Difficulty in changing behavior and attitudes, • 2Lack of expertise/resources in TQM, • 3Lack of employee commitment/understanding, • 4Lack of education and training to drive the improvement process, • 5Schedule and cost treated as the main priorities, • 6Emphasis on short-term objectives, • 7Tendency to cure symptoms rather than getting to the root cause of a problem, and • 8Too many documents are required (poor documentation).

It is easy to infer from the above that although TQM has been a magic word in the construction industry for the past few years, methods and techniques to implement the quality management program still need to be developed. The basic problem attributed to a lack of expertise or resources for implementing quality improvement programs is the difficulty in assessing what to measure and how to measure it – particularly the intangible aspects of quality. Without measurement, the notion of continuous improvement is hard to follow.

To address the issue of measurement, an attempt is made to determine the client satisfaction index. This provides a direct reference point from where quality improvement steps can be initiated in the construction industry. Various possibilities of client satisfaction were listed and rated. This gives us a measure or an index of client satisfaction or dissatisfaction that is discussed in Phase II of the study.

Phase II In the second phase of this study, a second questionnaire focused on the customer was created to identify the processes for improvement. From the analysis of this questionnaire, the client

satisfaction index was developed that lists the major causes of dissatisfaction for the clients. They are:

• Lack of attention to client priorities, • Poor planning, • Poor scheduling, • Inadequacy in processing change orders, and • Poor delivery schedules and methods.

Next, a third questionnaire was developed using the cause and effect diagram to identify the subcauses for the main reasons for client dissatisfaction. This was presented to contractors and their feedback was sought through structured interviews.

The major subcauses for the lack of attention to client priorities were:

• Lack of personnel training • Lack of quality and cost control • Inadequacy in contractor-subcontractor coordination • Lack of conformance to specifications

The main subcauses for poor planning in the construction industry were:

• Low quality of material and workmanship, • Poor management of change orders, • Poor cash flow analysis, • Construction underestimation, and • Poor equipment management.

The sub-causes for poor scheduling were:

• Incomplete design, • Lack of site condition supervision, • Inadequacy in project management coordination, and • Improper network model selection.

The main factors for the inadequacy in processing change orders were:

• • Changes in design by clients, • • Errors in construction design, • • Defective materials/equipment, and • • Weather delays.

The subcauses for the poor delivery schedules and methods in the construction industry were:

• Ambiguity in methods • Change orders from procurement department • The availability of materials and equipment

Phase III This analysis led to the final phase of the research study where the most important identified subcauses by the contractors were presented to the same owners who had participated in questionnaire #2. In questionnaire #4 they were asked to indicate a measure of their satisfaction if the contractors made improvements to the identified subcauses. We call this the improvement index. Following are areas that would increase customer satisfaction the most if the contractors improved them.

• Construction underestimation • Conformance to specifications • Project management coordination • Design changes by clients • Change orders from a procurement department

Customer satisfaction can be greatly enhanced by improving construction estimating, conformance to specifications, project management coordination, and by reducing design changes by clients, and change orders from the procurement department. The above areas were identified after analyzing the results of the last questionnaire in which we had asked the clients to identify the most important processes that need improvement.

This process can be repeated until different areas of improvement are identified through another cycle of the development of the client satisfaction and improvement index. The key to understanding is that clients are now a moving target – their expectations and requirements are constantly changing. To keep up with their ever-changing goals, contractors need to have a system of identifying, measuring, and continuously improving their tangible and intangible products and services in place.

Given the limited size of the sample, it was not possible to confirm that the causes and sub- causes of client satisfaction or dissatisfaction identified in the study were statistically significant. The objective of this study was to develop and demonstrate how a system of continuous improvement can be put in place by measuring different processes.

Recommendations for improvement Success in TQM deployment is very much driven by the adage: “What gets measured gets done.” It is of paramount importance to develop metrics related to key performance indicators (KPIs) and to report on-going measurement to all parties – top management and workers alike. Exception reports may be used to flag non-conformances. Top management should be attuned to having corrective measures implemented to address anomalies.

Factors to be measured The following factors are examples of measurements to be applied in the application of TQM.

Designer performance:

• Number of design errors • Processing time for shop drawings • Number of RFIs submitted • Response time for RFIs • Customer satisfaction ratings

Contractor performance:

• Accidents, days without an accident • Number of warranty calls • Number of punch list items • Number of failed inspections • Percentages of delay in schedule • Customer satisfaction ratings • Estimated cost versus actual cost – by trade/discipline

Best practices The following TQM-based best practices are recommended for improving performance by building customer loyalty.

• Develop a clear strategy for enhancing customer loyalty, emphasizing activities that represent high value. Resource limitations often make it impossible to be all things to all customers. Responsiveness and proficiency of customer service operations may need to be weighed against the quality and timeliness of delivery, for example.

• Capture the voice of the customer (VOC). Have customers define the criteria for quality, price, and value.

• Develop measurement systems to collect and analyze customer feedback – information on won/lost customers or projects is critical. Track problem resolution and the percentage of highly satisfied and highly dissatisfied customers.

• Base measurable performance goals on the VOC so those performance thresholds can be compared with customers’ needs.

• Establish a clear understanding of market segments in order to deliver value appropriately to each segment. Public sector customers have needs that differ from private sector companies – housing developers and office building investors have different needs as well. Value does not mean the same thing to each of these customers.

• Establish competitive benchmarks – know how well your competitors are delivering value to their customers. You may increase the satisfaction of your customers, but lose them to a competitor who can satisfy them even more.

• Maintain your company’s image by such “soft” issues as commitment, partnership, and integrity. If a crisis occurs that jeopardizes the value delivered, responsiveness and communication with customers can keep their loyalty intact.

• Do root cause analysis to see where problems originate; institute corrective action. • Discard the mistaken notion that construction is a project specific proposition; remember that

each satisfied customer provides a building block for the value and corporate image that forge long-term business success.

Above all, embrace change in order to adopt the new paradigm; like the dinosaur, those who do not change are doomed to extinction.

Summary for Part A Total quality management (TQM) is an approach to doing business that attempts to maximize the competitiveness of an organization through the continual improvement of the quality of its products, services, people, processes, and environments. There is no simple, comprehensive definition of quality. Deming’s view is that the customer is the most important part of the production line. Quality should be aimed at the needs of the customer, both present and future. By ensuring quality at each stage in the construction process, and thereby minimizing costly rework, as well as other costs, the quality of the final products should satisfy the final customer.