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How to Improve Quality and Productivity in a Construction Company GM588 Final Project Introduction During eight years ABC Construction Company has normally focused in construction of buildings within the commercial, industrial and multifamily markets in the Southeast of the United States. Normally, the company was used to deal with small and medium companies requiring short-term work, taking from one day to a month to complete.
In the last year customer composition has changed; ABC Construction has now large architectural, commercial and public utilities as customers, and some of them are requiring all contractors and subcontractors to set up a quality management initiative that meets their own quality management systems. Their contracts are medium to long-term work, extending over a year or longer.
ABC Construction employs around sixty people, including temporary workers who work on a one-time project basis. With over $6 million revenues, ABC Construction is classified as a small business per the U. S. Small Business Administration (Table of Small Business Size Standards Matched to North American Industry Classification System Codes, Sector 23-Construction, Subsector 236-Construction Buildings, http://www. sba. gov/content/table-small-business-size-standards).
After all these years without a formal quality management system, ABC Construction has started making plans to implement a quality management system that meets customer needs and expectations, as well as requirements of customer’s quality systems. In today’s global economy, competition is becoming ever more intense. Many service companies are trying very hard not only to satisfy their customer’s needs but where possible to exceed them.
This can only be achieved through cost reduction, improvement in service performance, increased customer satisfaction and a constant effort towards world-class service organizations. In order for ABC Construction to survive and grow in the future, it is essential that the company delivers high quality services at reasonable costs. Problem Statement The main challenge facing ABC Construction is finding the best approach to start the quality process in response to the growing pressure from their customers and the need to grow in the future.
They fear a conventional approach of a quality management system would not suit best their small company, as most of the quality manuals and documents are focused for large companies. From experience learned from other construction companies about their size, implementation of a quality initiative was very encouraging at the beginning but over a time period became burdensome, and many of these companies desisted from implementing a quality system mainly because the right approach was not adopted (Kerzner, 2009).
Company’s upper management understands that they need to implement a quality management system to remain competitive, retaining their market share, and also being able to respond to the ever changing competitive demand; however, there are several factors which may cause some resistance in the implementation of a quality management initiative within ABC Construction, such as misconception of the cost of implementation, organization stability required to obtain long-term results, and project diversity. Implementing a quality management system alone cannot ensure long term business success.
It has to count on full leadership commitment and total employee involvement in accordance to the quality management philosophy and principles (Evans &Lindsay, 2011). Being a small company with all of its resource limitations, the implementation and sustenance of a quality management system can be seen as an extra cost and not an investment at ABC Construction. In a construction company the building site of a project is transitory as compared to the main office, which means that the organization needs to form quality team(s) and provide regular training to all employees, regardless of their permanent or temporary status.
Also, all projects constructed are different, which means that project diversity is a difficulty that needs to be identified and classified from the beginning of the process; as result, quality must be addressed to those features that meet the personalized needs of the customers as well as the organization’s goals to meet the challenges of the future. A quality management system has to have the potential to change attitudes, culture, and work procedures at ABC Construction in a way the organization has never experienced before.
On this process the company needs to form high performance teams where employees interact and work in cross-functional teams. Processes and documentation shall meet both customers’ stated and implied needs. Literature Review Unlike the production of goods, which can be taken from the production line if they do not meet specifications, construction product is in a form of a project, which once built it cannot be taken away and replaced by a new one on the same project. A project is a unique representation of customer needs and requirements and it is constrained by schedule, cost and performance.
These three are inextricably linked such that altering one will undoubtedly have an effect on the others. Required performance can be said to represent quality, according to Crosby, (1984), who describes quality as simply: “conformance to requirements. ” The overall concept of a quality management system in a project driven organization like ABC Construction is shown in Figure 1 (Stebbing, 1993). Company quality system includes a company quality manual and procedures that are developed based on the company and customer’s requirements.
According to Stebbing, it is important to understand the quality manual and procedures in order to develop a project quality plan, which is a project-based quality approach where different parties work together to achieve the quality of the construction work. Figure 1. Organization Quality System and Plan (Source: Stebbing, 1993) The fundamental procedures should address the functions of project’s administration, finance, document control, record storage, retention and retrieval, planning, corrective actions, audits and customer relations.
In general, the process of construction projects can be divided into five stages: conceptual design and planning, detailed design, procurement, construction, and final inspection, which includes commissioning and project close-out. From this basis, Hill (1987) classifies the quality aspects of construction projects into four categories: quality of the design process; quality of the construction process; quality of the products; and quality of maintenance. This quality requirements place quality responsibility upon the five main stages involved in construction to effectively communicate with each other and work together as a team.
With participative management, the opposite of the hierarchical management style of the early twentieth century businesses, all employees are involved in the management process and decision making by having managers set policies and make key decisions based upon the advice and ideas of subordinates. This method provides management with more information from the front line and motivates the employees as they have some control of the decisions. Continuous process improvement is one of Deming’s major ideas (1982) and involves small steps toward the ultimate goal.
This involves patience on the part of management. It is also necessary the use of teamwork, which refers to cross-functional teams of workers that share in problem solving (Evans ;Lindsay, 2011). Chung (1999) is a notable writer in the field of construction quality who reveals that the nature of projects means there will be different professionals and tradesmen responsible for the finished building product, as a result, if a fault was to appear years later, it will de difficult to identify the source of the problem.
Therefore, the different professionals working on a project need to have separate quality management systems that will assure adherence to the contractual requirements. Small to medium construction companies are said to be at an even more disadvantage in trying to implement quality systems, due to their size, and the problems associated with being small (Beckford, 1998). Apart from the common argument that small construction companies have not got the management time to support implementation, there is also the issue of the cost of implementing the system itself, fear and inertia that results from being owner-managed. Beckford 1998). In support to implementing quality systems in small construction companies, Giles (1997) explains that the reputation of construction procurement creates an environment that diverts effort from pursuing quality on benefit of inefficiency, error and waste. Therefore, formal quality systems like the ISO 9001:2000 series provide a first step of increasing customer confidence by ensuring the material, product or service will conform to specifications and requirements. It relies on audits to measure the status of implementation.
However, detractors of this registration say that these conformance models are also its weakness being that its central purpose is to facilitate and enhance business (Curt W. Reimann, Harry S. Hertz; 2009), and little encouragement for competitiveness is made as it is not addressing the delivery of over-improving value to customers and the improvement of overall operational performance of organizations. In contrast, the Baldrige Award addresses competitiveness factors such as customer and market focus, continuous improvement, results orientation, competitive comparisons, binding to business strategy and public responsibility, among others.
The Malcolm Baldrige National Quality Award is built on a non-prescriptive framework/system view of performance excellence. The American Society of Quality (ASQ) administers the Baldrige Award. The award criteria represent a common language for communication among organizations for sharing best practices and are based on the examination of seven core values: leadership, strategic planning, customer and market focus, measurement, analysis, and knowledge management, workforce focus process management, and results.
The Baldrige Award is focused on enhanced competitiveness reflecting two key factors: (1) stakeholder orientation through delivery of sustainable value and (2) improvement of overall operations performance. The award guidelines can be used as an improvement tool even if the organization does not apply for an award Total quality management (TQM) is a quality approach that emphasizes a decentralized structure to encourage leadership and creativity. The purpose of this change in structure is to change the behavior of the employees.
This is a major change for most U. S. companies. However, successful companies have more functional integration and fewer layers of hierarchy (Jablonski, 1994). Much research has been done with regard to the implementation of TQM and it is believed that the benefits of higher customer satisfaction, better quality products, and higher market share are often obtained following the adoption of TQM by construction companies. TQM is considered an approach to improving the competitiveness, effectiveness, and flexibility of the whole organization.
Ideas of continuous learning allied to concepts such as empowerment and partnership, which are facets of TQM, also imply that a change in behavior and culture is required if construction firms are to become learning organizations (Love et al. 2000). Analysis The construction industry has been slow to implement quality management systems like TQM, Six Sigma, Lean Principles, SPC, and Balanced Scorecard, among others, probably due to the age of the industry and the reluctance to change old management techniques.
Projects are getting bigger and more complex while clients are demanding higher standards of quality of the end product. A lot of time, money and resources are wasted on construction projects as a result of poor quality management. There are a number of difficulties and resistance the implementation of the above quality initiatives in construction companies. The difficulties related to quality management systems are mainly people based, while the resistance encountered are industry and organization based (Menon et al. , 1992).
A study by Nwanko (1998), found that implementing quality management systems in most construction companies in the UK revolve around the ISO 9001-type implementation, this is probably due to the fact that the process of obtaining an ISO 9001:2000 certificate is not too complex. It involves putting together the necessary documents to prove to the external auditor that the system exists. It is important for construction companies to provide consistent value and quality to the products that they construct to remain competitive in today’s construction environment.
The cost of construction is ever increasing and it makes sense to try and save as much money as possible. A lot of money is lost not just during the construction period but also after the project is completed because of product and construction warranties due to latent defects, which stem from poor construction practices. Latent defects are also bad for the company’s image and it is very important to maintain a good company image. The need of ABC Construction to implement a quality management initiative that meets customer’s quality management system will make the company to focus on meeting customer needs and organizational objectives.
This quality initiative shall also bring enormous benefits for the whole organization at improving competitiveness, effectiveness, and flexibility. As a growing service company that has not had a formal quality management system, ABC Construction needs to perform an organization restructuring which implies a strong commitment from top management, and employee involvement in the process for the success of the quality initiative. The result would be a reduction in inefficiencies and waste, improved work practices, increased morale and the opportunity for a greater market share.
Gils (1997) indicates various obstacles in the implementation of a quality initiative in the construction industry: resistance to change; misconception of the quality system; quality perceived as something secondary to the business; procedures and methodologies may have appeared too complex; lack of understanding of the quality standards; high implementation cost, especially the initial cost; loss of productivity of the workforce due to the effort put forth in learning and implementing the new system besides their regular tasks; no encouragement from the industry customers; and difficult to apply to the construction industry.
The factors which may cause resistance in ABC Construction in the implementation of a quality management system are identified by Pheng & Teo (2004): Product diversity All buildings constructed are unique. Quality is seen as consisting of those product features which meet the personalized needs of the customers and thereby provide product satisfaction, supplemented with a provision of freedom from deficiencies. In the construction industry, anything which is constructed is unique, not just buildings, so the above paragraph can apply to all construction projects.
Each customer or employer is different and has different personalized needs, but the end product still has to remain free from defects. Each employer will have different standards of quality and a successful quality management system will have to accommodate for that. The standard of quality employed by the quality management system will have to be high to cater for all employer quality standards so that the employer will know what standard to expect. Organizational stability The construction industry has a high number of organizational collapses, especially during a downturn in the economy as we have lived it in the U.
S. Thus, commitment toward quality management strategies and policies that may take several years to provide pay-offs may be perceived as futile or a misdirection of resources. As compared to the head office, the building site is transitory. Teams specially formed for a project may cease to exist after contractual obligations end. This is very true in the U. S. construction industry at present because of the economic recession experienced at the moment. There are also large fluctuations in the construction industry over time.
Many workers are employed only for the duration of a specific contract and few are employed for longer periods, so it makes it very difficult to see the benefits of quality management system in the long run. Misconception of the cost of quality Baden-Hallard (1993) defined the cost of quality as costs associated with conformance to requirements and costs associated with non-conformance to requirements. Costs in the construction industry are being compounded by prevention and appraisal costs coupled with non-conformance costs.
Contractors often perceive quality management as an extra cost, but they do not realize that it is not the quality, but rather the non-conformance to quality that is expensive. The sources of costs associated with the non-achievement of quality include the costs of rework, correcting errors, reacting to customer complaints, having deficient project budgets due to poor planning, and missing deadlines. Biggar (1990) argues that the costs associated with implementing a quality management system could be substantial, depending on the size and nature of the company.
However, Biggar (1990) pointed out that the costs incurred from not achieving quality can cost owners up to 12% of the total project cost. There are other factors related to small construction companies like ABC Construction that might cause the implementation of quality management system to fail if not properly addressed: lack of measurement (probably the most critical for any quality management system to succeed); organization not concentrating on the vital few problems; failure to identify internal and external customers vital to the business; trainers and teams have limited knowledge; expecting oo much too soon. Recommendations The goal of ABC Construction is to develop a quality management framework that, if implemented and maintained, will improve the quality of the services provided. The framework will be a set of components that the selected company will need to address, document, and follow in the quest for the best quality product for the lowest possible cost. Not having any formal quality management system in place, several benefits from a successful quality management process are to be achieved.
Some of these benefits are: (1) ABC Construction will respond more positively toward customer needs and expectations; (2) higher customer satisfaction; (3) better quality constructions projects; and (4) higher market share which favors company’s growth. A successful quality management implementation will change company’s way of thinking about goals and processes, improving competitiveness, effectiveness, and flexibility of the whole organization.
The overall approach is to apply quality concepts and practices to the construction activities to ensure that the projects are delivered on time, as specified, error-free performance, and functional buildings. Although there are different philosophies on quality management that emphasizes diverse techniques and use different terminology, all share three common ideas: quality, teamwork, and continuous process involvement (Jablonski, 1994). I recommend ABC Construction to implement Total Quality Management (TQM) as their formal quality management system.
It will involve all employees in the management process and decision-making with total support and participation of management. Management and employees can become involved in the continuous improvement of the construction services as defined by the customer. TQM implementation as indicated by Jablonski establishes six attributes for success: (1) customer focus; (2) process focus; (3) prevention versus inspection; (4) employee empowerment and compensation; (5) fact-based decision-making; and (6) receptiveness to feedback. This approach will encourage creativity and leadership for all employees.
The above identified factors which may cause resistance in the implementation of TQM can be addressed as follows: Product diversity Benchmarking is a good way of catering for this problem and setting a good standard. Menon, (1997), states that benchmarking is a powerful tool in managing for quality and setting in place the continuous improvement process. Benchmarking attempts to compare similar products manufactured by competitors to gain a competitive advantage. The method used is to measure the process, service and product to asses current activities compared to competitors and determine where competitive advantage might be gained.
Organizational stability Each time a new employee is hired, he or she has to be trained in the quality standards of the ABC Construction, which can become expensive in terms of TQM goals in the long run. The TQM system will have to cater for this event to remain successful, and it may be considered critical and necessary element to satisfy and exceed customer needs. Misconception of the cost of quality Like the costs of maintenance, design, sales production/operations and other activities, the cost of quality can be budgeted, measured and analyzed. The cost of redoing an item of work far outweighs the cost of doing it right the first time.
In terms of construction life cycle quality, the quality requirements of TQM place responsibility upon the five main parties involved in construction (conceptual design and planning, detailed design, procurement, construction, and final inspection) to effectively communicate with each other and work together as cross-functional teams. The conceptual framework and structure for promoting their strategy and efforts will be directed towards continuous improvement and learning not only through their own excellence, but also through the synergetic contribution towards improving the quality of the project.
The result would be reduction in inefficiencies and waste, improved work practices, increased motivation and the opportunity for a greater market share. Reflection From this assignment I learned that implementing total quality management in all activities of the construction business is a necessity not just to survive in a global economy, but also excel in performance to exceed customer satisfaction. I found that even though TQM has advantages and disadvantages, the advantages must outweigh the disadvantages for this initiative to be effective.
This has been corroborated by many service companies outside the construction industry has successfully implemented TQM, or any other quality management initiative, as a management tool. There are a number of issues that affect the implementation of a successful TQM system. One of the most critical elements for this quality initiative to remain effective is continuous measurement and monitoring. Also, training is a very important, if not the most important part, of a TQM system. Everyone in a construction company has to be trained.
The lower the level of education a person has will determine the amount of training that the person will require. Small construction organizations like ABC Construction should realize that results cannot be gained overnight and that an organization needs time to adapt, change, and learn. They need to develop a quality culture form at all levels which will support TQM. Commitment and perseverance are necessary when they decide to start the implementation of this quality management system.
As I work closely with construction companies in a consulting engineering firm, I feel I have had a great learning experience on the advantages, disadvantages, and difficulties of implementing quality management systems in the complex construction sector. Despite the problems and the fact that the cost of its implementation could be substantial, the advantages are way too promising for any company not to embark on this process. References Evans, J. R. , Lindsay, W. M. (2011). Managing for quality and performance excellence (8th ed. ). Mason, OH: South-Western Cengage Learning.
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