Total Quality Management:

A Continuous Improvement Process

Introduction
In order to comprehend the need for improvement in the construction industry and to better
manage our projects and construction companies, we need to look for a method to do so.
Construction managers need to improve their performance. Construction costs are becoming far
too high. Construction project management is more difficult than it should be. When
turnaround at the end of a project becomes a gut-wrenching experience with unnecessary
disputes (which must be settled) that arise due to insufficient quality or indifference to quality,
settlement by negotiation, arbitration, or even litigation imposes a serious drain on the financial
resources of a company and limits profit potential.
To be competitive in todays market, it is essential for construction companies to provide more
consistent quality and value to their owners/customers. Now is the time to place behind us the
old adversarial approach to managing construction work. It is time to develop better and more
direct relationships with our owners/customers, to initiate more teamwork at the jobsite, and to
produce better quality work.
Such goals demand that a continuous improvement (CI) process be established within the
company in order to provide quality management. Ancient Greeks referred to the concept of
continuous improvement as well as the Chinese. Recently CI has been referred to as Total
Quality Management (TQM). Whichever name is preferred, the concept must be understood and
applied to a firms operations.
Meeting owner/customer requirements (providing customer satisfaction) is a primary objective
of quality management, and contractors who are the suppliers of construction services must
address owner/customer requirements if they are to succeed. The construction industry exists to
provide a service to its owners/customers who are becoming more demanding and are seeking
higher quality, better value, and lower costs. These owner/customer requirements mirror the
economic pressures they face in their own businesses. Implementing total quality management /
continuous improvement in managing everyday construction activities is relevant to all those
who participate in and contribute to the construction process.

What you will learn from this article:

1.
2.
3.

A management style that focuses on customer satisfaction, the elimination of waste, and
continuous improvement
A method for upper management leadership to demonstrate its commitment to the new style of
management with the involvement of all employees
An understanding of how the new style of management applies to owners, designers, prime
contractors, specialty contractors, and suppliers

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What is Total Quality Management?

TQM is a management philosophy, a paradigm, a continuous improvement approach to doing
business through a new management model. The TQM philosophy evolved from the continuous
improvement philosophy with a focus on quality as the main dimension of business. Under
TQM, emphasizing the quality of the product or service predominates. TQM expands beyond
statistical process control to embrace a wider scope of management activities of how we manage
people and organizations by focusing on the entire process, not just simple measurements.
TQM is a comprehensive management system which:

Focuses on meeting owners/customers needs by providing quality services at a cost that

provides value to the owners/customers

Is driven by the quest for continuous improvement in all operations

Recognizes that everyone in the organization has owners/customers who are either internal or
external

Views an organization as an internal system with a common aim rather than as individual
departments acting to maximize their own performances

Focuses on the way tasks are accomplished rather than simply what tasks are accomplished

Emphasizes teamwork and a high level of participation by all employees

TQM beliefs
Presented here are universal total quality management beliefs.

Owner/customer satisfaction is the measure of quality

Everyone has owners/customers; everyone is an owner/customer

Quality improvement must be continuous

Analyzing the processes used to create products and services is key to quality improvement

Measurement, a skilled use of analytical tools, and employee involvement are critical sources of
quality improvement ideas and innovations

Sustained total quality management is not possible without active, visible, consistent, and
enabling leadership by managers at all levels

If we do not continuously improve the quality of products and services that we provide our
owners/customers, someone else will

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Demings Fourteen Points

Presented below are Demings fourteen points for total quality management.
Create constancy of purpose for improvement of
product and service. (Plan to stay in business.)
Adopt the new philosophy. (Stop tolerating poor
quality.)
Cease dependence on inspection to achieve
quality. (Improve the process.)
End the practice of awarding business on the
basis of price tag alone. (Seek longer-term
supplier relationships; reduce the number of
suppliers.)
Improve constantly and forever every process in
the system of planning, production, and service.
Institute modern training (for everybody!).
Institute modern methods of supervision. (The
responsibility of foremen must be changed from
sheer numbers to QUALITY.)

Drive out fear. (Encourage employees to speak

up.)
Break down barriers between departments.
Eliminate slogans, exhortations, and targets for
the work force.
Eliminate work standards that prescribe
numerical quotas.
Remove barriers to pride in workmanship. (Poor
supervisors, poor materials, inadequate
equipment, lack of training, etc.)
Institute a vigorous program of education and
self-improvement for everyone.
Place everybody in the company to work to
accomplish the transformation and create a
structure in top management that will push every
day on the above points.

The Deming Theory

The Deming Theory of Management is a management philosophy based on four principles:
(1) an appreciation for systems, (2) a knowledge of variation, (3) a theory of knowledge, and
(4) psychology. Although the principles for continuous improvement are clearly profitable for
companies to implement, why has it been difficult to transform the culture of western
management to focus on quality? Deming compiled a list of seven deadly diseases that have
inhibited change in style of management. Although Demings Encyclopedia Britannica
videotape only highlights five, the entire list is presented in figure 1.6.
Lack of constancy of purpose to plan product and service that will have a market and keep the
company in business and provide jobs.
Emphasis on short-term profits: short-term thinking (just the opposite from constancy of
purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers and
owners for dividends.
Personal review system, or evaluation of performance, merit rating, annual review, or annual
appraisal, by whatever name, for people in management, the effects of which are devastating.
Management by objective, on a go, no-go basis, without a method for accomplishment of the
objective, is the same thing by another name. Management by fear would still be better.
Mobility of management: job hopping.
Use of visible figures only for management, with little or no consideration of figures that are
unknown or unknowable.
Excessive medical costs.
Excessive costs of liability, fueled by lawyers that work on contingency fees.

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Characteristics of Successful TQM Companies

The construction industry has arrived late to TQM, probably due to the tendency to easily brush
aside anything in management that is new, or to dismiss TQM as a fad.
Continuous improvement is not a fad but a necessary part of managements obligation to
properly run its company. Gone are the boom days when quality did not matter due to the
volume of work available and the ease of obtaining work. The attitude of construction managers
and contractors was simply to add it to the bill, because the owner will pay for it. In other
words, in those boom days Cost plus Profit equaled Price. Now, however, the new attitude is
Price minus Cost equals Profit. Owners are now demanding higher quality work, and at a lower
cost. In attempting to keep pace with the new attitude, a quality management system that helps
keep costs down is well worth implementing.
The characteristics that are common to companies that successfully implement TQM in their
daily operations are listed here.

Strive for owner/customer satisfaction and employee satisfaction

Strive for accident-free jobsites
Recognize that the owner/customer provides the revenue while the employees are responsible for
the profit
Recognize the need for measurement and fact-based decision making
Arrange for employees to become involved in helping the company improve
Train extensively
Work hard at improving communication inside and outside the company
Use teams of employees to improve processes
Place a strong emphasis on the right kind of leadership, and provide supervisors with a significant
amount of leadership training
Involve subcontractors and suppliers, requiring them to adopt TQM
Strive for continuous improvement
Quality principles that successful TQM companies recognize

The quality principles that successful TQM companies recognize and attempt to continually
incorporate into their actions are the following:

People will produce quality goods and services when the meaning of quality is expressed daily in
their relations with their work, colleagues, and organization.
Inspection of the process is as important as inspection of the product. Quality improvement can
be achieved by the workers closest to the process.
Each system with a certain degree of complexity has a probability of variation, which can be
understood by scientific methods.
Workers work in the system to improve the system; managers work on the system to improve the
system.
Total quality management is a strategic choice made by top management, and must be
consistently translated into guidelines provided to the whole organization.
Envision what you desire to be as an organization, but start working from where you actually are.
Studies have indicated that people like working on a quality-managed jobsite especially due to
the cleaner site and safer place to work.
Accept the responsibility for quality. Establish datums for measurement.
Use the principle of get it right, the first time, every time.
Understand that quality is a journey, not a destination. It consists of steps that form a process that
is continuous.

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The goal of management is to create a culture of quality across the entire project site--get the job
done right, the first time, every time. As in the airline industry where 99-percent quality is not
good enough, the construction industry also needs to strive for 100-percent quality. Today, the
number of contractors being considered for projects by some owners is growing smaller, and
only those contractors who can produce quality work are being asked to bid by these owners.
Every effort to incorporate the above principles into the companys actions will further quality
production.

How does a construction firm begin implementing the process?

Setting the stages
How can a construction firm begin the continuous improvement process? Outlined briefly here
are the overall target stages for establishing a successful continuous improvement strategy.
Start setting goals, and
start meeting the goals
you have set.

Use measurements to determine how exact your goals are.

Management indicate
complete commitment
to Continuous
Improvement (CI)

Quality can only be achieved when management gives CI a high priority and a clear need.
Productivity in the construction industry is estimated to be, at best, 50 percent, with some sources
placing it at 35 percent, leaving room for improvement.

Identify stages

The objectives of continuous improvement are to reduce waste, reduce costs, and increase
productivity. The starting point is simple but radical. The work at any construction site can be
sliced into a series of stages. The stages can begin with groundbreaking and end with
completion. At each stage, a team goes to the jobsite and accomplishes its own work. When the
work is completed, it can be handed over to another crew or another contractor. This chain of
events can be identified as a process.

Establish responsibility

The next step is to establish responsibility for the work. If we define what each team does and
establish responsibility for who is to accomplish the task, we have defined a product and an
owner/customer. This is the heart of the matter with CI: to define the product and the
owner/customer. Each team or crew is responsible for providing a first-class product to its
owners/customers. The product must be supplied with no hassles, no concealed errors, and no
botched work.

Set the datum

CI goes well beyond the concept of quality assurance. Merely relying on a quality product is not
the only responsibility of management. Traditional quality assurance simply fixes the product;
however, it is not enough that supervisors simply accept or reject faulty work. CI maintains that
when something goes wrong, we must find the root cause of the error and correct that cause.
What CI means is the setting of a datum so everyone can evaluate his or her work or product by
measuring against the datum. CI then becomes everyone working together to improve the way
work is actually completed.

Pre-Plan

The chain actually starts before breaking ground for the building. It actually starts with an
owner/customer who wants the building. We must know what our owners/customers who are
going to use the building actually want. We can do this by doing a great deal of pre-planning.
The pre-planning involves creating a team that is capable of doing the project. We have to
ensure that the process used to analyze job segments is in place so we can make the right
decisions at the right time and that the flow of information needed to make decisions is in place.
A revolutionary idea here is that even the designer can become part of the process of CI from the
conceptual stage of the project.

Regard each project as

part of a cycle

We can learn something from each project when we regard each project as part of a cycle.

Each worker regard

himself or herself as a
quality inspector of his
or her task

Each worker becomes his or her own quality inspector. In efforts to increase productivity and
lower costs, each worker becoming a quality inspector is vital.

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Additional goals include:

Each person initiates and
personally leads quality
improvement projects in his or
her area.

Ensure resources are available

throughout the organization.
Reinforce deliberate process
improvement.

Integrate TQM principles into

all planning.
Require data-based decision
making.

Establish organizational
performance goals that will
provide a benchmark for
success.

Constantly communicate and

share our vision with all levels
in the organization.

Reward quality-focused
behavior.
Remove cold middle
management.

Support teamwork not

individualism.

Constantly review policies and

decisions to ensure support for
TQM implementation.

Lead the organization to

establish an aggressive
customer-focused culture.

Reasons to Begin Now

The reasons to begin establishing quality improvement processes now are several. Study the
various areas below to determine which would affect your company in a positive way. It is believed
that all of the following would be of great benefit. Cost reasons are discussed at the end of this
section, under What are the Benefits of TQM?

For Management

For Employee

Provides an invaluable problem-solving tool for

managers and supervisors to use
Dispels negative attitudes
Management becomes more aware of problems
that affect the individuals work environment
Employees gain a sense of participation
Increases efficiency and productivity
Reduces turnover rate, tardiness, costs, errors,
and scrap & rework
Improves communications within and among all
departments
Develops management skills that were never
taught, or are long forgotten due to lack of
application
Develops overall company awareness and
company unity
Rearranges priorities which once seemed locked
in place
Builds loyalty to the company
Reveals training requirements in all departments
Lessens the number of defects received from
suppliers when they are encouraged to train in
quality management

Provides opportunity for personal growth

and development (as a result of team
training activities) and the opportunity to
develop and present recommendations
Increases innovation (through a greater
variety of approaches and perspectives) for
solving problems, removing fear of failure
Employees use their knowledge and skills
to generate data-driven recommendations
that will lead to well-informed decisionmaking
Encourages decision-making at the most
appropriate level
Increases motivation and acceptance of
new ideas
Increases job satisfaction (as a result of the
opportunity to participate in and have
influence over work)
Recognizes employees for their
knowledge, skills, and contribution toward
improvement
Develops mutual respect among
employees, management and customers
Promotes teamwork

Reducing rework to zero is achievable: Using quality management and CI to reduce rework to
nearly zero is an achievable goal. The negative cost of quality, which includes errors, delays,

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rework, etc., is estimated to be 30 percent of the cost of construction. This figure does not include
dissatisfied owners/customers who do not come back for repeat business.

How several companies successfully implemented continuous improvement in their firms

Sample Company: As an illustration of quality management in action, one construction company
procedure was enacted by establishing a daily foremans meeting that usually lasts one hour.
Although an hour may have appeared to be a long time, the company and its people believe it to be
worthwhile. Every person in the company has an opportunity to relate the status of his or her task
in the work cycle.
Included among the benefits from conducting this daily foremans meeting are the elimination of
conflicts between crews and crafts at jobsites, work crews not occupying the same space at the same
time, and the entire working staff becoming and remaining knowledgeable about all phases and
problems which exist at the jobsite. Additional benefits include improved coordination with other
trades, increased problem solving, and improved morale and efforts as a result of the ability to
directly air concerns.
Mechanical Contractor - $30 TP 50m volume. A commercial and industrial mechanical
contractor has started to implement TQM by forming Process Teams to study problem areas. The
company is also using strategic planning on a company-wide basis. Some of the areas they are
attacking are:
a.
b.
c.

Delays in the field--obtain information to reduce delays

Administrative problems--Billing, accounts payable, invoicing, phones
Develop partnering agreements with suppliers and vendors

Positive results were obtained in accounts payable and invoicing. Time was wasted on invoices due
to errors from vendors. The results were that the contractor and vendors were paid promptly, thus
improving cash flow. A supplier now warehouses safety equipment for the company.
A General Contractor with a volume of $200M/yr. This company embarked upon the
implementation of the TQM process by hiring a consultant to work with a key person in the
company to start TQM. The objective of the process was to provide a more participative
management-oriented company. The process is customer-driven and the company has worked hard
to involve all employees. Task teams have been formed and are producing solutions to problems.
The company feels that a Continuous Improvement Process has been reached. The positive result
that has been obtained through TQM is that morale is much improved, helping the company to
weather a declining market.
A large General Contractor - volume over $500M/yr. This contractor is using TQM to improve
quality in daily work. The contractor has 80 teams trained and functioning, and a seven-step
problem solving technique to solve problems. All participants have been trained in group
dynamics.
A large General Contractor with a volume of $700M/yr. A quality circle program was initiated
nine years ago and has resulted in creating a company environment that is conducive to partnering.
The companys ability to conduct business using partnering has led to successful new contracts and
has
been
responsible
for
turning
poor
jobs
into
profitable
ones.
The key to the companys successful partnering process is the utilization of an outside facilitator (a
professional psychologist).
The facilitator conducts preconstruction sessions on how to
communicate with different personalities with varying styles of communication. Partnering has
enabled them to obtain significant new amounts of work.
Wal-Mart The expansion of Wal-Mart Stores has been successfully accomplished with the
application of the principles of TQM to their Design and Construction process. Wal-Mart could not
have expanded with their past system that allowed change orders to average $1.00/SF. They
brought in a designer who committed to them a team of design professionals, and equipment which
produce complete construction documents that are biddable and buildable. Decisions on design and

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construction are now made at the lowest possible level. The result is that change orders were
reduced to less than $0.12/SF.

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Bechtel TQM was started in 1987 and has recently been reorganized into CCI (an acronym for
Commitment to Continuous Improvement). The initiatives for their TQM process were obtained
from their customers by using a simple questionnaire. They use Baldrige criteria to measure
success in the CCI process. They do not seek the award, just the benefits of the process. Bechtels
facilitator has worked under the Deming philosophy for four years and has told top management
that he does not want to go back to the old way of doing business. Neither do their customers or
their employees.
Indianapolis Department of Public Works The Indianapolis Department of Public Works started
a TQM process that was modeled after the Florida Power and Light (Qualtec) process. All
department employees are involved (approximately 900 people). The process has recently been
updated to meet their needs. The result of their TQM process has improved employee morale.
Motorola Motorola has a successfully working TQM process. Motorolas fundamental objective
(everyones overriding responsibility) is Total Customer Satisfaction. They have won the Baldrige
award and are corporate leaders in TQM. They will tell you that implementing TQM was a sound
business decision and a matter of survival for them. Similar cases are available from other large
corporations. They require a working TQM process of all contractors doing work for them.
Rogers-OBrien Construction Co. - volume of $30M/yr. This Dallas-based contractor started a
TQM process due to exposure to Texas Instruments TQM process. Texas Instruments is their
major client. Rogers-OBrien feels that TQM has been largely responsible for reducing overall
rework expenditures from approximately 7 percent to approximately 1.5 percent of construction
costs.
Built-Rite The Built-Rite way is an example of labor-management cooperation using the principles
of TQM. Built-Rite is managed by the Philadelphia Area Labor-Management Committee (PALM).
PALM is an alliance of construction users, contractors, and building craftspersons who are
committed to labor-management teamwork at the jobsite. In the past five years, over $6 billion in
construction projects has been completed without any work stoppages.

Successful companies who have received the Malcolm Baldrige National Quality award
The Malcolm Baldrige National Quality award was established by an act of Congress in 1987. In
several ways, it is modeled after the Deming Prize of Japan. The award is jointly administered by
the National Institute of Standards and Technology (NIST) and the American Society for Quality
Control (ASQC).
The 1992 Award Criteria stipulate that awards are presented annually to recognize those US
companies that excel in quality management and quality achievement. Up to two awards may be
presented in each of three eligibility categories of manufacturing companies, service companies,
and small business firms.
Past award recipients are

1991
1990

Marlow Industries
Solectron Corporation
Zytec Corporation
Cadillac Motor Car Company
IBM Rochester
Federal Express Corporation
Wallace Co., Inc.

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1989
1988

Milliken & Company

Xerox Business Products and
Systems
Globe Metallurgical Inc.
Motorola, Inc.
Commercial Nuclear Fuel
Division of
Westinghouse Electric Corp.

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The Pitfalls Successful TQM Companies Must Avoid

The transformation to quality is not without its pitfalls. Many companies have started on the
road to quality but failed to achieve success due to several factors:

Lack of top management support.

Lack of middle management support.
Commitment in only one department.
Short-term commitment - failure to stay on
course.
Haphazard approach - a little of this and that
with no meaningful change in the system.
Failure to acquire the services of a competent
statistician or to provide statistical training for
employees.
Measure success and guide program on the
basis of short-term profits.
Failure to solicit worker input.

Over dependence on computerized quality

control.
Funding failure - lack of funds to make
meaningful changes in the system (i.e., new
machinery, training, improved raw materials).
No market research. Not knowing what the
requirements are.
no testing of incoming materials - garbage in garbage out.
Overselling hourly workers - expecting instant
pudding.
Adversarial management (management by
fear).

However, with total commitment and constancy of purpose, these hazards can be overcome.
Misconceptions regarding the implementation of the continuous improvement process
Common misconceptions which appear at the beginning of the following paragraphs are
discussed.

Every site is different -- A common mistaken notion about TQM is that it does not readily apply to
construction because every site is different, and that construction is a one-time-only industry.
This notion is not true, because the plain fact is that wherever you work, the processes are the
same, and so are the methods and techniques.

Errors and delays are different -- Some maintain that errors and delays can be controlled on a
large job [versus a small job]; however, this is not true. Errors and delays are the same on large
and small projects, and they have the same negative effects. One example involves a concrete
project with the improper placement of anchor bolts. Improper placement of anchor bolts results
in a delay in erecting the structural steel. Someone has to pay for this delay that will affect
everyone at the jobsite, whether it is a large jobsite or a small jobsite.

It is a typical jobsite problem -- One might be tempted to say that the delay in the above example
is no big deal, that it is a typical jobsite problem, but that is precisely the point: Typical problems
must be eradicated at jobsites.

It costs too much -- The cost of implementing quality results from (1) training and (2) the cost
associated with transforming a company into the quality mode to follow common ideas and goals.
The profits incurred for implementing a continuous improvement process far outweigh the profits
gained while not using a continuous improvement process.
Its time to get started on Continuous Improvement.
Your competitors may have already started.

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10

Steps in implementing TQM

1 Obtain CEO Commitment

2 Educate Upper-Level Management
3 Create Steering Committee
4 Outline the Vision Statement, Mission Statement, & Guiding Principles
5 Prepare a Flow Diagram of Company Processes
6 Focus on the Owner/Customer (External) & Surveys
7 Consider the Employee as an Internal Owner/customer
8 Provide a Quality Training Program
9 Establish Quality Improvement Teams
10 Implement Process Improvements
11Use the Tools of TQM
12 Know the Benefits of TQM

Continuous Improvement

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11

1
2

Obtain CEO Commitment, and

Educate Upper-Level Management

The first and second steps are . . .

The first step in implementing TQM is to obtain the total commitment, involvement, and
leadership of the CEO and upper-level management.
The second step is to teach the CEO and upper-level management how to conduct the following:

Undergo quality training

Commit to TQM and provide the necessary

resources of time and money to permit
improvement

Actively lead the way by participating in the

activities of the quality steering committee and
company training

Drive fear out of the organization

Provide suitable recognition for those who

contribute to the quality mission

Drive decision making and problem resolution

to the lowest practicable level

Assist in the development of the corporate

vision statement, mission statement, guiding
principles, and objectives

Serve as a model of expected behavior

CEO and senior management roles are . . .

The roles of the CEO and Senior Management Team are to create an organizational culture in
which TQM can exist and flourish. An excellent culture that management can create for TQM to
exist and flourish contains the eight cultural elements indicated in the figure below.

Element
Number
1
2
3
4
5
6
7
8

Cultural Elements Required for TQM

Quality information must be used for improvement, not to judge or
control people.
Authority must be equal to responsibility.
There must be rewards for results.
Cooperation, not competition, must be the basis for working together.
Employees must have secure jobs.
There must be a climate of fairness.
Compensation should be equitable.
Employees should have an ownership stake.

Total Quality Management, by Marshall Sashkin and Kenneth J. Kiser, 1991, Ducochon Press.

Create a Steering Committee

Upon completion of upper managements commitment and training, a steering committee must
be created to guide the company through the process of implementing TQM. The role of the
steering committee and the processes the committee follows are listed here.

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Steering committee roles are . . .

Review and evaluate customer surveys.

Determine processes to be improved, based on customer and employee recommendations,

surveys, and a knowledge of existing problems.

Appoint task process improvement teams and ensure they receive proper training.

Monitor process improvement.

Oversee employee recognition for quality improvement.

Communicate successes and progress.

The steering committee handles a problem by . . .

1.
2.
3.

Problem is brought to the attention of the steering committee

Steering committee forms a team to examine the process and make necessary recommendations
for improvement
Team meets, reviews its mission, and determines how often it will meet. The problem is assigned
to the team following the procedures outlined in #10, The Structure Approach to Process
Improvement.

Outline the Vision Statement, Mission Statement, & Guiding Principles

Establishing guiding principles

In developing the fourth step, important principles to consider including in the companys vision
statement, mission statement, and guiding principles are as follows:

Owner/customer Satisfaction
Improved Safety
Elimination of errors and defects

Doing things right, the first time

Reputation as the best in the field
Continuous Improvement
Employee Empowerment

Below are sample statements and principles.

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Sample Vision
Statements

Heartland Professional Construction Services,

Lansing, Michigan
To revolutionize the construction industry by achieving new
standards of quality and productivity that are significantly above
current industry standards.

Brown + Root
We will consider ourselves successful when we are the preferred
provider of project services and the favored employer in our
industry, and when all of our businesses produce financial results
superior to those of their leading competitors.

Sample Mission
Statements

The Walbridge Aldinger Company, Detroit,

Michigan
We are in the business of providing the best construction-related
services that exceed our customers expectations. This will be
achieved through the commitment of a responsive team of
experienced professionals.

Walbridge Aldingers Quality Objectives:

Sample Guiding
Principles

Provide a logical structure for continuous improvement.

Exceed both internal and external owner/customer expectations.
Stimulate environment for change.
Utilize Quality Improvement Tools to change the results of our
actions for the benefit of our owners/customers, employees, and
communities.
Understand process thinking and value adding.
Focus on the process to achieve results.
Focus on prevention, not inspection.
Secure total employee involvement.
Commit a cultural change, beginning with management.

Pepper Construction Company, Chicago, Illinois

Pepper Values

Total Client Service: Pepper is committed to total client

satisfaction.

Skill, Integrity, Quality, and Responsibility: Pepper is

dedicated to maintaining the highest level of skill, integrity,
quality, and responsibility in providing professional services to its
clients.

People: Pepper recognizes that the quality of its people is the

critical element in achieving its mission. Pepper is committed to
the growth and empowerment of its people and to human
resources practices based on standards of excellence, fair
treatment, and equal opportunity.

Leadership: Pepper is committed to providing strong leadership

to its industry and to the communities in which it does business.

A Fair Profit: Pepper is in business to receive a profit for its

services. Profit objectives are established at fair levels and must

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be met for the company to continue to exist and serve the needs
of its clients and employees.

Defining the meaning of quality

What does one mean when one uses the word quality? If you can ask 12 people in an
organization what the word quality means, and you receive 12 different answers, then quality
management, CI, TQM, right the first time, zero defects, and defect free are only serving as
buzzwords within the organization. Quality is only useful and of value when it means the same
thing to all the people in an organization. Belief in too many ways to achieve quality can cause
serious problems. Quality must consist of well-defined objectives, so that quality means the
same to all in the organization.
In defining TQM for construction firms, we could choose the definition: TQM means keeping
the company running smoothly with continuous input from our owners/customers. In choosing
this definition, we accept that the idea is owner-driven and that owners want a new deal from the
construction industry. Each job starts out on a new, clean sheet of paper--we build each project
on that new sheet of paper to meet the needs of the owner. With each new job and new set of
people, we continually carry on the continuous improvement on the new, clean sheet of paper.
In addition, the further goal is to make each project or job better than its predecessor.
Owners are under competitive pressure and have endured periods of downsizing, cost-cutting,
and quality improvement to become efficiently competitive. Owners view construction as an
industry that has been resistant to change and have labeled it as simply non-competitive.

Prepare a Flow Diagram of Company Processes

A mechanical contracting firm created the TQM flow diagram illustrated in the figure below to
implement quality processes within the company.

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Focus on the Owner/Customer (External) & Surveys

Focusing on a customers concerns

Still one of the best ways of accomplishing quality improvement is obtained by focusing on
customers concerns, and by learning what those concerns are through owner/customer surveys.
Much can be provided by studying how your owner/customer feels about your service, your
attitude, and whether you would be recommended to another owner/customer. Several areas to
survey, and to take care to provide or honor, are listed here.

Safe operating procedures

Degree of communications

Accident experience

Planning

Attitude

Administrative procedures

Professional competence of the

project manager, superintendent, and
project engineers
Technical competence of the work
force
Overall responsiveness to
owner/customer requests

Appearance and conduct of the work

force
Condition of equipment

Coordination and supervision of

subcontractors
Appearance of the jobsite

Timeliness

The six principal elements of owner/customer satisfaction are:

Your product/service delivery

system
Your product/service performance
The general image of your
company
Your peoples level of
performance

The perceived price-value

relationship of your product/service
Your competitors strengths and
weaknesses

Surveying the customer

Successful TQM companies have asked their owner/customers the following questions.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

How well do we deliver what we promise?

How often do we do things right the first time?
How often do we do things right on time?
How quickly do we respond to your request?
How accessible are we when you need to contact us?
How helpful and polite are we?
How well do we speak your language?
How well do we listen to you?
How hard do you think we work at keeping you a satisfied owner/customer?
How much confidence do you have in our products or services?
How well do we understand and try to meet your special request?

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12. Overall, how would you rate the appearance of our facilities, products, communications, and
people?
13. Can you list any specific instances where we have fallen down?
14. Overall, how would you rate the quality of our service?
15. What could we do to improve our service to you?
16. Overall, how would you rate the quality of service provided by our competitor?
17. How willing would you be to recommend us?
18. How willing would you be to buy from us again?
19. Are we doing or not doing anything that bugs you?
20. What do you like best about what we do?
21. What parts of our service are most important for you?
22. What parts of our service are least important to you?
Many of these questions are from LeBoufs, How to Win Owners/Customers and Keep Them for
Life.

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Consider the Employee as an Internal Owner/Customer

In order to conduct an analysis of the internal processes within the company, the following steps
should be applied to the internal processes within a company.

List several of your internal owners/customers within your company

Choose one of these owners/customers to focus on for the application of this technique

Determine the Outputs (products, services, information) that must be provided to this internal
owner/customer

Determine the work Processes your company uses to produce these Outputs

Learn how your customers expectations are met and how satisfaction is measured

Provide a Quality Training Program

Which employees are trained first?

The successful TQM company provides training to employees in the order illustrated in the
figure below. The training program must begin with upper management, then training must be
provided for the remaining management, and the in-house trainers and facilitators. It cannot be
emphasized enough that if upper management is not trained and is not a viable, visible
participant from the beginning, then the program will not survive.

Upper Management

Remaining Management

In-House Trainers & Facilitators

Front-Line Supervisors

Non-Supervisory Employees

Team Training

Training of Subcontractors &

Suppliers

Continuous Training
To train employees in the order presented above, the following is recommended.

Areas of Training

Topics to cover

A, B, C

Cover basic awareness topics such as understanding quality, the

importance of owner/customer satisfaction, definitions, historical
background, principles of the gurus (Deming, Crosby, Juran, Ishikawa),
overview of TQM, benefits of TQM

Management
Training

Cost of quality: Identifying It and Tracking It

The role of management
Changing leadership styles in a TQM environment; internal
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owner/customer concept
Steps in implementing TQM
Structure needed, i.e., steering committee, process
improvement teams, facilitator(s), trainer(s), possibly a
corporate coordinator
Principles of team building
Formalized process improvement
understanding variation
measurement what, why, how
the seven tools of quality
quality improvement teams
Owner/customer and employee surveys
Employee empowerment
Malcolm Baldrige Award criteria

D
Front-Line
Supervision
Training

E
Training of NonSupervisory
Employees

F
Team Training

Need for quality, some definitions, overview of TQM, i.e.,

the ten elements or their equivalent, benefits of TQM
Company vision, mission, guiding principles
Company-planned steps for implementing TQM
Cost of quality: Identifying It and Tracking It
Changing leadership styles in a TQM environment,
employee empowerment, the role of the front-line
supervisor
Overview of formalized process improvement, role of the
steering committee, process improvement teams, facilitators
Need for quality, some definitions, overview of TQM, i.e.,
the ten elements or their equivalent, benefits of TQM
Company vision, mission, guiding principles
Company-planned steps for implementing TQM
Treating others as owners/customers
Employee involvement
How to operate as a team
Team-building exercises
Brainstorming
Understanding variation
Process improvement procedure
Seven tools of quality
Reaching consensus
Improvement exercise using actual company process
Subcontractors and suppliers conduct in-house training.

Training of
Subcontractors and
Suppliers

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How are management and other employees trained?

In order to implement the training mentioned above, the following process should be undertaken:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Select a consultant, community college, or other training

Train management
Select trainer, facilitator
Send trainer, facilitator to training
Trainer trains front-line supervisors
Trainer trains remaining employees
Establish a training committee
Orient short-term hires and new employees
Facilitator or trainer provides team training
Establish long-term, continuing program for training in quality management, leadership,
communication, technical skills
11. Evaluate all training
12. Improve training

Establish quality improvement teams

Quality improvement teams focus on . . .

In establishing quality improvement teams, a smaller company might assign one quality
improvement team. Larger firms might assign several, possibly with one quality lead team as a
guide for the other teams. Areas where quality improvement teams could begin investigating for
possible improvement are:

Increased Employee Value

Informed Employees

Technical Training

Quality Training

Employee Suggestions

Employee Participation

Higher Quality of Artistry

Personal Development

Good QIT member qualities are . . .

Representatives who are selected to be quality-lead team members should possess the following
attributes:

commitment to quality, customer satisfaction, and the success of the organization

good communication and interpersonal skills

a big picture view of the organization and of the industry

a strong commitment to learning and change

representation of a different area and level of the organization

good organizational skills

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Quality improvement team tasks are . . .

Quality improvement teams are active in the following task areas:

Identify the customers of the process

Determine customer expectations

Flowchart the process

Identify all of the inputs and interfaces

Identify the output(s)

Systematically review the procedures currently being used in the process

Collect and analyze available quantitative data

Determine the need for additional data

Identify the problem(s)

Determine the root cause of the problem

Determine potential solutions

Select a trial solution

Present recommendations to the steering committee

Implement the solution on a pilot-project basis

Analyze the data to discern if there has been improvement

The quality improvement team (QIT) is responsible for planning and managing the TQM
implementation process for the organization. The QIT is responsible for making TQM happen.

The QIT must take the lead in managing the cultural changes that TQM will require.

At least one member of the Senior Management Team (SMT) should be a member of the QIT.

The QIT reports to the Chief Executive Officer (CEO) and the SMT.

The QIT and SMT should hold a joint meeting to review the TQM effort at least quarterly.
Quality improvement team structure is . . .

A quality improvement team (QIT) meets on a regular basis. During the first months of the
TQM effort, the QIT will probably wish to meet once per week for 3 to 5 hours. In addition,
QIT members will spend an additional 6 to 10 hours per week on training, education, and QIT
assignments. After the TQM implementation plan is complete and underway, the QIT should
meet once or twice per month.
The QIT determines and defines the duties of each QIT member. Typical positions for members
are TQM Director or Coordinator; Communications, Education, and Training Coordinator;
Quality Measurement; Customer Satisfaction; and Employee Involvement and Satisfaction. The
types of quality improvement teams are permanent, temporary, preparation, planning, and
implementation. Facilitators hold an extremely important role in the success of implementation.
In the order presented here, the QIT plans the ongoing TQM education for: (1) QIT and SMT
members, (2) facilitators and supervisors, and (3) all employees.
The QIT reviews, approves and helps implement quality improvement plans, establishes the
TQM organizational structure and team structure for the company, procures (from management)
and manages the resources required for TQM implementation, solicits and evaluates Quality
Improvement Opportunities (QIOs), selects and commissions teams to work on QIOs, and
proffers rewards and recognition.
The permanent teams of the quality improvement process are based on the following areas of
concern:
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Key Objective Teams

Customer Satisfaction
Employee Morale/Satisfaction
Stakeholder Relationships

Functional Area QI Teams

Employee Involvement Teams

Natural Work Teams

Project Quality Teams

The temporary teams of the quality improvement process are:

Task Force QITs

The facilitators of the quality improvement process should retain the following characteristics:
Qualities of a good facilitator:
Is respected by people at all levels of the organization
Is organized
Is a good listener and communicator
Understands TQM principles and philosophies
Is objective and open-minded
Is a team player, one who likes to accomplish things
through others

Roles and duties

Organizes team meetings
Keeps meetings on track
Is record keeper
Procures needed resources and outside support
Communicates progress to QIT

Quality improvement teams address these special needs . . .

The principal items that quality improvement teams should address are discussed here. Note that
the items can be added or deleted as necessary, and are not listed in a particular order.

TIME

All participants, from the members to the steering committee, need

time to prepare and participate in these team activities.

LOCATION

Consideration must be planned for where the meetings will be held,

and where members can prepare for these meetings. It should be a
quiet area away from the work station.

SCHEDULE

Meetings should be on a regular schedule and, if missed, then

rescheduled within three working days for the sake of continuity and
to show the importance of these meetings.

STEERING
COMMITTEE

It must oversee and nurture, not drive, the program. An analogy to this
is how do you bring up your children to be confident, respected and
healthy, and to eventually become independent and make wise
decisions.

UNIONS

Get union members involved at the outset of a program. Ask them to

be participants in the steering committee.

PATIENCE

This is a long-range program and results come slowly. Patience must

be exercised continually.

VOLUNTEER

This is highly important. Members must want to join or depart from

teams freely.

ADVERTISE

Be consistent in the mode of advertising activities. Think it out before

implementing it to avoid a paper mill trap. Get all company
employees educated about teams - not a select few.

TRACKING

Some form of tracking is required but can become another paper mill

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which consumes too much time. Serious consideration for minimizing

paperwork must be given at the outset of your program and modified
as required.
TRUST

Lack of it, by management, will demotivate teams quicker than

anything. Likewise, the team members must trust those involved in
the program not to steal their problems or solutions.

LOYALTY

It can be secured if properly nurtured. Obtaining this must be a goal of

management.

TRAINING

This is so basic, but can delay a successful program needlessly by lack

of a good, practical training program. Every attempt must be made to
follow the training program, at all levels, once it has been documented
and approved.

10

Implement Process Improvements

Management interest and support

Focus on customer satisfaction

Identification of areas needing improvement

Employee involvement

Cooperative attitude between elements of the company

Viewing every person who is on the receiving end of a process as a customer

Fear driven from the company

Correctly composed teams

A system for selecting processes to be improved

Training for all employees in quality awareness

Training for teams in team procedures and disciplined problem solving

Improved communications outside the company

The structure approach to process improvement

1. Problem is brought to the attention of the steering committee
2. Steering committee forms a team to examine the process and make necessary
recommendations for improvement
3. Team meets, reviews its mission, and determines how often it will meet
4. Training is initiated for team members
5. Team meets weekly for an hour or two to analyze the problem and develop a solution
6. Solution is initiated on a pilot basis
7. Results of pilot study are examined
8. Solution is implemented company-wide

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Process Improvement
Suggested areas where quality improvement could begin are presented below.
Administrative

Project Management
and Engineering

Payroll

Invoices

Personnel
actions

Investme
nts

Insurance

Marketin
g

Training
(safety, quality,
technical)

Subcontracts

Partial
payment requests

Progress
review meetings

Estimating

Scheduling

Interfacing
with
architect/engineer

Shop drawing
review

Survey and
layout

Testing

11

Logistical

sing

ance

Construction

Storage
Layout
Warehou
Rough
grading
Delivery
Forming
Mainten
Placing
concrete

Placing
reinforcing

Erecting
precast panels

Framing
drywall

Pulling
electrical cable

Hanging
ductwork

Use the Tools of TQM

Seven classical tools of quality and process improvement, plus one, are presented below.

Tool
Flowchart
Cause and Effect
Diagram
Control Chart
Histogram
Check Sheet
Pareto Diagram

Scatter Diagram
Run Chart

Use
Portrays all the steps in a process. Helps understand the
process.
Portrays possible causes of a process problem. Helps
determine root cause.
Shows if a process has too much variation.
Portrays the frequency of occurrence.
Tabulates frequency of occurrence.
Visually portrays problems and causes in order of severity
or frequency. Helps determine which problem or cause to
tackle first.
Helps determine if two variables are related.
Shows variation and trends with time. Provides baseline
data, and helps to determine if a process is improving or
not.

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Presented here is an alphabetical listing of several quality improvement tools, followed by a

presentation of a few sample charts and diagrams.

Activity network diagram

Affinity diagram
Benchmarking
Brainstorming
Checksheets
Control charts: statistical
process control (SPC)
Cost-Benefit analysis
Cost of quality analysis
Cause-and-effect
diagrams
Customer surveys
Dot plot
Employee surveys
Fishbone diagram
Flowcharts
Focus group interviews

Force field analysis

Histograms
Is/Is-Not analysis
Interrelationship
Diagram
Interviews: Employee,
Customer,
Stakeholder
Matrix diagram
Motivating technique
Nominal group
technique
Operational definitions
Pareto charts
Pie chart
Plus - Delta
Prioritization matrices

Process capability analysis

Process decision program
chart
Productivity charting
Quality function
deployment
Regression analysis
Root-cause evaluation
matrix
Run chart
Sampling
Scatter diagrams
Solution-selection matrix
Stakeholder surveys
Stratification
Time plots
Tree diagram
Value engineering

Top-Down Flowchart
Simple, easy-to-construct charts that
emphasize the major steps of a
process. First, list the most basic steps
in a process or project. Then, below
each one, list the major substeps.

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Detailed Flowchart
Describe most or all of the steps in a
process, with varying levels of detail.
When needed, have the team as a
whole develop a top-down version,
then have smaller groups add levels of
detail.

Work Flow Diagram

Show the movement of materials,
people, or information within any
space. It is created by tracing these
movements on a sketch of the floor
plan or some similar map of the
workspace (or document).

Fishbone cause and effect diagrams.

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Control charts are time plots that also indicate the range of variation built into the system. They
are used to monitor a process to see whether it is in statistical control.

A histogram is a bar graph of a frequency distribution in which the widths of the bars are
proportional to the classes into which the variable has been divided and the heights of the bars
are proportional to the class frequencies.

Checksheets are structured forms that make it easy to record and analyze data. The best
checksheets are simple to use, make use of your operational definitions, and visually display the
data to reveal underlying patterns.

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12

What are the benefits of TQM?

The cost of quality

Why do we implement the above information into our companies? To make more money and/or
to stay in business. If you dont implement TQM/CI, it will cost your firm money. Its
managements choice to obtain these improvements. Failure to implement quality processes
results in a status quo situation where unnecessary costs remain and improvements are not
implemented. Noted here are the costs of nonconformance.
Cost of Quality

Cost of Nonconformance

The Cost of nonconformance

Cost Prevention

Rework
Recalls
Expediting
Removal of punch list items
Time extensions
Litigation costs and damages
Penalties and liquidated damages
Increased insurance costs

Accidents
Omissions
Errors
Poor Product Quality
Being Late
Lead us to

Areas where savings can be derived by making improvements are noted here.

Inspection of direct hire work

Inspection of subcontractor
work
Inspection at vendor source of
supply
Inspection of shipments

Review of shop drawings

All training costs, including
safety
Facilitator costs
Salary of quality coordinator, if
needed

Meetings of the steering

committee and quality
improvement teams
Administration of the quality
management program
Reward system

Whats it going to cost us to do TQM? you ask. Well, what is it

costing you now NOT to do it? . . . What is your cost of quality? IF
you dont have the real facts, the truth is you really dont know, . . .
but you probably sense what your cost of quality is costing you. You
can feel it, and its not a comfortable feeling.

Cost-Categories for unacceptable work

Work areas that affect cost are listed here:

Rework/revisions

Write-offs

Complaint resolution

Unbilled charges

Insurance premiums/coverage

Overdue receivables

Remove/replace

Claim defense

Bonding limits and costs

Change order redesign

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Ineffective interdisciplinary
coordination

Accept as-is, with credit to

client

Ineffective trade
coordination

29

(engineers and architects)

Invoice errors

Call-backs

Disputed invoices

Unpaid invoices

Unrecorded time

Unpaid time

Unplanned premium overtime

Repetitive quality assurance

Accept as-is, with no extra

compensation

Unplanned field services

The high cost of poor quality

Facts to consider when counting the high cost of poor quality are:
What is poor quality costing you?
Waste is the opposite of quality.
The tangible costs of poor quality include rework, accidents, missed schedules, unused
labor, liability and insurance, and scrapped materials.
The intangible costs of poor quality include lost customers, never-had customers who
went elsewhere because of what they heard from unhappy customers, and poor
morale among employees and stakeholders.

Four types of quality cost

The four types of quality cost are:
Prevention cost All costs associated with error prevention in a product, process or service.
Appraisal cost All costs associated with the assurance to conformance of quality
standards/requirements, inspection, testing, observation, etc.
Internal failure cost All costs associated with the evaluation and correction of the design
before it is released for construction, and all costs for rework on a project before it is turned
over to the owner.
External failure cost Similar to internal failure costs except that they occur after the
output has been turned over to the next processor or user. External failure costs often
include significant intangible costs of lost reputation and good will.

Summary
The highly competitive economic conditions that exist in todays construction industry require
that construction companies seek to achieve excellence to remain competitive. This excellence
can be achieved with a new style of management that focuses on customer satisfaction, the
elimination of waste, continuous improvement, and employee involvement.
To be competitive in todays market, it is essential for construction companies to provide more
consistent quality and value to their owners/customers. Now is the time to place behind us the
old adversarial approach to managing construction work. It is time to develop better and more
direct relationships with our owners/customers, to initiate more teamwork at the jobsite, and to
produce better quality work.
Such goals demand that a continuous improvement (CI) process be established within the
company in order to provide quality management.
Meeting owner/customer requirements (providing customer satisfaction) is a primary objective
of quality management, and contractors who are the suppliers of construction services must
address owner/customer requirements if they are to succeed. The construction industry exists to
provide a service to its owners/customers who are becoming more demanding and are seeking
higher quality, better value, and lower costs. These owner/customer requirements mirror the
economic pressures they face in their own businesses. Implementing total quality management /

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continuous improvement in managing everyday construction activities is relevant to all those

who participate in and contribute to the construction process.

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