Quality Management (Archived)

RT-010 Topic Summary
RT 010

Overview

The objective of the Quality Management Task Force study was to identify and quantify the magnitude of rework costs resulting from quality deviations in design and construction, and to present data that will encourage the construction industry to implement systems such as the QPMS to reduce these costs.

The average cost of rework on industrial projects exceeds 12 percent. For the $140 billion U.S. construction industry, this means that we waste in excess of $17 billion annually. These costs can be significantly reduced through better quality management. Design deviations (changes, errors, and omissions) accounted for roughly 80 percent of the increased costs, while construction deviations accounted for only about 20 percent.

A Quality Performance Management System (QPMS) has been developed that can be used as a management tool to identify and reduce deviation costs. 

The following conclusions can be drawn concerning the cost of quality aspects of the design, construction, and startup of engineered projects:

  1. Defining quality as conformance to established requirements provides an objective basis for measuring the costs of quality, provided the requirements are clearly stated.
  2. Quality management activities can be adequately tracked using a small number of categories. 
  3. Omitting from the current system certain impact costs associated with deviations, the costs of correcting deviations can be adequately tracked using a small number of categories.
  4. Existing work package breakdown structure (WBS) cost coding systems can be easily adapted to include the major categories involved in the cost of quality. 

The QPMS costs little to implement, and provides a simple, cost-effective method for tracking and analyzing the cost of quality in the construction project process. This provides management with the potential for a significant improvement in benefit-to-cost ratio through utilization of the QPMS. The cost of quality should be tracked on all engineered projects. 

Key Findings and Implementation Tools

1 : Quality Defined Against Established Requirements

Defining quality as conformance to established requirements provides an objective basis for measuring the costs of quality, provided the requirements are clearly stated.
Reference: (RS10-2)

2 : Defining the Cost of Quality

In the design, procurement, construction, and startup phases of a project, the cost of quality consists of two main parts: 1) the cost of quality management efforts, and 2) the cost of correcting deviations.
Reference: (RS10-2)

3 : Use of Quality Tracking Categories

Quality management activities involved in design and construction (including startup) can be adequately tracked using a small number of categories (approximately 31, of which 10 also can be performed on a reworked item).
Reference: (RS10-2)

4 : Effective Tracking of Quality Costs

Excluding impact costs associated with deviations, the costs of correcting deviations can be adequately tracked using approximately 80 categories, and can be identified for cost tracking by cause (owner, designer, vendor/fabricator, transportation, constructor, or other), type (error, omission, or change), and time of detection (design, procurement, construction, or startup).
Reference: (RS10-2)

5 : Mapping Quality Costs into Project Cost

Existing cost breakdown structure coding systems can be easily adapted to include the major categories involved in the cost of quality for design, procurement, construction, and startup.
(RS10-2, p. 11)   
Reference: (RS10-2)

6 : Implementation Tool #1

RS10-1, The Quality Performance Management System (QPMS)

Is a management tool providing for the quantitative analysis of certain quality-related aspects of design and construction by systematically collecting and classifying the costs of quality. The cost of quality is defined as the cost of correcting deviations (rework) plus the cost of quality management activities. (RS10-1, p. 23)
Reference: (RS10-1)

Key Performance Indicators

Improved cost, Improved quality (reduced errors & omissions), Improved performance/achieved success

Research Publications

Total Quality Management: The Competitive Edge - RS10-4

Publication Date: 04/1990 Type: Research Summary Pages: 22 Status: Archived Supporting Product

The Quality Performance Management System: A Blueprint for Implementation - RS10-3

Publication Date: 02/1990 Type: Research Summary Pages: 18 Status: Archived Supporting Product

Quality Management Organizations and Techniques - SD-51

Publication Date: 08/1989 Type: Source Document Pages: 101 Status: Archived Reference

Measuring the Cost of Quality in Design and Construction - RS10-2

Publication Date: 05/1989 Type: Research Summary Pages: 18 Status: Archived Supporting Product

Costs of Quality Deviations in Design and Construction - RS10-1

Publication Date: 01/1989 Type: Research Summary Pages: 26 Status: Archived Tool

Measuring Design and Construction Quality Cost - SD-30

Publication Date: 10/1987 Type: Source Document Pages: 118 Status: Archived Reference

Costs of Quality Deviations in Design and Construction - SD-29

Publication Date: 08/1987 Type: Source Document Pages: 166 Status: Archived Reference


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