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AACE International
209 Prairie Avenue, Suite 100
Morgantown, WV 26501
U.S.A.
In accordance with the requirements of partial fulfillment for recognition as a Certified
Cost Engineer by AACE International, I hereby submit the paper entitled:
TOTAL QUALITY MANAGEMENT
IMPLEMENTATION IN CONSTRUCTION INDUSTRY
Candidate No.: 29453
November 23, 2000
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TOTAL QUALITY MANAGEMENT
IMPLEMENTATION IN CONSTRUCTION INDUSTRY
CANDIDATE NO.: 29453
DATE: NOVEMBER 23, 2000
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TABLE OF CONTENTS
TABLE OF FIGURES ...................................................................................................... IV
ACKNOWLEDGEMENT ................................................................................................. V
ABSTRACT...................................................................................................................... VI
I. INTRODUCTION........................................................................................................... 1
2. BACKGROUND............................................................................................................. 2
3. WHAT IS TOTAL QUALITY MANAGEMENT (TQM) ............................................. 3
4. CONCEPT OF TQM AND ITS UNIQUE ASPECTS ................................................... 4
5. TQM ELEMENTS.......................................................................................................... 5
5.1 Commitment and Leadership.......................................................................... 5
5.2 Training........................................................................................................... 6
5.3 Team Building................................................................................................. 7
5.4 Techniques ...................................................................................................... 8
5.5 Cost of quality................................................................................................. 9
5.6 Supplier and customer involvement.............................................................. 10
5.7 Implementation ............................................................................................. 12
6.0 MEASURING AND VERIFYING THE IMPLEMENTATION............................... 13
7.0 PITFALLS TO TQM IMPLEMENTATION, IMPACT AND SOLUTION:............. 13
8.0 REASONS FOR TQM EFFORT FAILURE.............................................................. 15
9.0 SUMMARY AND CONCLUSIONS ......................................................................... 18
10.0 BIBLIOGRAPHY..................................................................................................... 19
Table of figures
Figure. 1. Juran s Triple role concept applied to construction.......................................... 11
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ACKNOWLEDGEMENT
During my technical paper work, I had received a great support and help from my
colleagues of Zamil Steel Industries. I am working with. Special thanks are due to Mr.
Mubashir Q. Mirza, Certified Cost Engineer and Mr. Mohideen, Certified Cost Engineer,
as they have provided a constant source of energy in preparing the paper. My
acknowledgments are due to the King Fahd University Library which has been a good
source of information for my work.
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ABSTRACT
In today s world of globalization and pluralism, organizations are facing the formidable
task of setting sound strategies and integrating their staff with their strategic plans. In its
simplest terms, the integration of staff planning with business planning requires that
when the strategic decisions are made regarding direction of the business, the competence
of executives should comply with the desired objectives, and vice versa.
The purpose of this paper is to present a strategy for implementing TQM in construction
companies that would help become competitive and profitable, and to enjoy growth. An
attempt has been made to define TQM relevant to the construction industry. The concept
and unique aspects of the quality management in the construction industry are discussed
in the initial sections.
Customer satisfaction and continuous improvement which are the fundamental goals of
TQM and thereby elements on which it is based are then discussed. Six elements that
form the framework that support TQM principles are presented. They include
commitment, training, team building, techniques, cost of quality, supplier and customer
involvement and implementation. Commitment and leadership from top management
essential to TQM implementation is stressed. Triple role concept of Juran has been
presented to show similarity between manufacturing and construction industries. Pitfalls
to TQM implementation, impact and solutions, some of the reasons for TQM effort
failure in construction industry are discussed.
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I. Introduction
Traditionally quality has been a term used to describe a desirable attribute of a company s
product of service offering. Some of the definitions that have been used by experts in
quality management field are:

conformance to requirements , Philip Crosby

fitness for use , Dr. Joseph M. Juran

meeting or exceeding customer expectation at a cost that represents value to
them , H. James Harrington

totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs , ISO 8402, ASQC, and ANSI.
There is no single definition of quality which can universally be applied to all types of
companies in different industries, supplying all varieties of products and services.
However, evaluating quality is not just a question of meeting customers expectations,
rather of exceeding them.
The products or services pass through different processes before they reach the
customers. The quality of the product or service should be maintained at a competitive
level through out all the stages or processes in order to exceed customer satisfaction.
Experts in the quality management field believe that this can be achieved by
implementing Total Quality Management (TQM).
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2. Background
In the 1950 American industry was enjoying a boom. Whatever was made could be sold.
Few industries headed the work of the man called Deming and his ideas about Total
Quality Management. In Japan however, things were different. Good stamped made in
Japan were known for poor quality and high price. Japanese industrialists were very
receptive to the ideas of Deming on TQM and set about implementing them. By the mid
1970 s Japan was beginning to seriously undermine its American and other western
competitors. First in cars, then in the whole range of goods including videos, Hi-fi and
computers, the rest is a history. The whole world started taking TQM seriously. A
number of years ago, the xerox office products division lost more than 50%of its market
share in copiers to Japanese competitors. To stem the slide, the company introduced Total
Quality Management (TQM) concepts in to its operations. In one of the early TQM
success stories, xerox regained market share, lowered costs, improved quality and
boosted profits. Consider the experience of companies which have adopted the principles
of TQM. Eastman Kodak produces film with fewer than 1 defect per million unit.
During one tracking period, L.L. Bean shipped 500000 packages without a single error.
Motorola estimated that it saved $ 2.4 billion in five years through an aggressive TQM
program.
In early 1930s, Mary Parker introduced a new concept in the human relations school.
The concept suggests a system of cooperation as a way to overcome our physical,
biological and environmental limitations instead of competition that represents the
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conflict ethic. In 1950s the work groups and work councils started to emerge in the
industrial societies of Western Europe. The idea of the cooperative ethic was adopted and
improved by Rensis Likert to cover not only the integrating roles across subunits of an
organization but the entire organization in what is called the linking pin . The
cooperative ethic constitutes the foundation of the total quality management. (Korukonda,
Watson & Rajkumar 1999). The real application of TQM in the United States started in
the late 1970s when the technique was adopted by large American corporations in an
attempt to compete with their counterpart in Japan. (Chatfield 1995).
3. What is Total Quality Management (TQM)
TQM is a philosophy, a set of tools, and a process whose output yields customer
satisfaction and continuous improvement. This philosophy and process differs from
traditional philosophies and processes in that everyone in the company can and must
practice it. It espouses win-win attitude, differentiates cost versus price, and provides
added value.
TQM combines cultural-changing tactics and structured technical techniques whose focus
is on satisfying the needs of internal customers and, hence, external customers. TQM
requires that the executives are involved and committed, not just interested, and the focus
is on implementation. Results of TQM include error-free processes which deliver
products and services fit for use, on time, with competitive pricing and good value.
Above all, TQM ensures satisfaction of all customer requirements to retain those
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customers improving internal processes to increase profits; and generating new business
from new products, services, and markets.
When properly carried out TQM becomes integrated into all aspects of the corporate
identity. TQM s scope covers all functions within a construction company and from
design, construction and sub-contracting. The most successful method requires a basic
foundation of total commitment from top management and an integrated approach to
training and implementation.
4. Concept of TQM and its Unique Aspects
The main concept of TQM is the involvement of all employees at all levels to work as
teams in the problem solving process. Teamwork makes the subunits emphasize not only
their own outcomes but also the outcomes of others. Also, the team members are given
the necessary power to carry on their duties. The assumption is that non-managerial
employees can make considerable contributions in favor of their organizations if they are
properly prepared and empowered. In the empowerment process, the employees are
provided with better information and skills and delegating authority to perform more
tasks. Moreover, empowerment participates in providing employee satisfaction which
will lead to a higher performance and will definitely results in customer satisfaction.
Everyone in the company must practice TQM and that gives it its uniqueness among the
traditional philosophies. The quality of a product or service and customer satisfaction are
not the responsibility of the QC/QA departments any more. When totally implemented,
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TQM revolution will eliminate the quality department from the organization (Korukonda,
Watson & Rajkumar 1999).
5. TQM Elements
5.1 Commitment and Leadership
Commitment is needed from entire corporate structure. This concept is not easily
embraced by most top executives. Traditionally executives role is of giving directions,
their new role should be one of giving support to the managers, workforce, and ultimately
to the customers; likewise, the manager s role should be to support the work force and
customers and the work force to support the customers. Organizations and companies
cannot guarantee employment

only customers can. Therefore, all the focus is on
customers.
Construction industry management cannot be excluded from Deming s proclamation, it
would be a mistake to export American management to a friendly country . The
prominent method of management practice in the United States today, including the
construction industry, is management by control, not by participation (Burati, 1994).
Forced by international competitive pressures and increasing demands for quality
products and services, industries are reevaluating the effectiveness of management by
control.
In construction terms, cost, schedule, and possibly quality goals are established for each
product. Project managers are rewarded on the basis of meeting these goals. This
method has been somewhat successful. It is simple logical, and consistent. But there are
problems when the work gets displaced by the controls themselves.
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5.2 Training
Under TQM, quality becomes everyone s responsibility and the training plan must be
targeted for every level of the company. There should be customized training plans for
management, engineers, technicians, home and field office staff, support personnel, and
field labor.
Many construction companies that had safety forced upon them with the formation of the
Occupational Safety and health Administration have proven the cost effectiveness of their
safety programs and now use their safety records as a marketing tool. Some of the same
techniques used to instill safety awareness in craft labor may be adaptable to instill a
similar quality awareness. It is easy to envision using a good quality performance record
as a strong marketing tool. An orientation to the basic concepts and procedures of TQM
provides employees with fundamental knowledge that can be linked to the instruction of
the more technical topics.
Employees should be trained and instructed in the basics of TQM, team problem solving,
interpersonal communication and interaction, cause-and-effect analysis and the basic
statistical methods. Training in those fields is beneficial to any quality improvement
effort.
Because of the nature of the construction industry, the work force is transient and
unstable and that could limit the benefits gained from the training sessions. However,
once TQM concepts become widely accepted, the transient nature of the construction
work force will not be a problem. An employee who joins a new company requires less
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training effort about the company specific TQM information because he has already
received the basic training in the previous company.
For the training effort to succeed, the following points should be considered:
a. Training should cover both technical and non-technical issues and also address
human behavior.
b. Training should involve everyone and should be conducted by managers.
c. Training subjects should be relevant to the trainee particular job and must be
applied quickly.
d. Follow-up training is essential; it should be a part of overall training plan and
should be continuous.
e. Methods and techniques taught through training should be applied to the job. The
effort should be follow a specific plan, and its implementation and effectiveness
are carefully tracked.
5.3 Team Building
A team is a group of people with different backgrounds, skills, and abilities who work
together to achieve clearly defined common goals through clear communication and
action. Teams are an integral component of the TQM process because they provide the
leadership necessary to achieve the goals established by the company. Teams are self-
maintaining through regular evaluations, which keep them focused on their goals. Once
the goals or objectives have been achieved, the teams are discontinued.
Formation of teams underlines management s commitment to TQM through dedication of
resources and the establishment of an infrastructure, which will enable the organization to
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begin and sustain a continual improvement process. The group approach to problems
solving gives a new dimension to the organization. With people in the habit of working
together, new lines of communication and cooperation are established. Organizations
that fail to develop these cooperative behaviors encounter duplicated effort, frustration,
and the inability to efficiently respond to challenge. There are four main stages of team
building, they are: forming, storming, norming and performing.
5.4 Techniques
Purpose of techniques is to provide the employer at all levels in any function be it
corporate level, senior executive management, project management, design, construction,
procurement, project control, field office and job site administration with basis for
measurement, statistical process control, and problem solving.
Statistics is used for computing measures of location and variation of the process
distribution. These can be used to estimate the process distribution and determine if the
process is meeting the requirements.

Mean or average: the average or mean of the process is an unknown value and is
estimated using the average or mean of the sample. The value of average
indicates where the center of the process is located.

Measures of variation: the amount of variation, spread, dispersion of the values in
a distribution must be expressed by a numerical value. If the values are grouped
closely to the average, the value of the measure of variation should be small. If
the values are widely spread out from the average, the value of the measure of
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variation should be large. Two commonly used terms to quantify are the range
and standard deviation.

Range: range is the simplest measure of variation to compute and is combined
together with ranges of several small samples from a process to estimate the
variation of the process distribution.

Standard deviation: standard deviation equals the square root of the variance.
However, in construction industry statistical methods include: histograms, check sheets,
cause-and-effect diagrams, Pareto diagrams, graphs, control charts and scatter diagrams.
These tools are essential to teams working in TQM problem solving process.
5.5 Cost of quality
Cost of quality is considered by many as the primary quality measurement tool. It is used
to track the effectiveness of the TQM process, select quality improvement projects, and
to provide cost justification to doubters. The concept of cost of quality is particularly
appealing to the cost-conscious construction industry. Quality costs are broken down in
to two categories (Ledbetter 1989).
Quality costs = quality management costs + deviation costs
Quality management costs = prevention costs + appraisal costs
In terms of construction, 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. Design or constructability reviews might be considered prevention costs,
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while inspection is an example of an appraisal cost. Deviation costs are those resulting
from not meeting the requirements. Some deviation costs are incurred on the project site
due to scrap, rework, failure analysis, re-inspection, supplier error, or price reduction due
to nonconformity. Other deviation costs are incurred once the client has the project.
These include costs for adjustment of complaints, repair costs, costs for handling and
replacing rejected material, workmanship, or equipment, costs for correcting errors, and
litigation costs.
5.6 Supplier and customer involvement
The function of construction industry is to provide customer with facilities that meet their
needs. By ensuring quality at each stage in construction process, and thereby minimizing
costly rework, the quality of the final product should satisfy the final customer.
Customer orientation recognizes that each work process consists of stages. During each
stage, customer feedback is obtained to determine the changes required to better meet the
customer needs.
Many parties are involved in the production of a product. The quality of such a product
depends on the relationship among the different parties; the customer, the supplier and
the processor. The quality of the product at any stage depends on the quality of the
previous stages. Figure 1. represents the relationship between the owner, designer and
constructor.
Joint teams are responsible for creating the link between the customer and the
organization. Those joint teams facilitate the communication and measure the
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requirements of the customer to convey it to the intended departments in the organization.
The joint teams goal is to increase the level of customer satisfaction.
Figure. 1. Juran s Triple role concept applied to construction
Constructor
Supplier

Processor of
operation

Supplier

Supplier

Processor of
operation

Supplier

Supplier

Processor of
operation

Supplier

Owner

Designer

Requirements

Plans &

Specs.

Facility

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5.7 Implementation
Objective of implementation of TQM is to retain existing customers, improved profits,
and create new business. There are no set procedures for implementing quality
improvement, there are some common steps that have been successful. And are
discussed in the following:

Preparation, planning and implementation: senior management should familiarize
with concepts, tools, and methods of TQM.

After familiarizing with TQM, it should begin to assemble the supporting
structure for implementing TQM on selected pilot projects. The quality support
structure comprises of an advisory committee, a quality consultant group, and
steering committee. The advisory committee, together with assistance of the
quality management consultants, should then begin formulating the quality
approach for the company. Steering committee will work at the departmental
level for directing the implementation effort down in to the departments.

As the implementation process gains momentum, the effort of working on the
pilot project should be extended to the rest of the company. Control points and
measures of the implementation effort should be included in the implementation
plan to track its effectiveness and make any necessary improvements. As a next
step it should be announced to the employees management s commitment to
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implementing TQM followed by forming steering teams at the departmental
levels.
The quality consultant group assists the steering teams in getting the TQM process down
into the quality teams within the department. Training is carried out as the quality teams
begin to form and is applied to real problems as soon as possible.
6.0 Measuring and Verifying the Implementation
The implementation is a planned and controlled process. As the process progresses, its
effectiveness should be compared against the control points and measures established at
the preparation and planning stage. These measures should be carefully monitored and
their conformity to the initial plan should be verified. Any deviation from the established
plan should be investigated and removed through the Deming s Plan, Do, Check and Act
(PDCA) problem solving process.
7.0 Pitfalls to TQM Implementation, Impact and Solution:
1. Lack of leadership: Lack of commitment from executive level is caused by not
understanding TQM. These executives believe that their management styles of
the past will work for the future. Without executive support TQM cannot be
implemented, several companies who decided not to use TQM have gone out of
business. As a solution to this problem experts in TQM should be invited to
present a seminar to the executive staff to influence them to accept the TQM idea.
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2. Non-formalization of an organizational structure and accountability: As a result of
the above implementation of TQM is either very slow or does not happen at all.
People do not know the rules or not held accountable for the results. Allow
sufficient time to develop an organizational structure with accountabilities, policy
and operating procedures.
3. Executive committee does not meet regularly to review the progress of TQM
implementation: The impact of this irregularity would result in fall of business
below expectations. People will perform as expected only in areas that are
inspected. The culture will not change unless it is being monitored. The
executives should monitor for which they are responsible, and not delegate this
task to others. The executives should hold an executive board meeting at regular
intervals.
4. The resource committee

does not meet consistently

takes more teams than it can handle

does not give the teams a written charter

does not require the teams to present their progress using standard format

allows the teams to miss their target dates

does not require true measurements as evidence of a project success

teams are allowed to deviate from the process without permission from the
resource committee
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does not provide feedback to the team leaders on performance and
behavior.
8.0 Reasons for TQM Effort Failure
It has been known that some companies failed to improve profit, reduce defects or
acquire customer satisfaction even after the implementation of TQM principles. Some of
those companies, like Wallace Company, won the Malcolm Baldrige National Quality
Award. This award was established in 1987 and is presented to companies with
excellence quality achievements in the United States. (Chatfield 1995)
Failure in the implementation does not mean failure of the method or principles of TQM.
Companies that failed got some common characteristics, which can explain the reasons
behind their failure. Those reasons are discussed in this section. (Tatikonda 1996)
1. Lack of Vision
Visioning is the process of visualizing the future and trying to benefit from its
opportunities. Visioning shows where the organization should go, the action plans it
should follow and the structure and systems of the organization required to reach the
target. To create continuous improvements, companies have to change the way they
think in order to achieve success. Xerox, for example, conducted surveys that
included its own customers and those who bought competitor s product in a step to
develop operating goals.
2. Lack of Customer Focus
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Customer satisfaction changes continuously and therefore must be put in focus to
understand what are the customer expectations and we can meet them.
3. Lack of Management Commitment
Most TQM programs failure caused by lack of management commitment. Top
management has to show its commitment by attending training sessions and
participating in decision-making. A survey shows that 70% of the manufacturing
executives delegated many of their responsibilities to middle management. Such a
behavior can negatively affect TQM program and question the commitment of top
management.
4. Training with no Purpose
Irrelevancy of the quality training participates in worsening the situation. Training is
costly and if we did not know what are the expected benefits it became like a waste of
time. Employees should know the nature of the training, the required knowledge and
how it will be applied.
5. Lack of Cost and Benefit Analysis
Companies should be able to measure the costs of lost sales and customer defections
in addition to the visible costs of warranty and training. The benefits of quality
improvements should also be measured and the potential revenue lost due to customer
defections must be known.
6. Organizational Structure
The role of management in firms trying to implement TQM must be clear. The layers
of bureaucracy will not help the organization no matter what amount of TQM training
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is given to the employees. Open communication lines between departments,
empowerment and flat organizations are very important elements in achieving TQM
success.
7. Lack of Measurements or Erroneous Measurements
The number of hours and the amount of money spent on training are not the
appropriate tools or measures of quality improvements. Relevant performance
measures are required to better evaluate and quality improvements. Performance
measures should include process and result measures.
8. Rewards and Recognition
Organizational improvements stand on three supports: strategic golas, performance
measurements and rewards / recognition system. In the TQM effort, teams with
outstanding performances should be recognized and rewarded.
9. Accounting Systems
Accounting systems has contributed to TQM failure. Most of the those systems
charge the cost of scrap, rework and warranty to the company overhead resulting in a
misleading index. Moreover, lost of sales and the cost of customer dissatisfaction are
not reflected in the accounting records.
10. Lack of corporate commitment to TQM.
11. Lack of defined corporate strategic direction due to not conducting strategic business
planning.
12. Lack of tactical plan to achieve any specific critical business success factor.
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13. Lack of a training curriculum tailored to the company s needs and the identification
of specific business results to be achieved.
14. Lack of proven process to implement.
15. Lack of review of progress with appropriate support and/or corrective action.
16. Lack of recognition of performances, or the opposite, consequences for non-
performers.
Unfortunately, the high rate of failure of TQM programs has created many casualties.
Many seasoned companies have gone by the wayside, careers have ended, and layoffs
have been prevalent. Those who survived are skeptical or total non-believers.
In general, superficial knowledge of TQM will definitely lead to unwanted results. The
vagueness in the goals for improving customer benefits should be cleared. (Eskildson
1994).
9.0 SUMMARY AND CONCLUSIONS
Implementing a Quality Management System will undoubtedly result in a positive change
in construction industry. TQM implementation process should evolve basically from the
corporate level and it should continue till the lowest hierarchical level. Quality
improvement programs shall begin with training to imparted to the employees for the
fundamental knowledge that links both technical topics, this would be beneficial to both
the employee and the employer as the employee would get better pay offs if he or she
joins a different organization, as for the employer the trained staff would yield better
results in terms of overall productivity and customer satisfaction. The next step in this
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order is to develop teams in order to apply techniques within an organization for problem
solving and continual improvement of skills.
The major milestone stages on the TQM road are: commitment (Awareness,
Understanding and Maturity stages), training, team building, application of techniques
and implementation. As organizations continue to travel on the TQM road they graduate
from one stage to the next depending on the progress made, as assessed at regular
intervals, internally and externally.
Many questions about the implementation of TQM in the construction industry still
remain. The public construction sector and the transient craft labor force are factors to be
addressed. However, this should not discourage efforts to adopt TQM. Establishing long
term owner-contractor relationships and avoiding low bid contracts are typically goals of
the TQM philosophy. These are contrary to the currently accepted and allowable public
sector contracting strategies. There have, however, been some efforts to sector
contracting strategies. There have, however, been some efforts to promote contracting
strategies for public projects other than accepting the low bidder. The construction
industry can successfully implement TQM by adapting the techniques that have been
successful in the manufacturing industry.
10.0 Bibliography
1. Burati, J., (March 1992), Quality Management Organizations and Techniques,
Journal of Construction Engineering and Management, Vol. 118(1), 112-128.
2. Chatfield, M., (Autumn 1995), TQM It Really Works, Public Roads, 24-27.
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3. Eskildson, L., (April 1994), Improving the Odds of TQM s Success, Quality
Progress, 61-63.
4. Hawley, K., (October 1995), Where s the Q in TQM, Quality Progress, 63-64.
5. Korukonda, R., Watson, J., (Winter 1999), Beyond Teams and Empowerment: A
Counterpoint to Two Common Precepts in TQM, Sam Advanced Management
Journal, 29-36.
6. Hradesky, L. (1995), Total Quality Management Handbook, McGraw Hill,
Inc., USA.
7. Tatikonda, L., & Tatikonda, L, (1996), Top Ten Reasons Your TQM Effort Is
Failing To Improve Profit, Production and Inventory Management Journal, 5-
9.