1997 AACE INTERNATIONAL TRANSACTIONS

PC.01 Beyond Project ControlsThe Quality Improvement Approach

Michael G. Sypsomos

he cost of quality is a bargain, considering the significant savings that result from implementing quality improvement programs, as well as other byproducts including future project savings resulting from lessons learned. This paper presents a proven method that uses existing project controls tools and methods combined with total quality management methodology. Data received from a Construction Industry Institute survey strongly showed that project success at leading companies is mainly attributed to hard measurements such as cost, schedule, and safety in addition to soft factors such as leadership, employee satisfaction, and teamwork for determining the performance of projects. But, although the trend in the construction and engineering industry is to use total quality management in the engineer-procure-construct (EPC) processes, companies have yet to combine the quality improvement framework with the conventional project management and project controls performance measurements. Each one of us, at one time or another, has fallen into the trap of allowing emotional decisions to be the determining factors in resolving or correcting a problem. But with the combined use of TQM and project controls tools, not only do we arrive at the most intelligent decision, we can also set indicators to trigger an alarm when things dont go well and when they exceed or do not meet an acceptable range of performance. Then, project managers and project controls specialists can follow the structured thinking process of quality improvement to perform a detailed analysis, identify the root cause of the problem, and determine the means to correct it. MEASURING QUALITY IMPROVEMENT

manager, project and process engineers, and corporate management, to the company shareholder. For that reason, it is very important that acceptable performance levels are developed and agreed upon by all team members (owner and contractors) at the earliest possible time in the life of a project. Measurement Measurement is a broad-based function in total quality management. It is defined as a quantified statement of extent (counts, percentage rates, etc.). The improvement objective of TQM creates a before-and-after scenario that implies some form of time-based evaluation, normally past/present versus the future. Opinion data as to some results is often sufficient in our project controls work, using past experiences, first-look shallow/soft report data, and even a rare management edict. More often though, decision-makers are convinced only by hard data information provided from a valid measurement process, such as cost and schedule progress, earned value, and performance. Many companies, despite having invested large amounts of time and money in developing measurement systems for the total quality management (TQM)/process improvement processes, in parallel to the expense incurred in their project controls measurement efforts, report frustration and a lack of confidence that they are doing the right things right. This paper will look at closing the gap between the two usually parallel efforts and focus on using the TQM/continuous improvement tools to maximize and optimize the benefits of project control systems. Metric Metric, in a new-jargon dictionary, is defined as a measurable outcome that indicates a degree of success in achieving some quality objective. Figure 1 depicts metric and measure examples and areas they apply. criteria for effective measurement In project controls and project management, as in any other group, in order for a system of measurement to be effective, it must be carefully formulated and must be managed in a disciplined manner. Measures also must be significant to the organization (usually generated by the quality deployment process), meaningful and appropriate to the team charged with performing them,

Measure Measure is how well you follow the execution steps (not only the end result). Its a standard for determining extent, dimensions, etc. By identifying the process and following it closely, you can accomplish what most companies cannot, which is using measurements for immediate improvements, rather than using lessons learned only in future projects. Keep in mind that quality doesnt have to always be of the highest level. A product or service could have the same end result (could do the same job), regardless of whether more money or time has been spent. The balance between quality meeting the requirements and satisfying customer expectations is an enormous variable, because not all customers have the same expectations. Customers are a composite group of individuals with different priorities and expectations. For project controls, the customers range from the project

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1997 AACE INTERNATIONAL TRANSACTIONS I first came in contact with the tools for quality improvement at Florida Power & Light, accurate, where we were taught to apply unbiased, and these tools to our work. We used them in meetings, presentations, simply measurable. and even during informal conversations. Informal brainstormINDUSTRY LESSONS ing sessions over the lunch hour ON QUALITY on ways to improve processes IMPROVEMENT often created great saving ideas A study was conducted for the company. What an eyein 1992 by the Construction opener that was! I knew that it Industry Institute involving was the solution to overcome 34 leading construction comfrustration and difficulty making panies implementing TQM/ the right decisions and getting process improvement. The my point across. Since then, I following are some of the have learned to think in terms of lessons learned by the study. the tools for quality improve Although many of the ment, not only in my daily work findings of the measurebut also in my personal life. ments will result in an This is not intended to be a action to improve certain Figure 1Measure/Metric Matrix complete course in TQM tools processes, it could prove but rather a demonstration of valuable and time saving in the beginning to analyze and imhow some of the tools and techniques can be used in project controls prove some of the processes that are obviously needing imto make our jobs easier. Using these problem-solving processes, provement. along with the tools of quality improvement, you will learn how you Management often sends out teams without charters. These can make a meaningful contribution to your work and life. teams, without some direction or training, more often than not, will develop a set of measures after a long, painstaking process USE OF DATA and then they will fall apart. Daniel Boorstin said that information is random and miscella Teams fell apart because there was no a step-by-step process. neous, but knowledge is orderly and cumulative. Before information can be useful, it must be analyzed, interpreted, and assimilated. A standard set of proven management measures needs to be deIn short, raw data have to be digested before they can be useful. This veloped so that they are not reinvented for each new project. process of digestion has been generally neglected in our education If a measure is not used, eliminate it. system. This deficiency has been called numerical illiteracy. A good indicator of a measures effectiveness is the extent to Numerical illiteracy is not a failure with arithmetic, but instead a which you take action based on what it tells you. failure to know how to use the basic tools of arithmetic to understand numbers and data. Finally, some of the most important indicators used by the participants, as one would expect, are the results of cost and schedProject Reports ule progress, as well as customer satisfaction. In project controls and project management, we tend to compare the current performance, trends, costs, etc., with the data from QUALITY IMPROVEMENT PROCESS the same period of the previous year. It seems that comparisons of This is for the person with the skills to do his or her work and this sort are built on the assumption that last year was normal. The who tries to do the best job possible but often is unable to influence traditional way in which information is presented in the monthly rethe system and make changes when they are needed. I am certain this ports is in the form of several tables of numbers showing describes a frustration we have all felt at one time or another on the planned incremental, cumulative (year-to-date) and average valjob, when you cant influence others to make needed changes. As a ues, as costs, progress, earned value, etc., and result, it left you feeling unhappy working with a system that you repeatable, timely, know is less than satisfactory, and you have not been given the opportunity to do your best. That can and often does affect your attitude and performance in life. This paper will help you understand how you can make a difference in the way you approach work, as well as the way you approach life, by using a set of problem-solving steps as well as simple work tools that are used in TQM or quality improvement. As the project controls organization and its work are regarded as a system of interlinked processes (cost, scheduling, estimating, etc.), then improvement of those processes using total quality management principles, results in improvement of the organization as a whole. comparisons of the current incremental, cumulative, and average values to their respective planned values.

The above comparisons collectively try to provide some context for interpreting how we are doing now. However, since the comparisons are limited, they may provide contradicting messages. Data Variation Benchmarking is one of the methods that compares data fluctuation from the norm, and it can be very useful if used correctly. This method though, could also be misleading, as sometimes comparisons are limited because of the amount of data used, and it could be weak

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1997 AACE INTERNATIONAL TRANSACTIONS because both the planned and current values are subject to the variation, caused by various factors. Cumulative (year-todate) figures used in cost, progress, etc., could also be misleading, and at times it makes you wonder if they were first invented by a cost engineer who got tired of having to explain the upand-down movement of the comparison between monthly values. Control charts are used most effectively to show variation, by concentrating on the behavior of the underlying process. A control chart plots data points usually over time and has a mean value and acceptable upper and lower control limits. Although control charts are an invaluable quality improvement tool, a detailed discussion of this chart is not included in this text because such a discussion would extend beyond the objective of this paper. ing to drive a car by watching the yellow line in the rear view mirror.

QUALITY IMPROVEMENT TOOLS Surveys have shown that 80% of the problems we take on the job can be corrected with these three Figure 2The Data Analysis Process tools: the checksheet, Pareto analysis, and cause-and-effect analysis. When these and other quality improvement tools are used effectively during all project management and project controls phases of a project life cycle, the results in planning and controlling resources, costs, and risk will be very rewarding. It would be an impossible task for this paper to attempt to cover the use of all quality improvement tools for every step of every phase of a project life cycle. Rather, an attempt is made to show the value and power of structured thinking by using problem-solving techniques. This paper focuses on one or two critical areas in each phase Figure 3Total Quality Tools of a capital project to show the benefit of using the TQM tools in parallel with the traditional/conventional project management techniques. Interpreting Data Many companies use front-end loading (FEL) to plan the work Most of us are visually oriented, and as a result, tables of data earlier and thus provide a better up-front definition, which will ultiare visually boring. A graph should accompany the table to help us mately result in greater savings. The FEL also breaks the project compare and see what the data are telling us. If a graph is worth a down into familiar and manageable pieces, providing valuable thousand words, then an annotated graph with the supporting inforlessons learned that can be used in the same phase for the next promation is easily worth ten thousand words. Data cannot be separated ject. The FEL philosophy is well in accordance with Jurans trilogy, from the context without the danger of distortion. which is quality planning, quality control, and quality improveWhen project controls people are under pressure to meet a ment. Its also the first step in Dr. W. Edwards Demings plan-dodeadline, there are three ways they can proceed: check-act cycle. 1. they can work to improve the system, Without further concentrating on the specific steps and their sequence in a projects life cycle, we will start identifying areas that 2. they can distort the system, or will be enhanced by using the quality improvement tools. The qual3. they can distort the data. ity improvement methodology can be used with business and proBefore they can improve a system or a process, they must ungram planning, cost estimating, economic and risk analysis, derstand how the input affects the output of the process. Finally, one planning, scheduling, and cost and schedule performance measuremust be able to change the input (and possibly the system) in order ment, and change control. to improve the process. Comparing numbers to plans alone will not Figure 3 shows the tools of quality improvement that are widely lead to the improvement of the process. Making sense of the data is a used today and their applications. To use these tools effectively reprocess that requires the data to be interpreted (figure 2). This interquires that you have some understanding of a process. A process is a pretation is usually based on the project controls persons or the proset of activities necessary to accomplish a task or produce an output. ject managers experience, plus his/her assumptions. When There is a process in everything we do. Since the process we will be experience is the basis for interpreting the data, then the interpretadiscussing involves project management and project controls, this tion is as good as the individuals experience. In many cases, when a writing assumes that we all have a good degree of understanding of standardized approach to interpreting data is not available, most their processes. managers use the reactive approach or the seat-of-the-pants apIn addition, it is important to understand that all processes have proach, and the best they can tell by looking at the daily progress is a set of influences (people, machinery, methods, materials) that comthat some days are better than others. As a result, managing a probine to make each process output unique. This uniqueness or variaject by means of raw data and the monthly project report is like trytion in output is the natural result of changes in the combination of PC.01.3

1997 AACE INTERNATIONAL TRANSACTIONS influences that occur every time a process is performed. For example, the success of implementing a project is dependent on the project manager and her/his staff (people), the companys systems (methods), the technology/computer system (machinery), and the supplies and other material. Variation in the output of a process is normal. Controlling the amount of variation though can lead to improvements in the quality of process outputs, and the tools for quality improvement combined with the traditional project controls tools can be used to influence this variation. The tools are so simple that initially you might discount their potential until you try them for yourself and find out how powerful they can be when applied correctly. Some of the positive results that you can expect from using the tools successfully will be defining problems in a clear and concise manner, leadership the responsibility and commitment to quality belongs to the highest level of management. deliveryinvolves the production and control of products throughout the project controls process as they affect cost, schedule, performance, risk, and product deliverables. employee empowerment involves the extent and nature of cost and schedule engineers involvement in self direction and improvement of processes. CASE STUDY In our case study, we will walk through the quality improvement process steps from the identification of the problem area to the solution and implementation.

Step 1Identify the Problem That Needs Improvement The warning mechanism in Figure 4Problem-Solving Steps our EPC project case study is that for the last 4 weeks the establishing priorities for problems, projects integrated schedule consistently shows a declining total analyzing problems to identify their true causes, progress as compared to the plan. So, the project controls engineer informs the project manager, and they get the project team together evaluating alternatives, to look at the potential problem. The project controls engineer tells involving others critical to improvement, and the team that if the trend continues, the project will get so far behind identifying and implementing solutions needed to correct probthat recovery will be impossible. In this case, there is a mechanism lems. in place to warn us of potential problem areas. Other ways to identify One important point is that you have to truly learn and become problems where the project control tools are not available are surproficient by using them and doing it several times. Some of the veys and interviews. If the problems are many, it wouldnt be wise to tools for quality improvement are more effective when applied by a attempt to solve all of them at once, so the team uses list reduction work team rather than an individual. Brainstorming, for example, to key-in to the most critical problems. when used by a team, produces results that increase dramatically In our example, the team uses a checksheet as shown in figure 5 than when one person does it alone. In fact, many of the tools are deto gather information about the problem area and show the need for signed to capture the collective thoughts of several people. Also improvement in measurable terms. work teams are effective when people who know most about the As mentioned earlier, a picture is worth a thousand words, so a problem are involved. bar chart (figure 6) is used to indicate the activity group that has, colThe tools potential to reduce or correct quality problems is inlectively, the most days behind schedule. Engineering is 18 days becreased when problems are addressed systematically by using a conhind, with procurement following with 16 negative days. sistent approach. The approach should also be analytic, using steps Then, from the initial apparent assessment, the problem is that lead to a careful review of a problem and tools that when used stated, being as specific as possible, and also being careful to dewill help develop the solution. Figure 4 shows the problem solving scribe the problem, not the symptom. So, the problem statement will steps. be phrased as follows. During the last 4 weeks, the engineering activities have been behind by a total of 18 days. Caution needs to be Total Quality Elements exercised because by using some initial incomplete data, a quick asThe four main quality improvement process elements as applied sumption of the problem can be inaccurate. to project controls and project management are After the engineering representative argued that his group was customer focuspeople measure everything that can tell them not as far behind as it seemed, the team decided to look at more data. what kind of job they are doing for the ultimate judge, the cusFurther review of the data identified a comparatively low perfortomer. mance rate for the procurement group activities. As a result, the PC.01.4

1997 AACE INTERNATIONAL TRANSACTIONS project controls engineer produced a progress status report for each one of the categories that are behind schedule, engineering, procurement, and construction. The results, as shown on a Pareto chart (figure 7) revealed a different problem, indicating that procurement was the major contributor to the declined progress. Pareto analysis is a way to show the relative importance of data, as well as the major factors that make up the subject being analyzed, and help prioritize and select countermeasures. It highlights the vital few, as opposed to the trivial many. Finally, in this step, a target date will be established for achieving the desired improvement. Step 2 Analyze First we need to identify the root cause(s) of the problem. The root cause is the underlying reason that a problem occurs. When we eliminate the root cause, the problem would also be removed. Caution also needs to be exercised because symptoms of the problem often look like root causes. In this step, and unless we had looked at additional data in the first step, we could have made the mistake to assume that engineering was the problem for the total progress lagging behind. Identifying the root cause(s) requires gathering and analyzing data relating to the problem. But, before collecting the information, a purpose needs to be established, and then the data collected that serve your purpose. Tools useful for identifying root causes are flowcharts, Pareto charts, cause and effect diagrams, and brainstorming. The Pareto chart in figure 7 indicates that the root cause of the problem is in the procurement process rather than engineering, contributing to 67% of the problem, or 10% of the total 15% progress decline. Next, the team identified and verified the root causes of the problem. Figure 8 shows a cause and effect diagram that identifies the potential factors (causes) that lead to an outcome (effect). This tool, also called a fishbone diagram, involves the following action: 1. isolate the cause to be verified, 2. 3. reduce or eliminate the cause, and determine the effect of your action on the problem. Figure 6Bar Chart Step 4Test-Implement This is an exciting time in the problem-solving process. It is time to realize the value of our work and to confirm and observe a reduction or elimination of the problem we have been studying. In our case study, the revised procedure allows the engineering material take-off personnel to release material orders directly to the vendor. The improved procedure reduces engineering and procurement workhours, and the time for bulk material order releases, from weeks to days. The Pareto chart, pie chart, bar chart, or checksheet are used to show the results of the improvement. In our case study, the team uses a Pareto chart (figure 9) showing the progress reduction being gradually minimized for procurement, compared with the one we started, when the problem was first identified.

Figure 5Checksheet

In this case study, the team identified three potential root causes, which after further evaluation, resulted in two that could be verified as valid. Step 3Evaluate Alternatives This step identifies actions that will reduce or eliminate the root cause(s). Brainstorming, interviews, and surveys are some of the tools used here. Then, the implementation of selected solutions is planned, as it applies to people, materials, methods, and machinery. In our case study, the implementation plan will involve adding one individual to the engineering group. This individual will fill the requisitions, code them, and send them directly to the vendor. In addition, the plan would include developing a new procedure for handling requisitions, training people, and communicating the change to all affected.

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1997 AACE INTERNATIONAL TRANSACTIONS process by documenting the activities involved and their sequence. A flow chart enables everyone involved in the process to understand how their work contributes to the product or service. Process flow charts greatly contribute to improving process, because they highlight inefficiencies, as well as repetitive or unnecessary steps. RECOMMENDATIONS Variation in every process is an inevitable outcome, despite all efforts to the contrary. When adopting the quality improvement process, the effect of standardization reduces variation to a minimum. Total quality management has left a lasting impression on various aspects of the way we do business. Many people think that it was a fad and passed, but the truth is that it woke up some simple and ingenious concepts in our business minds. If we are wise, we need to adopt and use these concepts as part of our everyday lives. We cannot afford to discount it as a fad. Since TQM started being a household word, the previously questionable quality of American products and services improved to a noticeable level. The change to something better is happening everywhere. True quality is more than an expression or a passing fad but rather an attitude, a condition embodied in a product or service intended to meet a customers need. Quality will happen by applying not only the conventional monitoring mechanisms but also the problemsolving steps and tools for quality improvement. With all three working together, we have a powerful change agent that tells us not only what the problem is but also why a change is needed and what must be done to achieve better results. Now, instead of being constantly frustrated, we are empowered to make a difference. s a project controls professional or as a project manager, I challenge you to adopt a quality improvement system in your daily work activity. Become familiar with process improvement and total quality improvement methods and tools. Study them and use them in conjunction with the traditional project controls measurements that you have been taught through your education and have used through your career, until you become very comfortable with them. Above all, make a permanent attitude adjustment so that you become sensitive to and recognize improvement opportunities. You will then, effortlessly make the right decisions and develop and implement solutions both in your professional and personal life, in the continuous pursuit of excellence.

Figure 7Pareto Analysis

Figure 8Cause and Effect Diagram Step 5Standardize Some of the steps taken to maintain the gains from the study are to document the changes, develop procedures, and make periodic checks to ensure that the procedures and changes are followed. As mentioned earlier, there are more quality improvement tools than the ones used in the case study. One of these tools that is especially worth noting is the process flow chart. A process flow chart developed even before any problems are encountered will clarify the

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Figure 9Results of Test-Implement

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RECOMMENDED READING Construction Industry Institute. Quality Performance Measurement Task Force. Quality Performance Measurements of the EPC Process . Lexington, KY: University of Kentucky, 1992. Humphreys, K.K., and L.M. English, eds. Project and Cost Engineers Handbook . Third Edition. New York: Marcel Dekker, 1993. Rummler A. Geary, and Brache P. Alan. Improving Performance. Second Edition. San Francisco: Jossey-Bass, Inc., 1995.

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Walton, Mary. Deming Management at Work. New York: The Putnam Publishing Group, 1990. Wheeler, J. Donald, Understanding Variation, the Key to Managing Chaos. Knoxville, TN: SPC Press, Inc., 1993. Michael G. Sypsomos CITGO Petroleum Co. 2423 21st Street Lake Charles, LA 70601

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