Total Quality Management in Construction Firms
Most construction projects have a lot of moving parts. From the simplest residential housing project to the largest industrial complex, there are a dizzying array of design decisions that call for trade-offs between form, function, quality, cost and time-to-completion. They also involve a lot of players.
Architects and engineers develop design specifications to account for project owner requirements while attending to structural integrity, building codes and safety standards. Contractors line up suppliers and staff the project with skilled managers, supervisors, craft workers and subcontractors.
Amidst this complex ecosystem, conflicts on the job site are far too common. The division of responsibilities often causes contributors to lose sight of how their individual tasks align with the project as a whole. Arguments can erupt over task ownership and who will take responsibility for mismatched deliverables or gaps in products or services. General contractors often find themselves in the unenviable position of resolving heated arguments or brokering solutions to these problems.
At best, it’s a waste of time and energy that could be applied to community engagement, business and employee development, or process improvement. At worst, it results in sizable cost overruns that needlessly drain the firm’s resources. A successful general contractor will use BIM (Building Information Modeling) on larger projects and host a pre-construction meeting with everyone involved in order to detect potential collisions at the job site.
Progressive construction firms have been adopting Total Quality Management (TQM) initiatives to foster effective collaboration, improve the quality and timeliness of the work, reduce cost overruns, bolster the firm’s reputation in the marketplace and reduce stress. It takes account of everyone’s needs and strives to get everyone on the same page before breaking ground. It makes use of performance measurements to track progress, identify opportunities for improvement and take effective action to alleviate trouble spots and concerns. It places decision making authority in the place where it will do the most good. Harmonious relations from top to bottom combined with smooth operations lead to fewer headaches and more profit.
While construction firms interpret TQM to suit their distinct cultures and ecosystems, their programs generally align with the following core principles.
They focus on what the customer wants.
Clients value quality, cost and adherence to schedule. However, construction firms also consider architects, engineers and subcontractors customers because they consume products, services and information and require support. Their needs center on clearly defined statements of work, fair price negotiation, access to key decision makers, prompt payment and effective communication and feedback throughout the project.
They manage by facts.
Construction firm owners establish key performance indicators to measure or monitor their own activities as well as those that impact clients and partners. Some of these metrics lend themselves to objective measure – e.g., payment cycle times. Others focus on subjective indicators – e.g., customer satisfaction surveys. They use these measurements to maintain high levels of quality and service while surfacing problems or issues that could impede progress on the project or strain working relationships.
They commit to a process of continuous improvement.
As problems or issues arise, owners work with the team to identify all possible root causes that led to a negative outcome. Root causes could involve people, processes, equipment, material or some combination thereof. They brainstorm ideas to correct the root causes and prioritize action based on the potential for improvement. They work with the affected parties to institute change and take new measurements to either confirm or challenge the revised approach.
They empower their employees.
By providing the appropriate training, resources and support, management grants power, authority and responsibility to individuals who are closest to the customer. This approach increases the efficiency with which decisions and problem resolution are addressed while encouraging personal growth. Successful mentors offer guidance and support in response to employee inquiries without becoming directly involved in the matter.
Aside from the bottom line benefits of total quality management programs, early adopters have experienced improved morale and reduced turnover and days lost on the job due to safety and health accidents. At a time when labor shortages in the industry have reached new heights, these benefits are worth their weight in gold. In fact, many programs have proven so successful that owners actively encourage (if not require) their subcontractors to adopt some or all of the defining principles.
While there are several standards and frameworks that govern TQM, implementation be delayed by lack of a textbook solution with all of the associated documentation and certification. Management may choose to invest in training and begin applying the principles to their operation. Intentional, incremental change may offer a practical road to sustainable performance improvement.
Meet the Author
Gary Alongi, CPA, CCIFP®
Aldrich CPAs + Advisors LLP
Gary Alongi brings over two decades of experience helping his clients reach their highest level of success. His extensive knowledge of the construction industry allows him to provide value-added services that save clients money, helps them comply with regulations and requirements, and take advantage of opportunities helping them grow their business. American Institute of Certified... Read more Gary Alongi, CPA, CCIFP®
- Audit and assurance services
- Certified Public Accountant
- Overhead rate (FAR 31) audits and compliance
- Certified Construction Industry Financial Professional (CCIFP®)