Understanding quality costs
Non-conformance costs arise because things go wrong. Activities which generate high quality cost are either not satisfying customer needs or not working efficiently. It is therefore essential that the Improvement Program identifies the magnitude of quality costs and where they occur.
Quality awareness.
A Quality improvement program relies on the complete commitment of all employees. Every individual must be educated to ensure they understanding their role and how they can contribute to quality improvement. Employees also need to kept informed of progress. To be successful, a quality improvement program often requires a complete change in the way an organization run:
- All employees require a greater understanding of customer requirements and the internal processes required to meet these requirements.
- It will no longer be acceptable to rely on finding and fixing errors, and
- Individuals should be empowered to take actions to improve the Quality of output from their own work areas.
To achieve these changes, a number of activity can help such as:
- Education, Individual must understand the reasons for change, the training must relevant, interesting and enable people to understand and participation in Quality Improvement.
- Communication, A constant flow of information is necessary, describing progress mad by the quality improvement program, how and when individual will be involved.
- Recognition, A system to recognize and publicly reward those who make an outstanding contribution to Quality Improvement can play an important part in encouraging employee commitment.
Measurement of performance:
It is only possible to focus on improving performance if the current performance of processes is measured. Improvement goals can then be targeted and improvement monitored.
Prevention
Business have traditionally relied upon checking output of errors and then correcting them; this is very inefficient way to run a business. The cornerstone of Quality Improvement is the recognition that errors are not inevitable they can be prevented. Action is necessary to ensure any problem which prevent quality improvement are identified and corrective actions implemented to eliminate them. A system is required to achieve this on an on-going basis. In K. Ishikawa’s view inspection does not add value to products, it only sorts out the bad ones. [6]
3. The barriers to the CQI program of construction companies:
Because of the industrial characteristics, construction companies have some problem to implementing CQI as follow.
- Uniqueness of the construction industry
The construction industry as considered in the context of this work may be taken in the broadest sense, i.e. to include all those professions and activities which contribute towards the production of the built environment, e.g. architects, surveyors, contracting organizations (both public and private sector), component manufacturers, materials suppliers, etc.
- Socio-political influences
Successive governments of varying persuasions have sought to control the nation's growing inflation rate through controlling the construction industry, more specifically the housing sector and its associated rise in capital values and, hence, perceived disposable wealth [8]. The environment in which the construction industry operates is subject to a wide range of influences and seldom, if ever, remains static. These influences emanate not only from within the industry itself, but also from external bodies such as government, pressure groups, the public at large and other industries.
-
Within the construction industry,
There exists a further set of barriers which may be perceived as specific to the construction industry's adoption of holistic TQM. This discrete functional set may be considered as containing five broad subheadings.
- product differentiation;
- organizational stability;
- change;
- contractual relationships; and
- team-work and management behaviour.
The first of these headings is clearly evident in the nature of the finished product, i.e. each building constructed in unique. Even houses on a large multiple development will have some degree of differentiation, e.g. additional under building due to varying soil conditions.
The second heading is supported by the consistently high number of organizational collapses in the construction industry, primarily due to poor cash flow management. Thus, commitment to policies or strategic issues which may take several years to provide 'pay-offs' may be perceived as futile, or a misdirection of resources.
The third heading is to some extent implicit in the very nature of the industry, i.e. the projects are very large, seldom situated in the same location and labor intensive; the workforce tend to be transient; demand fluctuates, subject to the client's perception of the value of the construction project.
The fourth heading encompasses a significant element in the continuing perception of 'quality being a cost'. The vast majority of projects executed within the construction industry will be subject to some 'standard form of contract', of which more than 90 exist [9]. Within these standard contract conditions, there are clauses relating to the 'making good of defects' [10]. The antiquated practice of the constructor and the architect carrying out 'snagging' is commonplace, and encouraged
The last heading, teamwork (or rather the lack of it) and management behavior, may be the more determinate factor in the success of TQM within the construction industry. The execution of contractual obligations contained within the construction project demands that human resources be brought together into some coherent form of team. These teams are formed at both conception and execution stages of the project. As such, their very nature is constrained by the life span of the project.
4. The present situation of Housing in Hanoi
Housing and residential area development in Hanoi has been primarily a state responsibility. In the 70s and early 80s, the government developed most of the housing in Hanoi, and by 1989, over 50% of the urban population lived in 4 million sq m of government housing. Government housing consisted mainly of walk-up apartment complexes, with early units having shared bathrooms and cooking facilities. Despite large government housing construction projects, demand continued to outrun house production in Hanoi, so that by the end of the 80s, overcrowding resulted in an average floor space of only 6 sq m per capita. "Doi moi" reform policies and reduced government budgets for housing brought about a rapid shift toward private construction of housing. In 1981, government constructed 94% of housing; by 1989, this had dropped to 38%, and the downward trend has continued. [13]. Most government housing is now dilapidated and poorly serviced.
At the moment, Hanoi is considered as a large construction. All most old house is in unacceptable condition and needs to be replaced. Currently, most housing is constructed by the private sector, about 75 percent were built by individuals [11], but there are some large building projects to be carried out by state own company, and it also create some problem. Some buildings have been operated in three or four years gone down their quality seriously, for example the elevator did not operate smoothly, some damages in kitchen or toilet. And the cost for repairing this damage is unpredictable. Therefore, it creates the needs to make higher housing quality for Hanoian and construction companies play a vital role in this process.
II. STATEMENT OF PROBLEM
Total quality management especially continuous quality improvement has been successfully applied by other industries in Vietnam as well as whole world. That is the way to ensure the high quality of products. Real estate is a strange phenomenon and is a new industry in Vietnam, but it attracts many attentions of society and affects to all members of society. The products of real estate may be the office or house for renting or selling. At the present the housing quality is very low. So the problem here is: Which is suitable CQI model for real estate company in Hanoi?
III. THE OBJECTIVES OF THE STUDY
The overall purpose of the study is to determine the chances and opportunities to apply CQI in construction company and to propose a model of implementing CQI by learning from Alpha model.
Researcher, therefore, will present Alpha model of implementation CQI and the sub objective will be:
To describe characteristics of construction companies
To provide the steps and key element in implementing continuous quality improvement.
Secondly, researcher will find out the chances and opportunities to apply CQI in construction company in Hanoi. The sub objectives will be:
- . To measure the important of construction companies in improving hosing quality
- To find out the extent do real estate companies implement continuous quality improvement
- To describe the difficulties and obstacles of construction company when apply continuous quality improvement.
And finally, researcher will propose a model for implementing CQI in construction company in Hanoi by composing the change and opportunities of applying CQI in construction company and the Alpha model.
IV. THE HYPOTHESIS TO BE TESTED
The research tries to prove the hypotheses that are:
- All construction companies in Hanoi haven’t been implementing Continuous Quality Improvement Program.
- There are no relationship between implementing CQI and the barriers of implementation CQI in companies in Hanoi.
V. THE SCHEME:
VI. THE STUDY DESIGN
All necessary methods and measurements will be used to achieve the objective of research. The methods can be used in this research are literature search and survey. It can be carrying out through the following measurements: literature to be read, questionnaire, and interview question. Literature search:
These sub questions will be conducted by literature survey as follows:
To describe characteristic of construction companies
To provide the steps and key element in implementing continuous quality improvement.
To measure the importance of construction company in improving housing quality.
The useful book - Implementing Total Quality Management of Leslay Munro Faure and Malcom Munro Fraure will provide necessary information out the component of CQI as well as the key steps in implementing CQI. This book also provide the Alpha model of implementation CQI in specific situation. However, the information will come from many other author’s books, magazines, reports as well as internet. The information of construction company will be extracted from the book Natural of Construction written by Tran Cong Hoang, and also collected from others sources such as Magazines, reports, and internet. For the third question, the information will be extracted from the new magazine and research paper carrying by Pham Hong Ke, as well as from other sources.
Survey:
The other sub-questions will be answered by survey, there are:
- To find out the extent do real estate companies implement continuous quality improvement
- To describe the difficulties and obstacles when apply continuous quality improvement.
- The questionnaire for the first question will be based on the step in that company implementing continuous quality management. As mention in the first part of research there are many phase in implementing the CQI such as , planning for CQI program, understanding customers, quality awareness, measurement of performance and prevention.
The result of this question will enable to test the first hypothesis. And as my knowledge about the situation of construction companies in Hanoi, the CQI is still the new concept and that is the reason to set up first hypothesis.
- For the companies have been applying CQI, they will face with many difficulties when carrying out the process, the difficulties are included the nature of industry and the affections of stakeholders of the companies. The questionnaire will create to find out the obstacles in applying CQI of all the companies( questionnaire part C). And beyond the difference in the natural of industries, I hove to receive the most frequent obstacle when carrying CQI program. That will be good resource to build up an good model for implementing CQI. As the expectation when build up this questionnaire, researcher expect to receive the difficulties relating to the specific characteristic of construction industry such as uniqueness of construction industry, social influences .
VII. MEASUREMENT PROCEDURES
Although in each question contains the measurement but it can be summary as the follows:
- Secondary sources:
The secondary sources of research will be: Internet web pages, books, and annual reports of the real estate companies.
- Books:
-
Designing a Research project, Piet verschuren and Hans Doorewaard, Lemma Utrecht – 1999
This book provides the method and steps to do a research. It is helpful for us to find out the sources of data and create the questionnaires as well as organize the interview.
- Implementing total quality management – Lesley Munro Faure and Malcolm Munro-Faure, financial times, 1992. This book provides a clear guide to implementing total quality management, shows how to set up the step to monitor the implementation of CQI.
-
Total quality management – The management of change through process improvement – John S. Oakland
This book aim at directors and managers in industrial, commercial, and service organizations, the volume guides readers through the language of TQM and sets forth and clear way to proceed for the entire organization. It reflects the developments, current understanding, and experience of TQM.
-
Continuous Quality Improvement, Alasdair White, Piatkus, 1997
This book provides practical program, and the tools and techniques to implement CQI in organization. It contains the practical CQI in difference organization as well as the steps in action plans.
Quality Planning and analysis, J.M Juran and Frank M. Gryna, Mc GRAW Hill International Editions, 1993. Providing the key concept of continuous quality improvement as well as the idea of Juran about CQI.
1.2 Report
Annual reports of Vietnam's real estate companies.
- Vinaconex annual report
- Housing and urban development corporation annual report.
- “Kinh doanh bat dong san” magazine.( ‘Real estate business’ magazine)
1.3 Internet Web pages:
Internet web pages can provide the information about companies and updated information about real market as well as new knowledge of CQI.
. This web page provides updated information about real estate market in Viet Nam
. This web page provides information about companies in Vietnam. This web page can be used to select the companies to send the questionnaire.
The subject of this website is CONTINUOUS IMPROVEMENT IN CONSTRUCTION: Analysis of Brazilian and English Practices
- Primary data:
Primary data will be collected by means of mailed questionnaire and interviews. (Observation is not applicable to this research)
2.1.Questionnaires:
Questionnaire will be designed into two main parts: Part one introduces the researcher and purpose of research. Part two contains the question related to the objective. Questionnaires will be sent to a sample of about 200 companies (including 150 real estate companies) in Hanoi, addressing to the relevant persons for each sub question.
2.2. Interview:
The interview will be hell with the project managers and directors or vice directors in 4 companies in Hanoi. The researcher will send a letter to chosen companies and to explain rationale of the research and apply for interview. The questions for each of sub questions will be well designed to achieve information.
VIII. SAMPLING
Questionnaires will be sent to 150 real estate companies, which are selected in web page of VCCI. Those companies do business in construction field.
Interviews will be made with 4 companies which author has relation. That can be guaranteed the feasibility of carrying out interview through telephone. The companies will be as follows:
- Housing and urban development corporation (HUD).
General manager: Mr. Nguyen Hiep
- Housing and services management company (HUDS)
Manager: Mr. Nguyen Ngoc Cuong.
- Construction Development Corporation.
- Vinaconex Construction Company No.7.
IX. SETTING
At present, Hanoi is considered a huge construction; therefore focus on quality at that moment can generate a lot of benefit in the future. The reason why the author chooses the CQI is that: By applying CQI we can avoid the mistake and can do the work better in the future. Thus it will create high quality and can meet the demand of the customer. For example: Vinaconex build the Building A in 1996, after three year, in 1999 there are some problems in that building, some damages in kitchen and toilet in some flats, the company must consider the reason of this problem and have to find out the solution of the problem. In 2000, when the company has another contract to build new building, it must be sure that this mistake will have to avoid. And this process has to do over and over. That is we called CQI.
X. ANALYSIS OF DATA
The secondary data will be processed and used through desk research. The method of content analysis will be used in this case, because the method of content analysis generates data from documents, the media and from reality. [10, page 133] It mainly concern to the second chapter of the report. Data will be collecting and gathering and finally it will reveal obviously the concept of CQI and other relevant theories. The data of this method relate to the following information:
- Theory about CQI
- The steps in the CQI program.
- Data from general information section (questionnaire) will be analyzed by Excel program the result will provide the participant’s profile.
First of all, the data from the Part A and Part B will be put in to Excel to interpret the selected companies are implementing CQI or not and if what is the phase they are stand on, just stating, in the middle or completing CQI program.
-
Testing hypothesis 1: if 100% construction companies haven’t got CQI program or just implement TQM in first state, the hypothesis will be accepted. If there will be only one construction company implementing CQI program the hypothesis will be rejected.
The Spearman’s Rank Correlation will be used to find out the relationship between applying CQI and the barriers of CQI to construction companies. The phrase of implementing CQI and the barrier will be ranked as follows:
The extent of implementing CQI The barrier of implementing CQI
Starting = 1 low = 1
Carrying out the program =2 Moderate = 2
Completed = 3 High = 3
It means that if a companies A are starting CQI program and the barrier is high, it will be ranked as:
Then, Use the formula Rs = 1-(6Sigma d2/n3-n) where n is the number of companies in the survey.
If the Rs value...
... is -1, there is a perfect negative correlation.
...falls between -1 and -0.5, there is a strong negative correlation.
...falls between -0.5 and 0, there is a weak negative correlation.
... is 0, there is no correlation
...falls between 0 and 0.5, there is a weak positive correlation.
...falls between 0.5 and 1, there is a strong positive correlation
...is 1, there is a perfect positive correlation
Testing hypothesis 2: if Rs value is 0, hypothesis is accepted, otherwise it is rejected.
The result of two hypothesis will be taken into account in order to make a suggestion of the model of CQI for construction company in Hanoi.
XI. THE STRUCTURE OF THE REPORT
The dissertation will be divided into the following chapters:
Chapter 1: Introduction
- Introduction to the research and the rationale of the research
- Objective of the research
- Research Methodology
- Limitations of the research
Chapter 2: Continuous quality improvement
This chapter is provided the literature review about continuous quality improvement.
Chapter 3: Current situation of housing quality in Hanoi and the factors involving in enhancing the quality.
Chapter 4: Elements of Continuous Quality improvement, a generic model.
Chapter 5: Conclusions and recommendations
This chapter will be the out come of the research. It will gives recommendations for implementation of continuous quality improvement in the real estate company, as well as suggest the model to implement it.
XII. PROBLEMS AND LIMITATATIONS
This report aims to make a suggestion for enhancing the quality of the high building in Hanoi, therefore it is not suitable to apply for the small building in Hanoi and for other cities in Vietnam. As mention in introduction part, 75 percent of new building belongs to individual, therefore this report can be apply for maximum 25 percent of new building in Hanoi. It is difficult to apply for the private companies, because they are not having sufficient capital to apply new quality standard.
Vietnam has been carried out the open-door policy for more than a decade therefore a lot of new economic phenomena, for example TQM, are still unacquainted with many companies especially real estate company. So that makes the difficulties for collecting the data and information for this research.
The distance between the Netherlands and Vietnam should take into consideration. In the case of interviewing that takes a lot of time and money to travel between two countries to carry our in-depth interview. The solution may be followed: interview will be carried through the telephone or Voice chat on Yahoo Messenger, that is an convenience way to connect people and is the cheapest way at the moment.
XIII. WORK SCHEDULE
REFERENCES
-
ROBERT. L. FLOOD., Beyond TQM, John Wiley & Sons,1993
-
J.M . JURAN AND F.M GRANA, Quality planning and analysis, Mc Grow Hill International edition, 1993
-
ALASDAIR WHITE, Continuous Quality Improvement, Piatkus, 1997
-
L&M MUNRO-FAURE, Implementing Total Quality Management, Financial Times, 1993
-
M &D. Southworth, How to Implement total quality Management, Graphic Arts Publishing Co. Livonia, New York, 1992
-
Kaoru Ishikawa, What is total quality control? The Japanese way, Englewood Cliffs, NJ: Prentice-Hall, 1985]
- Vietnam economics news,12/ 2002
-
HILLEBRANDT, P.M. (1985) Economic Theory and the Construction Industry, 2nd edn,
- JCT80 (1980) Joint Contracts Tribunal, The Standard Form of Building Contract
- SKITMORE, R.M. & MARSDEN, D.E. (1988) Which procurement system? Towards a universal procurement selection technique, Construction Management and Economics,
-
NGOC SON, Housing Reports, Kinh doanh bat dong san, 2002
-
PIET VERCHUREN AND HANS DOOREWAARD, Designing a research project, Lemma-Utrecht-1999
-
FORBES AND LE HONG KE, Vie Project on housing, Nhan dan, 2001
-
HAM SHERFI ABULHASSAN, Total Quality Management in Construction, Hisham AbulHassan, 1996
Website :
this website provide the sample of Speaman’s Rank Correction.
APPENDIX
Part one: Introduction
My name is Phung Duy Hung. I am a student undertaking a Master’s Degree in Real Estate Management at Saxion University, Deventer.
I am at present conducting as study on:
The implementation of continuous quality improvement to enhance housing quality in Hanoi
I would be grateful if you could assist me in my questionnaire.
Thank you in advance for your time and participation.
__________________________________________________________________
Part two: Questionnaire:
Please check ☑ the appropriate response. Leave a
question blank if not applicable to your organization.
A. Overview [ This part is to find out what the company is and what is the main business of it]
1. Please classify your organization:
□ architectural □ engineering consultancy
□ contractor □ construction management
□ other (please specify)
............................................................
2. Number of employees:
□ less than 25 □ 26 to 50
□ 51 to 100 □ 101 to 200
□ 201 to 400 □ over 400
4. Field of person filling out questionnaire:
□ Managerial □ engineering
□ Technician □ clerical
□ Secretarial □ other (please specify)
...........................................................
B Continuous quality improvement
5. Has your organization developed a clear definition of quality?
□ Yes □ No
11. Percentage of employees who are aware of the importance of quality:
□ none □ 10% □ 20% □ 30% □ 40%
□ 50% □ 60% □ 70% □ 80% □ over 90%
6. Do your organizations have a quality improvement program?
□ no
□ such a plan is under consideration
□ a quality improvement program has recently been implemented recently
□ a quality improvement plan has been a part of corporate policy for some time now
7. How long have you had your quality improvement program?
□ less than 6 months □ 6 months to a year
□ 1 to 2 years □ 2 to 4 years
□ over 4 years
8. Your organization’s quality improvement program can be described as:
□ there is no formal program
□ periodic short-range solutions or motivational programs
□ a formal program is underway with widespread employee awareness
9. Does your quality improvement plan have the full support of top management?
□ yes □ no □ can’t say
10. Steps taken in your quality improvement plan include:
11. Continuous Quality improvement Cycle in your company includes:
12. What is the first step in implementing the action plans?
□ Individual departments commit a small number to CQI program.
□ Individual departments commit all staff to CQI program
C. Difficulties in applying CQI.
13 If you are the CEO, do you ready for the new way in doing business?
□Yes □No
14 Are you ready to be educated about new knowledge?
□Yes □No
15. If you are the middle manager, are you willing to give up control?
□Yes □No
16 Are you willing to share knowledge with your colleague?
□Yes □No
17. Which is the most difficulty in applying CQI?
□ product differentiation; □ organizational stability;
□ change; □ contractual relationships
□ team-work and management behavior
18 It is difficult to understands customers because:
□ The customers have different requirements in quality
□ can’t not satisfy the needs of all customers.
□ Concentrating resource on improving internal processes and reducing costs at the expense of . the needs of external customers.
□ Others.
19 In the phase of planning for CQI program the problem usually arise from:
□ Management commitment and involvement
□ Quality improvement structure
20. It is difficult to Measurement of Performance in these areas:
□ Identifing the basic purpose of the business
□ Identifing the key measurement of performance for each department
□ A number of functional measures in each department
□ Reviewing measurement as a part of the annual business planning.
21. Is the CQI model in your organization as follows?
Management commitment - Dedicated Resources - Outside Consultant
Background research - Benchmarking- Analysis - Planning
People and Processes - Communication- Action plan – Management – Customer focused
Implementation
Monitor and Feedback
Continuous Quality Improvement
□ yes □ no
Interview question:
Would you please tell me your opinion about TQM, and CQI?
If you don’t mind, could you show me your strategy to implement CQI?
Do you think CQI has a vital role in your company?
Do you apply continuous cycle ( Plan, Do, Check, Act) to quality system and in activity?
Do you often organize the training and workshop for staff?
_________________________________________ __________________________________________
Phung Duy Hung – MSc. Real Estate Management
