Addressing Productivity through Quality Management

Operational Efficiency

Operational efficiency is achieved when an organization is able to deliver products or services in the most cost-effective way possible while meeting commitments. The ultimate goal of operational efficiency is to lower costs without compromising productivity and maintain quality as well as profitability. There are myriad ways to accomplish this by minimizing waste, reducing defects, proper planning, effective subcontractor selection and management, etc. For the purposes of this article, we will address the reduction or elimination of defects.

Construction defects may be attributable to design, a last minute or large volume of changes, defective or faulty material or workmanship, misuse during occupancy, maintenance practices, natural deterioration over time, or some combination of them. It may also be attributable to acts of vendors, suppliers, subcontractor's management, or personnel. For this paper, we will address defects resulting from the contractor's project delivery process and, more specifically, the production activities of the contractor's or subcontractor's craftspeople.

It is a fact that rework or corrective work invariably occurs on every construction project with little or no exceptions. The difference is the amount or extent to which this happens and is dependent on many factors, most of which reside with the construction manager or general contractor's management of their operations. This phenomenon is rarely measured and/or reported and, as a result, is not effectively addressed or efficiently controlled. This brings to mind the saying, "You need to measure in order to manage."

Construction Defects

Defects may be structural, nonstructural, or cosmetic. Another way to categorize defects is whether they are patent defects or latent. Patent defects are those that are readily identified or found during inspections. They may fall in all categories but generally are nonstructural or cosmetic. Patent defects are generally easy and quick to correct. Latent defects are those that are concealed and generally not identified or found during inspections. They may fall in all categories except cosmetic. Latent defects manifest themselves at some later point or date and, as a result, are more problematic to deal with. They take considerable time and resources and are generally more difficult to fix.

Many defects are minor, are easy to remedy, and are fairly inconsequential in impacting the project's progress. More serious ones take time, resources, and may, to some extent, impact workflow, as well as potentially increasing the time it takes to complete the project. This will reduce the project's operational productivity, which will create additional costs as well as negatively impacting the contractor's bottom line. There is also the potential for litigation, as well as the possible negative impact on future business. Significant or a large number of defects will invariably impact the project owner's satisfaction regarding the project.

The regrettable truth is that a large number of contractors and owners have been involved in disputes involving defective construction. A large-scale Dodge study found that over 75 percent of those participating in the study have, in fact, been involved in a dispute or claim in the previous 5 years. It is also a fact that construction defect claims rising to the level of legal action tend to be the most common as well as most expensive.

Generally, the expectation is that the craftsmen are capable of putting the work in place defect-free and that the project supervision will catch any defective work as part of their oversight and inspection function, as well as ensure such work is corrected. Defective work when caught by supervision is in all likelihood corrected. Project supervisors generally do not want to report negative data, so a good number of defects are not reported to or discussed with company management. And some defects are just not identified or corrected.

The organization's management may indirectly contribute to the problem. There may be a number of reasons why project supervision may not catch all the defective work. Management may understaff the project because they take on more work than they have competent staff to assign to oversee them. They may utilize less experienced staff who are less experienced in controlling the overhead cost. They may hire subcontractors whose capability does not align with the complexity or difficulty of the work, thereby impacting the site supervision's workload, and the list goes on.

Even though defective work is somewhat common on construction projects, most organizations do not have systems for collecting information on defective work. As a result, they do not specifically know what kinds of defects occur, why they occur, what are their potential negative impacts on the project, what are some of the "best" ways to deal with them, etc. They also do not know the cost impact of defects on the project delivery process. Various studies put the cost of defects in construction to around $150 billion–$200 billion annually.

Depending on which research study one uses, defective work can amount to anywhere from 5–10 percent, and sometimes more, of the cost of the overall project. According to various studies, large and midsize general contractors' net profits hover in the 1–2.5 percent range, with the largest organization ending up closer to the lower end of this range. So, if a construction firm can improve their project delivery process so that they produce 25 percent less defective work, they can easily double their profitability!

The beauty of this approach is that the firm does not need to use more time or resources. They just have to manage their operation somewhat differently. They have to make sure that the work is put in place correctly the first time out. To achieve this, they need information on their defect types, causes, costs, and/or time it takes to correct them. This highlights the fact that almost no company routinely collects data on their defects so as to enable them to properly manage their production activities in order to minimize their defect rate.

Defect Management

To properly manage operations to reduce defects, or better yet, eliminate them, the organization requires information. This involves collecting the proper and appropriate data, analyzing it to obtain the pertinent information with which to devise and implement interventions to effectively eliminate the underlying mechanisms that facilitate the creation of building defects. This approach will error-proof the project delivery process, thereby enabling the workforce to put the work in place correctly more times than not, with the hope of eventually doing this all the time.

To effectively address and deal with defective work, the organization's quality assurance program must have clearly defined steps for data collection and analysis to devise means to identify the underlying causes of the defect creation. This will allow for an appropriate solution to be devised and deployed so as to correct the deficiency. More importantly, the selected corrective method should correct the underlying causation so as to permanently eliminate potential similar future defects from ever occurring.

Focusing on defective work put in place, one identifies two obvious areas—the workforce and supervision's potential impact on them. This covers such areas as planning, organizing, directing, oversight, inspecting, and controlling. For work that is subcontracted, the general contractor's staff must ensure the subcontractor's field supervision has similar criteria with which to manage the quality of their workforce's production. The supervision's contribution includes these tasks.

• Assess the risk of the likelihood of defective work occurring in various tasks before the commencement of the work. This will ensure that the supervisor has a clear understanding of the task demand as well as any necessary associated resources with which to successfully complete the task.
• Align the task demand to the worker's capabilities. This will ensure that the worker has the knowledge and ability to properly perform the work.
• Identify factors that may exert demands or pressure on workers leading to potentially causing defects.
• Enable the successful accomplishment of a task by the workers by ensuring the sufficiency and availability of appropriate tools, equipment, material, access, and time.
• Ensure the worker has the appropriate information. Understand the associated impediments and risks identified and how best to deal with them.
• Discuss expectations related to the task. Allow a reasonable amount of time for the performance of the task.
• At the start of the task, the supervisor should spot-check workers putting the work in place to ensure that they meet the company's expected performance criteria.

The worker's contributions include these tasks.

• Make sure that they have a good understanding of the task and work involved and that they deem to having the appropriate tools, equipment, access, material, resources, and information, etc. to successfully complete the task. Ensure that any and all deficiencies are addressed, discussed, and resolved prior to the start of work.
• Make sure they can perform the task within the allotted time. If in doubt, discuss with the supervisor.

This should highlight the potential opportunity for general contractors to use the improvement of their quality management practices to ensure that work put in place is defect-free. This will reduce the need for close inspection of the workforce and, thereby, free up a supervisor's time for more productive management activities resulting in opportunities to improve production, leading to proactively increase the project's margins.

Conclusion

The industry as a whole and particularly innovative construction firms need to change the way they deal with defective work put in place at their worksites. They need to create a culture of putting work in place correctly and defect-free at every step of the way. Since, realistically, there is the potential that the system may fail and some defective work may be put in place, the organization must have a way to determine what went wrong to systematically eliminate such potential occurrences.

This requires that the organization devise a standardized process to collect data on what went wrong, why it happened, and what underlying means, methods, processes, practices, or procedures facilitated such an undesirable outcome to occur. Such a process then provides an effective means to structurally eliminate such deviations from ever occurring again in the work process. Such an approach will ensure a more robust and efficient means of ensuring high-quality project delivery.

Since in construction much of the work is performed by partners (subcontractors or others), the general contractor or construction manager can ensure a superior quality of product and/or services only if all levels of management, personnel, partner companies, and the rest of the supply chain are involved and focused on providing superior quality. Project owners will deem the quality of the product or service to be superior only if it meets, or better yet, exceeds their expectations. To deliver on this, companies must seek partners and suppliers who are like-minded and deliver on their promises.