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MONTEKi.1 v^A y3343-5101 










SUMMER 1993 












SUMMER 1993 

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MONTEREY CA 93943-5101 


Chapter One Introduction 1 

Chapter Two History 5 

Chapter Three What is Total Quality Management? 10 

Chapter Four Important Points of Quality 14 


4. 1 Create Constancy of Purpose for 14 

Improvement of Product and Service 

4.2 Adopt the New Philosophy 16 

4.3 Cease Dependence on Mass Inspection ... 18 

4.4 End the Practice of Awarding 20 

Business on Price Tag Alone 

4.5 Improve Constantly and Forever 23 

the System of Production and Service 

4.6 Institute Training, Retraining 25 

and Educat ion 

4.7 Institute Leadership 28 

4.8 Drive out Fear 29 

4.9 Break Down Barriers Between 31 

Staff Areas 

4.10 Eliminate Slogans, Exhortations 33 

Targets for the Workforce, and 
Numerical Quotas 

4.11 Remove Barriers to Pride of 35 


4.12 Take Action to Accomplish the 37 

Transf ormat ion 

Chapter Five Deadly Diseases and Other Obstacles ... 39 

to Total Quality Management 

5. 1 Lack of Constancy of Purpose 39 

5.2 Emphasis on Short Term Profits 40 

5.3 Evaluation of Performance, Merit 41 

Rating, or Annual Review 

5.4 Mobility to Top Management 43 

5.5 Running a Company on Visible 44 

Figures Alone - Counting the Money 


1 1 



Chapter Six 

Chapter Seven 
Chapter Eight 

Chapter Nine 

Bib 1 iography 
Appendix A 

Appendix B 

Appendix C 
Appendix D 

Excessive Medical Costs and 45 

Excessive Costs of Warranty, Fueled 
by Lawyers That Work on a Contingency 

Other Obstacles to Total Quality 46 


Safety Management is Vital to 47 

Total Quality Management Success 

The Role of Data 60 

Total Quality Management Today 62 

and Tomorrow 

Conclusion - Total Quality 69 

Management Implementation 
Recommendat ions 


Eternally Successful Organization 74 


How Ritz-Carlton Won the Baldrige 75 


Shewhart Cycle 78 

Selected Charts and Diagrams 79 

Demonstrating How Data Transformed 
By Statistics Can be Used 


The theory of total quality management is not a new 
phenomenon. Total quality management was first officially 
introduced in the 1940's and has continued to change and 
improve through the years. Even though this concept has not 
yet been fully accepted by businesses in the United States, 
the acceptance and implementation of total quality 
management programs is increasing. The single greatest 
obstacle for total acceptance seems to be based on the fact 
that business managers in the United States are more 
interested in short term results and profits than in steady, 
long term growth and improvement. This mindset requires 
that chief executive officers and top management improve the 
bottom line rapidly. Usually these results are only 
temporary and after the initial results begin to taper off, 
top management personnel move on to a new company. This 
trend produces negative side effects such as loss of company 
loyalty and decrease in company knowledge. 

As the development and evolution of total quality 
management is examined, perhaps the realization that only 
the occurrence of an economic disaster will cause America's 
corporate giants to open their eyes and apply the basic 
rules of total quality management. In May 1993, the trade 
deficit was 10.5 billion dollars, with approximately one- 


half attributable to the Japanese. Obviously, the 

principles taught to the Japanese people forty years ago by 

Dr. W. Edwards Deming are still awaiting endorsement by 

American businesses today. 

For some unknown reason, American companies became 

locked into a specific format and this tendency keeps them 

from looking toward the future. Managers believe their 

company's future will always be in one particular area, 

producing one specific product. After all, if it is a good 

product, people will always want it. Not so. Just ask the 

steel giants of the 1970's. Steel executives believed that 

foreign countries could never import steel to the United 

States because it would be too costly. As a result, the 

steel magnates used capital to pay stockholder dividends 

rather than reinvest in their companies by improving their 

processes or by purchasing additional plant equipment. 

Japan, taking advantage of poor planning on the part of 

American steel magnates, was able to gain a stronghold in 

the United States steel industry. People are mortal and 

will eventually wear out. However, businesses with proper 

management can always adapt, change and remain successful. 

Philip Crosby sets up some basic guidelines: 

A company that is going to be eternally successful will 
have these easily identifiable characteristics: 

People do things right routinely. 
Growth is profitable and steady. 
Customer needs are anticipated. 

Change is planned and managed. 
People are proud to work there. 

For a company to succeed it must always apply the principles 

of Total Quality Management. Companies begin to realize 

that the true test of quality is whether or not it has met 

the customer's needs. Even the American Society for Testing 

and Materials (ASTM) has recognized this fact. The Society 

publishes a manual that is used as a guide for consumer 

sensory evaluation: 

The Manual on Consumer Sensory Evaluation concerns 
itself with testing certain products using those 
untrained people who will become the ultimate users. 
These products can be evaluated on the basis, of taste, 
smell, touch, hearing or visual differences. 

Crosby suggests using a grid to determine a company's 

progress toward becoming eternally successful. The 

"Eternally Successful Organization Grid" (see Appendix A) is 

an overview that allows any company to measure itself at any 

point in time on items such as quality, growth, customers, 

change and employees. 

Total quality management seems to have its roots based 

on Dr. W. Edward Deming's fourteen points of management. 

These points, along with other principles of Dr. Deming's, 

will be examined. Specifically, their application to the 

construction industry will be explored. The seven deadly 

Philip B. Crosby, The Eternally Successful Organization (New 
York: McGraw-Hill, 1988) 16. 

E. E. Schaefer, ed., ASTM Manual on Consumer Sensory 

Evaluat ion (Philadelphia: American Society for Testing and 

Materials, 1979) 1. 

diseases and other obstacles which describe reasons why 
total quality management could fail will be discussed in 
some detail. Safety management is vital to an 
organization's success and will also be examined in detail, 
as will the role of data and statistical methods. Deming's 
fourteen points of management seem to be the most widely 
used and accepted when dealing with total quality 
management. However, for the sake of comparison and 
reference, Crosby's fourteen steps of quality are as 
follows: management commitment; quality improvement team; 
measurement; cost of quality; quality awareness; corrective 
action; ZD (zero defects) planning; employee education; ZD 
Day; goal setting; error-cause removal; recognition; quality 
councils; and, do- i t-over-again . Finally, where total 
quality management is today and where it will be tomorrow 
will be discussed. Further, one possible plan for 
implementing total quality management in construction will 
be presented. 


The concept of total quality management was originated 

by Dr. W. Edward Deming in the 1940's. Dr. Deming was a 

graduate of physics from Yale University, but became a 

statistician by trade. After graduating from Yale, Dr. 

Deming worked at the Department of Agriculture and for the 

Department of Commerce. His first application of 

statistical techniques was in developing a plan for the 1940 

census. Prior to 1940, the census process involved an 

attempt to poll everyone in the United States. It was only 

through Dr. Deming's random sampling technique that the old, 

laborious, time-consuming method was changed. It was after 

this that Dr. Deming received some short-lived notoriety for 

his use of statistical methods which he had learned from 

Walter A. Shewhart , a statistician for Bell Telephone 

Laboratories. Dr. Deming was requested by W. Allen Wallis, 

a professor at Stanford University (later to become 

Undersecretary of State), to teach his methods to companies 

and individuals involved in manufacturing for the war 

effort . 

In July 1941, Dr. Deming taught the first ten day 
course in statistical methods with the aid of Ralph 
Wareham of General Electric and Charles Mummery of 
Hoover Corporation. Wareham had studied statistical 

theory at the University of Iowa; Mummery was self- 
taught in the Shewhart methods." 

This initial effort resulted in 31,000 students across the 

country being taught these statistical methods. The 

American Society For Quality Control was initiated in 1946, 

with Dr. Deming serving as one of its initial members. 

Dr. Deming left the census bureau in 1946 and started 

his own business as a statistical consultant. From 1946 to 

1975, he was also a professor in graduate business school at 

New York University. His first contact with the Japanese 

was in 1951 after World War II had subsided. His initial 

purpose for visiting Japan was to help with the planning of 

a national census. It should be noted that after the war, 

American industry was unscathed, unlike European countries 

and Japan, which had their industries obliterated. Because 

American industry had geared up for the war, they were more 

than ready to be major suppliers of manufactured goods. 

With production running at an all time high and with little 

competition on the global market, corporate managers could 

literally do no wrong. There was a high demand to produce 

high quantities because of the attitude that the consumer 

would buy anything produced. This situation resulted in Dr. 

Deming's statistical quality control methods being shelved. 

Another reason Dr. Deming's methods were not put to use was 

because all of his previous efforts had been directed toward 

'Mary Walton, The Deming Management Method (New York: Putnam, 

1986) 8 

teaching the technical people formulas and methods and not 
toward management personnel who set policies and 
procedures and provided for their implementation. Whatever 
the reason for the shelving of Dr. Deming's methods, the 
United States began a joy ride which would last for almost 
forty years . 

After helping with the Japanese census of 1951, Dr. 
Deming lived and worked with the Japanese people off and on 
for thirty years. He was successful in Japan for several 
reasons. First, he lived in Japan long enough to learn 
about its language, people and culture. This later afforded 
him opportunities unavailable to any other American at that 
time. It was only by learning the culture that Dr. Deming 
was able to devise the best way to have his methods 
integrated into Japanese businesses. Second, Dr. Deming was 
able to seize the window of opportunity. After World War 
II, the Japanese industrial base was nonexistent. In other 
words, they were starting from scratch, which made them more 
open to ideas which would help put them on the road to 
recovery. The Japanese were a hard-working, patient people 
and were willing to try new ideas that fit perfectly into 
Dr. Deming's theory of total quality management. Japan was 
on its way to becoming the most respected quality 
manufacturer in the world. Third, Dr. Deming was able to 
reach the Japanese' top management with his principles. On 
several occasions, he met with top executives from Japan's 

twenty-one leading businesses. By doing this he was able to 
have his methods accepted and implemented from the top down 
and not from the bottom up as he had once tried in the 
United States. Additionally, the Japanese were more 
interested in long term growth than the annual report to 
stockholders which emphasized the bottom line. Dr. Deming 
also learned that the Japanese were very loyal people. This 
became very obvious to the American military that witnessed 
the destruction of pearl harbor and the Kamikaze pilots that 
were willing to give up their life because of their loyalty 
to Japan. This same loyalty was used in all facets of their 
lives. Unlike corporate takeovers and leveraged buy-outs in 
the United States, Japanese firms mutually agreed to mergers 
before they took place, with either company being able to 
say no. 

How and why was Dr. Deming finally discovered in 
America? It was in 1980, at which time Dr. Deming was 80 
years old. The Carter administration had left America with 
double digit inflation running rampant and economic disaster 
appearing imminent. People began to ask questions as to why 
the Japanese were doing so much better in the world markets 
than the United States. With the yen so strong against the 
dollar, people wondered how a country like Japan, whose name 
was once synonymous with junk ("Made in Japan"), could now 
be setting the global standard for quality. A television 
documentary was produced on June 24, 1980 entitled "If Japan 

Can... Why can't we?" This documentary attempted to discover 
how "good old American ingenuity" had become lost. The 
Nashua Company of America was examined because of its 
Japanese origin. It was found that it applied Dr. W. Edward 
Deming's principles of total quality management. As to why 
Nashua was doing so well in the United States, Dr. deming 
replied "If you get gains in productivity only because 
people work smarter not harder, that is total profit, and it 
multiplies several times". In the documentary, Dr. Deming 
was able to briefly describe his methods (15 minutes actual 
interview time). He further used the interview as an 
opportunity to chastise American industry for its ineptness. 
After the documentary aired, Dr. Deming's popularity and 
requests for his services blossomed overnight. 

"Walton 17. 



Total quality management, an effective business 

technique predominately used in Japan, is rapidly evolving 

in American business and industry. This concept consists 


... an integrated process involving both 
management and employees with the ultimate goal of 
managing the design, development, production, 
transfer and use of the various types of products 
and services in both the environment and 
marke t p 1 ace . 

This approach to business strategy involves employees at 

every level, from the Chief Executive Officer to the blue 

collar worker who performs custodial duties. To have 

successful total quality management, the products and 

services must consist of both quality assurance and quality 

control. Quality assurance must be differentiated from 

quality control or inspection, for "although a quality 

assurance program will include quality control and 

inspection, both these activities form only a part of a 

company's total commitment to quality.' 

Johnson Aimie Edosomwan, Integrating Productivity and Quality 
Management (New York: Marcel Dekker, Inc., 1987) 9. 

Lionel Stebbing, Quality Assurance: The Route to Efficiency 
and Competitiveness, 2nd ed. (Chichester: Ellis Horwood Limited, 
1989) 3. 


Quality assurance sets the standard that products and 
services must meet. The quality assurance function should be 
based on the customer's needs, not on the desires of 
suppliers or designers. These standards need to go further 
than just the basic contract specifications and documents. 
In doing so, "it is important to understand all of the 
customer's standards, both those in the contract documents 
and those more difficult to determine." After determining 
the customer's needs and assuring that the products and 
services can meet those needs, a quality control program can 
be established which will complete the total quality 
management strategy. Quality assurance is not stagnant, but 
must be a continual process that improves, changes, and 
seeks to satisfy an ever-changing, volatile and competitive 
market . 

A good quality control program guarantees that the 
products and services will conform to the specifications set 
forth in product definition. Some of the different 
parameters controlled in this process are size, type of 
material used, manufacturing tolerances and reliability. 
Quality of conformance is defined as "a measure of how well 
the product conforms to the specifications and tolerances 
required by the design." Every member of the quality 

Robert D. Martin, "Follow a Simple Strategy: Exceed Customer 

Expectations," Florida Constructor Jul. /Aug. 1992: 1. 

Edosomwan 9. 

control program must act as supplier, producer and customer. 
Each employee must supply and produce a product that meets 
the next employee's need. The employee must also act as a 
customer upon receipt of the product and determine if the 
product meets his or her own specific requirements. A good 
quality control program will seek to deliver goods and 
services that are correct the first time. 

The total quality management process must consist of 
both quality assurance and quality control to insure a 
marketable, competitive product for today's demanding 
customer. This management strategy must involve innovation, 
continual adaptation and risk taking. In order to minimize 
risks involved, training of quality management must be 
provided at every level of the organization. Programs often 
fail "due to lack of understanding or commitment." 
Quality management is moving to the forefront of American 
business and should make industries more competitive, both 
in the United States and in the international market. More 
and more companies are realizing that with proper 
implementation of the total quality management process, 
production will increase and costs will decrease. Even with 
an average three to five year implementation period, 
companies are realizing that quality assurance plus quality 
control equals total quality management and this equation is 
well worth the overall investment. The object of Total 

Martin 1-2. 


Quality Management is best described by John J. Hudiburg, 

CEO of Florida Power and Light CO.: 

The object of total quality management is simple: to 
establish a management system and corporate culture 
that will assure higher customer satisfaction than your 
compet i tors" . 

The best way to examine total quality management is to 

understand and examine the application of Dr. Deming's 

fourteen points of management. These fourteen points were 

especially written for American Industry, although with 

small variations can be applied world wide. Several of the 

points were never used in Japan, because they were not 

necessary and did not apply to their specific way of doing 

bus iness . 

John J. Hudiburg, "The CEO's Role in Implementing Total 
Quality Management." Alster, Judith and Holly Gallo, eds. 
Leadership and Empowerment for Total Quality . Symposium sponsored 
by KPMG Peat Marwick (New York: The Conference Board, 1992) 21. 



4.1 Create Constancy of Purpose for Improvement of Product 
and Service 

Most businesses are set up with their primary purpose 

being that of making money or, at least, to achieve a 

reasonable profit. Constancy of purpose is the notion that 

everyone is on board for the purpose of staying in business, 

being innovative, and investing in research and development. 

Most businesses are so preoccupied with today that they are 

unable to envision tomorrow. The most obvious* example of 

this is the recent demise of the computer giant IBM. At one 

time, IBM stock was worth $175.00 per share. It has now 

dropped to about $46.00 per share. One of the reasons given 

for this downfall was a lack of constancy of purpose. IBM 

did everything it perceived necessary in order to maintain 

its bottom line and, thus, achieved "good management". 

Unfortunately, when the computer giant awoke the next day, 

IBM found itself laying off thousands of people and closing 

facilities worldwide. "It is easy to stay bound up in the 

tangled knots of the problems of today, becoming ever more 

ef f ic ient in them. " 

'Walton 55 


Companies must continually improve and seek 

innovations. I worked for a manufacturing firm that saw its 

doors closed in the early 1980's. The first department to 

suffer large budget cuts and personnel layoffs was research 

and development. It was obvious that from that point on it 

was only a matter of time before the company would close its 

doors entirely. The company had literally cut its own 

throat by eliminating its ability to be innovative. 

Innovation does not require the design of a completely new 

product, idea or service. Innovation does require the 

manufacturer to be able to step back and examine its current 

offerings, compare those capabilities to the current or 

future demands of the customer, and make adjustments to meet 

those demands. After all, the true test of quality is by 

the end-user or consumer. Dr. Deming states that the 

company must have a plan to be innovative and every plan 

should answer the following questions: 

What materials will be required, at what cost? 

What will be the method of production? 

What new people will have to be hired? 

What changes in equipment will be required? 

What new skills will be required, and for how many 


How will current employees be trained in these new 


How will supervisors be trained? 

What will be the cost of production? 

What will be the cost of marketing? What will be 

the cost and methods of service? 


How will the product or service be used by the 


How will the company know if the customer is 

sat isf ied? 12 

For a contractor all of these questions should be answered 
and independently addressed in the context of every new 
contract. If these questions are not answered in the pre- 
planning stages for a job, then constancy of purpose will 
not be maintained. Each area covered by these questions 
involves different individuals throughout a contractors' 
organization. For example, it is impossible for an 
estimator to know the cost of production without first 
talking with the crews and determining their actual method 
of construction. All too often an estimator will assume a 
certain method when preparing a bid, which forces the field 
personnel to tackle the problem of how to construct the job 
and still achieve the same profit based on the estimator's 
calculations. In order for companies to achieve constancy 
of purpose they must be willing to expend resources in 
research and education. Companies should seek continuous 
improvement of products and services and invest in new aids 
to production, both in the field and in the office. 

4.2 Adopt the New Philosophy 

This new philosophy must begin with management. 
Moreover, it may have to start with major stockholders. In 
order for large companies to implement a new philosophy, 


Walton 56. 


stockholders (owners) must be willing to allow the time for 

a transformation to take place. Only then will managers 

become loyal and adopt "quality" as the new buzzword instead 

of "profit". Obviously profit is necessary for success, bu c 

quality must be considered first if companies expect to keep 

their doors open and to compete effectively. American 

companies have focused on bottom line results for too long 

and have neglected the total quality management process. 

This new approach to management must be applied to the 

construction industry as well. 

Total quality management is becoming a contract 
requirement within the construction industry. The 
nation's awareness of quality will be reinforced by the 
annual presentation of the Malcolm Baldrige Award for 
Quality. Most of Fortune 500 firms are pursuing this 
award. As a result, they are requiring their 
suppliers, which include contractors, to implement 
their own total quality management process. 

The Ritz-Carlton Hotel Company, a 1992 Malcolm Baldrige 

Award winner, already categorizes its suppliers based on 

their implementation of total quality management. They 

currently award services and contracts based on quality and 

not merely price. Service and contract companies must be 

able to continually improve right along with Ritz-Carlton or 

they will be seen as a barrier to the continued success of 


Lou Bainbridge and Bill Abberger, "Partnering - A Progress 

Report," The FMI Management Letter August 1992: 2. 

4.3 Cease Dependence on Mass Inspection 

The inspection system currently in place for American 

industries is set up in such a way that the costs of 

implementation far outweigh the system's worth. As products 

are inspected at different points along the production line 

and at the end of the line, a defective part or product may 

be discovered. At this point in time the defective item 

must either be scrapped, reworked or turned into something 

else. Each of these alternatives are costly. Typically the 

final cost for the end product is two to three times the 

original price for that product. This process inevitably 

slows down productivity. 

Inspection with the aim of finding the bad ones and 
throwing them out is too late, ineffective, costly, 
says Dr. Deming. In the first place, you can't find 
the bad ones, not all of them. Second, it cost too 
much . 

Inspection will always be necessary, but not to ensure 

quality. Inspection should be used to gather information. 

If quality is already built into the process, then 

inspection is only one tool that is part of the process. As 

inspectors gather information, the data acquired is used to 

define, analyze and redefine upper and lower control limits. 

Statistics derived from this data can also be used to assist 

in setting quality goals. Inspection is also necessary for 

gathering information when a new process has been 

implemented or a new piece of equipment or technology has 


Walton 60 


been introduced. Further, inspection for quality should be 

used when attempting to ascertain a suppliers' initial 

quality or for comparing potential product suppliers. 

Using specifications to determine or measure quality is 

not the answer either. 

This practice implies that anything inside the 
specifications may be all right, while something just 
outside is all wrong. It was, he says, Dr. G. Taguchi 
who won the Deming prize in 1960 who saw the absurdity 
of such suppositions and proposed an important 
improvement of principle. 

The principle simply stated is that as variance is 

decreased, cost decreases. 

Is this applicable and true for the construction 

process? In government and private contracting, quality by 

inspection will probably always be necessary. Because of 

the nature of construction, no two projects are the same, 

jobs have different quality requirements, different crews 

and customers, and hardly anything ever remains exactly the 

same from one project to another. However, recently more 

private companies and some government agencies have started 

to replace some of their testing specifications. The 

approach now being attempted is to use statistical 

acceptance procedures in lieu of the old pass/fail type of 

specification. This approach could be the wave of the 

future. Old methods are not only unfair and costly, but 

involved human judgement and opinions. However, this new 

15 Walton 61 


technique will take years to implement. The government 

bureaucracy still inhibits progress more so than private 


Red tape includes delay, buck-passing, pigeon holing, 
indecision and other phenomena which contribute to an 
end result of inaction. Red tape is of course a 
popular phrase for a series of diseases which arise 
from identifiable and curable specimens of management 
germs. As we analyze these diseases we see that they 
are present in industry as well. But the antibodies of 
industry today keep the degree of infection down to a 
more reasonable level. 

Companies need to concern themselves with all aspects of 

quality: performance; ease of use; delivery time; 

dependability; consistency; serviceability; life expectancy; 

aesthetics; and, perception. 

4.4 End the Practice of Awarding Business on Price Tag 

Every company that produces a product supplies it to 

someone else. If the supplier of the raw material produces 

inferior quality, then the end product (having gone through 

other phases of production) will only be as good as the 

original raw material would allow. Companies should seek to 

establish suppliers that can be counted on for quality. 

After the suppliers have attained the level of quality that 

meets a company's needs, then a certain loyalty should be 

established to do business with those suppliers. In the 

past, companies have mainly used the supply source that 

J. M. Juran, Bureaucracy: A Challenge to Better Management 
(New York: Harper, 1944) 38. 

could meet the minimum specification at the lowest price. 
The suppliers with the lowest price more often than not 
produce inferior products that are unreliable. Often these 
suppliers go out of business before the warranty on their 
products expires. 

In construction, this point applies to the way the 
United States Government awards most contracts. Current 
federal laws and regulations dictate that government 
agencies must award construction contracts to the lowest, 
responsive, responsible bidder. This translates into 
approximately 90% of government contracts being awarded to 
the contractor with the lowest price. In most cases these 
are the companies that must cut corners to ensure a profit, 
resulting in reduction in quantity and/or quality. 
Typically this could involve means, methods, materials or 
workmanship. Another problem inherent with this type of 
government contracting is the "small business set-aside". 
The current laws and regulations force agencies to award a 
large percentage of contracts to small businesses. In my 
experience, the firms that are most able to provide good 
quality construction are the big business construction 
firms. They have the resources, continuity and experience 
to deliver a quality product. In order for the United 
States Government to receive better construction these 
problems must be resolved. Obviously, resolution could be 
achieved through the policy-making and legislative process, 


but the "red tape" of the government seems to be unaffected 

by total quality management at this point. 

Currently there are more construction firms and 

resources than there are jobs available for award. Because 

of this, the industry will see a consolidation of firms in 

the 1990's with fewer, but larger firms remaining. This 

consolidation should be good for the industry. 

This will cause the overall competition to improve. 
Those companies that are marginal in their ability to 
process work and manage their firms will become 
casualties. We see this consolidation as being 
positive for the companies that survive. One of the 
problems facing the industry today, as it has for the 
last 10 or 15 years, is an over-abundance of 
contractors relative to the availability of work. This 
consolidation will result in enhanced profits for its 
survivors . 

The government must seek ways to enhance and improve 

quality with the low bidders it currently does business 

with. Several new methods such as "partnering" and 

"statistical acceptance theory" are currently being tested, 

but the jury is still out as to their success and 

acceptance. Other ideas, such as contracting by negotiation 

and selecting of pre-qual i f i ed bidder's list, have had some 

success in specific contracting fields. Construction 

contracting should be done in a similar fashion to the way 

the United States Government awards design contracts. Firms 

must first pre-qualify based on certain criteria, with price 

being only one such element. Technical expertise, company 

17 "Trends in Construction for 1992 and Beyond," The Contractors 
Management Journal (August 1992) 2. 

and personnel qualifications, and experience are also 
considered for contract award. Regardless of the eventual 
outcome, it takes years, even decades, to fully implement 
new ways of doing business with the United States 
Government . 

4.5 Improve Constantly and Forever the System of Production 
and Service 

This appears to be different from the age-old adage "if 

it ain't broke don't fix it". Just think where society 

would be today if it were still satisfied with the first 

model "T" that rolled off the production floor, the first 

refrigerator that was cooled with a block of ice, or 

communications without the use of satellite technology. 

This improvement to products or services must start at the 

design stage and continue through the entire process. The 

process must include all the essential players. The 

suppliers, producers, designers, quality personnel, owners, 

management, and the consumer or ultimate user. Sometimes 

these people are called stakeholders and need to be 

empowered to contribute to the organization's survival and 

prosperity. Michael E. Gerber breaks the participants into 

four groups: customers; suppliers; employees; and lenders. 

"To succeed, every business must learn to satisfy the 

essential needs, unconscious expectations, and perceived 

preferences of these groups in its universe." To survive 

M. E. Gerber, The Power Point (New York: Harper, 1991) 47 

and excel in the future, organizations need to concentrate 
on two interrelated issues: meeting the stakeholders' 
needs, and building a learning organization. Every step in 
the business process must be continually improving. This 
strive for continuous improvement must be initiated by 
management. Improving the process does not mean temporarily 
putting out a fire. "Finding a point of control, finding 

the special cause and removing it, is only putting the 

process back to where it was in the first place." 

On a construction job, a slump test is taken and the 

slump is too low. Someone grabs the hose and begins to add 

water to solve the problem. The problem may be temporarily 

solved, but neither the concrete nor the process is 

improved. This is not an improvement in quality, it is 

putting out a fire. It is very important that all 

individuals are empowered to make decisions and suggestions 

to continually improve the process and products. Management 

must be willing to take this risk. No one knows more about 

their job than the individual performing that job. If a 

concrete finisher thinks of an idea that will improve 

concrete finishing and provides a better quality product, 

then this idea should be considered and reviewed. Without 

empowerment, idea wills never surface. 

19 Walton 67 

4.6 Institute Training, Retraining and Education 

Everyone in a company should participate in continuing 
education and training. From the Chief Executive Officer to 
the janitorial workers, each individual should be offered 
the opportunity and be encouraged to further their 
education. The more knowledge people have, the more 
knowledge the company has. For construction, the point of 
training and retraining is well taken. All too often in 
construction, workers have learned from other workers. On 
any job site, it is difficult to find anyone who did not 
learn their trade from someone else, who in turn learned it 
from someone else. There are apprenticeship programs used 
by both union and non-union contractors. The problem that 
arises is when a worker incorrectly learns his trade. Once 
a person has been incorrectly trained, it is very difficult 
to retrain that worker. All too often the situation arises 
where "you can't teach an old dog new tricks". Statistical 
control charts can be used to monitor and analyze 
performance of workers. As long as a worker's performance 
is not in statistical control, then training should 
continue. There will always be good workers and bad 
workers. However, knowing their upper and lower control 
limits will allow managers to better know if something has 
gone wrong with the system. Further, every time a new piece 
of equipment, method, or technology is introduced, training 
and retraining should take place. Individuals should also 

be trained in total quality management concepts as well as 
the basics in statistical methods. How do we see that 
workers get the proper training that they need? First, the 
company must commit resources for that purpose and realize 
that not only is it going to cost money, but it will require 
employees to spend time away from work. The Ritz-Carlton 
Hotel Company, a 1992 Baldrige Award winner (see Appendix 
B), requires its employees to receive 126 hours of training 
annually. In the construction industry; contractors, 
engineering societies, designers, universities, federal, 
state and local governments all must be willing to take an 
active role and expend resources of both time and money to 
promote and upgrade vocat iona 1 - 1 echn i ca 1 schools. Trade 
training for the non-college worker must be revitalized. In 

a recent study it was found that the average unemployment in 

four major college cities was 4% . This was mostly 

attributed to high school graduates not planning on 

attending college. Not once in the entire article did it 

mention vocational training as a possible solution. Studies 

have also shown that a high percentage of crimes are 

attributed to unemployed high school graduates. With the 

military scaling back, options are very limited for a high 

school graduate with no training. Currently, the 

Association of General Contractors and others are providing 

20 Lillian Guevara-Castro, "Tale of Four Cities," The 
Gainesville Sun 20 June 1993: Al . 


some help in training, but will need a great deal of help to 
thwart the inner-city unemployment that plagues America's 
cities. One major benefit to training is that studies have 
shown it reduces employee turnover. The Ritz-Carlton boasts 
a turnover rate of 48% compared to the industry wide 
standard of 100%. "Training expenditures will be viewed as 

an ongoing investment of safety, quality and 

productivity." Supervisory management training reduced 

employee turnover in construction industry by 35% (see 

Figure 1 ) . 


Figure 1 

By what percentage does supervisory management training reduce 

employee turnover? 




32.80 Under $30M 39.33 Union 41.84 
36.43 $30-$74.9M 32.11 Non-Union 24.67 

39.23 $75-$199.9M 37.75 Both 
$200M or More 33.00 



Source: Survey of Supervisory Training in the U.S. Construction 


Figure 1 - Percentage by which supervisory management 
training reduces employee turnover. 


The Contractors Management Journal 7 

4.7 Institute Leadership 

Install the new way of management by utilizing 
continual quality improvement, principle centered 
leadership, and use of statistical process control. 
Management must learn how to motivate workers. Management 
must also learn how to instill pride amongst the workers, 
and when a product has been completed or service provided 
each worker should be proud of his or her accomplishments. 
It is the job of the manager to do everything possible to 
help a worker do his job correctly. The problem with most 
managers today is they do not know or do not understand what 
the workers' job is. Managers that come straight out of 
college are book smart, but are not street smart. Programs 
could be set up to get management out on the floor or on the 
job and learn about what workers actually do. At the Ritz- 
Carlton Hotels managers are required to spend 25% of their 
time on quality management. They actually dedicate time to 
spend in the hotels interviewing and talking to customers 
and employees. Programs must be set up to allow workers to 
progress into management, which can be accomplished through 
company education and training programs. This could mean 
that a company sponsor and pay for a workers' college 
educat ion . 

In construction, management does a good job at 
promoting crew workers to field supervision jobs. Most 
superintendents, general foremen and foremen were promoted 

from the field. Because of this, many field level 
supervisors know the jobs of the workers quite well, but 
often lack management and motivational skills. Likewise, 
many small, independent contractors are owned by tradesmen 
that have no formal schooling. Companies need to expend 
more resources to promote and educate from within, which 
will result in more long term employees. The Department of 
Defense has a very good program for this. The enlisted 
commissioning program affords the college opportunity for 
its best enlisted personnel. These future officers have the 
advantage of formal schooling and on-hands experience. 
Generally, these officers are given more immediate respect 
from their subordinates because of their experience and not 
merely because of rank. 

4.8 Drive out Fear 

"Driving out fear" was invented by Dr. Deming 
especially for American companies. Because of their 
approach to business, the Japanese did not need to learn 
this management principle. The Japanese encourage people to 
ask questions, solve problems and take risks. The American 
mentality encompasses the fear that one might ask a stupid 
question and be embarrassed, cause a problem, or even start 
an argument. If a worker attempts something risky, the 
worker will not be rewarded, but punished. This fear has 
been entrenched in American industry for decades and will be 
difficult to overcome. Workers fear retribution by way of 


job loss, reassignment, discrimination, and sometimes 

harassment . 

It is necessary, Dr. Deming says, for better quality 
and productivity, that people feel secure. He notes 
that se comes from Latin meaning 'without,' cure means 
'fear' or 'care.' Secure means 'without fear, '--'not 
afraid to express ideas, not afraid to ask 
quest ions ' . 

For construction, perhaps driving out fear is not a 

major problem. Because of its nature, most projects or jobs 

are temporary and workers are also temporary. However, it 

is still important that workers know that if they identify a 

material or process that is lowering quality, then, without 

fear, they can bring it forward. Workers should not have to 

worry about the project getting behind schedule or how the 

bottom line will be affected. Sadly enough, in construction 

it is too easy for a worker to just overlook poor quality 

because he knows that job will be over soon and he will be 

moving on. This happens in the United States Naval 

Construction Forces (Seabees), typically a detachment will 

deploy to a job site for six to nine months and receive 

"turnover" information about all of the ongoing 

construction. This turnover period usually lasts one to two 

weeks. Some workers in a battalion know that if they made a 

mistake it probably will not be found until they are long 

gone. Schedules, rather than quality, are stressed. Thus, 

if a worker discovers a mistake or identifies an item that 


Walton 72 

is lowering quality, that worker may look the other way if 
the established priority is to stay on schedule. Another 
problem in construction is the fact that sometimes the 
subcontractors are not included in quality planning, and 
subsequently do not adhere to any plan promulgated. To 
avoid liens and other problems, subcontractors will not ask 
important questions and instead go with the status quo. 
They usually believe in minding their own business, even if 
they see a way to improve quality outside their portion of 
work. If risks are taken, they fear possible loss of their 
contract, legal recourse and future loss of business. 
Companies must do away with the old style of management by 
results: quotas; personnel evaluations; quality by 
inspection; evaluate results; and, motivation by fear and 
intimidation. The most important and perhaps most difficult 
disease to overcome will be the psychological fear that has 
been inbred in American workers for too long. 

4.9 Break Down Barriers Between Staff Areas 

Management must create a system that tears down the 
inter-rivalries between departments. Teamwork, not just in 
a department, but throughout the entire company must be 
promoted and instituted. When it comes down to making a 
decision between what is best for the company or the 
individual, the person must choose for the company every 
time. This means all departments should be aware that what 
they purchase, produce or sell effects someone else in the 

organization. This is why it is very important that all 
departments are represented from the onset of the initial 
design of a product or service. It does no good to produce 
a perfect quality product for which there is no market. 
Likewise, it is no better to market a product that a company 
cannot produce. 

When determining whether breaking down these barriers 
is important and relevant in construction, it is helpful to 
examine the following possible scenario: A job is released 
for bid that requires a certain type of gravel to be used to 
produce architecturally pleasing concrete walkways. The 
estimating department bids the job as specified. The 
purchasing department orders a material that will conform to 
all the necessary specifications, except color (scheduling 
is tight and color of walkways cannot be that important). 
The purchasing department informs project management that 
they need to request a deviation in the specification for 
the color. Management submits the request and, knowing 
these approvals normally take a long time, instructs the 
concrete foreman to use the product upon arrival. The wrong 
color stone has now been ordered, delivered and is being 
installed. The change has been sent from contract 
management (owner's rep) to the owner for his approval. The 
original owner who participated in the initial design has 
changed companies. No one else remembers why he wanted that 
particular color, but he was a smart man and if he had a 

reason it must have been a good one. Specification 
deviation request is disapproved. 

From this scenario one could surmise that teamwork in 
construction is important. All departments should be in on 
the original design. After a problem arose, the company, 
along with the owner should have met and tried to work out a 
team solution. At the very least they could have seen how 
their product was going to effect the next department. 
Instead, the problem was just passed on to the next 
department, with no regard to quality or the needs of the 
owner . 

4.10 Eliminate Slogans, Exhortations, Targets for the 
Workforce, and Numerical Quotas 

When management decides to set targets for its 

employees, it has virtually ensured poor quality. A person 

whose performance is measured by numbers will do whatever is 

necessary to meet his quota. This means the number of 

inferior products will increase because there is only 

motivation for the individual to speed up and not slow down. 

Slogans and exhortations that put additional pressure on 

workers to complete impossible tasks should be eliminated. 

'Zero defects.' 'Do it right the first time.' These 
have a lofty ring, Dr. Deming says. 'But how could a 
man make it right the first time when the incoming 
material is off-gauge, off-color, or otherwise 
defective, or if his machine is in not good order?' 

23 Walton 76 

Management must provide the worker with everything he needs 
to work smarter, thus affording him the opportunity to 
produce his best if so motivated. 

Sometimes slogans are managements' way of actually 
setting goals for employees and putting them on public 
display, which creates even more pressure. Usually how that 
worker will accomplish that particular goal is not even 
discussed with him. Management should encourage employees 
to create their own slogans and mottos. This allows the 
employee to show pride in his work. To improve quality, the 
worker must improve the process and management must improve 
the process . 

In construction, goals are often set by the home office 
and handed down to the field offices. The project manager 
or superintendent communicates these goals to construction 
crews through bulletin boards, newsletters, or weekly 
toolbox meetings, if at all. However, these goals are top 
driven and the work force is not told how to accomplish 
them. They are told to stay on schedule by working harder 
and longer. More times than not, if a contractor falls 
behind schedule, the solution is either to hire more workers 
or work more hours or both. Typically, the causal delay of 
the schedule is in the construction process and not in the 
people. The correct solution should be to analyze the cause 
and improve the process. 

Slogans are found in construction just as in any other 
industry. Slogans such as "Think Safety" or "Safety First" 
are meaningless to workers if they have not received proper 
training, equipment and motivation. With management trying 
to achieve a goal of no lost time accidents on the job, 
slogans such as these are fruitless without proper planning. 
If management has not provided the methods to achieve the 
goal, then it will most assuredly fail. 

4.11 Remove Barriers to Pride of Workmanship 

Management needs to first identify all items involved 
in the process of manufacturing their particular product or 
providing their particular service. The biggest barrier to 
pride of workmanship is lack of communication between 
management and the worker. Management tends to be very good 
at dealing with numbers and dollars, but when it comes to 
communicating with workers, they have received very little 
to no training in this area. This makes them feel very 
uncomfortable if forced to deal routinely with the work 
force. Therefore, the easiest answer is avoidance. Once 
this communication barrier has broken down, the other 
barriers crumble much more rapidly. The other barriers 
could be anything in the process; from incoming defective 
material to improperly maintained equipment. If a worker 
uses a piece of equipment that is faulty, then it causes him 
to produce defective products. The worker can have no pride 
of workmanship while producing defective components and the 

end result is that his productivity actually decreases. 
Further, whatever that worker produces is being supplied to 
someone else, who now has to work with a defective product 
and this problem continues to get exponentially worse 
through the entire process. 

In construction, communication is very important 
because most jobs are built vertically. Also, in vertically 
constructed facilities, all the components end up comprising 
one final product. Therefore, it is paramount that quality 
begin with incoming material that is involved in the initial 
phase. For example, if quality for soil compaction is not 
ensured for a large building, then the propagation could be 
catastrophic. Once, while I was a project manager for two 
$13 million warehouses, concrete testing identified 
defective material in the buildings footers. The 28 day 
breaks revealed that the concrete was falling well below the 
required compressive strength specification. Obviously, 
this was an embarrassing situation for the contractor, 
concrete crews and concrete supplier. Pride of workmanship 
was being prevented by some barrier in the process. It was 
discovered that the problem was in the process at the batch 
plant. There was a defective piece of equipment at the 
plant that was causing the problem. This piece of equipment 
was a barrier to people being able to have pride in their 
job. The equipment was replaced, the process improved and 
quality was enhanced. 

4.12 Take Action to Accomplish the Transformation 

This final point emphasizes that it takes a special 
effort by everyone to implement all of these points. 
Training in statistics will have to take place and, perhaps, 
even the hiring of a temporary statistical consultant. The 
top management must buy in and completely endorse the 
program or it will fall flat on its face. All members of 
the company will have to receive training on the program 
itself. The best way to implement the program is to utilize 
the Plan-Do-Check-Act ( PDCA ) Cycle. In the PDCA Cycle, 
first a company should plan, which involves identifying the 
opportunity for improvement, documenting the present 
process, creating a vision of the improvement effort and 
defining the scope of the improvement effort. Second, it 
should "do" or carry out the plan which entails piloting the 
proposed changes on small scales with customers. Next, 
with time, study the results by observing what you learned 
about the improvement of the process. Finally, "act" or 
adjust the process based on your new knowledge by 
efficiently utilizing the new mixture of resources and 
repeating the PDCA steps on the very next opportunity. 
Originally, this was the Shewhart Cycle (see Appendix C). 
This plan will continually improve as the cycle is used. 
The implementation must not only have constancy, but also 
consistency. If there is not consistency among the 
employees, "they will tend to go off in different 


directions, well-meaning but misguided, diluting their 

efforts and sometimes working at cross-purposes." 

Mistakes will be made because management will actually be 

trying something new and different. But because fear has 

been driven out, this should not cause a problem. Further, 

everyone works as a team and teamwork should be stressed. 

Each team should find ways in their part of the process to 

continually improve all points. 

24 Walton 88 




Application of total quality management in some 
businesses has succeeded where in others it has failed. Dr. 
Deming cites some deadly diseases that can and have caused 
the program to fail. If companies wish to succeed in 
implementing total quality management, then continual 
improvement would include avoidance of the diseases. If a 
company is not willing to completely shake itself up to 
establish total quality management, then it probably is not 
serious about improving quality and productivity. However, 
if ready to become completely immersed, the long term 
success is in the company's future. Examination of these 
deadly diseases warrants a more detailed look. It should be 
noted that these are not the only reasons for failure, but 
are the major and most common reasons. 

5.1 Lack of Constancy of Purpose 

If a company goes out of business after having tried to 
implement a total quality management program, it probably 
failed to create a constancy of purpose amongst its 
employees for quality of products and services. The 
dedication to the new philosophy must be sincere, obvious 
and widespread. Employees have seen many faddish programs 
attempted before. To set this program apart from the 

others, something dramatic may have to be used. Employees 
need something to convince them that this is different and 
is also long term. To show how serious the management is, 
Deming suggests "such concrete activities as spending money 

on training and equipment, or shutting down operations when 

something is wrong can help convince employees." 

5.2 Emphasis on Short Term Profits 

Companies may actually have to take a short term loss 

to make the strategy work. This may require the involvement 

and cooperation between top management and the major 

stockholders. With the probability of long term growth and 

profit, the risk will be well worth it. 

There are estimates that 20-40% of an organization's 
efforts are spent in rework and unnecessary work. By 
making reductions in these areas, a company can clearly 
recover its up-front costs to implement total quality 
management, but it must recognize that there are up- 
front costs and provide for them. 

The problem occurs when attempting to convince the 

impatient, profit-driven owners. The return on investment 

in three to five years should please most owners, especially 

when given the alternative of decreased profit, short term 

growth or bankruptcy. Further, their company will become 

known for producing quality products. 

25 Walton 90. 

Transportation Research Board 72nd Annual Meeting January 10- 

14, 1993, Total Quality Management "Putting Theory into Practice" 

Session 168 , Sponsored by Committee A2F03 Management of Quality 

Assurance , 1 . 


5.3 Evaluation of Performance, Merit Rating, or Annual 

Evaluation of personnel encourages competition amongst 

employees and usually results in less teamwork. Evaluations 

and merit ratings force people to put themselves number one 

and the company two. Also, performance ratings mean people 

must be evaluated against someone or something. If it is 

against someone, say the top performer in their particular 

area, then this inspires competition and rivalry. If the 

evaluation is tied to something, then typically this means 

quotas or numbers. This will result in production of poor 

quality and service. A persons' evaluation should be tied 

to quality. Perhaps, like at the Ri t z-Car 1 ton , 

In all levels of the organization, annual raises and 
reviews are tied to evaluations of an individuals' 
quality of performance. Members of work teams can also 
share in bonus pools when solutions they recommend to 
quality related problems are successfully 
imp 1 ement ed . 

In construction, or any industry, this problem is not 

easily resolved. Annual raises tied to cost-of-living 

adjustments should be given out equally to all employees 

based as a percentage of their income. Companies should 

consider longevity raises at certain points in workers' 

careers. This type of raise also keeps people with the 

Edward Watkins , ed., "How the Ritz-Carlton Won the Baldrige 
Award," Lodging Hospitality Nov. 1992: 22. 


company longer. Profit-sharing should be considered as a 

viable alternative for all employees. 

We introduced company-wide profit sharing, which again 
was driven by our values. Our salaries are set on the 
50th percentile of our major competition. In addition, 
we have a variable component ranging from 1-7% of 
salary based on how we perform against the year's 
profit goal. The impact on our employees has been 
significant. One question in our 1988 survey asked 
employees to agree or disagree with, 'I will share in 
the business success of Hoechst Celanese.' In 1988, 
only 39% agreed with that statement, in 1991, 87% 
agreed. The responsibility for the quality process 
lies with line management; 25% of their performance 
appraisal is tied to our quality objectives. 

Bonuses, and other incentives or raises could be given based 

on quality improvement ideas or suggestions that continually 

improved the company. A working suggestion program is also 

a good way to measure a company's progress in the new 

culture of total quality management. Florida Power and 

Light Company initiated just such a program. 

The number of suggestions went from 600 in 1986 to 

25,000 in 1989. Quite an improvement. If I had only one 

indicator to judge a corporate culture by,, I would 
choose to look at the suggestion program. 

Another idea would be to base raises or incentives on an 

individual's personal strive to continually improve. If the 

company sponsors education and training, it should reward 

individuals who take advantage of it. Attention should be 

given to those employees who go beyond what is expected. 

Ernest H. Drew, "Winning with 'Quality Values'," Judith 
Alster and Holly Gallo, eds . , Leadership and Empowerment for Total 
Qual i ty , Symposium sponsored by KPMG Peat Marwick (New York: The 
Conference Board, 1992) 18. 

29 Hudiburg 25. 


Employees should be recognized for their continuous 

improvement and dedication to quality. 

... the recognition process needs to be thought out and 
it needs to be done on several levels. I have become 
even more convinced that money is a bad form of 
recognition. It is just not personal enough. 

5.4 Mobility of Top Management 

Retaining the chief executive officer and other top 
managers is a growing problem in the United States. With 
corporate mergers and leveraged buyouts, top executives find 
themselves moving around quite often, usually before they 
have made any real, long-term impact. For example, the 
average engineer moves around every two to three years in an 
effort to either find a better paying job, one with more 
responsibilities, or perhaps one that is just more 
satisfying. This constant requirement to improve one's 
position by being mobile is probably the number one reason I 
joined the United States Navy. After graduating Auburn 
University in 1980, I had already started looking to move up 
with another company in 1986 (this would have been my third 
company in six years). I figured moving every two years, on 
average, could be no worse than the moves required in the 
Navy. Although I change jobs with the Navy every two to 
three years, I still maintain my seniority and benefits and 
I do not have to start over from scratch, as would probably 


Philip B. Crosby, Quality Without Tears: The Art of Hassle- 

Free Management (New York: McGraw-Hill, 1984) 119 

be required in the civilian world. A definite allegiance to 
my employer has developed and I have acquired a great deal 
of corporate knowledge which carries over from one job to 
the next. With top management moving every couple of years, 
the opportunity to learn about the company, much less its 
employees and their concerns, is greatly limited. 
Unfortunately, this is presently the American way of life 
and may never change, especially for the large corporations. 
There is a great chasm between what the owners perceive as 
good for the company and what is taught in total quality 
management. Small and medium size companies, especially 
family owned, can probably best overcome this disease. 

5.5 Running a Company on Visible Figures Alone - Counting 
the Money 

This disease is difficult to avoid because most owners 

are concerned with hard figures and the bottom line. 

However, if total quality management is given a viable 

chance to succeed, then the invisible figures will 

eventually affect the visible ones. For example, as the 

number of a company's satisfied customers increases, the 

effect will be an increase in revenues, a visible figure. 

As quality (an invisible figure) improves, cost, a visible 

figure, will decrease. Because the correlations are 

sometimes difficult to prove and because they take time to 

occur, owners and stockholders become impatient and abandon 

the process too early. 


5.6 Excessive Medical Costs and Excessive Costs of 
Warranty, Fueled by Lawyers That Work on a Contingency 

For the construction industry, these may be the two 

biggest deterrents to not only implementing total quality 

management, but for survival as well. Concerning medical 

costs, "for some companies this is their largest single 

expenditure." Currently, the country is in turmoil 

concerning the health care debate. The current 

administration has promised a national health care plan, but 

the revenue to pay for the plan has not yet been found. 

Crosby sums up the current national health care problems 

quite appropriately: 

Physicians wouldn't let anyone run the health care 
industry, so costs went out of sight, and now the 
insurance and health maintenance organizations (HMOs) 
are taking over. Thus, practicing medicine is no fun 
anymore; it's like being in Britain. Soon patients 
will be assigned, except for the very rich. Hospitals 
are being bought up and run 'efficiently' through mass 
purchasing and fewer laboratory tests. 

Medical costs can be controlled in a large part by using a 

good safety program as part of total quality management. 

Lawsuits are either generated by internal employees or 

external entities. Most lawsuits that come from within 

involve safety and health issues. These, too, can be 

controlled for the most part by a new and improved quality 

safety program being introduced as part of the total quality 

management process. Because these issues are vital to a 

31 Walton 93. 

Crosby, The Eternally Successful Organization 20 

construction firm's existence, safety will be discussed 
later in detail. External lawsuits usually involve product 
liability. A total quality management program will correct 
some of this problem, but not all of it. As quality 
increases and defects decrease, accidents caused from faulty 
products will decrease. Other ways of reducing external 
lawsuits are partnering and design-build contracts. 

5.7 Other Obstacles to Total Quality Management 

Dr. Deming points out several other obstacles to total 

quality management: 

Neglect of long-range planning and transformation. 

The supposition that solving problems, automation, 

gadgets, and new machinery will transform 

indust ry . 

Search for examples. 

Our problems are different. 

Obsolescence in schools. 

Reliance on quality control departments. 

Blaming the workforce for problems. 

Quality by inspection. 

False starts. 

The unmanned computer. 

Meeting specifications. 

Inadequate testing of prototypes. 

Anyone that comes to try to help us must 

understand all about our business. 




In today's litigious society safety is a major 

consideration for construction managers. To ignore 

construction safety could mean the difference between 

staying in business and filing for bankruptcy. Apart from 

the economic impact, some sort of moral consideration for 

the importance of safeguarding human life must also occur: 

The struggle to provide safeguards to eliminate or 
reduce the number of accidents that occur, and the 
injuries and damage that result are predicated chiefly 
on these two aspects: (1) costs and (2) regard to human 
life and well-being. 

For many years the construction industry served as its own 

watchdog. However, safety today is determined through a 

combination of requirements set forth in laws, regulations, 

and extravagant costs resultant from rising insurance 

premiums and numerous claims. Penalties and other 

deterrents imposed by organizations such as Occupational 

Safety and Health Administration (OSHA) have raised the 

safety awareness of construction managers. Some of the 

safety components that affect and control costs are 

management participation, education of personnel, hazard 

identification and control, promotion of safe practices on 

Wi 1 1 ie Hammer , Occupational Safety Management and Engineering 

(New Jersey: Prentice-Hall, Inc., 1976) 2. 


the job, accident investigation and a comprehensive safety 


To reduce work injury risk there are five basic areas 
of influence: safety laws and inspection, employee 
safety training, availability of accident statistics, 
and management sponsored safety programs. 

The two economic considerations that need to be 

evaluated concerning safety are direct and indirect costs. 

Sometimes where safety is concerned, these terms are 

analogous to insured and uninsured costs. Direct costs are 

those which can be clearly identified and directly 

correlated to job safety. Insurance costs depend upon the 

number of claims for accidents and injuries and the past 

safety record of the company. Most of these insurance costs 

are encompassed under workers' compensation. Although the 

specific requirements for workers' compensation vary from 

state to state, the employer pays 100% of the cost. 

Workers' compensation insurance can be obtained either 

through an insurance company, a self-insurers' fund or by 

being self insured. Workers' compensation is based on 

occupational rates published for each particular craft and 

on the experience of the employer. The insurance premium 

will vary according to the current safety record of the 

employer. If an accidental death were to occur on a job 

site, this could be equated financially to as much as 5,000 

Dalha A. Muazu, "A Safety Program for a Building 
Construction Firm." Diss. University of Florida, 1976: 3. 

lost-time man hours on the job. Consequently, the direct 
result would be a rise in the insurance premiums. 

Liability insurance is also carried by employers in 
order to minimize loss when equipment or property is damaged 
through an accident. Liability requirements are usually set 
forth in the contract. Many studies have been undertaken to 
establish a basis for which losses could be related to a 
measurable cost and "in almost every instance it has been 
found that the total losses exceeded by far the amounts 
reimbursable by insurance companies." This non- 
reimbursed cost has caused many companies to increase 
coverage limits, which results in increased premiums, while 
others have decided to reduce risks instead. Risk reduction 
can be directly related to a specific job and is the cost 
attributable to safety prevention. However, the cost 
savings derived from these elements are negligible when 
compared to the positive results of increased productivity 
and increased profits. 

There seem to be many indirect or uninsured costs and 
pinpointing exact amounts is difficult. For example, from 
the following list some items will have actual costs more 
readily identifiable than others: cost of wages paid for 
working time lost by workers who were not injured; payments 
for settlement of injury or death claims; legal fees for 
defense against claims; cost of wages for working time lost 

Hammer 4 


by injured workers (other than workers' compensation 

payments); assessed punitive damages; recovery and salvage 

costs for equipment and vehicles; extra cost due to overtime 

work; loss from function and of operation income; wage cost 

due to decreased output of worker upon return; slowdown in 

operations; cost of time spent by supervisory personnel and 

clerical workers investigating or processing claims and 

workers' compensation forms; OSHA penalties; fines and 

temporary shutdowns; cost for corrective action; degradation 

of efficiency of operations because of loss of experienced 

and trained personnel; training costs for replacements; 

increased insurance costs; loss of public confidence and, 

therefore, revenue; loss of prestige; and degradation of 

morale. However, the actual costs attached to each of these 

should not be the number one motivational factor: 

At the present time attempting to predict how much 
could be lost in an accident to evaluate risk involved 
may be an exercise in futility. Not only will any loss 
probably be far higher than expected, but recent 
legislation has virtually eliminated cost 
cons iderat ions . " 

Passage of the Occupational Safety and Health Act in 1970 

forced many companies to reevaluate their safety practices 

and programs. In addition to fines or penalties, companies 

can now be forced to cease operations. In some cases jail 

sentences are invoked. Until recently many companies 

practiced safety only to avoid hassles with government 

Hammer 7 


agencies such as OSHA and the Environmental Protection 

Agency (EPA). Even though the construction industry created 

consensus safety standards to operate under, it became 

necessary to enact the Occupational Safety and Health Act 

because on-the-job injuries and deaths remained at 

unacceptable levels. The fox in the henhouse was not 

working and perhaps Admiral Hyman G. Rickover said it best: 

To forestall intrusion of Government, the industry 
concerned will usually propose voluntary safety 
requirements. These requirements represent the minimum 
all are willing to accept. This is not enough. There 
are more accidents. Only after the lapse of much time 
are laws finally enacted. Much harm will have been 
done in the int erva 1 --harm which could have been 
prevented. " 

Unfortunately, regulations and laws applied by agencies 

vary. This unending problem results from the diversity of 

the construction industry. The construction industry 

encompasses many and varied types of work and this tends to 

increase the complexity and uniform application of the laws 

as they apply to specific safety plans and practices. 

According to common law, the employer has historically been 

responsible for "a safe place to work, safe tools to perform 

their work, knowledge of hazards, competent fellow employees 

and supervisors and rules by which all could perform safely 

and a means to ensure that the rules were observed." 

Simply put, this means the employer must provide rules for a 

Hammer 62. 
Hammer 15. 

safe work place and must have a plan or program that 
monitors safety. Legislation and regulation will not work 
if workers and management do not take positive action to put 
these rules into practice in everyday activities and begin 
to care about safety in the work environment. 

From experience we know that as a federal agency OSHA 
makes rules concerning safety, supervises industry safety, 
investigates safety violations and holds hearings and makes 
rulings on those violations. Many companies have problems 
in dealing with the bureaucracy of OSHA. Once the rules are 
learned, it seems the rules change or new ones are added. 
Further, companies cannot use OSHA as a single source for 
information on safety rules. OSHA alone references more 
than twenty sources which, piled on top of one another, 
would be several feet high. Many costs can result from an 
OSHA inspection such as changing out faulty equipment, 
fines, penalties, jail terms, operational slowdown, work 
stoppage and record keeping. Underlying many of the 
problems in dealing with OSHA and other government agencies 
is the fact that standards vary from state to state and from 
agency to agency. This variance causes great difficulties 
when trying to deal with legal and technical requirements 
for safety as outlined by government agencies whether 
federal, state, city or municipality. A "standard" is that 
"which requires conditions or the adoption or use of one or 
more practices, means, methods or operations or processes, 

reasonably necessary or appropriate to provide safe or 
healthful employment and places of employment." Perhaps 
in an effort to get away from consensus standards the 
government went too far. The construction industry and 
government need to strive toward a medium whereby all can 
understand the laws efficiently and with relative ease. 

Management of safety has been tried many different ways 
in construction. All styles seem to have their own positive 
and negative aspects. However, most management safety plans 
have seven principal factors which significantly reduce 
accident costs: (1) know safety records of all field 
managers and consider their record in evaluations for 
promotion or salary increases, (2) communicate safety on job 
visits the same way you communicate about costs and 
schedules, (3) use cost accounting system to encourage 
safety by allocating safety costs to a company account or 
allocate accident costs to each specific project, (4) 
require detailed work planning to ensure equipment or 
materials needed to safely perform work are at hand, (5) 
insist that newly hired employees receive training in safe 
work methods, (6) use safety awards, and (7) use the 
expertise of safety departments where they exist. 

39 Hammer 62. 

Safety awards for workers, if used, should be incentives 

(nominal monetary value) based on first aid injuries rather than on 

lost-time injuries. Safety awards for field managers should be 

bonuses (substantial monetary value and made in private) based on 

lost-time injuries or reduction in insurance claim costs. 

An important aspect of construction safety is that all 
personnel, from the general laborer to the chief executive 
officer, must have and understand their role in safety. 
More importantly, each person must know their responsibility 
and should be held accountable for their respective safety 
tasks. Just as in their regular job, personnel should be 
promotable to a higher safety position. If not, they will 
become stagnant in their safety role and accidents will 
ensue. Continuing education should be afforded to all 
personnel. Key personnel should receive first-hand training 
and be briefed on any new rules or prevention methods and 
they should subsequently educate their fellow employees 
regarding same. At a minimum, all individuals should know 
basic safety responsibilities such as proactive accident 
prevention, awareness of hazardous situations, knowledge of 
the safety rules, knowledge of emergency procedures and 
their responsibility to report mishaps. As personnel 
function in safety roles, production should increase and 
risk-taking decrease. 

Any accident, as the word implies, can be avoided. 
Almost all are avoidable through the prevention of human 
error. This error is not necessarily always by the injured 
party. Human error could occur in design, operation of 
equipment, manufacture of equipment, maintenance, or even 
through the inaction of a witness to a potentially dangerous 


situation. All people in the construction industry should 

strive to provide: 

(1) equipment and procedures that will minimize the 
possibilities of errors by operators, (2) designs that 
eliminate or minimize the possibilities of accidents if 
an operator does make an error, (3) designs and 
safeguards that will prevent injury if an accident 
occurs . 

Anyone involved should use their best judgement, apply the 

known rules, and have a moral consideration for life. Also, 

we must learn from our mistakes and seek to correct 

problems. Besides the obvious reduction in insurance costs, 

accident reporting and accompanying statistics are vital to 

prevention of similar accidents. If a common problem exists 

within a community, such as a virus or disease, it must be 

reported and corrected in order to keep others from being 

detrimentally affected. 

As with most construction jobs, hazards are going to 

exist. It is the nature of the beast. It is very important 

that these hazards are clearly identified and controlled. 

Sometimes this requires bringing in an expert from outside 

the organization. If the job entails a hazard with which no 

one in the organization is experienced, an outside expert is 

advisable. The scope of the hazard must be identified and 

also controlled. Once identified, all employees should be 

made aware of the hazard and its potential effects. 

"Hammer 96. 

Companies should never attempt to control a hazard for which 
they have no experience. 

A good safety program is probably the best tool for 
accident prevention on the construction site. Safety 
programs can be very sophisticated, as often is the case 
when dealing with large companies, or they can be relatively 
simple, as is typical of smaller organizations. Due to 
their inexperience, smaller companies often ask insurance 
companies for assistance when formulating a program. 
Regardless of size, most plans seem to have two main parts: 
planning and controlling. Once the program has been 
established (planned), then it should be implemented with 
controls in place. Controls are numerous and vary greatly, 
but two important elements are regular site inspections and 
continual, detailed hazard analysis. The National Safety 
Foundation found that "85% of all accidents are unsafe acts 

i 9 

rather than unsafe conditions." If through a safety 
program employees are made aware of potential safety 
hazards, then some accidents could be predictable and 
therefore avoidable. It is estimated that 50% of all 
construction accidents could have been avoided by common 
sense and attention to basic safety practices. An 
employee's responsibilities include such items as: (1) 

Muazu vi i . 

The Associated General Contractors of America, Manual of 

Accident Prevention in Construction , 6th ed. (Washington, D.C.: 

AGCA, 1971) 8. 

compliance with all safety standards, (2) compliance with 
approved safety plans, and (3) wearing the prescribed safety 
equipment. Even items that seem trivial can return savings. 
For example, it has been shown that "a clean, safe job site 
may increase productivity by 5% and has been responsible in 
one case for a 12% increase in productivity.' 

One area still under close scrutiny is the application 
of behavioral science to construction safety. There are 
verifiable statistics that show most workers who are 
needlessly injured on the job through their own carelessness 
were injured due to lack of attention. This lack of 
attention is mainly due to a worker's concentration being 
diverted to other problems present in the worker's life such 
as marital or family problems, financial troubles, a recent 
move, new job, new position or others. Values can be 
assigned to each factor and employees can complete 
questionnaires related to these specific areas. After 
compilation of the values, a risk assessment can be made on 
employees. This could provide a possible warning for an 
employer that certain employees are at a higher risk than 
others. This would afford the employer the opportunity to 
minimize both his liability and the employee's risk for 
injury. This could be done by employer-sponsored 
counseling, reduced overtime, work assignment in less 

David Goldsmith, Safety Management in Construction and 

Industry (New York: McGraw-Hill, 1987) 39. 

dangerous areas, closer supervision, monitoring and 
communication. Sometimes emotional or mental problems are 
considered occupational illnesses if they are found to be 
work related and may be covered by workers' compensation, 
"An eager, we 1 1 -mot i vated individual who is undistracted by 
personal problems or stresses can out perform a distracted 
or poorly motivated person, all other things being 
equal ," 45 

There are many reasons to practice good construction 
safety. With the threat of government agencies imposing 
fines, work stoppage or possible jail sentences, companies 
can no longer ignore the impending cost of not managing 
safety properly. Even though exact cost savings are 
difficult to quantify, many managers are realizing 
significant cost savings through safety management. With 
the current wave of litigation in the air, everyone must 
stand up, take notice and assume responsibility. If not, 
they will be heading down a long, one-way road to 
extinction. Companies are beginning to realize that proper 
safety management increases profit and productivity, while 
at the same time enhancing the company's reputation within 
its community. More importantly, however, is the 
significance now being placed on preventing injury and loss 
of life. Although it is difficult to quantify such 

45 Hammer 108. 


achievements, it is clear that total job safety is rapidly 
becoming paramount in today's construction industry. 



Data is an important and useful tool when establishing, 
maintaining and improving a quality process. Data should 
always be based on facts and not include opinions, 
impressions or any human manipulation or intervention 
whatsoever. If the data is collected cleanly and used 
correctly, it is a viable tool in the overall scheme of 
total quality management. Any company that currently does 
not use statistics will find that statistical procedures can 
transform their business. "Only with the proper use of 

statistical methods can people minimize confusion in the 

presence of variation." Only after data has been 

collected and a statistical procedure applied can a company 

actually begin to understand their own production process. 

It is only after understanding the production process that 

they can attempt production. Finally, after learning how to 

actually control or change the process can a company start 

the process of continuous improvement. Improvement is 

possible because a quality process with control limits 

(upper and lower) has been established. If part of the 

process exceeds one of those limits, then the fact that a 

variation has occurred will be readily identifiable. Other 

46 Walton 96 

methods can be used to determine the actual root cause of 
the variation. In almost every case, the cause will be part 
of the process, not controlled by the worker. The cause is 
usually not the worker nor anything within his controllable 
domain. This is because the control limits were set based 
on data that included the workers production. Humans do not 
tend to vary greatly in their day to day job performance, so 
if a variation occurs outside a control limit, it is likely 
due to the process and not human error. 

Statistics and how they are utilized needs to be 
understood by all employees. This can be done as part of 
the training and education process. Statistical methods are 
fairly straightforward and can be handled mathematically by 
most people. There are many helpful charts which 
demonstrate how data transformed by statistics can be used. 
Some of these are cause and effect diagrams (fishbone), flow 
charts, Pareto analysis, run (trend) charts, histograms, 
control charts and scatter diagrams. The actual use and 
sample applications for each of these is included in 
Appendix D. Gathering and using data to transform a company 
into a quality leader in business is important, but only one 
part of the total program. 



Most companies that have introduced and implemented 
total quality management concentrate in the following areas 
directly exposing employees to customers; se 1 f- inspect ion ; 
simplifying work; cos t -of -qua 1 i ty monitoring; and working 
with vendors and suppliers on efforts of quality (Figure 2) 

itllilillllllllillllillllllllllllliiniilllllilliillllilllllllllllllllllllllllillllllllllllllllllllll lllllllllllll nillllllllllllllllllllllllllllllllllll Illlllllllllllllllllllllllllllllllllllllllllllllllllllllllltllllllllllli llllllillllliilililliiillliiiiiiiill minimi; mmiumillllliillllllllilmllllill 

Figure 2 

Percentage of Employees Covered by Total Quality Practices. 

Almost About Almost 

None None Some Half Most All All 

OX 1-20% 21-40% 41-60% 61-80% 81-99% 100% 

Direct employee 

exposure to customers 

Sel f- inspect ion 
Work s imp 1 i f i ca t ion 

Cost-of-quality monitoring 18 

3 2 


3 5 





Collaboration with suppliers 13 

Just-in-t ime deliveries 24 

Work cells or 41 
manufacturing cells 











3 2 

4 2 

" iNMiii^riNii imiiiii,MiLtJ!>Nr;rii( Ji i ai ih r u un M ui 1 1 1 ?f n i - ■ Hin n nil [ r r i H 1 1 in 1 1 1 1 . i n i(]i h i m i i m 1 1 , u,: ■ , i ■ h M m. 1 1 1 1 ' ,.n,iN. i m . . h nr - ■ : 1 1 1 ■ i lti i i :.. ■ i i i ii ; ; i i i - iimiii: r i n ( i tn i i i i;h unit (i imi uiifii iniMMf <, n i n; i n : m h i n m i : 1 1: 1 1 - 1 it: ■ ■ ■ >. 

Figure 2 - Percentage of Employees Covered by Total Quality 
Prac t ices. 

Studies have shown the major problem for the Fortune 1000 
companies was failing to expose all employees to total 

quality management. Less than 40% of all employees were 

actually exposed to the total quality management program. 

For the companies that are involved in manufacturing, 

emphasis on total quality management is taught to 

management, then exposure is made on the production floor. 

The total quality management process sometimes never leaves 

the manufacturing floor. Similarly, in the service 

business, because the main business is dealing directly with 

the customer, the emphasis on total quality management is 

placed on customer interface first and rarely becomes a 

company wide program. The good news is that total quality 

management has been introduced to some degree to most major 

companies in the United States. 

The results show that total quality programs are in use 
in the vast majority of U.S. organizations and suggest 
that a fairly standard pattern of practices is typical 
of total quality programs. 

Today companies that are in declining markets tend to adopt 

total quality management programs more quickly. Further, 

more manufacturing firms have adopted the program than other 

major industries, although the service industry is not far 

Edward E. Lawler, Susan Albers Mohrman and Gerald E. Ledford, 
Jr., Employee Involvement and Total Quality Management (San 
Francisco: Jossey-Bass Publishers, 1992) 96. 

48 Lawler 96. 


behind. It should be noted that all industries have, to 
some point, adopted total quality management (Figure 3). 


Figure 3 

Total Quality Management Index Scores by Industry 





All Companies 

Total Quality Index 


Chemical s 

Elect ton i cs 


Forest Products 

Motor Vehicles and Parts 

Diversified Services 

Commercial Banks 

Diversified Financial Services 

Savings Institutions 

Life Insurance Companies 

Transportat ion 


3. 3 

2. 5 

3. 1 
2. 2 
2 . 2 
2 . 2 
2 . 5 


Figure 3 - Total Quality Management Index Scores by 
Indus t ry . 

The chart is based on scoring indices correlated to seven 
total quality management practices. These are: direct 
exposure to customers; se 1 f- inspect ion ; work-simplification; 
cos t -of -qua 1 i ty monitoring; collaboration with suppliers in 
quality efforts; just-in-time deliveries; and work cells or 
manufacturing cells. To interpret the total quality 


Lawler 100 

management index, the scores are averaged over these seven 
principles as applied by each industry. 

In examining the construction industry, it is important 
to know how it currently stands in connection to total 
quality management and the direction to which it is heading. 
Due to the nature of the construction industry, only some 
companies have implemented total quality management 
programs. However, the companies that have used total 
quality management report improved customer and employee 
satisfaction, improved relationships with suppliers, 
subcontractors, owners and engineers, and that the return on 
investment is increasing. The companies praise total 
quality management and report that it has helped business. 
"The principles practiced in manufacturing firms are just as 
applicable to construction companies and can produce the 
same dramatic improvements in the quality of roads and 
bridges." The concepts, as discussed, are difficult to 
incorporate because they change the culture of companies. 
The culture of the construction industry would have to 
change and this would be no easy task. Changing the culture 
of your business is not something that will be accomplished 
quickly. The change must also happen in such a way as to 


Martin 19. 


effect a permanent change and not just a temporary phase the 

business is going through. 

A few managers - the explorers - are readily open to 
testing the new ways. Most managers - the 
conservatives - want to see results demonstrated before 
departing from their existing order. 

As one examines Deming's or Crosby's fourteen points it is 

obvious the construction industry would have to alter the 

way it conducts business significantly. Construction 

companies must begin to look more toward customer 

satisfaction, quality assurance, and continuous improvement. 

"Current estimates on improving rework and repair has a 

potential to exceed fifteen billion dollars per year and are 

probably closer to fifty billion dollars." Contractors 

will have two choices, investing in good quality or paying 

for bad quality. In the near future the construction 

industry will see a decrease in the sealed, low bid type of 

contracts. J Therefore, companies will need to establish 

themselves as quality contractors first, and low cost 

companies second. Numerous studies have shown that more 

than 20% off the bottom line of most construction projects 

can be achieved by the use of a good, sound quality 

management program implemented at the beginning of a job. 

Quality calls for doing better with your customers, better 

J. M. Juran, Juran on Planning for Quality (New York 
Harper, 1944) 312-13. 



Manual of Accident Prevention in Construction 20 
Lou Bainbridge and Bill Abberger 2. 


than you have ever done before, and better than your 

competitor. Total quality management will allow the 

production of better quality products at a lower price. 

Productivity improvements represent the single largest 
opportunity for cost reduction and enhanced 
competitiveness and profitability. Statistics show- 
that some thirty percent of labor dollars expended 
annually in construction projects are wasted." 

The issue of quality is becoming a competitive force. When 
times are tough, consumer purchases are based increasingly 
on the durability and quality of the product and the price- 
quality relationship becomes much more important. Total 
quality management has become a trend in United States 
industries and will continue to grow in the construction 
industry as well. Those companies that do not use these 
principles will fall behind the industry standard. Further, 
many companies in other industries which contract out 
services and construction will increasingly require their 
contractors to have implemented total quality management 
programs. Suppliers for construction companies must also 
become more active. Typical, adversarial relationships will 
begin to disappear as ideas like partnering and selective 
bidding type contracts increase. Even more formal 
partnering will begin to increase in popularity, such as 
design-build contracting. This type of contracting will go 
to the larger firms with more resources and experience. 
Just as the Japanese are on the verge of using virtual 

The Contractors Management Journal 2 . 

reality to let customers design their own cars, larger 
design/construction firms will use this technology to sell 
their services. As companies consolidate, they will invest 
in employees and the work force will get older, more 
permanent, experienced and more productive. 





Institution of an integrated approach to total quality 
management and quality assurance/quality control is vital to 
the success of today's companies. The development of a 
total corporate quality management program should be 
accomplished after thoroughly investigating the different 
approaches offered by various consultants/theorists and the 
aspects of each one as applied to the specific needs of the 
company. Education of management personnel should be 
accomplished first, as managers must fully understand and 
support the total quality management process and actively 
participate in its implementation. Both the technical and 
humanistic aspects of total quality management must be 
addressed in the training effort and training should be 
tailored to the job functions of each employee. Use of 
pilot projects during the early stages of implementation is 
necessary to obtain an indication of management and employee 
acceptance of total quality management. In order to create 
a team attitude toward improving quality, companies should 
strive to develop closer, more productive relationships 
among owners, contractors, subcontractors and vendors. 


The company needs to have an overall philosophy that 
encompasses plans for improvements and makes company 
decisions based on facts. The company needs to pursue 
continuous improvement while maintaining a long-term 
perspective. Improvement will have to be made both in the 
processes and the organizational system within the company 
in order for the total quality management program to be 
success f u 1 . 

7 1 


The Associated General Contractors of America. Manual of 
Accident Prevention in Construction . 6th ed. 
Washington, D.C.: AGCA, 197 

Bainbridge, Lou and Bill Abberger. "Partnering - A Progress 
Report." The FMI Management Letter August 1992. 

Crosby, Philip B. The Eternally Successful Organization . 
New York: McGraw-Hill, 1988. 

Quality Without Tears; The Art of Hassle- 
Free Management . New York: McGraw-Hill, 1984. 

Deming, W. Edwards. Sample Design in Business Research . 
New York: John Wiley & Sons, 1960. 

Statistical Adjustment of Data . New York: John Wiley 
& Sons, 1943. 

Deming, William Edwards. Some Theory of Sampling . New 
York: John Wiley & Sons, 1950. 

Drew, Ernest H. "Winning With 'Quality Values'." Alster, 
Judith and Holly Gallo, eds. Leadership and 
Empowerment for Total Quality . Symposium sponsored by 
KPMG Peat Marwick. New York: The Conference Board, 

Edosomwan, Johnson Aimie. Integrating Productivity and 

Quality Management . New York: Marcel Dekker, Inc.. 

Gerber, M. E. The Power Po int . New York: Harper-Row, 
1991 . 

Guevara-Castro, Lillian. "Tale of Four Cities." The 
Gainesville Sun 20 June 1993: A1+. 

Goldsmith, David. Safety Management in Construction and 
Industry . New York: McGraw-Hill, 1987. 

Hammer, Willie. Occupational Safety Management and 
Engineer ing . New Jersey: Prentice-Hall, 1976. 


Hudiburg, John J. "The CEO's Role in Implementing Total 

Quality Management." Alster, Judith and Holly Gallo, 
eds . Leadership and Empowerment for Total Quality . 
Symposium sponsored by KPMG Peat Marwick. New York: 
The Conference Board, 1992. 

Johnson, H. Thomas. Relevance Regained; From Top-Down 
Control to Bottom-Up Empowerment . New York: 
Macmillan, 1992. 

Juran, J. M. Bureaucracy: A Challenge to Better 
Management . New York: Harper, 1944. 

Juran on Planning for Quality . New York: 
Macmillan, 1988. 

Juran on Quality by Design . New York: 
Macmillan, 1992. 

Juran, J. M., ed. Quality Control Handbook . New York: 
McGraw-Hill, 1951. 

Lawler, Edward E., Susan Albers Mohrman and Gerald E. 

Ledford, Jr. Employee Involvement and Total Quality 
Management . San Francisco: Jossey-Bass Publishers, 

Martin, Robert D. "Follow a Simple Strategy: Exceed 
Customer Expectations." Florida Constructor 
Jul. /Aug. 1992. 

"'Total Quality' Boosts Performance." Roads & Bridges 
July 1992: 19. 

Muazu, Dalha A. "A Safety Program for a Building 

Construction Firm." Diss. University of Florida, 

Schaefer, E. E., ed. ASTM Manual on Consumer Sensory 
Eva 1 uat ion . Philadelphia: American Society for 
Testing and Materials, 1979. 

Stebbing, Lionel. Quality Assurance: The Route to 

Efficiency and Competitiveness . 2nd ed. Chichester: 
Ellis Horwood Limited, 1989. 

Transportation Research Board 72nd Annual Meeting January 

10-14, 1993. Total Quality Management "Putting Theory 
into Practice" Session 168 . Sponsored by Committee 
A2F03 Management of Quality Assurance. 


"Trends in Construction for 1992 and Beyond." The 

Contractors Management Journal August 1992: 1-16. 

Walton, Mary. The Deming Management Method . New York: 
Putnam, 1986. 

Watkins, Edward, ed. "How the Ritz-Carlton Won the 

Baldrige Award." Lodging Hospitality Nov. 1992:22-23 










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How Ritz-Carlton Won 


An unswerving focus on continuous 
mprovement helped this luxury hotel 
hain land the biggest prize in quality 


"^ he Ritz-Carlton Hotel Co. has 
done what many people 
thought no hotel chain could 
do. Last month, the Atlanta- 
chain became the first hotel corn- 
to win the coveted Malcolm 
;e National Quality Award, 
jress created the award in 1987 to 
te and recognize quality achieve- 
in U.S. businesses. Named after 
; Secretary of Commerce Malcolm 
;e, an early proponent of Total 
y Management (TQM) in the. 
ace. it is regarded as the ultimate 
mong those U.S. companies that 
hemselves on the quality of their 
ts and services. 

ming the Baldrige Award estab- 
hat Ritz-Carlton Hotels is not just 
uxury lodging, but about provid- 
:ry reliable product that gives our 
in exceptional value for their dol- 
ys a proud President and Chief 
ing Officer Horst Schulze. "And 
'ou think about it. that describes 
I meaning of quality." 1 
Zariton was a finalist in last year's 
tition. This year. 90 companies 
i for the award in one of three 
ies: manufacturing, service and 

with the founding of the firm in 1983, 
when parent company W.B. Johnson 
Properties bought the U.S. rights to the 
Ritz-Carlton name. The company cur- 
rendy operates 23 properties in the U.S. 
and two in Australia. 

President and COO Horst Schulze. 

"At the company's founding, it was 
clear that there was no single supplier of 
quality hotels in multiple locations that 
met consistently high standards for tran- 
sient guests and provided uniformly su- 
perior products and services for meeting 

a commitment to fill that role with qual- 
ity products and services that do what 
we say they will do." 

By 1987. Ritz-Carlton was recognized 
as one of the best luxury hotel chains in 
the industry, but Schulze wanted more. 

"We asked ourselves how we could 
become even better than we were," says 
Schulze. "The hardest thing for me to do 
was overcome my ego and admit that I 
really didn't know how to take the com- 
pany beyond where it was. Once we did 
that, the job became easier." 

The company closely examined sev- 
eral early Baldrige winners such as Mil- 
liken & Co. to learn how they instituted 
quality improvement programs in their 
operations. From there, Ritz-Carlton 
plunged head-first into TQM with aston- 
ishing results. In 1991, it received 121 
quality-related awards and earned in- 
dustry-best ranking from all three major 
hotel-rating organizations. Independent 
research commissioned by the chain 
shows that 97 percent of its customers — 
both transient guests and meeting plan- 
ners — aren't just satisfied but say they 
have a -memorable experience" when 
they stay at a Ritz-Carlton. 
T7 ven though running a hotel is one of 

tz-Cartton Palm Beach is one of the chain's grand luxury resorts. 

ire able to apply many of the qual- 
itrol principles that manufacturing 
mies use to monitor and improve 
iroducts. Of course, the challenge 
tvice company is to create excel- 
with people rather than with ma- 
or raw materials. 

iv people think you can t transfer 
lality improvement techniques 
in manufacturing to the service in- 
es." says Mene. "In all busi- 
— whether it's a factory or a ho- 
ork gets done by transforming 
is. materials and people into a 
pt or service. In both environ- 
(work is processed through a sys- 
ind management must decide 
(its going to concentrate its ef- 
I manufacturing plant probably 
i more time on machinery and 
ills, whereas were more con- 
i^with the flow of people coming 
1 organization." 

alitz-Carlton approach to qualm. 
I on a number of basic but com- 
(inciples. many of them drawn 
tditional TQM theory, 
shieve its goals, the company re- 
n everal key quality initiatives: 

1 r*hf»#« 

in/^ *w * %i*%» 

correct them immediately and then 
report them to management. 

"When things go wrong in a pattern, 
some aspect of the process is probably 
out of control," says Mene. "It's up to all 
employees to spot those problems and 
help develop ways to prevent them in 
the future." 

The company trains, coaches and en- 
courages employees to prevent break- 
downs in service before they happen. 
All Ritz-Carlton employees receive at 
least 126 hours of training on quality 
topics. Much of the schooling centers on 
the company's Gold Standards, which 
include a mono ("ladies and gemlemen 
serving ladies and gentlemen"), three 
steps of service and 20 "basics." 

Mene views the company's quality im- 
provement effort as an investment rather 
than an expense. What drives up costs in 
hotels. Mene argues, is the cost of re- 
peating service that should have been 
done right the first time. Most properties 
maintain a safety margin of employees 
on duty at all times just to correct prob- 
lems, because management knows that 
service isn't always provided correctly 
the first time. 

iThr r-r»m«"»:»nv'« rnn *»Tr*»<~tit Itpc 

tive. The officers are much more than 
cheerleaders when it comes to quality; 
they each spend at least one-fourth of 
their time on quality issues. 

"They spend a lot of time working on 
ways to improve our product by talking 
to as many guests and employees as 
possible." says Mene. The chain s 14 top 
executives also meet weekly as a senior 
management quality team to review 
quality standards and performance, indi- 
cators of guest satisfaction, market 
growth and development and profit and 
competitive status. 

The executive team's involvement in 
quality issues is most evident at the 
opening of a new property. Rather than 
soft or phased openings with shake- 
down periods to iron out operational 
bugs. Ritz-Carlton hotels open all at 
once, and management expects every- 
thing to be right when the doors open 
for the first guest. 

To see that it is done, a specially se- 
lected start-up team picked from the 
staffs of other hotels makes sure that all 
facilities, services and systems are in line 
with Ritz-Carlton standards. 

A "seven-day countdown control 
plan' synchronizes all steps leading to 
the opening. During that week. Schulze 
and the other senior leaders work at the 
hotel, coaching and testing the new em- 

Bloyees on the chain's Gold Standards. 
|Thc company meticulously 
gathers data on every aspect of the 
guest's stay to determine if the 
hotels are meeting customer ex- 

Key to the research are the daily quality 
production reports that identify all prob- 
lems, defects and waste reported in each 
of the r 20 work areas in the chain s sys- 
tem. The data compiled ranges from the 
time it takes for housekeepers to clean a 
room to the number of guests who must 
wait in line to check-in. 

The reports are die chain's early-warn- 
ing system to detect recurring problems 
for which it must develop prevention 
plans. "We make about 100,000 cus- 
tomer contacts every day, and if every 
one of those encounters is done cor- 
recdy. the customers are always happy 
and we have no waste," says Mene. 

The chain relies on technology to 
keep comprehensive computerized 
guest history profiles on the likes and 
dislikes of more than 240,000 repeat 
guests. Researchers survey more than 
25,000 guests each year to find ways the 
chain can improve its delivery of service. 
■ The company recognizes and 
rewards employees for contribu- 
tions to continuous improvement. 
In all l#*v^k of rhe organization annual 

/ I 

?>'•<&%. ■ 

►erformance. Members of work teams 

an also share in bonus pools when 

olutions they recommend to qualitv- 

elated problems are successfullv 


iRitz-Carlton asks its suppliers 

join the chain in adopting the 
•rinciples of TQM. As part of its 
upplier certification program. Ritz- 
iarlton asks potential vendors to 
onduct self-assessments of their 
uality efforts. The chain categorizes 
endors as either not-acceptable, 
cceptable. certified or as full partner. 

"NJC'e only want to deal with suppliers 
iat are capable of continuous improve- 
lent. says Mene. "Ultimately, we choose 
jppliers on their quality standards, not 
ist on their pnce tags." 

1 Ritz-Carl to n empowers its 
mployees to -move heaven and 
arth" to satisfy customer needs. If a 
jest has a need or a complaint or if a 
rrvice problem anses. employees must 
op what they're doing and do 
hatever it takes to provide 
nstant pacification." 

At each hotel, the executive 
>mmittee doubles as a senior 
uality management team. 
Iso. a quality advisor at each 
3tel — usually someone with 
Derations or personnel expen- 
lce but trained in TQM — acts 

an advisor to the team to fa- 
litate the quality process and 

make sure management s fo- 
is stavs on quality issues. 

Tow will winning the N'a- 

Xtional Quality Award help 
tz-Carlton in the lodging mar- 

"Maybe there s no tangible market ad- 
intage. " says Mene. "but by going 
rough the Baldrige selection process. 
e now have a road map that will heip 
i be more competitive and continu- 
islv improve our product." 
Schulze believes the award Firmly 
entifies Ritz-Carlton as the hotel com- 
iny that guests can count on if they 
ant a reliable product and value for 
eir dollar. 

"Thousands of companies are becom- 
g involved in the quality movement, 
id to the peopie in those firms Ritz- 
irlton will become a kev supplier be- 
use they know we offer a product thev 
n count on." 

Topping the winning of a Baldrige 
tard will be a tough chore, but the 
ain has set its sights even higher: bv 
96 it wants to be the first hotel com- 
,ny to provide a "memorable expen- 
ce" for 100 percent of its customers 
"U e never want to lose a single cu>- 


tJis does a truly cus- 
lpany go to 
. If you're as 
% you profess to 
:%a mountain in 
tmight offer toj 
rding they want - , 
.budget to 





r^^*^ f ^ l ^''\- < ^? rnen ^ oca i zoning regulations forced 

ik~*& % c t" 3 *^ to dose the tent, Freni went to 

*pIu^^Hton President and COO Horst 

ISchulze to propose The Pavilion as a 

^permanent replacement. "We had all 

•seen this thing evolve into a huge hit. 

? pot just in our meetings business but in 

the local social community as well." 

Freni says. "The company was all for 

obnhrjuing that success.* 

' i^Hc and Schulze put together a budget 

rim combined company funds with the 

s own capital. 

1th financing in place and The Pavil- 

tiSh'sahell under construction, Freni 

me inpurof longtime customers 

__iding what the building's guts 

fefc"t>e- He also pulled drawers of 

l ana* catering files to determine how 

jdustomers had used the ballroom, the 

tand the grounds over the years. "I 

■ ^realized we needed to incorporate fea- 

rd never really seen before in a ho- 

that allowed for ex- 

ffadbaity," he says. 

Freni, his customers and its de- 

created in The Pavilion are 

flexible ceiling and a state- 

jting system. Painted mid- 

the ceiling is inset with hun- 

lights that give the 

lighting standpoint, your 

is really your only limita- 

i says. The computer-oper- 

attaches to motorized ceil- 

ions that can be raised or 

to create a tiered or patterned 

JKabric panels hang across the 

to form a visual "curtain." 

•lighting system also enables event 

to adjust portions of the room 

;orrpm point specific tables and speakers 

hotel's A/V department can create 

ifates of company logos and theme 

lions that are projected on 

Instead of ornate wallpaper. 

«e painlecTplainly to reflect 

of the spotlights. 

to die resorts main building by 

can-style courtyard, the 

vflion includes a 10,000- 

meedng/event level and an 

of 12,000 square feet. The 

800 for dinner or 1,000 in a 

seating configuration. Its 

_ area accommodates 130 booths 

f*8)r ^SdTeatures electrical and water outlets 

most i mp ortant thing about The 

ys Freni, *is that we listened 

customer. Consequendy, we built 

Lcffify lhafs more in tune with their 

<? Zl BK 

. "r^vr'S*^l> 

■«-«--< ,. <Jil 

than with what some architect 
thoughts building like this should in- 




Study the 
What did 
we learn?. 

the effects 

of the change 
of test. 

What could be the most important 
accomplishment of this team? 
What changes might be desirable? 
What data are available? Are new 
observations needed? If yes, plan 
a change or test. Decide how you 
will use the observations. 

Search for data on hand that could 
answer the question propounded 
in Step 1. Or, carry out the change 
or test decided upon, preferably on 
a small scale. 

Step 5. Repeat Step 1, with knowledge accumulated. 
Step 6. Repeat Step 2, and onward. 

-Own** O* 4 ** Cfwm 



Selected Charts and Diagrams Demonstrating 
How Data Transformed by Statistics Can be Used 


Flow Chart 

Run (Trend) Chart 


Control Chart 

Mea»urement Time 


Pareto Chart 









Scatter Diagram 

Varubie 1 

— Diane Ritter 

Excerpts from The Deming Management Method by Mary Walton 
(pages 98-113) . 


Cause-and-Effect: "Late for Work" 

1 Man Powerj 

Materials | 

But (are 
CotTcct change 


Train rtckrt 


I Methods I 


* | Machines! 

Ishikawa, whose Guide to Quality Control was written for Japa- 
nese workers and is now the most widely read book on basic 
statistics for quality in the United States, outlines these benefits 
from cause-and-effect diagrams: 

1. The creation process itself is educational. It gets a discussion 
going, and people learn from each other. 

2. It helps a group focus on the issue at hand, reducing com- 
plaints and irrelevant discussion. 

3. It results in an active search for the cause. 

4. Data often must be collected. 

5. It demonstrates the level of understanding. The more com- 
plex the diagram, the more sophisticated the workers are about 
the process. 

6. It can be used for any problem. 3 


In an actual case, a hospital used a cause-and-eff ect diagram to 
examine the reasons why patients were receiving meals that were 
different from the orders they had placed. Afterward, the hospital 
staff targeted some of the causes for data collection. 

Cause and Effect: "Wrong Hospital Meals" 4 

Hiring polibea in dietary 

Diicipliiviry potior* 



served to 

patients on 

both shifts 

Lack of attention 
in dietary 


lack of .t*H 

— GOAL. M t marf ftggiT 


Flow Chart: "From Bed to Work" 

Get Dressed 


Eat Breakfast 

Drive to Work 

Arrive at Work 

Sleep Late 


Iron Clothes 

Watch TV 

Take Bus 

Park & Walk 


Pareto Charts 

Pronounced pah-ray-toe, these are among the most commonly 
used graphic techniques. People will speak of "doing a pareto" or 
say, "Lefs pareto it." This chart is used to determine priorities. 
The pareto is sometimes described as a way to sort out the "vital 
few" from the "trivial many." 

Suppose, in our continuing example of a morning routine, you 
would like to leave the house at 8:15, arriving at work by 8:45, so 
as to have a fifteen-minute period in which to relax — or a cushion 
against being late — before work begins at 9 a.m. More often, you 
leave by 8:30 a.m. and barely make it. You decided to keep track 
of the things that interfere with your departure for sixty days. 
You are sure that waiting for the bathroom is a major cause. And 
you know that getting caught up in reading the paper is a delay. 
So is the pesky garage door, which occasionally sticks. Sometimes 
you can't resist hitting the snooze alarm. 

In your research, you might use a checklist, a good way of 
collecting data. 

Here are some possible results: 

Conditions That Might Cause Lateness 
(Some days have more than one occurrence) 




Reading paper (more than 


ten minutes) 


Bathroom delay 


Snooze alarm 


Garage door 


Having to iron 


Other reasons 


These incidents could be displayed on a pareto chart. 


Pareto Chart: 

'Conditions That Might Cause 


















As a result, you might make some changes. Switch to an after- 
noon paper. Get up earlier. Buy a clock without a snooze alarm. 

At the printed circuit board plant, management organized a 
safety campaign at the employees' request. A team gathered data 
on accidents, then used a pareto to diagram the findings. Eye 
injuries were more common than any other. The team then re- 
searched causes and again made another pareto chart. The largest 
number of eye accidents occurred during the process of clipping 
the wire leads of components after they were soldered to the 
printed circuit board. In this fashion, pareto charts can be used to 
narrow down problems. 


Pareto Chart: 'Types of Injury" 6 

Types of Injury 

Causes of Eye Injury 







^ 10 






dipped Solder Duit 

Component SpUsh 

— GOAL, Memory jofxtr 

Run Charts 

A run chart is perhaps the simplest of the statistical tools. Data 
are charted over a period of time to look for trends. Sales per 
month over a period of a year is a typical use. 

A run chart could be used to track the number of minutes it 
takes to get to work. You discover that it always takes longer on 
Monday, and accordingly you allow more time. 


Run Chart: 


to Work 

on ' 









» 25 












/ \ 


' \ 

















w / 







Z 1 











K \ 



" * 

Weekly Week 2 Week 3 Week 4 

r r 

A hospital found that its emergency room was often either 
overstaffed or understaffed. It took the data it already had on 
emergency room cases and made a run chart. Admissions had 
been highest during January, July, September, and December. 
One might speculate that holidays and weather were a factor. The 
hospital decided it needed more information, investigating pas* 
years to see if the same pattern existed. It also used the run chart 
as a guide for conversations with the admissions staff. 


Run Chart: "Emergency Room Admissions" 

—GOAL Mrmor, fan 


A histogram is used to measure how frequently something oc- 
curs. Suppose, for example, you are wondering just how much 
time you should allow for the drive to work. On good days you can 
make it in fifteen minutes. Every so often, you hit a traffic jam, and 
it takes forty-five minutes. What is "normal"? dearly, not the av- 
erage of the two. To find out, you might — if you're really commit- 
ted to this project — collect data for, say, a hundred working days. 

Hypothetical Commuting Times 

15 16 20 15 18 17 20 18 17 19 23 20 21 21 16 15 17 21 17 17 
18 16 22 25 17 16 19 19 18 17 25 18 16 17 17 16 15 22 20 17 

16 15 18 17 17 16 19 18 19 20 24 27 17 19 22 16 18 21 20 24 
18 22 22 18 17 18 19 17 21 24 18 15 19 20 23 22 19 18 17 21 
32 22 18 20 21 19 20 24 16 17 18 20 22 20 20 19 18 15 19 20 


The data show that the longest trip was thirty-two minutes; the 
shortest, fifteen. All but two of the trips, fell between fifteen and 
twenty-five minutes. On a histogram, there is a distinct curve. 

Histogram: "How Long to Get to Work' 














































































X ' 




14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 

Travel Time to Work 

A print shop was receiving complaints about the quality of its 
finished product. Some customers thought the print wasn't dense 
enough. The shop measured the density over a period of time, 
then organized the results by frequency on a histogram to see 
where the bulk of the measurements fell. 



ii "Print Density" 8 







U- 4 


.60 .70 JO .90 1.00 1.10 1.20 1JO. 1.40 1.50 

Black Density of Print 

— GOAL, Memory joxx" 

Scatter Diagrams 

A scatter diagram is a method of charting the relationship be- 
tween two variables. 

Continuing our example, suppose your office has just insti- 
tuted flextime. You may come to work anytime between 7:30 and 
9:30 a.m. and leave eight and a half hours later. You would like to 
choose your hours to minimize drive time. 

Over the next month, you leave the house at various times 
between 7 and 9 a.m. and record how long it takes you to get to 
work. On a scatter diagram, the two variables show a distinct 


Scatter Diagram: "Drive Time" 




.£ 35 











= IS 



• r 


_ — _„ _ 

• • • 


• • • 

• i 


730 fcOO 

Time Leaving House 



Leaving before 7:30 or after 8:30 greatly shortens the trip. You 
much prefer leaving later, and it eases competition for the bath- 
room. You tell your boss you will work from 9:30 a.m. to 6 p.m. 

A manufacturer wanted to know whether there was a correla- 
tion between shelf life and the stability of his product. A scatter 
diagram showed that indeed there was. 

In business, a scatter diagram might be used to chart the rela- 
tionship between a worker's training and the number of defects, 
between moisture content and durability, between light levels 
and computer errors. 


Scatter Diagram 




Ingredient Stability 



M.G. Active Ingredient Per Sample 

3 8 Si 















) 5 10 15 20 25 

Shelf Life (Months) 

— -GOAL. Mrmtry fax" 

Control Charts 

Dr. Deming often talks about the need to use control charts to 
analyze processes. The purpose, he emphasizes, is "to stop peo- 
ple from chasing down causes." Properly understood, a control 
chart is a continuing guide to constant improvement. Control 
charts are easy to use and certainly not beyond the capabilities of 
most workers. But even experts, notes Dr. Deming, on occasion 
"find them extremely difficult to interpret." 

Writes Dr. Deming on this subject, "The production worker 
requires only a knowledge of simple arithmetic to plot a chart. But 
he cannot by himself decide that he will use a chart on the job, 
and still less can he start a movement for use of charts. 

"It is the responsibility of management to teach the use of con- 
trol charts on the job [ongoing] where they can be effective." 

He sounds this cautionary note: "Proliferation of charts without 
purpose is to be avoided." 

NAVAL i'UO i 'jtvMJU/M c o^nvui 
MONTEREY CA 93943-5101