Best Value

Best Value
Construction’s Six Sigma

In the 1980s, 37% of all construction projects reported major defects. 37%!!! No manufacturing company would survive a 37% defect rate. By the 1990s, the construction industry suffered 33% of construction projects over budget and 42% completed late. 42%!!! Late!!! 33% over budget!!! In any other industry, these statistics would spell disaster. However, the construction industry soldiered on into the 21st century in the same manner. During the first decade of the century, one researcher reported that 29% of projects were still completed late and 26% were over budget. A second more dismal report contended that 33% of projects were completed over budget and 50% were late.  Also, in 2005, 72% of industry professionals reported a significant increase in the number of change orders occurring for projects. I share this is dismal history of quality in our industry not as a bearer of bad tidings but rather as a kind of “Paul Revere” trying to wake up the industry to our major defect before it crushes us one at a time.

Quality Management Programs

Quality management programs such as Six Sigma, Total Quality Management, and Lean Production have found great success in the manufacturing market. When Jack Welch adopted the Six Sigma strategy at GE, he was, in effect, striving for “six-sigma” levels of performance in all his manufacturing processes. (A “six-sigma” process is one in which 99.99966% of the products manufactured are free of defects.)

Contrast that with the historic quality metrics in the construction industry detailed above. Our industry has failed to adopt any of the quality management programs that are revolutionizing manufacturing. Why? What is it about construction industry thinking that perpetuates acceptance of over-budget performance, the proliferation of costly change orders, and completion dates seen as “wishful thinking”. Why have we failed to adopt any of the three most popular quality management programs? 

Six Sigma

Six Sigma is a business management strategy that seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in the business and manufacturing processes. The program helps to solve most business problems with improved process knowledge. This increase in performance and decrease in process variation leads to defect reduction and vast improvement in profits, employee morale, and quality of product. 

Total Quality Management (TQM)

Total Quality Management consists of organization-wide efforts to “install and make permanent a climate where employees continuously improve their ability to provide on demand products and services that customers will find of particular value.

  • Total emphasizes that departments in addition to production (for example sales and marketing, accounting and finance, engineering and design) are obligated to improve their operations.
  • Management emphasizes that executives are obligated to actively manage quality through funding, training, staffing, and goal setting.

Lean Production

Lean Production is a systematic method for waste minimization within a manufacturing system without sacrificing productivity. Lean also deals with waste created through overburden and waste created through unevenness in work-loads.

These quality management programs have revolutionized the use of standardized systems, from the assembly of tightly specified products such as automobiles and gadgets, to the execution of commodity services such as information technology (IT) assistance and mail delivery.

Best Value – Construction’s Six Sigma 

Although the underlying principles of the classic quality management programs like Six Sigma, TQM, and Lean Production are relevant to all markets, the processes and methods of application may be inappropriate for an industry that dispenses highly diverse collaborative products such as construction. However, the principles of the Best Value Procurement method applied in the construction and services industries have been documented to significantly affect quality and efficiency in construction performance.

  • The Best Value system is an owner-driven quality program designed to improve a company’s ability to deliver a quantifiable, replicable product or service.
  • Originally conceived as a method of contractor selection, Best Value procurement evaluates a prospective contractor’s performance history by measuring such factors as quality of workmanship, professionalism, risk communication, customer satisfaction, ability to maintain project schedule, ability to follow user rules, regulations and requirements, and the ability to manage project cost. In effect, Best Value selection applies a kind of “Six Sigma” matrix to a contractor’s performance in advance of the contract award. Actually, the success of Best Value quality management hinges on a different approach to the application of the classic quality management programs to a highly variant product or service.

Check this space to find out more about how you might incorporate Best Value Quality Management into your company’s skill set. 

 

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