Framework: An Integrated Approach to Portfolio, Program and Project
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IV. TOTAL COST MANAGEMENT ENABLING PROCESSES - CHAPTER 11 - ENABLING PROCESSES
11.4 Quality and Quality Management
There are many definitions and perceptions of what quality and quality management are. In simple terms, quality in TCM is conformance of an asset (product, service, process, etc.) with requirements and expectations. Quality management is what an enterprise does to ensure that its assets meet these requirements and expectations. In TCM, quality management is not a separate process; TCM, including strategic asset management and project control, are quality processes. The TCM processes, as discussed in Section 2.1.2, are based on the plan, do, check, assess (PDCA) model; this model is a time honored quality management approach sometimes called the Deming or Shewhart cycle. TCM is what an enterprise does to ensure that its assets meet the requirements in respect to cost.
The International Organization of Standardization (ISO) has identified 8 principles that should guide quality management practice. These principles, with how TCM addresses them, are as follows:
Customer focus. The entry process to TCM is requirements elicitation and analysis (i.e., focusing on the customer needs and expectations).
Leadership. TCM establishes a unity of purpose and direction for cost management throughout the asset and project life cycles in alignment with the enterprises strategies.
Involvement of people. TCM recognizes the roles and responsibilities of everyone involved in asset and project management. By linking all efforts to enterprise strategy, people involved have a greater sense of ownership and motivation.
Process approach. TCM is by definition a process for applying the skills and knowledge of cost engineering. Each component process is based on the PDCA model.
System approach to management. TCM is focused on identifying, understanding, and managing its component processes as a system in alignment with the enterprises strategies.
Continuous improvement. TCM is not about repeating history, but improving on it by performance-focused planning. The PDCA model is specifically a continuous improvement model.
Factual approach to decision making. The TCM investment decision making process focuses on objective, economic analysis as the basis for decision making. It also stresses using empirical data as a basis for planning, and objective analysis as a basis for change management.
Mutually beneficial supplier relationships. TCM focuses on proactive team approaches, including the involvement of suppliers, contractors, and stakeholders other than owner. Quality management principles guide the resource and procurement planning processes of TCM.
These principles guide the actions an enterprise takes to achieve quality or conformance to requirements. Key actions to achieve conformance are measurement and control. TCM, based on the PDCA cycle, inherently stresses measurement and control in both its strategic asset management and project control processes. When people think of quality measurement and control, they often think of quality assurance (QA) and quality control (QC); these are key functions found in most enterprises that create and operate assets and manage projects. What is not often recognized is that the cost engineering function, applying the TCM process, is as much associated with quality as the QA/QC functions.
.1 The Relationship of Cost and Quality
Chapter 3 of the TCM Framework outlines a series of integrated asset management processes that start with business strategy and an identified business problem, elicit customer needs and establish requirements for any solution to the problem, translate those requirements into alternate asset scope, and then decide upon the alternatives based on economic cost measures. Cost measures are then critical to assessing asset performance. Subsequently, Chapter 7 outlines a series of project control planning processes that, again, winnow project scope down to a set of measures, of which cost is a key measure used to assess project performance. What is notable here is the translation of business strategy and customer needs to costs.
Philip Crosby, one of the most recognized authorities on quality management, established four "absolutes" of quality management:
Quality is defined as conformance to requirements, not "goodness."
The system for causing quality is prevention, not appraisal.
The performance standard must be zero defects, not "close enough."
The measurement of quality is the Price of Nonconformance, not indices.
In other words, Crosby is saying that quality comes from planning and design, and the best measure of quality is cost. From that perspective, cost engineering, applied in the TCM process, is arguably a more central function to quality management than quality assurance and control. Crosby goes on further to say that quality is too important to be left to the quality control department, meaning that management must create a system that results in quality; a system in which TCM and cost engineers should play a key role.
.2 Quality Policy and Standards
As discussed in Section 3.1, some requirements for a process or product may be voluntarily or involuntarily imposed on the asset or project management system by enterprise management, government, or some other authority. In TCM, quality policy is an imposed requirement, meaning the enterprises quality management strategy and approach is already established; TCM is a process to deploy that policy. In TCM, it is assumed that quality policy will reflect the ISO principles outlined in Section 11.4.1.
Another type of imposed requirement is accepted and agreed upon standards. Most industries have some established standards for the products they produced. There are also standards for how processes are performed. Possibly the most widely recognized authorities for establishing and maintaining standards are the International Organization for Standardization (ISO) and the American National Standards Institute (ANSI). In regard to TCM, the standards of most relevance are ISO 9000 (quality management systems-fundamentals and vocabulary) and ISO 10006 (quality management guidelines to quality in project management).
ISO 9000 (and its "family" of related standards) is focused on an enterprise having, maintaining, and following a documented quality process and procedures (i.e., QA). Enterprises apply and seek certification in the standard to assure their customers that they have a quality management system in place. ISO 10006 is similar, but is focused specifically on project management. As mentioned, TCM can be the basis for creating a cost management process in an enterprises quality management system in accordance with these standards.
.3 Quality Planning and Improvement
J.M. Juran also emphasizes the importance of prevention or design to quality management. In his Juran Trilogy, he emphasizes three aspects of quality management:
Quality Planning: Identifies the quality features to be provided and plans for delivering them without deficiencies.
Quality Improvement: Reduces or eliminates deficiencies in current goods, services, or processes.
Quality Control: Maintains the results achieved through the previous two practices.
Jurans quality planning is essentially the steps in Chapter 4 of the TCM Framework; that is, identify the problem and discover customer needs (i.e., requirements); develop the product and features that respond to the needs and processes able to produce the features (i.e., asset planning); and develop and transfer a control basis (i.e., decision making and project implementation). Again, quality planning is not a separate process or function, but an integrated way of planning directed toward satisfying customer needs. To plan for quality is not a separate plan, rather it is the way you plan. Using TCM, that way is based on the PDCA model for each component process. Every TCM component process starts with the planning step to determine how the rest of the PDCA process will be executed.
In Jurans view, planning and quality management must be guided by a "breakthrough" way of thinking. Quality improvement should emphasize not just traditional continuous improvement, but also breakthrough changes, which are "a dynamic, decisive movement to new, higher levels of performance." He further describes breakthrough as "the creation of good (or at least necessary) changes, whereas control is the prevention of bad changes." The mindsets of breakthrough (make change) and traditional control (prevent change) are so different that management must establish expectations for breakthrough to happen. Asset performance assessment and planning are where most breakthrough ideas will originate and be developed. The TCM sections on change management emphasize that the purpose of change management is not to limit change, but to manage it.
.4 Quality Assurance and Control (QA/QC)
While a goal of quality management may be zero defects or deficiencies, the reality is that humans and systems are imperfect and that goal is rarely achieved. There must be strong quality control to achieve the planned results. Furthermore, the quality and cost engineering control functions must interface because quality measures have cost attributes (i.e., cost of quality).
QA includes practices focused on providing confidence that requirements will be fulfilled while QC includes practices focused on fulfilling the requirements. QA is generally focused on measuring and assessing conformance of the quality management system and processes with its requirements. As such QA does not ensure quality assets or products, but provides confidence that nothing stands in the way of quality being achieved (e.g., Do you have a quality management process? Is it being followed?). QC focuses on measuring and assessing the conformance of products with their requirements (e.g., Is the product in accordance with specification?).
The measurement methods employed in QA/QC may be continuous (e.g., measurement devices on a production line) or may involve sampling, testing, inspection, or auditing. The methods generally employ statistics to analyze variances to determine if non-conformance is random or a trend. Non-conformance generally affects costs, schedule, productivity, and other measures of concern to cost engineers. Therefore, cost engineers often interface with QA personnel to impose proper process controls and with QC personnel in analyzing the causes of variance and identifying potential corrective actions. Generally, QA/QC requirements are also a critical part of contracts, and a source of performance issues that cost engineers are likely to have a part in addressing. TCM and QA/QC both rely on change management processes to maintain effective performance measurement control baselines.
.5 Quality Management Methods in TCM
While the component processes of TCM each represent a link in a quality management system, a number of the processes and methods are commonly associated with or are key to quality management. Some of these are briefly recapitulated in the following paragraphs with the reference sections shown.
Quality Function Deployment (re: Sections 3.1 and 3.2)
QFD is a methodology for translating requirements into design. In QFD, requirements are often called the "voice of the customer," and the QFD approach allows the designer to merge the "voice of the customer" with the "voice of the product or process." It is possible to consider cost as well as quality requirements in QFD; this variation has been called cost deployment.
Value Analysis and Engineering (VA/VE) (re: Section 7.5)
Crosby points out that the system for providing quality is prevention. Juran points out the need for breakthrough quality improvements. VA/VE supports both prevention and breakthrough improvement. Specifically, the intensive questioning, challenging, and analysis of functionality and validity of constraints that takes place during VA/VE function analysis is a method for building quality into an asset (i.e., preventing failure). In respect to breakthroughs, the VA/VE creativity step looks for ideas for how to perform functions. The step is supposed to be performed as unconstrained by habit and past thinking patterns as possible (i.e., "think outside the box") so that breakthrough opportunities can be discovered.
Benchmarking (re: Section 6.1)
Benchmarking is a measurement and analysis process that compares practices, processes, and relevant measures to those of a selected basis of comparison (i.e., the benchmark) with the goal of improving performance. The comparison basis includes internal or external competitive or best practices, processes, or measures. The method can support both continuous and breakthrough improvements depending on whether "best" practice benchmarks are viewed as goals to be achieved or exceeded (i.e., breakthrough).
Cost of Quality (re: Section 6.1)
Cost of quality analysis is the key method for assessing performance against functional requirements and constraints. Cost of quality refers to the cost of both conforming and not conforming (i.e., at variance) with requirements. Costs of quality are generally analyzed in the following four categories: prevention, appraisal, internal failure, and external failure. Prevention costs are the QA costs (e.g., training) and appraisal costs are the QC costs (e.g., testing). These costs are essentially designed into the asset or process during asset planning (i.e., costs of conformance that are fixed or controllable by design), so performance assessment tends to focus on the "resultant" cost of failure or variance during the assets use (i.e., costs of nonconformance are more variable by nature).
For strategic asset management and project control, the cost of quality is manifested in estimates, schedules, and resource plans as appraisal costs, activities, and personnel (e.g., inspection). In actual performance, failure costs are manifested in poor productivity, scrap materials, rework, and often claims and disputes because contracts usually establish QA/QC requirements.
Change Management (re: Sections 6.2 and 10.3)
For project control, change management refers to the process of managing any change to the scope of work and/or any deviation, performance trend, or change to an approved or baseline project control plan. For asset management, change management refers to the process of managing any change to documented information defining the scope of an asset or the basis of measuring and assessing its performance over its life cycle. Change management helps ensure that requirements always address customer needs. By ensuring that the basis of performance measurement is always consistent with established requirements, change management is also a key element of quality control.
Configuration Management (CM) (re: Section 6.2)
CM is a change management process that has traditionally been focused on controlling engineering documentation, but has evolved in recent years to encompass the entire business process infrastructure, including any information that could impact safety, quality, schedule, cost, profit, or the environment. CM, as with QFD, has been used most frequently in the software, product development, and military program arenas.
11.4.2 Key Concepts for Quality and Quality Management
This chapter touches on a few key quality and quality management principles that guided development of the TCM process. A key point of this section is to highlight that quality management is not a separate process, but a way that processes should work. TCM is a quality management process. Another key point is the relationship between cost and quality; that is, cost may be the best single measure of quality.
The following concepts and terminology described in this section are particularly important to understanding the quality and quality management in relation to TCM:
.1 Quality. (Section 11.4.1). See conformance to requirements.
.2 Conformance to Requirements. (Section 11.4.1 and 220.127.116.11). The definition of quality.
.3 Quality Management. (Section 11.4.1). TCM is a quality management process.
.4 Plan-Do-Check-Assess (PDCA). (Section 11.4.1). The basis model for TCM.
.5 Quality Measurement. (Section 18.104.22.168). In some views, cost is the best single quality measurement.
.6 Quality Policy. (Section 22.214.171.124). In TCM, quality policy is an imposed requirement that is assumed to be guided by accepted quality management principles (e.g., ISO principles in Section 11.4.1).
.7 Quality Standards. (Section 126.96.36.199). Imposed requirements (e.g., ISO 9000 standards).
.8 Quality Planning. (Section 188.8.131.52). An integrated way of planning directed toward satisfying customer needs.
.9 Quality Improvement. (Section 184.108.40.206). Includes both continuous and breakthrough improvements.
.10 Continuous Improvement. (Section 11.4.1 and 220.127.116.11). The traditional result of the PDCA process.
.11 Quality Assurance. (Section 18.104.22.168). Actions that provide confidence that the requirements will be fulfilled.
.12 Quality Control. (Section 22.214.171.124). Actions focused on fulfilling requirements.
Further Readings and Sources
The references on quality are too numerous to mention. However, the following references and sources provide basic information and will lead to more detailed treatments.
Cokins, Gary. "Quality Management." Chapter 7 in Skills and Knowledge for Cost Engineering. Morgantown, WV: AACE International, 2004.
Project Management Institute. A Guide to the Project Management Body of Knowledge, 3rd ed. Upper Darby, PA: Project Management Institute, 2004.
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