King Fahd University of Petroleum & Minerals

1. King Fahd University of Petroleum & Minerals CEM - 515 Quality Assurance Term Paper Presentation Understanding and Measuring the Cost of Quality on Construction Projects By Jihad Farhat

2. Table of Contents • Objective • Construction Quality cost Approaches • Quality Costs • Identifying the Causes of Poor Quality • Applying the Quality Cost Concept • Recommendations for Future Research

3. Objective • The objectives are: • Introduce the reader to the Cost of Quality on Construction Projects. • Develop a systematic approach for measuring quality costs • Assess the ‘complete’ Cost of Quality for construction projects • Determine the causal structure of rework by quantifying the causes, cost, and magnitude of rework

4. What is quality and what does it cost? (1) • Quality is defined as conformance to requirements • The system for causing quality is prevention of defects • The performance standard is zero defects • The measurement of quality is the price or cost of non-conformance

5. What is quality and what does it cost? (2) • Oberlender summarized quality costs as follows. ‘Quality costs consist of the cost of prevention, the cost of appraisal, and the cost of failure. • Quality in construction is directly related to time and cost, and vice-versa. • It is essential for project managers to understand the client’s requirements in terms of cost, quality and time and produce realistic estimates that match those requirements.

6. Construction Quality cost approaches • So far, only a few papers (Davis; Abdul-Rahman; Low and Yeo; Barber et al.; Love and Li; and a few others) have been written in the context of construction on how quality costs could be determined

7. Davis Approach • The cost of quality is defined as the cost of correcting deviations (rework) plus the cost of quality management activities.

8. Abdul-Rahman’s approach • Abdul-Rahman developed a quality cost matrix to capture the cost of nonconformance during construction.

9. Low and Yeo’s approach • This approach proposed a construction quality cost quantifying system (CQCQS). • The cost system is basically a documentation matrix that accounts for quality costs expressed as prevention, appraisal and failure costs.

10. Barber et al. • Developed a method to measure costs of quality failures. • It was based largely upon work-shadowing. Personnel on-site were shadowed for a period of time and the quality problems encountered were recorded.

11. Love and Li • They quantified the causes, magnitude and costs of rework. • A variety of sources such as interviews, observations, and site documents were used to collect the rework data, and only the direct costs of rework were included

12. Quality Cost (1) • Quality costs money only if we do things wrong • The cost of quality is estimated to fall between 10% and 30%. • The price of non-conformance is the cost of doing things wrong, and it needs to be eliminated. • The price of non-conformance can be greatly reduced, through systematic quality improvement.

13. Quality Cost (2) • Costs associated with failure arise from both internal and external sources. • Internal poor quality costs such as rework and material waste, increase an organizations cost of operations. • External poor quality costs such as contractual claims, defect rectification, and the loss of future business, result in loss of profits.

14. Quality Cost (3) • The key to improving quality and profitability is prevention. • Prevention dollars can be recovered many times over, through reduced appraisal and failure costs. • As more is spent on P & A, less has to be spent on correction.

15. Identifying the Causes of Poor Quality (1) • Quality costs can be used to identify the causes of poor quality and to develop estimates of their direct and indirect costs. • All personnel, from top management to site staff, should be made aware of the usefulness of quality cost data to the company

16. Causes of Quality Failure • Communications, e.g. poor information control, Misunderstandings; • Plant and equipment, e.g. breakdowns, punctures; • Personnel, e.g. carelessness, lack of training, poor workmanship, sickness; • Design, e.g. mistakes that ‘get on to’ the construction site; • Management, e.g. lack of planning, errors, poor organization; • Suppliers (including subcontractors), e.g. poor selection, errors and mistakes; • Force majeure, e.g. third parties, weather, ground conditions

17. Applying the Quality Cost Concept (1) • It is difficult to measure quality costs without the implementation of an effective quality cost tracking system. • Among the prevention, appraisal and failure costs, failure cost is the most difficult to identify and collect. • Failure costs, in particular, should be prioritized for improvement through reduction in cost of nonconformance.

18. Applying the Quality Cost Concept (2) • Failure costs, in particular, should be prioritized for improvement through reduction in cost of nonconformance. • One difficulty in costing the failures lay in estimating the cost of delays to the construction process.

19. Anticipated Outcomes • A carefully constructed PAF model combined with a view of production as a process • An understanding of the causes of quality problems through causal analysis. • An absolute figure for failures against which future projects could be compared, allowing measurement of the effects of learning, policy changes and continuous improvement initiatives. • The effect of encouraging a cultural change among those who participate in the exercise.

20. Recommendations for Future Research • Further work on creating and testing cost models is recommended for the near future. • Special emphasis should be placed on the constructability of the project, so as to minimize design changes and errors that may arise during construction

21. Recommended Quality Management Practices • The requirements of the client and end-users • Producing correct and complete drawings and specification • Coordinating and checking design documentation. • Conducting design verification through design analysis reviews • Controlling changes (e.g. scope freezing); • Committing to providing a quality service.

22. Thank You Questions ?