TQM Makes Inroads in Construction

by David W. Wood

Few industries have shown greater resistance to change than the construction industry. The old "we've always done it this way" attitude is pervasive in the hands-on business that, when compared to others, has changed little since God contracted with Noah to build the ark.

Take computers, for example. While the rest of the world saw them as an opportunity to increase productivity, all but a few contractors saw them as expensive paperweights. Even after being exposed to the magic they could perform, many continued to distrust their capabilities, running dual systems (computer and the old "manual" way) for such functions as estimating until they were convinced of the machines' reliability.

When TQM began to gain widespread recognition in the early 1990s as a process offering financial and cultural benefits, once again the construction industry sneered. "That may work for people like manufacturers, but not in construction," they said. "Ours is a totally different animal."

Fortunately, not all contractors bought in to that philosophy. A few, having read of the great success experienced by firms implementing TQM, wondered, "What makes us so different that it can't work for us?" They accepted the fact that modifications to the process would be necessary for it to work in the building business but believed that pioneering the effort would be worth the investment.

One contractor that said "Why not?" was Sylvan Industrial Piping of Pontiac, Michigan. They recently became the first U.S. mechanical contractor to be awarded Q1 status by Ford Motor Co. This achievement elevates Sylvan to the level of "preferred provider" for the automaker.

Sylvan's quality journey began in the spring of 1991 in Atlantic City, New Jersey, where CEO Mike Morrissey attended one of Anthony Costonis' TQM seminars. Costonis is president of Corporate Development Systems Inc. of Lynnfield, Massachusetts. The firm has been a construction industry strategic planner for more than 25 years.

During the early part of the presentation, Morrissey had difficulty seeing how the process could apply to construction, but early the first afternoon the fog began to lift.

"All of a sudden, things started to fall into place," recalls Morrissey. "I saw the possibilities, knew that TQM could do nothing but make us a better company, and I became enthusiastic."

Bringing that enthusiasm back to company headquarters in Pontiac, Morrissey talked with others on his management team and decided to enlist CDS' help in putting together a quality program. CDS conducted quality orientation programs with administrative and field staff, after which weekly sessions were held to begin the problem-solving and team-building processes. They formed a steering committee, chaired by estimator/project manager Terry McKinnon.

While TQM may have been new to Sylvan, its customers in the automotive industry had been involved in the process for decades. Ford, for example, was one of the first U.S. firms to involve itself in the quality movement, beginning in the late 1950s.

In 1979, with foreign competition beginning to make inroads, Ford brought in TQM guru W. Edwards Deming, who had revolutionized Japanese industry as a consultant.

Deming overhauled the company's quality system, moving it away from military specifications and in-house quality procedures that were detection-oriented to a mode that stressed prevention. Since then, Ford's top management has demonstrated its strong commitment to TQM.

Today, Ford is in the midst of a convergence that will reduce its supplier list by 90 percent. Companies that haven't achieved Q1 status by the end of 1997 won't be allowed to work for Ford. As part of that effort, in January 1993 Ford informed Sylvan, which had done work for Ford for 20 years, that it would be coming in and conducting on-site audits of all suppliers for the purpose of supplier reduction. Those audits would focus on four areas: quality, commercial, delivery and technical.

Though its TQM program was beginning to take shape, Morrissey understood that no company passed the first audit, and Sylvan was no exception. The initial audit simply helped Ford identify those areas that required improvement.

Eight months after the first audit, Ford returned for a second audit. This time, the results were better, just slightly below the Q1 certification level. Three months later, at the third audit, Sylvan passed with flying colors, achieving passing grades in all four categories.

Then, in March, Ford brought all the parties together, plus some plant-level customers, for Sylvan's final presentation. Sylvan's people delivered a three-hour presentation, after which Ford executives deliberated less than 10 minutes before informing Sylvan it had been awarded the Q1 flag.

"They told us it was the quickest caucus that had ever taken place," says Terry McKinnon.

Sylvan is justifiably proud of having been the first to achieve Q1 status of the eight mechanical contractors who had initially been prequalified to attempt the challenge.

"This certifies to the world that we offer the customer more than just the low dollar," says Morrissey. "Ford established a benchmark with its program, one that allows other customers to know how well we perform. We expect to benefit from that by attracting additional work."

There are additional benefits for Sylvan, according to Morrissey: "Q1 not only fortifies our relationship with Ford, but it has been a tremendous boost to the morale and pride within our company. Our people are extremely proud of our accomplishment because they know, firsthand, the effort that it required."

John Hruska, Supplier Quality Engineering-Facilities, Materials and Services Purchasing for Ford Quality Division, is quick to credit Morrissey and his staff for their contribution. "Senior management's commitment was the key to Sylvan's success," he says. "Achieving Q1 is a very intensive, demanding process that can only be reached with support at that level."

Sylvan began as a residential plumbing and heating contractor in 1954. It began doing some small automotive work for GM in 1959, and in the 1970s got into process work. Today, the company, with offices in Tennessee and New Jersey, and more than 200 employees, specializes in automotive-related work, dealing with pneumatics, hydraulics, paint systems, robotics and conveyors. Sylvan works throughout North America and has even traveled to the Far East while working with Ford, GM, Chrysler, Honda and Nissan.

Being able to hang the Q1 flag outside its offices is not the end of the line for Sylvan. Semi-annual self-surveys are required, and every two years Ford comes in and does a maintenance survey. The process is never-ending, according to Morrissey.

Further long-term goals include determining how his company can work with the automotive industry to develop ISO 9000 training that would apply to construction. "We just continue the problem-solving process and go on to create new teams to work on them," he says.

"In essence, a quality program points out the obvious things that a company should be doing that are sometimes overlooked," says McKinnon. "The other thing it does is combat the tendency that businesses have to raise volume at the expense of reduced profits. That causes everyone to get older quicker."

Costonis, who has viewed Sylvan's entire TQM effort, is understandably proud of his client's achievement. "This shows that TQM really makes a difference, that it really works, and does so in construction, an industry where it has been met with a high degree of skepticism," says Costonis.

About the author
David W. Wood is a Weare, New Hampshire-based copywriter, publicist and marketing consultant specializing in the construction industry.

The Nuts and Bolts of Ford's TQM Evaluation Process

Ford Motor Co.'s TQM program-the Construction Rating Standard for Contractors-is specifically designed for the construction industry. Using this standard, Ford's quality experts visit the offices of contractors wanting to do business with Ford. They conduct exhaustive and detailed two-day, on-site audits, labeled Ford's Construction Supplier Quality Evaluation.

The SQE contains four components: quality, technical, delivery and commercial. Each component divides into subcategories-each of which is assigned a maximum point value. Each contractor's points are tabulated so the contractor can be ranked.

Although the process is quite detailed, it's worth looking at what Ford evaluates.

In this category, auditors examine a contractor's commitment to quality. They rate planning programs, review processes, written procedures, training and education, team organization, statistical analyses of performance, monitoring and improvement systems, and customer liaison.

In addition, they look at internal and external indicators of the quality operating system, the commitment of the contractor's leadership and human resources, and the company's innovative approaches to procedures and documentation.

This category explores design in detail. Components that are examined include: staffing, specific technical expertise, project management, the use of value engineering, project coordination, regulatory compliance, system design/installation, the design and review process, scheduling, budgeting, problem solving, construction planning, dispute resolution, safety policies, CAD capabilities and serviceability.

Next, the SQE examines the development-improvement initiatives, specification standards and updating procedures, service operating and repair procedures, programs to keep pace with new technologies, continuous improvement practices in staffing and support, and post-project evaluation.

Lastly, project execution/construction is examined, including: the process flow for problem resolution and changes, how project owners are handled, how operations and maintenance manuals are developed and as-built conditions are determined; safety procedures; labor relations; scheduling; review-the tracking and coordination of shop drawings, materials and equipment; subcontractor coordination; architectural/engineering liaison; and punch-list processes.

In this category, once again, it's a detailed evaluation. How does the contractor ensure that customers' specifications are met? How does senior management communicate with employees? Is the company fully computerized? How are project milestones tracked against the schedule? How are critical schedule components expedited? What system is used to resolve customer problems? What about records maintenance and tracking?

In the final SQE category, auditors examine the contractor's cost competitiveness, management and financial strength, and other business issues. They want to know how price competitiveness is ensured and what cost-saving steps are being taken. They look at corporate mission statements, operating policies, business plans, organizational charts and financial statements.

Lastly, the auto manufacturer explores integrity, minority and legal issues, and responsiveness to problems.