What TQM means to us; TQM for the total openings industry.

Quality is no longer a back-burner issue in the construction industry; total quality management must now be a strategic objective within a firm. While many contractors will continue to focus excessively on external factors such as the labor shortage, demographics and regional cconomics, successful

In our industry, becoming the low cost producer is the best route to achieving strategic (competitive) advantage. We are facing a significant challenge to increase productivity this decade. Contractors who successfully meet this challenge will survive well beyond the year 2000. The following highlights several trends in the area of total quality management within the construction industry.

The construction industry's awareness of the need for quality is being heightened by the 1986 Malcolm Baldridge Award for Quality. Most of the Fortune 500 firms are actively pursuing this award. As a result, they are requiring their suppliers, which include contractors, to implement their own total quality management processes. This expectation will become mandatory within the construction industry.

Opportunities for improvement are significant within the construction industry. A recent FMI (management consultants to the construction industry) survey of field managers concluded that 100 percent of the respondents saw opportunities for improving job site activities, but surprisingly, 50 percent said that most of these improvements arc not implemented. The cost of poor planning (impact on productivity) and communication was reported to be approximately 20 percent.

Over the next five years, the quality culture will cascade throughout the industry as astute contractors increasingly realize that quality is the prescription for survival in the 1990s.

Quality develops a strong alliance between supplier and customer, thereby eliminating the need for numerous "competitive" suppliers. This leads to the decline of the competitive bid process, which focuses on price only and the need for many bidders.

The new realities in the industry are increased competition, increased litigation and paper work, and a declining demographic base. Implementing a quality process in construction allows a firm to respond to these challenges by lowering its costs, by building proactive teams that do not default to case building and letter writing, and by establishing a corporate culture that attracts and retains the best people.

Many contractors do not really understand quality as it is used today. They associate quality with end inspections, primarily through experiences with owner representatives. The underlying principle of total quality management today is an organizational focus on prevention and continuous improvement of the management processes. This is accomplished by forming teams to identify and resolve problems through the company. Decision making is pushed down to the lowest levels. For most contractors the necessity of implementing this new process will result in a significant cultural change. We predict that many will be slow to commit the time and resources to successfully implement this strategy for profitability and survival. In the 1990s, total quality management in construction will pull together all of the successful management tactics that have been used individually in the past (for example, employee involvement, centralized processes, measurement and trend analysis and a strong customer orientation).

More and more contractors are realizing that quality, field productivity and safety are inseparable. Important organizational and management changes are taking place as a result.

As the quality process becomes fully entrenched in the industry, contractors will have working relationships with fewer, but better, vendors and subcontractors. Suppliers will become active members of the project team(s) as they focus on proper packaging and just-in-time staged delivery.

Through a process referred to as "partnering," the adversarial relationships between owners, design professionals and contractors will be moderated prior to start-up. Partnering has been practiced on a limited level within private industry and is becoming more apparent in the public sector through the Corps of Engineers.

Management practices within the U.S. construction industry will evolve significantly over the next 10 years as we begin to formally "benchmark" the best management performers and supporting practices.

Giving workers responsibility and encouraging participation positively affect company profitability. The latest business studies show that providing workers with a sense of participation increases cost effectiveness far more than incentive pay.

Reprinted with permission of The FMI Management Newsletter, by Louis R. Bainbridge, director and William A. Abberger, director, FMI Corp., 919/787-8400,