Quality Management Standards in American Construction

In 1989, I was asked by Toichi Takeneka, the Chairman of Takenaka Corporation and one of the world’s preeminent design-builders, “Why do Americans care so little about doing it right the first time?” I found that a puzzling question. Is it true that Americans do not really manage quality as well as other major builders in the world?

I always thought that American builders were better and faster than any other builders in the world. We had to be! We built the Hoover Dam, the Golden Gate Bridge, the Panama Canal, and the trans-continental railroad, to name just a few. American engineering and construction management were the driving factors in the success of these endeavors. Surely these successful and high quality projects had to prove that we Americans were the best builders. Old fashioned construction training programs stressed this quality management. I was taught the construction industry in the old fashioned way. I had apprenticed and married into a construction family that had been building monumental buildings since 1842. I apprenticed under a master carpenter, Harold Butts, who stressed the two great carpenter adages, “Do it right the first time” and “Measure twice; cut once.” By working in the field for four years under the tutelage of a master carpenter, I was given an experience that people do not get today in most trades.

In the need to deliver projects in increasingly shorter times, some things began to be over looked. The NASA space program, once a shining star in how to build complicated projects correctly, now has begun to show some results of this systemic construction quality malaise. The Challenger failure, followed by the Columbia program failure, gave proof to a new builder mantra, “Get it done, and we will fix it later.” Labor costs and lower margins forced new builders into a new philosophy: “We can’t have this expensive labor standing around!” and “Do something; if it is wrong, we will fix it later.”

If you look at the great projects just mentioned, all of them were started or built prior to the Miller Act being enforced in the state and local arena. The Miller Act (1935) institutionalized the separation of professional services or architects from the construction activities. This is where the design-bid-build (low bid) project delivery process became the standard of project delivery for all government-funded projects. Here is where “low bid” became the sole selection criterion for the contractor. Quality issues began to appear when the low bidder was caught providing inferior materials to save money. Architects were required to become the watchdogs of quality and the owner’s representative. Before his trip to the moon, Neil Armstrong jokingly said, “I take great pride and comfort in the fact that every part of the lunar lander was provided by the absolute lowest bidder.”

The adversarial relationship between contractor, architect, and owner due to the design-bid-build procurement method has been a major factor in the increase of construction litigation. All parties of the construction contract act differently when they begin a project with the idea that a potential quality dispute might lead to litigation. Construction parties are more likely to keep and reference superfluous backup paperwork in those situations. Often, the demands of this paperwork will keep construction professionals from the real job of preventing defects.

Construction defect litigation has cast a new importance in quality control. Defending even a minor lawsuit can cost many times the savings made by workers cutting corners. Often, the owners of the construction company were unaware of the shortcut and only learned of it  after the fact. For example, I had a client that found out after the fact that instead of the 32-fastener pattern that was called for on the projects, his workers had installed sometimes as few as five fasteners per sheet. This construction company owner shared a bonus with the workers when they finished early, only finding out after a tornado hit that his workers had installed the roof incorrectly. Because of the workers’ negligence in not installing the fasteners properly in the first place, the contractor’s insurance was not valid and the contractor was responsible for defending himself in this construction defect case. This contractor ended up paying four times the labor savings in legal litigation defense.

To understand the major aspects of construction defects and their causes, one needs to understand the definition of quality. Webster’s dictionary defines it quite simply as “the measurement of the grade of excellence.” Pretty simple: if you strive for excellence, then you will increase your quality. With such a simple definition, why is it so hard to get our hands around the issue? One reason is that there are differing opinions of what true excellence is. One man’s excellence is another man’s mediocrity.

Until the 1950s there was no true vision or leadership in the field of quality management. What the “quality” world needed was someone to lead it to the scientific statistical world of the twentieth century and set up measurable levels of quality achievement. Enter W. Edwards Deming. Dr. Deming is known as the father of the Japanese post-war industrial revival and was regarded by many as the leading quality guru in the world. He was trained as a statistician; his expertise was used during World War II to assist the United States in its effort to improve the quality of war materials. At the end of World War II, Japan saw the need to change the world’s perception of their manufacturing and construction industry. Japanese industrial leaders and engineers invited Dr. Deming to Japan. They asked him how long it would it take to change the existing view that Japan produced cheap, shoddy imitations to one that Japan produced innovative, quality products. Deming said four years; they did it in four years.

The Japanese construction industry, often tightly aligned with the manufacturing Kiretzu, began to take notice that the improvements being made in the manufacturing industry could have application in the construction world. In the early 1970s, the Japanese “Big Five” construction groups adopted and incorporated Deming’s 14 points of quality management into their corporate culture. This culminated in Takenaka Corporation becoming the first construction entity to receive the prestigious Deming Award since the award program was founded in 1951. Takenaka received the award in 1979 and subsequently several other Japanese construction companies have won it.

While Japanese companies have the Deming Award to strive toward, we have no equivalent quality management award in the United States. However, there is the Baldridge National Quality Program. The Baldridge Award recognizes quality and performance excellence, not specific products or services or the reduction of deficits. There has only been one construction industry winner in this program in its 30-year history.

Another statistical quality analysis is the ISO 9000 and ISO 14000 Generic Management Systems. These are based on the following criteria: (1) resources are efficiently utilized, (2) management systems are recordable, (3) historical records are kept, and (4) there is a process for improvement. Clearly, there is no discussion on defect prevention. In my experience, only a few construction companies are ISO certified; they become so because their clients, such as Boeing, General Motors, and General Electric, require it. I have spoken with many of those contractors and they complain that ISO certification is a tedious and expensive exercise that does not truly change the number of incidents and the occurrence of defects.

Construction defects have been with us since the time of the pharaohs. The leaning tower of Pisa is probably the most identifiable defect in the world. Here, poor preparation of the soils that supported the structure was responsible for the subsequent sinking of the building. Other defects have had more serious results, such as the Hyatt Regency walkway collapse in Kansas City that killed 114 people and injured 200. This all happened because a construction contractor changed a detail (in order to save cost) and did not get the proper approval from all of the engineers.

Another famous construction failure was the cathedral of Saint-Pierre in Beauvais during the Middle Ages. At first, the cathedral was going to be a symbol of French unity and a masterpiece of architecture. However, as the project moved forward, the project fell out of favor, money became tight, and priorities changed. On the whim of the new bishop, an extra 16 feet were added to the height of the building to make it the tallest cathedral in Europe. In 1248, the choir section of the cathedral collapsed, killing many worshipers and workmen. While the cathedral appears to be a magnificent piece of architecture from a distance, when seen close up it is clearly a shell of what it could have been, lacking even a steeple. The cathedral once had a tower; it, too, collapsed as the cathedral nave had.

Beyond catastrophic failure and construction litigation, the AEC industry must develop a quality program for eliminating defects because quality programs make a difference in successful project completion. A study of quality performed in 1998 by the Project Management Institute asked the following question, “Does quality management make a difference? That is, do organizations that employ formal quality management practices outperform those that do not?”

Some of their findings were as follows: “53 percent of the respondents who reported that their projects conduct quality reviews ‘Almost Always’ also reported completing projects on time ‘Almost Always.’ Only 15 percent of the respondents who reported ‘Rarely’ to conducting quality reviews also report completing the project on time ‘Almost Always’.” If a company rarely finishes its projects on time, what is its chance of being successful?

The American AEC community stacks up to its international competitors very poorly in terms of quality management. For example, Takenaka Corporation has built and maintains a 406,000 s.f. technical research and defect prevention facility not far from the Narita Airport in Japan. Here a staff of 260 technicians work on construction problems every day of the week. One of their major competitors, Kajima, spends millions of dollars on similar research and only recently passed their fiftieth anniversary of construction quality control and technical research. On the other hand, recent U.S. Department of Commerce statistics show that American construction companies spend less than 0.05 percent of gross revenue on technical research and training.

Also, in Great Britain, AMEC Plc is hard at work pushing the envelope in new technologies and better processes for old technologies to make a more sustainable construction industry. AMEC outperforms most of its rivals in sustainability. It is the only construction company to adopt the UN Agenda 21 blueprint for sustainability. The program provides guidelines for continual improvement in managing and tracking pollution, energy consumption and efficiency, and bio-diversity in the construction process. One of the requirements of the program is an annual sustainability report. This report ensures that the company monitors its efforts toward a more sustainable building cycle. Sustainability measures defects and efforts to show that repeated defects negatively impact sustainability. If a company like AMEC builds environmentally friendly buildings and builds them without defects, it becomes an industry leader.

The American construction community may catch up to the rest of the world when (1) companies make quality a priority, much as they made safety a priority in the 1980s and 1990s and (2) company owners understand that quality defects can punish the bottom line. Punishment can raise its ugly head when experience modifiers are elevated as well as when the underwriting of general liability insurance policies is elevated due to poor quality performance. In much the same way that a safety accident can change the cost of workers’ compensation insurance, poor quality management will impact the underwriting costs of a general liability policy.

Here are a few steps that any company can take to put quality at the top of its priorities.

1. Establish the goals and philosophy of the company’s quality program and ensure that there is total management buy-in.
2. Establish operational procedures that run in parallel with the quality goals.
3. Identify all participants in the quality program and establish buy-in.
4. Begin a statistical quality reporting system and a benchmarking process across the company.
5. Provide incentives to those who successfully reduce defects.
6. Provide a formal lessons learned process and teach defect prevention through a review of all projects, not just the bad ones.
7. Implement the lessons learned from those projects in future projects.

Finally, as Deming said, “Plan, Do, Check, and Act . . . Total quality management is not a destination; it is a journey upward toward zero defects.”

The American construction industry must make quality the new priority of this century.