Project Management Institute

Quality and the prize

going for the gold

August 1991

PROJECT MANAGERS

The purpose of “Concerns of Project Managers” is to share expert knowledge and opinions on topics of general and continuing interest to PM NETwork readers. The opinions expressed in these columns are those of the respective author. They are in no way to be construed as official positions of PMI on an issue or endorsements, either positive or negative, of any product or service mentioned herein.

Alan S. Mendelssohn, Florida Power and Light Company, Juno Beach, Florida

Quality means ’customer satisfaction. In the world of quality management, there are many definitions for the word quality. While different organizations may describe it differently, all these definitions imply the same basic concept—that of satisfying the valid requirements of the customer.

Although the principles used to implement quality management and achieve customer satisfaction are relatively simple, their application can, at first, seem overwhelming. Without applying these key principles, however, an organization cannot be completely successful.

QUALITY MANAGEMENT PRINCIPLES

To be effective in implementing a quality management system, there are four basic principles [4] [10] that need to be practiced.

  • Customer satisfaction starts with identifying customers and determining their valid requirements. It means being able to objectively measure whether these customers are being satisfied. It requires an understanding of the processes used to provide the products or services that the customers want. And it involves controlling these processes to ensure that the customer is consistently satisfied. It doesn't matter whether the customer is “internal” to an organization or the “external” customer; the same things apply.
  • The Plan, Do, Check, Act (PDCA) cycle means continuous improvement. Processes are planned to accomplish the work, objectives are set, and resources are allocated. In doing the work, the processes are implemented. Check is the evaluation stage. Did the processes work? Were they effective? Did the work get accomplished properly? Was the customer satisfied? Based on what was found, action is required to make the necessary adjustments. As these adjustments are planned, the PDCA cycle starts over again.
  • Management by fact means two things. First, collect objective data about the processes being implemented and how well all the customers are being satisfied. Second, manage according to this information; not instinct, gut feel, preconceptions or other non-objective input.
  • Respect for people creates an environment that provides each person in an organization the opportunity to be utilized to their fullest in achieving quality. It is people who implement processes. They must be adequately trained, encouraged to communicate effectively and assigned the responsibility and authority to do their jobs and implement their work processes. They must be motivated and empowered to continually satisfy their customers.
Plan, Do, Check, Act Cycle

Plan, Do, Check, Act Cycle

PROCESS CONTROL AND IMPROVEMENT

Customers are satisfied when the output of a process consistently meets their needs [5]. This can only occur when a process is stable, or in control, and is capable of achieving the desired result. Those involved in implementing a process must have a thorough understanding of the activities involved. Flow charting a process helps in this effort. Indicators are used to track a process so action can be taken, when necessary, within the process activities, before the customer is impacted.

Processes are improved, and problems are solved by implementing some form of effective problem solving model. The number of steps in a model varies from organization to organization. All the models, however, have certain common elements that make them effective. These include the following [10].

  • Problem definition. Identification of a problem in very specific terms is needed before it can be worked on. Problem identification is based upon data.
  • Root cause evaluation. Before a problem can be solved, its “root causes” must be identified. This means that a cause and effect relationship exists between the root cause and the observed problem. Data is used to verify this relationship.
  • Countermeasures. These are implemented to “fix” the root causes. It is important to ensure that implementation of a countermeasure is the thing that reduces or eliminates a root cause. If this relationship cannot be demonstrated, then some other factor may be present, and the root cause can reappear to again cause the problem.
  • Results. The results should show the desired improvement using the same indicator that initially identified the problem. If the data does not show this desired improvement, then the problem is not solved. Sometimes it is necessary to go through several cycles to achieve success.
  • Standardization. To ensure that a problem will not recur, the counter-measures should become permanent. In other words, the work processes must remodified to include them. This standardization of improvements in the work processes is needed to consistently satisfy the customer and to eliminate “firefighting” situations.

To manage using facts requires that data be collected, analyzed and displayed in a manner that is very objective, and the conclusions will be obvious to anyone who looks at the data. A number of statistical tools can be used to help in this effort. The seven basic tools [7], as they are often referred to, include the following:

  1. A check sheet is a form on which data is collected systematically and recorded in a uniform manner.
  2. Graphs are visual displays of quantitative data. They compare or trend a set of numbers or statistics. Types of graphs include line graphs, bar charts and pie charts.
  3. A histogram is a bar chart that shows the spread or dispersion of data. It is a frequency distribution in bar format.
  4. A Pareto chart shows what major factors make up the subject being analyzed. It is a bar chart with the bars arranged in descending order with a cumulative percentage shown. It helps highlight the “vital few” from the “trivial many.”
  5. A cause and effect diagram, such as a fishbone diagram, is a graphic means of analyzing the relationship between an effect and its causes.
  6. A scatter diagram is used to show the relationship between two variables.
  7. A control chart is a special type of trend chart with statistically calculated limits used to track an ongoing process to see if it is within statistical control.
A Cause and Effect Diagram

A Cause and Effect Diagram

These seven tools can be used to measure customer satisfaction, to monitor ongoing processes, or to analyze data as part of the problem solving process. Other more sophisticated statistical techniques, as well as more advanced management tools, can also be applied, when appropriate, to control and improve processes.

THE QUALITY PRIZE

In the United States, there are two quality prizes that exist at the national level. The Malcolm Baldrige National Quality Award was started in 1988 to promote quality management in the private sector. Its equivalent for federal government agencies was started in 1989 and is called the President's Award for Quality and Productivity. Both awards are used to recognize excellence in achieving quality. Although their criteria for evaluation are organized differently, they both cover the same essential elements.

The DemingPrize [8] was established in Japan in 1951. It consists of two awards. The Deming Prize is presented to individuals who have made outstanding contributions in the theory and application of statistical quality control. The Deming Application Prize is presented to companies that have achieved very significant improvements in performance through the application of quality management based on statistical quality control. In 1986, the Deming Application Prize for Overseas Companies [3] was established; any company worldwide can apply for this prestigious award.

The European community is developing its own quality award; it will be similar to the Deming Prize and the Baldrige Award [4].

What does it take to win a quality award? The answer is the total implementation of quality management principles throughout an organization. This focusing of an organization's efforts to truly satisfy its customers is what is evaluated.

As previously indicated, the criteria for evaluation for the Baldrige [9] and President's Awards [11] are very similar. Some differences in the structure of their evaluation criteria exist, but the overall content of what is required is the same. Therefore, only the Baldrige Award will be addressed further.

What is the difference between the Baldrige Award and the Deming Application Prize? Both require the systematic implementation of quality management principles throughout an organization. Both recognize excellence, raise the level of quality awareness and promote the cress-functional sharing of information. There are differences, however, in the process to achieve these awards.

The Baldrige criteria are widely publicized and have been promoted as a tool for organizations to use in conducting self-assessments. The number of applications distributed last year was 180,000. On the other hand, the Deming evaluation criteria are not generally publicized and are used by prize applicants only.

Any organization can apply for the Baldrige Award by submitting an application. In 1991, 106 applications were submitted but no more than two can win in each of three categories: manufacturing companies, service companies and small businesses. Through 1990, there have been nine winners of the Baldrige Award. For the Deming Prize, only a small number of organizations are allowed to apply to the Union of Japanese Scientists and Engineers (JUSE), which administers the award. There are no limits, however, on the number of prizes awarded each year. Only one organization outside of Japan, Florida Power and Light Company [1] [4] 12], has received the Deming Prize.

Organizations applying for the Baldrige Award may or may not use outside consultants to help them in their self-assessment and application preparation. For the Deming Prize, consultants are required in assessing an organization's quality management implementation prior to applying, but are not required to do so after that.

While examiners for the Baldrige Award are drawn from industry, academia and government, only auditors from within JUSE are used for the Deming evaluation.

Finally, the Baldrige application/evaluation process takes six months to complete; those organizations chosen for an onsite review will spend, on average, four days of extensive evaluation. The Deming process takes one year; the onsite review of Florida Power and Light Company was conducted in two, very intensive, five-day sessions [4].

Analyzing the areas of evaluation for the Baldrige Award and the Deming Prize, certain common elements appear. These include the establishment, communication and implementation of the organization's goals and policies to achieve customer satisfaction; the development and control of the processes that provide the products or services; the continuous improvement efforts required to ensure that the processes keep satisfying customer needs; the employee training and involvement activities to support the above efforts; the results obtained through implementation of quality management; and the method for assuring that the system continuously works to achieve the desired objective.

There are, however, two areas specifically addressed in the Baldrige Award that are not separately identified in the Deming Prize criteria. These include the role of senior management in the leadership of quality efforts and a separate section on customer satisfaction. Because they are not specifically listed in no way diminishes their importance to success. In fact, these two areas are actually embedded throughout the Deming Prize evaluation process and are considered a fundamental part of the implementation of quality management. The demonstration of senior management's role in leading the quality effort and the focus on customers, both internal and external, is essential to a successful effort and is thoroughly evaluated.

THE REAL QUALITY PRIZE

To win a quality prize requires the across-the-board implementation of quality management principles throughout an organization. For some who are already doing this, challenging for an award may not be such a major effort. For others, who have not yet accepted this as an improved way to doing business, the task ahead could seem monumental. The biggest hurdle to overcome is usually the cultural change that is often required in an organization before it an effectively implement quality management.

Going for a quality prize is not an endpoint. Rather, it is a vehicle to push an organization faster towards accomplishing its goals. And winning a quality prize does not mean an organization is where it wants to be. In fact, in quality management, an organization is never where it wants to be since its goals keep changing as it continually improves its operation.

Whether or not an organization chooses to compete for a quality award would not stop it from winning The Real Quality Prize. That prize is continuing success in a more expanded, competitive environment. As Dr. J. M. Juran, a pioneer of modem quality concepts, recently said in a summary of the lessons learned from the 1988 and 1989 Baldrige Award winners

The Baldrige Award winners have made many stunning achievements within a few years. The first achievement was the stunning results with respect to quality:

  • Customer service response time has been reduced by an order of magnitude.
  • Defect levels have been reduced by an order magnitude.
  • Productivity has been doubled.
  • Costs have been reduced by 50 percent [6].

President Bush, in his remarks to the 1990 Baldrige Award winners, summarized The Real Quality Prize this way:

Quality means survival ….To compete and win in the international arena, U.S. companies are simply going to have to offer products and services that are world-class ….Quality Management is not just a strategy. It must be a new style of working, even a new style of thinking. A dedication to quality and excellence is more than good business. It is a way of life giving something back to society, offering your best to others [2].

Quality is defined by the customer. Listening to the customer, then focusing the organization's energies to satisfying the customer, creates an environment where everyone wins

The Real Quality Prize.

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Alan S. Mendelssohn is a project control supervisor in Florida Power & Light Company's Project Management Department. Since 1983, he has been heavily involved in all aspects of FPL's Quality Improvement Process and has played a lead role in its incorporation into the Project Management Department. He is also serving as a quality management consultant with the U.S. Army Material Command. Mr. Mendelssohn has a B.S. in physics and an M.S. in nuclear engineering. He is a Registered Professional Engineer in Florida and has been designated by the American Association of Cost Engineers as a Certified Cost Engineer. He is a member of the Quality Management Committee of the American Association of Cost Engineers and is a member of a special PMI committee working on an update of the quality management section of the PMBOK.

NEWS

REFERENCES

1. Amen, Vicki N., and Marie T. Mogollon-Seemer. 1990. The Deming Prize Process at FPL. 44th Annual ASQC Quality Congress Transactions.

2. Bush, G. December 13,1990. Text of Remarks by the President in Presentation of 1990 Malcolm Baldrige National Quality Award. Washington, D.C.

3. Deming Prize Guide for Overseas Companies. 1986. Deming Prize Committee. Union of Japanese Scientists and Engineers (JUSE).

4. Hudiburg, J.J. 1991. Winning With Quality, The FPL Story. White Plains, New York: Quality Resources.

5. Imai, M. 1986. Kaizen: The Key to Japan's Competitive Success. New York Random House.

6. Juran, J.M. March 1991. Strategies for World-Class Quality. Quality Progress.

7. Kume, H. 1985. Statistical Methods for Quality Improvement. The Association of Overseas Technical Scholarship, Tokyo.

8. Kume, H. October 1990. The Quality Cultural Exchange. Quality Progress.

9. Malcolm Baldrige National Quality Award, 1991 Application. Guidelines. 1990. Gaithersburg, MD: National Institute of Standards and Technology.

10. Mendelssohn, A.S. 1990. Quality - An All Encompassing Concept Critical to Project Success. 1990 Proceedings. Drexel Hill, PA Project Management Institute.

11. President's Award for Quality and Productivity Improvement Criteria and Scoring Guidelines. 1990. Washington, DC: Quality Management Branch, Office of Management and Budget.

12. Walton, M. 1990. Deming Management Method at Work. NY G.P. Putnam's Sons.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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