Chapter 1 Project Total Quality Management Chapter 1.ppt

Project Total Quality Management PTQM 07/30/24 1  Basics of Quality Management PTQM 07/30/24  “Quality is our Job”- Motorolla  Total customer satisfaction – Motorolla  Quality is “when our products do not come back; but our customers do.” ...

Project Total Quality Management PTQM 07/30/24 1  Basics of Quality Management PTQM 07/30/24  “Quality is our Job”- Motorolla  Total customer satisfaction – Motorolla  Quality is “when our products do not come back; but our customers do.”  Customers are the center of our universe- AT&T  A customer is the most important visitor on our premises. He is not dependent on us; we are dependent on him. He is not an interruption in our work; He is the purpose of it. He is not an outsider in our business ; he is part of it. We are not doing him a favor by serving him ; He is doing us a favor by giving us an opportunity to do so. Mahatma Gandhi PTQM 07/30/24  Globalization and competition resulted in paradigm shift of quality.  Quality was viewed as a defensive function rather than as a competitive weapon for use in developing new markets and increasing market share..  the quality emphasis was quality control: reducing number of defects/customer complaints that were received.  there was a heavy reliance on inspection (sorting the good from the bad) rather than on prevention. PTQM 07/30/24 4  Inspection involves identifying defective out put and either fixing it (rework) or disposing it of (scrap), which incurred cost.  It was therefore, believed that higher quality must be more costly.  However, it is found that achieving quality is not exorbitantly high with prevention. PTQM 07/30/24 3-5  PTQM is coined from two major management areas: Project Management and Quality management and TQM is an extension of Quality Management.  It is possible to shorten PTQM to be PQM  Both project management and quality management complement each other. PTQM 07/30/24 3-6  Project Management: The Application of Knowledge, Skills, Tools and Techniques to Project Activities to Meet the Project Requirements (PMBOK).  Project : A temporary endeavor undertaken to create a unique product, service or result. Q. Could you differentiate between Project and Business operation? PTQM 07/30/24 3-7  Quality management is the process for ensuring that all project activities necessary to design, plan and implement a project that is effective and efficient with respect to the purpose or the objective and its performance.  It includes following policies and procedures in order to ensure that a project meets the defined needs it was intended to meet. PTQM 07/30/24  Quality is Not a Matter of Luck … like throwing a dice and waiting to see what happens.  Achieving Quality in the Project Deliverable is the Result of Management …  Quality Must be Planned into the Deliverable and Built into the Deliverable PTQM 07/30/24  Quality management is not an event - it is a process, a consistently high quality product or service cannot be produced by a defective process.  is a repetitive cycle of measuring quality, updating processes, measuring until the desired quality is achieved.  Modern quality management complements project management and both disciplines recognize the importance of four components: PTQM 07/30/24 q Quality Project Management recognizes Management recognizes the importance of: Customer Satisfaction Prevention Over Inspection, Continuous Improvement, Management Responsibility PTQM 07/30/24 i) Customer Satisfaction—involves understanding, defining, evaluating, and managing expectations so that customer requirements are met.  This requires a combination of conformance to requirements, ensuring the project produces what it was created to produce, and fitness for use (the product or service must satisfy real needs). PTQM 07/30/24 ii) Prevention Over Inspection— states that quality is planned, designed, and built in rather than inspected in. The cost of preventing mistakes is generally much less than the cost of correcting them when they are found by inspection. PTQM 07/30/24 3-13 iii) Continuous Improvement—the plan-do- check-act cycle is the basis for quality improvement, which is a non stop endeavor. PTQM 07/30/24 iv) Management Responsibility—success requires the participation of all members of the project team, but remains the responsibility of management to provide the resources needed to succeed. PTQM 07/30/24 3-15  TQM also recognizes the same components as discussed above.  Total Quality Management (TQM) is a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback by involving all partners, which often times is accomplished through a series of small projects. PTQM 07/30/24 3-16  Analyzing the three words, we have: Total-- Made up of the whole Quality-- Degree of excellence of a product or service provides Management-Act, art, or manner of handling, controlling, directing etc.  TQM is an art of managing the whole to achieve excellence. PTQM 07/30/24 3-17  Project total quality management therefore is the process that ensures the project will satisfy the needs for which it was undertaken.  is not a separate, independent process that occurs at the end of an activity to measure the level of quality of the output.  Quality should be integrated in to all operations in an organization, project,… than to have an independent sacred dept. PTQM 07/30/24 3-18  PQM is a continuous process that starts and ends with the project.  It is more about preventing and avoiding than measuring and fixing poor quality outputs.  It is part of every project management processes from the moment the project initiates to the final steps in the project closure phase.  It applies to all projects, regardless of the nature of their deliverables PTQM 07/30/24  To Ensure that the Project will satisfy the needs for which it was undertaken: – Scope – Cost – Performance -Time  Meet or Exceed Customer Satisfaction  The Customer Ultimately Decides if Quality is Acceptable. Period! PTQM 07/30/24 3-20  “ Quality is in the eye of the beholder”  Webster’s Dictionary degree of excellence of a thing  American Society for Quality and ISO  The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs of the customer. PTQM 07/30/24 3-21  Quality is the degree to which the project fulfills requirements.  Involves Zero Variation from the Customer’s Expectations for Scope, Time and Cost …  Hence, involves “Hitting the Target” PTQM 07/30/24 3-22  Fitness for intended use how well product or service does what it is supposed to. Therefore, design quality characteristics into a product or service to meet d/t needs of consumers for what s/he is willing to pay.  A Mercedes and a Ford are equally “fit for use,” but with different design dimensions.  Therefore, it is about better performance, more features as per the demand. 3-23 Quality of Conformance  Making sure a product or service is produced according to design(conformance to standards, making it right the first time)  Product or service design results in design specifications that should achieve the desired quality. PTQM 07/30/24 3-24  For Producer perspective, quality is how effectively the production process is able to conform to the specifications required by the design.  E.g. if new tires do not conform to specifications, they wobble. if a hotel room is not clean when a guest checks in, the hotel is not functioning according to specifications of its design. PTQM 07/30/24 3-25  Achieving quality of conformance depends on a number of factors:  Design of the production process ( distinct from product design)  Performance level of machinery, equipment and technology, materials used, training and supervision of employees, and the degree to which SQC techniques is used. PTQM 07/30/24 3-26  Product based perspective views quality as a precise and measurable variable.  In this view, for example, really good ice cream has high butterfat levels; Good edible oil is colorless, odorless. PTQM 07/30/24 3-27 Note: The three perspectives are not independent  The characteristics that connote quality must first be identified through research (a user-based approach to quality).  These characteristics are then translated into specific product attributes (a product-based approach to quality).  Then, the manufacturing process is organized to ensure that products are made precisely to specifications (a manufacturing-based approach to quality). A process that ignores anyone of these steps will not result in a quality product. PTQM 07/30/24 3-28  Consumer’s and producer’s perspectives depend on each other :  Consumer’s perspective: PRICE  Producer’s perspective: COST  Consumer’s view must dominate, b/s it is consumer who makes the final judgment regarding quality. PTQM 07/30/24 3-29  Meaning Meaning of of Quality Quality Producer’s Producer’s Perspective Perspective Consumer’s Consumer’s Perspective Perspective Quality Quality of of Conformance Conformance Quality Quality of of Design Design Conformance to Production Production Quality characteristics Marketing Marketing specifications Price Cost Fitness Fitness for for Consumer Use- dominates Consumer Use- dominates PTQM 07/30/24 3-30 1. Company reputation –Quality affects :  Perception of new products  Employment practices  Supplier relations 2. Product liability- Quality reduce risk  Impure foods that cause illness, nightgowns that burn, tires that fall apart, or auto fuel tanks that explode on all lead to huge legal expenses, large settlements or losses, and terrible publicity. PTQM 07/30/24 3-31 3. Global implications - Improves ability to compete.  Quality is an international, as well as PM, concern.  For both a company and a country to compete effectively in the global economy, products must meet global quality, design, and price expectations.  Inferior products harm a firm's profitability and a nation's balance of payments. Remember the recent cases of Ethiopian export products Return back to home for quality reasons. PTQM 07/30/24 3-32  Loss of business – Boeing 737 Max - 600 cancelled orders  Liability– Boeing 737 Max  Lower Productivity  Higher Costs PTQM 07/30/24 3-33  Top management/Project Manager  Design  Procurement  Production/operations  Quality assurance  Packaging and shipping  Marketing and sales  Customer service PTQM 07/30/24 3-34  Dimensions of quality primarily for manufactured products include:  Performance basic operating characteristics of a product; how well a car is handled or its gas mileage  Features “extra” items added to basic features, such as a stereo CD or a leather interior in a car  Reliability probability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years. PTQM 07/30/24 3-35  Conformance degree to which a product meets pre– established standards(requirements).  Durability how long product lasts before replacement.  Serviceability ease of getting repairs, speed of repairs, courtesy and competence of repair person.  Aesthetics how a product looks, feels, sounds, smells, or tastes. PTQM 07/30/24 3-36  Safety assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles  Perceptions subjective perceptions based on brand name, advertising, and the like These cxs are weighed by customers relative to cost of product. In general, customers will pay for the level of quality they can afford. If they feel they are getting what they paid for (or more), then they tend to be satisfied with the quality of the product. PTQM 07/30/24 3-37 PTQM 07/30/24 3-38  Service quality is more directly related to time and the interaction b/n employees and customers. Dimensions by Evans and Lindsay:  Time and Timeliness How long must a customer wait for service, and is it completed on time?  Is an overnight package delivered overnight?  Completeness: Is everything (complete pack) customer asked for provided ?  Is a mail order from a catalogue company complete when delivered? PTQM 07/30/24 3-39  Courtesy: How are customers treated by employees?  Are catalogue phone operators nice and are their voices pleasant?  Consistency Is the same level of service provided to each customer each time?  Is your newspaper delivered on time every morning? PTQM 07/30/24 3-40  Accessibility and convenience How easy is it to obtain service? Does a service representative answer your calls quickly?  Accuracy Is the service performed right every time?  Is your bank or credit card statement correct every month?  Responsiveness How well does the company react to unusual situations?  How well is a telephone operator able to respond to a customer’s questions? PTQM 07/30/24 3-41  Quality did not come in to its current stature over night.  The advent of a new era does not necessarily mean that the practices and principles espoused by earlier eras died out; in fact many examples of craftsmanship or quality assurance can be found today. PTQM 07/30/24 3-42 PTQM 07/30/24 3-43 PTQM 07/30/24 3-44  W. Edwards Deming – disciple of Shewart, known for 14 principles for management. Changed the focus of quality assurance from the technical aspects to more of a managerial philosophy. Developed courses during World War II to teach statistical quality- control techniques to engineers and executives of companies that were military suppliers.  After the war, he began teaching statistical quality control to Japanese companies; in Japan he is frequently referred to as the father of quality control.  He is the most famous of all quality gurus and Deming award is annually given in Japan to commemorate him. PTQM 07/30/24 3-45  Deming’s approach to quality management advocated continuous improvement of the production process to achieve conformance to specifications and reduce variability.  Identified two sources of process improvements: (a)eliminating common causes of quality problems, such as poor product design and insufficient employee training and (b) eliminating special causes, such as specific machinery and operator.  Emphasized the use of SQC technique to reduce variability in production process.  Dismisses the use of final product inspection as coming too late to reduce product defects. PTQM 07/30/24 3-46  Primary responsibility for quality improvement is employees’ and managements’- not technicians’.  He Promoted extensive employee involvement in the quality improvement programs and recommends training for workers in QC techniques and methods. PTQM 07/30/24 3-47  Deming’s overall philosophy for achieving improvement is embodied in his 14 points summarized as: 1. Create constancy of purpose for long term goal achievement. 2. Adopt philosophy of prevention instead of acceptable level of poor quality as necessary to compete globally. 3. Cease mass inspection by relying on SQC to improve product and process design. 4. Select a few suppliers based on quality commitment rather than competitive prices. 5. Constantly improve production process by focusing on two sources of quality problems: - the system and workers, thus increasing productivity and reducing cost. PTQM 07/30/24 3-48 6. Institute worker training-focusing on prevention and the use of SQC techniques. 7. Instill leadership among supervisors to help workers perform better: Management should lead; not supervise. 8. Encourage employee involvement by eliminate fear among employees for reprisal for asking questions/committing mistakes or identifying quality problems. 9.Eliminate barriers between departments, and promote cooperation and team approach for working together. 10.Eliminate slogans and numerical targets that urge workers to achieve higher performance levels w/o showing them how to do it. 11.Remove numerical quotas that employees attempt to meet at any cost w/o regard to quality. PTQM 07/30/24 3-49 12. Enhance worker pride by improving supervision and the production process so that workers can perform to their capabilities. 13. Institute vigorous training and education programs in methods of quality improvement throughout the org from top mgt down, so that continuous improvement can occur. 14. Develop a commitment from top management to implement above 13 points  Note: These “14 points” were the foundation  for modern TQM and QMS PTQM processes. 07/30/24 3-50  Deming is also credited for development/propagation of Deming Wheel ( plan- Do- check -act)  Is a four stage process for continuous quality improvement that implements Deming’s 14 points. PTQM 07/30/24 3-51 1. Plan- a process or situation is studied, identifying problems and planning how to solve them. Customer expectations is determined and goals to measure quality improvement are established. 2. Do. Plan is implemented on a test basis, improvement is measured and results documented. PTQM 07/30/24 3-52 3. Check/Study –originally called check. It is called as study to reflect a more thorough analysis of the plan than a simple check. - Plan is assessed to see if it is achieving goals established in earlier stages and see if any new problem is developed. 4. Act. Plan is implemented and quality improvement (QI) is made part of the normal operation (Institutionalization). The process then returns to stage 1 to start the cycle over again to identify new quality problems and develop plans to solve them- the continuous improvement of a committed PTQM quality 07/30/24 mgt program. 3-53 PTQM 07/30/24 3-54  are those costs incurred to achieve good quality and to satisfy the customer, as well as costs incurred when quality fails to satisfy the customer. Cost of Quality Control Failure costs costs Prevention Internal failure Appraisal failure Cost costs costs Cost External PTQM 07/30/24 3-55  the potential for defective parts or services  Quality planning costs  Training costs costs of developing and costs of developing implementing quality and putting on quality management program training programs for  Product-design costs employees and costs of designing management products with quality  Information costs characteristics costs of acquiring and  Process costs maintaining data costs expended to related to quality, and make sure productive development of reports process conforms to on quality performance quality specifications PTQM 07/30/24 3-56  Is designed to ensure quality or uncover defects  Inspection and testing costs of testing and inspecting materials, parts, and product at various stages and at the end of a process.  Test equipment costs costs of maintaining equipment used in testing quality characteristics of products.  Operator costs costs of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality. PTQM 07/30/24 3-57  Scrap costs  Process downtime costs costs of poor-quality costs of shutting products that must be down productive discarded, including process to fix labor, material, and problem. indirect costs  Price-downgrading  Rework costs costs costs of fixing costs of discounting defective products to poor-quality products conform to quality —that is, selling specifications products as  Process failure costs “seconds” by reducing costs of determining its price. why production process is producing poor-quality products. PTQM 07/30/24 3-58  Customer complaint  Product liability costs costs litigation costs costs of investigating resulting from product and satisfactorily liability and customer responding to a injury customer complaint  Lost sales costs resulting from a poor- costs incurred quality product. because customers  Product return costs are dissatisfied with costs of handling and poor quality products replacing poor-quality and do not make products returned by additional purchases customer.  Loss of Good will  Warranty claims costs Note: External failure costs costs of complying with are the most expensive of product warranties all. PTQM 07/30/24 3-59  Costs of Training, inspection and testing , scrap , product return, warranty claims, liability costs are usually measured. But, cost of lost sales, customer complaints, process downtime, operator testing, quality infn, …are difficult to measure but must be estimated by mgt.  Mgt want quality costs to be reported in a manner that can easily be interpreted and meaningful. One format is Index numbers:  Index numbers ratios that measure quality costs against a base value. i. labor index- ratio of quality cost to labor hours ii.cost index- ratio of quality cost to manufacturing cost iii.sales index -ratio of quality cost to sales iv.production index-ratio of quality cost to units of final product. PTQM 07/30/24 3-60  Index numbers will not directly show how good or poor quality of a product is ; are informative only when they are compared to some standard or other index.  Increase in the expenditure of prevention cost results in decrease in all other quality cost category. PTQM 07/30/24 3-61 PTQM 07/30/24 3-62 PTQM 07/30/24 3-63  As prevention and appraisal costs increase, internal and external failure costs decrease.  Prevention and appraisal costs are costs of achieving good quality; while failure costs are costs of poor quality.  Note: Focus on preventing poor quality and concentrating in new product dev’t stage than production process , w/c reduces appraisal costs. PTQM 07/30/24 3-64  Quality and profitability are highly related.  Two ways quality improves Profitability: Sales Gains via  Improved response  Improved reputation  Flexible pricing/Premium price Improve Increased d Reduced Costs via Profits Quality  Increased productivity  Lower rework and scrap costs  Lower warranty costs PTQM 07/30/24 3-65  Productivity ratio of output to input- number of units produced from available input. It is measure of effectiveness in converting inputs in to output. improving quality by reducing defects will increase good outputs and reduce inputs. Improving product design and production process, improving quality of parts and materials, and improving job design and work activity increase productivity. 3-66 PTQM 07/30/24 3-67 Taju Title wants to evaluate its labor and multifactor productivity with a new computerized title search system. The company has a staff of four, each working 8 hours per day (for a payroll cost of $640/day) and overhead expenses of $400 per day. Taju processes and closes on 8 titles each day. The new computerized title-search system will allow the processing of 14 titles per day. Although the staff, their work hours, and pay are the same, the overhead expenses are now $800 per day. Calculate: a) Labor &multifactor productivity for old and new system. b) Calculate the percentage change in productivities? By: Mulachew Haile 07/30/24 68. By: Mulachew Haile 07/30/24 69 i. Labor productivity has increased from 0.25 to 0.4375. The change is ((0.437/0.25) -1)*100 = (1.75-1)*100 = a 75% increase in labor productivity. Or % increase = (New – previous)/Previous *100 = (0.437-0.25)/0.25*100 = 75% ii. Multifactor productivity has increased from 0.0077 to 0.0097. This change is ((0.0097/0.0077) -1)*100 = (1.259-1)*100, = a 25.9% increase in multifactor productivity. By: Mulachew Haile 07/30/24 70  Become efficient output increases with little or no increase in input  Expand both output and input grow with output growing more rapidly  Achieve breakthroughs output increases while input decreases  Downsize output remains the same and input is reduced  Retrench both output and input decrease, with input decreasing at a faster rate PTQM 07/30/24 3-71  Yield: a measure of productivity  a measure of out put;  It can be computed for entire production process or one stage in the process as: Yield=(total Yield=(total input)(% input)(% good good units) units) ++ (total (total input)(1-%good input)(1-%good units)(% units)(% reworked) reworked) or or Y=(I)(%G)+(I)(1-%G)(%R) Y=(I)(%G)+(I)(1-%G)(%R) Note: Any increase in the %ge of good products through improved quality will increase product PTQM 07/30/24 yield. 3-72 PTQM 07/30/24 3-73  The manufacturing cost per (good) product is computed by dividing the sum of total direct manufacturing cost and total cost for all reworked units by the yield, as follows: PTQM 07/30/24 3-74  ( K d )( I )  ( K r )( R) Product Cost  Y where: Kd = direct manufacturing cost per unit I = input Kr = rework cost per unit R = reworked units Y = yield PTQM 07/30/24 3-75 PTQM 07/30/24 3-76  Y = (I)(%g1)(%g2) … (%gn) where: I = input of items to the production process that will result in finished products gi = good-quality, work-in-process products at stage i PTQM 07/30/24 3-77 PTQM 07/30/24 3-78 -is another measure of the effect of quality on productivity, w/c combines the concept of product yield and quality index numbers. QPR productivity index that includes productivity and quality costs. non-defective units or Good quality products QPR = (input) (processing cost) + (defective units) (reworked cost) PTQM 07/30/24 3-79 PTQM 07/30/24 3-80  Substandard work  Defective products  Substandard service  Poor designs  Shoddy workmanship  Substandard parts and materials Having knowledge of this and failing to correct and report it in a timely manner is unethical. PTQM 07/30/24 3-81 …END… PTQM 07/30/24 3-82