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Project Management

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LESSON 36
PRINCIPLES OF TOTAL QUALITY
BROAD CONTENTS
Definitions of Total Quality
Total Quality Practices
Principles of Total Quality
Scope of Total Quality Management (TQM)
Empowerment
Cost of Quality
36.1
DEFINITIONS OF TOTAL QUALITY:
1. According to Crosby:
 Quality is not only free, it is profit maker
 Increase of 5% -10% in profitability by concentrating on quality
 Quality provides a lot of money for free
2. PandG Total Quality Management (TQM) Definition:
Total Quality is the unyielding and continually improving effort by everyone is an
organization to understand, meet, and exceed the expectations of customers.
3. A V. Feigenbaum:
As already discussed in lecture 34, A V. Feigenbaum introduced comprehensive approach
to quality in 50s by virtue of which, quality of products and services were influenced by the
following 9Ms:
Market
Money
Material
Management
Machines
Men/Women
Motivation
Mechanizations
Modern Information Methods
Mounting Products Requirements
As already discussed in the previous lecture, total quality is a people-focused management system
that aims at continual increase in customer satisfaction at continually lower real cost. Not a
separate area or program.
 Integral part of high-level strategy
 Works horizontally across functions and departments
 Involves all employees, top to bottom
 Extends backward and forward to include "supply chain and customer chain"
36.2
TOTAL QUALITY PRACTICES:
It includes the following:
 Encouraging openness
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Creating climates of trust and eliminate fear
Listening and providing feedback
Leading and participating in group meetings
Solving problems with data
Clarifying goals and resolving conflicts
Delegating and coaching
Implementing change
Making continuous improvement a way of life
36.3
PRINCIPLES OF TOTAL QUALITY:
There are three basic principles of total quality. These are as follows:
 Customer Focus
 Participation and Team work
 Continuous improvement (CI) and learning
36.4
SCOPE OF TOTAL QUALITY MANAGEMENT:
The figure 36.1 below depicts the scope of Total Quality Management (TQM). It is explained in
the ensuing paragraphs.
Figure 36.1: Scope of Total Quality Management (TQM)
Infrastructure: Basic management system necessary to function as a high performing
organization.
Practices: Activities that occurs within a management system to achieve high performance
objectives.
Tools: A wide variety of graphical and statistical methods to plan work activities, collect data
analyze results, monitor progress, and solve problems.
36.5
EMPOWERMENT:
Empowerment means that managers must relinquish some of power that they previously held.
Power shift creates management fears that workers will abuse this privilege.
Employees have authority and responsibility to make things happen. No one can be best at
everything. But when all of us combine our talents, we can be best at virtually anything.
Everyone in organization is "captain of his game". He thinks of his work unit as his "own
business", and perceives that his "work unit" is key part of "corporate enterprise". It builds
"confidence in workers" by showing them that company has confidence in them "to make
decision" on their own. Empowerment can be viewed as vertical teamwork between managerial
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and non-managerial personnel. People can be trusted to make important decisions about
management of their work activities. When people make decisions about management of their
work, its result is greater organizational effectiveness.
As a whole participation and empowerment assumes that employees are willing to improve their
"daily work process" and "relationships". Employee participation is essential active,
enthusiastic participation by employees essential to success of performance improvement
initiative.
Workers know what goes wrong and where hurdle in their processes. If given targets and
support they are best to develop creative and effective ideas for "positive change".
Problem for many project based organization reduction of "bureaucratic red tape" "that prevents
employees from seizing the initiative.
36.5.1 Participative Management:
Participative organizations are those that give:
 Information
 Knowledge
 Power
 Rewards to all employees so that everyone can be involved in organization's
performance Participative management. It is essential basis for empowered
workforce. Put "everybody's intellect" to work good thinking is not solely province
of managers. Different points of view can help shape better decision.
Participative management require that "responsibility and accountability" takes to
lowest possible level empowerment- for three eyes only creation of "corporate" spirit of
participation required that workforce have information, involvement and influence.
Participative management does not imply abrogation by management of its
responsibility it does imply workforce involvement in decision making process, but
final decision on corporate matters remains responsibility of manager.
When empowered employees become convinced that their duty is to their "process" not
to their "boss", wonderful things begin to happen. Teams shoulder responsibility for
their "process", and new, more "cooperative style" of work evolves.
Empowerment encourages "innovation" because employees have authority to "try out"
new ideas and make decisions that result in new ways of doing things. Access to
information when employees are given access to information their willingness to
cooperation and to use empowerment is enhanced.
Due to this "Accessibility", Teams  "Manage  and Control Opportunity" More
Effectively Than under old "Hierarchical Rules and Structure" where access to info
provided on A Need to Know Basis".
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36.5.2 Accountability:
Employees empowered to make decision, yet also held accountable for results.
Accountability is not to punish person or to generate immediate, short term results.
Intent is to ensure that empowered employees are:
Giving their best efforts
a) Working toward "agreed-upon goals"
b) Behaving responsibly toward each other
36.5.3 Empowerment ­ Some Key Principles:
 People are valuable resource because they have "knowledge and ideas".
 People want to participate.
 When people participate, they feel empowered; they think like owners.
 When people participate, they look for ways to improved opportunities.
 When people have importance into "corporate and department decisions", better
solutions are developed.
 People should be treated fairly and with respect.
Organizations should make long term commitment for development of people because
it makes them valuable to organization. People can develop knowledge to make
important decision about management of their work activities.
36.5.4 Six Ways of Empowering Employees for Quality Improvement in Projects:
1.
Involve employees in developing strategies for continuous improvement.
2.
Provide employees with skills required solving problems and making decisions.
3.
Define involvement and empowerment based on mission of organization.
4.
Establish organizational and individual goals.
5.
Establish customer-driven performance measurement at individual level.
6.
Involve and empower everyone to focus on continuous improvement.
Successful empowerment of employees requires:
Employees should be provided with:
o  Education
o  Resources
o  Encouragement
Policies and procedures should be examined for needless restrictions.
Atmosphere of trust should be fostered rather than resentment and punishment for
failure.
Information should be shared "freely" rather than "closely guarded" as "source of
control and power".
36.6
COST OF QUALITY:
To verify that a product or service meets the customer's requirements requires the measurement
of the cost of quality. For simplicity's sake, the costs can be classified as "the cost of
conformance" and "the cost of nonconformance." Conformance costs include items such as
training, indoctrination, verification, validation, testing, maintenance, calibration, and audits.
Nonconforming costs include items such as scrap, rework, warranty repairs, product recalls, and
complaint handling.
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Trying to save a few project dollars by reducing conformance costs could prove disastrous. For
example, an American company won a contract as a supplier of Japanese parts. The initial
contract called for the delivery of 10,000 parts. During inspection and testing at the customer's
(that is, Japanese) facility, two rejects were discovered. The Japanese returned all 10,000
components to the American supplier stating that this batch was not acceptable. In this example,
the nonconformance cost could easily be an order of magnitude greater than the conformance
cost. The moral is clear:
Feigenbaum divided cost of quality into two categories and four sub categories:
Costs of Control
o  Prevention costs
o  Appraisal costs
Costs of Failure of Control
o  Internal defect costs
o  External defect costs
Figure 36.2: Cost of Quality
Prevention costs are the up-front costs oriented toward the satisfaction of customer's
requirements with the first and all succeeding units of product produced without defects.
Included in this are typically such costs as design review, training, quality planning, surveys
of vendors, suppliers, and subcontractors, process studies, and related preventive activities.
Appraisal costs are costs associated with evaluation of product or process to ascertain how
well all of the requirements of the customer have been met. Included in this are typically
such costs as inspection of product, lab test, vendor control, in-process testing, and internal­
external design reviews.
Internal failure costs are those costs associated with the failure of the processes to make
products acceptable to the customer, before leaving the control of the organization. Included
in this area are scrap, rework, repair, downtime, defect evaluation, evaluation of scrap, and
corrective actions for these internal failures.
External failure costs are those costs associated with the determination by the customer
that his requirements have not been satisfied. Included are customer returns and allowances,
evaluation of customer complaints, inspection at the customer, and customer visits to
resolve quality complaints and necessary corrective action.
Prevention costs are expected to actually rise as more time is spent in prevention activities
throughout the organization. As processes improve over the long run, appraisal costs will go
down as the need to inspect in quality decreases. The biggest savings will come from the
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internal failure areas of rework, scrap, reengineering, redo, etc. The additional time spent in up-
front design and development will really pay off here. And, finally, the external costs will also
come down as processes yield first-time quality on a regular basis. The improvements will
continue to affect the company on a long-term basis in both improved quality and lower costs.
Also, as project management begins to mature, there should be further decreases in the cost of
both maintaining quality and developing products.
Prevention costs actually decrease without sacrificing the purpose of prevention if we can
identify and eliminate the costs associated with waste, such as waste due to:
Rejects of completed work
Design flaws
Work in progress
Improperly instructed manpower
Excess or noncontributing management (who still charge time to the project)
Improperly assigned manpower
Improper utilization of facilities
Excessive expenses that do not necessarily contribute to the project (that is, unnecessary
meetings, travel, lodgings, etc.)
Table 36.1: Cost of Quality
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles