quality & the construction contractor

Quality & the Construction Contractor

Damon P. Schneider – Consultant, Loss Control

AGENDA

• Overview of changes within functional area.

• QA / QC: what is the difference?

• Why is quality in work process and product important?

• The role of safety and loss control – providing

guidance to the policyholder.

Southeast Safety & Loss Control

Something seems different…..

• Ongoing evolution to a consultative service model (e.g. LARC meetings, CSAs).

• Continuous review of asset utilization.

• Willing to assist with “desktop assessments”.

• We are a “man down” so keep this in mind if you have time sensitivity.

Is quality work product an issue in construction?

Is quality work product an issue in construction?

Is quality work product an issue in construction?

Is quality work product an issue in construction?

Is quality work product an issue in construction?

QA…? QC…? WTH?

• Quality Assurance (QA): the continuous proactive management of the construction process designed to reduce rework & increase productivity.

• Quality Control (QC): the review of installed products / workmanship.

• What is the difference?– QA is used to manage quality throughout the

construction process. QC is inspection-based, after the fact….whoops too late!

Bad quality is bad business

• Lack of controls in approach to the project: – Viewed as reflective of overall company culture.

• Culture is the foundation of worker behavior.

• Rework, customer complaints, product recalls & returns, warranty claims, lawsuits & lost revenue represent 5-15% of total business costs (Boston Consulting Group, 2007).

Bad quality is bad business

• The BCG figure does not factor in financial impact of reputation risk:– Bad “rep” in the industry can impact the

sustainability of the company. – “We should not take peace for granted” (Angela

Merkel, Chancellor of Germany).

• Minimizing rework will reduce the use of material resources and the exposure of human resources to injury.

Benefits to having a quality orientation:

• Do the job once: – Increase efficiency.– Reduce variation in outcome.– Reduce the potential for injury.– Reduce the potential for property damage.

• Proper tools used on the proper materials.• Reduce cost associated with rework.

Benefits to having a quality orientation:

• Leverage “quality” as a business development tool.

• Assemble a project portfolio:– Defect free.– Under budget.– Zero accidents / property damage.– GC / Sub references.

Continuous Process Improvement

• Review specifications.• Plan the job.• RFIs? Change orders? Are they tracked?• Need for coordination when on site?• Create QA requirement lists specific to the

trade.• Train your people:

– Don’t assume they have a clue.

Challenges in this class of business

• Many of our PHs are in “survival mode”.• Get the job even if they are losing $$:

– Margins are otherwise in 3%+/- range.

• Safety and QA factors are the first to be cut:– CFO is now the “Safety Director”.

• Our efforts face some headwinds in this environment.

What should we look for?

• Does the PH have a “system”?• Proper specifications? • Member of industry association(s)?• Aware of industry best practice?• Do they pre-plan?• Any planning for the staging of materials?• Use of accepted contract forms for

delineating responsibility (e.g. AIA A401).

What should we look for?

• The right person for the right job?

• Is there a reliance on punch lists, architect reports or the county inspector for their “quality control”?

• Do they perform an “after action” report on completed projects?

What should we look for?

• Work from plans developed by a licensed architect / engineer?– Not from napkins!

• Maintenance of job files?• Review / assist with QA requirement lists:

– Address items that are “specification-specific”.– Common items from punch lists.– Signed copy for CM / GC / Sub.– Keep it to one page!

What should we look for?

• Discontinued products / operations.• Acquired products / operations.• Understand the extent of “design” exposure:

– This includes value engineering!

• Identify emerging risks:– Energy performance & code requirements for

projects funded by federal “stimulus”.– Possibly a “green” construction exposure to

liability.

Off on the horizon ….

• If we seek to target the “middle market”:– We should expect more formal processes.

• These processes can include:– Root cause analysis (which has safety and quality

applications).

– Six Sigma.– ISO-9001.– Lean construction– IPD and BIM.

Southeast Safety and Loss Control

• We are here as a resource to you, our agents and our policyholders…. Please feel free to lean on us for counsel.

• We work cheap! Pizza and tips!– I will accept coffee in lieu of food.

• Our expanded pool of resources includes our leadership team and safety professionals in nine states!

Any questions?