There is a veritable geyser of data tracking housing today. From existing-home sales, to house prices, to new-home permits, to starts—housing metrics abound.
8 essentials to achieving quality by prevention
In the final installment of a three-part series on quality management, operations expert Scott Sedam offers a roadmap for achieving the highest level of quality management — quality by prevention.
In part one on the evolution of quality management in home building in the January 2012 issue, we offered a model to determine where you stand in your own quality journey and the characteristics of each phase. In part two last month, we heard from industry veterans on how builders responded to the changes in customer expectation regarding quality, balancing customer needs with the new reality of building during a housing recession. This month, our focus is on the tools of prevention, leading ultimately to the goal of quality by design.
One of the very best builders in America told me recently that the reality is that his team is still largely stuck in the mode of providing quality through inspection and rework, both before and after the sale. I told him he is in good company, this being the predominate methodology employed around the world in home building. It does the job insofar as the customer eventually ends up with a good product, but at tremendous cost, as I detailed in the first two articles in this series.
Simply put, we cannot afford to keep doing things the way we’ve always done them and expect costs to do anything but increase.
In 1979, the late Phil Crosby, one of the gurus of the 1980s quality movement, wrote the popular book, “Quality is Free.” It’s hard to believe that not so long ago, this was considered controversial, even heretical. How many times in my early years of production did I hear the old saw expressed with a certain bravado, “Quality, low cost, production — pick two out of three.” The conviction was strong that having all three was impossible. Crosby’s assertion, however, is clearly demonstrated in the Rule of 1-10-100 presented in the first article in this series. For every penny, dollar, hour, or day you spend preventing problems, identification through inspection and rework prior to closing costs 10 times as much. Allow the customer to find problems after move-in and you add another factor of 10, for a total of 100 times more than prevention.
Read Part I: The evolution of quality management in home building
Read Part II: Where does quality management go from here?
Yet, in a sense, Crosby was wrong. Quality by prevention is better than free; it’s an investment that returns money to the company, whether builder, supplier, trade, or manufacturer. Quality by prevention isn’t a switch than can be flipped, and like magic, things change. I have, however, seen remarkable progress in short order when a company aligns its systems, has genuine management support, and employs the tools of prevention. There is not enough space in this article to present a comprehensive review of all the requirements for quality by prevention, but here is a list of eight specific things that virtually all quality leaders practice.
1. The Culture and Senior Management Commitment
I ran into one of my favorite company presidents not long ago. He runs a very successful operation but is continually frustrated at the inability of his people to take the next step beyond inspection-based quality. It was not the first conversation we have had on this subject, and I had tried to gently lead him to the conclusion I wanted him to reach. It was time to be direct so I told him straight; the problem was him. What he needed to do was as simple — and demanding — as this: set, reinforce, and maintain the culture he wanted by demonstration through his daily actions. What did he expect of his people? What did he inspect? What did he measure, monitor, question, demand, support, and reinforce daily? When the boss gives a continual, consistent message and backs it up daily, few employees fail to understand, and those who do not, well, they need to find a new home.
2. Matching Systems to Complexity
Any time that complexity exceeds the capacity of a builder’s systems, quality problems result. This is a guarantee, and by systems we mean any mechanisms builders use to control and manage the business, whether manual or computerized. Complexity has many sources and can include excessive variation in product types, options, and locations, or simply volume in excess of system capacity.
There is a caution here that has been said many times yet still goes largely unheeded in the building industry: there is no bigger mistake than to automate a bad system. So before you turn to one of the whiz-bang software packages (and there are many good ones) to manage any part of your business, first clean up your systems. Among the best pieces of advice ever given by the late Dr. W. Edwards Deming, the top quality guru of them all, was this: uncontrolled variation is the enemy of quality. What this means for builders is that you can have as much variation in product and options as you like, provided you have the systems and capacity to manage it. As it turns out, few do, and quality suffers.
3. Plans Strategy
Three years ago, on a flight home after a long week working with suppliers and trades on Lean implementation, I had a revelation. It dawned on me that at least half of all quality problems dealt with during production and warranty could be prevented — if the plans and specifications were nailed down fully before construction started.
Intellectually, I knew this was true from other industries, but I had finally seen enough evidence to undeniably confirm it in home building. Any dollar you shortchange in the plans process generates negative ROI at a substantial multiple down the line. Plans that lack site-specific detail create quality sinkholes.
Just last week, I met an HVAC contractor who has never once installed ductwork by any other method than “figure it out as you go.” He did indicate that they get pretty good at it “after we build eight or 10 of them.” He was incredulous to hear that some exceptional builders not only provide complete plans for all mechanical trades, but that each trade is invited into the builder’s design process before the first model is built. And let’s be clear on this point — if you are doing it informally, you are not doing it, and you are creating quality problems in the field. The result is loss for the builder, trade, and customer alike. This is not simply a checklist for things to do with plans before you commence building, although that’s a start. Getting plans and specifications right requires a strategy that is well thought out and adhered to. One piece of this puzzle that is rarely seen are the critical measurements that must be met and verified for each trade — similar to a critical path for schedule. Get these right and many quality issues down the line disappear.
4. Total Cost Strategy
As I have stated emphatically in previous Professional Builder articles on purchasing strategy, the only thing that buying on bid price alone guarantees is that you will never operate by lowest total cost. So whenever you hear of a company, school, governmental body, or any organization sending out bid packages and declaring that the winner will in all cases be the lowest bid, you can safely conclude that you are dealing with seriously misguided people, to put it kindly. There is no such thing as a commodity in the real world of home building. This fact is so obvious and proven in everyday experience that it is bewildering that the low-bid-only approach still exists. There is simply no better way to sabotage quality than by holding up bid price as your sole deciding factor in choosing supplier and trade contractors.
5. Exceptional Supplier/Trade Relationships
This element has been covered ad nauseam, yet the considerable progress that was made before the housing crash has been lost by so many builders in the pursuit of ever-more minute slices off the bid-price. If you are continually churning your suppliers and trades, how do you ever expect to get their best efforts when it comes to continual improvement of plans, product, and process? How do you get the best crews? Any field superintendent can tell you that crews are not all the same and having the best eliminates a huge segment of quality problems. There is a caution here, because not all long-term relationships are productive and some beg for change. For the highest quality and profit, however, having the fewest possible number of qualified suppliers and trades is a great enabler.
6. Airtight Schedule
Schedule works on many levels to prevent quality problems and this applies to custom as well as production builders. More than 20 years ago, it became apparent to me that the best builders are the best schedulers, and the best schedulers are the best builders. The downturn has only confirmed that more deeply. Running a tight schedule brings order and predictability to the chaos that all too often describes home building. Chaos is the prime breeding ground for quality problems and there is one huge, insidious obstacle. Like a fish never knowing it lives in water until it is thrown up on the bank, so many builders don’t know anything other than chaos and thus believe it is simply normal home-building procedure.
If a builder’s suppliers, trades, and employees, whether office or field, are running around with their “hair on fire,” that is obvious. More subtle, but still symptomatic of chaos, is the common operational practice of schedules done on the fly, directed by field superintendents via cell phone or even worse, driven by the suppliers and trades themselves, checking each site to determine if it is ready. Don’t kid yourself, this is just another form of chaos where no one knows for sure where to be or what to do more than a day or two in advance. These are huge obstacles to overcome, but preventing quality problems depends on a tightly managed, predictable schedule.
7. Two-Way Scopes of Work
One of the simplest and most powerful devices is the establishment of mutually developed, two-way scopes of work among builders, suppliers, and trades, and they only have meaning if they are used. Two-way means that suppliers and trades get the opportunity to lay down what they need from the builder and other trades in order to do their best job — a rarely-seen feature.
Of critical importance in each scope is the operational definition of “job complete” for every trade that works on the site, from site prep to framing to painting to final clean — and everything else in between. Go back and look at your scopes right now. Do you see this? I’ll bet not, and once again you are laying traps that will ensnare your well-intended quality efforts. While you’re at it, look to see if these scopes are as neat and clean as the day they were printed, or if they are annotated, dog-eared, and beat up a bit. If so, you know they are being used. If not, your scopes binder is nothing more than a bookend. The ultimate test? When was the last time you had a good fight with a trade or one of your field people over the specification in a scope and whether it was met? In the course of building homes, if you are holding your trades to the scopes, there will be occasional disputes. I suggest that if you don’t see that from time to time, no one is paying attention.
8. Metrics and Feedback Mechanisms
Plenty of builders have metrics. Few have genuine feedback mechanisms where the data generated by the metrics is processed back not into just corrective action, which is critical, but modification of systems and processes to prevent reoccurrence. This is essential and a hallmark of companies in any industry who reach the prevention level of quality. The metrics and measurement tools can be learned, but like any skill, the organization has to practice them to maintain proficiency. Two of the most powerful tools are the very simple pareto chart and its mathematically more challenging (but only slightly so) cousin, the histogram. If you are not accumulating on a monthly basis the occurrence and severity of “things gone wrong,” getting these items into a pareto chart or histogram as appropriate and taking action, quality by prevention will remain an elusive goal. Every metric you track must be part of a feedback loop. If it’s not, don’t bother tracking it.
Adopting the practices outlined above may seem daunting, but there simply aren’t any shortcuts to quality by prevention. Each one on its own is something the best builders should already be pursuing. Create a scorecard and conduct a no-tears assessment where you are on each process. Don’t just ask, but demand that your employees, suppliers, and trades participate in this scoring process. You’ll quickly discover where your roadblocks and bottlenecks are, and the very act of engaging your employees, suppliers, and trades with the tools — if you act on their comments — will take you several steps further toward prevention. All these steps move you toward the ultimate goal, quality by design, where every system, process, and practice of your company is designed and aligned to produce the highest-quality product at profit levels far above industry norms.
We will dive more deeply in to exactly what a quality-by-design-focused home builder looks like, feels like, and how it operates in an article later this year. Note: For a PDF with all three quality management articles in this series, email me at firstname.lastname@example.org.
Scott Sedam (email@example.com) is president and founder of TrueNorth Development. His articles appear monthly in Professional Builder and his Lean Building Blog appears each Tuesday on HousingZone.com.