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Abstract 002-0447

Introducing Total Quality Systems in Construction. A case study.

(Implantación de sistemas de calidad total en la construcción)

Second World Conference on POM and 15th Annual POM Conference, Cancun, Mexico,

April 30 - May 3, 2004.

Josep Capó, Guillermina Tormo, Ángel Ortiz

Dpto. de Organización de Empresas – Universidad Politécnica de Valencia

Plaza Ferrandiz y Carbonell; 03801 Alcoy (Alicante) Spain

Tel. + 34 96 652 84 66 / Fax: + 34 96 652 84 65

[pepcapo, gtormo, aortiz]@omp.upv.es ABSTRACT

This paper presents a model developed by the Department of Business Organization at the

Universidad Politécnica de Valencia (UPV). It can be used to develop business models following the self-assessment methodologies of the European Foundation Quality

Management, but it also introduces a new component; the creation of multi-departmental and multi-hierarchical teams with complementary roles for carrying out the self-assessment. One particular case is studied: that of a medium-sized business in the construction industry into which this model has been introduced. An analysis is made of the stages followed to introduce it, the difficulties that arose and the results obtained.

Keywords: business models, high performance teams, total quality, construction

1. Introduction

These are times of far-reaching technological and organizational changes, and many companies are finding that they have to change their approaches so as to be able to face the challenges presented by this new environment. In these situations, companies need to be very clear about the business model they want to follow because, if they are not, they will quite possibly lose their sense of direction and then it will be difficult for them to face their new challenges with any degree of success guaranteed.

The incorporation of new technologies and organizational forms has come about gradually in the construction sector, unlike in others where the changes have been truly revolutionary. The biggest changes have been in technology and management, especially with the incorporation of new materials such as prefabricated elements, the automation of on-site construction processes, and the move from practically non-existent planning to planning for specific projects. The Department of Business Organization at the Universidad Politécnica de Valencia (Spain) has developed a model for developing business models and has applied it to an up-and- coming construction business undergoing a stage of growth and expansion.

The aim is to find a business model consistent with the initiatives of the company, in which all the actions the company needs to carry out are structured in a coherent and integrated way, allowing future actions also to be integrated into the system.

2. Historical data.

2.1 The construction sector in Spain.

The construction sector in Spain has a more accentuated cyclical profile than the economy as a whole, basically as a result of its being strongly dependent on the economic cycle of investment in infrastructures and building. The fact that the business goes in cycles means that many companies, both large and small, experience great financial difficulties in times of recession, and this is the main reason why they are following new strategies.

The trends observed in Spanish constructors are as follows:

 Growing process of concentration

 High level of technification and introduction of innovative management systems

 Diversification into complementary business areas

 Orientation towards comprehensive project management

 Introduction of programs orientated towards the safety and training of all workers

whether staff or subcontractors

 Growing orientation towards attracting people's savings through their presence on

the stock market

A trend is visible towards new forms of organization and relationships between companies, suppliers and clients, which will enable them to face new challenges in the sector. This basically comes down to two main strategic choices whereby constructors try to reach a competitive size to enable them to guarantee the necessary technical and financial capacity to undertake new projects;

 Diversification

 Strategic alliances

Concentrating on the diversification option, we find that companies are following one of three main lines:

 Strengthening classic diversification activities (vertical diversification)

 Entering new businesses (horizontal diversification)

 Increasing their activity abroad (internationalization)

The first of these is the most predominant in small and medium sized constructors, while the other two are those most used by the big groups, which have the necessary human, technical and financial means to break into other sectors and markets.

Entering the real estate promotion business tends to be the first step in the process of vertical diversification for small and medium businesses (“natural development”) because of the high margins and the closeness of the business to construction and building.

Other typical activities in vertical diversification are those that have a certain relationship or similarity to the construction business itself and which can be fitted into its supply chain:

 Urban planning  Engineering

 Installation and assembly  Conservation

 Drainage  Construction materials

2.2 The company. The company that is the subject of this paper is family-run and was set up in the 1980s as a company specializing in industrial construction. At present it is undergoing a stage of growth and developing new lines of business - especially urban planning and real estate promotion - within a process of vertical diversification.

The company has seen spectacular growth, especially over the last three years. Over this period they have doubled their turnover every year compared to the year before. Such rapid growth, however, has brought them a series of problems including:

 Mixing the roles of supplier and customer on an internal level

 Not taking into account that the businesses are very different from a technical and

professional point of view, and that each requires a different financial structure

 No segregation or independence of the decisions made in each of the businesses

carried on

 In addition, the business cycles in real estate promotion are almost identical to those

in construction, so in slow periods the effect is multiplied

In order to avoid these problems it has become necessary to introduce new management models. These need to be structured by business area, decentralized in all operational aspects but with shared service centres for corporate functions and support so as to take full advantage of the functional synergies in these areas and reduce structural costs (Parada,

2002).

The aim is to develop a business model within this new dynamic, consistent with the new reality, through a series of actions enabling the company to undergo competitive growth that will be sustainable over time, acting in every area of the company (staff, strategies, processes and technology). 3. The model's objectives.

The proposal to work together has a single objective: to develop the company business model.

This objective seeks to generate a business model consistent with the initiatives of the company, in which all the actions the company needs to carry out are structured in a coherent and integrated way, allowing future actions also to be integrated into the system.

The main objective is accompanied by a series of complementary objectives that are considered necessary if the hoped-for results are to be obtained. Specifically, these are:

 to achieve suitable management of the change in order to obtain full integration

between the company staff and the new model developed

 to obtain a suitable transfer of knowledge towards company staff to facilitate their

autonomy and independence in the maintenance and evolution of future projects

4. The model's development.

The EFQM Excellence Model was chosen as a benchmark to enable a preliminary diagnosis of the company to be carried out in a structured way. Specifically, self-assessment of the company was undertaken following the model's criteria, and thus were obtained the strengths and weaknesses which will serve to establish the company model sought.

This model defines new criteria (Figure 1) for assessing the company's progress towards excellence. These criteria are used especially to locate the company's most serious weaknesses and consolidate its strengths, thereby enabling it to improve its results. Figure 1: Criteria of the EFQM model

What usually happens in companies that introduce the EFQM model is that self-assessment is carried out by one of the following methods:

 Pretending they are competing for the award

 Self-assessment forms

 Self-assessment through an improvement matrix

 Self-assessment questionnaires

 Self-assessment through work meetings

However, these methods obtain biased results because they do not involve all the staff, only management.

An alternative method for carrying out the self-assessment was proposed. It would be carried out by creating two high performance teams made up of staff from every department in the company and from all levels of the hierarchy. The process is as follows (Figure 2): Creation of work teams

Definition of objectives

Training in Total Quality

Analysis of each of the criteria

Presentation of strengths and weaknesses

Group scoring

Consensus meeting

Definition of action plans

Figure 2: Process to be followed for self-assessment

The main stages are explained in more detail below.

4.1 Creation of work teams.

4.1.1 General information.

The meaning of the word team originates from games. Each player in a team has a position and a specific responsibility and, although the skills of each player are important, the strength of the team depends especially on how they combine together. In a high performance team each player knows when and how he has to participate, and knowing how to do so at the right time is fundamental. In such circumstances it is essential that the players know each other. A team is made up of a small number of people with complementary abilities who have a common purpose and shared objectives for which they are mutually responsible. Teams are not large groups; their size tends to vary between 2 and 25 people, although the most advisable size is around 5-7 people. Teams that are too small may lack certain abilities or complementary points of view, while large teams find it more difficult to interact and work together as a team.

A team requires a product of working together and all its members are responsible for seeing it is carried out. This group product is the result of uniting the contributions of all the team members, who work together to reach an objective.

In the process of creating a team, the selection of its members becomes a factor which, even if undefined, is essential. Therefore the first thing the team leader has to concern himself with is finding people with the right blend of technical capacity, decision-making ability and people skills in order to bring about the mission's successful completion. Some researchers claim that a diversity of cultures, functions and personalities makes a greater amount and variety of training and points of view available to the team in such a way that its overall potential increases. Others, however, say that a team's performance depends on its common framework and shared objectives. Diversity produces divergent interpretations and unshared interests in such a way that conflicts become more probable and political behaviors develop.

These problems may make the decision-making process deficient.

Individuals contribute to work teams in different ways. Experimental studies carried out by

Belbin (1993) show that a team's success depends to a great extent on a balanced heterogeneity of contributions within it (always in accordance with a particular objective).

Composition then is transcendental and the selection of team members must focus not on the search for very powerful individuals but on individuals that complement each other. Thus people's weaknesses can be overcome while their strengths remain fully available. In this sense it should be pointed out that, while heterogeneity in the behavior of individuals is almost infinite, the variety of behaviors that bring value to tasks is much more limited.

Hence these useful behaviors can be organized according to a series of related groups called team roles. Therefore we can say that a team role is a tendency to behave, contribute and interrelate with others in a particular way. There are nine team roles, each of which contributes in a different way to ensure the team's success:

 Cerebral roles: Plant, Monitor Evaluator and Specialist.

 People-oriented roles: Coordinator, Teamworker and Resource Investigator.

 Action-oriented roles: Shaper, Implementer and Completer Finisher.

In short, it can be said that a team benefits from the way its members complement each other, while at the same time teams with greater diversity call for greater control of basic team development processes.

4.1.2 Creation of teams in the company.

First of all interviews were carried out with all company staff from the directors to the operators. These interviews had two objectives: to find out what all the staff thought of the company and at the same time to find the ideal people to make up the work teams.

Each interview sought to find out if the interviewee was willing and available to participate in an important project - as defining the company model would be - which would involve a great deal of time and effort. Potential leaders and people who might prove resistant to the change were identified at the same time.

Their principal roles were determined a priori following Belbin's methodology, and these would be used to create balanced teams.

In this case two balanced work teams were created to carry out the company's self- assessment, as explained in the following section. The main characteristics of the teams obtained are as follows:

 The teams are balanced between attention to detail and personal relations. The only

problem could be their scant concern for very specific matters

 They are focused on the tasks to be carried out, which they will do meticulously. Any

work they do will bear the seal of quality

 Considered as a whole, they are balanced teams with a great variety of personal

qualities, but it is important that each team member is aware of the role that others

carry out and their potential contributions

 The strength of these teams is to be found in their capacity for constructive debate.

This quality helps them avoid being pressurized into action and making mistakes due

to lack of forethought

 Their strength is the capacity to plan and make decisions in the long term; their

weakness is in short-term matters

4.2 Carrying out the company self-assessment.

Once the work teams had been formed, they were given basic training on team working and on the EFQM model.

First of all there was an introductory session in which the project's objectives were presented.

The teams were also given general information about the team roles, the results of their self- perception tests and details about the EFQM model criteria.

Next there was a practical course on the model in which the teams carried out the assessment of a fictitious company. This fulfilled two objectives: to familiarize them with the model, learning to assess a company following the criteria, and to learn how to work in a team.

The self-evaluation of the company itself was then carried out. To this end weekly sessions were organized following this agenda:

 Presentation of the relevant criteria by the moderator

 Separation of the two work teams

 Analysis by each team of the criteria as applied to their company, thus obtaining its

strengths and weaknesses and the corresponding scores

 Presentation of the conclusions by the two teams

 Debate and general consensus

Preliminary analysis was made of some of the criteria through surveys enabling further work to be carried out on the results, thereby supplying both objective and subjective assessment.

At the end of each session the project coordinator within the company took charge of drawing up the minutes along with the final conclusions that had been arrived at in the final consensus meeting. These were then sent to all the team members. During the week each team member had to have a meeting with colleagues who did not belong to the teams in order to tell them what had been agreed at the meeting. They could then contribute anything they considered important. In this way all company staff were encouraged to participate and get involved.

A short time at the start of the next meeting was set aside to go over the conclusions and contributions that may have arisen. Thus what had been talked about in the meetings reached the whole company and involved all the staff, rather than remaining as something that only concerned team members.

Once all the company self-assessment had been carried out, a final report was drawn up which included all the strengths and weaknesses detected.

4.3 Establishment of action plans.

Once the company self-assessment based on the EFQM Excellence Model had been carried out, the actions to be taken were as follows:

 Analysis and prioritization of weaknesses to be improved

 Establishment of work teams

 Drawing up of action plans for the improvement of each weakness

 Approval of the action plans by the EFQM committee

 Follow-up of the action plans

The details of each are listed below.

4.3.1 Analysis and prioritization of weaknesses to be improved

An analysis was carried out of the weaknesses to be improved which were obtained from the company self-assessment for each of the EFQM model subcriteria. These were then ordered according to their importance, and those considered to be priority were undertaken.

The two teams for change shared out the subcriteria in the following way:

 Team I:

o 1a, 2a, 3b, 4a, 4b, 5c, 5d, 6a, 6b, 9a, 9b

 Team II:

o 1b, 2b, 2c, 3a, 4c, 4d, 5a, 5b, 7a, 7b, 8

The weaknesses to be improved for each subcriterion were given points according to their importance as per the following guidelines:

 A weakness considered as priority for improvement receives a score of 10. The next

one gets 9 and so on until all weak areas have been given a score.

 In the event that a particular subcriterion contained more than 10 areas for

improvement, from number 11 onwards they would all have a score of 1. Once all the subcriteria areas for improvement had been scored, the EFQM model correction factor (Table 1) was applied in order to produce a final list of all improvement areas detected, ordered by importance.

Table 1: EFQM correction factors

Criteria EFQM correction factor 1. Leadership 1 2. Policy and strategy 0.8 3. People 0.9 4. Partnerships and resources 0.9 5. Processes 1.4 6. Customer results 2 7. People results 0.9 8. Society results 0.6 9. Performance results 1.5

4.3.2 Establishment of work teams

Once the ordered list of improvement areas was obtained, work teams were created and given the task of taking care of each one. The procedure for this was as follows:

 Each member of the self-assessment committee indicated whether they would be

willing to lead a work team. All of them were willing to continue, with the exception of

Rosa Juan, who preferred to leave the project at this point.

 The people willing to do so established the EFQM committee.

 The weak areas for improvement that were to be worked on were chosen from the

ordered list, the number of them chosen being equal to the number of work teams to

be formed.

 Each person involved chose an improvement area. In the event that two or more

people were interested in the same area, the most suitable of the two was chosen by a vote of the EFQM committee.

 Once all the improvement areas had been assigned, each team leader proposed a

maximum of three people from within the company to become members of their team.

 The committee approved the team leaders' lists and also had the power to propose the

substitution of any member or the incorporation of another.

4.3.3 Drawing up of action plans for the improvement of each weakness

Each team leader had a meeting with their team members and prepared an action plan proposal for the relevant improvement area. This included their objectives, the actions they envisaged would be necessary to reach them, how long each action would take, who would be in charge of them, and the resources that would be necessary.

4.3.4 Approval of the action plans by the EFQM committee

Each member presented their proposal to the committee, which then approved it if appropriate.

If the proposal were rejected, the committee suggested changes to the action plan, giving a period of one week for the necessary changes to be made. The proposal would then be put before the committee again for its definitive approval.

4.3.5 Follow-up of the action plans

Once the action plans are approved, each team must carry them out in order for their objectives to be reached within the expected time. The committee will meet every month to follow the teams' progress. 5. Conclusions.

This paper has shown a method for determining company models on the basis of self- assessment following the EFQM model, but carrying it out through the creation of high performance, multi-disciplinary and multi-hierarchical teams.

It has been possible to do the following by applying this model:

 Facilitate a systematic and global revision of the company

 Make the company aware of and committed to improving its overall management

 Diagnose the current situation

 Identify the company's strengths and weaknesses

 Decide on and plan improvements

 Promote a culture of continuous improvement

 Generate motivation and participation

 Encourage continuous staff training and greater professionalization.

 Improve results

The main problems that arose are as follows:

 Weak or partial involvement. A lack of or inadequate attention to any element (quality

oriented culture, reward system, worker participation,...) can mean that objectives

will not be reached

 Resistance from management. A lack of support and even opposition from

management. The causes for this may be:

o fear of losing power

o fear of losing their status within the company

o belief that their contribution to improving quality is much greater than that which their subordinates or any improvement team could supply

 Lack of integration. On many occasions there is no real integration between company

strategy, its human resources policies, etc. The change is not taken seriously because

there is no reward for reaching objectives

 The company must adapt the introduction of the system to its own circumstances and

not try to copy systems used by other companies

 The development of a larger bureaucracy. The new model could be seen by the staff as

a process for completing registers, drawing graphs, filling in forms, etc.

 The necessary changes in the organizational structures to support collaboration

mechanisms do not come about

 The managers expect fast infallible results to solve their problems

References

Parada Pardo, J. “El proceso de diversificación en el sector de la Construcción”. Directivos

Construcción nº 147, pág. 38. Julio/Agosto 2002

Belbin, M. “Roles de Equipo en el trabajo”. William Heineman. London. 1993.

Acknowledgements

We would like to thank the Foreign Language Co-ordination Office at the Polytechnic

University of Valencia for their help in translating this paper.

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