Construction Performance Management & Resource Optimization: Chapter Four Project Quality Management

Construction Performance Management & Resource Optimization
CHAPTER FOUR
Project Quality Management
Definition of Quality:
 Quality is the standard of something as measured against other things of a
similar kind. (Dictionary meaning)
 Quality is defined as „fitness to purpose’
 The term 'quality' is often used in a vague, blurred way. If someone talks
about 'working on quality', they may simply mean activities designed to
improve the organization and its services.
 Quality is essentially about learning what you are doing well and doing it
better. It also means finding out what you may need to change to make sure
you meet the needs of your service users.
 Quality is about:
 knowing what you want to do and how you want to do it

 learning from what you do
 using what you learn to develop your organization and its services
 seeking to achieve continuous improvement
 satisfying your stakeholders - those different people and groups with an
interest in your organization.
Project Quality Management includes the processes required to ensure that the
project will satisfy the needs for which it was undertaken. It includes all
activities of the overall management function that determine the quality policy,
objectives, and responsibilities and implements them by means such as quality
planning, quality assurance, quality control, and quality improvement, within the
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quality system. The following are the major project quality management
processes:
 Quality planning: identifying which quality standards are relevant to the
project and determining how to satisfy them.
 Quality Assurance: evaluating overall project performance on a regular basis
to provide confidence that the project will satisfy the relevant quality
standards.
 Quality Control: monitoring specific project results to determine if they
comply with relevant quality standards and identifying ways to eliminate
causes of unsatisfactory performance.
These processes interact with each other and with the processes in the other
knowledge areas as well. Each process may involve effort from one or more
individuals or groups of individuals, based on the needs of the project. Each
process generally occurs at least once in every project phase.
The basic approach to quality management described in this section is intended

to be compatible with that of the International Organization for Standardization
(ISO), as detailed in the ISO 9000 and 10000 series of standards and guidelines.
This generalized approach should also be compatible with:
a) Proprietary approaches to quality management such as those recommended by

Deming, Juran, Crosby, and others, and
b) Nonproprietary approaches such as Total Quality Management (TQM),

Continuous Improvement, and others.
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Total Quality management:
Is a relatively new concept in the construction industry.
TQM philosophy can be summed up into two concepts;

 Customer satisfaction
 Continuous improvement
The “Customer” are considered to be everyone involved in the building process-

from designers to subcontractors and employees.
With the goal of developing an atmosphere of pride, trust, and profitability in the
construction process the TQM concept does away with traditional hierarchical
barriers and encourages innovation and cooperation. Ideas flow more freely, and
decisions are made with more input from all of the parties involved.
“Continuous improvement” means making every job better than the last one. Ask
“is there a better way to perform this task?” if so, learn from the experience and
share it with other members of the project team. This can be seen at every level
in the TQM construction company- from the laborers on the job site to the upper
levels of management.
Is there a checklist for turning your organization into a TQM company? No.
Remember that TQM is a philosophy, not a business plan. Successful
implementation requires a change in attitude as well as changes in the way we
do business.
There are, however, several features commonly found in construction companies

that have successfully integrated TQM principles into their organizations. Some
of these include:
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1. Clearly define the purpose of the philosophy as improving the end product
2. Adopt the new philosophy without reservation
3. Cease dependency on inspection to achieve quality. Expect a quality product
in the first place.
4. Build long-term relationships with suppliers and subcontractors based on
trust.
5. Constantly improve quality and production, thus reducing costs.
6. Initiate training throughout all levels
7. Train leaders to help people do a better job.
8. Eliminate fear and encourage new ideas.
9. Have the company work as a team instead of as individual department.
10. Eliminate targets for the work force demanding zero defects and
unreasonable levels of productivity.
11.Eliminate management by numbers stressing quotas. Substitute leadership
instead.
12.Instill pride of workmanship in hourly workers.
13.Institute vigorous programs of education and self-improvement.
14.Put everyone in the company to work accomplishing the transformation.
TQM is everyone‟s responsibility and everyone‟s reward
Many companies have joined the ISO with the hope of increasing their competitive
advantage worldwide. Owners concerned about standards of quality are asking
contractors about internal programs of the company such as TQM and adherence
to standards such as ISO 9000. Involvement in these methods and adherence to
these standards can mean more satisfaction internally, more consistent quality of
service, and more business and profits.
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Project quality management must address both the management of the project and
the product of the project. The generic term product is occasionally used, in
literature regarding quality, to refer to both goods and services. Failure to meet
quality requirements in either dimension can have serious negative consequences
for any or all of the project stakeholders. For example:
 Meeting customer requirements by overworking the project team may
produce negative consequences in the form of increased employee attrition.
 Meeting project schedule objectives by rushing planned quality inspections
may produce negative consequences when errors go undetected.
The project management team must be careful not to confuse quality with grade.
Quality is the degree to which a set of inherent characteristics fulfills requirements
Grade is a category or rank given to entities having the same functional use but
different technical characteristics. Low quality is always a problem; low grade
may not be. Example 1, a software product may be of high quality (no obvious
bugs, readable manual) and low grade (a limited number of features), or of low
quality (many bugs, poorly organized user documentation) and high grade
(numerous features). Determining and delivering the required levels of both
quality and grade are the responsibilities of the project manager and the project
management team.
Quality Planning
Quality planning involves identifying which quality standards are relevant to the
project and determining how to satisfy them. It is one of the key facilitating
processes during project planning and should be performed regularly and in
parallel with the other project planning processes.
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For example, the changes in the product of the project required meeting identified
quality standards may require cost or schedule adjustments, or the desired
product quality may require a detailed risk analysis of an identified problem.
The actual quality requirements are not known at the time the quality management
plan is created, but you should describe the processes and techniques that you
will use to uncover the quality requirements and verify that the equipments are
met.
The quality management plan includes the following information:

a. Roles and responsibilities: describes the different quality related
roles on the project. These could include quality audits, third-
party testing, inspectors etc
b. Completeness and correctness criteria: helps to work with the
client up front to define what it means for a deliverable to be
considered complete and correct. If you define the criteria and
expectations up front, you will be much better able to meet the
client‟s expectations.
c. Quality requirements process: Describe the process you will use
to uncover and validate the customer‟s expectations for quality.
This is part of the requirements gathering processes
d. Quality assurance activities: focus on the processes being used
to manage and deliver the solution. Describe the major quality
assurance activities and techniques that will be used on this
project.
Quality assurance activities are like; Quality audits, quality

planning (creating a quality plan is a way to establish good
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overall quality processes for your project), Quality training

(training is a way to prevent errors) and quality assurance
checklist.
e. Quality control activities: describe the major quality control
activities and techniques that will be used on this project
Quality control has to be planned. Planning seeks ‟order‟and a

quality control system in construction reflects this
f. Quality standards: List any quality standards that the
company/organization has previously defined this project will
follow
g. Quality tools: List any quality-related tools that this project will
utilize
There are some common tools and techniques in Quality planning:
 Cost-benefit analysis; evaluates the cost-benefit tradeoffs for making a
potential change
 Design of experiments; is a statistical method which identifies influencing
factors of the product
 Benchmarking; comparing projects as a basis to measure performance
 Costs of Quality; failure cost, appraising cost & preventing to non-
nonconformance to requirements
The quality planning techniques discussed here are those most frequently
used on projects. There are many others that may be useful on certain
projects or in some application areas. The project team should also be aware
of one of the fundamental tenets of modern quality management quality is
planned in, not inspected in.
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Quality Assurance
Quality assurance is all the planned and systematic activities implemented within
the quality system to provide confidence that the project will satisfy the relevant
quality standards. It should be performed throughout the project. Quality
assurance is focused on the processes you are using to run the project and build
the deliverables and defines the organization structure, tasks and duties for
implementing quality management.
Some researches show that Design faults and construction faults are the main
quality problems.
Design faults:
 Misunderstanding the client‟s brief to the design
 Using information which is incorrect or out of date
 Misunderstanding of the client‟s expectations of quality standards
 Lack of co-ordination b/n the designers
 Loose or inappropriate specifications
 Construction faults:
 Not building to drawings or specifications
 Poor supervision leading to bad workmanship

 insufficient management of the quality of construction
Quality Assurance standards
Quality Assurance Standards are published documents which describe in detail

what systems should be used by a company to manage quality. These Standards
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exist because many large organizations will not buy (procure) from suppliers who
cannot give them assurance that they have systems which support quality
Prior to development of the ISO 9000 Series, the activities described under quality
planning were widely included as part of quality assurance. Quality assurance is
often provided by a Quality Assurance Department or similarly titled
organizational unit, but it does not have to be. Assurance may be provided to the
project management team and to the management of the performing organization
(internal quality assurance), or it may be provided to the customer and others not
actively involved in the work of the project (external quality assurance).
Quality Assurance System: ISO 9000
A QA system sets out expectations that a quality organizations should meet.
Typically, these are stages that organizations implementing a quality system aim to
follow;
 Agree on-standards. These concern the performance that staff, trustees &
users expect from the organization.
 Carry out a self-assessment. This means that you compare how well you are
doing against these expectations
 Draw up an action plan. This Will include what needs to be done, who will
do it, how it will be done,& when
 Implement. Do the work
 Review: at this stage, you check what changes have been made & whether
they have made the difference you were hoping to achieve.
Quality assurance is concerned with developing a formal structure, organization and

operational procedures to ensure specified quality throughout the total
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construction process. Quality assurance:

 is concerned with planning and developing the technical and managerial
competence needed to achieve the host organization‟s desired objectives,
 is concerned with the management of people, addressing the roles, duties and
responsibilities of individuals within the organizations
 is primarily the responsibility of management; its structure and
implementation as part of the total organizational framework,
 is also an important aspect of the marketing and promotional strategy of the
organization.
In 1987, the International Organization for Standardization, a federation of the

national standards organizations of over 90 countries, published ISO 9000 (the
name of a series of QA standards) International Standards for quality management
and quality assurance. These standards which have been adopted by many countries
throughout the world provide quality management guidance and identify generic
quality system elements necessary for quality assurance. They provide direction
regarding what needs to be done but do not prescribe how quality is to be
accomplished.
ISO 9000 series quality systems constitute four parts as shown hereunder:
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ISO 9000
Guidelines for Application Quality Assurance Models
ISO 9004 ISO 9001 ISO 9002 ISO 9003
Structure of ISO 9000 Standards
ISO 9001:
The most stringent level of application and contains all 20 clauses of the quality
system and are therefore the most comprehensive system available for
certification. Organizations involved in the design process and seeking
certification need to comply with ISO 9001 requirements. For example this
specification would apply to design consultants, architects, and design and build
companies.
ISO 9002:
This is applicable to manufacturing and/or installation companies that do not

undertake design activities. ISO 9002 requires process and inspection control
during production and/or service delivery. This standard applies to most
construction organizations, where evidence of inspection and tests, during a

construction process, has to be provided to clients.
ISO 9003:
This applies to organizations where quality assurance systems can be based upon
final inspection of product or service only. This part of the standard has limited
application in the construction industry.
How to implement a QA system
You can implement quality assurance in a general way by identifying the tasks,
processes, or systems critical to the business and writing clear guidelines and
instructions for staff. Use these guidelines and instructions for training and day-to-
day reference. For the tasks, processes and systems covered, this will reduce:
 the number of errors

 waste of time and materials associated with errors
 the number of customer complaints
 the number of problems to fix
 the time spent on giving day-to-day instructions
 the time needed to improve processes and systems (by establishing a stable
base)
You can then take this general principle of clearly documenting tasks, processes and
systems to the next level by using ISO 9000 (or another appropriate QA system
code) as a model for covering all aspects of quality, and for establishing formal
disciplines for controlling information accuracy, and reviewing and improving
systems.
Any company wishing to become registered for quality assurance must satisfy the
requirements of a certification body. Certification is conducted by a third party
which has no contractual relationship with the client and/or the contractor to
provide confidence that products or services supplied comply with the specified
requirements. The certification process can be represented in the following three
aspects of implementation:
 Examination of Documentation: applicants must submit evidence that proves
they have a documented quality system complying with the requirements of
the standard. Documentation will normally consist of a quality manual, a
procedural manual and if required a set of work instructions,
 Assessment: Once the documentation has been accepted by the certifying
body, it will perform an on spot investigation in order to verify that the
documents system is being implemented as described. If everything is
satisfactory, a certificate will be awarded.
 Monitoring: After the initial assessment, regular visits are made to ensure
that standards are being maintained. If standards are not being maintained,
the ultimate sanction would be the withdrawal of the certification.
Table of ISO 9000 series quality system elements:
Corresponding Applicability
Title ISO 9001 ISO 9002 ISO 9003
Management Responsibility X X X
Quality System X X X
Contract Review X X
Design Control X
Document Control X X X
Purchasing X X
Purchaser Supplied Product X X
Product Identification and X X X

Traceability
Process Control X X
Inspection Testing X X X
Inspection, Measuring and Test X X X

Equipment
Inspection Status X X X
Control of Non-Conforming Product X X X
Corrective Action X X
Handling, Storage, Packaging and X X X

Delivery
Quality Records X X X
Internal Quality Audits X X
Training X X X
Servicing X
Statistical Techniques X X X
Quality Control
Quality control involves monitoring specific project results to determine if they

comply with relevant quality standards, and identifying ways to eliminate causes
of unsatisfactory results. It should be performed throughout the project. Project
results include both product results, such as deliverables, and project
management results, such as cost and schedule performance.
Quality control represents increasingly important concerns for project managers.

Defects or failures in constructed facilities can result in very large costs. Even with
minor defects, re-construction may be required and facility operations impaired.

Increased costs and delays are the result.
Quality control can be seen in five basic stages:
1. Setting quality standards or design required by client

2. Planning how to achieve the required quality, construction methods,
equipment‟s materials, and personnel to be employed
3. Construct the building right first time
4. Correct any quality deficiencies
5. Provide for long term quality control through establishing systems and
developing a quality culture
The costs of quality:
Costs associated with quality need to be identified for management decisions. The
costs of quality can be broken down as follows;
 Failure Cost: the cost of demolishing and rebuilding, the cost of production
time, delays to other gangs
 Appraisal costs: the cost of inspection and testing
 Prevention costs: the cost of providing better designs, more training to reduce
failure costs, more maintenance
As with cost control, the most important decisions regarding the quality of a
completed facility are made during the design and planning stages rather than
during construction. It is during these preliminary stages that component
configurations, material specifications and functional performance are decided.
Quality control during construction consists largely of insuring conformance to

these original designs and planning decisions.
While conformance to existing design decisions is the primary focus of quality

control, there are exceptions to this rule. First, unforeseen circumstances,
incorrect design decisions or changes desired by an owner in the facility function
may require re-evaluation of design decisions during the course of construction.
While these changes may be motivated by the concern for quality, they represent
occasions for re-design with all the attendant objectives and constraints. As a
second case, some designs rely upon informed and appropriate decision making
during the construction process itself. For example, some tunneling methods
make decisions about the amount of shoring required at different locations based
upon observation of soil conditions during the tunneling process. Since such
decisions are based on better information concerning actual site conditions, the
facility design may be more cost effective as a result.
With the attention to conformance as the measure of quality during the construction
process, the specification of quality requirements in the design and contract
documentation becomes extremely important. Quality requirements should be clear
and verifiable, so that all parties in the project can understand the requirements for
conformance.
Quality Control by Statistical Methods
Statistical process control: is achieved by tacking periodic samples from the

process and plotting these sample points on chart, to see if the process is within
statistical control limit. If the sample point is outside the limit the process may be
out of control, and the cause is sought so that the problem can be collected.
 All processes contain a certain amount of variability that makes some

variation between units inevitable.
 There are two reasons why process might vary:
 The first is the inherent random variability of the process which depends on
the equipment and machinery, engineering, the operator and the system used
in measurement.
 The other reason for variability unique or special causes of that are
identifiable and can be collected.
 Equipment that is out of adjustment
 Defective materials
 Change in parts or materials
 Broken machinery or equipment
 Operator fatigue or poor working methods
A statistical control chart is a graph to monitor a production processes samples are

taken from the processes periodically and observations are plotted on the graph.
SPC in quality management
 Spc is a tool individuals can use to monitor production or service process for
the purpose of making improvements.
 Spc is a tool identifying problems in order to make improvements.
Quality measures: Attributes and variable
The quality of a product or service can be evaluated using either an attribute of

the product or service or a variable measure. There are two types of statistical
sampling which are commonly used for the purpose of quality control in batches
of work or materials:
1. The acceptance or rejection of a lot is based on the number of defective (bad)

or non-defective (good) items in the sample. This is referred to as sampling by
attributes.
2. Quantitative quality measure or the value of a measured variable can be used as

a quality indicator. This testing procedure is referred to as sampling by
variables.
 An assumption implicit in statistical quality control procedures are that the

quality of materials or work is expected to vary from one piece to another.
 While a designer may assume that all concrete is exactly the same in a
building, the variations in material properties, manufacturing, handling,
pouring, and temperature during setting insure that concrete is actually
heterogeneous in quality.
 Reducing such variations to a minimum is one aspect of quality construction.
 Insuring that the materials actually placed achieve some minimum quality
level with respect to average properties or fraction of defectives is the task of
quality control.
Statistical Quality Control processes charts.
 SPC charts are of three types:
 x Charts: Control charts for process means

 R charts: Control charts for process variability
 p charts: Control charts for attributes.
Principles of Control Charts: Normal Distribution
 The principle of normal distribution provides the basis for SPC. Many a
time‟s practitioners use the warning limits as ±2σ instead of 3σ.
3s 3s
Upper Control Limit
Lower Control Limit

Mean
Common
Causes
Special Special
Causes Area = 99.73
Causes
Area = 0.0013 Area = 0.0013
Principles of Control charts

x Charts: Control Charts for Process Mean
 The essence of SPC is to identify a parameter that is easy to measure and

whose value is important for the quality of the process output.
 That parameter is plotted in such a way that one can recognise nonrandom
variations and decide when to make changes.
 There are two cases in which charts fall
• When μ and σ are known
• When μ and σ are unknown
 The chart has three lines; the Centre line (CL) ,an upper control limit (UCL)
and a lower control limit (LCL).
 The samples or the individual measurements/observations can be plotted on

the graph for the analysis
P Chart: Control Charts for Attributes
• X mean chart and R charts are control charts for quantitative variables,
which take on numerical values.
• There are some qualitative variables also, which are vital in process control.
E.g: chance of winning/losing, completion/non-completion , In SPC a
qualitative variable that can take on only two values is called attribute
Centreline for a p chart

CL  p  p
Control Limits for a p chart
pq
UCL  p  3
n
pq
LCL  p  3
n
where
p  performance standard
q  1- p
n  number of samples
UCL  uper control limit
LCL  lower control limit
CHAPTER FIVE
Project Risk Management
Definitions:
 Risk is the difference b/n what was expected and happened
 The quantifiable likelihood of loss or less than expected returns
 Risks are simply the future issues which can be avoided or mitigated, rather
than present problems that must be immediately addressed
 Risk is a state of uncertainty where some of the possibilities involve a loss,
catastrophe, or other undesirable out come
Risk management is the systematic process of identifying, analyzing, and
responding to project risk. It includes maximizing the probability and consequences
of positive events and minimizing the probability and consequences of adverse
events to project objectives.
The following are the major processes in risk management:

 Risk Management Planning: deciding how to approach and plan the risk
management activities for a project.
 Risk Identification: determining which risks might affect the project and
documenting their characteristics.
 Qualitative Risk Analysis: performing a qualitative analysis of risks and
conditions to prioritize their effects on project objectives.
 Quantitative Risk Analysis: measuring the probability and consequences of
risks and estimating their implications for project objectives.
 Risk Response Planning: developing procedures and techniques to enhance
opportunities and reduce threats to the project‟s objectives.
 Risk Monitoring and Control; monitoring residual risks, identifying new
risks, executing risk reduction plans, and evaluating their effectiveness

throughout the project life cycle.
These processes interact with each other and with the processes in the other
knowledge areas. Each process generally occurs at least once in every project.
Although processes are presented here as discrete elements with well-defined
interfaces, in practice they may overlap and interact in ways not detailed here.
Risk has its origins in the uncertainty that is present in all projects.
Project risk is an uncertain event or condition that, if it occurs, has a positive or a

negative effect on a project objective. A risk has a cause and, if it occurs, a
consequence. For example, a cause may be requiring a permit or having limited
personnel assigned to the project. The risk event is that the permit may take longer
than planned, or the personnel may not be adequate for the task. If either of these
uncertain events occurs, there will be a consequence on the project cost, schedule,
or quality. Risk conditions could include aspects of the project environment that
may contribute to project risk such as poor project management practices, or
dependency on external participants that cannot be controlled.
Project risk includes both threats to the project‟s objectives and opportunities to
improve on those objectives. It has its origins in the uncertainty that is present in all
projects. Known risks are those that have been identified and analyzed, and it may
be possible to plan for them. Unknown risks cannot be managed, although project
managers may address them by applying a general contingency based on past
experience with similar projects.
Organizations perceive risk as it relates to threats to project success. Risks that are
threats to the project may be accepted if they are in balance with the reward that
may be gained by taking the risk. For example, adopting a fast-track schedule
that may be overrun is a risk taken to achieve an earlier completion date. Risks
that are opportunities may be pursued to benefit the project‟s objectives.
To be successful, the organization must be committed to addressing risk

management throughout the project. One measure of the organizational
commitment is its dedication to gathering high-quality data on project risks and
their characteristics.
Risk Management Planning
Risk management planning is the process of deciding how to approach and plan the
risk management activities for a project. It is important to plan for the risk
management processes that follow to ensure that the level, type, and visibility of
risk management are commensurate with both the risk and importance of the project
to the organization.
Outputs from Risk Management Planning

 Risk management plan: The risk management plan describes how risk
identification, qualitative and quantitative analysis, response planning,
monitoring, and control will be structured and performed during the
project life cycle. The risk management plan does not address
responses to individual risks.
o The risk management plan may include the following.
 Methodology. Defines the approaches, tools, and data sources that may be
used to perform risk management on this project. Different types of
assessments may be appropriate, depending upon the project stage, amount of
information available, and flexibility remaining in risk management.
 Roles and responsibilities. Defines the lead, support, and risk management
team membership for each type of action in the risk management plan. Risk
management teams organized outside of the project office may be able to
perform more independent, unbiased risk analyses of project than those from
the sponsoring project team.
 Budgeting. Establishes a budget for risk management for the project.
 Timing. Defines how often the risk management process will be performed
throughout the project life cycle. Results should be developed early enough
to affect decisions. The decisions should be revisited periodically during
project execution.
 Scoring and interpretation. The scoring and interpretation methods
appropriate for the type and timing of the qualitative and quantitative risk
analysis being performed. Methods and scoring must be determined in
advance to ensure consistency.
 Thresholds. The threshold criteria for risks that will be acted upon, by
whom, and in what manner. The project owner, customer, or sponsor may
have a different risk threshold. The acceptable threshold forms the target
against which the project team will measure the effectiveness of the risk
response plan execution.
 Reporting formats. Describes the content and format of the risk response
plan. Defines how the results of the risk management processes will be
documented, analyzed, and communicated to the project team, internal and
external stakeholders, sponsors, and others.
Risk Identification
Risk identification involves determining which risks might affect the project and
documenting their characteristics. Participants in risk identification generally
includes the following: project team, risk management team, subject matter experts
from other parts of the company, customers, end users, other project managers,
stakeholders, and outside experts.
Risk identification is an iterative process. The first iteration may be performed by a

part of the project team, or by the risk management team. The entire project team
and primary stakeholders may make a second iteration. To achieve an unbiased
analysis, persons who are not involved in the project may perform the final
iteration. Often simple and effective risk responses can be developed and even
implemented as soon as the risk is identified.
Tools and Techniques for Risk Identification
1. Documentation reviews: Performing a structured review of project plans and

assumptions, both at the total project and detailed scope levels, prior project
files, and other information is generally the initial step taken by project teams.
2. Information-gathering techniques. Examples of information-gathering techniques
used in risk identification can include brainstorming; Delphi; interviewing; and

strengths, weaknesses, opportunities, and threats (SWOT) analysis.
Brainstorming: Brainstorming is probably the most frequently used risk
identification technique. The goal is to obtain a comprehensive list of risks that
can be addressed later in the qualitative and quantitative risk analysis processes.
The project team usually performs brainstorming, although a multidisciplinary
set of experts can also perform this technique. Under the leadership of a
facilitator, these people generate ideas about project risk. Sources of risk are
identified in broad scope and posted for all to examine during the meeting. Risks
are then categorized by type of risk, and their definitions are sharpened.
Delphi technique: The Delphi technique is a way to reach a consensus of
experts on a subject such as project risk. Project risk experts are identified but
participate anonymously. A facilitator uses a questionnaire to solicit ideas about
the important project risks. The responses are submitted and are then circulated
to the experts for further comment. Consensus on the main project risks may be
reached in a few rounds of this process. The Delphi technique helps reduce bias
in the data and keeps any person from having undue influence on the outcome.
Interviewing: Risks can be identified by interviews of experienced project
managers or subject-matter experts. The person responsible for risk
identification identifies the appropriate individuals, briefs them on the project,
and provides information such as the WBS and the list of assumptions. The
interviewees identify risks on the project based on their experience, project
information, and other sources that they find useful.
Strengths, weaknesses, opportunities, and threats (SWOT) analysis. Ensures
examination of the project from each of the SWOT perspectives to increase the
breadth of the risks considered.
3. Checklists. Checklists for risk identification can be developed based on historical

information and knowledge that has been accumulated from previous similar
projects and from other sources of information. One advantage of using a check
list is that risk identification is quick and simple.
One disadvantage is that it is impossible to build an exhaustive checklist of risks,

and the user may be effectively limited to the categories in the list. Care should be
taken to explore items that do not appear on a standard checklist if they seem
relevant to the specific project. The checklist should itemize all types of possible
risks to the project.
4. Assumptions analysis. Every project is conceived and developed based on a set

of hypotheses, scenarios, or assumptions. Assumptions analysis is a technique that
explores the assumptions validity. It identifies risks to the project from inaccuracy,
inconsistency, or incompleteness of assumptions.
Risk Analysis
The purpose of risk analysis is to measure the impact of the identified risks on a
project. Depending on the available data, risk analysis can be performed
qualitatively or quantitatively.
Qualitative Risk Analysis
Qualitative risk analysis is the process of assessing the impact and likelihood of
identified risks. This process prioritizes risks according to their potential effect on
project objectives. Qualitative risk analysis is one way to determine the importance
of addressing specific risks and guiding risk responses. The time-criticality of risk-
related actions may magnify the importance of a risk. An evaluation of the quality
of the available information also helps modify the assessment of the risk.
Qualitative risk analysis requires that the probability and consequences of the risks
be evaluated using established qualitative-analysis methods and tools. Trends in the
results when qualitative analysis is repeated can indicate the need or more or less
risk-management action. Use of these tools helps correct biases that are often
present in a project plan.
Tools and Techniques for Qualitative Risk Analysis
1. Risk probability and impact. Risk probability and risk consequences may be
described in qualitative terms such as very high, high, moderate, low, and very
low.
Risk probability is the likelihood that a risk will occur.
Risk consequence is the effect on project objectives if the risk event occurs.
These two dimensions of risk are applied to specific risk events, not to the overall
project. Analysis of risks using probability and consequences helps identify those
risks that should be managed aggressively.
2. Probability/impact risk rating matrix. A matrix may be constructed that assigns

risk ratings (very low, low, moderate, high, and very high) to risks or conditions
based on combining probability and impact scales. Risks with high probability
and high impact are likely to require further analysis, including quantification,
and aggressive risk management. The risk rating is accomplished using a matrix
and risk scales for each risk.
A risk‟s probability scale naturally falls between 0.0 (no probability) and 1.0
(certainty). Assessing risk probability may be difficult because expert judgment
is used, often without benefit of historical data. An ordinal scale, representing
relative probability values from very unlikely to almost certain, could be used.
Alternatively, specific probabilities could be assigned by using a general scale
(e.g .1/ .3 / .5 / .7 / .9).
The risk‟s impact scale reflects the severity of its effect on the project objective.
Impact can be ordinal or cardinal, depending upon the culture of the organization
conducting the analysis. Ordinal scales are simply rank-ordered values, such as
very low, low, moderate, high, and very high. Cardinal scales assign values to
these impacts. These values are usually linear (e.g., .1 / .3 / .5 / .7 / .9), but are
often nonlinear (e.g., .05 / .1 / .2 / .4 / .8), reflecting the organization‟s desire to
avoid high impact risks. The intent of both approaches is to assign a relative
value to the impact on project objectives if the risk in question occurs. Well-
defined scales, whether ordinal or cardinal, can be developed using definitions
agreed upon by the organization. These definitions improve the quality of the
data and make the process more repeatable.
Figure 5-1 is an example of evaluating risk impacts by project objective. It

illustrates its use for either ordinal or cardinal approach. These scaled descriptors
of relative impact should be prepared by the organization before the project
begins.
Cost
Schedule
RATING IMPACTS FOR A RISK
Evaluating Impact of a Risk on Major Project Objectives (ordinal scale or cardinal, non-linear scale)
Project Objective Very low (0.05) Low (0.1) Moderate (0.2) High (0.4) Very High (0.8)
Cost Insignificant <5% Cost >20% Cost

5_10% Cost 10_20% Cost
Cost Increase Increase Increase
Increase Increase
Schedule Overall
Insignificant Overall Project Overall Project
Slippage Project
Schedule Schedule Slippage Slippage
<5% Schedule
Slippage 5_10% 10_20%
Slips >20%
Scope Decrease Major Areas of

Minor Areas Project End
Scope Barely scope Reduction
of Scope Item Is
Noticeable are affected Unacceptable
Are Affected Effectively
to the Client
Useless
Only Very
Quality Quality Quality Quality
Demanding Project End
Degradation Reduction Reduction
Applications Item Is
Barely Requires Client Unacceptable
Are Affected Effectively
Noticeable Approval to the Client
Unusable
The impacts on project objectives can be assessed on a scale from Very Low to
Very High or on a numerical scale. The numerical (cardinal) scale shown here is
non-linear, indicating that the organization wishes specifically to avoid risks with
high and very-high impact.
Figure 5-2 is a Probability-Impact (P-I) matrix. It illustrates the simple

multiplication of the scale values assigned to estimates of probability and
impact, a common way to combine these two dimensions, to determine whether
a risk is considered low, moderate, or high. This figure presents a non-linear

scale as an example of aversion to high-impact risks, but linear scales are often
used. Alternatively, the P-I matrix can be developed using ordinal scales. The
organization must determine which combinations of probability and impact
result in a risk‟s being classified as high risk (red condition), moderate risk
(yellow condition), and low risk (green condition) for either approach. The risk
score helps put the risk into a category that will guide risk response actions.
Risk Score for a Specific Risk
Probability Risk Score = P × I
0.9 0.05 0.09 0.18 0.36 0.72
0.7 0.04 0.07 0.14 0.28 0.56
0.5 0.03 0.05 0.10 0.20 0.40
0.3 0.02 0.03 0.06 0.12 0.24
0.1 0.01 0.01 0.02 0.04 0.08
0.05 0.10 0.20 0.40 0.80
Figure 5.2 Probability-Impact Matrix Each risk is rated on its probability of

occurring and impact if it does occur. The organization‟s thresholds for low (green),
moderate (yellow) or high (red) risk as shown in the matrix determines the risk‟s
score.
Quantitative Risk Analysis
The quantitative risk analysis process aims to analyze numerically the probability of
each risk and its consequence on project objectives, as well as the extent of
overall project risk. Quantitative risk assessment comes into play when we have
the ability to map a dollar amount to a specific risk
This process uses techniques such as Monte Carlo simulation and decision analysis
to:
Determine the probability of achieving a specific project objective.
Quantify the risk exposure for the project, and determine the size of cost
and schedule contingency reserves that may be needed.
Identify risks requiring the most attention by quantifying their relative
contribution to project risk.
Identify realistic and achievable cost, schedule, or scope targets.
Quantitative risk analysis generally follows qualitative risk analysis. It requires risk
identification. The qualitative and quantitative risk analysis processes can be
used separately or together. Considerations of time and budget availability and
the need for qualitative or quantitative statements about risk and impacts will
determine which method(s) to use. Trends in the results when quantitative
analysis is repeated can indicate the need for more or less risk management
action.
Tools and Techniques for Quantitative Risk Analysis

1. Interviewing. Interviewing techniques are used to quantify the probability
and consequences of risks on project objectives. A risk interview with project
stakeholders and subject-matter experts may be the first step in quantifying
risks. The information needed depends upon the type of probability
distributions that will be used. For instance, information would be gathered
on the optimistic (low), pessimistic (high), and the most likely scenarios if
triangular distributions are used, or on mean and standard deviation for the
normal and log normal distributions.
Examples of three-point estimates for a cost estimate are shown in Figure 5-3.
Continuous probability distributions are usually used in quantitative risk analysis.
Distributions represent both probability and consequences of the project
component.
Project Cost Estimates and Ranges
WBS Low Most Likely High

Element
Design 4 6 10
Build 16 20 35
Test 11 15 23
Total 41
Project
Figure
5.3 Cost Estimates and Ranges from the Risk Interview
The risk interview determines the three-point estimates for each WBS element. The
traditional estimate of $41, found by summing the most likely costs, is relatively
unlikely, as shown in Figure 5.3.
2. Sensitivity analysis. Sensitivity analysis helps to determine which risks have
the most potential impact on the project. It examines the extent to which the
uncertainty of each project element affects the objective being examined
when all other uncertain elements are held at their baseline values.
3. Decision tree analysis. A decision analysis is usually structured as a decision
tree. The decision tree is a diagram that describes a decision under
consideration and the implications of choosing one or another of the available
alternatives. It incorporates probabilities of risks and the costs or rewards of
each logical path of events and future decisions. Solving the decision tree
indicates which decision yields the greatest expected value to the decision-
maker when all the uncertain implications, costs, rewards, and subsequent
decisions are quantified.
4. Simulation. A project simulation uses a model that translates the uncertainties
specified at a detailed level into their potential impact on objectives that are
expressed at the level of the total project. Project simulations are typically
performed using the Monte Carlo technique. For a cost risk analysis, a
simulation may use the traditional project WBS as its model.
Risk Response
Risk response is an action or a series of actions designed to deal with the

presence of risk. This involves developing mitigation and treatment
strategies, and implementing them. Several risk response strategies are
available. The strategy that is most likely to be effective should be selected
for each risk. Then, specific actions should be developed to implement that
strategy. The following are some of the possible responses to the risk.
1. Avoidance. Risk avoidance is changing the project plan to eliminate the risk
or condition or to protect the project objectives from its impact. Although the
project team can never eliminate all risk events, some specific risks may be
avoided. Some risk events that arise early in the project can be dealt with by
clarifying requirements, obtaining information, improving communication, or
acquiring expertise. Reducing scope to avoid high-risk activities, adding
resources or time, adopting a familiar approach instead of an innovative
one, or avoiding an unfamiliar subcontractor may be examples of avoidance.
2. Transference. Risk transfer is seeking to shift the consequence of a risk to a
third party together with ownership of the response. Transferring the risk
simply gives another party responsibility for its management; it does not
eliminate it. Transferring liability for risk is most effective in dealing with
financial risk exposure. Risk transfer nearly always involves payment of a
risk premium to the party taking on the risk. It includes the use of insurance,
performance bonds, warranties, and guarantees. Contracts may be used to
transfer liability for specified risks to another party. Use of a fixed-price
contract may transfer risk to the seller if the project‟s design is stable.
Although a cost-reimbursable contract leaves more of the risk with the
customer or sponsor, it may help reduce cost if there are mid project changes.
3. Mitigation. Mitigation seeks to reduce the probability and/or consequences of
an adverse risk event to an acceptable threshold. Taking early action to
reduce the probability of a risk‟s occurring or its impact on the project is
more effective than trying to repair the consequences after it has occurred.
Mitigation costs should be appropriate, given the likely probability of the risk
and its consequences. Risk mitigation may take the form of implementing a
new course of action that will reduce the problem e.g., adopting less complex
processes, conducting more seismic or engineering tests, or choosing a more
stable seller. It may involve changing conditions so that the probability of the
risk occurring is reduced e.g. adding resources or time to the schedule. It may
require prototype development to reduce the risk of scaling up from a bench-
scale model. Where it is not possible to reduce probability, a mitigation
response might address the risk impact by targeting linkages that determine
the severity. For example, designing redundancy into a subsystem may
reduce the impact that results from a failure of the original component.
4. Acceptance. This technique indicates that the project team has decided not to
change the project plan to deal with a risk or is unable to identify any other suitable
response strategy. Active acceptance may include developing a contingency plan to
execute, should a risk occur. Passive acceptance requires no action, leaving the
project team to deal with the risks as they occur.
5. Risks in construction Projects
The construction risks can be broadly grouped under the following categories:
Technical Risks
 Incomplete design.
 Inadequate site investigation.
 Uncertainty over the source and availability of materials.
 Appropriateness of specifications.
Logistical Risks
 Availability of resources - particularly construction equipments, spares parts,

fuel and labor.
 Availability of sufficient transportation facilities.
Construction Risks
 Uncertain productivity of resources.

 Weather and seasonal implications.
 Industrial relations problems.
Financial Risks
 Inflation.
 Availability and fluctuation in foreign exchange.
 Delay in Payment.
 Local taxes.
Political Risks
 Constraints on the availability and employment of expatriate staff.

 Customs and import restrictions and procedures.
 Difficulties in disposing of plant and equipment.
 Insistence on use of local firms and agents.

Construction Performance Management & Resource Optimization: Chapter Four Project Quality Management

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Construction Performance Management & Resource Optimization

Project Quality Management

 knowing what you want to do and how you want to do it

The basic approach to quality management described in this section is intended

a) Proprietary approaches to quality management such as those recommended by

b) Nonproprietary approaches such as Total Quality Management (TQM),

Total Quality management:

Is a relatively new concept in the construction industry.

TQM philosophy can be summed up into two concepts;

The “Customer” are considered to be everyone involved in the building process-

There are, however, several features commonly found in construction companies

TQM is everyone‟s responsibility and everyone‟s reward

Quality is the degree to which a set of inherent characteristics fulfills requirements

The quality management plan includes the following information:

Quality assurance activities are like; Quality audits, quality

overall quality processes for your project), Quality training

Quality control has to be planned. Planning seeks ‟order‟and a

 Poor supervision leading to bad workmanship

Quality Assurance standards

Quality Assurance Standards are published documents which describe in detail

Quality Assurance System: ISO 9000

A QA system sets out expectations that a quality organizations should meet.

Quality assurance is concerned with developing a formal structure, organization and

construction process. Quality assurance:

In 1987, the International Organization for Standardization, a federation of the

Guidelines for Application Quality Assurance Models

ISO 9004 ISO 9001 ISO 9002 ISO 9003

Structure of ISO 9000 Standards

This is applicable to manufacturing and/or installation companies that do not

construction organizations, where evidence of inspection and tests, during a

How to implement a QA system

 the number of errors

Table of ISO 9000 series quality system elements:

Title ISO 9001 ISO 9002 ISO 9003

Purchaser Supplied Product X X

Product Identification and X X X

Inspection, Measuring and Test X X X

Control of Non-Conforming Product X X X

Handling, Storage, Packaging and X X X

Internal Quality Audits X X

Quality control involves monitoring specific project results to determine if they

Quality control represents increasingly important concerns for project managers.

minor defects, re-construction may be required and facility operations impaired.

Quality control can be seen in five basic stages:

1. Setting quality standards or design required by client

The costs of quality:

Quality control during construction consists largely of insuring conformance to

While conformance to existing design decisions is the primary focus of quality

Quality Control by Statistical Methods

Statistical process control: is achieved by tacking periodic samples from the

 All processes contain a certain amount of variability that makes some

 There are two reasons why process might vary:

 Equipment that is out of adjustment

 Change in parts or materials

 Broken machinery or equipment

 Operator fatigue or poor working methods

A statistical control chart is a graph to monitor a production processes samples are

SPC in quality management

 Spc is a tool identifying problems in order to make improvements.

Quality measures: Attributes and variable

The quality of a product or service can be evaluated using either an attribute of

1. The acceptance or rejection of a lot is based on the number of defective (bad)

2. Quantitative quality measure or the value of a measured variable can be used as