THE APPLICATION OF TOTAL QUALITY MANAGEMENT: A CASE STUDY OF RAILWAY CONSTRUCTION CORPORATION JSC

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION -*** GRADUATION THESIS Major: International Business Administration THE APPLICATION OF TOTAL QUALITY MANAGEMENT: A CASE STUDY OF RAILWAY CONSTRUCTION CORPORATION JSC Student name : Ngo Thi Xuan Huong Student code : 1112250017 Class : English 14 – High quality FBA Intake : 50 Supervisor : MSc Nguyen Khanh Hung Hanoi, May 2015 i TABLE OF CONTENTS TABLE OF CONTENTS i ACKNOWLEDGEMENT iv ABSTRACT v LIST OF FIGURES AND TABLE vi LIST OF ABREVIATION viii CHAPTER 1: INTRODUCTION 1.1 Research purpose 1.2 Research objectives and scope 1.3 Research questions 1.4 Research methodology 1.5 Research structure CHAPTER 2: LITERATURE REVIEW OF TOTAL QUALITY MANAGEMENT 2.1 Overview about quality management system 2.2.1 Definition of total quality management 2.2.2 Total quality management evolution 2.2.3 EFQM Excellence Model 11 2.2 Quality management system in construction 13 2.2.1 Quality defined in construction 13 2.2.2 ISO 9001:2008 standards 13 2.2.3 The effectiveness of implementing a quality management system 19 2.2.4 Obstacles to implement quality management systems 20 2.3 Critical success factors of TQM implementation in construction firms 22 2.3.1 Leadership 22 2.3.2 Resource management 23 2.3.3 Strategies and plan 24 2.3.4 Process management 24 ii 2.3.5 Customer satisfaction 25 2.3.6 Training and education 26 2.3.7 Continuous improvement 26 2.3.8 Communication 27 CHAPTER 3: RESEARCH METHOD 28 3.1 About Vietnam Railway Construction Corporation JSC 28 3.1.1 Backgrounds of the company 28 3.1.2 The existing application of total quality management in Railway Construction Corporation JSC 32 3.2 Research sources 34 3.2.1 Primary data 34 3.2.2 Secondary data 35 3.2.3 Research sources 36 3.3 Sample selection 36 3.3.1 Population 36 3.3.2 Sample selection 37 3.4 Data collection procedures 38 3.4.1 Pilot study 38 3.4.2 Developing the interviews questions 39 3.4.3 Developing questionnaires 40 CHAPTER 4: RESEARCH RESULTS 46 4.1 Business results before applying total quality management 46 4.1.1 Total quality management system of the company prior to ISO 9001 standards implementation 46 4.1.2 Business results before applying total quality management system 50 4.2 Analysis of benefits and costs of Railway Construction Corporation JSC before applying total quality management 51 4.3 The status of TQM Implementation in Railway Construction Corporation JSC 52 4.3.1 The extent of implementation of Quality management systems 52 iii 4.3.2 The implementation of EFQM Excellence Model’s Enables and Results Criteria 56 4.4 Analysis of TQM Implementation in Railway Construction Corporation JSC 69 4.4.1 Relationship of TQM practices and business results 69 4.4.2 The effects of TQM practices on business results 71 4.4.3 Barriers faced by the Vietnam Railway Construction Corporation JSC in the implementation of quality improvement initiatives 73 CHAPTER 5: CONCLUSION AND RECOMMENDATION 78 5.1 Conclusion 78 5.2 Recommendation 79 REFERENCES 83 APPENDIX A: QUESTIONNAIRES 86 APPENDIX B: QUESTIONS FOR INTERVIEW SECTION 95 APPENDIX C: 20 ELEMENTS OF ISO 9001 96 iv ACKNOWLEDGEMENT I would like to express my deep gratefulness for the patience, carefulness, knowledgeable guidance and constant encouragement of my supervisor, MSc Nguyen Khanh Hung His valuable advices are very essential to improve my graduation thesis quality Besides, I am thankful to Project Department and all employees of Railway Construction Corporation JSC and CAS Global because of providing me the required materials and data to complete this research project The research is involved in various discussions and interviews in order to contribute to its structure and quality Therefore, the assistance of MSc Nguyen Khanh Hung, Project Department of Railway Construction Corporation JSC and CAS Global is precious and is acknowledged for their time and patience Finally, I would like to give my special thanks to my family and friends for their sympathy when I conduct this study v ABSTRACT The development of modern society leads to diversified demands of customers to the products or services which they intend to pay for These demands are including the high quality and also the values which customers can get from the products or services to serve their lives Especially in construction industry, in order to meet the customer demands, the construction firms need to have a quality management system which controls all activities effectively and efficiently in both internal and external business Therefore, the framework for management and inovations of processes in construction industry has attracted the most interest This research work has identified and addressed the important issues related to the implementation of total quality management in Railway Construction Corporation JSC The main aims of this study are not only to improve the understanding of total quality management but also to present and evaluate the current situation of implementing the quality management system in the company Furthermore, one of the main aims of this study is to identify and highlight the current barriers faced by Railway Construction Corporation in the implementation of total quality management philosophy All these aims are conducted based on data which are collected by qualitative method and compared with the standard criteria of current quality management system and EFQM Excellence Model By then, the findings of this thesis bring the status, the advantages and barriers in the implementation of quality management system in Railway Construction Corporation The conclusions are drawn to sum up the results which are collected from the study Then, based on the results in the conclusion section, recommendations which consist of the individual ideas of the author are made up It is hopeful that theses recommendations can help the company increase productivity, improve the business performance and develop the quality of the products and services in Railway Construction Corporation JSC vi LIST OF FIGURES AND TABLE Figure 2.1: EFQM Excellence model 11 Figure 2.2: RADAR logic 11 Figure 2.3: ISO 9001 process flow 16 Figure 2.4: Critical success factors of TQM - Resource management 21 Figure 2.5: Critical success factors of TQM - Process management 22 Figure 3.1: Personel in Management Board of RCC 27 Figure 3.2: Personnel in General Director of RCC 27 Figure 3.3: Departments of head office of RCC 28 Figure 3.4: Departments of head office of RCC 28 Figure 3.5: Primary data 31 Figure 3.6: Secondary data 32 Figure 3.7: Data collection procedure 34 Figure 4.1: Process of implementing the quality management system 43 Figure 4.2: Results of business performance with ISO 9001 principles 47 Figure 4.3: Results of business performance with ISO 9001 elements 50 Figure 4.4: Results of EFQM's enables - Leadership 51 Figure 4.5: Results of EFQM's enables - Policy and strategy 53 Figure 4.6: Results of EFQM's enables - People management 54 Figure 4.7: Results of EFQM's enables - Partnership and resources 55 Figure 4.8: Results of EFQM's enables - Process 57 Figure 4.9: : Results of EFQM's results - Customer results 58 Figure 4.10: Results of EFQM's results - People results 59 Figure 4.11: Results of EFQM's results - Society results 60 vii Figure 4.12: Results of EFQM's results - Business results 61 Figure 4.13: Effects of TQM practices on business results 65 Figure 4.14: Barriers in the TQM implementation 68 Table 2.1: Total quality management evolution Table 2.2: ISO 9001 elements 14 Table 3.1: Sample selection for interview section 33 Table 3.2: Sample selection for questionnaires 33 Table 4.1: Results of evaluation performance with ISO 9001 principles 47 Table 4.2: Results of business performance with ISO 9001 elements 49 Table 4.3: Results of EFQM's enables - Leadership 51 Table 4.4: Results of EFQM's enables - Policy and strategy 52 Table 4.5: Results of EFQM's enables - People management 53 Table 4.6: Results of EFQM's enables - Partnership and resources 55 Table 4.7: Results of EFQM's enables - Process 56 Table 4.8: Results of EFQM's results - Customer results 57 Table 4.9: Results of EFQM's results - People results 58 Table 4.10: Results of EFQM's results - Society results 59 Table 4.11: Results of EFQM's results - Business results 61 Table 4.12: Effects of TQM practices on business results 65 Table 4.13: Barriers in the TQM implementation 67 viii LIST OF ABREVIATION RCC Railway Construction Corporation Joint Stock Company TQM Total quality management QSM Quality system management EFQM European Foundation for Quality Management ISO The International Organization for Standardization 84 Landin, A (2000) ISO 9001 within the Swedish construction sector Construction Management and Economics, Vol 18, No.6, pp.509-518 Leonard, D 2010 Quality management practices in the US homebuilding industry The TQM Journal 22 (1):101-110 Lewis, P., Saunders, M., and Thornhill, A (ed.) (2003) Methods for Business Students Pearson Education Limited, Harlow, Essex, United Kingdom Martinez-Lorente, A R., Dewhurst, F., and Dale, B.G (1998) "Total Quality Management: Origin and Evolution of the Term" The TQM Magazine, 10(5), pp.378-386 McCabe, S 1998 Quality improvement techniques in construction London: Addison Wesley Longman Limited McCabe, S and D Boyd 2004 Quality management 25 years on: what can we learn about initiatives in construction? 20th Annual ARCOM Conference, 1-3 September 2004, edited by F Khosrowshahi Heriot Watt University: Association of Researchers in Construction Management McCornac, D C 2006 The implementation of ISO 9000 in Vietnam: Case studies from the footwear industry International Business & Economics Research Journal (2):77-86 Nukulchai, W K (2003) Towards Total Quality Management In Higher Education: The Experience of Asian Institute of Technology" Asian Institute of Technology Oakland, J S., and Aldridge, A.J (1995) Quality Management in Civil and Structural Engineering Consulting International Journal of Quality & Reliability Management, 12(3), pp.32-48 85 Ofori, G., Briffett, C., Gang, G & Ranasinghe, M (2000) Impact of ISO 14000 on construction enterprises in Singapore Construction Management and Economics, Vol 18, No.8, pp.935-47 Pheng, L S (1996) Total Quality Facilities Management: A Framework for Implementation Facilities, 14(5/6), pp.5-13 Sashkin, M & Kaiser, K., (1991) Total Quality Management Kucochon Press: Seabrook Singh, P J., and Alan JR, S (2004) Relationship Between TQM and Innovation: An Empirical Study Journal of Manufacturing Technology Management, 15(5), pp.394 - 401 Turk, A M 2006 ISO 9000 in construction: An examination of its application in Turkey Building and Environment 41 (4):501-511 Watson, P and T Howarth 2011 Construction quality management New York: Spon Press WEBSITES EFQM Excellence model’ website: http://www.efqm.org/ (Accessed in 10/3/2015) ISO’s Website: iso.org (Accessed in 10/3/2015) Acsregistrar’s website: http://www.acsregistrars.com/ (Accessed in 10/3/2015) Railway Construction Corporation JSC’s website: congtrinhduongsat.vn (Accessed in 10/3/2015) 86 APPENDIX A: QUESTIONNAIRES (English version) QUALITYMANAGEMENT SYSTEM QUESTIONNAIRES Reference: ISO 9001: 2008 FOR IMPROVING QSM IMPLEMENTATION IN RAILWAY CONSTRUCTION CORPORATION JSC AIM This survey intends to: - To explore the current status of quality management system implementation in Railway Construction Corporation - To investigate both of benefits and barriers which the company has to face up with in the total quality management implementation CONFIDENTIALITY All information provided in this survey will be treated as strictly confidential, no companies or individuals will be identified in any subsequent research report, and all information collected will be used purely for the purposes of academic research CONTACT DETAILS If you have any questions involving in this survey, please contact with me: - Name: Ngo Thi Xuan Huong - Phone: 098 987 2338 - Email: Huong593@gmail.com 87 QUESTIONAIRES Please kindly answer the following question by ticking or circling the appropriate suggestions or writing your answer in the space: POSITION OF RESPONDENTS Member of Boar of Directors Manager Employee Engineer Expert from CAS Global Others (please specify) How long have you been contributed to the company 15 years QUESTIONS RELATED TO THE PRACTICE OF ISO 9001 PRINCIPLES AND ELEMENTS Based on your experience, please click X in the box which reflects the level of implementation of each major principle and elements of ISO 9001 standards in your company 4: fully implemented 3: not so fully implemented 2: minimally implemented 1: yet to be implemented The eight major ISO 9001 principles The company focuses on customer requirements and expectations The leaders establish unity of purpose and direction of the company Employees are fully involved and their abilities are empowered for the company’s benefit Project activities and related resources are managed as a process 88 The company identifies, understands, and manages interrelated processes as a system The company has a strategic objective for permanent and continuous improvement of overall performance Decision-making is based on an analysis of relevant data and information The company and its suppliers have a mutually beneficial relationship The ISO 9001 elements Management sets the company quality policy and implements it by providing resources and training A Quality Manual and supporting procedures have been created and are maintained Contracts reflect customers’ needs and expectations Design changes are carefully documented to ensure that they become fully coordinated and are approved internally and by clients Creation and modification of any quality documentation is strictly controlled by established procedures Purchasing procedures fully describe supplier requirements and there is a formal system for ensuring compliance to these standards Procedures detail methods of handling and safekeeping of product supplied by clients Methods of tracking the dates and lot-codes of products and raw materials, from arrival on site to incorporation into construction, 89 guarantee traceability Work instructions, quality plans and workmanship standards; verify that each job is being done correctly 10 Inspection and testing at receiving, in-process and final inspection areas ensure quality compliance Test and inspection records are retained and preserved as part of the quality documentation system 11 Instruments and measuring tools are calibrated regularly, and records maintained 12 Only inspected materials may be used or processed further Inspected product is always identified 13 Materials or products that fail to meet specifications are rejected and separated from normal production Only the proper authorities may decide if rejected material will be used as is, reworked or returned to the supplier 14 The corrective action system focuses on identifying the root causes of quality concerns and any corrective and preventative actions required 15 Procedures outline practices that protect products from damage during construction and delivery 16 Quality records provide an audit trail for internal and external auditors 17 Trained teams verify that the company Quality System is working, by evaluating whether the ISO 9001 requirements examined by the external auditors, are being met on an on-going basis 18 Training records are maintained for every employee showing their levels of expertise and frequency of training 90 19 Where servicing is specified in the contract, procedures are established to verify that servicing meets the indicated requirements 20 Control charts, graphs and other methods of analysis determine how well a process is working and facilitate continuous improvement QUESTIONNAIRES RELATED TO BUSINESS PERFORMANCE Based on your experience, please click X in the box which reflects the level of implementation of each major principle and elements of ISO 9001 standards in your company 4: strongly agree 3: agree 2: disagree 1: strongly disagree Criteria 1.1 Participate with the employees in decision-making 1.2 Management structure based on effective process management exists 1.3 Provide a proper system for employees to increase productivity 1.4 Working to continuously develop and improve the company processes 1.5 Our management encourages communications with suppliers and customers 2.1 The concept of total quality is reflected in the Company’s values, vision, and mission 2.2 The company policy and strategy are managed and reviewed on a regular basis 91 2.3 Necessary resources available for achieving the company’s policy and strategy 2.4 Company policy and strategy can be modified according to business results 2.5 The concept of total quality is embraced in the company’s strategy 3.1 Employees participated in the development of the company’s vision 3.2 The use of surveys to obtain perceptions of employees 3.3 Training are implemented according to employees requirements 3.4 Proper rewards system apply to employees 3.5 The quality improvement teams are effective 4.1 The company resources are sufficient to implement Total Quality Management 4.2 Company management recognizes that effective communication is the key towards creating a quality environment within the departments 4.3 Resources deployed in the development of company activities 4.4 The company and its partners work together for the same goals 4.5 The company uses an appropriate system for managing financial resources 5.1 The company processes are systematically managed and improved regularly 5.2 The company process performance is measured, and customer feedback considered 92 5.3 The company encourages innovation and creativity in process performance improvement 5.4 The company processes are designed and developed based on customer needs and expectations 5.5 The company is focusing on the processes more than the end results 6.1 Customer perceptions in our company are measured by customer surveys, focus groups, compliments and complaints 6.2 The company adopted an internal performance indicator to monitor, predict and improve customer perception 6.3 The company provides shareholders with truthful information in full transparency 6.4 The most important strategy in our company the achievement of customer satisfaction 6.5 The customer service in the company is effective 7.1 Employees’ perceptions of our company are measured by customer surveys, focus groups, compliments and complaints 7.2 Our company motivates its employees by providing learning opportunities for them all 7.3 Employees in our company are satisfied as far as health and safety are concerned 7.4 Employees in our company are satisfied regarding their salary and wages 7.5 Employees in our company are satisfy regards to the health and safety 93 8.1 Our company actively participates in social activities 8.2 Our company is involved in the training and education of community members 8.3 The company’s evaluations of quality results are spreading to society 8.4 Our company seeks to build good relations with quality institutions 8.5 The society decides the continuity of our company in business 9.1 The proper system exists to measuring business results 9.2 Business results in our company cover the financial and nonfinancial results 9.3 The main goal of measurement in our company is to ensure that customer requirements have been met 9.4 Knowledge management is the main component in the company (KPRs) 9.5 The company trend is to review and improve the key results regularly QUESTIONS RELATED TO BARRIERS OF QSM IMPLEMENTATION The following statements are related to problems that companies mostly faces in relation to effective ISO 9001 implementation Please tick X the appropriate box which indicates whether your company has also experienced these problems = Often experienced = Sometimes experienced = Very seldom experienced = Not experienced BARRIERS ISO 9001 is a matter of fulfilling audit requirements 94 Misleading QMS purposes Lack of a well-design reward system Failure in disseminating ISO 9001 –QMS Lack of effective management response Lack of strong motivation Uncertainty with sub- contractors and supplier quality systems Lack of effective internal communication Lack of corporate commitment 10 Resistance to QMS implementation 11 Difficulty in understanding ISO 9001 terminology 12 ISO 9001 is a documentation matter instead of opportunity to make a change 13 Poor external communication THANK YOU VERY MUCH FOR YOUR PARTICIPATION 95 APPENDIX B: QUESTIONS FOR INTERVIEW SECTION No Questions asked in the interview section In your opinion, what are the benefits and costs of Railway Construction Corporation JSC before applying ISO 9001 quality management system? What are the benefits of applying a TQM system within your firm and does it improve your business performance? What are the main impediments that may influence the adoption of TQM within your organization specifically and the construction sector in general? Do you believe that the cost of TQM implementation could be higher than failure of achieving quality in terms of rework, correcting errors, reacting to customer complaints, missing deadlines, and having deficient project budget due to poor planning? Do you believe it would be easy to generate awareness, educate, and change the attitudes of staff towards quality improvement, especially in the construction industry, due to the nature and never-changing environment of the construction project? 96 APPENDIX C: 20 ELEMENTS OF ISO 9001 ISO 9001 Elements E1 Management responsibility Quality functions required - Define, document and publicize quality policy - Define, document responsibility, authority and interrelations of staff - Identify and provide adequate resources - Appoint quality manager - Review quality systems on a regular basis E2 Quality system - Establish, document and maintain quality system - Prepare and effectively implement documented procedures - Define and document how quality planning is conducted for a project or contract, including preparation of a quality plan E3 Contract review - Review tender before submission - Review contract before signing - Review variation order before acceptance and transfer amended requirements to functions concerned E4 Design control - Plan design activities - Identify and review design input - Review, verify, and validate design input E5 Document and data control - Review and approve documents prior to issue - Review and approve document changes prior to issue - Control distribution and updating of documents E6 Purchasing - Evaluate and select subcontractors on basis of capabilities for quality - Exercise appropriate control over subcontractors - Review and approve purchasing documents prior to release - Specify arrangements for verification and product release of subcontractors product or work at subcontractor’s premises if required - Allow the client or his representative to verify subcontracted product or work at the contractor’s/subcontractor’s premises where specified in contract E7 Control of customer’s supplied product - Control verification, storage, and maintenance of customer supplied product 97 E8 Product identification and traceability - Identify material and semi-finished product from receipt and during all stages of production, delivery, and installation, where appropriate - Provide unique identification of individual product or batches where specifically required E9 Process control - Identify, plan, and control production, installation and servicing processes, including provision of documented procedures and suitable equipment - Assign qualified operators to carry out special processes E10 Inspection and testing - Conduct receiving inspection and testing of incoming materials and components - Conduct in-process inspection and testing of semi-finished work in accordance with quality plan - Maintain signed-off records of inspections and tests E11 Control of inspection, measuring and test equipment - Use inspection, measuring, and testing equipment capable of necessary accuracy and precision - Calibrate the equipment at prescribed intervals, or prior to use, and indicate its calibration status - Review previous results when the equipment is found to be out of calibration E12 Inspection and test status - Indicate by suitable means the conformance or nonconformance of product or work with regard to inspect and performed E13 Control of nonconforming products - Identify and segregate, when practical, any nonconforming product or work - Review and dispose of the nonconforming product or work by an authorized person - Inspect and/or test the product or work again after repair E14 Corrective and preventive action - Investigate cause of nonconformities, including client complaints - Take corrective/preventive action to eliminate cause/potential cause of nonconformities - Implement and record changes to document procedures resulting from corrective/preventive action - Ensure that corrective/preventive action is taken and that it is effective E15 Handling, storage, - Establish methods of handling product that prevent damage or 98 packaging, preservation and delivery deterioration - Use designated storage areas to prevent damage or deterioration - Asses condition of product in stock at appropriate intervals - Protect product during delivery E16 Control quality records of - Retain quality records for prescribed period - Maintain quality records in such a way that they are identifiable, retrievable and secured against damage, deterioration, or loss E17 Internal quality audits - Plan and schedule internal quality audits - Assign independent personnel to carry out internal quality audits - Conduct follow-up audits if necessary E18 Training - Identify training needs of staff - Provide training required E19 Servicing - Verify that servicing meets specified requirements E20 Statistical techniques - Identify the need for statistical techniques in quality control - Implement and control the application of statistical techniques ... REVIEW OF TOTAL QUALITY MANAGEMENT 2.1 Overview about quality management system 2.2.1 Definition of total quality management Since 1980s, total quality management (TQM) has become popular management. .. LITERATURE REVIEW OF TOTAL QUALITY MANAGEMENT 2.1 Overview about quality management system 2.2.1 Definition of total quality management 2.2.2 Total quality management evolution... total quality management and particularly ISO 9001 standards? Prior to examining the total quality management in Railway Construction Corporation, it should be given the background of total quality