quality and supply chain management

Question 1

define project quality management

Answer 1

getting quality right the first time, on time, to budget, and that meets operating and performance requirements and specifications integrated with:
* clearly defining scope and requirements at project outset
* clearly defining the technical and commercial requirements to satisfy the business need
* delivering the required performance
* maintaining schedule and keeping costs within set budgets
* effective risk management strategies

Question 2

why must we manage deviations and non-conformances?

Answer 2

allows us to deliver a project of continuous improvement so that defects either do not arise or can be fixed quickly if they do arise

Question 3

define quality

Answer 3

conformance to requirements

Question 4

what can be said about quality gaps?

Answer 4

• quality gaps created in the concept phase will be passed on and get bigger (cumulative) as they pass through each phase of the life cycle
• quality gaps will lead to schedule delays and cost increases
• quality gaps must not be created and then passed on to the next phase
• managing quality throughout the life cycle will help de-risk projects

Question 5

describe the concept phase

Answer 5

• trade-offs must be done in this phase as impacts on the project will be much greater (cost increases and schedule delays) if done in later phases
• higher performance levels often means increased product complexity; this should provide better quality but will probably result in higher costs, longer schedules, and increased risk
• budget constraints often mean that cost is the deciding factor and so quality and performance will ‘inevitably’ be at a lower level BUT safety must not be compromised

Question 6

define trade-off analysis

Answer 6

done to meet time, cost, quality, safety, and performance requirements while also considering potential risks

Question 7

describe the common issues found in the design phase

Answer 7

• equipment (especially systems and software) goes out-of-date, which is a major problem on projects with long life cycles; constant need to update and back-fit equipment
• equipment in products in advanced states of construction often has to be ‘stripped out’ to supply earlier products in the project that are experiencing problems
• obsolete equipment: equipment will not be available at some point in the future, can ‘design out’ if we have advanced notice, impacts on suppliers you can contract with
• cad software packages simplify, de-risk, and speed-up the product design process but over-reliance on them often leads to over-design of products (and hence schedule delays and cost increases)
• failure to incorporate lessons learned from other projects
• poor product specifications from previous phases makes it likely that we will develop a product that fails to meet requirements, usually caused by the need to cut costs, reduce schedules, and de-risk projects
• unresolved issues in the design phase can impact the construction phase by causing ‘concurrent engineering’, which means entering manufacture/construction phase before design is complete and so there are high levels of re-work

Question 8

how can we think about quality when we are designing

Answer 8

• knowing what you want and spending the time to understand all the requirements and defining the project up-front
• not making assumptions: this is not always possible
• learning from others: subject matter experts, teams, projects
• establishing and defining expectations at project outset and writing them into the specifications and acceptance criteria
• ensuring technology readiness levels and system readiness levels are met

Question 9

how can we better manage quality?

Answer 9

• using multi-discipline internal and external reviews to conduct criticality assessments and to identify ‘technical risk’
• undertaking contractor/supplier compliance audits to verify and validate their processes
• checking if sufficient/correct definition of requirements and specifications are provided to the supplier
• assessing contractor competency/capability (relevant skills) and capacity (numbers of people, actual facilities, and time available in their work order books) to deliver

Question 10

in the construction/manufacture phase, why do we need supply chains?

Answer 10

• it is no longer possible to do everything ‘in-house’ as projects and products become increasingly complex, expertise of other organizations needs to be utilized
• organisations lost expertise due to downsizing, people leaving, redundancy, retirement etc.
• strategic alliances: globalization, reduced time-to-market, share costs and benefits of new technologies and innovations
• capacity constraints: insufficient people, facilities, machinery etc.
• schedule and cost constraints: we can outsource work if our project is running late, what should be cheaper but might not be

Question 11

what are some potential issues we can expect to find in supply chains?

Answer 11

• lead times and storage problems
• poor quality leads to high levels of re-work

Question 12

list the activities we can do to ensure high quality

Answer 12

• evaluate and select contractors on following criteria: technical, project management, price, commercial terms and conditions, alternative/innovative solutions
• conduct cross-discipline reviews that endorse and approve contractor procedures, schedules, and deliverables
• conduct inspections and in-process audits of construction activities
• rigorously manage non-conformances and deviations
• provide technical support as required
• implement effective and rigorous management of change procedures

Question 13

describe the commissioning phase

Answer 13

• ultimate demonstration of ‘conformance to requirements’ through performance testing
• common issues include physical errors and test failures
• quality defects and non-conformances in commissioning phase will almost certainly be a result of failing to manage quality in the previous phases
• significant impact on cost and schedule if found at this stage

Question 14

define supply chain management

Answer 14

working with suppliers to ensure they deliver their products and services on time, to the right quality, and at the right price so that our project is deliverable

Question 15

describe the expected behaviours in supply chain management

Answer 15

• collaborative team working relationships so that project outputs are delivered on time, at cost, and at right quality
• forming face-to-face relationships with staff at all levels
• effective leadership from the prime contractor and effective management of delivering for the project from the subcontractor
• commitment to providing the right resources in order to deliver the equipment required

Question 16

what are the expected outcomes of good supply chain management?

Answer 16

• clear scope of work with well-defined roles and responsibilities
• equipment that is right first time: delivered on time, at the right cost and to the right quality
• supplier flexibility and leverage
• suppliers can make long-term plans based on orders that will be placed over many years
• no ‘blame game’ for liquidated damages on faulty equipment

Question 17

what are some potential problems with supply chain mangement?

Answer 17

• political issues: sometimes you are forced to work with a problematic supplier
• security issues: obtaining security clearance might be too time consuming or difficult
• supplier fragility: exacerbated by schedule delays and low volume projects
• equipment obsolescence: equipment goes out of date, particularly on long, complex projects
• supplier might be single source or your work represents only a small part of their business and so you have little influence over them
• suppliers exit market
• late equipment delivery
• supplier misses project-specific requirements
• sub-suppliers not given full instructions from main supplier
• use of cheap materials
• poor quality = high levels of re-work

Question 18

how can we improve supplier performance?

Answer 18

• holding them accountable for their work with quality requirements being non-negotiable
• evaluating them at project outset for critical/high risk items and only allow those that meet all requirements to bid for work
• spend time at project outset to make sure quality processes are followed and providing the intended result
• early involvement will prevent problems from occurring in later phases of the project life cycle
• understand their processes and identify opportunities to avoid non conformances
• implement corrective actions to prevent recurrence of non-conformances if they do occur
• look at what we can do differently to help them

Question 19

what two routes can we take when selecting suppliers and explain them

Answer 19

1. single source = non-preferred route as more difficult to have leverage with suppliers plus issues discussed previously
2. competitive = preferred route as potentially more leverage with suppliers on cost, schedule, and quality issues

Question 20

what are the different contract types?

Answer 20

• firm price: higher price as the contractor is taking the risk but there is more certainty in how much it will cost
• fixed price: lower price but you take the risk and so there is less certainty in how much it will cost
• performance Partnering Arrangements (PPA)/Target Cost Incentive Fee (TCIF)

Question 21

describe the Performance Partnering Arrangements (PPA)

Answer 21

• can be established between prime contractor and its key suppliers such as those who deliver critical equipment, are single source, or are fragile
• long-term agreements
• open book on commercially-sensitive information
• encourage innovation
• improved cost management
• helps resolve schedule issues
• pain-share/gain-share contract that is dependent upon performance and profit/loss ‘cut-off’ levels are defined at the outset

Question 22

describe the Target Cost Incentive Fee (TCIF)

Answer 22

• a type of contract in project management that incentivizes the contractor to meet a pre-set target cost by offering a financial reward
• The client and contractor agree on a cost target or estimate for the project upfront. This becomes the target cost.
• The project contract includes a fee percentage that the contractor will receive if they successfully deliver the project at or below the target cost. A typical fee percentage might be 10-20% of the difference between the actual cost and target cost.
• If actual costs exceed the target cost, the losses are typically shared between the client and contractor. The percentage share of the overruns would also be pre-negotiated

Question 23

advantages of TCIF

Answer 23

• It incentivizes the contractor to find creative designs or solutions to minimize costs. Any cost saving benefits them directly. So they are driven to create efficiencies.
• Risks of cost overruns are shared by both parties, rather than borne only by the client.
• It promotes open and transparent cost monitoring and tracking to assess performance vs. the target.

Question 24

disadvantage of TCIF

Answer 24

requires accurate cost estimating upfront to set a reasonable target