Estimating Subcontractor Costs: A 5-Level Quality Test

When it comes to quality management programs, the spectrum ranges from no formalized systems at all to a streamlined program with integrated mechanisms for continual improvement. Most organizations fall somewhere in the middle, but there are times when it’s important to know how a company ranks. A few scenarios when you might want to assess a quality program include hiring qualified subcontractors, evaluating the progress of your program, or determining the status of your program before you implement new systems.

Whether you want to evaluate a subcontractor’s quality program for an upcoming project or you want to see how your program measures up, this simple 5-level assessment can help you determine the level of a quality program:

Level 1: Relying on Experienced Field Personnel

One of the telltale signs of a Level 1 company is that they don’t really know how to communicate about quality. You could ask multiple people on the team what quality is, and they would all have different definitions. These types of companies rely heavily on the experience of field personnel to get the job done right. Because of this, everybody uses their own systems, and the results are inconsistent across projects.

The characteristics of a Level 1 company include:

• No consistent definition of quality
• Completion of work focuses primarily on responding to customer punch lists
• Quality depends on each individual field supervisor’s monitoring of daily work.

While a Level 1 company might sometimes produce quality work, the quality program is basic or nonexistent, which means that you will never know what types of results to expect.

You can protect yourself when contracting with Level 1 companies by having them work under your quality management system and filling the vacant role of Quality Manager. Include contract provisions for quality control procedures you expect them to perform under your quality program. Because their quality is fully dependent on experienced personnel, specifying their names in your contract to avoid bait and switch issues. You can’t go wrong if you assume that these companies supply you with work crews that you manage.

Read How to use QC to improve your Subcontractors Performance

Level 2: Beginning an Inspection Process

Often when a company starts down the path to implementing a quality program, they start with final inspections. This might include putting together a checklist that’s used during a final QA inspection to ensure that there are no major issues with the job. The intent is usually to catch any significant issues before the client does. While this is a good first step when starting a quality program, unfortunately, many companies also stop here.

The characteristics of a Level 2 company include:

• Quality is understood as an acceptable level of customer issues
• Supervisors generally perform final walk-through inspections to catch problems
• Punch lists document issues required for completion of work.
• There are inspection checklists but only some people are using them.

A Level 2 company is on the path toward a more formalized quality management program, but if they are stuck here or not interested in getting to the next level, they are not taking proactive steps to avoid issues in the first place.

For Level 2 companies, your job is to provide structure to their quality process that they can apply consistently, at least on your project. Coach them through preparing a written project quality plan that dovetails with your own project quality program. Give them limited access to using your quality management software so you can make sure they are following through with inspections and handling of deficiencies.

Level 3: Utilization of a Structured Inspection Process

When quality starts to be addressed during projects and not just when they are complete, a company moves up to Level 3. When companies are at this level, more people in the organization are involved in creating and implementing processes, and there is more focus on preventing quality issues before they arise.  

The characteristics of a Level 3 company include:

• Quality is well understood as compliance with project requirements.
• Checklist based inspections routinely document proper completion of work.
• Final QA checks are made to catch issues from reaching the client.
• Quality performance is measured by numbers of defects.
• Some larger issues trigger efforts to learn from mistakes and prevent recurrences.

A Level 3 company demonstrates a commitment to quality and has a structure in place to help them achieve their goals. While the systems might not be fully deployed, the company is on the right track.

Level 3 companies still need your help to make sure their quality approach is up to the level you need for first time quality on your project. Collaborate on a project quality plan that includes good practices they already have and then help them fill the gaps modeled on your quality methods. Continue your coaching and mentoring role to help them keep on track. Give them access and encourage them to use your quality management software particularly if theirs is not keeping up with what they need for Level 4.

Level 4: A Structured Quality Management Approach

Rolling out a comprehensive quality program takes time, but when the systems are fully in place and everybody in the organization participates, a company moves up to Level 4. Quality is a priority for companies at this level, and every employee from field personnel to executives is committed to reaching quality goals.

The characteristics of a Level 4 company include:

• Quality is understood as “building it right the first time” in compliance with project requirements.
• Project inspections are planned and tracked (ITP).
• First time quality results are measured at every inspection.
• Inspections record whether work is first time quality, an open deficiency or a corrected deficiency.
• The company strives for first time quality to prevent issues from reaching  the customer.

Companies at this level have the advantage of everybody being on the same page about quality. This means that even if first-time quality can’t always be achieved, everybody is at least striving for it and working together to continually improve.   

Level 4 companies don’t need your help as much as they need coordination with your quality process. Try not to put requirements on them that undermine or upset their quality process. Let their quality process do its job. You can back-off in overlapping areas that they have under control by shifting from a doing role to a surveillance role. Start looking at quality data integrations if you expect to do ongoing work with them. Companies at this level can have a significant impact on overall project quality and productivity.

Level 5: A Fully Deployed, Responsive Quality Program

Level 5 is the peak of quality performance. In addition to all the traits of a Level 4 organization, they are also agile and responsive. They are constantly working to refine processes and exceed client expectations. Quality is integrated into every aspect of the company, including HR and personnel evaluations.

The characteristics of a Level 5 company include:

• The company priority is for first time quality to prevent issues internally as well as for the customer.
• Inspection checklists adapt to project-specific risks and customer concerns.
• First time quality performance is part of personnel and department performance reviews.
• Issue prevention improvements are routine and occur on a regular schedule.
• Well-defined problem-solving and improvement processes are in place.

These companies are consistently firing on all cylinders, and the results show it.

Your job changes with Level 5 companies. You want all of your contractors to be like this so help them learn from Level 5 companies. Focus on improving Level 3 and 4 companies, particularly those that will be doing ongoing work that are receptive to upping their game on quality. Level 5 companies have a dramatic positive impact not only on you but all of the other contractors that touch their work.

It’s Time to Level Up

At each level you can anticipate their impact on project quality, productivity, and resource demands on your quality management program. With this information you can estimate costs your project will incur in addition to their bid price. This is good a discussion to have with your team before contractors are selected!

No matter where a company is on this spectrum, there is always room for improvement. Even Level 5 companies know that they can’t be complacent when it comes to quality. If you’re at a Level 1 or 2, focus on getting to the next level incrementally—no company gets to Level 5 overnight. If you’re using this system to evaluate subcontractors, look for signs that they are trying to up their game on quality.

If you’d like to learn more about how FTQ360 can help you get to the next level, contact us today.