Quality tools are applicable to local government.

• Author: Kline, James J.
• Position: Adoption of Total Quality Management by local governments

Applying a cost-quality approach can provide insights into an organization's processes, generate information on possible problem areas and offer general guidance on solutions.

An increasing number of local governments are adopting Total Quality Management (TQM). Government officials who recognize the importance of meeting customer quality expectations the first time and every time agree that decisions should be based on facts, not opinions. There is uncertainty, however, about the applicability of the associated quality tools to government.

This three-part article explains some of these tools, provides examples of their use, and discusses some of their strengths and weaknesses. Part one examines the use of flow charts in determining the cost of quality, part two discusses control charts and part three considers cause-and-effect diagrams. What is provided here is a general discussion of selected tools; for a more in-depth exploration of quality tools and statistical process control techniques, the reader is referred to articles and books cited in the list of references accompanying this article.

Flow Charts: Costing Quality

A flow chart is a diagram that shows the specific steps in a process. Although flow charts are extremely flexible in the processes they can diagram, a flow chart by itself is limited in what it can do. It can provide information on process stages and completion times and identify problem areas. But without information on management or customer expectations, or additional statistical or cost data, a flow chart does not tell how well the process measures up to quality expectations.

One area where flow charts are used is in determining the cost of quality. The private sector's experience in analyzing the cost of quality has resulted in the development of the $1, $10, $100 rule of thumb. This rule states that prevention of problems costs the company $1. Correcting or reworking a service or product problem before it gets to the customer costs $10. If the customer receives a poor-quality product or service and walks away dissatisfied, however, it costs the company $100; this is the cost of the loss of that customer's future business and of the effects of negative word-of-mouth advertising.

Experience indicates that the $1 and $10 portions of the rule are applicable to government. The City of Madison, Wisconsin, found in a garage project that, for every $1 spent on preventive maintenance, the city saved $7.15 in vehicle down time. As for the $100 portion, neither academics nor practitioners have spent much time examining the implication of providing quality service on public attitudes, and it is uncertain whether the $100 figure accurately reflects such costs for local governments.

The cost-of-quality concept can provide insights into an organization's processes, generate information on possible problem areas and offer general guidance on solutions. The City of Austin, Texas, includes cost of quality as part of its overall TQM training program. The City of Fort Collins, Colorado, currently is establishing a cost-of-quality training program. Both cities view cost-of-quality analysis as an important addition to the tools already available to their quality improvement teams.

Quality costs are usually grouped into four categories: prevention, inspection/appraisal, internal failure and external failure. The City of Austin, Texas, uses two cost categories: conformance, which groups prevention and inspection/appraisal together, and nonconformance, comprising internal and external failure. It also views the $100 portion of the rule of thumb as an opportunity lost and does not yet attempt to place a value on it.

Prevention costs are the costs of activities aimed at preventing errors and of building quality into the service, product or process. The types of activities included in these costs are

* system, service or product planning and design;

* quality monitoring and reporting systems;

* quality education and training;

* functional area training related to the product, service or system;

* administration of quality activities;

* supervisory and coordination activities related to the specific process, service or product;

* surveys or research on customer needs;

* recruitment and selection; and

* performance evaluation.

Inspection/appraisal costs are the costs associated with inspection and other activities aimed at determining the extent to which a service or process meets customer...