To Enhance Quality Control by Using PDRI to Define

Journal of Quality Vol. 21, No. 4 (2014) 269 DOI: 10.6220/joq.2014.21(4).04

To Enhance Quality Control by Using PDRI to Define Scope of Project Procurement 1*

2

An-Pi Chang , Chien-Cheng Chou , Jyh-Dong Lin

3

1

Department of Environmental Technology and Management, Taoyuan Innovation Institute of Technology 2

Department of Civil Engineering, National Central University

Abstract Project procurement management (PPM) contains 5 major elements; suppliers, time, price, quantity and quality. These elements directly affect the quality of procurement in different phases. PPM is indivisibly associated with different stages of the engineering life cycle. In preliminary planning and scheduling of project, and the control of cost and screening of suppliers, organizational strategy and the needs of the operational environment should be considered. In this study, the Project Definition Rating Index (PDRI) is adopted for the evaluation of the preliminary integration of a project. Mindjet Mind manager software is adopted as the tool for integration of the study within the defined scope. The PPM-PDRI model consists of 3 Sections, 17 Categories, and 80 Elements. This model is subject to validation in this study, when project scope definition is < 200 points, the actual cost is 3% below the budget, the actual progress is 4% ahead of schedule and the change order is controlled within 5% of the budget. Thus, it has been proved from the study result that, in terms of cost, schedule, change orders, construction quality and material quality, the PPM-PDRI model perfectly defines the scope of project procurement and effectively improves the performance of project quality management. Keywords: project procurement management, PDRI, Mindjet Mind manager, project quality management

Received: 11/2012; Revised: 03/2013; Accepted: 04/2013 *

Correspondence: Department of Environmental Technology and Management, Taoyuan Innovation Institute of Technology 414, Sec. 3, Zhongshan E. Rd., Zhongli City, Taoyuan County 32091, Taiwan, R.O.C. E-mail: [email protected]

270 To Enhance Quality Control by Using PDRI to Define Scope of Project Procurement

1. INTRODUCTION Project procurement organization has long been treated as a form of logistics support in many construction enterprises, and is managed as logistics supporting function. In the domain of construction engineering, procurement management has always been oversimplified as a means of supporting the needs in the workplace and for cost reduction. The influence of procurement management on the overall strategic outcome of project has always been overlooked (Ting, 2011). An outstanding procurement organization plays the supporting role in satisfying the procurement needs in the workplace as scheduled, and also performs the function of a quality manager to a certain extent. The principles of procurement should rest with appropriate price, suitable quality, timing, quantity and place in the pursuit of procurement. The role and function of project procurement should be transformed from the traditional tactical mindset to a strategic mindset (Hsu, 2012).The overall strategic consideration of procurement shall include the improvement of project quality management performance. In practice, procurement should satisfy the needs of all stakeholders whether quality is broadly or narrowly defined. Stakeholders as referred to are construction project owners, customers, builders, and suppliers. The quality of the end product of engineering should comply with all contractual requirements and contract documents. Further, it should also aim at the upgrade of service quality. The 5 major elements of procurement are suppliers, time, price, quantity, and quality (Hsu, 2012). In this study, the PDRI evaluation model is adopted to define the scope of the preliminary operation of procurement. The Mindjet Mind manager software is used for integrating related topics of procurement. Organizational strategy, project agreement specification documents, and environmental requirement for performance of works are taken into account for the break-down of the tasks in procurement operation. The scope of PPM-PDRI operation integration focused on the processes of preliminary strategy and planning, and could be translated into a checklist for subsequent execution and management of the process. The building of the PPM-PDRI evaluation model at the preliminary stage of the project can upgrade the quality of the entire engineering project in effect.

2. DESCRIPTION OF THE PDRI The Construction Industry Institute (CII) began to develop a tool used in the front-end planning (FEP) process since 1994. This tool is known as the Project Definition Rating Index, or PDRI. The first PDRI was intended for use on industrial projects. After successful research and testing, the PDRI for industrial projects went through three revisions to give us the current edition (Gibson and Bosfield, 2012). It became evident to the developers that there was a need for a similar tool for building projects. In 1999, the Project Definition Rating Index for building projects was developed (Construction Industry Institute [CII], 2008a; Gibson and Dumont, 1996). During the “2010 Rail

Journal of Quality Vol. 21, No. 4 (2014)

271

Conference” held in Canada, the PDRI was also applied in the realm of “front-end planning of Railway and Infrastructure Projects” (Cho and Gibson, 2000; CII, 2010; Wang and Gibson, 2010). In the meantime, some scholars also combined PDRI with statistical regression analysis and artificial neural networks (Bingham, 2010); or used the “Applying Neural Network” in evaluating the predicting cost and schedule performance (Wang et al., 2009). The PDRI is a tool designed to measure the degree of scope definition in a project and help the project delivery team identify strengths and weaknesses early in the overall project cycle. The identification of issues through use of the PDRI tool allows visibility of risk areas and focuses attention by the team on timely resolution of issues to avoid delays in project execution (U.S. Army Corps of Engineers, 2009). This tool is composed of a comprehensive checklist of scope definition elements to be evaluated based on the level of completeness by project representatives before detailed design and construction. After all elements have been assessed, an index is calculated that gives the relative level of definition for the project. A lower score indicates a more complete scope definition (CII, 2008b; Palmer et al., 2010). The PDRI helps stakeholders of a project quickly analyze the scope definition package and predicts factors that may impact project risk specifically in regard to buildings (Cho, 2000; CII, 1999). The method chosen to quickly develop reasonable and credible weights for the PDRI elements was to rely on the expertise of a broad range of construction industry practitioners marshaled together in workshops. The weighting development was therefore an inductive process in nature that incorporated expert input into developing final weights (Cho and Gibson, 2001). The PDRI for industrial projects is a weighted matrix with 70 scope definition elements (issues that need to be addressed in pre-project planning) grouped into 15 categories and further grouped into three main sections. In responding to the needs of the building industry (Wang and Gibson, 2006), for illustration purposes, Section I-Category (A) of the PDRI for Building Projects (both elements and their weights) is shown in Figure 1. This is one category of 11 in the PDRI for buildings and encompasses eight of 64 scope definition elements (Cho and Gibson, 2001). Under PDRI, the working structure is broken down for the tasks to be executed in this project. It can be used as a checklist for measuring project execution performance during the entire project process. The breakdown and the weight of the project preliminary planning are determined through seminar method by the participating scholars and experts. Relevant research reports indicated that such kind of system tends to invite radical opinions from each individual review member and lead to biased assessment direction and purpose, thus, affecting the final assessment result (U.S. Department of Energy, 2001). To improve such problem, the Vector Weighing Analysis Method is employed in this Research for integrating the questionnaire survey opinions. The said Vector Weighing Analysis Method is a statistical computation process developed by Satty of America’s Pittsburgh University for implementing in ANP and AHP. It uses the calculation of feature vectors to determine the weight (specific gravity) between each element, i.e., A = [aij], aij = wi/wj, aij= 1/aij, W = [w1, w2...wn], i, j = 1, 2, ..., n. Therefore, its feature vector (eigenvector) will be equal to “n × W” in order to obtain the


Figure 1. PDRI for building projects, category (A) max. Feature value “λ max” and consistent inspection C.I. for improving the mode and decision effectiveness, where: C.I. = (λ max-n)/(n-1) ≤ 0.1; n = standard count). Based on the empirical rules, Satty proposed that the matrix be deemed effective if the C.I. value is less than 0.1 for explaining that such matrix is available and is consistent (Jharkharia and Shankar, 2007; Saaty and Shang, 2007).

3. PPM-PDRI EVALUATION MODEL The process for defining PPM-PDRI scope is shown in Figure 2. PMI of USA divides the Project Procurement Management Process into 4 stages (planning, execution, management, and conclusion) (Project Management Institute, 2008). This study starts with the overall organization strategy. Procurement strategy is stated as the primary process for management. The primary scope of the PPM-PDRI evaluation in operation is defined in two stages, namely, strategy and planning. PPM-PDRI model will be described in the following order.

Figure 2. Defined scope of PPM-PDRI

3.1

Project procurement panel discussion The panel for the discussion of the scope of project procurement management could be held

for collective wisdom and the topics for discussion could be the factors affecting the performance of project procurement.


273

The panelists should include the representatives of the project owner (developer), project management organization (in this study, it refers to the function of the construction firm), 17 outside experts and consultants, and 6 scholars and experts in the field. There are 27 persons/times of participation in the survey through Definition Level weight setting questionnaire. Figure 3 illustrates an example to break down the Section I project procurement strategy using the Mindjet Mind manager software integrated model and all Categories and Elements evaluated are laid out in the figure based on their level and relationship. The PPM-PDRI model is then constructed, which is shown in Figure 4. The scope of operation covers 3 Sections, 17 Categories, and 80 Elements, and they serve as the standards for validation of this study. After Sections, Categories and Elements are defined, evaluation descriptions of all Elements are presented in detail. The A3 Element Description of Category (A) is shown in Figure 5 as an example. The step is executed to start the setting of weight between Sections, Categories, and Elements. The Research uses relative criticality weight questionnaires, of which, “1, 3, 5, 7, 9” represents criticality level and “2, 4, 6, 8” represents mean value. As suggested by Satty, the C.I. value should be below 0.1 ~ 0.15 and the questionnaire type is as per Figure 6. The analysis results of vector weight and consistence inspection between sections are shown in Figure 7. Table 1 shows the total score rated for PPM-PDRI is 1,000 points. Based on CII’s research suggestions for PDRI, such method would indicate good if the total score after assessment is ≤ 200 points and > 200 points would mean a less satisfactory execution result for project procurement during the preliminary project development stage. Therefore, the CII research suggestions are also selected for this Research in which such method is implemented as the basis for determining the result of final project procurement management assessment.

Figure 3. Mindjet mind manager software integration model


Figure 4. PDRI sections, categories, and elements


Figure 5. A3 element description of category (A)

Figure 6. PPM-PDRI relative weight questionnaire type

Figure 7. PPM-PDRI section weight analysis

275


Table 1. PDRI section and category weights Section weights Section

Category

Weights

574

A. Environmental factors to the enterprise

187

III Evaluation of suppliers

286

B. Project procurement plan

170

II Project Procurement Risk

140

D. Budget control

100

I

Project strategy

Category weights Weights

Total

1,000

Q. Items for evaluation

97

E. Project Procurement Efficiency

70

M. Performance evaluation

60

P. Quotation analysis

53

C. Project quality policy

47

N. Field Study

39

O. Supplier rating

37

F. Project SWOT

28

G. Contractual requirements

26

H. Risk Planning

22

I. Total score of probable risk

22

L. Geographical environment

18

J. Management reserve fund

12

K. Financial capital Total

12 1,000

We can see from the order of weighing in the sections and categories that gravity of procurement management is the key operation. It implies that the performance of project procurement execution rests with the procurement strategy of the organization. The distribution of weights also implies that the degree of importance of the factors affects the result of procurement. Yet, each task and objective in the operation should also be considered and should not be omitted just because the weight of such task or objective is ranked lower along the scale. Category (A) in Section I is used as an example to demonstrate the weight distribution approach in this study. The total vector weight is 187 in Category (A), and the weight ratios assigned for Element A1, A2 and A3 are 0.251, 0.197 and 0.55, respectively. After the total weight is distributed to each element based on the ratios (the product), the weight for Element A1, A2 and A3 are 47, 37, 103 points, respectively. This is the vector weight for each individual element and The PPM-PDRI weight table is complete after the weight of each element is assigned to the corresponding level within the five definition levels. The overall evaluation process of the PPM-PM module, as shown in Figure 8, is used as the basis for PPM-PM evaluations.

3.2

Verification of PPM-PDRI operation assessment The China Airlines Park BOT project in the Taiwan Taoyuan International Airport is focused

as the case of assessment in this study, and this project includes four subprojects: simulator training

Figure 8. PPM-PDRI project evaluation process

Journal of Quality Vol. 21, No. 4 (2014) 277


building, corporate HQ building, training dispatch building and international tourist hotel. Project team members, including representatives from the auditing office, investment management office, procurement and contracting officers and project managers, are all project stakeholders who took part in the project assessment process, and the project is assessed during the tender invitation and submission phases in the product lifecycle of the construction project. Taking the PPM-PDRI Project Score Sheet in Figure 9 for example, for the assessment of the project strategy in Section I, the perfect definition score is 31, or the total score of Definition Level 1, and the actual assessment score is the total score after the assessment. The difference between the two scores is used to evaluate how complete the project procurement process scope is defined. Shown in Figure 9 is the questionnaire mode used for Section I of this Research. Each of the members participating in the questionnaire survey is required to define the scores of different levels according to the project procurement planning report for the cases provided for this Research. The important point is that when a significant variation exists between the assessment levels, a meeting must be convened immediately to carry out repeated discussions in order to reach consensus for the final review comments. In Figure 9, the white background in the Definition Level column means the final score selected after the discussion; as for the meaning represented by Level 0 ~ 5, please refer to the definition description in the lower part of Figure 9.

3.3

PDRI result analysis The ideal total score of PPM-PADI Module established for this Research will be 113 points, and

that for the result of Actual Assessment Score will be 176 points, including 63 score for Difference. The comprehensive result analysis is shown as per Table 2. The said result is consistent with the original assessment result of the historical case. It means that the project procurement assessment mode established for this Research will be applicable for the project procurement management field. In this regard, the PPM-PDRI can be used to evaluate the result and present insufficiency by quantitative method in order to make improvement or present well-based counter measures and improvement approaches. When the actual assessment score ≤ 200 points, the overall project quality can be enhanced through procurement management. Take Section I in Figure 9 for example, after actual assessment, the difference is 32 points, and from the Definition Levels, it is clear that the scopes of Elements A2, Table 2. Performance for PPM-PDRI validation projects using 200 point cut-off Performance

PDRI Score

Difference

Perfect definition score

Actual assessment score

I Project strategy

31

63

-32

II Project Procurement Risk

26

29

-3

56

84

-28

113

176

-63

III Evaluation of suppliers Total


279

B2, C4, D1 and E1 are yet defined complete, and all insufficiency in the scope can be identified and enhanced using Element Description of Category. After analyses of the project performance regarding the cost, schedule and change orders on the China Airlines Park BOT project, the performance assessment can be identified as shown in Table 3.

Figure 9. PPM-PDRI project score sheet


Based on the criterion, project scope definition < 200 points, the actual cost is 3% below the budget, the actual progress is 4% ahead of schedule and the change order is controlled within 5% of the budget. Thus, it has been proved from the study result that in terms of cost, schedule, change orders, construction quality and material quality, the PPM-PM Model can indeed enhance performance of project procurement management. Table 3. Cost, schedule, change orders of performance PPM-PM PDRI score = 176

Performance

< 200

Cost

3% below budget

Schedule

4% ahead of schedule

Change orders

5% of budget

Acceptance failure rate: construction quality

< 2% (Total score)

Failure rate: material test

< 1% (Total score) (N = 4)

4. CONCLUSIONS A construction project has unique features that make evaluation with a common assessment system difficult. This is indeed part of the exclusiveness of the industry. A perfect definition of the scope of procurement in this industry will surely contribute to the upgrading of construction project quality. The PPM-PDRI model not only helps to define the tasks of procurement, process, and objective in full-range, but also helps to evaluate the overall project procurement process through the quantification of definition level in assessing the needs for the completeness of the operation. The prime force for the success of project is the organization. The importance of procurement management to the upgrade of and contribution to project quality cannot be overlooked. Indeed, it yields complementary effects on project quality. PPM-PDRI provides an integrated quantitative evaluation model for both qualitative and quantitative analysis. In the process of assessing project strategy and planning, we can clearly see if each task is ready and complete. If specific needs cannot be satisfied, we can take immediate corrective or preventive action. In the execution and management stages, we can translate the tasks and process contained in the PPM-PDRI model into a checklist in order to evaluate the performance of project execution. For a long time, procurement organization has been taken simply as a means to reduce or keep down project cost. However, procurement organization has different degrees of influence on different aspects of management in the workplace. Examples are subcontracting strategies, the evaluation and selection of subcontractors, the production capacity, technology and competence of the suppliers -- these are all closely associated with the quality of a project at different stages. Total quality management is not just a matter of specification requirements in the contract. Quality in the broad


281

sense should be the satisfaction of the needs of the stakeholders of the project. The use of the PPMPDRI model for validation can help provide a perfect definition of the scope of project procurement. Through the assessment of definition level, we could achieve a quality management result. In terms of project management, the difference between the construction industry and traditional manufacturing industry is that the environment, culture, goal and attribute of each project are drastically different, and thus, the project procurement modes will vary. The procurement process in the construction industry is mostly independent. As communications are rather insufficient, the relationship between project execution and quality is mostly ignored. The largest contribution of this study is that the model proposed in this study can effectively and vertically integrate different project procurement conditions based on the process of different construction projects to define the scope of project procurement process in detail, take the needs of project quality into consideration, and adequately meet the needs of project management in the construction industry based on the qualification, quantification, process and goal assessments.

References Bingham, E., 2010, Development of the Project Definition Rating Index (PDRI) for Infrastructure Projects, Master Thesis, Arizona State University, Phoenix, AZ. Cho, C.-S., 2000, Development of the Project Definition Rating Index (PDRI) for Building Projects, Ph.D. Dissertation, University of Texas, Austin, TX. Cho, C.-S. and Gibson, G. E., Jr., 2000, Development of the Project Definition Rating Index (PDRI) for building projects, Proceedings of Construction Congress VI: Building Together for a Better Tomorrow in an Increasingly Complex World, 343-352. Cho, C.-S. and Gibson, G. E., Jr., 2001, Building project scope definition using project definition rating index, Journal of Architectural Engineering, 7(4), 115-125. Construction Industry Institute, 1999, Project Definition Rating Index (PDRI) for Building Projects, Construction Industry Institute, Austin, TX. Construction Industry Institute, 2008a, Pre-Project Planning Tool: PDRI for Buildings, 3rd ed., Construction Industry Institute, Austin, TX. Construction Industry Institute, 2008b, PDRI: Project Definition Rating Index Industrial Projects, 3rd ed., Construction Industry Institute, Austin, TX. Construction Industry Institute, 2010, PDRI: Project Definition Rating Index Infrastructure Projects, Construction Industry Institute, Austin, TX. Gibson, G. E., Jr. and Bosfield, R., 2012, Common barriers to effective front-end planning of capital projects, Proceedings of Construction Research Congress 2012: Construction Challenges in a Flat World, 2459-2468. Gibson, G. E. and Dumont, P. R., 1996, Project Definition Rating Index (PDRI), Bureau of Engineering Research, University of Texas at Austin, Austin, TX.


Hsu, J., 2012, Purchasing and Supply Management, Bast Wise, Taipei, Taiwan. Jharkharia, S. and Shankar, R., 2007, Selection of logistics service provider: an analytic network process (ANP) approach, Omega, 35(3), 274-289. Palmer, J., Gibson, G. E., Jr., and Bingham, E., (accessed April, 2013), Front end planning of railway projects, Proceedings of 2010 Rail Conference. . Project Management Institute, 2008, A Guide to the Project Management Body of Knowledge (PMBOK Guide), 4th ed., Project Management Institute, Newtown Square, PA. Saaty, T. and Shang, J. S., 2007, Group decision-making: head-count versus intensity of preference, Socio-Economic Planning Sciences, 41(1), 22-37. Ting, C.-K., 2011, The Practice of Procurement Management, 4th ed., Promax Consultant Service, Taipei, Taiwan. U.S. Army Corps of Engineers, 2009, Engineering and construction bulletin, Technical Report, Vermont Avenue. U.S. Department of Energy, 2001, Office of Environmental Management Project Definition Rating Index (EM-PDRI) manual revision 1, Technical Report, Washington, DC. Wang, Y.-R., Chen, Y.-J., and Huang, C. F., 2009, Applying neural network ensemble concepts for modeling project success, Proceedings of 26th International Symposium on Automation and Robotics in Construction, 199-205. Wang, Y.-R. and Gibson, G. E., Jr., 2006, Pre-project planning and its practice in industry, Proceedings of International Symposium on Automation and Robotics in Construction 2006, 878-883. Wang, Y.-R. and Gibson, G. E., Jr., 2010, A study of preproject planning and project success using ANNs and regression models, Automation in Construction, 19(3), 341-346.


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應用 PDRI 定義專案採購範圍以提升品質控制績效 1*

2

張岸礕　周建成　林志棟 1

2

桃園創新技術學院環境科技與管理系 2

國立中央大學土木工程學系

摘　要專案採購五大要素包括供應商、時間、價格、數量以及品質。完整定義營建工程專案採購管理作業範圍，直接影響各階段品質的良窳。專案採購管理 (PPM) 作業對於工程生命週期各階段有著不可分割的關聯性。專案前置作業的採購計畫、時程與成本的管控、廠商評選等作業，皆需考量組織策略與執行環境需求。本研究運用專案定義評級指數 (PDRI) 評估模式做為專案前期整合性的評估。運用 Mindjet Mind manager 軟體做為採購作業範疇研討整合工具。 PPM-PDRI 評估模式共分為 3 個部分、17 個目標種類和 80 個要素。此評估模式經本研究驗證，在專案作業範圍定義成果符合 < 200 分的情況之下，於成本管理的績效上低於預算的 3%，在專案進度管理的執行績效超前預定進度的 4%，而於專案設計變更的管制績效，控制在預算的 5% 範圍內。研究成果驗證以 PPM-PDRI 評估模式進行專案採購管理，對於營建專案的成本、進度、設計變更、施工品質與材料的品質管控，有實質上的助益。關鍵詞：專案採購管理、PDRI、Mindjet Mind manager、專案品質管理

收件日：101/11；修改日：102/03；接受日：102/04 *

聯絡作者：桃園創新技術學院環境科技與管理系，32091 桃園縣中壢市中山東路 3 段 414 號。 E-mail: [email protected]

To Enhance Quality Control by Using PDRI to Define

To Enhance Quality Control by Using PDRI to Define

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