QUALITY MANAGEMENT SYSTEM IN 
MANUFACTURING ORGANIZATION Vs 
PROJECT ORGANIZATION. 
A Comparative Case Study. 
A Thesis 
Presented To 
The Department of Civil Engineering 
University of Moratuwa, 
Sri Lanka. 
Submitted In Partial Fulfillment 
of The Requirement For The Award of 
MSc in Construction Project Management. 
By 
M.J.M.N. Marikkar 
Thesis Supervisor - Dr. N.D. Gunewardena 
September 2001. 
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University of Moratuwa 
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T H 
ACKNOWLEDGEMENTS 
I wish to express my appreciation and sincerely thaak those who assisted and guided 
me in this study. This dissertation would not have been possible without their support and 
encouragement. Firstly, to my Supervisor, Dr. N.D. Gunewardena, whose guidance and 
insight was immeasurable throughout the research work. I am grateful to Mr. U.D. 
Jayawardena. CEO/GM of Lanka Transformers Ltd., for providing the opportunity to 
engage myself in a Masters Degree course and for his encouragement as always. My 
colleagues at Lanka Transformers Ltd., Mr. Narendra De Silva, Mr. Lasith Wimalasena 
and Mr. Chaminda whose assistance was main source of motivation. Most of all to my 
wife Zeena and two children, for their patience and understanding. 
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CONTENTS. 
Acknowledgement 
Abstract 
Abbreviations 
CHAPTER 1. INTRODUCTION 
1.1 Introduction to the Study 1 
1.2 Background 3 
1.2 Objectives 11 
1.3 Methodology 11 
1.4 Main Achievements 12 
CHAPTER 2. QUALITY AND QUALITY MANAGEMENT SYSTEMS 
2.1. Quality 13 
2.2. Quality Management Systems 15 
2.3. ISO 9000 and Benefits 16 
2.4. Introduction of ISO 10006 Guidelines 20 
2.5. Concept of TQM 21 
CHAPTER 3. APPLICATION OF ISO 9000 IN A MANUFACTURING 
ORGANISATION: THE CASE STUDY OF LTL 
3.1 Introduction of ISO 9000 System to LTL 23 
3.2 Status Prior to the Implementation of ISO 9000 23 
3.3 Implementation Approaches For ISO 9001 Certification and Compliance 28 
3.4 Benefits Realised By Implementation of ISO 9000 30 
CHAPTER 4. PROJECTS AND PROJECT MANAGEMENT 
4.1 Quality in Project Management 47 
4.2 Requirement of Quality Management System for Projects 52 
4.3 Difference Between Project Situation and Manufacturing 54 
III 
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CHAPTER 5. APPLICATION OF ISO 9000 IN A PROJECT SITUATION : 
THE CASE STUDY OF LTL 
5.1 Study On Quality Management System Requirements For Projects 59 
5.2 The Study on practical Difficulties encountered in 
Implementation of ISO 9000 in LTLP. 65 
5.3 Gap Analysis Technique 69 
5.3 Steps To Be Taken for Implementation 81 
CHAPTER 6. CONCLUSION & RECOMMENDATIONS 84 
References 88 
Appendix 1- ISO 9000 in Construction industry of Taiwan, Thailand and Hong Kong. 
Appendix 2- TQM Definitions and Principles. 
Appendix 3- Questionnaire of the Survey on Employee Motivation. 
Appendix 4- Steering Committee for implementation of ISO 9000 for LTL Projects Ltd., 
Appendix 5 -List of issues, Problems and Opportunities of Existing Management System. 
Appendix 6- Questionnaire distributed among the Steering committee 
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ABSTRACT 
Quality Management Systems are now widely used by business enterprises of all the sectors such 
as Manufacturing, Service, Construction and Project Management. While Quality is expressed as 
"meeting customer expectations" the Quality Management can be referred to as "Continuos 
Improvement". Therefore every organization, irrespective of their size and nature of business 
needs to empathize on Quality Management within all the entire organization. ISO 9000 is 
V implemented by Companies mainly for few reasons viz. to satisfy the demand by the customer, to 
survive in the market, to establish confidence in the customers by certification etc. 
Lanka Transformers Ltd., (LTL) is a diversified company owning manufacturing facilities, 
service divisions and many subsidiaries. The manufacturing and service facilities of the company 
are already accredited with ISO 9000 series certification. The subsidiary for construction and 
Project Management, LTL Projects (Pvt.) Ltd., is now in the process of implementing ISO 9001 
series. 
This research is based on two case studies. One study was on the ISO 9001 certified Transformer 
Manufacturing plant and the other was on LTL Projects (PVT) Ltd. This study was aimed to 
ascertain the benefits of implementing ISO 9000 in the manufacturing plant and to examine the 
^ most suitable Quality Management aspects for the Construction and Project Management 
environment. The study was carried out by the analysis of past records, literature surveys, 
Questionnaire survey and interviews. 
The implementation of ISO 9000 in the Transformer manufacturing plant has provided positive 
results. The employees in the plant work with satisfaction and motivation in their work situations 
and are willing to contribute for further continual improvement. Overall performance of the plant 
has improved in quantum of production, quality of product, service to the customers, human 
resource development etc. However the introduction of ISO 9000 in its basic form in the Project 
^ division of the company was not successful in its first attempt. One of the main reasons for this 
situation could be attributed to the distinct differences in manufacturing and project management. 
Manufacturing is a repetitive process based on operational management principles, whereas 
Project management situations are unique in each case in many ways. Further studies revealed 
that the implementation of a Quality Management System to a Project Management organization 
should address the various issues in relation to specific project environment. This scenario 
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cannot be fully covered by ISO 9000 alone. It requires inputs from other Quality System 
principles. Thus it is identified that any, Project Management organization should develop a 
Quality Management System, which is blended with the concepts of ISO 9000, the guidance from 
ISO 10006 and it should also fall within the TQM philosophy in order to achieve the maximum 
benefits of Quality System implementation. 
The study provided an opportunity to the company to identify the status and employee behavior 
V in relation to the Quality management System for the manufacturing plant since its certification. 
Further the study provided guidance to review the implementation approach of ISO 9000 to 
Project management situations, by incorporating the solutions for issues pertaining to the project 
division of the company. 
It is suggested that further studies be carried out, to identify common issues that are specific to 
construction and project management companies to develop a Quality Management System that 
will be more suitable for such organizations. 
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ABBREVIATIONS 
BOO - Build Own Operate 
BOT - Build Own Transfer 
COQ - Cost of Quality 
CEB - Ceylon Electricity Board 
IPP - Independent Power Producer 
ISO - International Organization for Standardization 
kVA - kilo Volt Ampere 
LTL - Lanka Transformers Ltd., 
LECO - Lanka Electricity Co Ltd., 
MW - Mega Watt 
PM - Project management 
QA - Quality Assurance 
QC - Quality control 
QM - Quality Management 
QMS - Quality management system 
S A A R C - South Asian Association of Regional cooperation 
TQM - Total Quality Management 
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