Executive Summary of Article. Because ISO 9000’s focus was primarily initiated within the manufacturing industry, especially the automobile and airline industries, many contractors have not given it much thought. However, it has expanded and will continue to expand to service providers and the construction industry. Read this article to learn about ISO 9000 and how it could impact your operations.
ISO 9000 Benefits. “An ISO 9000 certified contractor is credited for its procedures not for the products or facilities it produces.”
“The benefits to a contractor include an increased top line and real cost to operations as a result of the efficiencies created.”
In 1987, the International Organization of Standardization published (ISO) 9000. The original purpose of ISO 9000 was to demonstrate a commitment and ability to provide uniform quality assurance standards for product manufacturing and has since expanded to service providers. When an organization becomes ISO certified, that organization has demonstrated a commitment to its procedures and the total quality of the product or service by establishing an effective quality management system.
ISO 9000 is effectively the establishment of a quality system. A quality system has a good organizational structure and identifies responsibilities, procedures, processes and resources required to achieve stated management goals and objectives.
ISO 9000 does not guarantee product or service quality, but it is a quality system standard. An ISO certified entity is credited for its procedures, not its products. As such, a contractor’s product is not guaranteed. However, if a company is ISO certified, owners can be assured the company maintains a quality focus to ensure its products or services are the best that can be provided to consumers.
Quality Standards
There are different types of ISO quality standards. Those quality standards can be classified as primary, secondary and support standards and are generally defined as follows:
- · Primary standards are quality requirements for external quality assurance and quality management guidance.
- · Secondary standards provide guidance for the selection and application of primary standards.
- · Support standards provide quality technology and support in the development and implementation of a quality system.
ISO 9000 requires that documentation be made of procedures for performing work that affects the product or service quality. It also requires the work be performed in accordance with the documentation. In addition, records of activities should be retained as evidence of compliance and to compare actual results with what was planned. Lastly, a program should be in place to improve any inefficiencies identified. In reality, this should be occurring on a routine basis in order for the company to utilize past performance to more accurately estimate future projects.
The best approach is to structure a quality system in steps:
The first step is creating and documenting policies to satisfy each of the standard requirements by developing a quality manual. The manual should describe the quality policy statement, organization, responsibilities and policies for each element of the organization. A well-written manual should act as an advertisement for the quality of the products or services of the company.
The second step is to document system procedures. This describes the purpose and scope of an activity including what will be done, by who, when, where and how. Further descriptions may include the equipment and documentation required and how it shall be controlled.
The third step includes identifying the word instructions, specific procedures, forms, records, inspections, test plans and quality plans. Adequate documentation is essential for contractors — as turnover can be high and several people may perform the same tasks. With power documentation and ISO certification, a company can be assured that procedures will be followed in accordance to specific requirements whether your employees are new or have worked for you in the same job for years.
The Certification Process
A third-party assessment is performed by an accredited ISO 9000 representative or independent registrar. The focus of the onsite review is to evaluate the company’s documented procedures to ensure compliance. The microscope is on the contractor’s systems and processes, not the end product. The ISO 9000 goal is not to tell you how to do your business, but to ensure that a consistent and well-documented process is in place.
The registration process can take on to two years to complete and costs for the independent registrar range from $12,0000 to $25,000. In addition, you will likely incur consulting costs. The certification is valid for three years and can be renewed. Certainly, the time and effort incurred during the initial certification process will not be repeated during the renewal stage. The more extensive a contractor’s existing documentation and quality assurance program, the easier the certification process.
IS ISO 9000 Really for Contractors?
Most contractors become ISO 9000 certified because certain project owners or customers require it. Contractors on the front end of the ISO 9000 certification process include those in the electrical or mechanical field. It may be a matter of time before most construction operations are certified. This may occur as a result of a pass through requirement, from those contractors that are certified, whereby non-certified, lower tier contractors will not be contracted by prime contractors.
Benefits to ISO 9000 Certification
Beyond meeting project owner or prime contractor requirements, certification can produce benefits that the contractor can enjoy. These include:
- · Higher perceived quality of customer service;
- · Improved customer satisfaction;
- · Competitive edge over non-certified competitors;
- · Increased market share;
- · Greater quality awareness;
- · Improved employee morale;
- · Better documentation.
Additionally, the processes for ISO certification will provide management with information regarding the operations and efficiencies of the organization they might otherwise take for granted.
These benefits to the contractor can actually increase the top line and reduce cost in certain areas as a result of the efficiencies created. The ultimate result is an improved bottom line.
The certification process can be an expensive task. However, savings over the long run resulting from eliminating unnecessary procedures, as well as using the certification process as a marketing tool can very quickly pay for the certification expenses.
About the Author: Timothy Cummins, CPA is with the public accounting firm of Aronson, Fetridge & Weigle, 6116 Executive Blvd., Fifth Floor, Rockville, MD 20852; Phone (301) 231-6200. Article copyright ã 1999, Aronson, Fetridge & Weigle, first published in the firm’s Fall 1999 issue of “The Contractor” newsletter. Reprinted by ConstructionRisk.com with permission.