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Effectiveness of Quality Control Circle On Construction Company Performance

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Conference Paper · November 2018

DOI: 10.1109/ICETAS.2018.8629264

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 2018 IEEE 5th International Conference on Engineering Technologies
& Applied Sciences, 22- 23 Nov 2018, Bangkok Thailand

Effectiveness of Quality Control Circle On Construction

Company Performance In Indonesia*
Rahmat Nurcahyo, Ofila Irhamna, M. Dachyar and
Ramdha Dien
Department of Industrial Engineering
University of Indonesia
Depok Campus, Indonesia 16424
rahmat@eng.ui.ac.id ofila.irhamna@ui.ac.id
Abstract - Quality is a crucial aspect which has to be concerned TQM. They succeeded in identifying each integration between
by organization to win the competition and gain success, including the business system and the TQM system, including the top
a construction industry. Furthermore, poor implementation of management commitment, the involvement of human resources
quality management policy and limited participation from in the business process, and the main thing was top manage-
employee will negatively impact the management of the project and
ment knowledge towards TQM.
competitiveness of the company. Decresing not only the success
Lenka et al. [7] in 2010 confirmed that the practice of ser-
potential but also the survival po- tential of construction company
within the industry. Performance achievement be better if the vice company TQM is different from manufacturing compa-
company supports the implementation of integrated quality nies, this can be seen in table 1. Manufacturing organizations
management. Quality Con- trol Circle (QCC) has been found to be differ from service sector organizations in terms of processes,
a simple and productive technique of Total Quality Management operations, product features and customer relationships. Manu-
(TQM) and is proposed to be applicable in construction facturing organizations focus on production processes and
companies. This study aims to determine the effect of quality quality, while service organizations focus more on customer
control group objectives on the performance of construction satisfaction. Factors such as social responsibility and the adop-
companies in Indonesia. Regression was conducted to analyze the tion of environmental management systems such as ISO certifi-
effect of the relationship between the objectives of the quality cates are more common in manufacturing organizations. Ser-
control group on the performance of the construction company
vice organizations use aspects of process control from TQM
with software SPSS 22. Based on the data analysis obtained from
practices, such as information and process analysis and control
the survey, it was concluded that the objective of the quality
control circle influenced the performance variable of construction using statistics. They convey more customer ratings regarding
companies in Indonesia by 61%. service quality. Meanwhile, manufacturing companies empha-
Index Terms: construction industry, quality control circle, size more on the relationship between suppliers and contrac-
performance, regression analysis. tors. In manufacturing companies, training is the most im-
portant thing, especially training in advanced statistical meth-
I. INTRODUCTION ods. While the training services company focuses on communi-
cation and personal skills according to Lenka et al. [7].
Customer orientation is the basis of the TQM system. This
The last dimension of TQM practice in the service sector
means the company creates products and services according to
identified by Jitpaiboon et al. [8] in 2007 was top management
customer needs and requests. Customer needs must be fully
commitment and leadership, Benchmarking, customer focus
integrated into the design and development of products and
and satisfaction, service marketing, social responsibility, em-
services according to Goldmand et al. [1]. In fact, all business
ployee satisfaction human resource management, service cul-
activities in the company began to research and identify the
ture , continuous improvement, and information analysis. Sara-
needs and desires of consumers and ended by giving the value
vanan and Rao argue that the TQM system in service organiza-
of products and services that match their expectations, Johnson
tions may have little difference from the TQM system in manu-
et al. [2]. In addition, the most important is the involvement of
facturing organizations.
all stakeholders in the production process of goods and ser-
vices, so that the quality of products/services produced can TABLE I
meet or even exceed customer needs, Topalovic et al. [3]. TQM PRACTICES IN MANUFACTURE AND SERVICE ORGANIZATIONS
The company applies TQM to improve competitiveness, TQM Practices in Service Organ- TQM Practices in Manufacture
increase financial benefits, and become more innovative Bon et izations Organizations
al. [4]. The advantage of implementing TQM can be seen from
Focus on HR Focus on technology/products
the improvement of company performance according to Abdul-
lah et al. [5]. Soltani et al. [6] in 2008 analyzed the literature to Focus on top management commit- Focus on top management commitment
identify the elements that influence the implementation of

*
This work is supported by Hibah PITTA 2018 Universitas Indonesia, contract number 2514/UN2.R3.1/HKP.05.00/2018

978-1-5386-7966-1/18/$31.00 ©2018 IEEE


ment and visionary leadership and visionary leadership
Continuous improvement Continuous improvement
The emphasis is on interpersonal In recruitment, the emphasis is on
relationships and communication technical skills
skills
The control process is statistically Statistical process control is universally
not in accordance with the service determined
sector
Check customer dissatisfaction Elimination of defective products
Quality measurement based on the Quality measurements are carried out
level of customer satisfaction statistically
Physical evidence has an impact on Physical proof cannot be applied
service quality
Source: Lenka et al.
The basic principles behind quality control circle are to
support for improvement and development of organization, to
exercise human capability fully and examine hidden capabilities,
to respect humanity and build a worthwhile to live in a jubilant
positive environment [9]. The benefits from quality control
circle on organization and employees have become significant
to improve the company’s capability to maintain
competitiveness and achieve conformity [10]. Quality control
circle is way of retaining the workforce and improving
employee morale, motivation and desire to work for the
organization and also increases the employee satisfaction level
so employer can gain commitment and trust from the employ-
ees [11].
Quality can be seen as a series of coordinated activities to
direct and control the construction company so the
performance effectiveness and efficiency can be improved [12].
Although the ideas of performance measurement are developed
to improve the performance of a business, it can sometimes
delude management. If the quality is not appropriately planned
and executed for any business, it can be worthless and some-
times become a boomerang for the business [13]. A positive
relationship between three measures of workplace performance
are about labor productivity, financial performance and service
quality [14].
The construction company will have a well-plan and or-
ganize management system that upgrades its quality of con-
struction products and their organization processes for contin-
uous improvement and consistently meet the customer’s re-
quirements [15]. Quality implementation is crucial in the
construction industry, management must be committed and
quality culture must be created to nurture a positive attitude
[16]. Quality control circle is a tool which gives a several bene-
fits like product quality improvement, organizational perfor-
mance improvement and improvement in the relation-
ship within the organization which motivate employees and
improve team work among them [17]. Though quality control
circle research are a few decades old and have been regularly
conducted in many countries and industries, quality control
2018 IEEE 5th International Conference on Engineering Technologies
& Applied Sciences, 22- 23 Nov 2018, Bangkok Thailand
circle is not only limited to manufacturing company but also for
any organizations where there is a scope for group based solu-
tion of work related problems [18]. In order to bridge this gap,
this research has been conducted. It is expected that this research
will widen the existing knowledge base of the quality control
circle as well as construction literature.
II. LITERATUR REVIEW
Every company is concerned with the quality of its prod-
uct. It is crucial that quantity requirements be satisfied and
production meet the schedule, it is equally crucial that the
product meet requested specifications, because customer's sat-
isfaction is derived from quality goods and services. Stiff
rivalry at regional and global levels and consumers awareness
require production of quality goods and services for the growth
and survival of the company. Quality and productivity are the
keys to bring prosperity into the company and improve the
quality of work life.
A. Quality Control Circle
The concept of quality control circle was originated in Ja-
pan and it was followed by other countries for the development
of their human resources. The quality control circle is a human
resource development tool which found to be effective for
increasing the level of performance of workers in various sec-
tors. A number of research have been conducted on various
aspects of total quality management, employee performance
and quality circles by research organizations, individual re-
search scholars and other agencies [19,20, 21].
A quality control circle is volunteer group consist of mem-
bers who discuss about workplace and service improvements and
produce proposal to their management about ideas [22]. The
concept of Quality Control Circle is mainly based upon
appreciation of value of the worker as a human being, as
someone who want to improve the job, his experience, wis- dom,
attitude, intelligence and feelings [23].
Quality control circle is a formal, institutionalized mecha-
nism for participative and productive problem solving interac-
tion among the employees within the organization [24]. The
objectives of the Quality Circle are [25]:
1) To motivate the employees

2) Encourage for team work

3) To improve the quality and productivity

4) To improve the communication in the organization

5) To improve the quality product and service

6) To build a cheerful and meaningful environment

7) To improve a positive mindset and a sense of in-
volvement in the decision making processes

8) To contribute towards the development and improve-
ment of the organization

9) To satisfy the human needs

The successful impact of Quality Circle towards
organization and employees depends on [26]:

1) The circle philosophy has been evolved to fit into the
company's style in an organization.
2) The members of the Quality Circle work and integrat-
ed together.
Quality Circle usually under the supervision of a team
leader who has the ability to identify, analyze the work-related
problems, find the solutions and recommend the solutions to
management in order to motivate the workers and improve the
performance of the organization [27].
B. Performance
A performance measurement framework is a complete set
of performance measures and indicators derived in a consistent
manner according to a forward set of rules or guidelines [28].
The development of performance measurement help the
frameworks become more comprehensive and practicable. The
literature review about the previous research of performance
measurement in construcion from 1998 to 2009 concluded that
research in this area has focused on three levels, including:
1) Stakeholder level; 
 construction professionals, business efficiency and government
2) Organizational level; and 
 needs to be done immediately, nationwide will face a serious
3) Project level. 
 threat from foreign competitors. It takes a concerted effort so
The primary performance measurement frameworks ap-
plied in the construction company are as follows [29]:
1) EFQM excellence model; 
 velop and have high global competitiveness.
2) BSC model; and 

3) KPIs model. 
 Regression analysis is one of the most commonly used
There are also several frameworks for performance meas-
urement available within the construction industry, however,
these three model are the most commonly used models for per-
formance measurement in construction industry [30]. The
primary objectives of performance measurement is to measure
and improve the efficiency and the quality of the performance,
and also to identify opportunities for progressive performance
improvements [31]. Performance measurement must be fully
attuned to economic and ethical objectives. There are two cat-
egories for analysis [32]:
1) Effectiveness of a selected strategy such as extent of tar-
geted market capture, financial performance, and real unit
cost. 

2) Determinants of competitive success, for instances em-
bracing quality, productivity, flexibility, social contribution
and innovation.
The science of performance measurement in construction
industry must be understood: it is the first step of a continuous
performance improvement cycle. Performance measurement
must be proceeded by result evaluation, comparison, designing
for improvement, and then implementation of strategy within
specialists who are responsible for commitment and actions.
Based on literatures, the three basic and most crucial
performance indicators in construction projects are time, cost
and quality [33].
In a quality driven construction company, the following
are the main reasons why performance measurement is needed
and why it plays an important role in quality and productivity
2018 IEEE 5th International Conference on Engineering Technologies
& Applied Sciences, 22- 23 Nov 2018, Bangkok Thailand
improvement. Performance measurement helps [32]:
1) Ensure that client requirements have been met (and if not,
why not);
2) Enable establishment of achievable business objectives and
monitors compliance thereto;
3) Provide standards for business comparisons;
4) Provide transparency and a scoreboard for employee to
monitor their own performance;
5) Identify quality problems and those requiring priority at-
tention;
C. Construction Company
The construction company is one of the businesses in the
economic sector that is associated with a planning or imple-
mentation and supervision of a construction activity to estab-
lish a building or other physical form. Based on the observa-
tions made, the national construction companies are not ready
to face competition in globalization and free trade, the im-
provement of industrial structure, the ability of the construction
business management, the individual capacity of workers and
that the structure of this industry can become more efficient
and effective in making the national construction industry de-
D. Regression
statistical method to analyze the relationship between two or
more variables. Regression analysis is a method of analysis that
can be used to analyze data and draw meaningful conclusions
about the dependency relationship of variables to other varia-
bles. The relationship obtained is generally expressed in terms
of mathematical equations which express the relationship be-
tween independent variables (independent variable) and de-
pendent variable (dependent variable) in the form of simple
equations.
III. METHODOLOGY AND RESULT
A. Research Instrument
The research instrument is a questionnaire survey, pre-
pared to obtain information from respondents. This data is used
as an effective tool to qualify for validity and reliability. The
questionnaire was sent to respondents using e-mail with the
target population are 100 construction company in Indonesia.
Research variable is the attribute of the person, object or
activity that has certain variations set by the researcher to be
studied and then draw its conclusions. There is a relationship
between one variable to other variables then the various varia-
bles in the study can be distinguished as follows:
a. Independent Variable (X)
Variables that cause change or affect the dependent varia-
ble. In this study, the independent variable is a Quality
control circle (X)
TABLE II
 2018 IEEE 5th International Conference on Engineering Technologies
& Applied Sciences, 22- 23 Nov 2018, Bangkok Thailand

INDEPENDENT VARIABLES QUALITY CONTROL CIRCLE (X) validity and reliability, if the measuring instrument is stable
Quality Control Circle (X) and dependability and predictability so that the gauge can be
X1 Reduction Cost consistent over time.
X2 Motivate
X3 Teamwork TABLE V
X4 Quality RELIABILITY TEST RESULT
X5 Communication Model Summary
X6 Improve the quality & service Std. Error
X7 Build a happy and meaningful Adjusted R
Model R R of the
X8 Attitude Square
Square Estimate
X9 Contribute to develop
X10 Satisfy
1 ,786a 0,618 0,575 1,67108

b. Dependent Variable (Y) From the results of the reliability test obtained value Alpha
Variables that are affected by independent variables. In Cronbach = 0.758> 0.196 (table r) then the questionnaire that
this study, the dependent variable is company perfor- has been tested has proven its reliability. Alpha Cronbach =
mance (Y). is located between 0.8 to 1.00 or greater (>) of 0.6 so the re-
liability level is very reliable.
TABLE III
DEPENDENT VARIABLES QUALITY CONTROL CIRCLE (Y) IV. DISCUSSSION
Performance in Construction
Industry (Y) A. Data Analysis
Y1 Price From the results of the f test, all variables of the quality
Y2 Quality control circle can simultaneously affect the performance of the
Y3 Time construction company. Analysis of the relationship between
Y3 Safety variables using the coefficient of determination which aims to
see the relationship of the quality control group variable (X) to
After the filled questionnaire received, we calculated using the performance in the construction industry (Y) can be per-
SPSS 22 software and regression to analyze the collaborative fect or not indicated in the independent variable (X) will be
effect of the quality control circle on company performance. followed by the dependent variable (performance) on the pro-
portion same. This test by looking at the value of R square
B. Validity Test (R2), the coefficient of determination is 0 to 1.
Validity test is used to find out how accurate the measuring
instrument performs its measuring function. Validity testing is TABLE VI
done by correlating between the construct score with the total QUALITY CONTROL CIRCLE ON PERFORMANCE TEST
score. Cronbach's Alpha
Cronbach's Based on Stand- N of
TABLE IV VALIDITY Alpha ardized Items
TEST RESULT Items
Corrected Cronbach's Al-
Model Item-Total pha if Item De- .758 .847 11
Correlation leted
y 0,673 0,819 Based on the data processing in the table obtained for the
x1 0,624 0,727
quality control group on safety R square value of 0.61. Thus all
x2 0,535 0,736
x3 0,562 0,736 the variables of the effectiveness of the quality control group
x4 0,435 0,743 simultaneously are very influential on the achievement of the
x5 0,409 0,742 performance of construction companies (Y), by 61%.
x6 0,482 0,738
x7 0,45 0,74
V. CONCLUSION
x8 0,609 0,732 The performance measurement at the construction compa-
x9 0,535 0,733
ny has expanded to some level, there are measurements on
x10 0,487 0,736
employee, company performance, and construction project
Referring to the corrected item total correlation of all performance. The novelty of this research is by combining the
data declared valid, seen from r> r table (0.196). So the whole factors of the construction company's performance that is the
question can be continued for reliability test. cost efficiency factor that has been issued to increase revenue,
the timeliness of the company in managing several projects, the
C. Reliability Test quality of the company in carrying out procedures according to
Reliability test is used to determine the accuracy of the SOP (Standard Operating Company) and the implementation
measuring instrument. The measuring instrument has a high of Health and Safety Work) to support zero accident on any

project produced by the construction company. In this research
concluded that these factors can influence and interrelated to
improve the performance of construction companies with good
criteria and there is a relationship of 61% between variables.
ACKNOWLEDGMENT
Supported by Hibah PITTA 2018 Universitas Indonesia,
contract number 2514/UN2.R3.1/HKP.05.00/2018
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