The impact of Quality and Safety Management on Project Profitability

1 Reply

ISO45001 ISO9001 Quality safety
Project Management

Quality and safety are key topics in a number of projects. It already starts during the tender phase. Companies need to prove they have a functional QMS and a proper safety culture. Most companies prove this by showing their portfolio of certificates in combination with their “days without injury” metric. These are all general pieces of information and are used mainly to win the project. However, during the execution of the project, these topics should still get the priority, as they need to check if the company ended up making money at all.

Costs of Quality

Things always go wrong when you try to create something new and that is a good thing. However, it is crucial to register the issues that do occur during the project to be able to have a reality check on the margins. Whenever a supplier arrives late and your team needs to wait or when the wrong materials were delivered, always register the issue. Also, when a part needs to be repaired due to a mistake, register the hours. It is crucial to have this data and take actions to solve them, but never blame the employees because of it. Costs involved in mistakes can be significant and even eat away a lot of the margins. This can be crucial to success, especially in industries with low margins to begin with, like constructions. Hence, register the issues to be able to calculate the margins correctly.

Costs of Safety

Incidents have quite the impact on everybody involved. Even though the injury can be minor, it is always a wake up call of the risks involved in the job. Hence, issues with injuries or even sick days should also be registered. The company should learn from these risky situations and try to avoid them in the future. On the other end, the safety issue can have a big impact on the project. Deadlines might be missed due to the person not being there and morale might be impacted due to the injuries. Putting exact costs on these injuries isn’t easy, but you can always make an estimation.

Project Profitability

As noted above, quality and safety can have a significant impact on the margins of a project. This isn’t an exact science, but adding up all the costs and including some administration costs for handling the issues will give a great idea of the additional costs made to get the project done. These costs were never taken into consideration during the tender phase. Reducing these costs in future projects allows the company to potentially make a healthy profit. These profits can then be used, for example, to reduce the price of the project that gives the company a better position during the tender phase. Looked at it this way, it means that quality and safety becomes an even bigger competitive edge than just having the certificates on the wall.

1 comment

  1. Pingback: The Impact of Poor Quality on Organizations as shown by Boeing - Qooling

Leave a Reply

Your e-mail address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.