Profiting from Six Sigma

Six Sigma is a program for improving manufacturing quality developed by Motorola in the mid-1980s and adopted and expanded by General Electric (GE) in the 1990s. Today, Six Sigma is being used by a variety of other well-known manufacturing firms as well as all types and sizes of service firms. Like these other firms, the electrical contracting firm can benefit from Six Sigma principles and processes. This article will discuss Six Sigma and how it can be used to improve the performance of the electrical contracting firm’s operations, which, in turn, will reduce its costs and increase its profitability.

What is Six Sigma about?

Six Sigma is about processes and process improvement. The “work” performed by any business organization or unit within that business organization can be described as simply the transformation of inputs into outputs for the purpose of satisfying customer needs. This transformation of inputs to outputs adds value for the customer who is the ultimate user of the output. At first glance, you would say that this definition of “work” only applies to manufacturing firms that take raw materials and parts and transform them into finished products that are sold in the marketplace. However, this definition of “work” is as applicable to service firms as it is to manufacturing firms and electrical contracting firms are service firms.

If you look closely at an electrical contracting firm you will find that it is a collection of interrelated work processes. Each is made up of a group of related activities that takes inputs and processes them in such a way that the output or end result adds value for those that need it either inside or outside the electrical contracting firm. For example, electrical construction takes labor, materials, and equipment and transforms these inputs into work in place for the project owner. Similarly, the electrical contracting firm’s accounting department takes information about the quantities and costs of labor, materials, and equipment used on the job along with the amount of work completed and transforms these inputs into a weekly cost report for the project manager, weekly payroll for the electricians working on the project, and a monthly pay request for the owner.

Putting work in place at the project site is the electrical contracting firm’s primary work process that generates the profits that keeps the firm in business. However, accounting processes are equally important because without regular and accurate cost information, projects could not be effectively managed. Without payroll there would be no electricians to perform the work, and without accurate and timely billing there would be no revenue to keep the firm in business. There are a number of other back office processes such as human resources, procurement, warehousing and material handling, tool and equipment control that support the construction process and are equally important to the electrical contracting firm’s success as the accounting function. All of these processes need to be continually monitored to ensure that their outputs meet customer needs and expectations and that they efficiently transform inputs to outputs.

Customer focus

The term “quality” means many things to many people. However, the term “quality” in this article will simply mean the ability of a work process output to meet customer needs and expectations. Since the sole purpose of any work process is to provide an output that fulfills customer needs, the focus of any process analysis or improvement must be on the ability of that work process to effectively and efficiently fulfill stated and implied customer needs. Customer focus is the cornerstone of Six Sigma because customer needs and expectations must define the output of any work process.

There are two types of customers affected by the electrical contracting firm’s processes: external customers and internal customers. External customers are those individuals and organizations outside the electrical contracting firm that utilize work process output. The electrical contracting firm has a number of external customers that it deals with on a day-to-day basis. The most obvious external customers would be the general contractor and project owner that are directly impacted by the construction process. However, there are a number of other external customers that are impacted by the electrical contracting firm’s processes and these include the local IBEW and its member electricians, manufacturers and distributors, the local authority having jurisdiction, other on-site specialty contractors, among many other individuals and organizations.

Internal customers are employees within the electrical contracting firm itself that use the work of other employees as a basis for their work. The concept of internal customers is less obvious than external customers but very important because what happens internally affects the quality of the output delivered to external customers. Shoddy, incorrect, or incomplete internal work affects the ability of other employees to produce a quality product delivered to external customers. For example, poor record keeping in the field on a time and materials contract affects the accounting department’s ability to provide the owner with an accurate and timely invoice for work completed.

Essence of Six Sigma

Six Sigma is about measuring and understanding work process variation. Sigma is the Greek letter used in statistics to denote standard deviation about the mean or the expected value of a process. Work process variance is a function of standard deviation. The higher number of standard deviations or “sigmas” away from the mean that result in an acceptable process output, the more reliable the process. Six Sigma has its roots in statistical measurements and statistical process control (SPC), but you don’t need to be a statistician to apply and benefit from the philosophy and concepts that Six Sigma is based on.

The goal of Six Sigma is for a given work process to produce not more than 3.4 defects per million opportunities. A “defect” is simply defined as failing to meet customer expectations. Electrical contracting firms do not mass produce millions of individual parts like a manufacturing firm where a “defect” occurs when a part’s physical characteristics such as dimensions or weight fall outside a predetermined tolerance range. Instead, the electrical contracting firm’s work processes produce outcomes for customers and those outcomes vary. For each of its processes, the electrical contracting firm must understand the process customer’s tolerance for variance and where that variance results in customer dissatisfaction that is a “defect.”

As stated on GE’s Six Sigma web site, “customers feel the variance not the mean.” This is a very powerful statement and key to understanding and applying the precepts of Six Sigma. From the process perspective, if we produce outcomes that “on average” meet customer needs and expectations, we believe our process is working properly and there is no need for process improvement. However, we can get the same “average” outcome from our work process whether individual outcomes vary greatly or little around our “desired” outcome. If our outcomes vary greatly around the “desired” process outcome, customers will perceive the process output to be erratic and customer satisfaction will be low even though “on average” we are achieving the “desired” outcome. If this is the case, our process is out of control and we need to fix it.

Process measurement and improvement

Six Sigma demands that we manage with the facts. The only way we know if a process is in or out of control is by measuring its outcomes. To effectively measure process outcomes we first must understand the process and define what the outcome of the process should be from the standpoint of the customer. This will allow the electrical contracting firm to determine exactly what attributes of the process outcome determine customer satisfaction. We then need to use the attributes of the process outcome that determine customer satisfaction to determine the metrics that we are going to measure. Once the metrics have been established, data needs to be gathered and analyzed to determine if the process is in or out of control from the customer’s standpoint. If the process is out of control, then we need to determine why it is out of control and make necessary changes to improve it. EC


This article is the result of a research project entitled ISO 9000 Evaluation & Update that is being sponsored by the Electrical Contracting Foundation, Inc. The author would like to thank the Foundation for its continuing support.

GLAVINICH is Director of Architectural Engineering & Construction Programs in the Department of Civil, Environmental & Architectural Engineering at The University of Kansas. He can be reached at 785.864.3435 or

About the Author

Thomas E. Glavinich

Freelance Writer
Thomas E. Glavinich was an associate professor in the Department of Civil, Environmental and Architectural Engineering at the University of Kansas. His tenure as one of Electrical Contractor's most trusted and reliable source of industry research end...

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