August 22, 1966 M20-2

CHAPTER 2. STATISTICAL QUALITY CONTROL

2.01 SQC APPLICATIONS

a\. SQC can be used for any operation in which:

\(1\) The work units can be specifically defined;

\(2\) A random sample of work units can be selected; and,

\(3\) The quality of each work unit can be definitely determined.

b\. Routine SQC procedures may be readily adapted for an operation which
meets the following criteria:

\(1\) Several employees perform the same or similar operations.

\(2\) Work is processed in high volumes and is repetitious in nature.

c\. Sound sampling practices, along with other SQC principles, should be
applied whenever sampling is used to estimate the quality level, make
comparisons, or determine compliance with performance standards. Where
unsound sampling practices are followed, the resulting estimates,
comparisons, and comparative evaluations maybe unreliable. Un­reliable
results are almost always uneconomical, even if obtained at low cost.

2.02 QUALITY MINDEDNESS

a\. SQC provides basic tools for quality control and improvement, but
the at­titude of employees toward quality is equally important. Quality
mindedness includes not only the employee\'s pride in workmanship, but
also the employee\'s realization that he has a personal stake in VA\'s
quality reputation. It means that the employees must have a com­plete
understanding of the reasons for the particular quality standards
established. It means that employees and management both recognize that
quality is as important as quan­tity. Neither cost nor quantity has
meaning without consideration of quality.

b\. Intermediate supervisors tend to concern themselves with those
problems that appear important to top management. Unless top management
shows continued interest in quality work by deed as well as word,
however, not much will happen in the balance of the organization.
Interest in quality has to be genuine. And it has to be borne out by
action, by periodic meetings to discuss quality problems, by
wholehearted effort to seek out and elim­inate or reduce the causes of
quality deficiencies and by a judiciously balanced and sustained
interest in quality improvement, including recognition of individual and
group quality achievements.

2.03 FUNCTIONS OF SQC

The functions of SQC as applied to operations of the Department of
Veterans

Benefits are;

a\. To determine the quality level of work units in process, as well as
overall services to veterans and finished end products, and to compare
the existing quality in these areas with specified requirements and
standards;

b\. To aid in determining the optimum quality obtainable under given
conditions and with available resources; and

c\. To assist in improving both quality and productivity and in reducing
costs, by influencing work processes, specified requirements, and
standards.

2.04 COST OF QUALITY\--SQC

a\. The cost of quality control includes the costs of all means by which
the fre­quency of defective work is kept down. Therefore, the cost of
quality control is justified provided this cost of preventing defects
does not rise to an amount greater than the losses which would have been
caused by the defects thus prevented.

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b\. SQC applies the old adage \"an ounce of prevention is worth a pound
of cure.\" The success of SQC in decreasing the quantity of defective
work is based upon the fact that to maintain the necessary standards of
excellence with minimum loss, the quality of the service or end product
must be known at all time s. Given this knowledge, remedies may be
devised and applied, thus preventing mistakes. The importance of
constant knowledge of quality cannot be overestimated, for it is the key
both to the maintenance of an accept­able quality level and to quality
improvement, which constitute the chief aim of a good con­trol system.

c\. These factors demonstrate that while there must be a constant
knowledge of quality, the avoidable as well as the unavoidable costs of
quality maintenance must be con­sidered and evaluated to determine how
much control data are needed and what constitutes an economical yet
satisfactory quality level for each item requiring control. The
avoid­able costs of quality are those costs which would disappear if all
errors and other defects disappeared; for example:

\(1\) Labor and materials on all work redone because of quality defects.

\(2\) Extra work operations added because of presence of quality defects
in outgoing completed work, such as conduct of special case reviews,
proc­essing of excess appeals and complaints, processing of additional
in­quiries and other correspondence, etc.

\(3\) Excess quality reviews and inspections, investigations of the
causes of quality defects, and conduct of excess Central Office quality
surveys, staff visits, internal audits, etc., because of the presence of
substand­ard quality conditions.

\(4\) Work delays and stoppages resulting from quality defects.

\(5\) Impaired public relations with veterans, beneficiaries, service
organi­zations, members of Congress and other outside persons and
organiza­tions.

2.05 DEVELOPING AN SQC PLAN

The following actions outline the basic steps involved to develop and
implement

an SQC plan:

a\. Decide what items require control; i.e., work units, services, end
products, functional areas, costs, etc. Avoid the mistake of controlling
certain items simply because they are easy to measure. Control only
those items which are most highly correlated with final quality.

b\. Decide what different things are to constitute \"errors\" or quality
defects. Prepare a classified list of such errors or other quality
defects for each item selected for control. In effect, the classified
errors should serve to define \"quality\" precisely and provide a common
base for quality measurements leading to improvement action.

c\. Fix an acceptable quality level, such as percentage in error or
other quality indicator, representing a standard for each item under
control. Provide for use of tenta­tive standards until adequate quality
data are accumulated and verified to discern the best quality levels
that operations are capable of producing with available resources.

d\. Prepare the necessary written instructions for implementing the SQC
plan, including:

\(1\) Instructions covering operation of the SQC plan at field stations.

\(2\) Sampling procedures; i.e., size, frequency, place, and method of
selection, sample makeup, checkpoints, etc.

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\(3\) Provision of necessary SQC worksheets and report forms for
recording and reporting quality information, including \"error cause\"
identifica­tion. and removal actions.

\(4\) Reporting instructions for field stations.

\(5\) Instructions covering validation reviews by intermediate and
higher levels of supervision at field stations to verify the reliability
of the quality data recorded and reported by first level supervisors.

\(6\) Instructions covering Central Office validation reviews, if
applicable.

2.06 SQC MEASUREMENTS AND STANDARDS

The quality characteristics of DVB operations are observed as
attributes; i.e.,

by classifying each item reviewed or inspected into one of two classes
as either conform­ing or not conforming to specified requirements.
Therefore, quality measurements and standards are expressed as the
\"percent of work units in error\" or the number of \"errors per hundred
work units\" according to the following criteria:

a\. Percent In Error. When conformance or nonconformance to only one
quality requirement is being measured, express the SQC measurement and
the standard as the \"percent of work units in error.\" For example, if
the item under control is the \"accuracy percent of work units in error
of filing material in the correct claims folder\" or the \"timeliness of
processing,\" only one quality requirement is measured. \"Percent in
error\" is also used when any single work unit with one or more defects
is classified simply as a \"unit in error\"; in many such situations,
however, a more meaningful and more accurate assessment of quality can
be obtained by observing the \"number of errors per hundred work
units,\" as described below.

b\. Errors Per Hundred Work Units. When conformance or nonconformance to
multiple quality requirements are measured, express the SQC measurement
and the stand­ard as the \"number of errors per hundred work units.\" For
example, if the item under control is \"substantive errors - rating,\"
conformance or nonconformance to several quality requirements are
measured. As indicated earlier, sometimes when multiple quality
requirements are involved the SQC measurement and the standard are
expressed as the \" percent of work units having one or more errors.\"
In this kind of a situation, however, different field stations may have
about the same percent of work units containing one or more errors with
significant differences in the number of errors per hundred work units.
For both quality improvement and evaluation purposes, it is better to
express the SQC measurement and the standard as the number of \"errors
per hundred work units.\"

2.07 TIMELINESS MEASURES AND STANDARDS

a: Whenever feasible, timeliness measures and standards will be
expressed in terms of the \"percent of work units processed within
specified time limits.\" In effect, the standard should establish an
allowed reasonable time for the necessary processing routines to
operate, from initial receipt to final disposition of the work unit. The
percent of work units which is not expected to be processed within the
specified time limit repre­sents an allowed \"tolerance\" level for the
normal proportion of exceptional and more dif­ficult work units which are
known to require more elapsed time to process.

b\. Ordinarily, timeliness standards will not be expressed in terms of
average processing times. For control, evaluation, and improvement
purposes, the average proc­essing time is too much affected by the
processing times for individual work units in the series which represent
extreme deviations from the average. It is more important to know the
proportion of work units processed -within the expected time (standard),
and when significant changes occur in this proportion. Management
attention should be directed to the work units which are taking longer
than the expected time to complete.

c\. Random samples of work units processed may be used to determine
conformance to standards representing the percent of workunits to be
processed within speci­fied time limits. The tables in appendixes D and
E, or other tables specially developed

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for this purpose, may be applied to test whether the random sample
percentage of work units not [processed within the specified
time]{.underline} limit provides a reliable basis for conclud­ing that in
the population of completed work units from which the sample was drawn,
the true percent of work units processed within the prescribed time
period does or does not conform to the established standard.

2.08 QUALITY LEVEL

For VA purposes, the quality level is the average quality of the work
units produced over a specified period of not less than 6 months
estimated on the basis of specified quality reviews. Normally, the
quality level will be computed on the basis of samples of work units
produced during the previous 12-month period. A shorter period of not
less than the previous 6-month period may be used whenever a significant
change has occurred in the quality level.

2.09 REVISING ACCEPTABLE QUALITY LEVEL OR STANDARD

a\. Whenever there is sustained evidence of an improved quality level
for an item under SQC, the AQL or standard should be revised downward to
conform to the new and better quality level. Control [charts are
most]{.underline} effective [when the standard approximates
the]{.underline} [actual process average]{.underline}. If the standard
error rate is significantly higher than the process average and the
standard error rate is used as the central line on the control chart,
many assignable causes of variation from the process average may not be
reflected by the con­trol chart.

b\. On the other hand, an upward revision of the AQL or standard
should-not be made merely on the basis of a poorer process average that
seems to have resulted from less attention to quality on the part of
employees or management. An upward revision should not be made unless
there is strong evidence that changes of a more or less per­manent nature
have taken place, such as tighter quality requirements, which make it
in­evitable that with the same or no more attention paid to quality than
before, the process average error rate will increase.

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