Volume 7, Issue 4, April – 2022 International Journal of Innovative Science and Research Technology ISSN No:-2456-2165 IJISRT22APR469 www.ijisrt.com 275 The Effect of Total Quality Management Implementation on Quality Performance through Knowledge Management and Quality Culture as Mediating Variable at PT XYZ Zulfirman, Ahmad Hidayat Sutawijaya Master of Management Program, Mercu Buana University Jakarta, Indonesia Abstract:- The intense level of construction business competition demands that Construction Company has to improve their performance to compete with other construction companies. One of the performances that need to be improved is Quality Performance. PT XYZ as a foundation specialist contractor operating in Indonesia seeks to improve Quality Performance in order to face competition in the foundation construction business in Indonesia. The purpose of the study is to analyze the effect of Total Quality Management (TQM) on Quality Performance mediated by Knowledge Management and Quality Culture in PT XYZ. The research method used quantitative research method. This study used primary data and analysis data using Structural Equation Modeling–Partial Least Square (SEM-PLS). The employee population is 259 employees and sample of this study is 53 employees at different positions level of PT XYZ. The results showed that Total Quality Management, Knowledge Management, and Quality Culture had positive and significant effect on Quality Performance at PT XYZ. Knowledge Management and Quality Culture can mediate the effect of TQM on Quality Performance. Keywords:- TQM, Knowledge Management, Quality Culture, Quality Performance, Construction Industry. I. INTRODUCTION Currently, construction companies in Indonesia are still facing uncertainty in running their business. This is evidenced by the construction indicator data for the first quarter of 2020 to the first quarter of 2021 released by the Central Statistics Agency (BPS) of the Republic of Indonesia which states that construction companies are still facing problems in running their business. The level of intense competition is one of the main problems faced by construction companies beside the problem of decreasing demand for construction services and rising prices of building materials. Even in the first quarter of 2021, the level of intense competition is the first order of business problems with a very tight competition index value of 29.73. The level of intense business competition can block the growth opportunities of construction company so that efforts are needed to manage an efficient construction business while still consider to job specifications and construction product specifications that have been determined. In conditions of intense business competition, the bankruptcy of construction business can be due to the services offered are not competitive compared to the services offered by competitors, both in terms of price and completion time of construction projects. One source of inefficiency in construction costs is the occurance of Cost of Poor Quality (COPQ) due to defects or failures in the construction process. According to Shrouty & Tiwari (2017), COPQ is the total cost of failure, both internal failure costs and external failure costs. With COPQ, construction costs will increase and company profits will decrease. In addition to incurring additional costs, defects or failures in the construction process can also have an impact on the reputation of Construction Company in the eyes of their project owner. Defects or failures in the construction process can also cause delays in the completion time of construction work due to rework/repair time so that it can affect the satisfaction level of construction project owners. In an effort to create quality products and services, the application of management system that focuses on quality is a must. The implementation of Total Quality Management (TQM) is the answer to this need. The purpose of TQM is to provide a quality product and/or service to customers, which will, in turn, increase productivity and lower cost. With a higher quality product and lower price, competitive position in the marketplace will be enhanced (Besterfield et al., 2019). The application of TQM can increase customer satisfaction, reduce defects and production failures (Shoshan & Celik, 2018). PT XYZ as a specialist foundation contractor in Indonesia is experiencing inefficiency in construction costs due to the occurance of COPQ due to defects and failures in the construction process in the construction of drilled pier foundations and retaining walls in several high rise building projects. Defects and failures experienced in the construction process also often occur repeatedly and occur in previous projects. And even a failure of the construction process can occur repeatedly in the same project. With efforts to reduce defects or failures in the construction process, companies can reduce or even eliminate COPQ and can maximize profits and increase competitiveness. The results of the survey at PT XYZ concluded that defects and failures in the construction process were predominantly caused by inappropriate work methods/procedures, not