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PANEL 2A Standards and Quality Certification: Technology Upgrading & Trading Tools. The National Standards and Quality System. Jean-Louis Racine The World Bank Cambridge, England April 19, 2007. Knowledge Economy Forum VI Technology Acquisition and Knowledge Networks. Outline.

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slide1

PANEL 2A

Standards and Quality Certification: Technology Upgrading & Trading Tools

the national standards and quality system

The National Standards and Quality System

Jean-Louis Racine

The World Bank

Cambridge, England

April 19, 2007

Knowledge Economy Forum VI

Technology Acquisition and Knowledge Networks

outline
Outline
  • An Introduction to Standards
  • The Standards Development Process
  • The Conformity Assessment System
  • Standards and International Integration
an introduction to standards1
An Introduction to Standards

Types of Technical Standards: by Function

M10 x 1.5-6g-S

an introduction to standards2
An Introduction to Standards

Types of Technical Standards: by Author

Formal standards: standards bodies

Market standards: industry

Sponsored standards

(e.g. Adobe ‘pdf’ file format)

Unsponsored standards

(e.g. computer keyboard layout)

an introduction to standards3
An Introduction to Standards

Types of Technical Standards: by Enforceability

Global supply chains

(e.g. ISO/TS 16949 for auto parts manufacturers)

an introduction to standards4
An Introduction to Standards

Benefits of standards

  • Diffuse technology
  • Allow for specialization and economies of scale
  • Facilitate trade (especially shared standards)
  • Diffuse market information
  • Diffuse information on safety, health and environmental regulations
  • Reduce transaction and search costs
  • Allow to harness network externalities
  • Increase competition by promoting interchangeability
the standards development process1
The Standards Development Process
  • At the national level:

Develops technical content

Technical committees

National standards body/ies

Coordinates standards program

Submits drafts for public review

-Votes on standards

-Approves standards

-Publishes standards

Comments on drafts

Propose new standards

Public (consumers, industry, government, non-profits)

the standards development process2
The Standards Development Process
  • At the international and regional level:
    • International standards organizations:
      • ISO, IEC, ITU
    • Regional standards organizations:
      • CEN, CENELEC for EU/EFTA
      • EuroAsian Interstate Council for CIS
the conformity assessment framework1
The Conformity Assessment Framework
  • Conformity Assessment
    • Certification, testing, inspection and calibration
    • Often conducted by an independent third-party
    • Typically involves a number of competing private certification bodies or laboratories
the conformity assessment framework2
The Conformity Assessment Framework

Worldwide total of ISO 9000 certificates

(ISO 9001 after 2004)

Source: ISO (2006)

the conformity assessment framework3
The Conformity Assessment Framework
  • Accreditation
    • Formal recognition that conformity assessment bodies are competent to carry out specific tasks
    • Accreditation is done against a specific standard
    • Typically sought on a voluntary basis

National accreditation body

accreditation

Certification bodies, inspection bodies, calibration laboratories, testing laboratories

conformity assessment

Firms and other organizations

the conformity assessment framework4
The Conformity Assessment Framework
  • Metrology
    • A National Metrology Institute
      • Establishes the national measurement system
      • Develops and diffuses measurement standards for basic units

Measuring length with an interferometer at the UK National Physical Laboratory

Source: UK NPL website

the conformity assessment framework5
The Conformity Assessment Framework
  • The diffusion of measurement units, precision and accuracy in the economy

National metrology institute

Calibration laboratories

Manufacturers, repairers, installers, researchers, universities

Retailers, traders, students

National and international consumers, public health and safety, natural environment

standards and international integration1
Standards and International Integration

Standards

National standards body

Calibrations

Regional and international standards & mutual recognition agreements

National metrology institute

Accreditation

National accreditation body

  • Testing labs
  • Calibration labs
  • Inspection bodies
  • Certification bodies

Conformity assessment

Firms

Exports compliant with regional and global standards

Standards

Quality, compatibility, safety, health

National consumers & the general public

slide20

Panel 2A April 19, 2007

Standards and Quality Certification:

Technology Upgrading& Trading Tools

Standards, Markets, and Regulation:

The Two Faces of Standards in the

Knowledge Economy

Paul Temple

Department of Economics

University of Surrey

KNOWLEDGE ECONOMY FORUM VI

Technology Acquisition and Knowledge Networks

Cambridge, England. April 17-19, 2007

slide21

The Two Faces of Standards

  • Standards and regulation: close relationship between
  • Standards and regulation
  • Standards as a source of ‘codified’ information about
  • technology. Today the standards catalogue of the
  • British Standards Institution contains around 30,000
  • documents describing technology – test methods,
  • reference materials etc. Many documents underpin
  • Markets by facilitating communication between firms
slide22

The Economics of Standards:

A Brief Review

  • 1980s growing interest in the role of standards in processes by
  • which technology is adopted by user population. This was
  • fuelled by awareness of critical role of standards in ICT
  • Subsequent work on the microeconomic functions of individual
  • standards common in literature (case studies/economic models)
  • Some work has also focused on the broader ‘macro’ economic
  • outcomes, i.e. in the development of markets and the ‘diffusion’
  • of technology
slide23

Macro studies of standards

  • first econometric analysis on the implications of the activity of
  • Standards bodies for broader ‘macro’ economic outcomes
  • conducted by Swann et al (1996). This work emphasised the
  • impact of standards ‘catalogues’ for trade.
  • national standards promoted ‘non-price’ competitiveness
  • of exports over and above the impact on productivity
  • also – contrary to common opinion - promoted imports
  • but what about productivity?
slide24

Based on earlier German research,

a study for the DTI in London suggested that....

Standards contributed to about 13% of the UK’s long run

productivity growth in the post-war period 1948-2002

slide25

Standards and Regulations:

The ‘new EU approach’

  • Since 1985 ‘national’ standards have increasingly
  • been replaced by harmonised European standards
  • ‘new approach’ directives allow products to be tested
  • for conformity against a harmonised standard developed
  • by the European standardization bodies –
  • CEN/CENELEC/ETSI – which are then marketed through
  • member bodies – AFNOR, BSI, DIN etc.
  • European standards focus on product specifications
  • Efficiency aspect: firms minimize costs to achieve conformity
slide26

The Internationalisation/Harmonisation of

European Standards Catalogues

slide28

Standards and Markets

  • the use of standards is not uniform across economies
  • manufacturing and in particular the engineering sectors
  • of economies are particularly intensive in the use of
  • standards
  • many standards assist market entry by providing the
  • Infrastructure through which product characteristics can be
  • measured - test methods, reference materials etc.
  • Many standards ‘link’ different sectors of the economy
  • particularly in respect of capital investment
slide29

Standards in UK

Manufacturing

Metal

Manufacture

Chemicals

Other

Manufacture

Metal

Products

Food, Drink,

Tobacco

Mechanical

Engineering

4919

Electrical

and

Instrument Engineering

5940

Textiles

Paper

Printing

Transport

Equipment

2419

<50

50-99

100-250

250+

slide30

Standards as a source of knowledge:

Research using the Community Innovation Survey (CIS)

  • The CIS has proved to be an important tool for the analysis
  • of both technological innovation (new to world) and the
  • diffusion of innovation (new to firm)
  • The survey can be used to assess the role of standards in
  • providing accessible ‘codified’ information about technology
  • and providing both information and constraining innovation
  • Research by Peter Swann using CIS3 established a positive
  • correlation between the information content of standards and
  • their potential role in constraining innovation
slide31

CIS4: importance of information

sources for innovation in UK

Professional

associations

Technical

standards

scientific

journals

Internal

55%

51%

53%

conferences

ENTERPRISE

26%

64%

Suppliers

government

research

68%

26%

69%

25%

universities

40%

62%

Clients

competitors

consultants

competitors

% rating each source at least of some importance (low//medium/high)

slide32

Standards and Innovation Outcomes

Relative Probabilities: for the range of innovation outcomes

covered in CIS3, for those enterprises that cite standards as

being relevant are 2-3 times a likely to rank an outcome as ‘high’

Relative probabilities computed as:

Pr (Innovation outcome = high | standards regarded as relevant)

Pr (Innovation outcome = high | standards regarded as of no relevance)

slide33

Some conclusions:

The paradox of standards

  • Research suggests standards promote trade and competition
  • Standards associated with regulation/bureaucracy/red-tape
  • Standards an important and low cost source of codified information on an international basis and hence not an immediate source of competitive advantage for firms.
  • However standards may be associated with human capital formation at the level of the firm
  • Relationship with innovation complex but innovators rate
  • standards as an innovation source more highly than non-innovators
slide34
Quality and Standards Matter:Implementing Effective Quality Systems to Support Trade and Competitiveness Initiatives

José-Luis Guasch

World Bank

and

University of California, San Diego

slide35
Quality and its effects:
    • On exports , FDI performance
    • Long term growth and productivity
  • Quality: long term growth
  • Quality and Standards as entry points to innovation
  • Quality and standards as instruments for mainstreaming of SMEs into supply chains
  • Government role: policies and programs to support quality and standards use and adoption
slide40

Source: The ISO Survey.

Numbers on top indicate ISO 9000 Certifications

slide44

ISO 9000 standards can bring benefits due to both internal and external factors to the organization (but they are costly).

Benefits due to internal factors include:

Lower costs and shorter cycle time due to more effective use of resources.

Higher quality processes, leading to fewer costly inspections, warranty costs and reworking.

Greater customer focus, resulting in flexible and fast responses to market opportunities.

Greater management involvement in improving quality performance and control over employee performance.

Better working conditions and motivation for employees.

Benefits due to external factors include:

Greater consumer confidence that products will meet their requirements or regulations, leading to an increase in customer base.

Greater consumer satisfaction, leading to repeat purchases.

Better image of the organization.

table 10 summary of studies evaluating the effect of certification on firm performance

Table 10: Summary of studies evaluating the effect of certification on firm performance

Notes: 0 = no effect, + = slight positive effect, ++ significant positive effect

slide46

Brazil

Average Coefficients (% Changes in TFP corresponding to a Unit Increase in the Explanatory Variable, ceteris paribus) for Selected Variables, by Groups of TFP Models and Firm’s Size (con’t)

slide49

The Innovation Cycle for SME’s

R&D

Business

Intelligence

Product

Development

+ Innovation

Technological Audits

Prototyping

Quality Product &

Systems Certification

Lab Tests Training Legislative Surveillance

from a survey of lac firms
From a Survey of LAC Firms
  • Firms that secured quality certification were 10 times more likely to innovate/tech adoption than those firms that did not, within five years of event
  • Firms which products complied with standards domestic or international were 5 times more likely to innovate than those that not within five years of event
quality and standards as instruments for mainstreaming of smes into supply chains
Quality and standards as instruments for mainstreaming of SMEs into supply chains
  • Firms that secured quality certification were 8 (12) times more likely to become suppliers of major firms (exporters) those firms that did not, within five years of event
  • Firms which products complied with standards domestic or international were 3 (5) times more likely to become suppliers of major firms (exporters) than those that not within five years of event
types of coordination mechanisms

Types of Coordination Mechanisms:

Market (de facto) standards are the result of industry self-regulation.

Market standards can be unsponsored if they do not involve any proprietary rights or identifiable author and are accessible to all market participants.

Sponsored market standards involve the proprietary rights to a set of technical specifications, where a specific design wins a position of market dominance.

A growing number of market standards have been established through industry consortia.

Formal (de jure) standards involve an explicit coordination and negotiation process prior to commitment to a particular standard.

Voluntary standards can be developed by interested groups through voluntary standards development organizations (SDOs).

Mandatory standards or technical regulations are elaborated by governmental authorities and their application is compulsory.

government role
Government Role
  • Policy setting
  • Designing the National Quality System
  • Regulatory oversight
  • Setting mandatory standards and enforcing compliance
  • Institutions
  • Providing services
  • Coordinating function
  • Providing information and business intelligence on standards and quality requirements in external markets (and domestic)
  • Seeking agreements (acreditation, recognition, reciprocity etc) with other countries (trade partners)
  • Financing programs to assist (some) firms and providing incentives
government role on financing and subsidies and on service provision
Government Role:On financing and subsidies and on service provision
  • Justified on account of market failures
    • Public good nature of information: diffusion
    • Lumpiness, scale effects of investments, geography: laboratories, accreditation, certification
    • Coordination failures
    • Externalities
    • Imperfect capital markets
  • Fiduciary responsabilities: compulsive testing
  • Rate of discount-Accelerating outcomes and impact
  • Demostration effects
slide55

INSURING COMPLIANCE WITH OVERSIGHT GLOBAL ORGANIZATIONS:The World Trade Organization (WTO) Technical Barriers to Trade (TBT) Agreement forbids the use of standards, conformity assessment procedures and technical regulations as non-tariff trade barriers. The TBT Agreement is an integral part of the WTO Agreement, which now counts 148 countries. The principles of the TBT Agreement include the following:

The avoidance of unnecessary obstacles to trade

Harmonization

Non-discrimination

Equivalence

Mutual recognition

Transparency

table 10 cont summary of studies evaluating the effect of certification on firm performance

Table 10: cont. Summary of studies evaluating the effect of certification on firm performance

Notes: 0 = no effect, + = slight positive effect, ++ significant positive effect

table 12 cont total iso 9000 implementation and certification costs

Table 12: cont. Total ISO 9000 implementation and certification costs

Note: firm sizes are defined as follows - a. small & medium= less than US$ 25m annual sales, medium-large = US$ 25m to 200m annual sales; b. small & medium = less than US$ 11m annual sales, medium = US$ 11m to 25 m annual sales; c. medium = US$ 25m annual sales; d. small = less than 50 employees, medium = 50-350 employees, large = less than 350 employees; e. no definition; f. small = 20-99 employees in industry and 10-49 employees in commerce, medium = 100-499 employees in industry and 50-249 employees in commerce, large = 500 or more employees in industry and 250 employees or more in commerce; h. small = less than US$ 18m turnover, medium = US$18m to 117m turnover, large = more than US$ 117m turnover.

Source: a. Plexus Corporation 1999 in Wilson 2002; b. Irwin Publishing 1996 in Schuurman 1997; c. Zuckerman 1994 in Stevenson 2001; d. ISO 1995 in Schuurman 1997; e. Ramos 1995; f. QSP 1999 in Santos 2002; g. Magd 2003; h. Turner 2000.

table 14 typical iso 9000 registration costs in latin america 2005

Table 14: Typical ISO 9000 registration costs in Latin America (2005)

Source: interviews with certification bodies operating in Argentina, Ecuador, Mexico and Peru.

slide61

European Commission

EUROPEAN STANDARDISATION IN SUPPORT OF

EUROPEAN POLICIES AND LEGISLATION

Norbert ANSELMANN

(norbert.anselmann@ec.europa.eu)

Head of Unit I3 “Standardisation”

Enterprise and Industry Directorate General

European Commission

slide62

European Commission

Directorate General Enterprises and Industry

  • CONTENT

* Political context

* Enhance and broaden the use of European standardisation in European policies and legislation :

= support of Better Regulation Policy

= support of industrial and enterprise policy

* European standardisation and the challenge of globalisation

slide63

European Commission

Directorate General Enterprises and Industry

  • POLITICAL CONTEXT

* Communication from the European Commission on

the role of European standardisation in the framework

of European policies and legislation

(COM(2004) 674 final)

* Endorsement through conclusions from the Council

of Ministers relating to European standardisation

of 21 December 2004

slide64

European Commission

Directorate General Enteprises and Industry

  • POLITICAL CONTEXT

* Action plan for European standardisation

www.ec.europa.eu/enterprise/standards_policy/index_en.htm

The regularly updated action plan reflects in operational terms

the implementation of the EU’s standardisation policy

slide65

European Commission

Directorate General Enterprises and Industry

ADVANTAGES OF STANDARDISATION

  • Following a DTI study (2005), 13% of UK post-war productivity growth can be attributed to standards-based dissemination of technology, management practice and other knowledge, as part of the innovation system.
slide66

European Commission

Directorate General Enterprises and Industry

ADVANTAGES OF STANDARDISATION

  • A DIN study (2000) revealed that the added value generated by standardisation is at least as important as the added value generated by patents.
slide67

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION

TO THE IMPLEMENTATION OF EU POLICIES

  • As identified in the Lisbon agenda, standardisation is an important tool for:
    • better regulation;
    • strengthening the competitiveness of European industry and contributing to the development of industrial projects.
slide68

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION

TO THE IMPLEMENTATION OF EU POLICIES

  • Vice-President Verheugen said “I expect standardisation to continue to be a strength. Standardisation is contributing to the reduction of barriers to trade and to increased competitiveness. European standards makers are a major contributor to better regulation with standards being produced in support of co- and self-regulation”.
slide69

European Commission

Directorate General Enterprises and Industry

ADVANTAGES OF STANDARDISATION

  • Where standardisation has been identified as an essential tool of an effective and forward-looking business strategy, the implementation of such strategy can be the source of business success.
slide70

European Commission

Directorate General Enterprises and Industry

  • SUPPORT OF BETTER REGULATION POLICY

The role of the EU legislator consists of legislating

on the mandatory protection requirements to ensure public interests.

It is the role of the independent European standards bodies CEN, CENELEC and ETSI to adopt voluntary standards which provide for more detailed solutions giving technical expression to the legal requirements.

slide71

European Commission

Directorate General Enterprises and Industry

  • SUPPORT OF BETTER REGULATION POLICY

* The New Approach methodology has

been applied since 1985 to more than 20 regulated sectors, including machinery, gas appliances, toys, electrical equipment, medical devices, pressure equipment, telecommunications equipment, measuring instruments and construction products.

slide72

European Commission

Directorate General Enterprises and Industry

  • ESSENTIAL REQUIREMENTS

* Products placed on the European

market must comply with the

‘essential requirements’ which address in

a generic way the aspects of protection of

health and safety of patients, users and

third persons.

slide73

European Commission

Directorate General Enterprises and Industry

  • HARMONISED STANDARDS

Harmonised European standards adopted by

the European standards bodies CEN,

CENELEC and ETSI give technical expression

to the essential requirements.

Harmonised standards remain voluntary.

However, it is easier for the manufacturer to

establish compliance with the Directives by

using standards.

slide74

European Commission

Directorate General Enterprises and Industry

  • SUPPORT OF BETTER REGULATION POLICY

* More than 4000 voluntary European standards

have been adopted in support of this

legislation.

* The EU is committed to make even broader

use of this regulatory concept in areas such

as environment protection, transport, and the use

of energy.

slide75

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION

TO THE IMPLEMENTATION OF EU POLICIES

BETTER REGULATION POLICY

* Extension towards other areas of EU legislation such as :

= air traffic management = interoperability of rail systems = eco-design of energy using products (EuP Directive)

= energy performance of buildings

* Application of the concept of general reference to voluntary standards in existing EU legislation

slide76

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

    • STRENGTHENING OF COMPETITIVENESS
  • European standardisation can contribute to enhance competitiveness of European industry, to facilitate the innovation of products and processes and to take benefit from the access to the European Internal Market.
slide77

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

  • Areas where standardisation can support the introduction of new technologies and processes:
  • = hydrogen technologies,
  • = space, GALILEO,
  • = environmental technologies (eg. Eco-design), rationale
  • use of energy, sustainable construction
  • = nano-technologies
slide78

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

* Support of public procurement:

= European Defence Handbook

= eAccessibility

slide79

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

* ICT standardisation work programme :

= eHealth

= e-Learning, e-Business, e-Government, e- Invoicing

slide80

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

* Standardisation in the service sector :

= customer call centres,

= facility management

= film archiving

slide81

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

* Normally the initiative for the development of voluntary European standards belongs to

the stakeholders themselves (industry, users, consumers, NGOs, …)

slide82

European Commission

Directorate General Enterprises and Industry

CONTRIBUTION OF EUROPEAN STANDARDISATION TO THE IMPLEMENTATION OF EU POLICIES

* In the context of needs to support European policies, the European Commission invites European standards bodies – through « mandates » - to set up and implement comprehensive standardisation programmes.

* « Mandates » are endorsed by the Member States through the 98/34 Committee

slide83

European Commission

Directorate General Enterprises and Industry

EUROPEAN STANDARDISATION AND

THE CHALLENGE OF GLOBALISATION

* EU is committed to the development and use

of international standards from ISO, IEC, ITU

* Level of transposition of international standards :

= 80% of CENELEC standards = 40 % of CEN standards

slide84

European Commission

Directorate General Enterprises and Industry

EUROPEAN STANDARDISATION AND

THE CHALLENGE OF GLOBALISATION

* In the interest of market access and facilitation of

trade, we invite our trade partners to make use of

international and European standards wherever

possible

slide85

European Commission

Directorate General Enterprises and Industry

EUROPEAN STANDARDISATION AND THE CHALLENGE OF GLOBALISATION

  • We welcome the further implementation of the international regulatory model adopted by UN/ECE which promotes the use of voluntary standards

WWW.UNECE.ORG/TRADE/TIPS/STDPOL

slide86

European Commission

Directorate General Enterprises and Industry

EUROPEAN STANDARDISATION AND

THE CHALLENGE OF GLOBALISATION

  • The European Commission contributes to the promotion of the visibility of European standardisation :
  • = appointment of a standardisation expert at the EU delegation in China
  • = standardisation is part of EU neighbourhood policy and of cooperation activities with third countries
slide87

European Commission

Directorate General Enterprises and Industry

  • CONCLUSIONS

* European Internal Market legislation making use of voluntary standards has provided for about 15 years a successful framework for the free circulation of goods and a high level of protection of health and safety.

slide88

European Commission

Directorate General Enterprises and Industry

  • CONCLUSIONS

* It has contributed to regulatory convergence and harmonisation of standards at global level.

slide89

European Commission

Directorate General Enterprises and Industry

  • CONCLUSIONS

* The use of voluntary standards in support of this legislation has proven to be a successful tool. Thanks to the availability of European and international standards, both manufacturers and regulators could rely on the most adequate technical solutions taking account of the state of the art and the pace of technogical evolution.

slide90

European Commission

Directorate General Enterprises and Industry

  • CONCLUSIONS

* The voluntary nature of harmonised

standards provides for flexible solutions which allow predictibility and legal security whilst supporting technological progress and

innovation.

* These advantages refer to manufacturers, conformity assessment bodies and public authorities.

slide91

IMPORTANT INTERNET SITES TO REMEMBER

http://ec.europa.eu/comm/enterprise/regulation/index.htm

DGEnterprise …..

Harmonised

standards

http://ec.europa.eu/comm/enterprise/newapproach/

standardization/harmstds/index.html

New

Approach ......... http://www.newapproach.org

www.cenorm.be

www.cenelec.org

www.etsi.org

slide92

European Commission

Directorate General Enterprises and Industry

THANK YOU FOR YOUR ATTENTION

slide93

Standards and Quality Certification:

Human Capital

Knowledge Economy Forum

Cambridge

17-19 April 2007

Chris Humphries CBE

Director General, City & Guilds

the vocational education system

English

Sector Skills

Development

Agency

Learners

Employers

Jobs

‘Own’

Define/feedback

license

Courses

Awarding Body

QualSpecs

Provider

Providers

Awarding Body

Sector Skills Councils

£’s

£’s

(Standards)

Syllabus

Qualifications &

Curriculum

Authority

Support

Funder

Learning &Skills Council

Authorise

funding

(Materials)

Assessment

Certification

QA

The vocational education system

Skills standards boards

Define

National Occupational Standards

Accredit

Validate

Regulator

quality assurance elements

Learners

Employers

Jobs

Learning

QualSpecs

Providers

Funding Agency

Planning & control

Learning quality

Teaching quality

Inspection

Quality assurance elements