Examining Cost of Quality for Projects
Cost of Quality refers to the total cost of effort needed to achieve an acceptable level of quality in the projects, product or services. These costs include all the work performed as a result of non-conformance to requirements. Some of these cost of quality include prevention costs, appraisal costs, and failure costs which combines to form cost of quality for a project.
The four type of costs associated with quality are prevention costs, appraisal costs, internal failure costs and external failure costs. Prevention costs and Appraisal costs are called conformance costs- the amount spent to avoid failures. Internal and external failure costs are called non-conformance costs – the amount spent to rectify errors.
#1 PREVENTION COSTS
These are upfront costs of programs or processes needed to meet customer requirements or design in quality. They are additional cost added to projects to prevent things from going wrong. Some examples include design plans, quality plans, employees and customer training, process evaluation and improvements, vendor surveys as well as other related preventive activities.
#2 APPRAISAL COSTS
These are costs associated with evaluating whether the programs or processes meet requirements. Some of these costs include inspection costs, testing, design reviews as well as destructive test loss.
#3 INTERNAL FAILURE COSTS
These are costs associated with making the product or service acceptable to the customer after it fails internal testing and before it is delivered to the customer. Some of these costs include the cost of scraps and rejects, design flaws, work or repair as well as defect evaluation.
#4 EXTERNAL FAILURE COSTS
These are costs incurred due to the rejection of the product or service by the customer. Some of these costs include product returns, liabilities, evaluation of customer complaints, maintenance costs, corrective actions as well as the loss of contract among others.
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