Cost of Quality

As in all things in project management, there should be a favorable ratio of benefits and cost to quality (Figure 4-1). This is usually referred to as prevention rather than cure.

Figure 4-1. Economics of quality.

Figure 4-1. Economics of quality.

The total cost of curing a problem once it has occurred is generally higher than the cost of preventing the problem in the first place. It is apparent that the potential savings between the cost of defects and the cost of prevention are great. Generally, many of the costs of defects are not recognized in an organized way to reflect their true cost. This is because when some of the costs of these defects are recognized, the project has been turned over to a maintenance and support function. The project team may have been dissolved, and the members may be working on other projects.

As in other projects, a cost-benefit analysis of the proposed methods of implementing quality should be done on each of the proposed methods. According to Edward Deming, ''Eighty-five percent of the costs of quality is the direct responsibility of management.''

The following is a listing of the considerations for these costs:

Costs of Prevention

• Additional planning

• Education and training of project team and stakeholders

• Inspection and testing of the internal and external deliverables of the project

• Improved designs for quality purposes

• Quality staff

• Quality audits

• Quality plan and execution

Costs of Defects

• Replacement of defective parts and inventory

• Repairs after the delivery of the product

• Loss of future business with the stakeholder

• Legal issues for nonconformance

• Liability for defect

• Risk to life and property

Deming's Fourteen Points

Edward Deming is probably best known for his fourteen points on quality (Figure 4-2). These guidelines were developed during Deming's work with Japanese industries and serve as a guideline for the practice of practical quality management.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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