Cost of quality is a system, providing managers with cost details often hidden from them. Cost of quality includes both the cost of conformance and the cost of nonconformance to quality requirements. Cost of conformance consists of all the costs associated with maintaining acceptable quality. The cost of noncon-formance or the "cost of poor quality" is the total cost incurred as a result of failure to achieve quality. Historically, organizations looked at all costs of quality. Today, many excellent organizations are concentrating strictly on the noncon-formance costs. This highlights the waste, or losses, due to deviation from best target values. Once these costs are determined, they can be reduced or eliminated through application of the continuous improvement philosophy.
Typically, the cost of nonconformance includes items such as inspection, warranty, litigation, scrap and rejects, rework, testing, retesting, change orders, errors, lengthy cycle times, inventory, and customer complaints.
Cost of quality can often be traced to lack of early integration of system parts and functions. When the deliverable is planned in parts, with little interaction between project team members, quality usually suffers and the cost of inspection, testing, integration, and rework increases.
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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.