will come from the internal failure areas of rework, scrap, reengineering, redo, and so on. The additional time spent in up-front design and development will really pay off here. And, finally, the external costs will also come down as processes yield first-time quality on a regular basis. The improvements will continue to affect the company on a long-term basis in both improved quality and lower costs. Also, as project management matures, there should be further decreases in the cost of both maintaining quality and developing products.

Figure 20-6 shows that prevention costs can increase. This is not always the case. Prevention costs actually decrease without sacrificing the purpose of prevention if we can identify and eliminate the costs associated with waste, such as waste due to

• Rejects of completed work

• Work in progress

• Improperly instructed manpower

• Excess or noncontributing management (who still charge time to the project)

• Improperly assigned manpower

• Improper utilization of facilities

• Excessive expenses that do not necessarily contribute to the project (i.e., unnecessary meetings, travel, lodgings, etc.)

Another important aspect of Figure 20-6 is that 50 percent or more of the total cost of quality can be attributed to the internal and external failure costs. Complete elimination of failures may seem like an ideal solution but may not be cost-effective. As an example, see Figure 20-7. There are assumptions in the development of this figure. First, the cost of failure (i.e., nonconformance) approaches zero as defects become fewer and fewer. Second, the conformance costs of appraisal and prevention approach infinity as defects become fewer and fewer.

If the ultimate goal of a quality program is to continuously improve quality, then from a financial standpoint, quality improvement may not be advisable if the positive economic return becomes negative. Juran argued that as long as the per unit cost for prevention and appraisal were less expensive than nonconformance costs, resources should be assigned to prevention and appraisal. But when prevention and appraisal costs begin to increase the per unit cost of quality, then the policy should be to maintain quality. The implication here is that zero defects may not be a practical solution since the total cost of quality would not be minimized.

Figure 20-6 shows that the external failure costs are much lower than the internal failure costs. This indicates that most of the failures are being discovered before they leave the



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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