Category Archives: Quality Cost

Quality Cost

Quality Cost and Benefits

The Cost of Quality

Building quality steps in the schedule adds a certain amount of effort and cost to the project. However, these incremental costs will be rewarded with shorter timelines and reduced costs throughout the life cycle of the solution. Examples of the cost of quality include:

  • Deliverable reviews. There is a cost associated with the time of the people attending the reviews. This includes any preparation, the actual review time for all participants, and the resulting follow-up work from the review.
  • Creation of the Quality Management Plan. The time required to plan quality into the project and the solution, including identifying completeness and correctness criteria.
  • Client approval. The time and effort required for the client to review interim and final deliverables and formally approve them as being correct and complete.
  • Testing. Testing is a part of the project life cycle and it is done to ensure the solution meets requirements and quality standards.
  • Quality control standards. The time and cost associated with defining relevant standards utilized throughout the project and/or the organization.
  • Audits. Audits are opportunities to have an outside party review the processes used to create your deliverables. Third party auditors provide a fresh perspective and unbiased opinion on whether good work processes are defined and are being followed. However, there is no question the audit takes extra time and effort on the part of the project manager and the person doing the audit.
  • Checklists. These are usually used to validate that all steps of a process were completed or all the components of a deliverable are in place. There is a cost to create them and a cost to fill them out.
  • Quality Control and Quality Assurance Groups.  If your company has distinct groups that specialize in quality control or quality assurance, their costs are part of the overall costs of quality for the organization.
  • Gathering metrics. Metrics are normally gathered to show the status of a process and to correct or improve the process if necessary. Collecting metrics takes time and there is an associated cost.

The Benefits of Quality

The costs of quality must be weighed against the benefits of providing a quality solution. Whereas many of the costs of quality show up in the project, many of the benefits of quality show up over the entire life cycle of the solution. The benefits of quality include:

  • Increased client satisfaction. Fewer defects mean that the client will be more satisfied. Higher service quality will also make the client experience much more pleasant. If you are in a “for-profit” business, this will result in goodwill and may translate into additional sales, or higher margins on future products.
  • Higher productivity. Fixing errors and reworking previously-completed deliverables are a drain on productivity. In fact, they contribute to negative productivity. If the deliverables are produced with higher quality and less rework, the overall project productivity will go up.
  • Lower costs / shorter duration. Although there is an initial higher cost to a quality process, this is more than made up with less rework toward the end of the project. This will save time and cost on the project.
  • Higher project team morale. Team morale suffers if there are many errors uncovered during the project. People feel bad when errors are uncovered and it can be frustrating to have to correct errors repeatedly. Team morale will rise (or at least hold steady) if deliverables are created with fewer errors the first time.
  • Fewer errors / defects. Higher quality shows up over the life of the solution with fewer defects and errors. If you are producing a product for sale in the marketplace, higher quality means fewer returns, less warranty work, fewer repairs, etc. If you are creating a long-term solution, this means less support and maintenance problems over the life cycle.

One of the key points of formal quality management is that if you spend more time and cost on the QA and QC side of quality management, you will be able to save substantially on the internal and external failure costs. In fact, the savings for external failure costs can be substantial. In some case you might deliver a product that your organization will utilize for many years. If you build a poor quality product, the support costs (external failure costs) could be substantial. On the other hand, if you spend more time focusing on building a better quality product during the project, the cost of operating and supporting the product long-term may be dramatically reduced.