Friday, April 13, 2012

Cost of Quality

What is cost of quality?

Cost of quality is the cost of lack of quality or the cost of poor quality.

Cost of quality can be classified as

1. Prevention costs

2. Appraisal costs

3. Internal failure costs

4. External failure costs

If everyone can deliver products and services right the first time, there is no need to spend any money one cost of poor quality. In real world situation, this does not happen.

Have you seen a software project that has cost of quality as zero? Service industries such as Software are not as mature as manufacturing industries. Even in manufacturing industries, we don't see any product that has cost of quality as zero.

As the cost of quality exponentially increases from prevention to appraisal to internal failure to external failure, organizations that focus on reducing cost of (poor) quality spend more money on prevention to reduce the overall quality costs.

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