L E S S O N 4 C O S T O F Q U A L I T Y


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L E S S O N 4 C O S T O F Q U A L I T Y

  1. 1. 4. COST OF QUALITY SQA, Paola Di Maio
  2. 2. <ul><li>Cost * Schedule = Features * Quality </li></ul><ul><li>The formula suggests that improving quality requires some combination of higher cost, longer schedule, or fewer features. Holding schedule and features constant, quality correlates with cost: </li></ul><ul><li>Quality = a constant * Cost </li></ul>
  3. 4. <ul><li>Conformance costs are the costs associated with attaining quality. These are the voluntary investment costs for things like defect prevention and early reviews. </li></ul><ul><li>Non-conformance costs are the costs of dealing with defects. This includes things like debugging and rework resulting from exposed defects. These are involuntary costs and a source of potential savings if defects can be reduced </li></ul>
  4. 5. QUALITY IS FREE <ul><li>Increasing the first category of costs (prevention) tends to reduce the second category (rework). When the amount saved by avoiding defects rises faster than the amount invested in order to avoid these defects, quality is free* . </li></ul>
  5. 6. <ul><li>Philip Crosby was so convinced of this dynamic that he titled one of his books Quality is Free : main point which was that the major costs of quality are the costs associated with poor quality. A s the voluntary costs of defect prevention are increased, the involuntary costs of poor quality (mainly rework) decrease by an even greater amount thus making quality free [Crosby]. --------------------------------------------- </li></ul>
  6. 7. <ul><li>Timing of Cost of Quality Expenses </li></ul>
  7. 8. TYPES OF COST Technical support, defect reporting and tracking, field updates, loss of future sales. Costs associated with fixing defects found after release. External Failure Repair, retesting, updating documentation. Costs associated with fixing defects found prior to release. Internal Failure Inspections, testing, audits, quality control. Costs associated with analyzing and testing the product to ensure it conforms to specifications. Appraisal Training, early reviews, quality planning, tools, process improvement initiatives. Costs associated with preventing defects. Prevention Example Definition Category
  8. 11. <ul><li>the cost of quality is both a model and metric for planning and monitoring process improvement initiatives. </li></ul><ul><li>Cost of quality estimates can be used to justify spending on quality improvement initiatives. Tracking conformance and non-conformance costs over a period of time provides a strong argument for investing in defect prevention and early reviews. </li></ul><ul><li>Candidate process improvement initiatives can be compared and prioritized on the basis of their return on investment (ROI) as measured by cost of quality estimates. The initiatives with the highest ROI can then be scheduled for implementation. </li></ul><ul><li>In a showdown between budget, schedule and product quality, quality usually loses because it's harder to quantify. Cost of quality analysis provides quantitative data on the value of quality which can be used to make informed decisions regarding tradeoffs between budget, schedule and quality. </li></ul><ul><li>Cost of quality estimates can be used to budget spending on quality improvement programs. The budget for quality improvement programs can be based on expected returns rather than a fixed percentage of development costs. </li></ul><ul><li>The cost of quality can be used to assess the performance of process improvement initiatives. </li></ul><ul><li>The cost of quality provides a single measure for comparing the success of diverse projects. </li></ul>
  9. 12. READING <ul><li>PLEASE READ CHAPTERS 1-10 </li></ul><ul><li>(overview of each chapter) </li></ul><ul><li>TIAN CHAP 17.4 regarding cost </li></ul>
  10. 13. LEARNING TARGETS <ul><li>understand cost in relation to quality </li></ul><ul><li>give definitions of main terminology </li></ul><ul><li>differentiate different types of costs </li></ul><ul><li>explain the meaning of 'quality is free' </li></ul>
  11. 14. ASSIGNMENT AND TEST <ul><li>1) Write a summary of this lesson </li></ul><ul><li>2) read the relevant materials and be ready to answer questions in class </li></ul>