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Cost of Quality for Construction Projects: a Fresh Look

 

SERIES ARTICLE

Advances in Project Management Series

By Dr. Ron Basu

United Kingdom

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The Concept of COQ

The concept of ‘the cost of quality’ is not new. In fact Juran first discussed the cost of quality analysis as far back as 1951. However it is Feigenbaum who should be credited with the definition of the cost of quality when he identified the four cost categories in 1956. These can be classified as Prevention Costs, Appraisal Costs, Internal Failure Costs and External Failure Costs. Both concept and categories have been followed basically in the same format ever since.

Prevention Costs and Appraisal Costs are often defined using one of three terms: as the Cost of Control, the Cost of Conformance or the Cost of Good Quality. Regardless of the label used, this refers to the outlay of setting up and managing a quality management team with clearly defined processes. Similarly, Internal Failure Costs and External Failure Costs are also combined to be known as the Cost of Failure, the Cost of Non-conformance or the Cost of Poor Quality. These are the expenses of defects and reworks arising from poor quality management.

Thus the basic theory is quite simple; however, the challenge lies in defining and measuring each of the sub-components leading to the four major cost categories. As they say, the devil is in the detail. It is a bit like having a baby – easy and pleasing to conceive but rather more painful to deliver!

Traditional and Modern Views

The traditional view is that as the Cost of Control increases the Cost of Failure decreases until it reaches a point beyond which the total cost of quality increases. In other words, from this point the cost of improving quality becomes larger than the derived benefits. This is sometimes called the ‘optimum point’ of quality effort (see Figure 1)

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Editor’s note: The Advances in Project Management series includes articles by authors of program and project management books published by Gower in the UK. Dr Ron Basu is the author of the Gower book Managing Quality in Projects. Information about the Gower series can be found at http://www.gowerpublishing.com/advancesinprojectmanagement.

 


 

About the Author

pmwj33-Apr2015-Basu-PHOTO

Ron Basu, PhD

United Kingdom

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Dr Ron Basu
is Director of Performance Excellence Limited and a Visiting Fellow at Henley Business School, England. He is also a Visiting Professor at SKEMA Business School, France. He specialises in Operational Excellence and Supply Chain Management and has research interests in Performance Management and Project Management. Previously he held senior management roles in blue-chip companies like GSK, GlaxoWellcome and Unilever and led global initiatives and projects in Six Sigma, ERP/MRPII, Supply Chain Re-engineering and Total Productive Maintenance. Prior to this he worked as Management Consultant with A.T. Kearney.

He is the co-author of ‘Total Manufacturing Solutions’ , ‘Quality Beyond Six Sigma’, ‘Total Operations Solutions’ and ‘Total Supply Chain Management’ and the author of books with titles Measuring e-Business Performance , ‘Implementing Quality’ , ‘Implementing Six Sigma and Lean’ , ‘FIT SIGMA’ , ‘Managing Project Supply Chains’ and ‘Managing Project Quality’ . He has authored a number of papers in the operational excellence and project management fields. He is a regular presenter of papers in global seminars on Project Management, Six Sigma, Manufacturing, and Supply Chain topics.

After graduating in Manufacturing Engineering from UMIST, Manchester, Ron obtained an MSc in Operational Research from Strathclyde University, Glasgow. He has also completed a PhD at Reading University. He is a Fellow of the Institution of Mechanical Engineers, the Institute of Business Consultancy, the Association for Project Management, and the Chartered Quality Institute. He is also the winner of APM Project Management Award.

Ron lives with his wife Moira in Gerrards Cross, England and has two children, Bonnie and Robi. He can be contacted at [email protected]