‘Cost Of Quality’ Perceptions In Project Quality Management

Definitions of Quality

Quality theorists and policies define quality in different ways; specifically:

• The degree to which a set of inherent characteristics fulfils requirements (ISO)
• Conformance to requirements (Philip Crosby)
• Fitness for use (Joseph Juran)

The Project Management Institute (PMI) follows the International Standard Organization (ISO) definition; however, project managers can more readily relate to the description that defines quality as, ‘the degree to which the project fulfils requirements’.  

The Role of Project Quality Management

Project management involves applying knowledge and skills, as well as tools and techniques to project activities to achieve the project’s goals i.e. to fulfil the requirements for which it was undertaken.  It is only by understanding the ‘cost of quality’ during planning and by following stringent quality standards, that a project can achieve this.  The activities related to maintaining high-quality management of a project and its deliverables incur an associated cost. During planning, a cost-benefit analysis needs to be carried out to ensure that the cost of the quality activity does not exceed the expected benefit.To have a deeper understanding of PM, its roles and responsibilities, check Project Management professional certification.  

Conformance Costs

To ensure adherence to the quality policy, both proactive and reactive actions need to be undertaken during the lifetime of a project.  Proactive activities include quality assurance audits, training, documentation of processes, use of appropriate equipment and sufficient time to do planned work; whereas reactive activities consist of quality control inspections, measurements and testing. Losses related to destructive testing are also included here.

Non-Conformance Costs

Given, there is a failure to maintain desired quality during the execution of a project, the organization would then become liable for both internal and external failure costs.  Internal failure costs include rework associated with rectification of errors or costs related to scrapping of completed but unacceptable work.  External failure costs could consist of rectification or replacement of defective items under warranty schemes and exposure to liabilities.  Additionally, the reputation of the company would suffer, leading to a reduction of goodwill and ultimately loss of business.

Cost of Quality

Both costs of conformance as well as those of non-conformance form part of the ‘Cost of Quality’.  It is self-evident that the latter far outweighs the former; hence modern quality management theories emphasize planning, designing and building into a project, rather than on inspecting quality in the management or deliverables of a project. 
 
Benefits of meeting Quality Requirements

An understanding of the various components of the ‘Cost of Quality’ enables the project manager to primarily focus on conformance activities, in order to reduce the impact of non-conformance.  The recent trouble that Samsung experienced due to an exploding battery in the Note 7 mobile phone, is a perfect example of the negative impact on a company’s reputation and bottom line, of a failure in adhering to quality standards.  The benefits of meeting quality requirements include reduced rework and scrap, higher productivity, lower costs and increased customer satisfaction.

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