Cost of Poor Quality

Cost of Poor Quality (COPQ) is the sum of all costs that would disappear if the job is done right the first time. COPQ mostly remains hidden because normally it is not quantified and recorded in the existing accounting systems. Management fails to initiate timely corrective actions due to lack of knowledge about their hidden losses. It adversely affects the cost, scope and schedule of projects. These losses cannot be reduced unless they are measured or quantified. Many studies have been conducted on quantification of quality costs in the manufacturing and construction industries, which have been summarized in this study to provide a holistic perspective of all such research studies carried out in the last 40 years starting from 1975 to 2014. Based on the review of 42 pertinent literatures on COPQ it can be inferred that COPQ ranges from 16.91% to 26.90% of company’s revenue. This study has investigated on the ranges of hidden quality costs and the extent by which they can be reduced. The existing quality cost measurement systems are not standardized and yet to attain maturity. Therefore, there is a big room for development and implementation of quality cost measuring system especially in the construction industry. It has opened new avenues for future research in the quantification of quality costs.