Project Management Accounting: Budgeting, Tracking, and Reporting Costs and Profitability, Second Edition

Cost of Quality

An old adage about quality goes, “You can't inspect in quality.” In other words, no matter how much you inspect a product or a service, if you are not putting quality into the work being done, you can't inspect it in after the fact. You will wind up spending a lot of money either correcting the problem immediately or correcting it later. The longer you wait to correct, the more expensive the correction.

We define quality as fitness for use according to the original design of the product or service. As we said in The Essentials of Strategic Project Management, quality is the answer to “the two simple questions: ‘What is it?’ and ‘What does it do?'”

The first criterion of quality is whether the product or service is what it is supposed to be. During quality planning, you must take up the answer to this question and decide how you would know if the end deliverable is what it is supposed to be. On a technical project, this might involve a comparison with the detailed specification of a product or software. On a non-technical project—for example, a project to reengineer a business process, this would be a comparison with the proposed workflow of the new process.

The three costs associated with quality are prevention costs, correction costs, and warranty costs. As indicated, quality costs are a balance between preventing mistakes and discovering and correcting them.

Prevention

The best place to ensure quality in a product or service is at the time that the product or ...