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Quality Problem Factors

Managerial/Stakeholder
 Lack of contractor supervision
 Poor relationship and partnering among project participant
 Reduced Subcontractor responsibility
 Inappropriate method of contractor selecting
 Poor quality procedure
 Lack of quality department
 Lack of auditing system
 Short term objectives
 Poor Training system
 Lack of process improvement
 Lack of Management commitment
 Lack of quality policy
 Low effective project management system
 Supplier impact
 Bureaucracy
Technical
 Low quality drawing and specification
 Design complexity
 Difficult data collection system
 Poor performance of quality tools and techniques
 Difficult application of quality system
Environment / Material / Equipment
 Project size
 Project complexity
 Material/Equipment specification
 Project Environment
 Low quality and poor availability of resources
Cultural / Political
 Lack of motivation
 Incompatible tendering procedures
 Low tendency to teamwork

The Cost of Good Quality (CoGQ)


1. Prevention Costs – These are costs incurred to avoid product failures.
These can include, but are not limited to, the following:
 Establishing Product Specifications / procedure development
 Quality Planning
 Preventive Maintenance
 Supplier Qualification assessments
 New Product Development and Testing
 Development of a Quality Management System (QMS)
 Proper Employee Training
2. Appraisal Costs –These are the costs of inspection needed to reduce the risk of sending
defective products to customers or costs incurred to maintain acceptable product quality
levels. Appraisal costs can include, but are not limited to, the following:
 Incoming Material Inspections
 Component testing
 Process Controls Analysis
 Check Fixtures / Quality control for product testing
 Quality Audits
 Supplier Assessments
 Cost of testing Equipment
3. Internal Failures: – These are the costs associated with defective products that are
uncovered prior to delivery to customers, Or costs associated with defects found before the
product or service reaches the customer. Internal Failures may include, but are not limited to, the
following examples:

 Excessive Scrap
 Product Re-work or part replacement
 Waste due to poorly designed processes
 Machine breakdown due to improper maintenance
 Costs associated with failure analysis like additional testing, specialized tests
 Profit lost on the defective product – sold in a lesser price or when checked unit wise an extra
amount spend on it.

4. External Failures – These are the costs associated with defective products that are uncovered
subsequent to delivery to customers or costs associated with defects found after the customer
receives the product or service. External Failures may include, but are not limited to, the following
examples:
 Liability
 Company’s Brand - reputation – Loss of business
 Service and Repair Costs
 Warranty Claims
 Customer Complaints
 Product or Material Returns
 Incorrect Sales Orders
 Incomplete BOMs (billing of Materials)
 Shipping Damage due to Inadequate Packaging

There are seven generic ways (in addition to the cost of quality) in which the quality outputs can be
measured:

1) Defects (work not to specification)

2) Rework (work requiring correction)

3) Scrap (work thrown away)

4) Lost items (work done again)

5) Backlogs (work behind schedule)

6) Late deliveries (work after agreed time)

7) Surplus items (work not required)

Examples of Poor Workmanship

 Installing products and materials incorrectly


 Incorrect water-to-cement ratio
 Improper plumbing
 Poor concrete compaction

Some Results of Poor Workmanship

 Corrosion
 Molding
 Plumbing issues
 Damaged electrical wiring
 Injuries and death
 Loss of water through evaporation
 Cracks in foundation and walls
 Leaking roofs
The cost of quality
July 22, 2018

The cost of quality is the accumulated cost of not creating a quality product. These costs can
include reworking a product, testing it, field service to make corrections after a product has
been installed, and replacing a faulty product. This aggregate cost is reported to management to
give them a basis for ensuring that processes always produce to customer expectations.

A customer perceives a product as having a high level of quality if it conforms to his


expectations. Thus, high quality is really just making sure that a product does what a customer
expects it to do. Based on this definition, quality is not having the highest possible standards for
creating the ultimate product. Thus, if you insist on creating a mahogany interior for a car’s
glove box when the customer only wants it to be big enough to store maps, then you have just
gone to considerable expense to create something that a customer does not define as being of
high quality.

This view of quality means that a company can eliminate any costs that customers have no
quality perceptions about. The cost reduction can impact a great many areas. For example, it
may be perfectly acceptable to use lower-quality or thinner materials, or to allow blemishes in
areas where customers cannot see them, or to allow production at a lower tolerance level than is
currently the case (which eliminates some rework costs).

There are two types of quality that a company should be concerned about, one of which
originates in the engineering department, while the other is the responsibility of the entire
organization. They are:

 Quality of design. This is the ability of a company to design a product that conforms to the
quality expectations of a customer. In other words, the quality that customers expect is designed
into the product. This type of quality requires a considerable amount of interpretation of what
engineers think customers want, and how these wishes are integrated into the final product
design. If quality is not designed into the basic structure of a product, there is no way to
improve the quality situation later, short of replacing the product with a new version.
 Quality of conformance. This is the ability of a company to produce a product that conforms to
the original product design. This type of quality is not just the responsibility of the production
department; the purchasing staff has to acquire the correct materials, the shipping department
must deliver it without damage, and the marketing department must communicate the attributes
of the product that matter most to customers.

There are several types of costs that are impacted by the quality of a product. They are:

 Preventive costs. These are costs incurred to avoid product failures. These costs include
production procedure development, staff training, product testing, preventive maintenance on
the machinery used to create products, and supplier qualification assessments.
 Appraisal costs. These are the costs of inspection needed to reduce the risk of sending defective
products to customers. These costs include supplier component testing, quality control product
testing, process analysis, and the cost of any testing equipment.
 Internal failure costs. These are the costs associated with defective products that are uncovered
prior to delivery to customers. These costs include rework of the defective products, additional
testing of the reworked products, scrap, purchasing replacement parts, and the lost profit on
products that must be sold as seconds.
 External failure costs. These are the costs associated with defective products that are uncovered
subsequent to delivery to customers. These costs include lost revenue from customers who will
not buy from the company again, the processing of returned goods, administering warranty
claims, field service costs, liability lawsuits, and possibly even a comprehensive product recall.