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Cost of Quality
Charlie GraggCEOSoftware Engineering Applications Solutions, Inc.
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Agenda
Cost of Quality DefinitionsMeasuring COQUsing COQ
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Cost Of Quality Definitions
Cost of Good Quality The resources expended creating and
delivering a product or service free of defects not including any cost expended associated with re-conducting a process that resulted in a non-perfect product.
Cost Of Quality The total resources expended creating
and delivering a product or service free of defects.
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Good and TotalCost of Quality
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Measuring COQ
Define Quality Activities Identify Activity Action TakersDetermine Activity Action Taker Cost
RatesDetermine Activity DurationCalculate Activity CostRecord Quality Activities Per PeriodCalculate COQ Per Period (Phase,
Iteration, etc.)
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Define Quality Activities
Five Major Areas Prevention Appraisal Internal Failure External Failure Facilities
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Prevention
Risk ManagementMeetingsDocumentationTrainingTestingChange ManagementReports
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Appraisal
ReviewsAssessmentsDHF DocumentationDHF Audits
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Internal Failure
Exception Reports InvestigationsCAPA’sDefect Correction
Requirements Design Code Smoke Verification (Regression) Validation (Regression)
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External Failure
Exception Reports InvestigationsCAPA’sDefect Correction On Market
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Facilities
RentUtilities
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Quality Activities
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Activity Examples
The following 11 Slides provide examples of Activity Data.
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Action Takers
Employee Category
Clerical
Exempt Grade 12
Indirect Labor
Exempt Grade 14
Exempt Grade 16
Section Manager
Department Manager
S/W Developers
Vice Pres
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Action Taker Cost Rates
Employee Category Code Salary/Hour
Clerical CL $20
Exempt Grade 12 E12 $30
Indirect Labor IL $40
Exempt Grade 14 E14 $50
Exempt Grade 16 E16 $60
Section Manager E18 $70
Department Manager E20 $80
S/W Developers DV $90
Vice Pres VP $100
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Average Activity CostDefect Correction – Smoke Test
DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Unit Test Execution 1 0.25 1-DV $22.50
Code Reviews 3 0.25 3-DV $67.50
Conduct Engineering Test 1 0.5 1-IL $13.00
SCR Update 1 0.25 1-E-12 $5.00
Total Activity Cost$208.00
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Activities Per Period
Internal Failure Costs EventsException Reports 1Investigations 2CAPA's 1Defect Correction (Pre-Market) 56Internal Failure Costs Sub-Total
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COQ Calculation
Internal Failure Costs Events Event Cost Events CostException Reports 1 136.00$ 136.00$ Investigations 2 1,005.00$ 2,010.00$ CAPA's 1 1,895.00$ 1,895.00$ Defect Correction (Pre-Market) 56 652.50$ 36,540.00$ Internal Failure Costs Sub-Total 40,581.00$
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Total Activity Cost $15.00
Requirement Defect Correction (Requirements)
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Total Activity Cost $105.00
Requirement Defect Correction (Design)
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Unit Test Execution 1 0.25 1-DV $22.50
Code Reviews 3 0.25 3-DV $67.50
Total Activity Cost $195.00
Requirement Defect Correction(Coding)
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Unit Test Execution 1 0.25 1-DV $22.50
Code Reviews 3 0.25 3-DV $67.50
Conduct Engineering Test 1 0.5 1-IL $13.00
SCR Update 1 0.25 1-E-12 $5.00
Total Activity Cost $208.00
Requirement Defect Correction(Smoke Testing)
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub-activity cost
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Unit Test Execution 1 0.25 1-DV $22.50
Code Reviews 3 0.25 3-DV $67.50
Conduct Engineering Test 1 0.5 1-IL $13.00
Conduct Verification Test 1 0.5 1-E-14 $15.00
SCR Update 1 0.25 1-E-12 $5.00
Total Activity Cost $223.00
Requirement Defect Correction(Verification)
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DescriptionQty of
Employeesinvolved
Time (hour)
Employee'sCategory
Sub- activity cost
Root Cause Analysis 1 4 1-DV $360.00
Requirements Analysis 1 0.5 1-E-14 $15.00
Code Creations 1 1 1-DV $90.00
Unit Test Execution 1 0.25 1-DV $22.50
Code Reviews 3 0.25 3-DV $67.50
Conduct Engineering Test 1 0.5 1-IL $13.00
Conduct Verification Test 1 0.5 1-E-14 $15.00
SCR Update 1 0.25 1-E-12 $5.00
Validation 1 0.5 1-E-14 $15.00
C&R 1 8 1-E-14 $240.00
Total Activity Cost $843.00
Requirement Defect Correction(On-Market)
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Requirement Defect Correction Costs
Defect Cost
$-$200.00$400.00$600.00$800.00
$1,000.00
Requir
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ts
Desig
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Smok
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Verific
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On-M
arke
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When Found
Do
llars
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Using COQ
Measure Activity Costs Over Time Phase Iteration Project
Identify Likely Improvement AreasFacilitate Quality ImprovementsRealize Cost Reductions thru Process
Improvement
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Questions