(Quality discussed in the context of software)
When calculating the total production costs associated with the development of a new application or system, two components must be considered.
The first component consists of costs associated with producing the product “right the first time” or RTF costs. These costs include labor, materials, and tools associated with the actual development of the application. Cost of Quality is a term that is used to quantify the total cost of failure, appraisal, and prevention costs associated with the production of software.
The second component includes the additional costs associated with assuming that the product delivered meets the quality goals established for the product. This cost component is called the Cost of Quality, and includes all costs associated with the prevention, identification, and correction of product defects.
The three categories of costs associates with producing quality products are:
Prevention costs – Money required to prevent error and to do the job right the first time. These normally require up-front costs for benefits that will be derived months or even years later. This category includes money spent on establishing methods and procedures, training workers, acquiring tools, and planning for quality. Prevention money is all spent before the product is actually built.
Appraisal costs – Money spend to review completed products against requirements. Appraisal includes the cost of inspections, testing and reviews. This money is spent after the product is built before it is shipped to the user or move into production.
Failure costs – All costs associated with defective products that have been delivered to the user or moved into production. Some failure costs involve repairing products to make them meet requirements. Others are costs generated by failures such as the cost of operating faulty products, damage incurred by using them, and the costs associated with operating a Help Desk.
The cost of quality will vary form one organization to the next. The majority of costs associated with the Cost of Quality are associated with the identification and correction of defects. To minimize production costs, the project teams must not only focus on defect prevention but on the cost of overheads. The goal is to optimize the process to the extent that rework is eliminated and inspection is built into the production and also supporting processes. Any quality assurance group must identify the costs within the above three categories, quantify them and then develop programs to minimize the totality of these three costs. Applying the concepts of continuous testing (control systems) to the product process will reduce the cost of quality.