Cost of Quality
Charlie GraggCEOSoftware Engineering Applications Solutions, Inc.
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
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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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