Cost of Quality 2016 Charlie Gragg Software Engineering Applications Solutions, Inc www.seas-inc.us

Why Cost of Quality (CoQ) Analyze Benefit(s) for Process Improvement Price Effort Budget Observed Analysis not Speculative Incremental Improvements High Benefit Low Cost Work Center Targeted

CoQ Overview Definitions Quality Activities Measuring CoQ Cost or Benefit Measuring CoQ Process Calculating CoQ for Requirement Change Actual CoQ Costs Using CoQ CoQ Metric Experience

CoQ Definitions Cost of Good Quality Cost of Poor Quality Cost of Quality

Measuring Cost of Quality

Cost or Benefit

Cost or Benefit

High Level Identify Activities Analyze Benefit for Process Improvement Price Effort Budget Identify Possible Improvement Areas Strategically Allocate Effort Evaluate Cost/Benefit Repeat the Process

Process Define Quality Activities Identify Activity Action Takers Determine Action Taker Cost Rates Calculate Average Activity Cost Record Quality Activities Per Period Calculate CoQ Per Period

Define Quality Activities Four Major Areas Prevention Appraisal Internal Failure External Failure

Prevention Risk Management Meetings Documentation Training Testing Change Management Reports

Appraisal Reviews Assessments DHF Documentation DHF Audits

Internal Failure Exception Reports Investigations CAPA’s Defect Correction (Pre-Market) Requirements Design Code Defect Correction Verification

External Failure Exception Reports Investigations CAPA’s Defect Correction On Market

Calculating Cost of Quality (CoQ) Define Quality Activities Identify Activity Action Takers Determine Action Taker Cost Rates Calculate Average Activity Cost Record Quality Activities Per Period Calculate CoQ Per Period

Requirement Change Actions Requirements Analysis Code Creations Unit Test Execution Code Reviews Conduct Engineering Test Software Change Request (SCR) Update

Action Takers Employee Category Clerical Exempt Grade 12 Indirect Labor Exempt Grade 14 Exempt Grade 16 Section Manager Department Manager Software Developers Vice President

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 Software Developers DV $90 Vice President VP $100

Activities-Requirement Correction (Found in The Following Phases) Requirements Design Coding Unit Testing Verification On Market

Requirements

Design

Coding

Unit Testing

Verification

On Market

Requirement Change Cost

Cost of Quality For Time Period April - December

Costs Due to Preventable Failures Internal Failures Exception Reports $816 Investigations $5,025 CAPA’s $8,335 Defect Correction in Requirements Phase $0 Defect Correction in Design Phase $450 Defect Correction in Code Phase $38,775 Defect Correction in Verification Phase $90,215 Defect Correction in Verification Regression Phase $288,063 Internal Failure Costs $431,679 External Failures $642 $2,085 $5,850 Defect Corrections (OM) $7,764 External Failure Costs $16,341

Using CoQ Measure Activity Costs Over Time Identify Likely Improvement Areas Facilitate Quality Improvements Incremental High Benefit Work Center Targeted Realize Cost Reductions Thru Process Improvement

CoQ Metric Experience Metrics That Worked Metrics That Did Not Work Metrics That Could Be Useful