1. Cost of Quality 2016 Charlie Gragg
Software Engineering Applications Solutions, Inc

2. 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

3. 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

4. CoQ Definitions Cost of Good Quality Cost of Poor Quality
Cost of Quality

5. Measuring Cost of Quality

6. Cost or Benefit

7. Cost or Benefit

8. 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

9. 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

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

11. Prevention Risk Management Meetings Documentation Training Testing
Change Management
Reports

12. Appraisal
Reviews
Assessments
DHF Documentation
DHF Audits

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

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

15. 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

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

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

18. 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

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

20. Requirements

21. Design

22. Coding

23. Unit Testing

24. Verification

25. On Market

26. Requirement Change Cost

27. Cost of Quality For Time Period April - December

28. 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

29. 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

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