COST OF QUALITY cost of quality: the way is to quantify the total cost of quality-related efforts and deficiencies. Quality is subjective and depends on the role of the evaluator. Best practice is that quality is measured from the perspective of the end consumer of the product or service. Failing to measure from this perspective will result in a gap between what the customer expects and what is actually delivered. Best practices also indicate that any quality assessment is “point in time” or “dynamic” rather than static. What is perceived as quality will change over time with additional information, new choices, or more experience. Although the popular name for this concept is the cost of quality, it is actually the cost of poor quality. For the business analyst, the cost of designing and developing a new system, or modifying an existing system, is of paramount importance. The language of business is money. Therefore, the impact of quality decisions must be converted into financial terms for it to make sense. This helps fill gaps in understanding that can arise when there is no other common ground. • Product cost: the amount of resources (time and money) required to build the product once, correctly. In manufacturing environments, this represents the majority of total costs, often up to 95%. On the other hand, in information technology it is common for this to represent only 30% of the final cost of a product. The remaining funds spent represent the cost of (poor) quality. Some of these costs are aimed at preventing errors from being created, while others are aimed at detecting and correcting already constructed defects. • Product evaluation and inspection costs: the resources used to determine whether the product was built correctly...... middle of paper ...... and implement good standards and procedures, including including time spent training on how to use them effectively, time spent collecting and analyzing defect data, time spent on acquisition, installation and training of personnel using the appropriate tools. , and time spent learning effective communications and interpersonal skills. Because they prevent the creation of defects, prevention costs are the most effective in actually improving quality; but because these defects don't actually occur, it's often difficult to directly demonstrate ROI. • Total Product Cost: This is the sum of the four elements above. Juran, Crosby, and Perry demonstrated that a small percentage increase in prevention costs results in a much larger reduction in failure costs, thus producing a net reduction in total product costs, as shown in Figure 1-6 Cost of quality..