When planning for project and product quality for the PMP certification Exam, you want to be able to assess the cost of conforming to the quality requirements with the consequences of nonconformance. When you look at the cost of quality, you always want to keep in mind the cost-benefit analysis of the investment in quality.
Cost-benefit analysis. A financial analysis tool used to determine the benefits provided by a project against its costs.
Cost of quality
The two aspects to the cost of quality are
Cost of conformance: The cost of not allowing defects to occur. In other words, what are all the costs associated with having an acceptable end result?
Cost of nonconformance: The cost of failure.
Cost of quality. A method of determining the costs incurred to ensure quality. Prevention and appraisal costs (cost of conformance) include costs for quality planning, quality control, and quality assurance to ensure compliance to requirements. Failure costs (cost of nonconformance) include costs to rework products, components, or processes that are noncompliant, costs of warranty work and waste, and loss of reputation.
Cost of conformance
Costs of conformance are generally broken into two categories: prevention costs and appraisal costs.
Prevention costs are associated with not allowing defects to occur. Some common prevention costs are
Training: Can include training on equipment, training in a quality methodology, or any kind of skill or knowledge needed to perform a role effectively.
Robust processes and documentation: Having documented processes that reduce the variability of outcomes helps ensure quality outcomes. This can include policies, procedures, work instructions, checklists, technical manuals, and so forth.
Appropriate tools and equipment: Having the right tools. You can’t expect a valid schedule for a complex project if you’re working in a word processing program.
In addition, you need to have the time to do the job right the first time.
Appraisal costs are associated with measuring results. This includes costs such as
Testing: This can include software testing, a process walk-through, trying to break the product, and so on.
Inspections: Inspections include measuring, observing, and reviewing data.
Test equipment calibration: If you have test equipment, you need to make sure the test equipment is accurate and reliable.
Independent validation: Getting an outside opinion or consultation is a form of appraisal cost. In fact, in many industries, this is considered a best practice.
Quality assurance: Quality assurance comprises making sure that quality processes are being followed and are effective. It can include a quality audit.
Quality control: Quality control is taking measurements and comparing them with the quality requirements to ensure the quality requirements are being met.
Cost of nonconformance
The costs of nonconformance are basically the cost of failure: internal and external failure costs.
Internal failure is a problem that the project team finds. Internal costs consist of
Scrap material: This type of cost can include new parts as well as costs incurred to repair broken parts and keeping extra inventory on hand.
Rework: The work to repair broken or malfunctioning products.
Root cause analysis: Costs associated with discovering where and why the defect occurred as well as correcting the process that allowed it to occur.
External failure costs can get much higher. An external failure is not found by the project team. The defect is usually found by the customer. Although external failure costs are not typically absorbed by the project, they do affect the organization — sometimes, quite a bit. External failure costs include all the costs of internal failure plus the following:
Warranty: This includes the shipping to and from the customer, or replacement of the part of product. It has incremental costs of help desks or customer support phone lines. In some cases, this entails sending technicians to the customer site to repair or replace the malfunctioning product.
Lawsuits: In some circumstances, product failure will result in a lawsuit. At the very least, this entails the cost of legal representation. Of course, product recalls and class action suits can get extremely expensive.
Loss of business and goodwill: If you release products that are prone to breaking or that aren’t effective, it won’t be long before you lose customers.
Benchmarks
When planning your quality parameters, you might want to look at best in class or best outcomes from other projects, and use those as a target. This is benchmarking. The childcare center example could benchmark customer satisfaction ratings for the site.
Design of experiments
This technique is used to optimize a product or a process. It entails working with multiple variables to find the best possible combination. For the childcare center example, the kitchen crew might try to optimize a menu with a healthy treat for snack time by adjusting ingredient ratios, cooking time, and cooking temperature to find the best interaction of these variables.
Statistical sampling
To determine whether a group of deliverables meets the quality requirements, you don’t have to test every single one. In many circumstances, you can test a sample of them and determine the viability of the entire group based on the outcome of the sample. Say the Project Management Office Director wanted to determine how well all the project managers are following the change control policies.
If 15 project managers were managing 42 projects, the director could randomly select five change control logs from different project managers for different projects and infer the performance of the rest of the projects based on the results of those five change control logs.
When sampling, you can employ
Attribute sampling: Indicates whether the result conforms.
Variable sampling: Indicates the degree to which the result complies as rated on a continuous scale.