Post on 12-Jan-2017
Cost of Poor Quality
Outline
DefineCost of Poor
Quality
Where we stand?
Benefits Way Forward
Define
• Joseph Juran - first discussed the cost of quality analysis in 1951
Define
PREVENTION
APPRAISAL
INTERNAL FAILURE
EXTERNAL FAILURE
Define
Focus on Cost of Poor Quality
Benefits of COPQ
Direct contribution in profit
Identify quality improvement candidates;
• Identify all failures costs
• Detect root causes and eliminate them
Promotes the effective use of resources – Hidden
factory concept
Measure of the success of projects
Provides incentives for doing the job right first time.
Benefits of COPQ
q
Q
• In 2007, U.S. construction industry expenditures were $1.246 trillion and out of these, $62 billion (5%) were wasted on the direct cost of rework alone.
(Bureau of Economic Analysis, 2009)
• Annual turnover of the Australian construction industry was estimated at $A32 billion per annum whereas the cost of rework was approximated at $A4 billion (12.5%) per annum.
(Construction Expert Group, 1993)
• An average contractor is estimated to spend between 5-10 percent of the project cost on rework.
(Construction Industry Development Board (CIBD))
Benefits of COPQ
Initiate accurate measurement of
Cost of Poor Quality
Way Forward
But how??
Senior Management support is critical for implementing Senior Management support is critical for implementing COPQ programCOPQ program
Way Forward
All quality improvement occurs on a project-by-project All quality improvement occurs on a project-by-project basisbasis
- Juran- Juran
Determine level of detail for COPQ measurementDetermine level of detail for COPQ measurementStart with Internal and External Failure costs Start with Internal and External Failure costs onlyonly
Select any pilot project for measurement of COPQSelect any pilot project for measurement of COPQ
Selection of projectSelection of project
Formation of COPQ team Formation of COPQ team (preferably QA&QC + (preferably QA&QC + Planning)Planning)Mandate is given to COPQ team Mandate is given to COPQ team (for accurate (for accurate measurement)measurement)Monthly reporting from COPQ team Monthly reporting from COPQ team (Areas of (Areas of improvement)improvement)
Way Forward
Select any specific activity or activitiesSelect any specific activity or activities
• Only measuring COPQ will not resolve the problems of a
company
• Shall identify activities that need to be done in order to
improve the quality level of the company
Way Forward
Once COPQ team identify improvement area;Once COPQ team identify improvement area;
Perform root cause Perform root cause analysisanalysis
Suggest corrective Suggest corrective actionaction
Results will not be over-nightResults will not be over-night
Way Forward
Corrective action can be investment in;Corrective action can be investment in;
Prevention CostPrevention Cost Appraisal CostAppraisal Cost
Management should not react if COPQ value is highManagement should not react if COPQ value is high
Fix the Leak
Way Forward
q
Q
(in US $)
(H&S Motor Company, USA)
Way ForwardCOPQ team identified improvement area;COPQ team identified improvement area;
!! Overcome Psychological Inertia, to save all initiatives !!
Way Forward
Conclusion
Use COPQ as a tool to identify improvement areas (Prevention or Appraisal) in order to eliminate internal and external failures.
Failures
Eccentric Rebars Right First Time
Taking the revision cloud too seriously
Red-bull reinforced concrete
Failures
Thank You Thank You