COQ - An Overview (Rev 01)

7/24/2019 COQ - An Overview (Rev 01)

1/25

Cost of Poor Quality


2/25

Content

DefineCost of Poor

Quality

MeasureCOPQ Baseline

AnalyzeCritical Factors

ImproveCritical Factors

ControlImprovement

Plan


3/25

Define

Cost of Quality (COQ)

Joseph Juran - first discussed the cost of quality analysis in 1951

is a means to quantify the total cost of:

Quality-related efforts (Prevention + Appraisal)

Deficiencies (Failure)


4/25

Define

Categories of Cost of Quality (COQ)


5/25

Is Cost related to

Prevention of Non-

Conformance?

Define

Is Cost related to

Inspection or testing?

PREVENTION

APPRAISAL

Is Cost related to

Failure?

Is Failure identified

internally?

INTERNAL FAILURE

EXTERNAL

FAILURE


6/25

Define

Focus on Cost of Poor Quality


7/25

Measure Baseline

CurrentStatusof

CostofPoorQualityinDescon

Procedure available but is

it implemented properly?

NO.!!


8/25

Measure Baseline

(inPak

Rs.)

Duration AppraisalCost* FailureCost*

Jan Oct,2015 35,307,150 1,380,477

*DataisforNKB,LMW,KMW,HMW,Borouge&Baraka

DesconCOQStats

CurrentStatus

of

Cost

of

Quality

in

Descon

ProjectrelatedCARs(Jan Oct,2015)

230*

*DataisforNKB,LMW,KMW,HMW,Borouge&Baraka

(inNumbers)


9/25


10/25

In order to assess the right picture of Reworks / Repairs /

Nonconformances, we must measure COPQ

AretheiranyotherbenefitsofmeasuringCOPQ?

Measure Baseline

Yes.!!


11/25

Why measure COPQ?

COPQ direct contribution in profit

COPQ - identify quality improvement candidates;

Identify all failures costs

Detect root causes and eliminate them

COPQ - measure of the success of projects

COPQ - cost data for motivational purpose


12/25

In 2007, U.S. construction industry expenditures were $1.246 trillion and out

of these, $62 billion (5%) were wasted on the direct cost ofreworkalone.

(Bureau of Economic Analysis, 2009)

Annual turnover of the Australian construction industry was estimated at

$A32 billion per annum whereas the cost ofrework was approximated at

$A4 billion per annum.

(Construction Expert Group 1993)

In a publication entitled Managing Construction Quality, an average contractor

is estimated to spend between 5-10 percent of the project cost doing things

wrong and rectifying them.

(Construction Industry Development Board (CIBD))

Why measure COPQ?


13/25

Why measure COPQ?

Welded Pipe

SpoolWelding Welding

Site Space Site Space

Site Space

Value Added

Non-Value Added

Philip R. Thomas, Competitiveness

Through Total Cycle Time. McGraw-Hill

(1990)

The Hidden Project

Repair

Fix

Test

Repair

Fix

Test


14/25

Why measure COPQ?


15/25

Measurement Started What next?

Leakage Identified Now FIX it!


16/25

Analyze critical factors

COPQ

measured

correctly

(X = Rs. 36,470/-)

(Y)

High repair rate

Higher rejection rate at receiving inspection


17/25



18/25

(in US $)


(H&S Motor Company, USA)


19/25


Taking the revision cloud too seriously Red-bull reinforced concrete


20/25


Light pole Argument Right FirstTime


21/25

All quality improvement occurs on a project-by-project basis

- Juran

Improve critical factors

Only measuring COPQ will not resolve the problems of a company; Instead,

it will only give a view on what activities that need to be done in order to

improve the quality level of the company


22/25

Senior Management support is critical for implementing COPQ program



23/25

Determine level of detail for COPQ measurement

Start with Internal and External Failure costs only


Select any pilot project for measurement of COPQ

Selection of project (preferably from start)

Formation of COPQ team (preferably QA&QC + Planning)

Mandate is given to COPQ team (for accurate measurement)

Monthly reporting from COPQ team (Areas of improvement)


24/25

Once COPQ team identify improvement area;

Perform root cause analysis and suggest corrective action

Investment in Appraisal cost or Prevention cost

Results will not be over-night

Control improvement plans


25/25

Conclusion

The goal of using COQ is to increase prevention activities in

order to eliminate internal and external failures and to reduce

appraisal activities.

COQ - An Overview (Rev 01)

Documents

Transcript of COQ - An Overview (Rev 01)