Categorizing Project Quality Planning Costs

It's a fact—projects cost money. However, even though planning for quality costs money, it's well worth the expense. People will remember poor quality much longer than a timely delivery or cheap price. In today's market, mistakes regarding the quality of a product or service can be expensive for everyone.

To meet quality requirements, projects must incur some primary planning costs. These costs can be divided into four main categories—prevention costs, appraisal costs, failure costs, and intangible costs.

Creating quality products and services requires an understanding of all of these costs. When project managers understand quality costs, it's easier for them to make decisions about such things as investing in a process, designing revisions, or changing procedures. The total quality cost of a project is considered to be the sum of the four main categories discussed below.

• Prevention costs. Prevention costs occur from activities that prevent poor quality in products and services. Such costs help ensure the customer's requirements are met.
• Appraisal costs. Appraisal costs are linked with measuring, evaluating, or auditing products and services. This can include material reviews, incoming inspections, work-in-process inspections, and final inspections or testing.
• Internal and external failure costs. Internal failure costs are associated with not meeting customer requirements prior to when the product or service is provided. External failure costs occur when the nonconforming product reaches the customer.
• Intangible costs. Intangible costs of poor quality are hidden costs that involve the company's image. They can be three or four times greater than tangible costs. Missing a deadline or other quality problems can be intangible costs of quality.

Identifying and utilizing the four primary costs in effective quality planning will help ensure that your product is a success. Recognizing that prevention costs, appraisal costs, internal and external failure costs, and intangible costs are valuable tools and techniques to the quality planning process will result in greater satisfaction for all stakeholders.