Limitations of quality cost analysis, Project Management

The dark side of quality cost analysis

The Quality Cost Analysis will always look at the organisation's costs and not the customer's costs. The manufacturer and the seller are definitely not the only people who will suffer from quality-related costs. The customer suffers from the quality-related costs too. If the manufacturer sells a bad product then the customer will face significant expenses in dealing with the bad product.

Most of the software failures do not lead to deaths. Most of the software projects involve the conscious tradeoffs among many factors which include the cost, the time of completion, the richness of the feature set, and the reliability. There is nothing wrong in doing this type of business tradeoff, consciously and also explicitly, unless the fact is not taken into account that some of the problems which leave in the product may cost the customers much more than the cost to the organisation.

The problem of the cost-of-quality analysis is that it will be set up to underestimate the litigation and the customer dissatisfaction risks. The total cost should include the customer's external failure costs into account (the lawsuits).

The following table compares the external failure costs which will have to be borne by the buyer and the seller:

Table 11. 1: Comparisons of the external failure costs borne by the buyer and the seller

Seller: External failure costs

Customer: Failure costs

These are the types of the costs which have  to  be  absorbed  by  the  seller which releases a defective product.

These are the types of the costs absorbed  by  the  customer  who  will buy a defective product.

  • Technical support calls
  • Preparation of the support answer books
  • Investigation of the customer complaints
  • Refunds and the recalls
  • Coding or testing of the interim bug fix releases
  • Shipping of the updated product
  • Added expense got by supporting multiple versions of the product in the field
  • Public Relation work to soften the drafts of the harsh reviews
  • Lost sales
  • Lost customer goodwill
  • Discounts to the resellers to encourage them to keep on selling the product
  • Warranty costs
  • Liability costs
  • Wasted time
  • Lost data
  • Lost business
  • Embarrassment
  • Demos or the presentations to the potential customers fail because of the software
  • Failure while attempting other tasks which can only be done once
  • Cost of replacing the product
  • Cost of reconfiguring the system
  • Cost of the recovery software
  • Cost of the tech support
  • Injury or death
Posted Date: 9/29/2012 1:22:09 AM | Location : United States

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