Module 5

Cost of Software Quality

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Because the main language [of
Corporate Management] was
money, there emerged the concept
of studying quality-related costs as
a means of communication
between the quality staff
departments and the company
mangers – Joseph Juran

It is always cheaper to do the job

right the first time – Philip Crosby
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 Business Context
Costs usually visible:
- Customer problem reports
- Law suits
- QA and QC costs
Costs usually invisible:
- Poor team work
- Lack of planning
- Lack of training
- Poor problem handling
- Lack of good practices and standards
- Ineffective project performance

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Total Quality Management
Quality Improvement

↑ in Demand
↓ in Costs

Better Profitability

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Cost of Correcting Defects

The thumb rule is that the nearer the failure to the

end user, the more expensive it is to correct.

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 CoQ Elements
Internal costs of failure
Internal Costs of
Costs due to lack of quality Failure
Costs due to lack External costs of failure

of quality External Costs of

Cost of quality
Failure
Cost of
Appraisal costs
Quality Appraisal
Costs of achieving quality
Costs of achieving Costs
quality Prevention costs
Prevention
Costs

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 Cost of Quality Categories
Category Definition Typical Costs for
Software

Internal Quality failures Defect management,

failures detected prior to rework, retesting
product shipment
External Quality failures Technical support,
failures detected after product complaint
shipment investigation, defect
Appraisal Discovering the notification
Inspection, Testing and
condition of the associated activities,
product product quality audits
Prevention Efforts to ensure SQA administration,
product quality process improvements,
metrics collection and
analysis

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 Traditional View on Quality Costs
Quality
Cost in $

Total cost
Failure cost

Control cost

0% Minimum 100%
Optimal Defective Rate
Acceptable Quality Level
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Knox’s Theoretical Model
Cost as a Percent of Development
Prevention Appraisal Int Failure Ext Failure TCoSQ
60

50

40

30

20

10

0
1 2 3 4 5
SEI CMM Level

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 Knox model application
 Raytheon’s Equipment Division (RES)
 Level 1 – CoSQ between 55-67% of
development cost
 Level 3 – CoSQ around 40% total project
cost
 ToSQ at 15% development cost, Rework
at <10% of total cost.(1996)

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 RES Journey
Start of intiative
Percentage of total project cost

70 CMM level 1 CMM level 3

60

TCoSQ
50
Rework

40
Cost of
Conformance
30

20

Appraisal
10 Rework
Prevention

0
87 88 89 90 91 92 93 94 95 96
Year

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 Potential Benefits of CoSQ
 Justification for quality initiatives
 Basis for budgeting the quality operation
 Compare process improvements and
identify the most cost effective ones
 One measure of comparing the success of
projects
 Identify quality improvement candidates
 Reduce the quality costs by altering the
process in a particular project

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 CoSQ Chart

Quality Cos t

CoSQ Chart

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 What’s required for CoSQ
implementation?
 Where do we stand?
 Management commitment
 Piloting and Educate the teams
 Establish a CoSQ measurement system
 Trend analysis
 Baseline and annual improvement goals
 Collect and analyze data
 Monitor on every project and take corrective
action immediately
 Publish the results and get others involved

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 CoSQ Report
Cost Effort % of Cost
Category Total
Failures
Appraisal
Preventio
n
Total
Cost

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 Presenting to the Management

1. CoSQ as percentage of Sales

2. Total Quality Costs as ratio of Profit
3. Rework Cost as a percentage of Profit
4. CoSQ Vs Defect Density over a period

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Case Study

CTS-CoSQ case study

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 References
 Principles of Quality Costs, 3rd Edition, Jack
Campanella
 Quality Control Hand book, 5th Edition,
Juran.
 Using the cost of quality approach for
software, H.Krasner, 1998, Crosstalk,
Vol.11, No.11
 CoSQ: A means of promoting SPI, Houston,
D., and Keats, J.B.

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