What are the three components of Cost of Quality (COQ)?

There are three COQ categories:

Prevention- Money required preventing errors and to do the job right the first time is considered prevention cost. This category includes money spent on establishing methodsand procedures, training workers and planning for quality. Prevention money is all spent before the product is actually built.

Appraisal– Appraisal costs cover money spent to review completed products against requirements. Appraisal includes the cost of inspections, testing and reviews. This money is spent after the product or subcomponents are built but before it is shipped to the user.

Failure– Failure costs are all costs associated with defective products. Some failure costs involve repairing products to make them meet requirements. Others are costs generated by failures, such as the cost of operating faulty products, damage incurred by using them and the costs incurred because the product is not available. The user or customer of the organization may also experience failure costs.

The following figure shows a few examples of the three costs of quality that illustrate the types of activities in each of the categories. Experience has shown that a small group of knowledgeable people can develop estimates for the COQ categories. The estimate does not have to be highly precise because the amounts will be so large that even errors of plus or minus 50% would not affect identifying the actions that need to be taken to reduce the COQ.

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