Relationship between quality assurance costs and failure costs

[Mary McD]

Does anyone have any data on the relationship between assurance costs and failure costs -- in order to help me justify why it's a good idea to do assurance?

real-life examples or actual data is the most helpful; but feel free to 'sanitize' the data while still providing info if you're more comfortable with that!

Thanks so much,
Mary McD

 

[Duke Okes]

The typical "theoretical" ratio given is $1 in prevention = $10 in appraisal = $100 in failure. However, the ratios would vary very widely depending on industry and which costs a specific company elects to include in each COQ bucket.

You might try contacting the ASQ Quality Management Division's Cost of Quality committee.

 

[Howard Lee]

My dad used to say something about an ounce of prevention being worth a pound of cure.

It seems the older I get, the smarter he was.

 

[Helmut Jilling]

Does anyone have any data on the relationship between assurance costs and failure costs -- in order to help me justify why it's a good idea to do assurance?

real-life examples or actual data is the most helpful; but feel free to 'sanitize' the data while still providing info if you're more comfortable with that!

Thanks so much,
Mary McD

I don't see that it would be possible to do a "Rule of Thumb" though I often use the 10 to 1 rule as a discussion point. Obviously, assurance or prevention is cheaper than failure in most cases.

If you can determine what failure would cost you, based on your current customers, it would be a good starting point.

 

[JP Frisbee]

I agree with hjilling, however, I believe there are things such as a loss of customer confidence in the product, loss or reduction of sales, as well as increased costs by vendor services which are much more difficult to measure. These issues may result in contract rewrites, additional requirements placed on the company, or even certain guaranties be made in the event of delayed or failed service. Good Luck!