Consider a quality assurance system where all defects or errors coming from qual
ID: 447671 • Letter: C
Question
Consider a quality assurance system where all defects or errors coming from quality control are documented, categorized, and analyzed. Furthermore, this quality assurance process provides for developing and conducting training in needed areas for overall continuous improvement. This effort requires several people to perform these tasks. Consider this to be a cost plus contract without quality assurance exclusions. The customer pays for these quality assurance efforts. Can or should anticipated quality and cost saving be built into the original contract schedule and budget? If so, specifically how would this work? Could these savings be measured, and is it cost effective to do so? Can the level of quality exceed customer requirements? If so, how can this be controlled? If not, what are the implications for negotiating contracts? What percentage of the project budget should be dedicated to quality management? Defend your answer.
Explanation / Answer
Can or should anticipated quality and cost saving be built into the original contract schedule and budget? If so, specifically how would this work?
Quality can be defined as “the degree to which a set of inherent characteristics fulfil requirements.” i.e. quality can be understood as meeting the stakeholder's standards and expectations or requiremnts. Hence, I believe the anticipated quality and cost saving should be built into the original contract schedule and budget. The anticipated quality and cost saving should be incorporated in the contract documentation itself, so that the stakeholders and the project managers have the same expectation of quality and associated costs from the project. To determine the standard that is needed to be achieved, so that the product or the service is said to meet the quality levels expected, are defined and detrmined by the stakeholders, as per their needs and requirements from the project. Hence, when contract documentation is in process, the quality standards should be discussed and clarified by both the parties to establish a single anticipated quality standard and that should be included in the contract, and hence, should be included in the original contact schedule and budget. A formal acceptance of the contract would then indicate that both thep arties are on the same page when anticipated quality and cost savings of the project are considered.
Could these savings be measured, and is it cost effective to do so?
These const savings can be measured, by using some meauring tools like benchmarking, cost-benefit analysis, and total cost of quality (the total cost of all the activities and efforts related to quality assuarnce). Assuring the quality requirements are met leads to many cost savings in the form of less reworks and rejections(at the manufacturer's end), and lower warranty claims and product return requests (at the customer's/stakeholder's end). Achieving the anticipated quality also result in improved line efficiency (at the manufacturer's end), customer satisfaction and good will (at the customer's end). Cost savings resulting from these factors can be measured by conducting a cost-benifit analysis for the project's quality assurance. Also, the project's planned quality costs and practices can be benchmarked againgst some prior projects to estimate the cost saving achievable in the project by quality assurance efforts. It is cost effective to do so because, the tools like benchmarking and cost benefit analysis are not very capital intensive, but give a good picture about the cost saving potential of the project.
Can the level of quality exceed customer requirements? If so, how can this be controlled? If not, what are the implications for negotiating contracts?
Exceeding customer's quality expectations can be if the manufacturer ads some features to the product that were not demanded by the customer or by providing the product to the customer in shorter time than promised or at lower costs than promised. In any case exceeding quality requirements from the customer comes as an added cost for the manufacturer. Hence, yes the level of qulity can be exceeded, but it is not wise to do so. To control this situation, a quality policy or a quality plan should be defined in the manufacturing organization, clearly stating the limitations of the project's quality, and the drawbacks associated with exceeding customer's quality requirements. Methods like using quality checklists and other quality metrics can also be helpful.
What percentage of the project budget should be dedicated to quality management?
This is subjective to project's needs and customer's quality expectations to declare a ceratin percentage for quality budget in the total project's budget. But, to decide the percentage of the project budget to be dedicated to quality management, the project management team needs to identify both the direct (eg: reworks, returns,etc) and the indirect costs (eg: cost of lost customer,etc) of quality.