Price of Non Conformance (PONC)

In general, human being always tried to find the short-cuts for doing the given task. Sometimes it helps in inventing new & improved ideas to complete the given task by keeping the required quality standards. But generally it leads to Non-Conformance from agreed quality standards.

Quality standards may vary from customer to customer. Conformance of quality standard means delivering the agreed quality to customer.

The "cost of quality" isn't the price of creating a quality product or service. It's the cost of NOT creating a quality product or service.

Every time work is redone, the cost of quality increases. Obvious examples include:

•       The reworking of a manufactured item.
•       The retesting of an assembly.
•       The rebuilding of a tool.
•      The correction of a bank statement.
•        The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.

Most of the costs of poor quality are hidden from our normal quality measures. These costs of quality are often referred to as the Hidden Factory. This includes:

1.  Unhappy customers
2. Schedule interruptions
3. Fire Fighting
4. Unnecessary Procedures
5. Equipment Failures
6. Extra Operations such as touch ups and trimming
7. Distracted Engineers
8. Expediting time
9. Poorly performing product
10. Extra inspection and testing
11. Wasted materials and energy
12. Sorting
13. Extra inventory
14. Unexplained budget variations
15. Missed shipments
16. Complaint Investigation Cost

Total Quality Costs

Quality costs are the total of the cost incurred by:

• Investing in the prevention of nonconformance to requirements.
• Appraising a product or service for conformance to requirements.
• Failing to meet requirements.

It is highly recommended to follow the Quality standard to avoid re-working cost in Project Management.