Cost of Quality: Cost of Conformance vs Cost of Non-conformance for PMP Exam

Project Quality Management is an important aspect of project management according to the PMBOK® Guide as the quality of the deliverables directly affects the satisfaction of the customers. The acts of ensuring quality for the project and deliverables inevitable involve costs and this should be well considered during the project cost, time, scope and human resources planning.

Additional FREE PMP resources: 47+ Commonly Confused Term Pairs with detailed explanations. If you found this article useful, you may wish to reference other Commonly Confused Term articles.

Cost of Conformance vs Cost of Non-Conformance

• Cost of Conformance: this is the costs incurred by carrying out activities to ensure the project and deliverables conform to the quality requirements and avoid failure (i.e. building quality into the project processes).
  • Cost of Conformance can be broadly divided into two categories:
    • Prevention Costs — money spent on activities/equipment to prevent defects from arising in the first place, e.g. :
      • Equipment update and maintenance
      • Training provided to staff
      • Documentation
      • Following quality standards
      • Time and human resources involved
      • Quality Assurance activities
    • Appraisal Costs — money spent on those activities to inspect and dig out defects to prevent these defects from getting into the hands of the customers, e.g.:
      • Testing and inspection
      • Destructive testing loss
      • Quality Control activities
• Cost of Non-Conformance: this is the money that needs to be spent for not conforming to the quality requirements.
  • Cost of Non-Conformance can also be broadly divided into two categories:
    • Internal Failure Costs — the costs incurred when defects in the deliverables are detected internally (i.e. not yet presented to the customers)
      • Defect Repair
      • Rework
    • External Failure Costs — the costs incurred when defects are found the deliverables have been delivered to customers and in actual use (this is the worst kind of quality costs)
      • Warranty work
      • Liabilities
      • Loss of business goodwill

Both the Cost of Conformance and the Cost of Non-Conformance can be collectively referred to as the Cost of Quality. Cost of Conformance is considered much lower than the Cost of Non-Conformance. Therefore in the PMP Exam, quality management advocates “prevention over inspection”.

Illustrated Example

Let’s take the project of producing a PMP Exam Prep Book/Study Guide as an example for illustrating the Cost of Conformance concepts.

During the writing of the Book, a lot of time, efforts and money are involved in the editing and proofreading of the book to ensure all the content of the book is accurate and error-free. These Cost of Conformance activities include reviews (in multiple times) by the author, editors and subject matter experts. Oftentimes, current credential holders and students are also invited to read through the book to provide valuable feedback. Extensive testing on printing and production will also be carried out to ensure the final product (i.e. the Book) is in the perfect shape for PMP aspirants. All these would involve considerable time and costs.

However, if the publisher would like to accelerate the delivery of the Book to market after a change of the exam syllabus by leaving out these Cost of Conformance activities  (i.e. once the author has finished the writing, it will go directly into printing). Aspirants would initially be pleased to be able to receive the book so early to facilitate their exam preparation. But, they will later find that the content contains a lot of errors (in definitions, concepts and even the mock PMP exams) that hinder their studies or even cost their exam failure. A lot of bad comments and low ratings would be given to the book so other students will consider this book to be of low quality — that’s a loss of a lot of reputation and business.

Through this example, PMP Aspirants would understand why Books are usually late to the market for several months after the change of exam syllabus.

Summary

In the PMP Exam, the Cost of Quality is lowest for prevention and inspections (Cost of Conformance) but highest for failures (involving: rework, defect repair, lost reputation and sales and external costs — Cost of Non-conformance).  As an example, the cost of rework can be as high as 5000 times the cost of carrying out unit testing. The project manager must try hard to assure project quality through quality conformance processes and activities in order to minimize the cost of non-conformance.

The quality activities included in the cost of conformance will affect time, cost and scope of the project.

Additional FREE PMP resources: 47+ Commonly Confused Term Pairs with detailed explanations. If you found this article useful, you may wish to reference other Commonly Confused Term articles.