Cost of Quality, or (COQ) as it is often referred to, is a monetary figure used by project management personnel in the decision making process. It is also often misunderstood. Cost of Quality does not refer to the cost of providing a quality service or product. It refers to the cumulative costs required to bring poor quality service or products up to the standards defined by project management. In essence it is the cost of failing to provide a product or service of acceptable initial quality, which is a big concern for project management.
This figure is the sum of two categories and four sub-categories. There is the cost of conformance. This includes the cost of prevention and the cost of appraisal. The cost of prevention includes all costs which are specifically designed to keep poor product quality from happening in the first place. Cost of appraisal refers to the cost required to measure and evaluate the product or service at various intervals during production and after completion. The other category is the cost of non-conformance, also referred to as failure costs. These are the costs involved in repairing or retooling a product or service of poor quality. Internal failure costs are costs accrued before the product has been shipped or the service has been furnished, such as the costs to rework products, components, or processes that are non-compliant. External failure costs refer to costs after product shipping and during or after a service has been provided.