The cost of quality (COQ) is the money spent beyond what it would cost to build a product right the first time. If every worker could produce defect-free products the first time, the COQ would be zero. Since this situation does not occur, there are costs associated with getting a defect-free product produced.
There are three COQ categories:
1. Prevention - Money required to prevent errors and to do the job right the first time is considered prevention cost. This category includes money spent on establishing methods and procedures, training workers and planning for quality. Prevention money is all spent before the product is actually built.
1. Appraisal – Appraisal costs cover money spent to review completed products against requirements. Appraisal includes the cost of inspections, testing and reviews. This money is spent after the product or subcomponents are built but before it is shipped to the user.
2. Failure – Failure costs are all costs associated with defective products. Some failure costs involve repairing products to make them meet requirements. Others are costs generated by failures, such as the cost of operating faulty products, damage incurred by using them, and the costs incurred because the product is not available. The user or customer of the organization may also experience failure costs.