Cost of Quality (COQ) is a measure that quantifies the cost of control/conformance and the cost of failure of control/non-conformance. In other words, it sums up the costs related to prevention and detection of defects and the costs due to occurrences of defects.
Definition by ISTQB:
- cost of quality: The total costs incurred on quality activities and issues and often split into prevention costs, appraisal costs, internal failure costs and external failure costs.
- Cost of Control (Also known as Cost of Conformance)
- Prevention Cost
- The cost arises from efforts to prevent defects.
Example: Quality Assurance costs
- The cost arises from efforts to detect defects.
Example: Quality Control costs
- Internal Failure Cost
- The cost arises from defects identified internally and efforts to correct them.
Example: Cost of Rework (Fixing of internal defects and re-testing)
- The cost arises from defects identified by the client or end-users and efforts to correct them.
Example: Cost of Rework (Fixing of external defects and re-testing) and any other costs due to external defects (Product service/liability/recall, etc)
FORMULA / CALCULATION
- Cost of Quality (COQ) = Cost of Control + Cost of Failure of Control
- Cost of Control = Prevention Cost + Appraisal Cost
- Cost of Failure of Control = Internal Failure Cost + External Failure Cost