Impact of ISO 9001 Standard on the Quality Costs of Construction Projects in the Philippines

Quality Costing Technique: An Appropriate Financial Indicator for Reducing Costs and Improving Quality in the Organizations

“…He classified the quality cost in his quality cost model (Juran's quality triangle) as conformance and nonconformance cost, where conformance cost refers to improving quality, and non-conformance cost refers to poor quality. Juran's quality triangle is included two axises that are time on the horizontal axis and cost of poor quality on the vertical axis, he also justified that quality cost or "non-quality" as one of this graph is the best parameter to assess quality improvement into the organization [11].…”

“…However, the quality costs can be categorized into the four main groups, which are namely: 1) Prevention costs: These expenses related to costs of design and manufacturing that are directed toward the prevention of nonconformance and defect, and to meet customer's requirements [7], [1]. According to Juran [6], the prevention costs can be classified as Quality planning; New-products review; Process planning; Process control; Quality audits, and; Training; [14], [11], [7].…”

“…Appraisal costs are included [14]. Verification; Quality audits; Inspection equipment, and; Vendor rating [11];…”

“…These costs are Included in this area are Scrap; Rework; Repair; downtime; defect evaluation; evaluation of scrap, and; Corrective actions for these internal failures [7], [11] and; 4) External failure costs: These expenses generate when products or services cannot satisfy customer or specified requirements but the defects could not be discovered till delivery to the customer [1]. These expenses are Customer returns and allowances; Repair and servicing; Warranty claims; Complaints, and; Bad impact on the reputation and image [8], [7], [11].…”

“…Similarly, the literature review indicated that quality costing method as an important quality management tool is not applied in most quality management programs [11]. Also, the evidence indicated that organizations used a quality costing method were successful in reducing quality costs and improving quality for their customers [17].…”