IT QM Part1 Lecture 4

1. IT QM Part1 Lecture 4 Dr. Withalm 22.11.2014

2. Lectures at the University of Bratislava/Spring 2014 27.02.2014 Lecture 1 Impact of Quality-From Quality Control to Quality Assurance 06.03.2014 Lecture 2 Organization Theories-Customer satisfaction-Quality Costs 13.03.2014 Lecture 3 Leadership-Quality Awards 20.03.2014 Lecture 4 Creativity-The long Way to CMMI level 4 27.03.2014 Lecture 5 System Engineering Method-Quality Related Procedures 03.04.2014 Lecture 6 Quality of SW products 10.04.2014 Lecture 7 Quality of SW organization Dr.Withalm

3. Today’s Agenda • Quality Costs • Repair/Fix and Correct Dr.Withalm

4. Conclusion of Part 1/1 • Impact of Quality • Quality wins • Quality deficiencies • Standards • Quality definition • Evolution from quality control to TQM • Shewhart, Deming, Juran, Feigenbaum, Nolan, Crosby, Ishikawa • Evolution of organization theory • i.e. Taylorism, System Dynamics, System Thinking, Quality Assurance • Product liability • Customer satisfaction • Criteria, two-dimension queries, inquiry methods Dr.Withalm

5. Conclusion of Part 1/2 • Quality costs • Failure prevention, appraisal, failure, conformity, quality related losses, barriers • Leadership • Behavior, deal with changes, kinds of influencing control, conflict resolution, syndromes to overcome when introducing changes • Audits • Quality awards • Creativity techniques • Mind Mapping, Progressive Abstraction, Morphological Box, Method 635, Synectics, Buzzword Analysis, Bionic, De Bono • Embedded Systems • FMEA-Failure Mode Effect Analysis Dr.Withalm

6. Quality Costs/1 • Primarily Quality Costs summarized error costs • In order to measure the effectiveness of the manufacturing process • In the beginning of the industrial age quality control focused on • Erroneous products • The primary category of he classical quality costs • Due to Shewhart’s – and especially – Deming’s initiative • Failure prevention becomes more and more important • Failure prevention by establishing and applying respective processes • On the other hand it was always necessary • To prove the effectiveness of the manufactured products • By respective tests i.e. admission of facilities and devices • The third category of the classical quality costs Dr.Withalm

7. Quality Costs/2 Failure prevention costs: • Costs which develop by measures, which serve the fault prevention. Appraisal costs: • Costs which developby examinations. Failure costs (internally/externally): • Costs, which result internally, due to errors - or which result externally. Dr.Withalm

8. Quality Costs/3 • For contempory quality management it is essential • To prove that increasing of failure prevention costs is implying a sharp decrease of error costs • That is the most severe challenge of quality costs Dr.Withalm

9. Quality Costs/4Failure prevention costs • Including all costs which support the prevention of failures • Personal costs for quality managers and quality responsible persons within projects • Establishing of respective processes • i.e. SW development process, procurement process • Quality relevant measures • i.e. reviews, prototypes, tests (unit, integration), CM, QFD, RE • Suggestion Scheme • Internal audits and assessments • Revealing weaknesses in order to improve processes • Establishing and provision of project controlling data base • Measuring metrics in order to improve processes Dr.Withalm

10. Quality Costs/5External failure costs • Costs for liability issues • Depending on SIL: but generally can produce astronomical costs • Costs for warranty • In worst case the status must be established before the system was deployed • Different departments are involved • Service department tries to fix the error • In worst case development department must be involved • Lost customer, image, etc. Dr.Withalm

11. Quality Costs/6Internal failure costs • The later in the development process they are detected the more expensive is their fixing • In the phase where errors are revealed following tasks must be performed: • Evaluate from which phase the error originates • Correct the error • Establish new test cases • Update all respective phase results (documents, source code, test cases,…) • Perform regression tests • CM must be updated Dr.Withalm

12. Quality Costs/7Appraisal costs • Are more or less neutral costs • All error prevention costs can only minimally reduce appraisal costs • Typical appraisal costs arise • System and acceptance tests • These tests are usually defined by contracts • Metrology equipment i.e. calibration • Mystery calls and mystery shopping • Own personal requests services-unknown by other departments-many departments may be involved • Appraisal costs may be extremely expensive in specific cases: • high costs for test equipment • i.e. derailing system for railways Dr.Withalm

13. Quality Costs/8Open Issues of classical Quality Costs/1 • Inheritance from Taylorism • Collection of Costs • View Period • Assignment • Representation • Introduction Strategy • Barriers which must be overcome Dr.Withalm

14. Quality Costs/9Inheritance from Taylorism • Quality control was an isolated discipline • Focusing only on detecting errors • Aligned mainly on production/manufacturing requirements • Accounting was established with respective cost centers, cost categories • Currently supported by ERP systems as SAP, Oracle • Separation in three quality cost categories followed later Dr.Withalm

15. Quality Costs/10Collection of Quality Costs • By different departments • i.e. QM, Accounting, Service Department • At different milestones • Depending on the assigned cost category • More frequently/rarely • Business processes for collecting quality costs must be assessed and improved Dr.Withalm

16. Quality Costs/11View Period • Comes also from Taylorism • Errors originally were only detected during the quality control • All other implications i.e. liability, warranty were not considered at all • They were also collected but assigned to other/wrong cost categories respectively cost centers • In the mean time strong improvements were accomplished • Nevertheless some weaknesses remain: • Warranty is very dynamic • Borders between departments • When finishes the product life cycle • Liability costs may be huge • But as suing tends to last years doubts arise if all costs are correctly assigned Dr.Withalm

17. Quality Costs/12Assignment/1 • There are a lot of problems to assign quality related costs to the right cost center • See example with liability • But it‘s also challenging to assign it correctly to quality cost category i.e. prevention, appraisal, error • Further problem is the right assignment to the department which caused the cost • Take into account: you must meet the right cost category and the right cost centre • This process must always be under examination • Only with one wrong assignment the trust into Quality Cost is lost Dr.Withalm

18. Quality Costs/13Assignment/2 Dr.Withalm

19. Quality Costs/14Representation/1 • Failure prevention costs are an investigation in order • To ensure the future of the company • Improving the competitiveness • Customers are satisfied: see Deming Chain Reaction • Unfortunately only monetary amounts are presented as quality costs • Managers don’t differentiate between the quality cost categories • The so called “good” quality costs i.e. failure prevention costs should be increased • in order to sharply decrease the “bad” quality costs i.e. (internal/external) failure costs Dr.Withalm

20. Quality Costs/15Representation/2 Dr.Withalm

21. Quality Costs/16Business Process /1 • Motivation of employees • Definition of terms • Collection of Quality Costs • Feed Back to managers and employees • Improvement activities Dr.Withalm

22. Quality Costs/17Business Process /2Motivation of Employees • All concerned activities are time consuming • Usually project managers are focusing on concrete project activities as planning, monitoring,… • Ongoing information of all departments about this issue • Recommended together • Both managers and employees must have the insight • Failure costs will endanger the success of their company • Correct application of the business process is requested • For revealing all causes for failures Dr.Withalm

23. Quality Costs/18Business Process /3Definition of Terms • Cost categories, cost centers, cost units must be defined exactly • Allocation rules • Difference between origin of failures and their detection • Which department collects which data • Is the reporting balanced • Independent steering group should be established • Are results proven • Also by this independent steering group Dr.Withalm

24. Quality Costs/19Business Process /4Collection of Quality Costs • Define exact dates • i.e. milestones of the project or periodic dates (monthly, quarterly) • Establish an adequate database to enter these data • i.e. in Part 2 Proweb will be briefly introduced • Responsibility for collection must be clearly defined • During SW development respective QRP (Quality Responsible Person) • After acceptance test it must be defined: • It‘s a challenge as projects comes out of sight of project managers • Costs will be collected either by a service organization or an other department Dr.Withalm

25. Quality Costs/20Business Process /5Feed Back to Employees and Managers • Either at management review (see ISO 9000) or at periodic times (monthly, quarterly) • Topics are either projects or quality costs of the whole business unit • In the case of management review: • Managers are asked about quality deficiencies • Implying that managers are well informed about these issues • In the case of periodic reporting • Both employees and managers are informed by quality managers about these issues • Rough ideas about improvements will be presented Dr.Withalm

26. Quality Costs/21Business Process /6Improvement Activities • Each improvement activity must be explained by analysis of failures cases • See measurement and failure analysis in ISO 9000 and CMMI • Analysis bases on measurements recorded in a respective repository/data base • In SW projects: at each milestone metrics will be recorded in the repository • i.e. how many failures (origin/detection phase), detected by reviews/tests • An improvement activity diagram will be established • Each activity itself is performed as a project • Responsible persons • Assigned resources • Phases and milestones • Note: programs of such improvement activities will be checked by ISO 9000 and CMMI assessments Dr.Withalm

27. Quality Costs/22Barriers which must be overcome/1 Dr.Withalm

28. Quality Costs/23Barriers which must be overcome/1 Too large work and cost • Technical personnel usually doesn‘t like administrative activities • Entering of data must be facilitated and – if possible –automated • The rules of assigning quality costs must be facilitated and –if possible- automatic checks (plausibility) should be provided • Personnel must be responsible – recommended QRP respectively the quality manager • These persons must be trained • Omit too many details Dr.Withalm

29. Quality Costs/24Barriers which must be overcome/3Lack of Time • During project planning time must be foreseen • Project manager is responsible for entering these data • QRP must escalate in case of not existing quality data Dr.Withalm

30. Quality Costs/25Barriers which must be overcome/3Unclear Proceeding • The most severe problem: • Costs will be gathered and months later – if ever- concerned personnel gets a feed back • Training and motivation is essential to overcome • Doubting both on the process and on the report • Process must be clearly defined and also the target Dr.Withalm

31. Quality Costs/26Barriers which must be overcome/4Advantages are not convincing • Prepare success stories and present them on motivation events • Improvement action which brought measurable/immeasurable success • Admit also some weaknesses • Focus on the essential target • Increasing of failure preventions costs enabled a sharp decrease of failure costs • Increasing the profitability of the company and ensuring jobs Dr.Withalm

32. Quality Costs/27Process Related Costs/1Conformity Costs/1 • Especially in SW engineering fulfilling of requirements has the highest priority • Costs for all tasks / activities which support these endeavors are called conformity costs • Are we developing the right requirements? • Are requirements contradictory? • Reviews of user requirement specification with all stake holders • Establishing of specific test cases for the system test by a specific test team • Developing of prototypes • Establishing of specific test cases of the acceptance test • Recommended by the end user Dr.Withalm

33. Quality Costs/28Process Related Costs/2Conformity Costs/2 • Are we developing correctly • Respective reviews during the inner phases as design and implementation • Respective test levels as unit tests and integration tests • Are non functional requirements met • Are business oriented requirements met • What‘s about implicit requirements Dr.Withalm

34. Quality Costs/29Process Related Costs/3Non Conformity Costs/1 • Expenditures for all internal failures • i.e. failures are revealed in the system test but originate from requirement analysis • Expenditures for all external failures • Warranty • Costs of different other departments for evaluating the failures • Expenditures for delayed shipping • i.e. cost for contractual penalty, redesign Dr.Withalm

35. Quality Costs/30Process Related Costs/4Summary/1 • Are aligned to SW engineering • ISO 9000 and CMMI compatible project repositories have respective structuring • Usually in big companies accounting is performed with ERP tools as SAP or Oracle • Interoperability and automatic assigning to classical quality costs is very expensive • Mapping of classical quality costs to process related costs must be bijective (one-to-one and onto) • i.e. each cqc corresponds a prc and vice versa Dr.Withalm

36. Quality Costs/31 Summary Dr.Withalm

37. Quality Costs/32 Comparison of Quality Related Costs with Process Related Costs Dr.Withalm

38. Quality Costs/33Benefits • Increases the productivity (see Deming Chain Reaction) • Personal costs are decreased • Increases the profit of the company • All quality costs deteriorate the profit • Analysis of quality costs enable • Improving of business processes (i.e. SW development process) • To pass ISO 9000 certification and CMMI assessments Dr.Withalm

39. Quality Costs/34 Quality Related Loss • What costs a dissatisfied customer? • What costs a lost customer? • What costs a lost order? • What costs declining image? • Of course there exist no exact numbers for these issues • But there is no doubt that you are concerned with huge numbers Dr.Withalm

40. Quality Costs/35 Life Cycle Cost All costs, which result over the entire life span of a plant. • Investment costs • Maintenance costs • Operating costs Quality related costs not only origin by development and manufacturing but also during operation and maintaining Dr.Withalm

41. Quality Costs/36 Experiences • 15 years after having established project control and quality assurance results show • a high correlation of CMMI Maturity Level and sharp decrease of error costs • While failure prevention costs were moderately increased • Besides the same effect were measured by meeting the roll out times • Thanks to BSC Dr.Withalm

42. Quality Costs/37 What‘s the difference between repair/fix and correct?/1 Dr.Withalm

43. Quality Costs/38 What‘s the difference between repair/fix and correct?/2 What‘s the difference between repair/fix and correct? Repair: is fixing any sort of mechanical or electricaldevice should it get out of order or broken. In SW we speak of patching Corrective measures: make sure that errors not arise repeatedly Preventive measures: prevent potential errors before they occur. Dr.Withalm

44. Quality Costs/39 Steps of a corrective measure Fixing the error Description of error Cause analysis Definition and implementation of measure Observation of current occurrence Evaluation of the efficiency of the measures Process will be adapted according these measures Dr.Withalm

45. Thank youfor your attention!

46. Farbpalette mit Farbcodes Primäre Flächenfarbe: Akzentfarben: R 255 G 210 B 078 R 245 G 128 B 039 R 229 G 025 B 055 R 000 G 133 B 062 R 000 G 084 B 159 R 000 G 000 B 000 R 255 G 255 B 255 R 255 G 221 B 122 R 248 G 160 B 093 R 236 G 083 B 105 R 064 G 164 B 110 R 064 G 127 B 183 R 064 G 064 B 064 Sekundäre Flächenfarben: R 170 G 190 B 195 R 130 G 160 B 165 R 215 G 225 B 225 R 255 G 232 B 166 R 250 G 191 B 147 R 242 G 140 B 155 R 127 G 194 B 158 R 127 G 169 B 207 R 127 G 127 B 127 R 220 G 225 B 230 R 185 G 195 B 205 R 145 G 155 B 165 R 255 G 244 B 211 R 252 G 223 B 201 R 248 G 197 B 205 R 191 G 224 B 207 R 191 G 212 B 231 R 191 G 191 B 191 R 255 G 250 B 237 R 254 G 242 B 233 R 252 G 232 B 235 R 229 G 243 B 235 R 229 G 238 B 245 R 229 G 229 B 229 Dr.Withalm