Using The Cost of Quality Approach For Software
Using The Cost of Quality Approach For Software
Herb Krasner
Krasner Consulting
Cost of software quality (CoSQ) is an accounting technique that is useful to enable our understanding of
the economic trade-offs involved in delivering good-quality software. Commonly used in manufacturing, its
adaptation to software offers the promise of preventing poor quality but, unfortunately, has seen little use to
date. This article discusses the rationale and context for using CoSQ, then defines a basic CoSQ model that
differentiates the costs involved with handling nonconformances due to a lack of quality, appraisal efforts
performed for the achievement of acceptable quality, and efforts to prevent poor quality from occurring.
November 1998
M a jo r C a te g o ry
S u b c a te g o ry
D e fi n i t i o n
D e a lin g w ith
n o n c o n fo r m a n c e s .
I n t e r n a l n o n c o n fo r m a n c e s .
Q u a lity p ro b le m s d e te c te d p rio r to
p ro d u c t s h ip m e n t.
E x t e r n a l n o n c o n fo r m a n c e s .
Q u a l i t y p r o b l e m s d e t e c t e d a ft e r p r o d u c t
d e liv e ry.
D is c o v e rin g th e c o n d itio n o f th e p ro d u c t.
D is c o v e rin g th e le v e l o f
n o n c o n fo r m a n c e s .
A s s u rin g th e a c h ie v e m e n t o f q u a lity.
Q u a l i t y b a s i s d e fi n i t i o n .
E ffo r t s t o d e fi n e q u a l i t y , s e t q u a l i t y
g o a ls , s ta n d a rd s , a n d th re s h o ld s .
Q u a l i t y t r a d e - o ff a n a l y s i s .
D e fi n i n g r e l e a s e c r i t e r i a fo r a c c e p t a n c e t e s t i n g a n d r e l a t e d q u a l i t y
s ta n d a rd s .
E ffo r t s t o p r e v e n t p o o r p r o d u c t q u a l i t y
o r im p ro v e p ro c e s s q u a lity.
A p p ra is in g th e
le v e l o f q u a lity.
Preventing poor
q u a l i t y fr o m
o c c u rrin g .
November 1998
8 CROSSTALK
and the Raytheon efforts [11], which all discuss trends in software rework costs.
The Price Waterhouse study analyzed the costs and benefits
of software quality standards from a survey of 19 United Kingdom software suppliers. The study estimated the cost of a quality control effort (prevention and appraisal costs) to be 23
percent to 34 percent of development effort. The study also
estimated failure costs at 15 percent of development effort for a
total cost of software quality (TCoSQ) of 38 percent to 49
percent of development effort. It must be noted that this study
excluded the costs of unit testing and rework because the suppliers could not separate these costs. With increases in the estimates to account for this oversight, TCoSQ in a software organization with a quality system can range from 40 percent to 55
percent of development costs with a conformance costs to
nonconformace costs ratio from 1.5-to-2.
Based on the results of my study of Lockheed projects at
various Capability Maturity Model (CMM) levels along with
anecdotal and quantitative data collected in the mid- and late
1980s, I predicted the relationship of Software Engineering
Institute (SEI) CMM-based process maturity level to typical
rework rates and quality levels that could be expected [9]. Table
2 is a slice of that presentation.
Due to the SEI CMM process maturity movement, we have
an aggregation of the payoff data that has been collected as a
result. See [12] for more information on how software process
maturity is related to CoSQ, software defectiveness levels, and
other measures of success.
R. Dion [13] used the CoQ model as one means to interpret the results of improvement initiatives undertaken at
Raytheon Electronic Systems (RES). Recently, T.J. Haley, et al.
[11], updated this study. Using the results of tracking 15
projects, they recorded significant results in a little over three
years. In the Level 1 stage, RESs CoSQ fluctuated between 55
percent and 67 percent of total development costs, and when
reaching Level 3 process maturity, their CoSQ had dropped to
approximately 40 percent of total project cost. The ratio of
conformance to nonconformance costs was 1.5. By 1996, this
organizations TCoSQ was approximately 15 percent of development costs, and the rework due to both internal and external
nonconformances has been reduced to less than 10 percent of
development costs.
November 1998
P rocess Maturity
Rework
P roduct Quality
(c h a ra c te ris tic )
( p e r c e n t o f t o t a l d e v e l o p m e n t e ffo r t )
( d e fe c t d e n s i t y )
Im m a tu re
> = .5 0
d o u b le d ig it
Project Controlled
.2 5 - .5 0
s in g le d ig it
D e fi n e d O r g a n i z a t i o n a l
Process
.1 5 - .2 5
.X
.0 5 - .1 5
.0 X
< = .0 5
< .0 0 X
C o n tin u o u s L e a rn in g a n d
Im p ro v e m e n t
CoSQ Programmatics
Several points can be made with regard to the programmatic
aspects of measuring and using CoQ information specifically
for software development organizations. These are
Initiating a CoSQ effort.
Accounting and gathering the quality cost data.
Gathering the quality metrics.
Presenting the results.
Improving the CoSQ program continuously.
Initiating the CoSQ Effort
Convincing management of the value of tracking CoSQ may
be the initial hurdle one encounters in using this technique.
There is a modest upfront investment required to educate those
to be involved.
Initially, rough estimates of software quality costs may suffice well for several reasons.
Usually, the largest CoSQ costs can be estimated readily
from time and activity reports, so the expense of data gathering can be limited until its value is demonstrated.
Controlled, scientific studies are unlikely, and incomplete data can suffice in beginning a software cost-benefit
analysis.
Figure 4. Cost of software quality and CMM level.
November 1998
Accounting
Gathering quality cost data assumes that
costs have been accounted using task
categories that can be summed into the
four major categories of quality costs.
Many software organizations track costs
in a manner amenable to quality costing,
but many others do not. In the latter
case, a preliminary step of defining and
installing such a chart of accounts is
required. A sample of such a chart of
software quality costs can be found in
[5]. The quality categories in a software
organizations chart of accounts must be
tailored to reflect its software process. To
realize the full benefit of CoSQ, it must
also allow for the addition of continuous
improvement tasks.
In the best cases, quality costs can be
taken directly from departmental accounting (salary and expense) reports. In
other cases, it may be necessary to resort
to basic accounting and engineering
records, such as schedules, time reports,
defect reports, and purchasing records.
In the worst cases, one may fall back on
interviews with members of the software
organization to construct estimates of
each quality cost category. Exceptions are
in the external failure category.
One of the pitfalls of a CoSQ program is controversial cost categories.
Usually, the question is about which
costs are normal operating costs and
which are quality costs. An example
would be the cost to produce a project
management plan. Although this plan is
produced for the sake of managing a
projects expenses and schedule, it also
influences product and process quality.
In this case, it is helpful to keep in mind
the following points.
The trend among quality specialists
has been to view quality costs as those
incurred to directly prevent, appraise,
10 CROSSTALK
November 1998
Conclusion
CoQ is a proven technique in manufacturing industries for both communicating the value of quality initiatives and
indicating quality initiative candidates.
CoSQ offers the same promise for the
software industry but has seen little use
to date. Initial uses of CoSQ show that it
can be a large percentage of development
costs60 percent or higher for organizations unaware of improvement opportunities. CoSQ has demonstrated its value
in measuring the ROI of a software improvement program, as in the RES case.
November 1998
References
1. Software Quality Matters, http://
www.utexas.edu/coe/sqi.
2. Davis, A., Editors Column, IEEE Software, December 1997.
3. Juran, J.M. and Frank M. Gryna, Juans
Quality Control Handbook, 4th ed.,
McGraw-Hill, New York, 1988.
4. Crosby, P.B., Quality Without Tears,
McGraw-Hill, New York, 1988.