List of Figures xvii
List of Tables xxi
About the Author xxv
Preface xxvii
Acknowledgments xxxiii
About the Companion Website xxxv

1 Concepts and Fundamentals 1
1.1 Quality and Business 1
1.1.1 Definitions and Dimensions of Quality 1
1.1.2 Quality in Business 4
1.1.3 Business Cost Categories 8
1.1.4 Section Summary 10
1.2 Introduction to COQ 11
1.2.1 Definitions and Roles of COQ 11
1.2.2 Quality and Financial KPIs 15
1.2.3 Section Summary 22
1.3 Perspectives of COQ 22
1.3.1 Strategic Role of COQ 22
1.3.2 Benefits and Challenges of COQ 24
1.3.3 "Quality-is-free" Philosophy 26
1.3.4 Main Topics in COQ 28
1.3.5 Section Summary 31

2 Categorization of COQ 41
2.1 Four Traditional COQ Types 41
2.1.1 PAF Cost Overview 41
2.1.2 Prevention Costs 42
2.1.3 Appraisal Costs 45
2.1.4 Failure Costs 48
2.1.5 Section Summary 52
2.2 Discussion of COQ Categories 52
2.2.1 COQ Assignment Challenges 52
2.2.2 Sector-specific COQ Practices 55
2.2.3 Extended COQ Perspectives 58
2.2.4 Section Summary 62
2.3 Assessment of COQ 63
2.3.1 Cost Detail Models 63
2.3.2 Cost Quantification 67
2.3.3 Additional COQ Considerations 70
2.3.4 Subjectivity Management 74
2.3.5 Section Summary 76

3 Common COQ Models 87
3.1 PAF Cost Model 87
3.1.1 PAF Model Overview 87
3.1.2 Evaluation of PAF Model 92
3.1.3 Section Summary 94
3.2 Characteristics of PAF Model 94
3.2.1 COQ Curves 94
3.2.2 Discussion of PAF 97viii Contents
3.2.3 Section Summary 100
3.3 Process Cost Model 100
3.3.1 Process-oriented Approach 100
3.3.2 Characteristics of PCM 104
3.3.3 Model Selection 106
3.3.4 Section Summary 108
3.4 Activity-based Costing 109
3.4.1 ABC Overview 109
3.4.2 ABC Methods 113
3.4.3 Discussion of ABC 117
3.4.4 Section Summary 119

4 Redefinition of Total COQ 129
4.1 Holistic Thinking in Quality Management 129
4.1.1 Holistic Thinking Principles 129
4.1.2 Broader Impacts of Quality 133
4.2 Indirect COQ 136
4.2.1 Indirect COQ Concept 136
4.2.2 Challenges of Indirect COQ 141
4.2.3 Section Summary 144
4.3 Management of Indirect COQ 144
4.3.1 Characteristics of Indirect COQ 144
4.3.2 Estimation of Indirect COQ 148
4.3.3 Section Summary 151
4.4 Total COQ Model 151
4.4.1 COQ Model Expansion 151
4.4.2 TCOQ Implementation 154
4.4.3 Section Summary 159
4.5 Subject-Focused TCOQ 159
4.5.1 COQ-related KPIs 159
4.5.2 Quality Impact Analysis 162
4.5.3 Section Summary 165

5 Quality Improvement Economics 175
5.1 Foundations of Project Economics 175
5.1.1 Economic Fundamentals 175
5.1.2 Economic Analysis in QM 180
5.1.3 Section Summary 184
5.2 Basic Economic Analysis 184
5.2.1 Break-even and Return Methods 184
5.2.2 Benefit–Cost Analysis 189
5.2.3 Section Summary 192
5.3 Project Valuation Methods 193
5.3.1 Key Valuation Factors 193
5.3.2 Present Worth Analysis 196
5.3.3 Future and Annual Worth 199
5.3.4 Section Summary 200
5.4 Advanced Analyses 200
5.4.1 Incremental ROR 200
5.4.2 Risk Assessment 203
5.4.3 Sensitivity Analysis 207
5.4.4 Section Summary 210

6 COQ Implementation 219
6.1 COQ Program Development 219
6.1.1 Program Foundations 220
6.1.2 Program Readiness 222
6.1.3 Financial Considerations 227
6.1.4 Section Summary 230
6.2 Program Core Elements 231
6.2.1 COQ Models 231
6.2.2 COQ Data Management 233
6.2.3 Implementation Example 236
6.2.4 COQ Reporting 239
6.2.5 Section Summary 241
6.3 Organizational and Contextual Factors 241xii Contents
6.3.1 Implementation Challenges 241
6.3.2 Organizational Culture 244
6.3.3 Sector Applications 247
6.3.4 Section Summary 251
6.4 Implementation Framework 251
6.4.1 Pillar I—Structural Foundation 252
6.4.2 Pillar II—Operational Execution 252
6.4.3 Pillar III—Sustainable Reinforcement 252
6.4.4 Integrated Framework Summary 253

7 COQ Integration in QM 263
7.1 Overview 263
7.1.1 COQ in QM Frameworks 263
7.1.2 ISO 10009 Guidelines 264
7.1.3 Section Summary 264
7.2 Lean and Six Sigma 265
7.2.1 Principles of LM and SS 265
7.2.2 Integrated COQ Applications 268
7.2.3 Section Summary 273
7.3 Variation and Prioritization 273
7.3.1 Variation and Cost 273
7.3.2 Taguchi Loss Perspective 276
7.3.3 Theory of Constraints 278
7.3.4 Section Summary 280
7.4 Quality Standardization 281
7.4.1 Quality Standards Overview 281
7.4.2 Sector Standards 282
7.4.3 ISO 10014 Guidelines 286
7.4.4 Section Summary 289
7.5 Quality by Design 290
7.5.1 Design-driven Quality 290
7.5.2 Quality Planning 293
7.5.3 Section Summary 298

8 COQ Case Studies 311
8.1 Introduction 311
8.1.1 Chapter Organization 311
8.1.2 Review Framework 311
8.1.3 Review Guidance 312
8.2 Manufacturing and Engineering 313
8.2.1 Manufacturing Practices 313
8.2.2 Construction Projects 317
8.2.3 Engineering Applications 320
8.2.4 Section Summary 324
8.3 Service and Governmental Operations 324
8.3.1 Healthcare Operations 324
8.3.2 Hospitality and Supply Chain 328
8.3.3 Public Sector and Infrastructure 331
8.3.4 Section Summary 334
8.4 Specific and Regional Studies 335
8.4.1 Thematic Studies 335
8.4.2 Regional Studies 339
8.4.3 Section Summary 343

9 QM and COQ Frontiers 351
9.1 QM and COQ Advancement 351
9.1.1 Ecosystem-driven QM 351
9.1.2 Strategic COQ Enablement 356
9.1.3 Knowledge Foundation for COQ 358
9.1.4 Section Summary 360
9.2 Proactive and Expanded QM Practices 360
9.2.1 Proactive QM 362
9.2.2 QM Expansions 365
9.2.3 Section Summary 368
9.3 Application of AI Technologies 368
9.3.1 AI in QM Overview 368
9.3.2 AI Applications in QM 372
9.3.3 Section Summary 375
9.4 COQ Research 376
9.4.1 Research Trends 376
9.4.2 Modeling Approaches 379
9.4.3 Quality 4.0 Evolution 380
9.4.4 Section Summary 384

Key Takeaways 384
Exercises 386
References 388
A Acronyms, Abbreviations, and Notations 395
B Answers to Analysis Problems 401
Epilogue 405
Index 407