The application of costs of quality is a good means to identify the quality performance of an organization. A quality costing system is a management tool for identifying and monitoring costs incurred with respect to quality. It enables the application of proper management direction and control over areas where quality cost figures are abnormally high. Some may argue that quality is even better than free. Improving quality need not necessarily increase costs. In fact, the benefits from a properly implemented quality system far outweigh the costs.
Quality costs comprise four major categories — prevention costs, appraisal costs, internal failure costs and external failure costs. Formal definitions of these categories are described in British Standard BS 6143. Let's take a closer look.
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