You are the project manager of the NHQ Project, which is part of the HQQ Program to construct a condominium building. Samuel, the program manager, has required that you document any variances to costs, schedule, scope, and quality expectations as part of the program governance. You believe that your project team now has an internal failure cost that needs to be documented for Samuel. Which of the following is an example of internal failure cost?
A. Rework
B. Quality audits
C. Random quality audits
D. Project team training
The Correct Answer and Explanation is :
The correct answer is A. Rework.
Explanation:
Internal failure costs are costs that occur when defects are identified before the product or service reaches the customer. These are typically incurred as a result of issues that arise during the production or construction process. These costs can include rework, repair, scrap, and any activities required to fix problems within the internal processes, even before the product or service is delivered.
Rework specifically refers to the act of correcting or fixing defects or mistakes that have been discovered within the project, which typically happens during the project execution phase. When defects are identified, rework is often required to correct the issues, which leads to additional labor, time, and materials spent on addressing the problems. This is a direct internal failure cost because it arises from issues within the project before any product or service is delivered to the customer.
On the other hand:
- B. Quality audits are part of the external costs or control measures to evaluate the quality of the product or service. These audits help detect problems but are not considered internal failure costs since they do not directly involve fixing defects.
- C. Random quality audits are similar to quality audits but may be conducted at random intervals to assess the process quality. These audits again help in identifying potential issues but are not the direct costs of fixing those issues. They also don’t fall under the internal failure category.
- D. Project team training is an example of a preventive cost, not an internal failure cost. Investing in training ensures that the team has the required skills to avoid mistakes in the first place, thus preventing future defects and rework.
In summary, rework is the best example of an internal failure cost because it represents the direct costs incurred when issues are discovered and need to be corrected internally, impacting the project’s schedule, cost, and quality.