CONTENTS
ABSTRACT .............................................................................................................................. 2
CHAPTER 1 ............................................................................................................................. 3
INTRODUCTION.................................................................................................................... 3
1.1 GENERAL ....................................................................................................................... 3
1.2 OBJECTIVE .................................................................................................................... 4
CHAPTER 2 ............................................................................................................................. 5
LITERATURE REVIEW ....................................................................................................... 5
CHAPTER 4 ............................................................................................................................. 8
METHODOLOGY .................................................................................................................. 8
CHAPTER 4 ........................................................................................................................... 11
CONCLUSION ...................................................................................................................... 11
REFERENCES ....................................................................................................................... 12
MES College Of Engineering 2 Department of Civil Engineering
ABSTRACT
Cost of quality is an essential element of the total cost of any construction project.
Consequently, the accurate assessment of such cost of quality can materially affect the
reliability of the estimated cost of any construction project. Stated differently, the accurate and
reliable cost estimating for any construction projects is not really possible without the deep
investigation for the expected cost of quality of this project. Cost of quality is generally affected
by many factors. Any attempt to assess the cost of quality of any project should take the
different cost of quality factors into consideration.
In this paper various factors that contribute to cost of quality are determined through primary
and secondary survey. These factors are weighted and ranked on the basis of their priority.
Then these factors are used to create a neural network model that will enable the assessment of
cost of quality for any future building project. This will improve a construction firm’s
performance and its ability to compete with other companies by improving the price of their
buildings. The ‘‘Neural Connection” software package will be used to generate the proposed
model. The main factors affecting the expected cost of quality will be clearly identified. The
different sequences of the model development will be deeply investigated. Moreover, the
validity of the proposed model will be evaluated using a number of case study applications.
MES College Of Engineering 3 Department of Civil Engineering
CHAPTER 1
INTRODUCTION
1.1 GENERAL
Cost of quality is the cost associated with preventing, finding, and correcting defective work.
These costs are huge, running at 20% - 40% of sales. Many of these costs can be significantly
reduced or completely avoided. One of the key functions of a Quality Engineer is the reduction
of the total cost of quality associated with a product.
There are numerous definitions on quality cost or cost of quality based on prevention, appraisal
and failure costs. Prevention costs are associated with actions taken to ensure that a process
provides quality products and services, appraisal costs are associated with measuring the level
of quality attained by the process and failure costs are incurred to correct quality in products
and services before (internal) and after (external) delivery to the customer. The concept of cost
of quality originated in manufacturing settings, in the 1950s, as a means of justifying staff
functions responsible for quality management. A number of organizations are now seeking
both theoretical advice and practice evidence about cost of quality and the implementation of
quality costing system. In the time, cost, quality trade off analysis for construction project, the
objective is to construct projects using computer simulation and interactive procedure (Shankar
et al, 2011).
COQ is usually understood as the sum of conformance plus non-conformance costs, where cost
of conformance is the price paid for prevention of poor quality, and cost of non-conformance
is the cost of poor quality caused by product and service failure. These COQ can be also broken
down into the three categories:
Prevention cost: the cost of any action taken to investigate, prevent or reduce the risk
of nonconformity.
Appraisal cost: the cost of evaluating the achievement of quality requirements.
Failure Cost: There are sub classified in to 2:
o Internal failure cost: the costs arising within an organization due to
nonconformities or defects at any stage of the quality loop.
o External failure cost: the cost arising after delivery to a customer/user due to
nonconformities or defects which may include the cost of claims against
MES College Of Engineering 4 Department of Civil Engineering
warranty, replacement and consequential losses and evaluation of penalties
incurred.
Cost of quality is an essential element of the total cost of any construction project. Cost of
quality is generally affected by many factors, such as planned COQ for the project, awareness
of quality for project team, supervision team experience, labour skills, suppliers, design errors,
defected material, plan of improving quality, external factors, accident, equipment down time
and project duration.
1.2 OBJECTIVE
The objective of this study is to identify the most important factors affecting cost of quality
and to develop an Artificial Neural Network model that can help cost estimator to arrive at a
more reliable assessment for the expected cost of quality of any building construction project.
MES College Of Engineering 5 Department of Civil Engineering
CHAPTER 2
LITERATURE REVIEW
COQ models were classified into five groups of generic models. These are: P-A-F model,
Crosby’s model, and opportunity cost models, process cost models and ABC (Activity Based
Costing) models. The following is a summary for the main literature concerning the cost of
quality topic:
1. G. Heravi et.al (2014) Cost of Quality Evaluation in Mass-Housing Projects in Developing
Countries
In this paper the quality related activities are categorised based on their relative importance.
The activities are grouped as preventive activities group, appraising activities group, internal
failure related activities group and external failure-related activities group.
In preventive activities group, root cause analysis of non-conformances and conducting
preventive actions weighted the highest. The first step in preventing the problems is to survey
them deeply, removing the problems and preventing them to reoccur. The next important
quality related activity was motivating the staff. Companies try to motivate the staff to improve
work quality by increasing salaries, for example. Design review and Drawings check was
ranked third under this group. Checking the plans and offering necessary changes before the
execution phase will prevent incompatibilities of operational plans with each other, which can
result in work stoppages until the plans get modified.
In appraising activities group, in process inspection and testing stood first in priority for quality
related activity. The first and most important activity that companies carry out to control and
examine a project is to inspect and ensure precision and accuracy during performance. Second
important factor was found to be Product inspection and testing. After the completion of the
execution phase, initial inspections may unearth some non-conformances during the
construction that the contractor is responsible for. Third important factor was Material
inspection and testing. Because reducing construction costs is the main goal of mass-housing
contractors, they are not interested in setting up an equipped laboratory in a construction site
and prefer to choose a trustworthy supplier for assuring the quality of the materials.
MES College Of Engineering 6 Department of Civil Engineering
In internal failure related activities group, in process reworks and corrective actions was found
to be the most important quality activity. It is because remedying the non-conformances closer
to project delivery time would inflict more expenses on the company. Product repairs was the
next important activity. Postponing the elimination of defects until the end of the project would
impose higher costs on the project.
In external failure related activities group warranty works weighed highest. Every organization
inevitably tries to avoid anything that causes dissatisfaction for the client or the beneficiary
because it may lead to notoriety for future projects. Customer complaints is the next important
quality activity that is to be considered. The reason the construction companies and
organizations try to avoid legal claims is that such legal entanglements not only can easily
impair their reputation but may also impose high costs on the organization.
2. K. N. Jha et.al. (2006) Critical Factors Affecting Quality Performance in Construction
Projects.
The factors that adversely affected the quality performances of projects were: conflict among
project participants; hostile socio-economic environment; harsh climatic condition; PM’s
ignorance & lack of knowledge; faulty project conceptualization; and aggressive competition
during tendering. Analyses also led to the conclusion that the extent of contribution of various
success factors varies with the current performance ratings of the project. Project manager’s
competence and top management support are found to contribute significantly in enhancing the
quality performance of a construction project.
3. V.V. Waje et.al. (2010) Cost of poor Quality in Construction
Stated that poor quality resulting from non-conformance during construction leads to extra cost
and time to all members of the project team. The costs of rectifying non-conformance can be
high and they can affect a firm’s profit margin and its competitiveness. Construction related
firms can identify non-conformance information by employing a quality cost matrix as
illustrated in a case study as a basis for improvement.
Also defines the categories of COQ.
Failure cost. They are of two types:
o Internal Failure Cost: Internal failure cost is a cost that would disappear if no
defects existed prior to handover to the customer. These costs include rework,
MES College Of Engineering 7 Department of Civil Engineering
scrap, re-inspection, re-testing, corrective action, redesign, material review,
material downgrades, vendor defects, and other like defects.
o External Failure cost: External failure cost is a cost that would disappear if no
defects existed in the product after shipment to the customer. These costs
include processing customer complaints, customer returns, warranty claims and
repair costs, product liability and product recalls.
Appraisal Cost: The costs incurred while performing measuring, evaluating, or auditing
to assure the quality conformance. These costs include first time inspection, checking,
testing, process or service audits, calibration of measuring and test equipment, supplier
surveillance, receipt inspection etc.
Prevention Cost: The costs related to all activities to prevent defects from occurring and
to keep appraisal and failure to a minimum. These costs include new product review,
quality planning, supplier surveys, process reviews, quality improvement teams,
education and training and other like costs.
4. Rosenfeld (2009) Cost of quality versus cost of non-quality in construction
Compare cost of quality versus cost of non-quality in construction. The methodology is based
on quantifying the four types of quality-related costs in residential construction, and relates
them to each other by expressing them all as percentages of the relevant total construction
revenues.
MES College Of Engineering 8 Department of Civil Engineering
CHAPTER 4
METHODOLOGY
The first step is to identify the objective. The objective is to identify various factors that
contribute to cost of quality in a construction project. A questionnaire is prepared using these
factors. The questionnaire is distributed among builders of apartment/villa projects. The
response is tabulated and RII value of each factor is found. These factors are then weighted
and ranked on the basis of their priority. Then these factors are used to create a neural network
model that will enable the assessment of cost of quality for any future building project.
Data collection is be collected from both primary and secondary sources. Primary data on cost
of quality are obtained through the use of well-structured questionnaires administered to
owners and builders of selected private buildings. Data obtained from this source formed the
basis of this study. Secondary data were obtained through review of various relevant literatures.
The consistency and stability of response from respondents are evaluated using a
reliability test such as the Cronbach’s alpha method.
o Cronbach alpha or simply the alpha is calculated as follows:
Let X be an n×k matrix of the quantified answers of a questionnaire.
Each row of X represents a subject and each column a question. The
quantified answers may be in any scale (e.g. 0–1, 1–5, 0–100, etc.). The
Cronbach’s alpha coefficient is measured in the following way:
α= 𝑘
𝑘−1∗ [(σ2
τ -Σ σ2i )/ σ
2τ )]
o where, σ2i is the variance of each column of X,
o σ2τ the variance of the sum of each row of X,
o k the number of respondents, should be greater than 1 in
order to have non-zero denominator
Alternatively Cronbach’s alpha can be calculated using SPSS statistical package or MS
Excel installed with real statistics package.
Reliability of the data is considered at low level when cronbach alpha is less than 0.3
which means the data is not reliable and cannot be adopted. Reliability is at high level
when cronbach alpha is more than 0.7 (Wong and Cheung (2005).
MES College Of Engineering 9 Department of Civil Engineering
Once the data is found to be reliable, the factors leading to delay and cost overrun are
ranked on the basis of Relative Identity Index or simply RII.
o RII is calculated as follows:
Relative Importance index (RII) calculation was used to determine
relative significance and ranking of cost and time overrun factors.
RII (%)=Σa/(𝐴 ∗𝑁) ∗ 100
Where,
o RII= Relative importance index
o a= weighting given to each factor by respondent and it
ranges from 0 to 4
o A= highest response
o N= total number of participants
The ranking is done using SPSS statistical package.
Neural connections software by IBM is used to develop a neural network that will create the
proposed model. Artificial Neural Networks is use as a modelling tool that can enhance current
automation efforts in the construction industry. The structure of the neural network model
includes an input layer that receive input from the outside world, hidden layers that serve the
purpose of creating an internal representation of the problem, and an output layer, or the
solution of the problem. Before solving a problem, neural networks must be ‘‘trained’’.
Networks are trained as they examine a smaller portion of the dataset just as they would a
normal-sized dataset. Through this training, a network learns the relationships between the
variables and establishes the weights between the nodes. Once this learning occurs, a new case
can be entered into the network resulting in solutions that offer more accurate prediction or
classification of the case.
The steps for the design of ANN model will be illustrated to predict the percentage of the
expected cost of quality for building construction projects. All factors that have an effect on
the expected cost of quality of the building construction projects are identified. These factors
are considered as the input variables for the proposed neural network model, while the expected
cost of quality as a percentage from the total projects contract value is considered as the output
variable of this model.
Neural network models are generally developed through the following six basic steps:
MES College Of Engineering 10 Department of Civil Engineering
Identify the problem, decide what information to be used and what will the network do;
Come to a decision of how to gather the information and symbolize it;
Define the network, select network inputs and identify the expected outputs;
Structure the network;
Train the network;
And analyse the trained network.
This engages addressing novel inputs to the network and evaluates the network’s results with
the authentic life results.
MES College Of Engineering 11 Department of Civil Engineering
CHAPTER 4
CONCLUSION
All the way through the literature review, potential factors that control the percentage of cost
of quality for building construction projects are recognized. The factors are then checked for
reliability and finally a neural network model is to be created for accurately assessing the cost
of construction including the cost of quality.
MES College Of Engineering 12 Department of Civil Engineering
REFERENCES
1. A. Jafari and G. Heravi (2014)- Cost of Quality Evaluation in Mass-Housing Projects
in Developing Countries, ASCE, 140(5): 04014004, pp: 1-9.
2. K. N. Jha and K. C. Iyer(2006)-Critical Factors Affecting Quality Performance in
Construction Projects, TANDF, Vol. 17, No. 9,pp: 1155–1170.
3. V.V. Waje and Vishal Patil (2010)-Cost of poor Quality in Construction, IOSR Journal
of Mechanical and Civil Engineering (IOSR-JMCE), ISSN: 2278-1684, PP: 16-22.
4. N. Ravi Shankar, M. M. K. Raju, G. Srikanth and P. Hima Bindu (2011)- Time, Cost
and Quality Trade-off Analysis in Construction of Projects, Contemporary Engineering
Sciences, Vol. 4, no. 6, pp.: 289 – 299.
5. Rui Alexandre Sampaio and Reis Almeida (2011)- Evaluation and modelling of the
costs of non-quality in the Portuguese construction industry, University of Lisboa,
pp.:1-11.
6. Philip Barlow (2009) - Cost of Quality in the Construction Industry, California
Polytechnic State University.
7. Arthur B. Jeffery (2003) - Managing Quality: Modeling the Cost of Quality
Improvement, Southwest Business and Economics Journal, pp.: 25-36.
8. Y. Rosenfeld (2009)-Cost of quality versus cost of non-quality in construction,
TANDFonline, Construction engineering and economics, pp.: 107-117.
9. Carlos Gershenson, Artificial Neural Networks for Beginners, Sussex, pp.:1-8.
10. William Kruskal (1984), Concepts of Relative Importance, University of Chicago,
Vol.8, pp.: 39-45.
