Mahmood, S; Ahmed, S M; Panthi, K and Kureshi, N I (2014) Determining the cost of poor quality and its impact on productivity and profitability. Built Environment Project and Asset Management, 4(3), pp. 296-311. ISSN 2044-124X
Abstract
Purpose – The purpose of this paper is to examine how effectively the cost appraisal system proposed measures the cost of poor quality (COPQ) in a construction project. The paper first formulates how COPQ can be measured and later clarifies the relationship between COPQ, labor productivity, and profitability. Design/methodology/approach – In order to measure COPQ, the researchers prepared data entry forms for recording COPQ items on a daily basis and formulated the cost contribution of lost material, lost man-hours, lost machinery hours, and lost overhead on the overall COPQ for the project. The proposed method was then applied in a case study. Findings – The results showed that, for the 60-days study period, COPQ decreased by about 24 percent while labor productivity and profitability increased by about 17 and 11 percent, respectively, after the implementation of COPQ measuring system. This study further supports the use of the COPQ system in construction projects as a mechanism to facilitate continuous improvement. Originality/value – COPQ is a major cost that is often ignored in construction projects due to the difficulty of measuring it. This paper presents a COPQ measuring and recording system capable of identifying COPQ. The implementation of the system is shown to increase productivity and profitability as demonstrated by the project used for the case study.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction industry; construction project; cost of poor quality; labor productivity; productivity; profitability; project management |
| Index terms: | project management, implementation, construction industry, appraisal, labour productivity, profitability, methodology, construction project, continuous improvement, productivity, case study |
| Subjects: | project management theory and practice, production management, research methods, management, factor and component analysis, performance measurement, industry analysis, data collection methods, economic analysis, contractual arrangements |
| Topics: | Business Strategy, Project Management, Research Practice, Procurement, Quality Management, Site Management |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here