The objective of every organization and every employee should be to deliver quality software. But then, quality does not come free. This cost of quality will have three important components :
Failure cost is the cost of fixing the bugs. At the time of releasing the software to the customer, if the software has many bugs, then you need to spend lot of money on the maintenance of the software. This is the failure cost. Your objective should be to reduce the failure cost to the maximum possible extent.
Appraisal cost is the cost of assessing whether the software has any bugs. This cost is the cost incurred on testing the software before releasing it to the customer. To reduce failure cost, you may increase the appraisal cost, but there is a limit to the amount of testing to be done.
Prevention cost is the cost of modifying the process to avoid bugs. The project manager has to give a lot of thrust to the process so that the quality is built into the product in every stage of development. For instance, you may realize that the customer is reporting many bugs in the software. Instead of focusing only on removing the bugs or just increasing the effort on testing the product, a better option would be to find out the root cause and modify the process—the project manager can study whether introducing the software testing tools will help in better quality product. If so, the cost of the testing tools, the cost of training the engineers on these tools etc. will be the prevention cost.
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