Reducing hidden internal failure costs in road infrastructure projects by determination of Cost of Poor Quality, a case study

Cost of Poor Quality (COPQ) is the sum of all costs that would disappear if the job is done right first time. According to various researchers, COPQ ranges between 22 to 33% of total revenues. COPQ remains hidden because normally it is not measured and recorded in the existing accounting systems. Management fails to initiate timely corrective actions due to lack of knowledge of hidden problems/losses. It adversely affects the cost, scope and schedule of projects. Therefore, construction companies require a COPQ system to initiate timely corrective actions to reduce their hidden losses. The researchers designed a COPQ system and tested it on a public sector project as an experimental study. Before and after analysis have been carried out to observe the effect of this exercise on COPQ. According to results and analysis, the tested COPQ system has a capability to bring continuous improvement. It successfully reduced COPQ from 36.41% to 15.07% in sixty days study priod. The results have validated the COPQ measuring system for use on future construction projects.