So often the thought for increasing profit is to build more homes. When in fact, the easiest way to increase profit is to reduce the Cost of Poor Quality.
Cost of Quality (COQ) consists of:
Prevention Costs
Appraisal Costs
Failure Costs
Prevention and Appraisal Costs are the normal costs involved in a well-functioning business. However, Failure Costs are the Costs of Poor Quality! By reducing the Failure Costs, the profitability of each home is increased. In most organizations the Failure Costs exceed the costs of Prevention and Appraisal.
At last month’s (Nov., 2014) annual meeting hosted by the Best Practices Research Alliance and IBACOS, there was a great presentation on COQ by Glenn Cottrell, VP and Director of Builder Solutions at IBACOS. The presentation provided insights to the COQ profile for home builders, how those costs typically breakdown and how action can be taken.
Here is a link to the Alliance COQ presentation: 'How to steal $10K more in profit per house'
http://www.theresearchalliance.org/media/157282/annlmtg_2014_coq_blog.pdf
Glenn can be contacted at gcottrell@ibacos.com to learn more about the analysis behind his presentation.
To learn more about IBACOS and the Best Practices Research Alliance, visit www.ibacos.com and www.theresearchalliance.org
What could you be saving on jobsite waste, construction oversight, cycle-time and warranty?
The research, case studies and $ for these are provided in the presentation.
How do your Prevention, Appraisal and Failure cost profiles line up?
What is your COQ?
Where and how can you save and increase your profits?
Related blogs:
http://www.housingzone.com/blog/field-rework-index
http://www.housingzone.com/blog/sustaining-quality-underlying-causes-failure
http://www.housingzone.com/blog/costs-not-using-quality-are-you-willing-pay-quality-your-business
http://www.housingzone.com/blog/sources-quality-defects-construction-projects
http://www.housingzone.com/blog/cost-rework
http://www.probuilder.com/blog/value-checklists
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