IDEAS home Printed from https://ideas.repec.org/a/taf/conmgt/v27y2009i2p107-117.html
   My bibliography  Save this article

Cost of quality versus cost of non-quality in construction: the crucial balance

Author

Listed:
  • Yehiel Rosenfeld

Abstract

The research is a pioneering attempt to determine the optimal level of investment in quality by construction companies. 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 (revenues to the company due to construction, excluding land, etc.). The findings reaffirm, on the one hand, that investing in quality is a worthy strategy and that, in the situations examined, the ratio of the direct benefits to the investment (in terms of savings on internal and external failures) is at least 2:1. On the other hand, the findings also show that an excess of quality costs (prevention and appraisal) is wasteful. Above a certain level of investment, the extra benefits are marginal, and thus do not offset the extra costs. Statistically fitted graphs, based on actual quantitative data, support this hypothesis, and provide approximate boundaries of effective versus ineffective investments in quality. In this study, the optimal range lies between 2% and 4% of the company's revenue. Investing less than 2% in prevention and appraisal will definitely entail higher failure costs, whereas an investment of over 4% most probably will not pay itself back.

Suggested Citation

  • Yehiel Rosenfeld, 2009. "Cost of quality versus cost of non-quality in construction: the crucial balance," Construction Management and Economics, Taylor & Francis Journals, vol. 27(2), pages 107-117.
    • Handle: RePEc:taf:conmgt:v:27:y:2009:i:2:p:107-117
    DOI: 10.1080/01446190802651744
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/01446190802651744
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01446190802651744?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. P. E. D. Love & P. Mandal & H. Li, 1999. "Determining the causal structure of rework influences in construction," Construction Management and Economics, Taylor & Francis Journals, vol. 17(4), pages 505-517.
    2. Peter Love & Heng Li, 2000. "Quantifying the causes and costs of rework in construction," Construction Management and Economics, Taylor & Francis Journals, vol. 18(4), pages 479-490.
    3. Raymond Aoieong & S. L. Tang & Syed Ahmed, 2002. "A process approach in measuring quality costs of construction projects: model development," Construction Management and Economics, Taylor & Francis Journals, vol. 20(2), pages 179-192.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ionica Oncioiu & Sorinel Căpuşneanu & Dan Ioan Topor & Ana Maria Ifrim & Ramona Camelia Silvestru & Monica Ioana Toader, 2021. "Improving Business Processes in a Construction Project and Increasing Performance by Using Target Costing," SAGE Open, , vol. 11(1), pages 21582440219, February.
    2. Alberto Cerezo-Narváez & Andrés Pastor-Fernández & Manuel Otero-Mateo & Pablo Ballesteros-Pérez, 2022. "The Influence of Knowledge on Managing Risk for the Success in Complex Construction Projects: The IPMA Approach," Sustainability, MDPI, vol. 14(15), pages 1-30, August.
    3. Sungmin Yun & Wooyong Jung, 2017. "Benchmarking Sustainability Practices Use throughout Industrial Construction Project Delivery," Sustainability, MDPI, vol. 9(6), pages 1-20, June.
    4. Ileana – Sorina Rakos, 2021. "Cost Management Regarding S.C. Adarco Invest S.R.L. Petroșani," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1110-1119, December.
    5. Shimon Fridkin & Michael Winokur & Amir Gamliel, 2024. "Development of a Quality Deterioration Index for Sustainable Quality Management in High-Tech Electronics Manufacturing," Sustainability, MDPI, vol. 16(15), pages 1-34, August.
    6. Ooi, Joseph T.L. & Le, Thao T.T. & Lee, Nai-Jia, 2014. "The impact of construction quality on house prices," Journal of Housing Economics, Elsevier, vol. 26(C), pages 126-138.
    7. Olanrewaju Abdul Lateef & Lee Alice Hui Jing, 2022. "Investigation of the poor-quality practices on building construction sites in Malaysia," Organization, Technology and Management in Construction, Sciendo, vol. 14(1), pages 2583-2600, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hosang Hyun & Hyunsoo Kim & Hyun-Soo Lee & Moonseo Park & Jeonghoon Lee, 2020. "Integrated Design Process for Modular Construction Projects to Reduce Rework," Sustainability, MDPI, vol. 12(2), pages 1-19, January.
    2. Fatemeh Mostofi & Vedat Toğan & Yunus Emre Ayözen & Onur Behzat Tokdemir, 2022. "Predicting the Impact of Construction Rework Cost Using an Ensemble Classifier," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    3. Raphael N. Milion & Thaís da C. L. Alves & José Carlos Paliari & Luisa H. B. Liboni, 2021. "CBA-Based Evaluation Method of the Impact of Defects in Residential Buildings: Assessing Risks towards Making Sustainable Decisions on Continuous Improvement Activities," Sustainability, MDPI, vol. 13(12), pages 1-20, June.
    4. Alencastro, João & Fuertes, Alba & de Wilde, Pieter, 2018. "The relationship between quality defects and the thermal performance of buildings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 883-894.
    5. Ramin Ansari & Mohammad Khalilzadeh & Roohollah Taherkhani & Jurgita Antucheviciene & Darius Migilinskas & Shohreh Moradi, 2022. "Performance Prediction of Construction Projects Based on the Causes of Claims: A System Dynamics Approach," Sustainability, MDPI, vol. 14(7), pages 1-19, March.
    6. Markus Hoppe & Avner Engel & Shalom Shachar, 2007. "SysTest: Improving the verification, validation, and testing process— Assessing six industrial pilot projects," Systems Engineering, John Wiley & Sons, vol. 10(4), pages 323-347, December.
    7. Hossein Kiani & Seyed Hossein Hosseini & Farshid Abdi, 2018. "A Model to Investigate the Effect of Work Ethic Culture on Dynamics of Rework in Management of Projects," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 16(1), pages 40-59.
    8. Kudrekodlu V. Prasad & Venkatesan Vasugi, 2023. "Readiness Factors for Sustainable Lean Transformation of Construction Organizations," Sustainability, MDPI, vol. 15(8), pages 1-23, April.
    9. Kheira Anissa Tabet Aoul & Rahma Hagi & Rahma Abdelghani & Monaya Syam & Boshra Akhozheya, 2021. "Building Envelope Thermal Defects in Existing and Under-Construction Housing in the UAE; Infrared Thermography Diagnosis and Qualitative Impacts Analysis," Sustainability, MDPI, vol. 13(4), pages 1-23, February.
    10. Eze Emmanuel Chidiebere & Idiake John Ebhohimen & Ganiyu Bashir Olanrewaju, 2018. "Analysis of Rework Risk Triggers in the Nigerian Construction Industry," Organization, Technology and Management in Construction, Sciendo, vol. 10(1), pages 1778-1793, August.
    11. Jahangirian, Mohsen & Eldabi, Tillal & Naseer, Aisha & Stergioulas, Lampros K. & Young, Terry, 2010. "Simulation in manufacturing and business: A review," European Journal of Operational Research, Elsevier, vol. 203(1), pages 1-13, May.
    12. Zezhou Wu & Kaijie Yang & Xiaofan Lai & Maxwell Fordjour Antwi-Afari, 2020. "A Scientometric Review of System Dynamics Applications in Construction Management Research," Sustainability, MDPI, vol. 12(18), pages 1-16, September.
    13. Mark Hall & Cyril Tomkins, 2001. "A cost of quality analysis of a building project: towards a complete methodology for design and build," Construction Management and Economics, Taylor & Francis Journals, vol. 19(7), pages 727-740.
    14. Guofeng Ma & Shan Jiang & Tiancheng Zhu & Jianyao Jia, 2019. "A Novel Method of Developing Construction Projects Schedule under Rework Scenarios," Sustainability, MDPI, vol. 11(20), pages 1-25, October.
    15. Shahid Hussain & Wang Xuetong & Talib Hussain, 2020. "Impact of Skilled and Unskilled Labor on Project Performance Using Structural Equation Modeling Approach," SAGE Open, , vol. 10(1), pages 21582440209, March.
    16. Othman Ayman Ahmed Ezzat & AlNassar Nooran, 2021. "A framework for achieving sustainability by overcoming the challenges of the construction supply chain during the design process," Organization, Technology and Management in Construction, Sciendo, vol. 13(1), pages 2391-2415, January.
    17. Yuting Qi & Queena K. Qian & Frits M. Meijer & Henk J. Visscher, 2019. "Identification of Quality Failures in Building Energy Renovation Projects in Northern China," Sustainability, MDPI, vol. 11(15), pages 1-23, August.
    18. Ergo Pikas & Lauri Koskela & Olli Seppänen, 2020. "Improving Building Design Processes and Design Management Practices: A Case Study," Sustainability, MDPI, vol. 12(3), pages 1-18, January.
    19. Raymond Aoieong & S. L. Tang & Syed Ahmed, 2002. "A process approach in measuring quality costs of construction projects: model development," Construction Management and Economics, Taylor & Francis Journals, vol. 20(2), pages 179-192.
    20. Chantelle Brink & Sangwon Han, 2015. "Application of Social Network Analysis for Analyzing the Relationships between Root and Direct Causes of Defects," Modern Applied Science, Canadian Center of Science and Education, vol. 9(12), pages 1-12, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:conmgt:v:27:y:2009:i:2:p:107-117. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RCME20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.