QualityMgmt Examples

PMP Preparation Course, Chapter 8 December 08

Promastar & IPMS Group 1

1

Quality Systems and Gurus

1. ISO

2. TQM

3. Deming

4. Crosby

5. Juran

Source: Adapted from “Three Paths, One Journey,” Steve Gibbons—The Principal

Financial Group, Journal for Quality and Participation (October/November 1994);

articles by Armand V. Feigenbaum in Journal for Quality and Participation (1988–

1996).

For the PMP Exam you need to know the paradigms and

absolutes of the main quality systems and gurus:

2

W. Edwards Deming

Quality is continuous improvement through reduced variation.

Deming’s Five Principles:

1. The central problem is the failure of management to understand variation.

2. It is management’s responsibility to know whether the problems are in the system or in the behavior of the people.

3. Teamwork should be based on knowledge, design, redesign. Constant improvement is management’s responsibility.

4. Train people until they are achieving as much as they can.

5. It is management’s responsibility to give detailed specifications.



3

Philip B. Crosby

Quality is conformance to requirements

The Four Absolutes of Quality Management:

1. The definition of quality is conformance to requirements.

2. The system of quality is prevention.

3. The performance standard is zero defects.

4. The measurement of quality is the price of nonconformance.

4

Joseph M. Juran

Quality is fitness for use

The Quality Trilogy:

• 1. Quality improvement.

• 2. Quality planning.

• 3. Quality control.



5

Cost of Quality

There are 3 types of costs that are incurred: prevention costs, appraisal costs, and failure costs

(internal and external).

Cost of Quality

Cost of

Conformance

Cost of

Non-conformance

Prevention

Cost

Appraisal

Cost

Internal

Failure

External

Failure

6

The Cost of Quality

Before & After TQM

Prevention Costs

2% maximum

Appraisal Costs

23%

Failure Costs

75%

Prevention Costs

10 – 15%

Appraisal Costs

10 – 15%

Failure Costs

Savings 50% of

total in 3 years

Costs of Poor Quality

BeforeAfter



7

Marginal Analysis

When considering the cost of quality, marginal analysis help to define the point where incremental revenue from quality improvement equals the incremental cost to secure it.

8

Control Limits and

Specification Limits



9

Interpreting Patterns

in Control Charts

10

Pareto Chart

• A Pareto chart is a specific type of histogram,

ordered by frequency of occurrence, which shows how

many defects were generated by type or category of

identified cause.

• The Pareto technique is used primarily to identify and

evaluate nonconformities and guide corrective action.

Pareto’s Law – A relatively small number of causes

will typically produce a large majority of

the problems or defects (80/20 rule)



11

Pareto Chart Example

12

Pareto Chart in the Exam

How does the exam refers to Pareto Chart ?

1. Helps focus attention on the most critical issues

2. Prioritize the potential “causes” of the problem

3. Separate the critical few from the uncritical many



13

Basic Statistical Definitions

• Mean (µµµµ) – Average, sometimes ( x ) is used

• Variance – Sum of squared differences between

mean and each value, (x- µµµµ)2, divided by number

of samples less one (n-1)

• Standard deviation – Square root of the variance

14

Example of Standard Deviation

Item Weight (x) (x-µ)2

1 4.9 0.02778

2 5.0 0.00444

3 5.1 0.00111

4 5.2 0.01778

5 5.3 0.05444

6 5.5 0.18778

7 4.7 0.13444

8 4.8 0.07111

9 5.1 0.00111Total 45.6 0.50000



15

Example of Standard Deviation

• Mean (µµµµ) = 45.6 / 9 = 5.066; (rounded to 5.07)

• Variance – Sum of squared differences

between mean and each value, (x- µµµµ)2, divided

by number of samples less one or (9-1=8);

thus 0.5 / 8 = 0.0625

• Standard deviation – Square root of the

variance; thus 0.0625 = 0.25

16

Using Standard Deviation

� 2 standard deviations (+/- 1) = 68.26 %



0-1-2-3 +1 +2 +3

These figures need to

be memorized for the

exam



17

Summary

Review Questions

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QualityMgmt Examples