Economics of Quality

To ensure that the homes are built as designed to achieve optimal energy savings, a builder's quality control and assurance processes are necessary. There are economic costs to a builder for quality management including the costs for prevention, appraisal, and the cost of failure that can directly affect the economics of energy efficiency upgrades in a high performance home. An effective quality management system should create efficiencies and related savings that are greater than the investments in the quality activities required to achieve the savings. However, the costs of quality are difficult to measure due to the fact that the performance metrics have not been fully defined and are often not effectively utilized by builders.

The goal of this paper is to detail the value of quality management in general as well as specifically to new home construction and high performance homes. The paper outlines the economics of quality including the cost of quality which breaks down the impact of quality into its component parts, its value, its impact in the construction industry, and its value for high performance homebuilders. It lays out recommended tools and techniques for the introduction of quality management and the monitoring of its impact based on metrics. Builders using these tools and techniques have seen dramatic improvements in energy and quality performance, profitability, and customer satisfaction.

Economics of Quality
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