The Cost of 2nd Time Quality
Most builders are astounded to discover how much poor quality costs.
We tend to treat the constant stream of quality errors that plague daily operations as just another cost of doing business—that is, until we calculate the actual costs.
Estimating the Cost of 2nd Time Quality
Every employee in the company--from pick-up laborers to management--spends a significant portion of his or her time dealing with quality and customer satisfaction issues.
Builders typically estimate the cost of 2nd time quality to be 2 to 4 percent of sales revenue. If you also consider 2nd time quality costs embedded in your subcontractors, the figure grows to 8 to 12 percent of sales.
Quality-based Cost Reduction
The goal of quality-based cost reduction is to improve quality and return the costs to your bottom line.
Reducing quality costs are worth pursuing. Removing half of the costs is a reasonable short-term expectation that makes a concentrated effort worthwhile. First Time Quality® can help!