Bs 6143 1 Guide To The Economics Of Quality Part 1 Process Cost Model 7011e

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BRITISH STANDARD

BS 6143-1: 1992 Incorporating Amendment No. 1

Guide to the economics of quality —


Part 1: Process cost model

BS 6143-1:1992

Committees responsible for this British Standard


The preparation of this British Standard was entrusted by the Quality, Management and Statistics Standards Policy Committee (QMS/-) to Technical Committee QMS/22, upon which the following bodies were represented: Association for Consumer Research (ACRE) Association of Consulting Engineers Association of Consulting Scientists Bristol Quality Centre British Coal Corporation British Gas plc British Institute of Management British Maritime Technology British Non-ferrous Metals Federation British Nuclear Fuels plc British Paper and Board Industry Federation British Photographic Association British Quality Association British Railways Board British Steel Industry British Telecommunications plc British Valve and Actuator Manufacturers’ Association British Welded Steel Tube Association Cable and Wireless plc Chartered Institute of Marketing Chemical Industries’ Association Computing Services Association Consumer Policy Committee of BSI Defence Manufacturers’ Association Department of Trade and Industry (National Physical Laboratory) Department of Trade and Industry (Standards and Quality Policy Unit, Quality, Design and Education Division)

This British Standard, having been prepared under the direction of the Quality, Management and Statistics Standards Policy Committee, was published under the authority of the Standards Board and comes into effect on 28 February 1992 © BSI 11-1998 The following BSI references relate to the work on this standard: Committee reference QMS/22 Draft for comment 90/97580 DC ISBN 0 580 20440 5

EEA (the Association of Electronics, Telecommunications and Business Equipment Industries) Energy Industries Council Engineering Equipment and Materials s’ Association GAMBICA (BEAMA Ltd.) Guildford County College of Technology Health and Safety Executive Institute of Quality Assurance Institute of Trading Standards istration Institution of Chemical Engineers Medical Sterile Products Association Mercury Communications Limited Ministry of Defence National Accreditation Council of Certification Bodies National Association of Plumbing, Heating and Mechanical Services Contractors National House-building Council National Quality Development Network PERA International Power Generation Contractors’ Association (BEAMA Ltd.) Society of Motor Manufacturers and Traders Limited Solvents Industry Association Ltd. University of Salford Water Services Association of England and Wales

Amendments issued since publication Amd. No.

Date

Comments

7633

May 1993

Indicated by a sideline in the margin

BS 6143-1:1992

Contents Committees responsible Foreword


0 1 2 3 4

Page Inside front cover ii

Introduction Scope Definitions The process cost model Relationship between the traditional (PAF) quality and process cost approaches

1 1 1 2 3

Appendix A Examples of process models Appendix B Examples of cost models Appendix C Examples of process cost reports Appendix D Preparation of process and cost models

5 9 11 15

Figure 1 — The basic process model Figure 2 — Typical inputs and outputs of personnel department processes Figure 3 — Typical inputs and outputs of manufacturing department processes Figure 4 — Typical inputs and outputs for quality assurance department processes Figure 5 — Typical inputs and outputs for technical publications unit processes Figure 6 — Typical process report for a personnnel department Figure 7 — Typical cost report for a manufacturing department Figure 8 — Typical process report for a quality assurance department Figure 9 — Typical process cost report for a technical publications unit Figure 10 — Stages of a process model Table 1 — Cost model for a personnel department Table 2 — Cost model for a manufacturing department Table 3 — Cost model for a quality assurance department Table 4 — Cost model for a technical publications unit Table 5 — Identification of costs for key activities Publication(s) referred to

© BSI 11-1998

2 5 6 7 8 11 12 13 14 15 9 9 10 10 16

Inside back cover

i

BS 6143-1:1992


Foreword This Part of BS 6143 has been prepared under the direction of the Quality, Management and Statistics Standards Policy Committee. This Part of BS 6143, together with BS 6143-2:1990, is an extensive revision and expansion of BS 6143:1981, which was withdrawn upon publication of BS 6143-2. BS 6143-1, the process cost model, sets out a method for applying quality costing to any process or service. It recognizes the importance of process measurement and process ownership. The categories of quality costs have been rationalized to the cost of conformance and the cost of nonconformance. This serves to simplify classification. The method depends on the use of process modelling and the standard gives guidelines on useful techniques. The application of the process control model is compatible within the concept of total quality management. BS 6143-2, the prevention, appraisal and failure model, is a revised version of the traditional method of product quality costing in manufacturing industries. Improvements have been made in the light of experience and it is recognized that successful practitioners may wish to continue with this approach. Continuation of this approach does not preclude the simultaneous development of the process cost model. A British Standard does not purport to include all the necessary provisions of a contract. s of British Standards are responsible for their correct application. Compliance with a British Standard does not of itself confer immunity from legal obligations.

Summary of pages This document comprises a front cover, an inside front cover, pages i and ii, pages 1 to 16, an inside back cover and a back cover. This standard has been updated (see copyright date) and may have had amendments incorporated. This will be indicated in the amendment table on the inside front cover. ii

© BSI 11-1998

BS 6143-1:1992


0 Introduction Total quality management (TQM) requires the management of processes, not just of outputs. This is fundamental to improving quality and productivity in manufacture and service enterprises alike. Every person within the organization contributes to and operates within a process, and every process should have an identified process owner who is responsible for the effectiveness of that process. Historically, the concept of a quality cost model has suggested that certain identifiable costs are in some way related to the “quality” of the end result. By contrast, within the TQM culture, all business activity is related to processes and therefore the cost model should reflect the total costs of each process rather than an arbitrarily defined cost of quality. The only partitioning which is ultimately valid is that between the costs of conformance to requirements and the costs of nonconformance. Both are usually capable of improvement. The “process” may be considered at any level within the organization, e.g. the process may be a particular work stage, or it may be the overall process of operating the business. In either case, the process uses materials and resources and the process owner, whether an individual, a supervisor or the managing director, needs the facility to monitor the costs of that process and take action to ensure that these are minimized. NOTE A new standard guide to total quality management is being prepared as a revision of BS 4891.

1 Scope This Part of BS 6143 provides guidance on the modelling and determination of costs associated within any business process in a manner consistent with the pursuit of continuous improvement and the concept of total quality management. NOTE The titles of the publications referred to in this standard are listed on the inside back cover.

2 Definitions For the purposes of this Part of BS 6143 the definitions given in BS 4778 apply, together with the following. 2.1 quality related cost cost in such categories as: prevention cost; appraisal cost; internal failure cost; and external failure cost NOTE

These categories are individually defined in BS 6143-2.

2.2 cost of conformance (COC) the intrinsic cost of providing products or services to declared standards by a given, specified process in a fully effective manner 2.3 cost of nonconformance (CONC) the cost of wasted time, materials and capacity (resources) associated with a process in the receipt, production, despatch and correction of unsatisfactory goods and services 2.4 process cost the total cost of conformance and cost of nonconformance for a particular process 2.5 process any activity that transforms inputs into outputs, utilizing resources and being subject to particular controls NOTE Inputs, controls and resources are all supplied to the process.

2.6 inputs materials and/or data that are transformed by the process to create outputs 2.7 outputs the result of the transformation of inputs NOTE In practice the outputs include: a) that which conforms to the requirement; b) that which does not conform; c) waste; d) process information.

2.8 controls inputs that define, regulate and/or influence the process NOTE Controls embrace procedures, methods, plans, standards policies, strategy and legislation.

2.9 resources contributing factors which are not transformed to become an output NOTE Examples of resources include people (individuals or groups), equipment, material, accommodation and environmental requirements.

2.10 process owner the individual who has full responsibility for and authority over the process

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1

BS 6143-1:1992

2.11 synthetic cost a cost, derived from available relevant data on a clearly established basis NOTE rate.

An example of a synthetic cost is hours worked × labour

2.12 environment


the external and internal conditions that influence the existence, development and performance of the process

3 The process cost model 3.1 The process Total quality management (TQM) requires the management of processes, not just of outputs. This is fundamental to improving quality and productivity in manufacture and service enterprise alike. Every person within the organization contributes to and operates within a process, and every process should have an identified process owner, who is responsible for the effectiveness of that process. 3.2 Identification of inputs, outputs, controls and resources It is useful to construct a block diagram to identify all the elements of the process. It also focuses attention on the need for the process. The process model should be prepared essentially as shown in Figure 1 and examples of more complex process models are shown in appendix A.

Figure 1 — The basic process model 3.3 The process cost elements Cost elements associated with the process can be identified and recorded under one of the following categories: a) people; b) equipment; c) materials; d) environment.

2

Each individual cost element also needs to be identified as a cost of conformance and/or a cost of nonconformance and the source of the data recorded. 1) Cost of conformance (COC). The cost of operating the process as specified in a 100 % effective manner. This does not imply that it is an efficient, nor even a necessary process, but rather that the process, when operated within its specified procedures, cannot be achieved at a lower cost. This is the minimum cost for the process as specified. 2) Cost of nonconformance (CONC). The cost of inefficiency within the specified process, i.e. over resourcing of excess costs of people, materials and equipment arising from unsatisfactory inputs, errors made, rejected outputs and various other modes of waste. These are considered non-essential process costs. Both areas of cost offer opportunities for improvement. An operator within a process can usually influence directly only the cost of nonconformance, but he can recommend to the process owner changes that may ultimately affect the cost of conformance. The owner of the process should monitor the process and make changes that will impact on both parts of the process cost. Some processes exist only because of nonconformance elsewhere, and the need for them may vanish if that nonconformance is removed. 3.4 Preparation of the process cost model The cost model may be generated for any process within the organization. It may be used to identify and monitor process costs within one particular aspect of the organization such as an invoicing system, works order distribution system or the recruitment process. Alternatively, it may be used to monitor the overall cost e.g. of a department. Examples of cost models are given in appendix B. The cost model is constructed by identifying all of the key activities to be monitored and listing them as either COC or CONC. The source of the data should also be identified. Ideally, this source of data should be from information already collated within the finance function. In some instances, however, it may be necessary to generate synthetic cost data. This is acceptable within the model, provided the assumptions are clearly stated.

© BSI 11-1998

BS 6143-1:1992

Careful setting up of the cost model is critical to the success of the technique and is the first task of the process owner. Once set up, the model is used for regular reporting on performance. In order to achieve this, the model needs to remain stable to allow comparison with previous periods to be made and cost trends to be monitored. The choice of key activity parameters to be recorded is therefore of paramount importance. The model should be reviewed early in its use to ensure its effectiveness and thereafter periodically for continued effectiveness.


3.5 Using the model 3.5.1 Teams It is advisable that quality improvement teams be formed to review particular aspects or processes of the organization. These teams should be encouraged to prepare a process cost model and use this initially in the data collection and analysis phase, identifying opportunities to be investigated, and subsequently during the monitoring phase, in order to report on the improvements achieved. 3.5.2 Identify process The process should be identified and isolated as a discrete set of activities and given a name. The owner should be identified. The outputs from the process should be identified and each output should be recognized as going to one or more customers. In general, a customer will be the owner of another process. The inputs to a process should be identified, such as material and data. The controls and resources should also be identified. 3.5.3 Identify costs Each process will contain a number of key activities. These should be identified. The cost of conformance and cost of nonconformance elements for each activity should be identified and established. 3.5.4 Cost report The organization should adopt a uniform format for the cost report. The report should contain a complete list of the costs of conformance and nonconformance elements, and should specify: a) identification of all inputs, outputs, controls and resources of the process being considered; b) whether actual or synthetic costs are used; c) the means of calculation for each element of cost; d) the source of cost data.

© BSI 11-1998

The source of data may be an actual cost or a synthetic cost and this information should also be recorded, i.e. actual cost:

a cost required by the financial system of the organization to be separately identified and recorded;

synthetic cost:

a cost not separately identified and recorded as an actual cost, but derived from available relevant data on a clearly established basis, e.g. hours taken to complete task × hourly rate.

Examples of cost reports are given in appendix C. 3.5.5 Improvement process A programme of quality improvement activities should be planned, on the basis of information contained in the report, and priorities established. The process owner should consider iterative cycles of improvement using teams or individuals and monitor the resultant cost changes. From consideration of the initial balance of cost of conformance (COC) and cost of nonconformance (CONC), decisions may be made as to whether the process design or the elimination of waste is the first priority. After improvements have been made, the balance may shift and attention move to the other aspect, this alteration continuing unless other areas of the balance offer greater scope for improvements and returns.

4 Relationship between the traditional (PAF) quality and process cost approaches In the traditional approach to quality cost modelling, much time is expended in identifying and categorizing costs as prevention, appraisal and failure (PAF). Such categorization may be difficult and unsatisfactory for several reasons, e.g. as follows: a) Many of the costs can be justified as fitting into any one of the three categories. For example, design reviews may be considered to be a prevention cost; however, they are essentially a checking stage and, as such, could be considered an appraisal cost; but having been introduced to trap design faults at an earlier stage than might otherwise result, they could be considered a failure cost.

3


BS 6143-1:1992

b) Allocation of costs to prevention, appraisal or failure tends to divert attention from the true purpose of cost reporting which should be the constant drive ever to lower costs. Thus there is a view that increasing prevention costs indicates an awareness of the costs of quality and should result in a reduction in total costs. Whilst this is true at one level, prevention costs themselves should eventually be a target for reduction, i.e. the category is unimportant. The true value of cost reporting on a consistent basis is the opportunity to measure process performance, introduce changes and monitor the effects of these changes. There may be, however, a need to link the PAF model with the process cost model, particularly where quality costs have been reported in the traditional manner and are understood and accepted by some people within the organization. In such a case the cost of conformance might initially be considered to comprise prevention and appraisal costs plus the basic process costs, and the cost of nonconformance to be the failure costs.

4

The cost of conformance merely indicates the cost of satisfying the standards declared. It does not indicate an efficient, or even a necessary process. It should therefore be considered as an opportunity for cost improvement. Appendix D shows an example of the series of activities needed in the development of a process cost model for the provision of services to the National Health Service. It consists of developing the process model, and then the cost model.

© BSI 11-1998

BS 6143-1:1992

Appendix A Examples of process models


Figure 2 to Figure 5 show examples of process models and illustrate the flow of inputs and outputs.

Figure 2 — Typical inputs and outputs of personnel department processes

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BS 6143-1:1992

Figure 3 — Typical inputs and outputs of manufacturing department processes

6

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BS 6143-1:1992

Figure 4 — Typical inputs and outputs for quality assurance department processes

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BS 6143-1:1992

Figure 5 — Typical inputs and outputs for technical publications unit processes

8

© BSI 11-1998

BS 6143-1:1992

Appendix B Examples of cost models The example cost models shown in Table 1 to Table 4 identify the key activities for a process and indicate the proportion of cost planned to carry out the process; cost of conformance and the unplanned cost; and cost of nonconformance. Table 1 — Cost model for a personnel department


Key activity

Cost of conformance

Attitude surveys

Total cost

Audit of salaries

Total cost

Appraisals

Cost of appraisals

Cost of nonconformance

Cost of progressing non-returns

Industrial action

Total cost

Staff turnover

Total cost

Recruitment costs

Cost of satisfying requirements

Sponsored students not ing business

Cost of not satisfying requirements, i.e. delays, etc. Total cost

Training

Cost of training

Cost of cancellations

Grading

Cost of grading

Cost of appeals

Personnel change requests

Cost of those approved

Cost of errors, rejections, referrals, etc.

Preparation of statistics

Routine reports

Cost of special reports, chasing inputs, etc.

NOTE

See also Figure 2.

Table 2 — Cost model for a manufacturing department Key activity

Cost of conformance


Planning, production engineering work study, cost control, materials and process laboratory

Part cost

Part cost (effect of engineering change, planning errors, etc.)

Production inspection and test costs

“Good” hours booked

Reinspection/retest/fault finding

Test gear depreciation, calibration and preventative maintenance

Total cost

Breakdowns

Total cost

Production costs

“Good” hours booked

Rework

Material costs

Estimated cost

Scrap cost, overspend

Waiting time

Total cost

Cost of work held due to shortages

Total cost

NOTE

See also Figure 3.

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BS 6143-1:1992

Table 3 — Cost model for a quality assurance department Key activity

Cost of conformance

Audits and reviews

Cost of audits and reviews

Vendor appraisals

Total cost

Vendor liaison

Audit

Produce and monitor quality plans, manuals and procedures

Total cost

Failure correction

Trouble shooting, investigations


Customer liaison

NOTE


Audits of outstanding actions

Total cost Agreeing and monitoring standards, plans, milestones, etc.

Follow-up actions, e.g. replanning, complaints, rejects, etc.

See also Figure 4.

Table 4 — Cost model for a technical publications unit Key activity

Cost of conformance


Appraisal of client’s requirements and advice to client

Cost of service

Cost of re-appraisal due to change of brief

Client input data; , sort and store

Cost of actions upon receipt

Cost of progressing data and items not received

Queries on input data received, and action to address anomalies

Total cost

Author's initial draft

Total cost

Preparation of illustrations, and graphics

Total cost

Printing of illustrations and artwork

Cost of first print run

Publish draft to in-house approval stage. (Technical and editorial approval)

Total cost to print text and incorporate printed illustrations, assemble and bind

Correlate and ratify in-house comments and amend draft. Publish first draft to client for comment/approval

Cost to change text and illustrations, update master on publishing system and check. Print, assemble, bind and issue

Cost to make changes due to in-house policy changes

Ratify and incorporate client comments and check status for next draft issue or amendment to first draft

Cost of incorporating minor additional and technical comments. Reissue for approval

Cost of changes due to adverse comments relating to compliance with contractual requirements

Print and issue “final” publication

Total cost

Amendment to “final” publication

Total cost for variation to contract requirements

NOTE

10

Cost of reprint, e.g. registration, image density correction

Total cost for corrective amendment, i.e. not a variation to contract requirements

See also Figure 5.

© BSI 11-1998

BS 6143-1:1992

Appendix C Examples of process cost reports Figure 6 to Figure 9 show examples of cost reporting using the cost model, all costs whether synthetic or actual use are given in pounds (£) so that totals can be calculated. PROCESS COST REPORT PROCESS Personnel Department Process conformance

PROCESS OWNER Personnel Manager Cost

Act. Syn.

£

Process nonconformance

DATE Cost Act. Syn.

Cost data source £


People Attitude surveys Salary audits

Ï Ï

Publicity Appraisals

Ï Ï

Recruitment costs to satisfy requirements

Training

 Hours taken to complete   task × hourly rate Progressing non-returns (appraisals, etc.)

Ï

Hours taken to complete task × hourly rate

Industrial action

Ï

Hours taken during negotiation × hourly rate (total hours for all staff)

Staff turnover

Ï

Termination interviews, hours × hourly rate. Payment in lieu of notice Interview expenses, relocation expenses, advertising, labour cost for recruitment staff

Ï

Inadequate recruitment

Ï

Special training needs

Sponsored students not ing company

Ï

Cost of sponsorships s package

Ï Cancellations or non-attendance at training courses

Consultative committees, health and safety, grading, union/manager

Ï

Total hours spent × hourly rate

Ï

Appeals/failures to agree Executive reports (routine)

Cost of training course

Ï

Total hours spent × hourly rate Hours taken to prepare report hourly rate

Ï Special reports: statistical, accident, etc.

Ï

Hours taken to prepare report × hourly rate

Environment Floor space, site changes

Ï

Materials and methods

Ï

s package: floorspace, site services, telephones, site istration

Training material, site publications Personnel manual, directives, health and safety guidance

Invoiced cost Hours taken to prepare information × hourly rate

Ï

Total process conformance cost

Total process nonconformance cost

Prepared by ......................................................... NOTE

See Figure 2 and Table 1.

Figure 6 — Typical process cost report for a personnel department

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BS 6143-1:1992

PROCESS COST REPORT PROCESS Production Department Process conformance

PROCESS OWNER Manufacturing Manager Cost

Act. Syn.


£

DATE Cost

Act. Syn.

Cost data source £

People Assembly, inspection and test

Produced hours × hourly rate from s package

Ï Hours taken of rework, reinspection, retest

Ï

Excess codes: hours × hourly rate from s package

Waiting time

Ï

Excess code: hours × hourly rate from s package


Equipment Cost of capital equipment to carry out work, i.e. depreciation, calibration, maintenance, chronos

s package: capital assets inventory × (manufacturing efficiency)

Ï

Cost of capital equipment to carry out rework, etc.

Ï

s package: capital assets inventory × (1 – manufacturing efficiency)

Environment Floor space, maintenance facilities, services

s package: (floorspace, site services, telephones, site istration, maintenance) × manufacturing efficiency

Ï

Floor space, etc. for rework

Ï

s package: (floorspace, site services, telephones, site istration, maintenance) × (1 – manufacturing efficiency)

Materials and methods Purchased material and Ï material handling and packing

Cost estimates Scrap, contingencies material Ï price variance

Task allocation, supervision of process, progressing (NOTE. Processing information provided by Industrial Engineering

s package: (supervision, progress labour costs) × y %a

Ï

Fault finding guides, cost of change, implementation, on the job training Total process conformance cost

Scrap report

Ï

s package: (supervision, progress labour costs) × (1 – y) %a


Prepared by ................................................... NOTE ay


is the agreed proportion of the costs being considered.

Figure 7 — Typical cost report for a manufacturing department

12

© BSI 11-1998

BS 6143-1:1992

PROCESS COST REPORT PROCESS Quality Assurance Process conformance


Internal scheduled audits

PROCESS OWNER Q.A. Manager Cost Act. Syn. Ï

Appraisal of prospective supplies

Ï

Scheduled surveillance and audit of supplies and subcontractors

Ï

Production, control and maintenance of quality plans, manually and procedures

Agreeing and monitoring standards, plans, milestones, etc.

Ï

£


Cost Act. Syn.

Cost data source £

Internal non-scheduled audits Ï

Recorded time

Follow-up actions and audits

Recorded time

Ï

Recorded time and expense Additional surveillance and auditing the result of poor product of service

Ï

Recorded time and expense

Revisions and reissues to correct errors and omissions

Ï

Recorded time and additional cost of reprographics

Investigations and trouble shooting

Ï

Time recorded

Follow-up actions replanning, Ï complaints rejects, etc.



Prepared by .......................................

Signed .........................

NOTE 1 NOTE 2

DATE

Time recorded and expense

Approved .........................

Cost of labour and material only would be considered unless drastic improvements lead to reduction of facilities. See Figure 4 and Table 3 for models of process and cost.

Figure 8 — Typical process cost report for a quality assurance department

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BS 6143-1:1992

PROCESS COST REPORT PROCESS Preparation and printing of technical publications Process conformance

PROCESS OWNER Technical Publications Manager Cost

Act. Syn.

Appraisal of client’s requirements

Ï

Log-in client input data, sort and store

Ï

£


Cost Act. Syn.

Reappraisal due to change of brief

Ï


Cost data source £ Time and heavy rate Time sheet coded booking Sub-divided by reference to typical activity surveys and presented as synthetic cost

Queries on input data and action to address anomalies Author’s initial draft

DATE

Ï

Ï

Time and heavy rate Time sheet coded booking

Preparation of illustrations and Ï graphics

Time sheet coded booking

In-house technical and editorial Ï approval of draft

Time sheet coded booking

Correlate and ratify in-house comments, change text and illustrations, update master on publishing system and publish first draft for client, comment/approval

Ï

Rework due to in-house policy changes

Ï

Time sheet coded bookings

Incorporate minor additional and technical comments from client and reissue. Reissue for approval

Ï

Rework due to adverse comments from client relating to compliance with contractual requirements

Ï

Time sheet coded bookings

Print and issue final publication

Synthetic cost derived from typical activity surveys

Ï

Computer terminal/word processor Electronic publishing system

Ï

Depreciation and maintenance costs recharged

Filler spray booth Photocopier

Ï

Computer use recharged to Technical Publications Unit

First print run of illustrations and artwork

Ï

Cost of reprinting due to unsatisfactory work

Ï

Reprographic Unit job sheets

Print text and incorporate printed illustrations, assemble and bind at “draft for in-house approval” stage

Ï

Cost of reprinting Ï illustrations and artwork due to in-house policy changes

Reprographic Unit job sheets

Print, assemble and bind at “draft for client approval” stage

Ï

Reprographic Unit job sheet

Print, assemble and bind at final Ï publication

Reprographic Unit job sheet



Prepared by ..................................................... Signed ............................................... Approved ............................................................... NOTE


Figure 9 — Typical process cost report for a technical publications unit

14

© BSI 11-1998

NOTE

From the process model shown in Figure 10 and the cost model given in Table 5, a process cost report (see appendix C) can be developed to suit the requirement of the process.

D.1 Preparation of process model stages 1 to 4 Figure 10 shows stages 1 to 4 in the preparation of a typical process model for the provision of food services to the National Health Service.

BS 6143-1:1992

Figure 10 — Stages of a process model 15


© BSI 11-1998

Appendix D Preparation of process and cost models

BS 6143-1:1992

D.2 Identification of costs for key activities Table 5 gives an example of the preparation of a cost model for the provision of services to the National Health Service. Table 5 — Identification of costs for key activities Key activity

Process costs related to providing food services Cost of conformance

Plan and order food

Cost of labour to produce accurate plan and to order correctly


Cost of waste food due to over planning


Cost of supplying expensive alternatives due to under planning Prepare and present food

Material, labour and energy costs to produce planned food

Cost of waste food and labour, etc. due to incorrect preparation and packing

Deliver food

Cost of delivery to patients within specified times

Cost of waste due to delays or incorrect deliveries

Handle complaints

Cost of investigations and rectifications

Clean facilities

Cost of materials and labour to clean to specified standards

Recleaning costs Cost of prohibition/improvement notices

Train staff

Cost of planned training

Cost of cancellations Cost of ineffective training

16

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BS 6143-1:1992

Publication(s) referred to


BS 4778, Quality vocabulary. BS 4891, A guide to quality assurance. BS 6143, Guide to the economics of quality. BS 6143-2, Prevention, appraisal and failure model.

© BSI 11-1998


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