PM Minute: Appraisal Costs

In today’s PM Minute, we begin a four-part series covering the four components of the total cost of quality.

Appraisal costs are one of the costs that make up the cost of good quality. Appraisal costs are costs related to testing and inspection as part of the Quality Control process.

Appraisal costs may look at the materials or inputs provided by a supplier to ensure compliance with standards and requirements. In a manufacturing environment, raw goods and other supplies could be inspected. In a service environment, like loan operations where I have worked, appraisal may include validating the information contained in a loan application as part of originating, approving, closing, and servicing the loan.

The process by which the product or service is created is also appraised to make sure it is designed to produce to specification. In Colocation #37, we talked about continuous improvement in processes with Seth Wiesenthal, an ASQ certified six-sigma black belt.