The annual report issued by Leonard Software Inc. includes several expenditure
items, listed in the table below.
Indicate the subclass of cost of software quality to which each of the following
expenditures belongs: PC =prevention costs, AC =appraisal costs, IFC =internal
failure costs, EFC = external failure costs, MPC = management prevention costs,
MAC= management appraisal costs, IMFC= internal management failure costs, and
EMFC =external management failure costs. In cases where an expenditure item is
not a software quality cost, mark “X” in the “nonsoftware quality cost” column.
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Leonard Software Inc.: expenditure
Subclass Nonsoftware
of software quality cost
No. Expenditure item quality cost
1 Working hours spent installing software at
customer’s site in Singapore
2 Waiving of customer’s debt as agreed to in
compromise following software failures
detected in the installed software
3 Payment for Dr. Jacobs’s participation in a
design review
4 Payments made to “King SQA Consultants”
for preparing the new version of the software
quality procedures
5 Repair of a color printer
6 Working hours spent participating in monthly
meetings of the Coordination and Control
Committee headed by the Department
Manager
7 Travel to Switzerland to examine advanced
software testing system proposed to company
8 Purchase of barcode sticker software package
to be integrated in the inventory management
software system.
9 Working hours spent correcting errors listed in
a design review report.
10 Customer’s compensation for delay in schedule
resulting from the company’s inability to
recruit sufficient professional manpower for
the development team.
11 Working hours spent by the Chief Software
Engineer and Martin Fountain, Senior Project
Manager, in examining the schedule estimates
for the “Top Assets” tender.
12 Working hours spent in preparation of an
updated version of Leonard Software’s
C Programming Instructions.
13 Working hours spent by programmer (John) in
correcting program bugs detected by his team
leader in their weekly meeting.
186 Chapter 9 Cost of Software Quality
9.5 The company’s last year’s annual CoSQ were as follows:
Cost of software Previous year’s annual
quality class costs in thousands $
Development and SQA Prevention costs $1,238
activities quality costs Appraisal costs $3,450
Internal failure costs $4,238
External failure costs $2,890
Management quality costs Management $225
prevention costs
Management $127
appraisal costs
Internal management $1,840
failure costs
External $4,650
Management
failure costs
Development costs $12,876
(design and coding)
The software quality assurance manager has proposed a dramatic change in Leonard Software’s software quality expenditures policy. It is expected to reduce failure
costs by the following significant percentages: internal failure costs – 10%, external
failure costs – 25%, and managerial internal and external failure costs – at least 25%.
The SQA manager’s proposal involves increasing expenditures as follows: prevention costs $400,000, appraisal costs $700,000, managerial prevention costs
$580,000, and management appraisal costs $220,000.
Management commented about the proposed extravagant expenditures required
for the proposed SQA progress project. Management requested that you evaluate the
SQA manager’s proposal.
a. Examine the proposal and calculate its results from a financial aspect.
b. Explain in your own words, how this dramatic program’s additional funds should
be utilized in order to bring about the expected reduction in failure costs.
c. Can you list any hidden costs of failure that have not been mentioned in the program,
but which are expected to be reduced as a result of implementing the proposal?
d. Assuming the scope of development activities for next year will be similar to that
of last year, will the proposed project reduce the percentage of CoSQ in the total
costs of software products? Present your calculations.
