Free PMI Project Management Professional (PMP) Practice Question

The correct answer is False. External failure costs are incurred after the product or service has been delivered to the customer. These costs arise when defects are discovered by customers after they have received the product or service.

External failure costs may include:

• Customer complaints handling
• Product recalls
• Warranty claims
• Repairs and replacements
• Loss of customer goodwill

In contrast, internal failure costs are incurred to fix defects before the product or service reaches the customer. Prevention costs and appraisal costs are incurred to prevent defects and assess quality, respectively, also before delivery to the customer.

Understanding the distinction between these cost categories is crucial for project managers to effectively allocate resources and implement quality management strategies that minimize overall COQ while maintaining high product or service quality.