Unpacking Quality Deficiency Costs: A Framework for Mapping and Managing Quality Deficiency Costs at Company X, a large Swedish transportation company

Abstract

This thesis explores the internal structure and propagation of Quality Deficiency Costs (QDCs) within Company X, Sweden’s national train operator. While several cost components—such as quality deficiency fees, EVF compensation, and replacement traffic—are well documented and easily quantified, others like productivity loss, staff strain, and brand reputation are harder to measure but integral to the broader cost landscape. Despite their significance, the internal interconnections, escalation dynamics, and organizational distribution of these QDCs remain poorly understood. Without a clear picture of how quality-related costs emerge, propagate, and interact across functions, Company X struggles to distinguish between unavoidable losses and inefficiencies that could be proactively addressed. To address this discrepancy, the study develops and applies a two-layered analytical framework. The first layer of the analysis categorizes and quantifies the Quality Deficiency Costs (QDCs) within Company X operations between the years of 2019 and 2024. The second layer offers supplementary, illustrative context for selected cost propagation patterns within the organization, supported by continuous meetings and a limited set of interviews. The framework integrates ripple effect theory, systems thinking, cost of quality models, and root cause analysis to trace how costs move and accumulate internally. By revealing quantitative cost patterns and propagation dynamics, complemented by perspectives from Company X stakeholders and employees, the study offers scope for prioritizing and improving QDC governance.