TQM2

Cost of Quality
as a Driver for
Continuous Improvement
Presented by
Roger E Olson
Partner
SYSTEMS Quality Consulting 1
Agenda
1. Linking Quality Improvement to Profits

2. Cost of Quality Definitions and Types
3. Understanding Cause and Effect in
COQ Measurements
4. Establishing COQ Baseline
5. Cost Driver Analysis

COQ Measurements

History/Background of COQ
• Joseph Juran first discussed cost of quality

analysis in 1951 in the first edition of
Quality Control Handbook
• Armand Feigenbaum identified the four cost
categories in 1956 in “Total Quality
Control” in the Harvard Business Review,
Vol. 34, No 6

Armand Feigenbaum’s original categories

• Cost of Control
– Prevention costs
– Appraisal (i.e., inspection) costs
• Costs of Failure of Control
– Internal defect costs
– External defect costs

• The Quality Cost Committee was

established by the then ASQC in 1961
• Philip Crosby, a former CEO, popularized
the concept of COQ with his book Quality
is Free in 1979
• The current revisions of ISO 9000, QS-9000
and AS9100 reference the use of COQ in
quality improvement

Crosby’s categories
• Price of Conformance (POC/COC)
– Prevention costs
– Appraisal costs
• Price of Nonconformance (PONC/CONC)
– Internal defect costs
– External defect costs

Deming, Juran, Crosby on COQ
(Philosophy)
• Deming – the cost of nonconformance, and the

resulting loss of good will, is so high that
measuring it is not necessary
• Juran – as defect prevention increases, the cost of
scrap/rework decreases faster. Need to know
where to look
• Crosby – money is the language of management,
you need to show them the numbers

Juran and Crosby on COPQ
The cost of poor quality (COPQ = PONC):

• “COPQ is the sum of all costs that would
disappear if there were no quality problems.”
- Juran
• “You can easily spend 15 - 30% of your sales
dollars on PONC.” - Crosby
• “In most companies the costs of poor quality
runs at 20 - 30% of sales.” - Juran

Something to Think About…
• Net profits for many companies is less than

5% of sales
• COPQ on the average is 17% of sales
• Total COQ on the average is 25% of sales
• COPQ is some companies is as high as 40%
of sales
• COPQ is typically 3 to 6 TIMES as large
as profits

Example 1
Paper Mill – April 2004 Report to New CEO

• Sales: $220,000,000 (460 employees)
• POC: $7,600,000
• PONC: $35,300,000
• COQ: $42,900,000
• EBITDA: $12,678,000
• Net Profit: $3,150,000

Example 1

• Sales: $220,000,000
• POC: $7,600,000 (>90% appraisal)
• PONC: $35,300,000
• COQ: $42,900,000 3X 11X
• EBITDA: $12,678,000
• Net Profit: $3,150,000
• Net Profit/Sales = 1.43%
Example 1

• Sales: $220,000,000
• POC: $7,600,000 ~ 5X
• PONC: $35,300,000
• COQ: $42,900,000
• EBITDA: $12,678,000
• Net Profit: $3,150,000
Example 2a
Transportation Industry Supplier (1998)

• Sales: $130,000,000
• COC: $4,400,000 (92% appraisal)
• COPQ: $18,500,000
• COQ: $22,900,000
3X 9X
• EBITDA: $6,531,000
• Net Profit: $2,050,000
Example 2b
Transportation Industry Supplier (2003)

• Sales: $185,000,000
• COC: $8,600,000 (45% appraisal)
• COPQ: $8,100,000
• COQ: $16,700,000
0.5X 1.2X
• EBITDA: $19,900,000
• Net Profit: $6,650,000
Don’t Let Poor Quality Costs Eat Your Profits!
COPQ
Profits

• Background of Quality Costs

• Evolution of Quality
• Traditional vs Value Driven Quality Strategy

What is Quality?
Quality is “fitness for use”

(Joseph Juran)
Quality is “conformance to requirements”
(Philip B. Crosby)
Quality of a product or service is its ability to satisfy
the needs and expectations of the customer

“Inspection with the aim of finding the bad ones
and throwing them out is too late, ineffective and
costly. Quality comes not from inspection but
improvement of the process.”
Dr. W. Edwards Deming

Founder of the Quality Evolution

All quality improvement of a lasting nature occurs as
the result of a project. Joseph Juran
Traditional “Strategy”
• Historically, organizations tend to treat

strategic planning and quality improvement
planning as two separate and unrelated
activities
• Strategic planning tends to be regular and
scheduled, but with no follow up
• Continuous improvement is not a process, it
happens randomly, with no connection to
the “big picture”
Value Driven Quality Strategy
• Starts with a focus on the customer

• Organizations treat strategic planning and
quality improvement planning as an
integrated activity
• Strategic planning is a function of need, not
the calendar
• Continuous improvement is a process, it
happens regularly, with a connection to the
“big picture”
COQ Measurements

Cost of Quality Definitions and Types
Total Quality Costs represent the difference

between the actual (current) cost of a
product or service and what the reduced
cost would be if there were no possibility of
substandard service, failure to meet
specifications, failure of products, or
defects in their manufacture.
Campanella, Principles of Quality Costs

Prevention
The costs of all activities specifically

designed to prevent poor quality in products
or services. Examples include:
• Quality planning • Process capability evaluations
• New product reviews • Supplier capability surveys
• Quality education • Quality improvement projects
These are all planned,

proactive activities
Income Statement
Income
Sales
Returns
$4,100,000
($105,000)
Hidden Quality Costs
Income $3,995,000
Cost of Goods Sold

Labor $960,600
Prevention Costs
Materials $1,118,000
COGS $2,078,600 $20,000
Expenses
Salaries $483,800
Services
Depreciation
$98,400
$194,340
• Quality Planning $4,000
Training $3,300
Supplies $36,900 • Engineering design $10,000
Interest $61,500
Rent $287,000 • Quality Training $2,000
Accounting $24,600
Legal $28,200 • Preventive maint. $4,000
Office Supplies $16,400
Travel $28,700
Licenses/Certification $12,300
$20,000
Meals and Ent. $15,300
Advertising $82,000
Sales Shows $41,000
Repairs $44,600
Telephone $20,500
Utilities $36,900
Expenses $1,515,740
Profit $400,660
Prevention
In the ideal situation, prevention costs will be

the largest portion of the Total Cost of
Quality.
Typically, prevention is less than 10% of
TCOQ
It should be over 70%!

Appraisal
The costs associated with evaluating or

auditing products or services to assure
conformance to quality standards and
performance requirements. Examples:
• Incoming inspection/test
• Calibration of inspection/test equipment
• Final inspection/test
These are all planned activities

Income Statement
Income
Sales
Returns
$4,100,000
($105,000)
Income $3,995,000
Cost of Goods Sold

Labor $960,600
Appraisal Costs
COGS $2,078,600 $250,000
Expenses
Salaries $483,800
Services
Depreciation
$98,400
$194,340
• Inspector wages $40,000
Training $3,300
Supplies $36,900 • In-process inspect $75,000
Interest $61,500
Rent $287,000 • Quality audits $20,000
Accounting $24,600
Legal $28,200 • Calibration services $40,000
Travel $28,700
• Supplies $15,000
Advertising $82,000 • QC floorspace $50,000
Sales Shows $41,000
Repairs $44,600 • Regulatory approval $10,000
Telephone $20,500
Utilities
Expenses
$36,900
$1,515,740
$250,000
Profit $400,660
Appraisal
Appraisal costs should be the second largest

category, but should not exceed prevention
costs.

Internal Failures
All costs resulting from products or services

not conforming to requirements or
customer/user needs which occur before
delivery/shipment of product, or the
furnishing of a service. Examples include:
• Scrap/rework
• Reinspection/retesting
• Material Review Board
These are non-value added and reactive

Income Statement
Income
Sales
Returns
$4,100,000
($105,000)
Income $3,995,000
Cost of Goods Sold

Labor $960,600
Internal Failure Costs
COGS $2,078,600 $400,000
Expenses
Salaries $483,800
Services
Depreciation
$98,400
$194,340
• Labor (rework) $110,000
Training $3,300
Supplies $36,900 • Materials (rework) $95,000
Interest $61,500
Rent $287,000 • Eng. redesign $30,000
Accounting $24,600
Legal $28,200 • Failure analysis $20,000
Travel $28,700
• Software fix $40,000
Advertising $82,000 • Fire loss – equip. $70,000
Sales Shows $41,000
Repairs $44,600 • Rework space $35,000
Telephone $20,500
Utilities
Expenses
$36,900
$1,515,740
$400,000
Profit $400,660
Internal Failures
• The goal is to identify all

internal failures and
resultant costs, and then
systematically identify
and eliminate root causes
until internal failure costs
are eliminated.
• Remember, all firefighting
is a the result of a failure!

External Failures
All costs resulting from products or services

not conforming to requirements or
customer/user needs which occur after
delivery/shipment of product, or the
furnishing of a service.

External Failures - Examples
The costs incurred when the customer finds the failure
– Processing customer complaints
– Field repairs
– Recall costs
– Returned goods
– Processing returned materials
– Warranty costs
– Loss of reputation
– Penalties
– Customer incurred costs These are non-value added

Income Statement
Income
Sales
Returns
$4,100,000
($105,000)
Income $3,995,000
Cost of Goods Sold External Failure Costs

Labor $960,600
COGS $2,078,600 $330,000
Expenses
Salaries $483,800 • Returns $105,000
Services $98,400
Depreciation $194,340 • Labor $60,000
Training $3,300
Supplies $36,900
Interest $61,500
• Materials $40,000
Rent $287,000
Accounting $24,600 • Consulting Services $37,000
Legal $28,200
Office Supplies $16,400 • Legal $25,000
Travel $28,700
Licenses/Certification
Meals and Ent.
$12,300
$15,300
• Travel $15,400
Advertising $82,000
Sales Shows $41,000 • Meals & Entertain $3,000
Repairs $44,600
Telephone $20,500 • Repairs $44,600
Utilities $36,900
Expenses $1,515,740 $330,000
Profit $400,660
Income Statement
Income
Sales $4,100,000
Returns ($105,000)
Income $3,995,000
Cost of Goods Sold

Labor $960,600
Materials
COGS
$1,118,000
$2,078,600
Prevention: $20,000
Expenses Appraisal: $250,000
Salaries $483,800
Services $98,400 COC $270,000
Depreciation $194,340
Training $3,300
Supplies
Interest
$36,900
$61,500
Int. Failure: $400,000
Rent
Accounting
$287,000
$24,600
Ext. Failure: $330,000
Legal $28,200 COPQ $730,000
Travel $28,700
Advertising $82,000
Sales Shows $41,000 COPQ/Sales = 18.3%
Repairs $44,600
Telephone $20,500
Utilities $36,900
Expenses $1,515,740
Profit $400,660
Income Statement
Income
Sales $4,100,000
Returns ($105,000)
Income $3,995,000
Cost of Goods Sold

Labor $960,600
Materials
COGS
$1,118,000
$2,078,600
Prevention: $20,000
Expenses Appraisal: $250,000
Salaries $483,800
Services $98,400 COC $270,000
Depreciation $194,340
Training $3,300
Supplies
Interest
$36,900
$61,500
Int. Failure: $400,000
Rent
Accounting
$287,000
$24,600
Ext. Failure: $330,000
Legal $28,200 COPQ $730,000
Travel $28,700
Advertising $82,000
Sales Shows $41,000
Repairs $44,600
Telephone $20,500
Utilities
Expenses
$36,900
$1,515,740
TCOQ $1,000,000
(TCOQ/Sales = 24.4%)
Profit $400,660
TCOQ Summary
Sales: $4,100,000 Prevention: $20,000 (2%)

Profit: $400,660 Appraisal: $250,000 (25%)
COC $270,000 (27%)
COC/Sales = 6.5%
Int. Failure: $400,000 (40%)
COPC/Sales = 17.8%
Ext. Failure: $330,000 (33%)
TCOQ/Sales = 24.4%
COPQ $730,000 (73%)
COPQ/Profit = 1.8 TCOQ: $1,000,000 (100%)

TCOQ/Profit = 2.5

Price of Conformance and Price of Nonconformance
Over Time
POC is increased initially,

POC then slowly decreased
Total Cost of Quality
over time
But, POC never goes

PONC
away completely
Year 1 Year 2 Year 3 Year 4 Year 5
Over time, PONC is reduced to 1/10 - 1/20 of its original level

THE Barrier to Reducing COPQ
POC You must INCREASE

Total Cost of Quality
the POC, mostly

Prevention costs,
PONC
BEFORE COPQ will
start to drop.
Year 1

Spending more on
prevention will reduce
appraisal and failure
costs over time
Failure
Appraisal
Costs
Prevention
Time
In the Beginning COQ Category Maturity
~65% Failure <10%
~25% Appraisal <20%
<10% Prevention >70%
% of Total COQ
Failure
Appraisal
Prevention
How the Percentages Should Change Over Time
• A survey by the Illinois Manufacturers’

Association revealed a 400% margin of error
in cost of poor quality assessments.
• Companies initially reported an average of 6%
cost of poor quality (6% of sales).
• A later, in-depth assessment showed the
average to be closer to 25% (25% of sales).
• The Survey Conclusion: 75% of the cost of
poor quality is hidden, and not obvious!
Results of an ASQ survey of CEOs:

• Over 70% thought their organizations COPQ was
less than 10 percent of sales
• Twenty-seven percent admitted they had no idea
what their companies COPQ was
• One of the conclusions of those conducting the
survey: “too many people still do not understand
the relationship between cost and quality”

Artificial Hip
Failure cost
$10,000 as a function
of detection
Litigation loss
point in
$1000
Field Failure/Repair process
$100 Receiving Inspection
External
$10 Final Inspection
Failure Costs
Internal
Subsystem/Assembly
Component
$1 Prevention
Process Time
COQ Measurements

Why Study Cause and Effect and COQ?
A key finding in a four-year study* for the

Institute of Management Accountants, of
more than thirty industry leaders, is the
importance of understanding the cause and
effect relationship among strategy, quality,
productivity, profitability and
competitiveness.
* Atkinson, Hamberg and Ittner, Linking Quality to Profits, 1994

Understanding Cause and
Effect in COQ Measurements
The study found that without exception the
successful companies in the study based
quality related decisions on a clear
understanding of the cause-and-effect
relationship between the goals they wanted
to accomplish and the step required to
achieve those goals.
Atkinson, Hamberg and Ittner, Linking Quality to Profits, 1994

The High Level Cause and Effect View
Effective Quality Improvement

Which Leads to
It all Higher Quality

Starts Which Leads to
Here!
Increased Productivity
Which Leads to
Increased Profitability
Which Leads to
Increased Competitiveness
Any Similarity?
Effective Quality Improvement

Which Leads to
Higher Quality
Which Leads to
Which Leads to
Which Leads to
The Problem Is…..
When Senior Management

Doesn’t Understand
High Quality
Leads to
Which Leads to
Which Leads to
The Cause and Effect Framework
Step 1. The quality process embraces the

strategic vision and goals of top
management, aligning the objectives and
priorities of the quality process and the
business.

Step 2. Improvement projects are chosen on

the basis of improving profitability and
customer satisfaction by eliminating the
high payback root cause of poor quality and
the related nonvalue-added activities and
waste. (We will look at how to do this in a
later chapter – Cost Driver Analysis)

Step 3. Productivity gains from higher quality are

trapped and held by making the organizational
alterations necessary to eliminate nonvalue-added
activities and waste. This means we have to
institutionalize process improvements. We need
to monitor and measure those processes to insure
the gains don’t go away.

Step 4. Profitability gains from higher

productivity are trapped and held by
redeploying resources from nonvalue-added
activities into value-added activities. Note:
Most companies are not good at this step!

Short-Term Cost of Quality and Total
Quality Management (Quick Fix)
2. Fewer people to
1. Cut budget do same work-
false improvements!
3. More errors
5. Poor quality
And rework
4. Total
costs
increase
Pacific Bell Cost of Quality Handbook, 1992

Long-Term Cost of Quality and
Total Quality Management
1. Invest in 2. Teams improve processes

quality and productivity
improvement
5. Improved quality
3. Fewer defects and rework
And profitability
4. Decrease
In
Total
costs
Pacific Bell Cost of Quality Handbook, 1992

COQ Measurements

Establishing COQ Baseline
• Two Approaches
• Advantages and Disadvantages of each
approach
• Getting started

Two Approaches
• Ad-hoc informal system

– Purpose is to quickly get a good estimate of
how large TCOQ and COPQ are
– Output is TCOQ report for a point in time
• Formal Cost of Quality System
– Permanent feature of management reporting
and decision making system
– Provides detailed ongoing reports

Ad-hoc informal system
• Cross functional team

• Meets for two weeks to two months and
then disbands
• Reviews existing quality, defect, rework
reports
• Conducts interviews to assess extent of
failure costs
• Reports on TCOQ and COPQ as of a
given date
Advantages and Disadvantages of an
Ad-hoc informal system
• Advantages
– Can have report in two to four weeks
– Less cost than formal system
• Disadvantages
– Typically underestimates COPQ and does not
get managements attention

Formal COQ System
• Cross functional team

• Involves finance department
• Requires training of all employees on cost
of quality concepts
• Requires ongoing data collection efforts

Advantages and Disadvantages of a
Formal COQ System
• Advantages
– Data is very accurate
– Root cause analysis and problem solving is
easier
• Disadvantages
– Slower to get first report
– Adds infrastructure (costs) although these will
be more than offset IF COQ projects are
successful
Starting a COQ Program
• Senior management support is critical for

either approach
• Senior management must be open to the
possibility that COPQ is large (Why?)
• COQ programs cannot be started from the
bottom up (Why?)

Starting a COQ Program
1. Determine level of detail to be included

1. Level 1 Assessment deals with internal and
external failures only
2. Level 2 Assessment adds appraisal costs
3. Level 3 Assessment adds prevention costs

COQ Assessment Problems
• When ongoing periodic assessments are

made, the cost of poor quality may continue
to increase over the first 2-3 years, due to
assessment team members getting better at
identifying poor quality costs
• The first assessment may identify far more
improvement than the organization can
handle

Potential COQ Assessment Problems
• Avoid the expectation that a cost of quality

assessment solves any problems – it is a
data gathering exercise
• Level 1 assessments are most useful when
used to identify significant opportunities for
savings, to avoid drowning in minutia

The COQ Challenge
• Many COQ costs appear to be appraisal, but

when you dig deeper, they are only there
because some process is not working right.
• Some COQ costs are currently seen as not
related to COQ.
• Remember: “ COPQ is the sum of all costs
that would disappear if there were no
quality problems.” -Juran

For every cost, and cost category, be willing
to ask this question: “If all of our processes
(admin and manufacturing) produced the
correct results the first time, would this cost
still be here?”

3. Understanding Cause and Effect in COQ
Measurements

Cost Driver Analysis
• Definition
• Methodology
• Root Cause Analysis
• Percent Allocation and Cost
• Add Common Root Cause Costs

The underlying beliefs:

1. For each failure there is a root cause
2. Causes are preventable
3. Prevention is always cheaper

What is it?
A powerful technique that integrates the
problem solving tools of the quality
process with the poor-quality cost
assessment.

Cost Driver Analysis-How To
1. Determine the root cause of the poor-

quality costs
2. Identify the activity percentages and
calculate the cost of poor quality
related to each root cause

Cost Driver Analysis-How To
3. Combine the financial impacts of common

root causes to determine the total
financial impact of the root cause
4. Perform a cost-benefit analysis for the
high financial impact root cause to
determine the financial payback

Internal Failure costs
Scrap $66,500 14.9
Repair $1,900 0.4
Rework $2,500 0.6
Failure analysis $4,000 0.9
Total Internal Failure costs $74,900 16.8
External Failure costs

Failures - manufacturing $14,500 3.2
Failures - Engineering $7,350 1.6
Penalties $198,714 44.4
Failures - Sales $4,430 1.0
Warranty charges $31,750 7.1
Failure analysis $7,600 1.7
Total External Failure costs $264,344 59.1
Total Quality Costs $447,144 100

Poor-Quality-
Cost Element
Late shipments
Penalties Incorrect shipments Cost

Drivers
Partial shipments

Identify the Percentages
$198,714
X 80%
$158,971
80%
Partial
Shipments
$198,714
15%
Penalties
5%

$198,714
X 80%
$158,971
X90%
$143,074
90%
Excessive
Downtime
80%
Partial
Shipments
$198,714
15% 10%
Penalties
5%

$198,714
X 80%
$158,971
X90%
$143,074
X75% 75%
$107,306 Tool
Breakage
90%
Excessive
Downtime
80% 15%
Partial
Shipments
$198,714
15% 10%
Penalties
5%

$198,714
X 80%
$158,971 95%
X90% Hard Spots in
$143,074 Raw Material
X75% 75% $101,940
$107,306 Tool
X95% 90% Breakage 5%
$101,940 Excessive
Downtime
80% 15%
Partial
Shipments
$198,714
15% 10%
Penalties
5%

Identify the Root Cause
Root Cause of
Poor Quality Hard Spots in
Raw Material
Poor-Quality- Tool
Cost Element Breakage
Excessive
Downtime
Partial
Shipments
Penalties

Last Thoughts

Failure To Include White Collar Costs
Prominent quality experts maintain that the

inability of COQ systems to accurately
capture white-collar costs and indirect
quality costs is a fatal shortcoming and
probably the single most frequently found
reason for failure.

Failure To Include White Collar Costs
Examples:
• Disruption of operations due to out of
conformance purchases and production
• Excessive inventory levels maintained to
accommodate poor quality
• Poor quality related schedule changes
• Opportunity costs of lost consumer goodwill

Need to have a “CoQ Process”
• “Doing” Cost of Quality needs to be more

that just data collection and analysis
• Need to create a process that takes Cost of
Quality data and turns it into actions that
results in lower Cost of Poor Quality
(PONC/CONC)

The COQ Process
1. Commitment
2. COQ Team
3. Gather data (COQ assessment)
4. Pareto analysis
5. Determine cost drivers Typically
6. Process Improvement Teams Missing
7. Monitor and measure
8. Go back to step 3

“Wished I had understood that Cost of Quality stuff better”

Key Points
• COPQ is big, usually 15-20% of sales!

• COPQ is usually 3-5X profits, can be 10X.
• Understanding poor cost of quality drivers is the
key to understanding the right project to work on.
• Must capture white collar/indirect COPQ costs.
• Prevention/Appraisal costs have to go up, before
overall COQ can go down. There are no
exceptions to this!

Questions

SYSTEMS Quality Consulting
Training and Consulting
ISO 9001 ISO 14001
Lean Manufacturing Six Sigma
www.systemsquality.com
909-484-7545

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Cost of Quality

1. Linking Quality Improvement to Profits

SYSTEMS Quality Consulting 2

SYSTEMS Quality Consulting 3

• Joseph Juran first discussed cost of quality

SYSTEMS Quality Consulting 4

Armand Feigenbaum’s original categories

SYSTEMS Quality Consulting 5

• The Quality Cost Committee was

SYSTEMS Quality Consulting 6

SYSTEMS Quality Consulting 7

• Deming – the cost of nonconformance, and the

SYSTEMS Quality Consulting 8

The cost of poor quality (COPQ = PONC):

SYSTEMS Quality Consulting 9

• Net profits for many companies is less than

SYSTEMS Quality Consulting 10

Paper Mill – April 2004 Report to New CEO

SYSTEMS Quality Consulting 11

Paper Mill – April 2004 Report to New CEO

Paper Mill – April 2004 Report to New CEO

Transportation Industry Supplier (1998)

Transportation Industry Supplier (2003)

SYSTEMS Quality Consulting 16

• Background of Quality Costs

SYSTEMS Quality Consulting 17

Quality is “fitness for use”

SYSTEMS Quality Consulting 18

Dr. W. Edwards Deming

SYSTEMS Quality Consulting 19

• Historically, organizations tend to treat

• Starts with a focus on the customer

SYSTEMS Quality Consulting 23

Total Quality Costs represent the difference

SYSTEMS Quality Consulting 24

The costs of all activities specifically

These are all planned,

Cost of Goods Sold

In the ideal situation, prevention costs will be

SYSTEMS Quality Consulting 27

The costs associated with evaluating or

These are all planned activities

SYSTEMS Quality Consulting 28

Cost of Goods Sold

Appraisal costs should be the second largest

SYSTEMS Quality Consulting 30

All costs resulting from products or services

These are non-value added and reactive

Cost of Goods Sold

• The goal is to identify all

SYSTEMS Quality Consulting 33

All costs resulting from products or services

SYSTEMS Quality Consulting 34

SYSTEMS Quality Consulting 35

Cost of Goods Sold External Failure Costs

Cost of Goods Sold

Cost of Goods Sold

Sales: $4,100,000 Prevention: $20,000 (2%)

COPQ/Profit = 1.8 TCOQ: $1,000,000 (100%)

SYSTEMS Quality Consulting 39

POC is increased initially,

But, POC never goes

Year 1 Year 2 Year 3 Year 4 Year 5