QE Foundation, Inc.

QE Principle Formula & Measurement ©

QE Principle is both a conceptual model used to deal with quality and efficiency issues and a mathematical measurement utilizing the dollar value of the following three factors:

1. Available Revenues for Providing Services

2. Actual Expenditures Made to Provide Services

3. Projected Costs Needed to Provide Services

The interpretation of QE in the model is that Q or quality is the degree to which the actual expenditures equal the projected costs needed to provide services, and that E or efficiency is the degree to which actual expenditures equal available revenues to provide services.  Combined together, QE or quality efficiency is the degree to which the all three factors are close to being equal to each other. 

When the dollar values of all three factors are equal, the QE Principle is represented by an equilateral triangle and the mathematical measurement will result in a 100% rating.  The triangle's sides are labeled using the three factors as follows:

The mathematical measurement is the degree (percentage) to which the triangle is equilateral.  The formula chosen to arrive at the mathematical measurement is as follows:

The actual QE measurement value is the percentage of how close the triangle is to being equilateral.  Some example measurement values and indicated problems are as follows: 

1. If r is 80% of e and e is 66 2/3% of n, the QE value is 58% and indicates a QE (quality&efficiency) problem.
2. If r is equal to e and e is 60% less than n, the QE value is 60% and indicates a Q (quality) problem.
3. If r is equal to e but 100% more than n, the QE Value is 76% and indicates a E (efficiency) problem.

Note: A QE (quality and efficiency) problem exists when r<e<n or r>e<n, a Q (quality) problem exists when r=e<n, and an E (efficiency) problem exists when r<e=n, r<e>n, r<e>n or r=e>n.  A debatable E (efficiency) problem exists when r>e=n, if profit is not an issue (e.g. government).

Practical applications of the QE Principle deal with ongoing adjustments in revenues, expenditures and needed service costs.  The QE Principle helps to determine the revenue necessary to meet expenditures necessary to meet the costs of needed services, or to manage/control expenditures beyond available revenues but still meet the cost of needed services, or to manage/control the amount of needed services required to be provided.

Another purpose of the QE Principle is to bridge the gap of understanding between professionals who specialize in quality control issues, professionals who specialize in cost efficiency and budget issues, and stakeholders responsible for creating an overall profitable and viable organization.  All too often, those who want to increase quality and those who want to manage costs do not fully integrate their concerns.  The QE Principle is designed to provide that kind of integration.