In the US the process for getting and keeping a driver’s license is as follows:

Question

In the US the process for getting and keeping a driver’s license is as follows:

Study the law à Get learner’s permit à Practice driving à Driver’s test, get license à Drive à Accident or get a ticket à Results (e.g., temporary loss of license) à drive à accident à drive à get old and stop driving. In some places there is a test for proficiency at an older age such as 70; in others there is none.

Analyze the above system from the perspective of quality costs. How does this system maintain driver quality (meaning drivers who don’t get into accidents)? What are the prevention and appraisal costs that this system incurs? How do they compare (in magnitude) with internal and external costs? If you were redesigning the system to improve driver quality without raising total system costs, what would you change?

(Note that in this as in many other services, the customers (the drivers) are also part of the production process. So you can call “internal failure costs” the costs borne by the government plus the bad driver. External failure costs are costs that affect other drivers.

Explanation / Answer

The system maintains quality by having tollgates before and after you get a license. One must know the applicable laws, practice driving test to get a license. Further, the license can be revoked temporarily on the basis of a violation of traffic rules or an accident.

Prevention & Appraisal costs - Providing a learner's permit before the driver's test, Driver's test, proficiency test for people aged > 70 years.

Internal costs could be attributed as waste in cases where driver getting a learner's permit fails miserably in the driver's test because of lack of knowledge. This is possible if the test is too easy or is not strong enough to detect to-be drivers with weak knowledge of rules. There will be lot of re-work and usage of resources for driver's test.

External costs could be attributed to cases wherein a driver causes accidents on the road due to poor driving skills. The license is temporarily revoked and a re-test is done to assess the driving capability. All this would come at an additional cost and usage of resources.

I would add a process for permanent revocation of license for three tickets in a year or accidents caused in a year. We should have a process wherein the revocation of license is a considerable deterrent for people to follow rules. For example - Your license is revoked for 2 years. The person needs to re-apply for a learner's permit at double the cost.

Internally, once a driver clears driver's test they must be given a learner's license for 3 months and in case of no accident or ticket, the license is made permanent. Otherwise, the learner's license continues for the person involved depending on nature and number of violations.

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