How Pareto Chart Analysis Can Improve Your Project

The Pareto Chart is a simple tool that can help you become a better project manager. It is a
special type of histogram that helps to visualize a “rule” known the Pareto Principle.

The Pareto Principle was discovered by a 19th century Italian economist and sociologist named
Vilfredo Pareto (1848 – 1923). When he was researching the distribution of wealth in society, he found that
80% of the wealth was held by 20% of the population.

Even more interesting was that he was able to see similar distributions outside of economics. For example, in
his own garden he found that 80% of his peas were produced by only 20% of the peapods he had planted.

Because of this particular distribution, this principle is also known the 80/20 Rule and
the Pareto Distribution. It can be generalized with the following statement.

“80% of the outputs result from 20% of the inputs.”

– The Pareto Principle

But keep in mind, the specific ratio isn’t that . The main idea is that there are usually only a few
inputs that generate most of the outputs. A Pareto Diagram can
help you identify these “vital few” inputs

Project Manager’s Resource

The 80/20 Manager: The Secret to Working Less and Achieving More

A Pareto Diagram has several key benefits…

The chart lists the inputs along the horizontal axis in descending
order of output frequency. The left vertical
axis measures the number or frequency of the output for each input and
is charted using a bar graph. The right vertical axis measures the
cumulative percentage of the outputs and is charted using a line graph.

In the sample Pareto diagram above, you can see that there are seven categories of Project Issues. It is
evident that most of the issues, 42% to be exact, are related to “Installation.” It is also very easy to see that
three categories account for 79% of the issues: Installation, Software Faults, and Shipping.

Based on this Pareto analysis, if you focused your efforts on addressing just the Installation issues,
you would have the potential to cut your total issues by more than 40%!

As you can see, Pareto analysis is a great tool to identify the critical inputs to focus on
that will give you the best results.

In addition to the basic Pareto diagram, there are other variations that you could use…

Using a Pareto chart to analyze problems in your project will allow you to focus your efforts on the ones
that offer the greatest potential for improvement.

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determine and achieve project quality. Learn 3 key quality management
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