Pareto Analysis is a statistical technique in decision-making used for the selection of a limited number of tasks that produce significant overall effect. It uses the ... ebook~21WaystoExcelatProjectManagementNotrecordedParetoAnalysisStepbyStepByDuncanHaughey|minutereadParetoAnalysisisastatisticaltechniqueindecision-makingusedfortheselectionofalimitednumberoftasksthatproducesignificantoveralleffect.ItusestheParetoPrinciple(alsoknownasthe80/20rule)theideathatbydoing20%oftheworkyoucangenerate80%ofthebenefitofdoingtheentirejob.Takequalityimprovement,forexample,avastmajorityofproblems(80%)areproducedbyafewkeycauses(20%).Thistechniqueisalsocalledthevitalfewandthetrivialmany.Inthelate1940sRomanian-bornAmericanengineerandmanagementconsultant,JosephM.JuransuggestedtheprincipleandnameditafterItalianeconomistVilfredoPareto,whoobservedthat80%ofincomeinItalywentto20%ofthepopulation.Paretolatercarriedoutsurveysinsomeothercountriesandfoundtohissurprisethatasimilardistributionapplied.Wecanapplythe80/20ruletoalmostanything:80%ofcustomercomplaintsarisefrom20%ofyourproductsandservices.80%ofdelaysinthescheduleresultfrom20%ofthepossiblecausesofthedelays.20%ofyourproductsandservicesaccountfor80%ofyourprofit.20%ofyoursalesforceproduces80%ofyourcompanyrevenues.20%ofasystemsdefectscause80%ofitsproblems.TheParetoPrinciplehasmanyapplicationsinqualitycontrol.ItisthebasisfortheParetodiagram,oneofthekeytoolsusedintotalqualitycontrolandSixSigma.InPMBOK,Paretoorderingisusedtoguidecorrectiveactionandtohelptheprojectteamtakestepstofixtheproblemsthatarecausingthegreatestnumberofdefectsfirst.ParetoAnalysisHereareeightstepstoidentifyingtheprincipalcausesyoushouldfocuson,usingParetoAnalysis:Createaverticalbarchartwithcausesonthex-axisandcount(numberofoccurrences)onthey-axis.Arrangethebarchartindescendingorderofcauseimportancethatis,thecausewiththehighestcountfirst.Calculatethecumulativecountforeachcauseindescendingorder.Calculatethecumulativecountpercentageforeachcauseindescendingorder.Percentagecalcul