Pareto Chart | Analysis, Use and Example

If you have been interested in fields such as industrial engineering, engineering management, statistics, business administration, there is a high chance that you have heard of the pareto principle before. According to the Italian economist Vilfredo Pareto, he put forward the Pareto principle, claiming that 80 percent of the effects resulting from a process result from 20 percent of the existing causes.

The Pareto chart, on the other hand, is a very useful tool for prioritizing the tasks determined in the project planning process according to their effects in project management. Its relationship with the Pareto principle is quite simple. This is actually its visualization.

What is a Pareto Chart?

It is a combination of a bar chart and a line chart that shows the frequency or magnitude of different problems or issues. The bars are arranged in descending order of their height and the line represents the cumulative percentage of the total. The chart helps identify the most important issues or issues that need to be addressed first. We can use the issue log as an assisting document here.

When to Use a Pareto Chart in Project Management?

It may be useful to use a pareto chart at many different points in the project. But its main purpose is to identify the root causes of the most critical problems that affect the success of the project. It can help you prioritize assigned tasks based on their potential or current impact and allocate the resources you have accordingly. This is done in line with the resource management plan.

Thanks to the Pareto chart, you do not waste time dealing with things that are not the direct cause of problems, you can perform frequency or impact analysis and prioritize problems and tasks. By doing this, you have the chance to focus only on the things that can create value in the project.

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1: CZ

I remember the PAreto principle from lectures. However, what this principle asserts seems a bit trivial to me. So how can we be sure that 80 percent is caused by 20 percent reasons. Has PAreto done enough analysis on this?