This process is used to prioritize certain factors among others. It is also referred to as identifying the "critical few" that play a significant role in whatever issue is being examined.
A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line.
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 Pareto Principle (also known as the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of doing the entire job.
Setting: A computer in order to create the chart is needed, a professional program might be helpful.
Number of participants: any
Types of participants: Any types of participants can be involved in this process.
Time needed: The time needed for this process depends on what the issue and number of factors being considered.
Pre-Work Required: Think through the possible list of things that will be compared, and the possible standard measures, in order to guide the group to choose ones that will be helpful.
Together with the client (group), develop a list of problems, items or causes that can and will be compared.
Now, develop a standard measure in order to compare the chosen items. This can be the frequency of something (How often e.g. utilization, complications, errors occur?), the time (How long something takes?) or the cost (How many resources it uses?)
Now, choose a time frame for collecting the data.
Tally the standard measures the group choses, for each item, e.g. how often each item occurred, or the total costs or time. Add these amounts in order to determine the grand total for all the items. Then find the percentage of each item in the grand total of all items. To do this, take the sum for each item, divide it by the grand total, and multiply it by 100.
List the items that are being compared in a decreasing order of the measurement of comparison, for example the most frequent to the least frequent. The cumulative percent for an item is the sum of that item's percent of the total and that of all the other items that come before it in the ordering by rank.
This step requires the listing of the items on a horizontal axis of a graph, starting with the highest and then moving to the lowest. Now, label the left vertical axis with the numbers (frequency, time, or cost), then label the right vertical axis with the cumulative percentages (the cumulative total should equal 100 percent). Finally, the bars for each items can be drawn.
Next, draw a line graph of the cumulative percentages. The first point on the line should line up with the top of the first bar.
The last step is to analyze the diagram. This is done by identifying those items that appear to be the cause for most of the difficulties.
Look for a clear break point in the line graph, where it starts to level off quickly. If there happens to be no break point, the items that account for fifty percent or more of the effect should be identified.
In case that there appears to be no noticeable pattern, that means if all the bars are essentially of the same height, other factors that might affect the outcome have to be considered. This could be a day of the week, shifts, the age group of patients, or the home village. In this case, separate Pareto charts can be drawn.
Follow-Up Required: There is no follow-up required.
Usual or Expected Outcomes: The outcome is a chart that displays on which areas the priority focus is or should be on.
Potential pitfalls: Mistakes could occur, when the collection of the data is not precise.
How success is evaluated: The process is successful when a chart has been created that displays the priorities of the client, and can thereby help to improve certain areas.
The creation of the Pareto Chart can be done collaboratively online with one person sharing their screen and plotting the graph based on the input from the team.