Pareto Analysis

The Pareto analysis is based on the theory that by performing 20% of the work one is able to get 80% of the advantage or that 80% of the problems are caused by 20% of the causes. In this article we look at how the Pareto Analysis can be applied to problem solving and task management.

How to do a Pareto Analysis

The first step in doing a Pareto Analysis is to write down a list - this list will either contain the possible causes of a problem, the tasks to be completed or other factors that one is considering. Once you have created this list you need to add a meaningful score to that item. Let's say, for example, that you are looking at complaints made against your company; your list would contain the different complaints people have made and the score may be the number of complaints made about that specific item. Once you have made this list and given each thing a score you will be able to give each score a percentage of the whole and work out where the main problem lies (or which task will achieve the greatest benefit). The Pareto principle is based on the fact that one of these items on your list will stand out predominantly from the other, or that 20% of your list will have 80% of the effect.

Applying a Pareto Analysis to Task Management

When applying a Pareto Analysis to task management we start with a list of tasks that we need to perform ranked in order of importance. This order of importance should determine how much this item contributes to the overall project. By ordering these items in this order and giving each of them a figure based on how much you feel this activity will contribute to the overall project you are able to work out the top 20% of the activities that will give you 80% of the result. This way you can focus on accomplishing these activities and then determine whether it is actually worth it to complete the other 80%.

Applying a Pareto Analysis to Problem Solving

Another area where a Pareto Analysis may be applied is in the area of problem solving. According to the Pareto Principle 80% of the problems are caused by 20% of the causes. When analyzing a problem you start by writing down a number of possible causes and then rank these causes by giving them a score as to how much they affect the problem. 20% of these causes should stand out as being the primary causes, resulting in 80% of the problem. Once you have dealt with these 20% you may find that it is unnecessary to deal with the 80% and the other 80% may actually require more work and a higher cost in dealing with them then is worthwhile.

What a Pareto Analysis has to do with your Success

The Pareto principle was really first discovered when people realized that 80% of the wealth lay in the hands of 20% of the people. The 20% of the people who are most successful have also learnt to focus on the 20% of the activities that will bring them the highest measure of success. The Pareto principle is in fact very common in a variety of circumstances and even if a Pareto Analysis cannot be applied directly it may still be useful when a situation requires recognizing priorities and determining the importance of some aspect.

In conclusion, the Pareto Principle states that 20% of the causes cause 80% of the effect - 20% of the activities cause 80% of the result, 20% of the causes cause 80% of the problems, etc. This principle is applied in a Pareto Analysis which allows one to work out what causes of a problem one should be dealing with or what activities one should be concentrating on. In order to do a Pareto analysis you start with a list of causes or tasks and give each of these a score which can be calculated as a percentage. You are then able to see what is giving the greatest effect and work on this.