What are the steps to using a Pareto chart in project management?

1 Define the problem

The first step is to define the problem or issue that you want to analyze and improve. You need to have a clear and specific statement of what the problem is, how it affects your project, and what your desired outcome is. For example, you might want to reduce the number of defects in a software product, increase customer satisfaction, or shorten the project duration.

2 Collect the data

The next step is to collect the data that relates to the problem or issue. You need to have a reliable and consistent method of measuring and recording the data, such as surveys, observations, tests, or reports. You also need to decide on the time period and the frequency of data collection, depending on the nature and scope of your problem. For example, you might collect data on the number and type of defects in your software product over a month, or the level of customer satisfaction after each delivery.

3 Categorize the data

The third step is to categorize the data into different groups or classes that represent the possible causes or factors of the problem or issue. You need to have a logical and meaningful way of grouping the data, such as by source, type, frequency, severity, or impact. You also need to ensure that the categories are mutually exclusive and collectively exhaustive, meaning that each data point belongs to only one category and that all the data points are covered by the categories. For example, you might categorize the defects in your software product by functionality, performance, usability, or security.

4 Calculate the frequencies and percentages

The fourth step is to calculate the frequencies and percentages of each category of data. You need to count how many times each category occurs in the data set, and divide it by the total number of data points. This will give you the frequency or proportion of each category. Then, you need to multiply the frequency by 100 to get the percentage of each category. For example, if you have 100 defects in your software product, and 40 of them are related to functionality, then the frequency of functionality defects is 0.4 and the percentage is 40%.

5 Draw the Pareto chart

The fifth step is to draw the Pareto chart using a bar graph and a line graph. You need to plot the categories of data on the horizontal axis, and the frequencies or percentages on the left vertical axis. You need to arrange the categories in descending order of frequency or percentage, from left to right. Then, you need to draw a bar for each category, showing its height according to the frequency or percentage. Next, you need to plot the cumulative frequency or percentage on the right vertical axis, starting from zero and adding up the frequencies or percentages of each category. Then, you need to draw a line that connects the points of the cumulative frequency or percentage, starting from the first category and ending at the last category. For example, if you have four categories of defects in your software product, and their frequencies or percentages are 40%, 30%, 20%, and 10%, then you need to draw four bars with those heights, and a line that starts from 40% and ends at 100%.

6 Analyze the Pareto chart

The final step is to analyze the Pareto chart and identify the most significant causes or factors of the problem or issue. You need to look at the bars and the line, and see which categories have the highest frequencies or percentages, and which ones contribute the most to the cumulative frequency or percentage. You also need to look for the point where the line crosses the 80% mark on the right vertical axis, and see which categories are on the left of that point. These are the categories that account for 80% of the problem or issue, and are the ones that you should focus on to improve your project. For example, if you have four categories of defects in your software product, and the line crosses the 80% mark after the second category, then you should focus on the first two categories, which are functionality and performance, to reduce the number of defects and improve your software quality.