Pareto Principle and Charts		page contents What How Go On
What Is It Good For? Dr. Joseph Juran (of total quality management fame) formulated the Pareto Principle after expanding on the work of Wilfredo Pareto, a nineteenth century economist and sociologist. The Pareto Principle states that a small number of causes is responsible for a large percentage of the effect--usually a 20-percent to 80-percent ratio.		Recognizing the relationships the Pareto charts reveal will allow you the opportunity to let participants have a say in the decision process. By attacking the causes that really matter, you will be more successful in identifying solutions that might be more acceptable and useful. You can apply this ratio in a number of ways:   Addressing the most troublesome 20 percent of the problem will solve 80 percent of it.   Within your process, 20 percent of the individuals will cause 80 percent of your headaches.   In public involvement, 20 percent of the people will command 80 percent of your time.   Of all the solutions you identify, about 20 percent are likely to remain viable after adequate screening. A Pareto chart can be a useful tool for graphically depicting these and other relationships. The chart can help show you where allocating time, human, and financial resources will yield the best results.
How Do I Use It?   Research by Dr. Juran and many others has demonstrated that about 80 percent of the issues in decisions that really matter falls within the social and political realm. Thus, it does little good to have excellent technical analyses and designs (the 20-percent arena) if the 80-percent social and political arena is ignored or poorly addressed.		Briefly, a Pareto Chart is a bar chart based on cumulative percentages. To create a Pareto Chart:   Select the items (problems, issues, actions, publics, etc.) to be compared.   Select a standard for measurement.   Gather necessary data (you may want to use a frequency chart).   Arrange the items on the horizontal axis in a descending order according to the measurements you selected.   Draw a bar graph where the height is the measurement you selected. Influence Diagrams can be used with Pareto charts to show the relative importance of related concepts.
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