PARETO ANALYSIS

The 80/20 Rule!!

INTRODUCTION
Named after Vilfredo Pareto, an Italian economist
Formula to show that income was distributed unevenly
80% of wealth in the hands of 20% people

The Doctrine
A disproportionately large percentage of errors or defects in any process are
usually caused by relatively few problems.

BENEFITS OF PARETO
ANALYSIS
Solves problem efficiently by the identification and the ordering,
according to their importance, of the main causes of the faults.
Sets the priorities for many practical applications. Some examples are:
process improvement efforts for increased unit readiness, customer
needs, suppliers, investment opportunities.
Shows where to focus efforts.
Allows better use of limited resources.

SOME FACTS
80% of interruptions come from 20% of the people.
80% of an equipment budget comes from 20% of the items.
80% of benefit comes from the first 20% of effort.

80% of complaints are about 20% of your services.

80% of a nurse's time is spent on 20% of the patients.
80% of the decisions made in meetings come from 20% of the
meeting time.

80% of innovation comes from 20% of the staff.

80% of staff problems come from 20% of the staff.
80% of your success comes from 20% of your efforts.
- British NHS Institute for Innovation and Improvement

HOW TO DO A PARETO
ANALYSIS
Step 1: Identify list of Problems
Step 2: Identify the Root Cause of Each Problem
Step 3: Score Problems
Step 4: Group problems Together by Root Cause
Step 5: Add up the score for Each Group
Step 6: Take Action

EXAMPLE
Problem (Step1)

Cause (Step 2)

Scoring(Step 3)

Inconsistent apartment Inventory in

various Portals

Lack of Proper Procedure and Tools

Inconsistent Booking Records

No Proper Control

Redundant Booking

No Proper Control

Cancellation are not Modified

properly in the website

Lack of Training

10

Need to reshuffle the booking to

create vacancies

Lack of Proper procedure and Tools

Score
based on
number of
occurrences
(frequency
distribution)

EXAMPLE
Causes

Value

Cumulative

Cut off

No Proper Control

13

48%

80%

Lack of Proper Procedure and Tools

33%

80%

Lack of Training

100%

80%

14

120%

12

100%

10

80%

8
60%
6
40%

4
2

20%

0%
Control

Procedure

Training