Pareto Analysis

Pareto analysis is a statistical technique in decision making that is used for selection of a limited number of tasks that produce significant overall effect. It uses the the Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that for many phenomena, 80% of the consequences stem from 20% of the causes.

The idea has rule-of-thumb application in many places, but it is commonly misused. For example, it is a misuse to state that a solution to a problem "fits the 80-20 rule" just because it fits 80% of the cases; it must be implied that this solution requires only 20% of the resources needed to solve all cases.

As a result pareto analysis is a formal technique useful where many possible courses of action are competing for your attention. Basically, it consists of estimating the benefit delivered by each action with subsequent selection of a number of the most effective actions that deliver the total benefit reasonably close to the maximal possible one.



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12 points to remember in PM - Vital dozen for PMs

1. Understand the context of project management.
2. Recognize project team conflict as progress.
3. Understand who the stakeholders are and what they want.
4. Accept and use the political nature of organizations.
5. Lead from th front.
6. Understand what "success" means.
7. Build and maintain cohesive team.
8. Enthuisiasm and depair are both infectious.
9. One look forward is worth two looks back.
10. Remember what you are trying to do.
11. Use time carefully or it will use you.
12. Above all, plan, plan, plan.



from Lessons for an accidental profession- Business Horizons, March - April 1995