Paretho
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The document explains Pareto analysis, a technique for prioritizing changes by identifying and resolving key problems, based on the Pareto principle which suggests that 20% of causes lead to 80% of results. It outlines a step-by-step method for identifying problems, determining their root causes, scoring them, grouping similar issues, prioritizing them, and taking action on the most critical items first. The analysis is useful for focusing efforts on high-impact changes, although costs of solutions should also be considered.
Paretho
- 1. Paretho MPA 208 Planning Workshop
- 2. Pareto Analysis is a simple technique for prioritizing possible changes by identifying the problems that will be resolved by making these changes. By using this approach, you can prioritize the individual changes that will most improve the situation.
- 3. Paretho Using the 80:20 Rule to Prioritize Imagine that you've just stepped into a new role as head of department. Unsurprisingly, you've inherited a whole host of problems that need your attention. Ideally, you want to focus your attention on fixing the most important problems. But how do you decide which problems you need to deal with first? And are some problems caused by the same underlying issue?
- 4. Pareto Analysis uses the Pareto Principle – also known as the "80/20 Rule" – which is the idea that 20% of causes generate 80% of results. With this tool, we're trying to find the 20% of work that will generate 80% of the results that doing all of the work would deliver. Note: The figures 80 and 20 are illustrative – the Pareto Principle illustrates the lack of symmetry that often appears between work put in and results achieved. For example, 13% of work could generate 87% of returns. Or 70% of problems could be resolved by dealing with 30% of the causes.
- 5. How to Use the Tool Step 1: Identify and List Problems – First, write a list of all of the problems that you need to resolve. Where possible, talk to clients and team members to get their input, and draw on surveys, helpdesk logs and suchlike, where these are available. Step 2: Identify the Root Cause of Each Problem – For each problem, identify its fundamental cause. (Techniques such as Brainstorming, the 5 Whys, Cause and Effect Analysis, and Root Cause Analysis will help with this.)
- 6. Step 3: Score Problems – Now you need to score each problem. The scoring method you use depends on the sort of problem you're trying to solve. For example, if you're trying to improve profits, you might score problems on the basis of how much they are costing you. Alternatively, if you're trying to improve customer satisfaction, you might score them on the basis of the number of complaints eliminated by solving the problem. Step 4: Group Problems Together By Root Cause – Next, group problems together by cause. For example, if three of your problems are caused by lack of staff, put these in the same group
- 7. Step 5: Add up the Scores for Each Group – You can now add up the scores for each cause group. The group with the top score is your highest priority, and the group with the lowest score is your lowest priority. Step 6: Take Action – Now you need to deal with the causes of your problems, dealing with your top-priority problem or group of problems first. Keep in mind that low scoring problems may not be worth bothering with; solving these problems may cost you more than the solutions are worth. Note: While this approach is great for identifying the most important root cause to deal with, it doesn't take into account the cost of doing so. Where costs are significant, you'll need to use techniques such as Cost/Benefit Analysis, and use IRRs and NPVs to determine which changes you should implement Source: http://www.mindtools.com/pages /article/newTED_01.htm last accessed 11-10-2011