Pareto analysis is a statistical technique in decision making used for selection of a limited of number of tasks that produce significant overall effect. It uses the Pareto principle - the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job.

Pareto analysis is a formal technique useful where many possible courses of action are competing for your attention. Basically, it consists in estimating of a 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.

Steps to identify the important causes using Pareto Analysis

• Step 1: You get a table with the causes and their frequency as a percentage.
• Step 2: Arrange the rows in the decreasing order of importance of the causes i.e. the most important cause first
• Step 3: Add a cumulative percentage column to the table
• Step 4: Plot with causes on X, cumulative percentage on Y axis
• Step 5: Join the above points to form a curve
• Step 6: Draw line at 80% on Y axis parallel to X axis. Then drop the line at the point of intersection with the curve on X axis. This point on the X axis separates the important causes and trivial causes.