PARETO CHART
A Pareto chart is a bar chart showing how often different categories of events take place, ordered with the most common to the left, and the least common to the right. It sometimes also includes a line showing the cumulative frequency (adding each column's value to the previous ones in turn). Using a Pareto chart allows us to focus on where improvement efforts will make most impact.
The Pareto chart is an illustration of the 80/20 rule. Vilfredo Pareto was an Italian economist working in the early 20th century. He noted that 80% of theincome at that time in Italy went to only 20% of the population. Joseph Juran,a management theorist, adapted this thinking and popularised the notion (the Pareto Principle) that much could be achieved by focusing on the 20% ofcircumstances in which 80% of problems occur.
On a Pareto chart the categories contributing to 80% of the problems are often referred to as the 'vital few' whereas the others are labelled the 'useful many'. A Pareto chart indicating where falls occur in a fictional hospital, wards 24L, 25L and 25R together account for more than 80% of the falls, would be regarded as the 'vital few', and might be a good place to start a falls improvement project.
They work best if you have at least 30 observations across the categories graphed. Smaller numbers can be misleading due to random chance.The classification by categories is only a guide to where to focusattention. It does not necessarily tell you that something individual to that category is the cause of the different frequencies seen.
They are a useful tool not only when identifying opportunities for improvement, but also in drilling down to understand the reasons for special causes on graphs showing counts, percentages and rates.