Pareto chart

Pareto chart

A lot of people have heard about Pareto chart. But do we know what Pareto chart is?

A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line. The left vertical axis is the frequency of occurrence, but it can alternatively represent cost or another important unit of measure. The right vertical axis is the cumulative percentage of the total number of occurrences, total cost, or total of the particular unit of measure. Because the reasons are in decreasing order, the cumulative function is a concave function.

Pareto charts are extremely useful for analyzing what problems need attention first because the taller bars on the chart clearly illustrate which variables have the greatest cumulative effect on a given system. These charts can be generated by simple spreadsheet programs, such as OpenOffice and Microsoft Excel and specialized statistical software tools as well as online quality charts generators.

The Pareto chart is one of the seven basic tools of quality control.

The Pareto chart provides a graphic depiction of the Pareto principle, a theory maintaining that 80% of the output in a given situation or system is produced by 20% of the input.

What Questions the Pareto Chart Answers?

• What are the largest issues facing our team or business?
• What 20 percent of sources are causing 80 percent of the problems?
• Where should we focus our efforts to achieve the greatest improvements?

When to Use a Pareto Chart

• When analyzing data about the frequency of problems or causes in a process.
• When there are many problems or causes and you want to focus on the most significant.
• When analyzing broad causes by looking at their specific components.
• When communicating with others about your data.

Pareto Chart Procedure:

1. Decide what categories you will use to group items.
2. Decide what measurement is appropriate. Common measurements are frequency, quantity, cost and time.
3. Decide what period of time the Pareto chart will cover: One work cycle? One full day? A week?
4. Collect the data, recording the category each time. (Or assemble data that already exist.)
5. Subtotal the measurements for each category.
6. Determine the appropriate scale for the measurements you have collected. The maximum value will be the largest subtotal from step 5. (If you will do optional steps 8 and 9 below, the maximum value will be the sum of all subtotals from step 5.) Mark the scale on the left side of the chart.
7. Construct and label bars for each category. Place the tallest at the far left, then the next tallest to its right and so on. If there are many categories with small measurements, they can be grouped as “other.”

Steps 8 and 9 are optional but are useful for analysis and communication.

8. Calculate the percentage for each category: the subtotal for that category divided by the total for all categories. Draw a right vertical axis and label it with percentages. Be sure the two scales match: For example, the left measurement that corresponds to one-half should be exactly opposite 50% on the right scale.
9. Calculate and draw cumulative sums: Add the subtotals for the first and second categories, and place a dot above the second bar indicating that sum. To that sum add the subtotal for the third category, and place a dot above the third bar for that new sum. Continue the process for all the bars. Connect the dots, starting at the top of the first bar. The last dot should reach 100 percent on the right scale.

 

The video below will help you to create a good Pareto chart:

https://www.youtube.com/watch?v=bxr0iL6NI1g

Here is a link on how to create a Pareto chart in Excel:

http://www.excel-easy.com/examples/pareto-chart.html

References:

http://whatis.techtarget.com/definition/Pareto-chart-Pareto-distribution-diagram

http://www.isixsigma.com/tools-templates/pareto/pareto-chart-bar-chart-histogram-and-pareto-principle-8020-rule/

http://en.wikipedia.org/wiki/Pareto_chart

http://asq.org/learn-about-quality/cause-analysis-tools/overview/pareto.html

Work Breakdown Structure (WBS)

A work breakdown structure (WBS) is a deliverable-oriented grouping of the work involved in a project that defines the total scope of the project.

The WBS is a document that breaks all the work required for the project into discrete tasks, and groups those tasks into a logical hierarchy. The Work Breakdown Structure provides a structural view into the project. It is an essential tool for planning and executing the project.

There are three reasons to use a WBS in your projects. The first is that is helps more accurately and specifically define and organize the scope of the total project. The most common way this is done is by using a hierarchical tree structure. Each level of this structure breaks the project deliverables or objectives down to more specific and measurable chunks. The second reason for using a WBS in your projects is to help with assigning responsibilities, resource allocation, monitoring the project, and controlling the project. The WBS makes the deliverables more precise and concrete so that the project team knows exactly what has to be accomplished within each deliverable. This also allows for better estimating of cost, risk, and time because you can work from the smaller tasks back up to the level of the entire project. Finally, it allows you double check all the deliverables’ specifics with the stakeholders and make sure there is nothing missing or overlapping.

WBS is often shown in two different forms:

—  Graphical or chart form

—  Tabular or list form

Hierarchical Structure (tabular)

Level	WBS Code	Element Name
1	1	Widget Management System
2	1.1	Initiation
3	1.1.1	Evaluation & Recommendations
3	1.1.2	Develop Project Charter
3	1.1.3	Deliverable: Submit Project Charter
3	1.1.4	Project Sponsor Reviews Project Charter
3	1.1.5	Project Charter Signed/Approved
2	1.2	Planning
3	1.2.1	Create Preliminary Scope Statement
3	1.2.2	Determine Project Team
3	1.2.3	Project Team Kickoff Meeting
3	1.2.4	Develop Project Plan
3	1.2.5	Submit Project Plan
3	1.2.6	Milestone: Project Plan Approval
2	1.3	Execution
3	1.3.1	Project Kickoff Meeting
3	1.3.2	Verify & Validate User Requirements
3	1.3.3	Design System
3	1.3.4	Procure Hardware/Software
3	1.3.5	Install Development System
3	1.3.6	Testing Phase
3	1.3.7	Install Live System
3	1.3.8	User Training
3	1.3.9	Go Live
2	1.4	Control
3	1.4.1	Project Management
3	1.4.2	Project Status Meetings
3	1.4.3	Risk Management
3	1.4.4	Update Project Management Plan
2	1.5	Closeout
3	1.5.1	Audit Procurement
3	1.5.2	Document Lessons Learned
3	1.5.3	Update Files/Records
3	1.5.4	Gain Formal Acceptance
3	1.5.5	Archive Files/Documents

Building WBS

The analogy approach: Review WBSs of similar projects and tailor to your project

The top-down approach: Start with the largest items of the project and break them down

The bottom-up approach: Start with the specific tasks and roll them up

Mind-mapping approach:  Mind mapping is a technique that uses branches radiating out from a core idea to structure thoughts and ideas

Considerations When Building a Work Breakdown Structure

As you set up your project WBS, think about how you will want to use it later in the project. For instance, pay close attention to the indents in your WBS because these eventually end up being the indent structure in your Gantt schedule. Intuitively we gravitate toward developing task-oriented work breakdown structures because they are easy to understand, and because we tend to think of a project as a collection of tasks. It usually takes more effort to develop a deliverable-oriented WBS because they include multiple levels of detail. Yet, taking the time to develop a deliverable-oriented WBS may better serve the project, especially if extensive project management controls are used. Determine whether you want to build a WBS that is process oriented or product oriented. What’s the difference? If the results you want from your project can be defined in verbs, then you want a WBS that is process oriented. If you want a WBS that is built on nouns, then it will be product oriented. Remember that our brains can simultaneously comprehend only 7 to 9 items at a time. When a project involves hundreds of tasks, they need to be broken into chunks that we can readily understand and use. The process of creating a WBS helps break down the project, which makes it easier to manage – and master. Be sure there is no overlap in scope definition between two elements of your WBS. Not only would this result in duplication of effort, but would likely cause confusion regarding responsibility, authority and cost accounting. To help alleviate this problem, create a WBS dictionary to describe each component in detail.

The Building Process

Not only do you need the project scope to create your WBS, you need the input from the project managers and team leaders. Generally, the WBS-building process finds all these people in a room with plenty of white boards and markers, or pads of paper and sticky notes. Out of this brainstorm session should come a first draft of the project WBS. It should be one that will foster “buy in” because the core project personnel participated in its development.

Creating a quality WBS can take a substantial amount of time, but is usually worth the effort because of the additional clarity it provides for the project manager.

The first step to creating your WBS is to get all your team, and possibly key stakeholders, together in one room. Although your team is not listed as an input or tool in the above sections, they are probably your most vital asset to this process. Your team possesses all the expertise, experience, and creative thinking that will be needed to get down to the specifics of each deliverable. Next, we have to get the first two levels setup. The first level is the project title, and the second level is made up of all the deliverables for the project. At this stage it is important to function under the 100% Rule. This rule basically states that the WBS (specifically the first two levels) includes 100% of all the work defined in the project scope statement and management plan. Also, it must capture 100% of all the deliverables for the project including internal, external, and interim. In reality the WBS usually only captures between 90-95%, and 100% is our goal.

Once we have gotten the first two levels set, it is time to launch into our decomposition. Decomposition is the act of breaking down deliverables in to successively smaller chunks of work to be completed in order to achieve a level of work that can be both realistically managed by the project manager and completed within a given time frame by one or more team members. This level of breakdown and detail is called the work package. Work packages are the lowest level of the WBS and are pieces of work that are specifically assigned to one person or one team of people to be completed. This is also the level at which the project manager has to monitor all project work. Now the million dollar question is how specific and small does a chunk of work need to be to still be considered a work package? Well PMBOK does not seem to give a definitive answer on that. Most project managers concur that this varies by project, but can usually be measured using the 8/80 Rule. The 8/80 Rule says that no work package should be less than 8 hours or greater than 80 hours. Notice we said that the work package is the lowest level of the WBS. Activities and tasks are not included in the WBS. They will be planned from the work packages once they are assigned.

Now you are ready to start your team on the work of decomposition, but do not get too far ahead of yourself quite yet. As grandpa always said "There is no reason to reinvent the wheel." Occasionally, you will run into a project that is a "first of its kind," but that is not usually the case. Most of the time, you, your team, or your organization has done a project like this one in the past. That means that there should be a WBS from the previous project that you can use as a template. This will save you a lot time and effort. Even if you have not done a project like this one before, most Project Management Offices (PMOs) have basic WBS templates that can get you started. Another great technique to make your life easier is the Post-It Note Technique. I know it sounds a little cheesy, but it actually works very well. In this technique you simply write each deliverable on a post-it note and stick them at the top of a wall. Then you and your team start to break down each deliverable into components and write each component on its own post-it note. This way, as you place them on the wall and start to create your tree structure, everyone can easily see what has been accomplished and where you are headed. Also this technique allows for easy movement of components around within the WBS.

Also, when creating the WBS for very large, lengthy, or complex projects, all the deliverables' specifics might not be known up front and, therefore, it is difficult to create a full WBS. In cases such as these many people use what is called Rolling Wave Planning. This is when you plan down to the level of detail currently known and go back to plan deeper once more information is acquired. Usually rolling wave planning needs to stay as least 2-3 months ahead of the actual work being done, but of course this varies slightly by industry.

Pitfalls

Lastly let's look at five common pitfalls to creating a WBS. If you can keep these few possible issues in mind when you are creating your WBS, you and your team will be much more successful at creating a useful and accurate Work Breakdown Structure.

1. Level of Work Package Detail

When deciding how specific and detailed to make your work packages, you must be careful to not get too detailed. This will lead to the project manager to have to micromanage the project and eventually slow down project progress. On the other hand, work packages whose details are too broad or large become impossible for the project manager to manage as a whole.

2. Deliverables Not Activities or Tasks

The WBS should contain a list of broken down deliverables. In other words, what the customer/stakeholder will get when the project is complete. It is NOT a list of specific activities and tasks used to accomplish the deliverables. How the work is completed (tasks and activities) can vary and change throughout the project, but deliverables cannot without a change request, so you do not want to list activities and tasks in the WBS.

3. WBS is not a Plan or Schedule

The WBS cannot be used as a replacement for the project plan or schedule. A WBS is not required to be created in any type of order or sequence. It is simply a visual breakdown of deliverables.

4. WBS Updates Require Change Control

The WBS is a formal project document, and any changes to it require the use of the project change control process. Any changes to the WBS change the deliverables and, therefore, the scope of the project. This is an important point to help control scope creep.

5. WBS is not an Organisational Hierarchy

The WBS and Organisational Hierarchy chart are never the same thing. Although often similar in appearance, these two documents are very different. The Organisational Hierarchy shows things like chain of command and lines of communication, but the WBS is restricted simply to a project and shows only the deliverables and scope of that project.

We hope that this article has helped you better understand the Work Breakdown Structure's purpose, process, and common pitfalls. The WBS is an extremely valuable tool to the project management methodology. It can make or break a project. It sets the foundation for the rest of the project planning. A solid WBS helps ensure proper project baselines, estimating, resource use, scheduling, risk analysis, and procurement.

References:

http://www.brighthubpm.com/project-planning/2940-tips-for-building-a-work-breakdown-structure/

http://www.projectsmart.co.uk/work-breakdown-structure-purpose-process-pitfalls.php

IS 445/645-Introduction to Project Management

http://www.youtube.com/watch?v=VVljo-u66qk