W4_AsmaF_Pareto Chart for analyzing the causes behind the projects delays and budget exceeding


1. Problem Definition

In its annual performance meeting, IT department is analyzing the causes behind the projects delays and budget exceeding. It’s important to get the greatest cumulative effect on project delays and cost overruns for IT as it’ll help the department to increase the performance in next projects.

2. Identify the feasible alternatives

The department conducted a meeting and brainstormed the problems which they think are the major problems which cause the delay and budget exceed:

  1. Inaccurate cost estimates
  2. Insufficient authority given to the project manager; responsibility without full authority  
  3. Expansion of functionality; many change orders in the middle of execution stages and in UAT phases
  4. Poor scope definition, inaccurate requirements given by the owner to the contractor
  5. Inaccurate definition of the key stakeholder of the project from the planning phase
  6. Neglecting quality control by the contractor; causing so many errors and bugs
  7. Insufficient master project schedule
  8. Owners not monitoring the project well and do not follow-up with the contractors

3. Development of the outcome for alternative

To identify the most significant major issue for the department to focus on, Pareto Chart will be generated to analyze the issues. Pareto chart is a bar and line graph where the bars represent the frequency sorted in descending order.

Image

Table 1. Top 8 issues causing the delay and budget exceed in the last 3 years

4. Selection Criteria

The department will focus only at the 20% of the significant issues which will cover minimal 80% of the problems.

5. Analysis and Comparison of the alternative

 Image

Figure 1. Pareto chart analysis

Figure 1 shows that the most significant issue to be focused on and pay attention to is: Expansion of functionality; many change orders in the middle of execution stages and in UAT phases.

6. Selection of the Preferred Alternative

According to figure 1, the department should focus on the top 5 issues:

  1. Expansion of functionality
  2. Poor scope definition
  3. Inaccurate cost estimates
  4. Neglecting quality control by the contractor
  5. Insufficient master project schedule

If the department solved the 5 above issues, it means 80% of issues have been solved.

7. Performance Monitoring and the Post Evaluation of Result

The department needs to develop some actions/plans to solve the top 5 issues that cause the budget exceeding and the delays. Then, the department can have a half year performance follow-up to measure the improvements from those actions on the new projects. Note, Lesson learnt documents need to be developed after each project in order to analyze the problem based on more accurate values.

 

References

  1. Tague, N. R. (2005). The quality toolbox (2nd ed., pp. 376-378). Milwaukee, Wis: ASQ Quality Press.
  2. Sharma, S. (2013). Ten golden rules to avoid delays in ERP projects. Retrieved June 23, 2014, from http://www.computerweekly.com/opinion/Ten-golden-rules-to-avoid-delays-in-ERP-projects
  3. LAKSONO, A. (2014, June 17). W16_AL_Pareto Chart | Kristal AACE 2014. Retrieved June 23, 2014, from http://kristalaace2014.wordpress.com/2014/06/17/w16_al_pareto-chart/
  4. Bassard, Michael & Riter, Diane (2010). The Memory Jogger 2nd Edition, Canada, GOAL/QPC
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2 thoughts on “W4_AsmaF_Pareto Chart for analyzing the causes behind the projects delays and budget exceeding

  1. Asma…… GREAT case study and your analysis was well done, but look again at your Figure 1…… Are you supposed to be focusing on the top 20% or the top 80%?

    Your Step 4 is correct but because Figure 1 is wrong, it makes Steps 5 and 6 wrong as well….

    Take 10 minutes to fix this very simple error, repost and collect the 5 stars you have earned….

    BR,
    Dr. PDG, Boston

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