W4.1_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

Pareto chart analysis

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 issue (20%): Expansion of functionality in order to solve 80% of the problem

7. Performance Monitoring and the Post Evaluation of Result

The department needs to develop some actions/plans to solve the top issue 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 “W4.1_AsmaF_Pareto Chart for analyzing the causes behind the projects delays and budget exceeding

  1. AWESOME, Asma……. NOW you’ve got it right….!! Very important as you are almost 100% certain to get a Pareto question on your PMP exam!!!

    Keep up the good work and looking forward to more really well done postings like this….

    BR,
    Dr. PDG, Jakarta

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