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How To Create Pareto Chart In Excel || Pareto Analysis in Excel - 80/20 Rule or Pareto Principle

Updated: Apr 29

In this tutorial, let us learn about Pareto chart and how to create this in Excel.

Pareto chart is based on Pareto principle also known as 80:20 rule. this is basically used in project management.


According to this principle 80% of problems are caused because of 20% of issues or else

80% of results are because of 20% efforts that we put in. So in project management, we use this principle to solve 80% of the problems by targeting 20% of those issues.

So, let us now see how to create this Pareto chart in Excel for our further analysis.

This is my example data as shown here.


Here, I am showing different reasons and their respective occurrences.


Steps:


1. Arrange this data in the descending order of occurrences i.e column D


2. Calculate Cumulative %s of occurrences in column E


3. Apply the same formula in all cells

4. Select entire data range I,e C4:E13

5. Go to insert tab and click on 2D column cluster chart


6. Right click on any of the bars and select change series chart type.

7. In the dialog box, select combo in the left pane

8. For first series, maintain the chart as cluster

9. For 2nd series i.e cumulative % series, select the chart type as line and tick the checkbox to make it as secondary


10. Adjust the vertical axis to make the maximum value as 1

11. Now, draw two lines bisecting at 80% on your vertical axis and drop a vertical line to the x axis from the point


12. This will show that the bars to the left side of this point are 80%

13. You can color these bars with color so as to highlight the data for better presentation.


So friends this is how we create the Pareto chart in Excel.


Watch this video tutorial for better understanding:


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