Pareto Chart is also known as Pareto Diagram. Pareto Chart is type of chart that contains bars and a single line. Individual values are represented by bars and cummulative total is shown by line. The left vertical axis is frequency of occurrence and right vertical axis is cummulative percentage of occurrences. The horizontal axis contains reason of occurences.
Pareto chart shows how many defects were created by category or type of identified causes. Then rank the causes based on number of defects caused. The project team should address the causes based on greatest number of defects.
Pareto chart or Pareto diagram also tries to highlight Pareto’s law i.e. small number of causes produces majority number of defects. This is known as 80/20 principle i.e 80% of problems are due to 20% of the causes.