Why the Pareto principle should be known by any contractor

In the construction industry, mistakes happen a lot, and they can become expensive and even existential. In fact, all lean experts admit that the construction industry is the last industry where the most waste still occurs. 

I have been working in the construction industry for years and have managed many complex and large scale projects. Our scope was producing, designing, delivering, and assembling custom-made ventilated facades. The product was custom made, and many projects received award-winning prizes. 

Ground breaking discovery

Our scope and job were very complex; many parts were unique, and people needed special training for basically every new project. Finding Lean was ground breaking. Lean helped improve delivery success rates, quality, and overall productivity and performance. 

But there was one principle that changed our lives the most: the Pareto principle. 

Lean construction is not easy

Problem with Lean construction is that it can become time consuming and costly, and not every construction company can allow such costs. It takes time to train the staff but whenever Lean is implemented the change and results will be visible. I have been studying and implementing many Lean principles and strategies and so far I have found that starting point and easiest entry into Lean is Pareto principle. 

What is Pareto principle?

Pareto principle also known as 80/20 rule, states that for 80% of our daily problems are caused by 20%  of our actions, works or decisions. In another words this means that 80% of our problems can be fixed by 20% of our effort. For example, we started to look where we are losing most of the time. We found that most time is being consumed by missing materials, or hard to find materials or parts. We looked back at the whole picture and we realized that we are producing and manufacturing hundreds of different type of details which actually with a little effort could be reduced to several custom designs. We often think that something we are doing makes sense while in reality, we are creating a mess unknowingly. 

Where to start? 

My advice to anyone who is new to Lean and is just starting their journey is to write down all the problems they face on-site, in production, office, or anywhere else in their business. Then they should organize them starting from the most expensive, time consuming or problematic. This will give them a prioritized list of all their problems. 

Give value to problems

When the list is made you should review all of the items with your team and value them. How much effort is needed to fix them and what could be possible benefits once fixing them? You will then start to realize that by fixing top problems you are also fixing other items from your list. And you will also realize that by fixing main items from the list you receive the greatest results. For the last items in your list you will then realize that is not worth your time to fix them and leave them as they are. This also motivates other team members to acknowledge that we have one single goal to fix the main issues and small problems leave as they are. 

Pareto is the right start

Whenever someone asks me about Lean I always recommend them to start with Pareto principle. People need to have this first groundbreaking aha moment when they realize that they are into something and Pareto principle does it the best. Pareto principle when implemented right always will fix 80% of problems with 20% of the effort. 

Author – Emil Berzins. Follow me on