nadee cpd project

8/4/2019 Nadee Cpd Project

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Chapter I – Introduction

1.1Introduction to the report

This project helped to reduce household expenditure of a family without affecting the quality

of lives.The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the

principle of factor sparsity) states that, for many events, roughly 80% of the effects come

from 20% of the causes. Mainly focusing on purchasing pattern and buying frequency of

items. Through this method I could understand consuming pattern of goods and services in

our home and what are the unnecessary items that we bought.

Every family have their own expenses. But according to the family income sometimes it is

difficult find a suitable way to spend the money. So PARATO LAW gives a good base to

learn how to spend our income depends on the weight of the expenditure. if people can

reduce this expenditure for some certain amount then they can save more and they can have

better lives in present as well as in future. In a country like Sri Lanka there are lots of low

income level people and some amount of inflation inside the country. Therefore people have

to earn money so hardly and they have to spend that money as in big amounts. In this type of

situation Pareto low can be used to reduce household expenditure of a family and to increase

the productivity to improve quality of lives of people.

There are some essential expenses which we cannot cut off, but if we can study properly

about this expenses we can identified that there are some unwanted expenses occurred during

the month. And some services we consume daily, might consume by us in an inappropriate

way. Therefore reduce household expenditure is not a very easy task. But if we study and

implement Pareto low properly we can reduce household expenditure up to some extent.

Pareto law

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the

unequal distribution of wealth in his country, observing that twenty percent of the people

owned eighty percent of the wealth. In the late 1940s, Dr. Joseph M. Juran inaccurately

attributed the 80/20 Rule to Pareto, calling it Pareto's Principle. While it may be misnamed,

Pareto's Principle or Pareto's Law as it is sometimes called, can be a very effective tool to

help you manage effectively.

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Where It Came From

After Pareto made his observation and created his formula, many others observed similar

phenomena in their own areas of expertise. Quality Management pioneer, Dr. Joseph Juran,

working in the US in the 1930s and 40s recognized a universal principle he called the "vital

few and trivial many" and reduced it to writing. In an early work, a lack of precision on

Juran's part made it appear that he was applying Pareto's observations about economics to a

broader body of work. The name Pareto's Principle stuck, probably because it sounded better

than Juran's Principle.

As a result, Dr. Juran's observation of the "vital few and trivial many", the principle that 20

percent of something always are responsible for 80 percent of the results, became known as

Pareto's Principle or the 80/20 Rule.

What It Means

The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are

trivial. In Pareto's case it meant 20 percent of the people owned 80 percent of the wealth. In

Juran's initial work he identified 20 percent of the defects causing 80 percent of the problems.Project Managers know that 20 percent of the work (the first 10 percent and the last 10

percent) consume 80 percent of your time and resources. You can apply the 80/20 Rule to

almost anything, from the science of management to the physical world.

You know 20 percent of your stock takes up 80 percent of your warehouse space and that 80

percent of your stock comes from 20 percent of your suppliers. Also 80 percent of your sales

will come from 20 percent of your sales staff. 20 percent of your staff will cause 80 percent

of your problems, but another 20 percent of your staff will provide 80 percent of your

production. It works both ways.

How It Can Help Us

The value of the Pareto Principle for a manager is that it reminds you to focus on the 20

percent that matters. Of the things you do during your day, only 20 percent really matter.

Those 20 percent produce 80 percent of your results. Identify and focus on those things.

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When the fire drills of the day begin to sap your time, remind yourself of the 20 percent you

need to focus on. If something in the schedule has to slip, if something isn't going to get done,

make sure it's not part of that 20 percent.

There is a management theory floating around at the moment that proposes to interpret

Pareto's Principle in such a way as to produce what is called Superstar Management. The

theory's supporters claim that since 20 percent of your people produce 80 percent of your

results you should focus your limited time on managing only that 20 percent, the superstars.

The theory overlooks the fact that 80 percent of your time should be spent doing what is

really important. Helping the good become better is a better use of your time than helping the

great become terrific. Apply the Pareto Principle to all you do, but use it wisely.

1.2Statement of the problem

This project report is mainly focusing on by using Pareto low application how to reduce

household expenditure of a family. In here I was able to identify that what are the 20% of

items which mainly contributes to the 80% of the whole expenditure of the month. In here

there are further details about how we are getting our monthly income to the family, and howeach member of family contributes to this whole process. Contribution of each member is

different from one to one. Although we are a one family each of us have different views and

interests on many things which are connected with the age, environment, life patterns,

experiences, norms and value systems, responsibilities, view about the life, desires, and

future expectations.

In our family there are 6 members. Father, mother, two brothers, one sister and I.As my

father is a businessman we will be able to get around Rs. 10,000,00 as our monthly income.

As a student my class fees and transportation cost is somewhat differ from month to month.

But all the other expenses incurred during the month are almost same. And there are some

situations our cost for expenditure takes high value; like Christmas and other festivals.

Usually we were enrolled in a pattern of day to day purchasing and all retail items from a

supermarket twice a week. there are long term expenses which I didn’t consider on my

calculations. . So our monthly expenditures are nearly around Rs. 1, 26,343

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After implementing Pareto law inside the house with the help of my family members I was

able to reduce the monthly expenditure by 20%. Before applying Pareto law it was Rs. 1,

26,343 for whole month but now it will take somewhere round Rs……………… I was able

to do that by eliminating wastage of monthly expenditure. And I cut off some unwanted

purchases.

1.3Objectives of the study

1.Standards - The amount required to reduce household expenditure (20%)

2. Performance - To reduce the household expenditure

3. Conditions - * PARETO LAW

*without affect current quality of life of family members

1.4Significance of the study

This study is important to find out the expenditures incurred on commodities of the

household. This research is conducted by to fulfil the partial requirement of the Continuous

Professional Development module. According to the studying area it is important to identify

the waste and unnecessary expenses. By studying this cost cutting method we can save

money which is unnecessarily spent on commodities, then it can be used to future consumption

or as an investment. therefore quality of lives of people will increase.

Chapter II – Background

We were advised to reduce our normal monthly consumption amount as a practice to save

some amount for the future consumption although it is a very little amount. Before doing the

project report, I had to make the background for the project. As I mentioned earlier this is a

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project which we can use to reduced household expenditure of a family. To collect relevant

and accurate data I had to get support and contribution from every member in my family.

Earlier all of them were not aware about Pareto Law application. Because of that my first task

was to introduced Pareto law and its’ importance to all my family members. From the support

of them I was able to collect data daily. Everyone should have to write their daily expenses

on a particular book which I used to record all information. I did not consider long-term

expenditures like repairs on vehicles, houses etc and insurance payments, finance payments,

EPF, ETF payments etc and also immediate expenses like parties, weddings etc.

First I had to collect all the expenditure relevant to may month. Earlier I was not aware about

daily expenses occurring every day. From the help of my mother I was able to list down all

the quantities we need for a month and the unit price of each households items. Although

there are many expenses I have to get only the expenses which are consumable within the

period of month. So I had to put away all the expenses which are long-term, and which are

related to immediate expenses.

And to my project I had to collect electricity, water, and telephone bills, but those all bills

will come at the middle of the month. And there is a one month delay of those. Therefore I

have to calculate units consumed during the month by using meters. Then I had to calculatemonthly consumption. and we buy fruits from the market or from the nearest fruit stall.

After list down all the data I collected I found 84 items for the analysis. Among those the

highest amount was fast food cost. It is Rs.19417. In this month May I could identified the

rice consumption was low due to fast food consumption. And next one is electricity bill.

According to past reports every month we are getting high electricity bill.

Although we didn’t consider about the expenses much, Most of them were unnecessary costs.

. Basically I noticed that most of the expenses were made because of we are buying instant

foods from outside frequently. Data implementation was done during the month of June. For

that I used the PARETO LAW; which is also known as 80/20 rule by Vilfredo Pareto. The

principle of “vital few and trivial many”, the principle that 20% of something always are

responsible for 80%of the results.

Vital few means items which are up to the 80% of total consumable items. Through the

implementation of PARETO LAW I was able to reduce our total consumption by 20%byreducing the some of the costs and by improving the some costs in like vegetables.

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Before do the implementation our total consumption is nearly around Rs………….. and after

implementing I was able to reduce the cost by nearly around Rs………… so in the month of

June our cost is about Rs.

Although it is a very little amount with comparison to the total earnings when considering the

long-term wise it is a huge amount.

The most important thing is that; also it is a cost cutting of total expenses no once life style

was jeopardized due to that attempt. Everyone was very happy about the implementation.

Literature review

Pareto Analysis is a statistical technique in decision making that is used for the selection of a

limited number of tasks that produce significant overall effect. It uses the Pareto Principle

(also known as the 80/20 rule) the idea that by doing 20% of the work you can generate 80%

of the benefit of doing the whole job. Or in terms of quality improvement, a large majority of

problems (80%) are produced by a few key causes (20%). This is also known as the vital few

and the trivial many.

In the late 1940s quality management guru Joseph M. Juran suggested the principle and

named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy

went to 20% of the population. Pareto later carried out surveys on a number of other

countries and found to his surprise that a similar distribution applied.

PARETO LAW was the main approach used to do the data analysis part. All are done

according to the 80/20 principle. All mathematical and statistical calculations were done

according to this approach.

The Pareto Principle or the 80/20 rule proves its mettle in practically every area of

management some of which are given below:

(a) 20 percent of the customers account for 80 percent of the sales.

(b) 20 percent of the products or services account for 80 percent of the profits.

(c) 20 percent of your stock takes up 80 percent of your warehouse space.

(d) 80 percent of your stock comes from 20 percent of your suppliers.

(e) 80 percent of your sales will come from 20 percent of your sales force.6



(f) 20 percent of your staff will cause 80 percent of your problems.

(g) 20 percent of a company’s staff will output 80 percent of its production.

Chapter III-Methodology

3.1 Population and sampling

When implementing the pareto law, it is difficult to implement to the population. Therefore I

took a sample of twelve months such as May and June months.

Usually pareto law concept use in larger scale industries. Therefore to ensure the

effectiveness and ability of monitoring I choose my family consists of six members. While

conducting the research I was not add any long term expenditures.

3.2 Instrumentation

According to Pareto Law analysis first we have to identify 20% of items which contribute to

80% of the expenditure. After calculate that we can take necessary actions to reduce that 20%

of vital few items. Because it is affecting to 80% of total expenditure. Therefore I was able to

identify that 20% of vital few items.

So I started to collect data beginning of may. But I wasn’t at home May 2 nd due to our family

trip. Therefore I had collected data until 31 st of May to complete 30 days.

3.4 Conceptual Frame Work

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ACTIVITY APR. MAY. JUNE. J

U

.1 2 3 4 1 2 3 4 1 2

Project proposal receiving and trial report

preparing

Analyzing the project proposal

Discussion among the family members

Data collection

Data analysis

Improving the cost reductions

Collecting other relevant information

Preparing the project report

Final analysis

Submit the report

Pareto’s Law is an inexact rule that, in a given situation, 80% of the effects come from 20%

of the causes. Italian economist Vilfredo Pareto noted that 80% of Italian income went to

20% of the population. Pareto’s Law was named after him by business management specialist

Joseph M. Juran, who spotted that the 80–20 rule was common across many areas of business. For example, 80% of sales generally come from 20% of one’s clients.

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Pareto’s Law has many useful applications in business. A Pareto chart is a type of

bar chart, used to illustrate the 80–20 assumption, in which the values plotted

are in descending order with a line graph showing the cumulative totals of each

category from left to right. Such charts are used to monitor

3.5 Validity and Reliability

To make my report more accurate I have collected all fast food bills and food city bills to get

actual value of goods and services that we use.

Almost all the data were collected with actual bills accept some expenses. Like

transportation, vegetables, fruits, coconut etc

I used a book to record all transactions took place during the two months At the latter part of

the month I took all the expenses in to one table and analyzed them according to a methodical

way. I made consumption charts for two months to show how the household expenditure has

reduced from May to June.

But sometimes I faced a difficulty when buying vegetables, fruits and stationery items that

prices are sometimes little bit differ from shop to shop. So almost all the data were collected

with actual bills except some expenses like transportation, vegetables, fruits, stationery and

etc.

3.6 Scope and Limitations

1. Water bill

When recording data for water consumption we are not getting a separate bill for home and

the hotel.

2. Time

All our presentations, assignments and exams had come without any time break. So

managing the time was a hard task for me.

3. Price

As I mentioned earlier price fluctuations and price differences are affecting the calculations.

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4. Billing proofs and cumulative values

I wasn’t able to find billing proofs for all the consuming expenses.. Although in here we get a

cumulative amount as our monthly consumption it is not an appropriate amount. Because, in

here wI only used the monthly consumable items, other than that long term and immediate

expenses are not taken to the consideration

Chapter –IV- Data Presentation

Table 1 - Data for the May month

ITEM UNIT

SIZE

UNIT

PRICE

MONTHLY

CONSUMPTION

UNITS

MONTHLY

EXPENDITURE

Electricity 365 365 5000

Water 2100

Telephone1700

hand phone bill2500

Internet bill1207

Mortin spray 1 235 1 235

Tea 5 200 3600

Sugar 6 103 5486

Milk powder 10 260 92350

Maldive fish 200g 130 200260

Pepper powder 117g 98 117g 106

Cardamom 25g 100 25g100

Saffron powder 350g 220 150g61

Chilly pieces/ pow. 550g 140 537g151

Coriander 250g 45 250g 45

Green gram 625g 147 514g121

Goraka 400g 20 380g 76

TSP 2pkts 45 1 45

Cinnamon 58g 125 58g 131

Cloves 60 35 60 42

Kurakkan 500g 130 500g130

Jelly 3pkts 90 3pkts 270

10



Samahan 3 10 330

Chick peas 2pkts 117 1pkt117

Green tea 2pkts 400 1400

Flour 500g 100 250g 50Toilet paper 2 70 2

140

Air freshener 1 204 1204

Toilet soap 11 11265

Mosquito coil 1pkt 42 1pkt 42

Sponges 5 27 5 135

Coffee 130g 180 130g 520

Marmite 1 215 1 215

Lime pickle 1 240 1 240

Vegetables 3750

Jam 1 385 1 385

Butter 1 210 1210

Belle Margarine 1 325 1325

Toilet cleanings 2 312 11/2 271

Fabric softener 1 250 1 250

Cosmetics 10 4700 52590

Sanitary napkins 2 283 2283

Tooth paste 3 146 3 438

Cotton buds 1 40 1 40

Clorox 2 235 2 470

Rice 18kg 110 18kg 1980

Prawns 4kg525g 600 4kg 525g 2715

Fruits 1323

Biscuits and sweets 4098

Detergent powder 4pkts 299 4pkts 1196

Salmon 1 215 1 215

Dahl 1kg 115 750g 86

Cordial 1 285 1 285

Salt 4 32 4 128

Dill seed 50g 28 50g 28

Mustard cream 1 95 1 95

Oveltine 1 195 1 195

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Papadam 6 41 6 246

Match boxes 4 4 2 8

Fish 3kg 250g 3kg 250g 2330

Breakfast cost

7208

Threewheel hires 2100

Beef 4kg 440 4kg 1780

Phone reloads 3 100 3 300

Daily school exp.2670

My travelling exp. 4470

Office transport fee2000

School bus fee 5000

Fuel exp.

3900

Fast food exp. 19417

.salon exp. 2950

Sausages 1 350 1 350

Eggs 10 17 10 170

Coconut 40 30 20 600

School fees8750

Institute fees 9167

Pork 1kg 400 1kg 400

Fertilizers 690

Chicken 2kg 300g 350 2kg 300g 830

Gas 1 1890 1 1890

Vinegar 1 108 1 108

Cologne 1 420 1 420

Chicken meat balls 1pkt 340 1pkt 340

Stationery items 144

Dish wash liquid 1 90 1 90

Dry fish 250g 300 250g 300

Hospitality exp. 6440

Total 126643

Table 2: Methodical Data

No Item

Monthly

expenditure1 Fast food exp. 19417

12



2 School fees 8750

3 Institute fees 9167

4 Breakfast cost 7208

5 Hospitality exp. 6440

6 Electricity 50007 My daily exp. 4470

8 Biscuits and sweets 4098

9 Fuel exp. 3900

10 Vegetables 3750

11 Salon exp. 2950

12 Prawns 2715

13 Daily schooling exp. 2670

14 Cosmetics 2590

15 Mobile phone bill 2500

16 Milk powder 235017 Fish 2330

18 Water bill 2100

19 3wheel hires 2100

20 Office transport fee 2000

21 Rice 1980

22 Gas 1890

23 Beef 1780

24 Telephone bill 1700

25 Fruits 1323

26 Internet bill 1207

27 Detergent powder 1196

28 Chicken 830

29 Fertilizer 690

30 Coconut 600

31 Tea 600

32 coffee 520

33 sugar 486

34 clorox 470

35 Tooth paste 43836 cologne 420

37 Green tea 400

38 Jam 385

39 Sausages 350

40 Chicken meat balls 340

41 Belle margarine 325

42 Dry fish 300

43 Phone reloads 300

44 Sanitary napkins 283

45 Cordial 285

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46 jelly 270

47 Toilet cleanings 271

48 Toilet soap 265

49 Maldive fish 260

50 Fabric softener 25051 papadam 246

52 Toilet paper 240

53 Lime pickle 240

54 marmite 215

55 salmon 215

56 butter 210

57 Air freshener 204

58 oveltine 195

59 eggs 170

60 Chili powder 15161 Stationery items 144

62 Toilet paprer 140

63 sponges 135

64 cinnamon 131

65 Kurakkan 130

66 Green gram 121

67 Chick peas 117

68 vinegar 108

69 Pepper powder 106

70 cardamom 100

71 Mustard cream 95

72 Dish wash 90

73 Dahl 86

74 goraka 76

75 Saffron powder 61

76 Flour 50

77 Corriendor 45

78 Tsp 45

79 cloves 42

80 Mosquito coil 42

81 Cotton buds 40

82 Samahan 30

83 Dill seed 28

84 Match boxes 8

Total 120975

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Chapter V – Data Analysis

Table 3

No Item Monthly

expenditure

Portion Cumulative

value

Cumulative

Portion (%)(%)

1 Fast food exp. 19417 16.05042 19417 16.05042

2 Institute fees 9167 7.57759 28584 23.62801

3 School fees 8750 7.23289 37334 30.8609

4 Breakfast cost 7208 5.95825 44542 36.81915

5 Hospitality exp. 6440 5.32341 50982 42.14256

6 Electricity 5000 4.13308 55982 46.27564

7 My daily exp. 4470 3.69497 60452 49.97061

8 Biscuits and sweets 4098 3.38747 64550 53.35808

9 Fuel exp. 3900 3.22380 68450 56.58188

10 Vegetables 3750 3.09981 72200 59.68169

11 Salon exp. 2950 2.43852 75150 62.12021

12 Prawns 2715 2.24426 77865 64.36447

13 Daily schooling exp. 2670 2.20706 80535 66.57153

14 Cosmetics 2590 2.14093 83125 68.71246

15 Mobile phone bill 2500 2.06654 85625 70.779716 Milk powder 2350 1.94255 87975 72.72155

17 Fish 2330 1.926601 90305 74.64815

18 Water bill 2100 1.73589 92405 76.38404

19 3wheel hires 2100 1.73589 94505 78.11993

20 Office transport fee 2000 1.65323 96505 79.77316

21 Rice 1980 1.63670 98485 81.40986

22 Gas 1890 1.56230 100375 82.97216

23 Beef 1780 1.47137 102155 84.44353

24 Telephone bill 1700 1.40524 103855 85.84877

25 Fruits 1323 1.09391 105178 86.94268

26 Internet bill 1207 0.99772 106385 87.9404

27 Detergent powder 1196 0.98863 107581 88.92903

28 Chicken 830 0.68609 108411 89.61512

29 Fertilizer 690 0.57036 109101 90.18548

30 Coconut 600 0.49597 109701 90.68145

31 Tea 600 0.49597 110301 91.17742

32 coffee 520 0.42984 110821 91.60726

33 sugar 486 0.40173 111307 92.00899

34 clorox 470 0.38851 111777 92.397535 Tooth paste 438 0.36205 112215 92.75955

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36 cologne 420

0.34717 112635 93.10672

37 Green tea 400 0.33064 113035 93.43736

38 Jam 385 0.31824 113420 93.7556

39 Sausages 350 0.28931 113770 94.0366440 Chicken meat balls 340 0.28104 114110 94.31768

41 Belle margarine 325 0.26865 114435 94.58633

42 Dry fish 300 0.24798 114735 94.83431

43 Phone reloads 300 0.24798 115035 95.08229

44 Sanitary napkins 283 0.23393 115318 95.31622

45 Cordial 285 0.23558 115603 95.5518

46 jelly 270 0.22318 115873 95.77498

47 Toilet cleanings 271 0.22401 116144 95.99899

48 Toilet soap 265 0.21905 16409 96.2180449 Maldive fish 260 0.21492 116669 96.43296

50 Fabric softener 250 0.20665 116919 96.63961

51 papadam 246 0.20334 117165 96.84295

52 Toilet paper 240 0.19838 117405 97.04133

53 Lime pickle 240 0.19838 117645 97.23971

54 marmite 215 0.17772 117860 97.41743

55 salmon 215 0.17772 118075 97.59515

56 butter 210 0.17358 118285 97.76873

57 Air freshener 204 0.16862 118489 97.93735

58 oveltine 195 0.16119 118684 98.09854

59 eggs 170 0.14052 118854 98.23906

60 Chili powder 151 0.12481 119005 98.36387

61 Stationery items 144 0.11903 119149 98.4829

62 Toilet paprer 140 0.11572 119189 98.59449

63 sponges 135 0.11159 119424 98.70608

64 cinnamon 131 0.10828 119555 98.81436

65 Kurakkan 130 0.10746 119685 98.92182

66 Green gram 121 0.10002 119801 99.02184

67 Chick peas 117 0.09671 119923 99.1185568 vinegar 108 0.08927 120031 99.20782

69 Pepper powder 106 0.08762 120137 99.29544

70 cardamom 100 0.08266 120237 99.3781

71 Mustard cream 95 0.07852 120332 99.45662

72 Dish wash 90

0.07439 120422 99.53101

73 Dahl 86 0.07108 120508 99.60209

74 Goraka 76 0.06282 120584 99.66491

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75 Saffron powder 61 0.050423 120645 99.71533

76 Flour 50 0.041330 120695 99.75666

77 Coriander 45 0.03719 120740 99.79385

78 Tsp 45

0.03719 120785 99.83104

79 cloves 42 0.03471 120827 99.86575

80 Mosquito coil 42 0.03471 120869 99.90046

81 Cotton buds 40 0.03306 120909 99.93352

82 Samahan 30 0.02479 120939 99.95831

83 Dill seed 28 0.02314 120967 99.98145

84 Match boxes 8 0.00612 120975 100.0000

120975 100

Pareto Law Application

Total expenditure = 120975*80% =Rs. 96780

20 items of household items were contributed to 80% of total expenditure of whole month.

Those 20 items are highlighted in the given ‘Table 03’.

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18



Table 4 – Cost Reduction

No

Item Before

implementing

After

implementing

Savings

1 Fast food exp. 19417 14945 44722 Institute fees 9167 9167 -

3 School fees 8750 8750 -

4 Breakfast cost 7208 5087 2121

5 Hospitality exp. 6440 5762 678

6 Electricity 5000 4280 720

7 My daily exp. 4470 4300 170

8 Biscuits and sweets 4098 2671 1427

9 Fuel exp. 3900 1300 2600

10 Vegetables 3750 2800 95011 Salon exp. 2950 590 2360

12 Prawns 2715 2105 610

13

Daily schooling

exp. 2670 2820 -150

14 Cosmetics 2590 478 2112

15 Mobile phone bill 2500 2450 450

16 Milk powder 2350 2224 126

17 Fish 2330 3860 -1530

18 Water bill 2100 2000 100

19 3wheel hires 2100 3000 -90020 Office transport fee 2000 2000 -

0

20004000

6000

8000

10000

12000

14000

16000

18000

20000

MAY JUNE

Fast food exp.Institute feesSchool feesBreakfast costHospitality exp.ElectricityMy daily exp.Biscuits and sweetsFuel exp.VegetablesSalon exp.PrawnsDaily schooling exp.Cosmetics

Mobile phone billMilk powderFishWater bill3wheel hiresoffice trasport

Above chart shows how I able to reduce the items of our family expenses in month of June. I

could not reduce some of the items cost. During the month June I couldn’t reduce costs such19



as daily schooling expenses of my younger brother and sister’s, fish cost and 3wheel hiring

cost.

Table 5 – Data chart for month June

Item Consumption Expenditure

Fast food cost 14945

Institute fee 9167

School fees 8750

Hospitality exp. 5762

Breakfast cost 5087

School buscharges 5000

Electricity bill 4280My dailyexpenses 4300

fish 3860

Daily schoolingexp. 2820

Rice cost 6kg 3190

vegetables 8kg 750g 2800

3wheel hires 3000

Mobile phone bill 2450

Milk powder 2224Office transportfee 2000

Water bill 2000

beef 4kg 500g 1980

Chicken 3Kg 500g 1575

Prawns 3Kg 250g 2105

petrol 1300

Gas 1890

Telephone bill 1450

Internet bill 1200 Tea 3 pkts 600

Sugar 5 kg 525

Green tea 1 pkts 400

Detergentpowder 3 pkts 897

Coconut 20 600

Sausages 2 pkts 700

fruits 860

Salon expenses 590

Fertilizers 600

20



Coffee 35 g 140

Chili powder 450 g 126

Maldive fish 100 g 200

Dull 500 g 115

Chick peas 500 g 117

Cinnamon 100 g 125

oil 750 ml 250

Dry fish 375 g 187

Toilet soap 7 231

Jam 300 g 158

margarine 375 g 243.75

Non fat milk 2 310

Clorox 1 235

Sanitary napkins 283

Toothpaste 2 440

cosmetics 2 478

Pork 1 kg 400

Coconut milkpowder 1 260

Big onion 3 kg 500g 350malun 165

potato 1 kg 130

Phone reloads 300

Stationary exp. 445

Soft drinks 270

papadam 7 287

eggs 20 340

Mortien spray 1 325

Salmon 2 430

Birth day cards 2 240

Cordial 1 285

Salt 3 pkts 96

Turmeric powder 100 g 54

Curry powder 100 g 61

Pepper powder 100 g 98

vinegar 375 ml 54

Mortin coil 1 pkts 42

Dish wash liquid 1 90

Panadol 2 40noodles 2 90

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Flour 500 g 50

Packets of tisssues 2 40

Cotton buds 1 40Goraka 60 g 12

Dil seed 70 g 19.60

Coriander 460 g 41.40

vinegar 375ml 54

gel 2pkts 10

Match boxes 2 8

Total expenditure 110,289.75

Different between household expenditure =

= 120975 110289.75

= 10685.25

= 9%

After the reduction;

80% cost of 20% items = 88231.80

20% cost of 80% items = 22057.95

Chapter VI - Findings

This household expenditure project give us an idea about how to reduce monthly expenditure

and what are the unnecessary costs occurred during a period of month time in a house. It

helped our family members to reduce our daily expenditures while keeping quality of life and

improving productivity.

After collecting all the necessary data for the project, I was able to calculate each of

expenditure separately that we used to spend every month as our household expenditure.

After collecting, organizing and analyzing data I was able to find out our total monthly

consumption is nearby around Rs.120975. After collecting and preparing all the data Iapplied Pareto Law theory to that. My list of consumptions items had 84 items in the month

22

May month total

ex enditure

June month total

ex enditure



of May. Even though there are 84 items in the list mostly 80% of the cost/expenditure

covered only around 20 items.

The 80% expenditure of 20% items = Rs.96505

The 20% expenditure of 80% items = Rs.24470

Expenditure Items

80% 23.8%

20% 76.2%

6.1 TOTAL MONTHLY EXPENDITURE

vital few items in my house expenditures

23

76

24

80%

20%



1 Fast food exp.

2 School fees

3 Institute fees

4 Breakfast cost

5 Hospitality exp.

6 Electricity7 My daily exp.

8 Biscuits and sweets

9 Fuel exp.

10 Vegetables

11 Salon exp.

12 Prawns

13 Daily schooling exp.

14 Cosmetics

15 Mobile phone bill

16 Milk powder17 Fish

18 Water bill

19 3wheel hires

20 Office transport fee

After implementing Pareto law I could able to save Rs.10685.75, a portion of 9%

104000

106000

108000

110000

112000

114000

116000

118000

120000

122000

may

june

24



6.2 Reduction of cost

Chapter VII – Conclusion

First step of the project was to collect all the data such as monthly consumption, prices of

one unit, total consumption of each item and cumulative value of monthly household

expenditure. For this calculation I took only the consumable items other than the long term

and short term items, immediate expenses. Finally I found out our monthly household

expenditure is nearby around Rs. 120975. This total cost contains 84 of items.

After that I applied Pareto Law approach to collected findings. Then I calculated vital few

items and trival many items. For 80% of expenditure was based on 20 items of monthly

consumption and 20% of expenditure based on 76 items of monthly consumption. Then I

explained those findings to my family, and we decided that each of us take responsibility to

reduce some costs. We all understood that it is very important and it can increase productivity

and quality of lives of our family members in future. And we came up with different

solutions to reduce some costs. It was very difficult to select correct approach to reduce costs, because we all came up with different ideas according to our interest and personal views.

Somehow after discussed the matter we selected most appropriate, easy and effective method

to reduce household expenditure daily.

During the month June we all worked on that, and finally we were able to reduce it by 9%

from total expenditure. For some items we reduced the consumption and for some items we

increased the consumption. And some of unwanted expenses have cut off by us because of

their high cost. To do that we had to change some daily routine patterns and habits without

any disagreements of family members.

Although it seems like a difficult target first but when really practicing, it was not difficult. I

was able to save Rs.10689.75 at the end of month June

Chapter VIII – Recommendations

25



All the recommendations are made on to reduce the consumption of the selected vital few

items. But while recommending I understood all the expenses can not reduce, if not that will

negatively affect to the quality of our family members.

The highest value held in my list was fast food expenses. in the beginning of month

of June I discussed this matter with my family members and with their help I could

reduced it by Rs.4472

Then the next highest variable cost incur to the breakfast expenses so after discussed

with my family members we all got to gether and reduced waste of food because

earlier we bought food for breakfast more than we need.

Expenditure incur for salon reduced due to no weddings occurred in June

Next cost is electricity. I advised my brother and sister to switch off fans and lights

when they come out from their rooms. Those kind of little actions helped to reduce

electricity cost.

Land phone charges also reduce cutting off unwanted calls and calls for mobile

numbers which include high cost. Because sometimes my family members take calls

to nearby places even though they could go and tell the message. When we were

reduced do it we could easily reduced the telephone bill.

But we couldn’t reduce the 3wheel hiring cost due to more shopping. But we can do it

by doing shopping at once without going several times.

And we decided to reduce consumption of yogurts, biscuits and ice cream. Because if

we can eat fruits instead of sweets, it will costs low and it’ll good for the health.

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There were some household items if we buy large packet rather than small amounts,

it’ll give an advantage to save money. I advised my parents to change some brands of

goods and buy large packets at one time like milk powder.

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nadee cpd project

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