What does 80/20 rule mean in project environment?

Originally, the Pareto Principle referred to the observation that80% of Italy’s wealth belonged to only20% of the population.

More generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

• 20% of the input creates80% of the result
• 20% of the workers produce80% of the result
• 20% of the customers create80% of the revenue
• 20% of the bugs cause80% of the crashes
• 20% of the features cause80% of the usage
• And on and on…

But be careful when using this idea! First, there’s a common misconception that the numbers20 and80 must add to100 — they don’t!

20% of the workers could create10% of the result. Or50%. Or80%. Or99%, or even100%. Think about it — in a group of100 workers,20 could do all the work while the other80 goof off. In that case,20% of the workers did100% of the work. Remember that the80/20 rule is a rough guide about typical distributions.

Also recognize that the numbers don’t have to be “20%” and “80%” exactly. The key point is that most things in life (effort, reward, output) are not distributed evenly – some contribute more than others.

It is a very effective and the common rule of thumb in today's world. In case of project environment it means80% of the contribution comes from20% of the potential contribution available, which means that80% of the total outcome of the project comes from20% of the available causes.