The Pareto Principle in Project Management

The origin of the Pareto principle

The Pareto principle goes back to the Italian Vilfredo Pareto. This scientist and sociologist found out that 80% of the Italian national wealth is owned by about 20% of Italian families. Now you probably ask yourself what the distribution of the Italian national wealth has to do with project management.

The American Joseph M. Muran, who is one of the pioneers of quality management, used the principle described above in the 1930s, phrased it more generally and named it after Vilfredo Pareto. The Pareto principle is also called the 80-20 principle because it states that 20% of all causes account for 80% of the total effect. This means that there is a linear imbalance between input and output.

The 80-20 principle

The basic idea of the Pareto principle can be applied to most situations. Of course, the exact proportions are not always fixed at 80% output and 20% input, but are only intended to represent the basic idea of this principle. The only important thing is that there is an imbalance and that a large part of the final result can be achieved with a relatively small input.

Examples of how the Pareto principle can be applied to different situations:

• 20% of fishermen catch 80% of the fish
• 80% of the time we wear 20% of the clothes in our closet
• 80% of the turnover of a company is achieved with 20% of the products.
• 80% of a project can be completed with 20% effort, while 80% effort is needed for the remaining 20% of the project

Now you know about the origin of the Pareto principle and the connection to the distribution of the Italian national wealth. Now we would like to explain how this principle can be applied to project management.

^{Image: The Pareto Principle}

The Pareto principle in project management

Increasing efficiency

The Pareto principle can help prioritize the tasks at hand, especially in critical situations with deadline pressure and scarce resources. As a result, you not only reduce the pressure, but also contribute to increasing your efficiency and effectiveness.

The objective here is:

• Focus on the important tasks that deliver a high output.
• Identify all time-consuming small tasks that hardly deliver any positive effect on the project's success.

This principle is particularly helpful when you feel overwhelmed by too many simultaneous tasks. Knowing that you can already achieve a lot (80%) by completing the important tasks, i.e. with 20% effort, provides a great relief in moments like that. In order to prioritize your tasks according to the Pareto principle, you should examine the tasks using the following guiding questions:

• Which goal are you getting closer to by completing this task?
• Output: What percentage of the goal will you achieve by completing this task?
• Time required (input): How much time do you have to spend on completing the task?

After you have considered the tasks at hand on the basis of these guiding questions, you can turn to the most important tasks according to the 80-20 rule. These are the tasks that will give you the greatest output while requiring the least amount of input in terms of time.

Risk mitigation

The Pareto principle can also be used when it comes to project risks and, ultimately, project success. Here we assume that 20% of project risks will cause 80% of all problems. To minimize risk, you should analyze all project risks to identify the critical 20%. Then, you need to eliminate the critical 20% or develop prevention strategies.

Improve communication

Communication is another area in project management where it is helpful to apply the Pareto principle. I'm sure most of you will feel the same way: At the beginning of each workday, you face a flood of emails that you need to manage. According to the Pareto principle, only 20% of all the information that reaches you every day is really important. In order to communicate effectively, you should spend the majority of your time on the 20% of emails that are actually important. Reply to or delete the rest of the emails later.

Caution The Pareto Principle is not an excuse for sloppiness and lack of conscientiousness. In order for 20% of your work to really turn into 80% output, you need to approach the 20% with extreme diligence and focus. The 80-20 rule is a good guide in stressful situations and can be applied to many other areas of project management.

 

^{(Original German text by Kathrin Jungwirth; English translation by Linh Tran)}