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The Italian economist Vilfredo Pareto stated that 80% of the wealth of Italy was owned by 20% of the population of Italy. IMHO, this became such a hit that the thought leaders cutting across many industries, started applying this in a business context, as a rule and proclaimed that 80% of the issues/problems in their ecosystem, are created by 20% of the causes. The idea was not to proclaim the exact numbers or percentage. But to portray the fact that the majority of the issues/problems are created by few of the major causes. That's how the 80/20 rule is applied in the business context. Conclusion: In reality, this is how the pattern looks in a typical data distribution Reference Link: Wikipedia.org (for ascertaining the actual fact)

Cost benefit analysis is the process used to measure the benefits of a decision. It involves measurable financial metrics like the result of your decision in project yield revenue or cost save. CBA is a tool to determine which potential decision makes the most financial sense for the business. Based on the CBA tool business can decide whether to pursue a project. Financial benefit-cost analysis includes the below 8 steps. 1. Determine the annual revenue of the project 2. Find the Project cost 3. Calculate the project net benefits 4. Determine the discount rate 5. Find the average incremental cost 6. Find the financial net present value 7. Find the financial internal rate of return 8. Analysis of Risk and sensitivity Other cost also you need to account for Indirect Cost – fixed cost Intangible cost – any cost difficult to measure Opportunity cost – lost benefit or opportunities There are some tools like BCR Benefit Cost ratio may also computed to summarize the overall relationship between relative cost and proposed project benefit. We have /regression modelling, Valuation and forecasting techniques are some of the tools used for Cost Benefit analysis. There are some exception when the organization still taking projects even that do not have favorable cost benefit. The environmental projects, Customer satisfaction projects which Organization wants to pursue even that do not have favorable cost benefit but it maintains the company’s reputation and customer satisfaction.