Unformatted text preview: completed on time, increasing the cost might shorten the time intended. Project management helps reduce transaction costs which are contracting costs. Transaction costs are the fees charged by a financial intermediary such as a bank, broker, or underwriter. Project management tools can reduce transaction costs by avoiding incomplete contracting which could lead to a “hold up” problem. For instance if Subway restaurants chain contacts a farm to plant a specific kind of tomatoes that otherwise the farm has no use for, and then Subway backs out, there is a “hold up” problem. The solution for this problem is to create a command and control structure, a hierarchy or organization to produce things....
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This note was uploaded on 05/26/2011 for the course BA 320 taught by Professor Mattwimble during the Fall '10 term at University of Michigan-Dearborn.
- Fall '10
- Project Management