This preview shows page 1. Sign up to view the full content.
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....
View Full Document
- Fall '10
- Project Management