Abstract
The theories of project management are not well developed despite the existence of extensive literature on the topic. This paper derives a New Institutional Economic theory of project management. It is suggested that project management encompasses both the discipline of operational management and that of economics. The operational management part deals with optimization of project processes. The basic postulation of the economic part is that human beings will maximize their benefits under constraints. Constraints are converted to either price or cost to facilitate the application of the law of demand. Three examples are used to demonstrate how refutable hypotheses can be derived when changes in constraints lead to changes in behaviours. The functions of project management are discussed in the contexts of this theoretical framework. A synthesis with existing theories is also given.
Highlights
This paper develops a New Institutional Economic theory of project management
A new institutional economic theory of project management involves performance reporting and the lessons learned will be used to the correct the previous phases (Koskela, Howell 2002)
This paper has developed a New Institutional Economic Theory of project management
Summary
This paper develops a New Institutional Economic theory of project management. There are claims that there is no coherent underlying theory of project management (Shenhar, Dvir 1996) and that the theory is implicit and obsolete (Koskela, Howell 2002). The claim that there is no theory of project management annoyed J. Rodney Turner, who attempted to develop a theory through a serious of editorials in International Journal of Project Management (IJPM) (2006a, 2006b, 2006c, 2006d). Morris (2002), and that different types of projects need different theories (Shenhar 2001). Inspired by the fruitful developments of New Institutional Economics since 1960s, this paper attempts to make a contribution to the theory of project management from the New Institutional Economic perspective
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