The role of transaction costs in corporate project management

Abstract

Natalia Petrovna Shepilova - National Research University "Higher School of Economics".

Email: nshepilova@hse.ru

This article focuses on transaction costs which have a great impact on the corporate projects costs; efficient transaction costs management of high quality involves a comprehensive approach to the assessment of possible losses arising from transactions, as well as their classification and evaluation. Different approaches to the definition of transaction costs are considered. Their sources, such as high cost of information and opportunistic behavior, are identified and described. Classifications of transaction costs according to Eggertsson, Ivanov, Kapelyushnikov, Milgrom and Roberts are provided. The author indicates the role of transaction costs in value based management which includes value evaluation, budget development and value control. In particular, such methods as minimizing transaction costs by reducing uncertainty and Earned Value Analysis are mentioned. The author presents two methods of transaction costs management: minimizing transaction costs of organization’s interaction with its partners at the market, under which control and management is carried out on the transaction costs of commercial and regulatory types (which are connected to the interactions with contractors and clients and to the need to minimize regulatory risks respectively); and minimizing in-house transactions, under which control and management is carried out on the transaction costs of research and in-house types (which are connected to the search for information and market analysis and to the coherence of the corporate teamwork). The author proposes using the provided identification and classification of projects’ transaction costs, as well as methods of their management as a tool for projects’ cost and time management, which allows to consider all the factors that affect the projects’ costs at different stages of its implementation more fully.