الإصدار 7 - العدد 19 (2026-10-20)

The Economics of Project Management: Strategic Value Creation, Resource Allocation, and Governance Under Uncertainty

Prof. Dr: Ahmad Abdulrazzaq Al-Sayed Omar

College of Business Administration- Department of Business Administration Majmaah University - Kingdom of Saudi Arabia

Modern project management has evolved from an operational mechanism focused primarily on mechanical execution (time, cost, scope) into an economic engine for strategic value realization. Despite sophisticated control systems, complex projects routinely experience significant cost escalations, schedule overruns, and value deficits. This study investigates the economics of project management through a multi-theoretical framework integrating Transaction Cost Economics (TCE), Agency Theory, Real Options Analysis (ROA), and Behavioral Economics. Employing a conceptual-analytical modeling methodology, this paper examines the economic interplay between contract architecture, information asymmetry, and executive behavioral biases. We formulate mathematical models for incentive alignment in procurement contracts and develop an analytical model evaluating project managerial flexibility under stochastic uncertainty. The findings demonstrate that linear cost-control measures systematically destroy enterprise value when implemented in high-volatility environments. Value maximization requires replacing deterministic budgeting heuristics with dynamic contingency governance and asymmetric incentive models. The research contributes to the literature by bridging classical microeconomic theory and strategic project delivery, providing actionable insights for executive boards, PMOs, and institutional policymakers.